Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K AMENDMENT - DC Industrial Liquidating Trust | d8ka.htm |
| EX-99.1 - FINANCIAL STATEMENTS - DC Industrial Liquidating Trust | dex991.htm |
Exhibit 99.2
INDUSTRIAL INCOME TRUST INC.
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
The following pro forma financial statements have been prepared to provide pro forma information with regard to real estate acquisitions and financing transactions, as applicable. The unaudited pro forma financial statements should be read in conjunction with Industrial Income Trust Inc.’s (the “Company”, “we”, or “our”) historical Annual Report on Form 10-K for the period from Inception (May 19, 2009) to December 31, 2009, filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2010, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, filed with the SEC on November 15, 2010.
The accompanying unaudited pro forma condensed consolidated balance sheet presents our historical financial information as of September 30, 2010, as adjusted for (a) the purchase of the following properties, each as defined below: (i) the Atlanta Portfolio; (ii) the Inland Empire Building One; (iii) the Baltimore Building One; (iv) the Dallas Portfolio; (v) the Tampa Building; and (vi) the Baltimore Building Two and (b) the Subsequent Financing Transactions, as defined below, as if those purchases and transactions had occurred on September 30, 2010.
The accompanying unaudited pro forma condensed consolidated statements of operations for the period from Inception (May 19, 2009) to December 31, 2009, and for the nine months ended September 30, 2010, combine our historical operations with the purchase of each of the property and financing transactions described below, as if those transactions had occurred on May 19, 2009, with the exception of the acquisition of the Renton Industrial Building and the related mortgage note payable.
On June 30, 2010, the Company acquired a 100% fee interest in the Renton Industrial Building located in the Kent Valley submarket of Seattle, Washington. The Renton Industrial Building consists of approximately 127,000 square feet of rentable area. The total purchase price was $12.6 million, exclusive of transfer taxes, due diligence, and other closing costs. Prior to our acquisition of the Renton Industrial Building, it was owner-occupied, and our current tenant, DHL Global Forwarding, was not a prior tenant. Therefore, prior period financial statements for the Renton Industrial Building as a rental property are not available, and pro forma financial information regarding the property’s operations and regarding the financing secured by the property has not been included in the accompanying pro forma condensed consolidated statements of operations.
The Renton Industrial Building is 100% leased to DHL Global Forwarding. A portion of the lease commenced on July 1, 2010, and the remainder of the lease began in December 2010 and will expire in October 2020 and contains two consecutive three-year renewal options. The lease provides for the rent to escalate periodically with average annual lease payments (cash basis) of approximately $1.1 million during the primary lease term. DHL Global Forwarding is responsible, subject to certain exceptions, for the operating expenses incurred in the operation and maintenance of the Renton Industrial Building. In addition, per the terms of the lease, Deutsche Post AG, the parent of DHL Global Forwarding, has executed a guaranty of any and all amounts due under the lease, up to an aggregate maximum amount which will be reduced incrementally for each year of the lease.
On August 25, 2010, the Company acquired a 100% fee interest in three buildings located in the Bell Gardens Industrial Park in Los Angeles County, California, aggregating approximately 263,000 square feet on 11.5 acres (“Bell Gardens”). The total acquisition cost of Bell Gardens was approximately $15.5 million, exclusive of transfer taxes, due diligence, and other closing costs. The Company funded the acquisition using proceeds from its public offering.
On September 1, 2010, the Company acquired a 100% fee interest in one building located in the Bayside Business Park in the San Francisco Bay Area of California, aggregating approximately 246,000 square feet on 10.4 acres, and a 100% fee interest in three buildings located in the Pinole Point Business Park in the San Francisco Bay Area of California, aggregating approximately 475,000 square feet on 30.0 acres (collectively the “Bay Area Portfolio).” The total acquisition cost of the Bay Area Portfolio was approximately $60.0 million, exclusive of transfer taxes, due diligence, and other closing costs. The Company funded the acquisition using proceeds from its public offering and debt financing.
On September 30, 2010, the Company acquired a 100% fee interest in 13 buildings located in the Northeast submarket of Portland, Oregon, aggregating approximately 475,000 square feet on 29.9 acres (collectively the “Portland Portfolio”). The total acquisition cost of the Portland Portfolio was approximately $28.0 million, exclusive of transfer taxes, due diligence, and other closing costs. The Company funded the acquisition using proceeds from its public offering and debt financing.
