Attached files
file | filename |
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EX-99.1 - EXHIBIT 99.1 - NNN 2003 VALUE FUND LLC | c02099exv99w1.htm |
EX-10.2 - EXHIBIT 10.2 - NNN 2003 VALUE FUND LLC | c02099exv10w2.htm |
EX-10.1 - EXHIBIT 10.1 - NNN 2003 VALUE FUND LLC | c02099exv10w1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 2010
NNN 2003 Value Fund, LLC
(Exact name of registrant as specified in its charter)
Delaware | 000-51295 | 20-122092 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
1551 N. Tustin Avenue, Suite 300, Santa Ana, California |
92705 |
|
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (714) 667-8252
Not Applicable
(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:
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)) |
Item 1.01 Entry into a Material Definitive Agreement.
The information reported in Item 2.01 of this Current Report on Form 8-K is incorporated herein by
reference.
Item 2.01 Completion of Acquisition and Disposition of Assets.
As previously disclosed in our Current Report on Form 8-K filed on October 14, 2009, we were in
default on a loan agreement that we, through NNN Executive Center 2003, LP, our indirect
subsidiary, and NNN Executive Center 2003 GP, LLC, our wholly owned subsidiary, entered into on
September 15, 2005, with the Ivan Halaj and Vilma Halaj Inter Vivos Trust, an unaffiliated third
party, or the Executive Center I Lender, in connection with our refinance of Executive Center I,
located in Dallas, Texas, or the Executive Center I property. The non-recourse loan, which matured
on October 1, 2009, was evidenced by a promissory note in the original principal amount of
$5,000,000, which was secured by a deed of trust and security agreement and was guaranteed by an
indemnity and guaranty agreement, as amended, or the loan agreements.
On May 28, 2010, we entered into a settlement agreement with the Executive Center I Lender, or the
Settlement Agreement. The Executive Center I Lender had forborne its right to exercise certain of
its remedies under the loan documents and pursuant to the terms of the Settlement Agreement agreed
to: (i) accept a deed-in-lieu of foreclosure of the Executive Center I property conveying record
and beneficial title to the property to the Executive Center I Lender in complete cancellation of
all indebtedness arising from the loan agreements; and (ii) release us from all liability and
obligations arising out of the loan agreements. The deed-in-lieu of foreclosure transaction was to
close on the date of our filing of the deed and the other property conveyance documents with the
Dallas County Clerks Office.
As a result of the indefinite closure of the Dallas County Clerks Office, on June 2, 2010, we
entered into an amendment to the Settlement Agreement, or the Amended Settlement Agreement, with
the Executive Center I Lender. The material terms of the Amended Settlement Agreement provided for
the closing to occur upon our delivery of the executed deed and the other property conveyance
documents to the Executive Center I Lender. On June 2, 2010, we completed the deed-in-lieu of
foreclosure transaction whereby we transferred our ownership interest in the property to the
Executive Center I Lender in exchange for complete cancellation of the loan agreements and release
of all of our liabilities, obligations and other indebtedness arising from the loan agreements. At
the time of closing, the loan had an outstanding principal balance of $4,590,000. We did not
receive any cash proceeds from the transfer of the Executive Center I property and we did not pay
Grubb and Ellis Realty Investors, LLC, our manager, a disposition fee in connection with the
transfer of the Executive Center I property.
The material terms of the Settlement Agreement and the Amended Settlement Agreement are qualified
in their entirety by the terms of the agreements attached hereto as Exhibits 10.1 and 10.2,
respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On or about June 4, 2010, we distributed an investor letter, or the Investor Letter, to our unit
holders, announcing the sale of Executive Center II and III, located in Dallas, Texas, or the
Executive Center II and III property, the disposition of the Executive Center I property and a
distribution payment to our unit holders. A copy of the Investor Letter, which is hereby
incorporated into this filing in its entirety, is attached to this Current Report on Form 8-K as
Exhibit 99.1.
The information furnished under this Item 7.01 of this Current Report on Form 8-K, including
Exhibit 99.1,
shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that section.
Item 8.01 Other Events.
We, through NNN Executive Center II and III 2003, LP, our indirect subsidiary, along with NNN
Executive Center, LLC, an entity also managed our manager, and sixteen unaffiliated third party
entities sold the Executive Center II and III property, our unconsolidated property, to Boxer F2,
L.P., an unaffiliated third party, for a sales price of $17,000,000 on May 24, 2010. Our portion of
the net cash proceeds was $541,000 after payment of the related mortgage loan, closing costs and
other transaction expenses. In connection with the sale of the Executive II and III property, we
also received approximately $787,000 as full repayment of a note receivable and accrued interest
due to us from the property. Our manager waived the disposition fee it was entitled to receive in
connection with the sale of the Executive Center II and III property, therefore, we did not pay a
disposition fee to our manager. We, through NNN Executive Center II and III 2003, LP owned a 41.1%
interest in the Executive Center II and III property.
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
The pro forma financial information required as part of this item is being provided below as
follows:
INDEX TO THE PRO FORMA FINANCIAL STATEMENTS
I. | Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2010 | |
II. | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2010 | |
III. | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2009 | |
IV. | Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements as of March 31, 2010 and for the three months ended March 31, 2010 and the year ended December 31, 2009 |
NNN 2003 VALUE FUND, LLC
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements are presented for
illustrative purposes only, and are not necessarily indicative of the results of operations of
future periods or the results that would have been realized if we had disposed of Tiffany Square,
located in Colorado Springs, Colorado, or the Tiffany Square property, and Executive Center I,
located in Dallas, Texas, or the Executive Center I property, as of the dates set forth below. The
unaudited pro forma condensed consolidated financial statements (including notes thereto) are
qualified in their entirety by reference to and should be read in conjunction with our historical
consolidated financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2009 and our Quarterly Report on Form 10-Q for the period ended March 31, 2010. In
managements opinion, all adjustments necessary to reflect the transactions have been made. The
disposition of the Tiffany Square property, which occurred on May 7, 2010, was previously reported
on our Current Report on Form 8-K filed with the SEC on May 13, 2010.
The accompanying unaudited pro forma condensed consolidated balance sheet as of March 31, 2010 is
presented as if the dispositions of the Tiffany Square and Executive Center I properties had
occurred on March 31, 2010.
The accompanying unaudited pro forma condensed consolidated statement of operations for the three
months ended March 31, 2010 is presented as if the dispositions of the Tiffany Square and Executive
Center I properties had occurred on January 1, 2009.
The accompanying unaudited pro forma condensed consolidated statement of operations for the year
ended December 31, 2009 is presented as if the dispositions of the Tiffany Square and Executive
Center I properties had occurred on January 1, 2009.
The accompanying pro forma condensed consolidated financial statements are unaudited and are
subject to a number of estimates, assumptions, and other uncertainties, and do not purport to be
indicative of the actual results of operations that would have occurred had the dispositions
reflected therein in fact occurred on the dates specified, nor do such financial statements purport
to be indicative of the results of operations that may be achieved in the future.