On November 1, 2010, the Company acquired a 100% fee interest in two buildings located in the Suwanee Pointe submarket of Atlanta, Georgia, aggregating approximately 232,000 square feet on 16.9 acres (collectively the “Atlanta Portfolio”). The total acquisition cost of the Atlanta Portfolio was approximately $14.2 million, exclusive of transfer taxes, due diligence, and other closing costs. The Company funded the acquisition using proceeds from its public offering and debt financing.
1
On December 29, 2010, the Company acquired a 100% fee interest in one building located in the Inland Empire metropolitan area of Perris, California, aggregating approximately 1.3 million square feet on 60.2 acres (the “Inland Empire Building One”). The total acquisition cost of the Inland Empire Building One was approximately $80.0 million, exclusive of transfer taxes, due diligence, and other closing costs. The Company funded the acquisition using proceeds from its public offering and debt financing.
On December 30, 2010, the Company acquired a 100% fee interest in one building located in the Brandon Woods Business Park located in the Port of Baltimore, Maryland, aggregating approximately 274,000 square feet on 11.9 acres (the “Baltimore Building One”). The total acquisition cost of the Baltimore Building One was approximately $16.1 million, exclusive of transfer taxes, due diligence, and other closing costs. The Company funded the acquisition using proceeds from its public offering and debt financing.
On January 19, 2011, the Company acquired a 100% fee interest in two buildings located in the Pinnacle Industrial Center in Dallas, Texas aggregating approximately 575,000 square feet on 36.2 acres (the “Dallas Portfolio”). The total acquisition cost of the Dallas Portfolio was approximately $25.7 million, exclusive of additional transfer taxes, due diligence, and other closing costs. The Company funded these acquisitions using proceeds from its public offering.
On January 19, 2011, the Company acquired a 100% fee interest in one industrial building located in the Madison Business Center in Tampa, Florida that is approximately 147,000 square feet on 8.9 acres (the “Tampa Building”). The total acquisition cost of the Tampa Building was approximately $10.7 million, exclusive of additional transfer taxes, due diligence, and other closing costs. The Company funded these acquisitions using proceeds from its public offering.
On January 27, 2010, the Company acquired a 100% fee interest in one industrial building located in Hagerstown, Maryland that is approximately 824,000 square feet on 70.3 acres (the “Baltimore Building Two”). The total acquisition cost of the Baltimore Building Two was approximately $41.2 million, exclusive of additional transfer taxes, due diligence, and other closing costs. The Company funded the acquisition using proceeds from its public offering and debt financing.
The Company entered into the following financing transactions prior to September 30, 2010 and these transactions are included in the historical consolidated unaudited balance sheet as of September 30, 2010: (i) $7.6 million mortgage note payable secured by the Renton Industrial Building on August 31, 2010; (ii) $30.0 million mortgage note payable secured by the Bay Area Portfolio on September 1, 2010; (iii) $9.4 million mortgage note payable secured by Bell Gardens on September 30, 2010; and (iv) $17.3 million mortgage note payable secured by the Portland Portfolio on September 30, 2010.
Subsequent to September 30, 2010, the Company also entered into the following financing transactions (the “Subsequent Financing Transactions”) on the following dates: (i) $7.8 million mortgage note payable secured by the Atlanta Portfolio on November 1, 2010; (ii) $45.0 million mortgage note payable secured by the Inland Empire Building One on December 29, 2010; (iii) $9.0 million mortgage note payable secured by the Baltimore Building One on December 30, 2010; (iv) $12.4 million mortgage note payable secured by the Dallas Portfolio on January 27, 2011; (v) $6.2 million mortgage notes payable secured by the Tampa Building on January 27, 2011; and (vi) $23.4 million mortgage note payable secured by the Baltimore Building Two on January 27, 2011. The mortgage notes payable secured by the Atlanta Portfolio, the Dallas Portfolio, the Tampa Building, and the Baltimore Building Two are cross-collateralized.
The unaudited pro forma condensed consolidated financial statements have been prepared by our management based upon our historical financial statements and certain historical financial information of the acquired properties. These pro forma statements may not be indicative of the results that actually would have occurred if these transactions had been in effect on the dates indicated, nor do they purport to represent our future financial results. The accompanying unaudited pro forma condensed consolidated statements of operations do not contemplate certain amounts that are not readily determinable, such as additional general and administrative expenses that are probable, or interest income that would be earned on cash balances.