NNN 2003 VALUE FUND, LLC
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2010
(Unaudited)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2010
(Unaudited)
Sale of | Disposal of | |||||||||||||||
Company | Tiffany Square | Executive Center I | Company | |||||||||||||
Historical (A) | Property (B) | Property (C) | Pro Forma | |||||||||||||
ASSETS |
||||||||||||||||
Real estate investments: |
||||||||||||||||
Operating properties, net |
$ | 32,719,000 | $ | | $ | | $ | 32,719,000 | ||||||||
Properties held for non-sale disposition, net |
8,495,000 | (5,934,000 | ) | (2,561,000 | ) | | ||||||||||
41,214,000 | (5,934,000 | ) | (2,561,000 | ) | 32,719,000 | |||||||||||
Cash and cash equivalents |
2,099,000 | (160,000 | ) | | 1,939,000 | |||||||||||
Accounts receivable, net |
359,000 | (13,000 | ) | (18,000 | ) | 328,000 | ||||||||||
Accounts and loans receivable due from related parties, net |
466,000 | | | 466,000 | ||||||||||||
Restricted cash |
1,551,000 | (561,000 | ) | | 990,000 | |||||||||||
Identified intangible asests, net |
2,721,000 | | | 2,721,000 | ||||||||||||
Other assets related to properties held for non-sale disposition |
2,613,000 | (2,130,000 | ) | (483,000 | ) | | ||||||||||
Other assets, net |
878,000 | | | 878,000 | ||||||||||||
Total assets |
$ | 51,901,000 | $ | (8,798,000 | ) | $ | (3,062,000 | ) | $ | 40,041,000 | ||||||
LIABILITIES AND (DEFICIT) EQUITY |
||||||||||||||||
Mortgage loans payable |
$ | 43,247,000 | $ | | $ | | $ | 43,247,000 | ||||||||
Mortgage loans payable secured by properties held for non-sale
disposition |
16,985,000 | (12,395,000 | ) | (4,590,000 | ) | | ||||||||||
Accounts payable and accrued liabilities |
1,968,000 | (450,000 | ) | (823,000 | ) | 695,000 | ||||||||||
Accounts and loans payable due to related parties |
263,000 | (203,000 | ) | (4,000 | ) | 56,000 | ||||||||||
Acquired lease liabilities, net |
62,000 | | | 62,000 | ||||||||||||
Other liabilites related to properties held for non-sale disposition |
159,000 | (14,000 | ) | (145,000 | ) | | ||||||||||
Security deposits, prepaid rent and other liabilities |
735,000 | | | 735,000 | ||||||||||||
Total liabilities |
63,419,000 | (13,062,000 | ) | (5,562,000 | ) | 44,795,000 | ||||||||||
(Deficit) Equity: |
||||||||||||||||
NNN 2003 Value Fund, LLC unit holders deficit |
(11,518,000 | ) | 4,264,000 | 2,500,000 | (4,754,000 | ) | ||||||||||
Noncontrolling interest equity |
| | | | ||||||||||||
Total (deficit) equity |
(11,518,000 | ) | 4,264,000 | 2,500,000 | (4,754,000 | ) | ||||||||||
Total liabilities and (deficit) equity |
$ | 51,901,000 | $ | (8,798,000 | ) | $ | (3,062,000 | ) | $ | 40,041,000 | ||||||
The accompanying notes are an integral part of these unaudited pro forma condensed
consolidated financial statements.
consolidated financial statements.
NNN 2003 VALUE FUND, LLC
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2010
(Unaudited)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2010
(Unaudited)
Sale of | Disposal of | |||||||||||||||
Company | Tiffany Square | Executive Center I | Company | |||||||||||||
Historical (A) | Property (D) | Property (E) | Pro Forma | |||||||||||||
Revenues: |
||||||||||||||||
Rental revenue |
$ | 1,725,000 | $ | | $ | | $ | 1,725,000 | ||||||||
Rental revenue of operations held for non-sale
disposition |
610,000 | (367,000 | ) | (243,000 | ) | | ||||||||||
Total revenues |
2,335,000 | (367,000 | ) | (243,000 | ) | 1,725,000 | ||||||||||
Expenses: |
||||||||||||||||
Rental expense |
832,000 | | | 832,000 | ||||||||||||
General and administrative |
174,000 | | | 174,000 | ||||||||||||
Depreciation and amortization |
468,000 | | | 468,000 | ||||||||||||
Operating expenses of operations held for
non-sale disposition |
570,000 | (281,000 | ) | (289,000 | ) | | ||||||||||
Total expenses |
2,044,000 | (281,000 | ) | (289,000 | ) | 1,474,000 | ||||||||||
Income before other income (expense) and
discontinued operations |
291,000 | (86,000 | ) | 46,000 | 251,000 | |||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(847,000 | ) | | | (847,000 | ) | ||||||||||
Interest expense of operations held for
non-sale disposition |
(496,000 | ) | 324,000 | 172,000 | | |||||||||||
Interest and dividend income |
12,000 | | | 12,000 | ||||||||||||
Equity in losses of unconsolidated real estate |
(407,000 | ) | | | (407,000 | ) | ||||||||||
Other income |
4,000 | | | 4,000 | ||||||||||||
Consolidated net loss |
(1,443,000 | ) | 238,000 | 218,000 | (987,000 | ) | ||||||||||
Net loss attributable to noncontrolling interests |
(98,000 | ) | | | (98,000 | ) | ||||||||||
Net loss attributable to NNN 2003 Value Fund, LLC |
$ | (1,345,000 | ) | $ | 238,000 | $ | 218,000 | $ | (889,000 | ) | ||||||
The accompanying notes are an integral part of these unaudited pro forma condensed
consolidated financial statements.
consolidated financial statements.
NNN 2003 VALUE FUND, LLC
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009
(Unaudited)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009
(Unaudited)
Sale of | Disposal of | |||||||||||||||
Company | Tiffany Square | Executive Center I | Company | |||||||||||||
Historical (F) | Property (G) | Property (H) | Pro Forma | |||||||||||||
Revenues: |
||||||||||||||||
Rental revenue |
$ | 8,554,000 | $ | (1,582,000 | ) | $ | | $ | 6,972,000 | |||||||
Rental revenue of operations held for non-sale
disposition |
830,000 | | (830,000 | ) | | |||||||||||
Total revenues |
9,384,000 | (1,582,000 | ) | (830,000 | ) | 6,972,000 | ||||||||||
Expenses: |
||||||||||||||||
Rental expense |
4,164,000 | (752,000 | ) | | 3,412,000 | |||||||||||
General and administrative |
678,000 | (26,000 | ) | | 652,000 | |||||||||||
Depreciation and amortization |
1,246,000 | (107,000 | ) | | 1,139,000 | |||||||||||
Operating expenses of operations held for
non-sale disposition |
1,005,000 | | (1,005,000 | ) | | |||||||||||
Real estate related impairments |
1,000,000 | (300,000 | ) | | 700,000 | |||||||||||
Real estate related impairments of operations
held for non-sale disposition |
3,000,000 | | (3,000,000 | ) | | |||||||||||
Total expenses |
11,093,000 | (1,185,000 | ) | (4,005,000 | ) | 5,903,000 | ||||||||||
(Loss) income before other income (expense) and
discontinued operations |
(1,709,000 | ) | (397,000 | ) | 3,175,000 | 1,069,000 | ||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(4,198,000 | ) | 1,019,000 | | (3,179,000 | ) | ||||||||||
Interest expense of operations held for
non-sale disposition |
(861,000 | ) | | 861,000 | | |||||||||||
Interest and dividend income |
50,000 | (1,000 | ) | | 49,000 | |||||||||||
Investment related impairments |
(126,000 | ) | | | (126,000 | ) | ||||||||||
Equity in losses of unconsolidated real estate |
(3,154,000 | ) | | | (3,154,000 | ) | ||||||||||
Other expense |
(49,000 | ) | | | (49,000 | ) | ||||||||||
Loss from continuing operations |
(10,047,000 | ) | 621,000 | 4,036,000 | (5,390,000 | ) | ||||||||||
Income from discontinued operations |
957,000 | | | 957,000 | ||||||||||||
Consolidated net loss |
(9,090,000 | ) | 621,000 | 4,036,000 | (4,433,000 | ) | ||||||||||
Net loss attributable to noncontrolling interests |
(196,000 | ) | | | (196,000 | ) | ||||||||||
Net loss attributable to NNN 2003 Value Fund, LLC |
$ | (8,894,000 | ) | $ | 621,000 | $ | 4,036,000 | $ | (4,237,000 | ) | ||||||
The accompanying notes are an integral part of these unaudited pro forma condensed
consolidated financial statements.
consolidated financial statements.