2
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2010
(Unaudited)
| Company Historical (1) |
Acquisition Transactions (2) |
Financing Transactions |
Consolidated Pro Forma |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investment in property, net |
$ | 114,462,940 | $ | 188,642,700 | $ | — | $ | 303,105,640 | ||||||||
| Cash and cash equivalents |
9,754,147 | (187,725,000 | ) | 195,934,087 | (3) | 17,963,234 | ||||||||||
| Other assets, net |
7,878,151 | — | 512,670 | (4) | 8,390,821 | |||||||||||
| Total Assets |
$ | 132,095,238 | $ | 917,700 | $ | 196,446,757 | $ | 329,459,695 | ||||||||
| LIABILITIES AND EQUITY |
||||||||||||||||
| Liabilities |
||||||||||||||||
| Accounts payable and other accruals |
$ | 1,362,156 | $ | 5,134,937 | $ | — | $ | 6,497,093 | ||||||||
| Mortgage notes |
64,160,000 | — | 103,750,000 | (4) | 167,910,000 | |||||||||||
| Prepaid rents |
803,917 | — | — | 803,917 | ||||||||||||
| Intangible lease liabilities, net |
249,681 | 917,700 | — | 1,167,381 | ||||||||||||
| Due to affiliates |
5,588,977 | — | — | 5,588,977 | ||||||||||||
| Distributions payable |
850,346 | — | — | 850,346 | ||||||||||||
| Derivative liability |
103,012 | — | — | 103,012 | ||||||||||||
| Total Liabilities |
73,118,089 | 6,052,637 | 103,750,000 | 182,920,726 | ||||||||||||
| Equity |
||||||||||||||||
| Preferred stock |
— | — | — | — | ||||||||||||
| Common stock, $0.01 par value |
78,024 | — | 105,375 | (3) | 183,399 | |||||||||||
| Additional paid-in capital |
65,104,073 | — | 92,591,382 | (3) | 157,695,455 | |||||||||||
| Accumulated deficit and other accumulated comprehensive loss |
(6,205,948 | ) | (5,134,937 | ) | — | (11,340,885 | ) | |||||||||
| Total Stockholders’ Equity |
58,976,149 | (5,134,937 | ) | 92,696,757 | 146,537,969 | |||||||||||
| Noncontrolling interests |
1,000 | — | — | 1,000 | ||||||||||||
| Total Equity |
58,977,149 | (5,134,937 | ) | 92,696,757 | 146,538,969 | |||||||||||
| Total Liabilities and Equity |
$ | 132,095,238 | $ | 917,700 | $ | 196,446,757 | $ | 329,459,695 | ||||||||
The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
3
INDUSTRIAL INCOME TRUST INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
| (1) | Reflects our historical condensed consolidated balance sheet as of September 30, 2010. Please refer to our historical consolidated financial statements and notes thereto included in our Quarterly Report on Form 10-Q, filed with the SEC on November 15, 2010. |
| (2) | Subsequent to September 30, 2010, we acquired eight buildings comprising approximately 3.4 million square feet on 204.4 acres. The aggregate purchase price of these properties was approximately $187.7 million, exclusive of transfer taxes, due diligence, and other closing costs. The following table sets forth the preliminary purchase price allocations of the acquired properties: |
| Acquisition |
Acquisition Date | Land | Buildings | Intangible Lease Assets |
Intangible Lease Liabilities |
Contract Purchase Price |
||||||||||||||||||
| Atlanta Portfolio |
November 1, 2010 | $ | 1,273,564 | $ | 11,362,903 | $ | 1,513,533 | $ | — | $ | 14,150,000 | |||||||||||||
| Inland Empire Building One |
December 29, 2010 | 15,065,771 | 53,786,895 | 11,942,504 | (795,170 | ) | 80,000,000 | |||||||||||||||||
| Baltimore Building One |
December 30, 2010 | 4,916,181 | 9,295,241 | 1,928,279 | (39,701 | ) | 16,100,000 | |||||||||||||||||
| Dallas Portfolio |
January 19, 2011 | 3,106,438 | 19,624,619 | 3,026,772 | (82,829 | ) | 25,675,000 | |||||||||||||||||
| Tampa Building |
January 19, 2011 | 1,004,102 | 6,818,623 | 2,827,275 | — | 10,650,000 | ||||||||||||||||||
| Baltimore Building Two |
January 27, 2011 | 5,926,338 | 27,061,193 | 8,162,469 | — | 41,150,000 | ||||||||||||||||||
| Total |
$ | 31,292,394 | $ | 127,949,474 | $ | 29,400,832 | $ | (917,700 | ) | $ | 187,725,000 | |||||||||||||
These acquisitions were financed using proceeds from our offering of common stock and debt financing. We utilized approximately $83.9 million of net offering proceeds to fund the acquisitions; the remaining $103.8 million of the aggregate purchase price of these properties was obtained through debt financing as described in Note 4. We incurred approximately $5.1 million in acquisition costs related to these acquisitions.