NNN 2003 VALUE FUND, LLC
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2010 and For the Three Months Ended March 31, 2010
and the Year Ended December 31, 2009
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2010 and For the Three Months Ended March 31, 2010
and the Year Ended December 31, 2009
The unaudited pro forma condensed consolidated financial statements have been adjusted as discussed
in the notes below.
(A) | As reported in our Quarterly Report on Form 10-Q for the period ended March 31, 2010. | |
(B) | Adjustments have been made to reflect the sale of the Tiffany Square property to an entity affiliated with the lender of the Tiffany Square property, or the Tiffany Square Lender, for a sales price equal to the outstanding principal balance of the loan, plus accrued interest and any other amounts due under the loan documents, as if the sale had occurred on March 31, 2010. As such, adjustments have been made to remove the carrying value of the property of $5,934,000 and the related mortgage loan of $12,395,000 as of March 31, 2010, as well as other assets and liabilities related to the Tiffany Square property. | |
(C) | Adjustments have been made to reflect the transfer of the Executive Center I property to lender of the Executive Center I property, or the Executive Center I Lender, as if the transfer had occurred on March 31, 2010. As such, adjustments have been made to remove the carrying value of the property of $2,561,000 and the related mortgage loan of $4,590,000 as of March 31, 2010, as well as other assets and liabilities related to the Executive Center I property. | |
(D) | Adjustments have been made to reflect the sale of the Tiffany Square property to an entity affiliated with the Tiffany Square Lender, as if the sale had occurred on January 1, 2009. As such, adjustments have been made to remove all revenues and expenses of the Tiffany Square property during the three months ended March 31, 2010. | |
(E) | Adjustments have been made to reflect the transfer of the Executive Center I property to the Executive Center I Lender, as if the transfer had occurred on January 1, 2009. As such, adjustments have been made to remove all revenues and expenses of the Executive Center I property during the three months ended March 31, 2010. | |
(F) | As reported in our Annual Report on Form 10-K for the year ended December 31, 2009. | |
(G) | Adjustments have been made to reflect the sale of the Tiffany Square property to an entity affiliated with the Tiffany Square Lender, as if the sale had occurred on January 1, 2009. As such, adjustments have been made to remove all revenues and expenses of the Tiffany Square property during the year ended December 31, 2009. | |
(H) | Adjustments have been made to reflect the transfer of the Executive Center I property to the Executive Center I Lender, as if the transfer had occurred on January 1, 2009. As such, adjustments have been made to remove all revenues and expenses of the Executive Center I property during the year ended December 31, 2009. |
(d) Exhibits.
10.1 Settlement Agreement between NNN Executive Center 2003, LP and Ivan Halaj and Vilma Halaj
Inter Vivos Trust, dated May 28, 2010
10.2 Amendment to Settlement Agreement between NNN Executive Center 2003, LP and Ivan Halaj and
Vilma Halaj Inter Vivos Trust, dated June 2, 2010
99.1 NNN 2003 Value Fund, LLC Investor Letter, dated June 4, 2010
SIGNATURES
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.
NNN 2003 Value Fund, LLC |
||||
June 4, 2010 | By: | /s/ Kent W. Peters | ||
Name: | Kent W. Peters | |||
Title: | Chief Executive Officer |
Exhibit Index
Exhibit No. | Description | |
10.1
|
Settlement Agreement between NNN Executive Center 2003, LP and Ivan Halaj and Vilma Halaj Inter Vivos Trust, dated May 28, 2010 | |
10.2
|
Amendment to Settlement Agreement between NNN Executive Center 2003, LP and Ivan Halaj and Vilma Halaj Inter Vivos Trust, dated June 2, 2010 | |
99.1
|
NNN 2003 Value Fund, LLC Investor Letter, dated June 4, 2010 |