| (3) | Cash and cash equivalents of $195.9 million under financing transactions consists of $103.8 million provided by debt financing proceeds, plus $92.7 million provided by net proceeds from our common stock offering, less approximately $0.5 million for amounts incurred to obtain debt financing. Since September 30, 2010, we have issued approximately 10.5 million shares of common stock through January 28, 2011. This resulted in gross common stock offering proceeds received, from September 30, 2010 through January 28, 2011, of $104.1 million, less offering costs of $11.4 million. Offering costs consist principally of registration, printing and selling costs, including commissions. Dividends which may have been paid or payable on the pro forma additional common stock offering proceeds have not been reflected in the pro forma balance sheet. |
| (4) | Subsequent to September 30, 2010, we entered into financing arrangements for approximately $103.8 million of mortgage notes payable, which we utilized to fund the acquisitions described in Note 2. We have capitalized approximately $0.5 million of costs associated with these financing arrangements; these costs will be amortized over the expected term of the financing arrangement. The following table sets forth the key terms of these financing arrangements: |
| Property Debt Secured By |
Issuance Date | Maturity Date | Interest Rate |
Amount Financed |
||||||||||||
| Atlanta Portfolio (a) |
November 1, 2010 | November 1, 2020 | 4.90 | % | $ | 7,750,000 | ||||||||||
| Inland Empire Building One |
December 29, 2010 | December 29, 2020 | 5.68 | % | 45,000,000 | |||||||||||
| Baltimore Building One |
December 30, 2010 | December 30, 2020 | 5.68 | % | 9,000,000 | |||||||||||
| Dallas Portfolio (a) |
January 27, 2011 | November 1, 2020 | 4.81 | % | 12,400,000 | |||||||||||
| Tampa Building (a) |
January 27, 2011 | November 1, 2020 | 4.81 | % | 6,160,000 | |||||||||||
| Baltimore Building Two (a) |
January 27, 2011 | November 1, 2020 | 4.81 | % | 23,440,000 | |||||||||||
| Total |
$ | 103,750,000 | ||||||||||||||
| (a) | The mortgage notes payable secured by the Atlanta Portfolio, the Dallas Portfolio, the Tampa Building, and the Baltimore Building Two are cross-collateralized. |
4
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (MAY 19, 2009) TO DECEMBER 31, 2009
(Unaudited)
| Company Historical (1) |
Acquisitions (2) | Pro Forma Adjustments |
Consolidated Pro Forma |
|||||||||||||
| REVENUE |
||||||||||||||||
| Rental revenue |
$ | — | $ | 13,531,355 | $ | (724,254 | )(3) | $ | 12,807,101 | |||||||
| Reimbursement and other revenue |
— | 2,943,494 | — | 2,943,494 | ||||||||||||
| Total Revenue |
— | 16,474,849 | (724,254 | ) | 15,750,595 | |||||||||||
| OPERATING EXPENSES |
||||||||||||||||
| Rental expense |
— | 1,463,135 | — | 1,463,135 | ||||||||||||
| Real estate taxes |
— | 1,830,349 | — | 1,830,349 | ||||||||||||
| Real estate depreciation and amortization expense |
— | — | 7,192,424 | (3) | 7,192,424 | |||||||||||
| Organization expenses |
136,902 | — | — | 136,902 | ||||||||||||
| General and administrative expenses |
716,826 | — | — | 716,826 | ||||||||||||
| Asset management fees, related party |
— | — | 1,553,200 | (4) | 1,553,200 | |||||||||||
| Acquisition-related expenses, related party |
— | — | — | — | ||||||||||||
| Acquisition-related expenses |
— | — | — | — | ||||||||||||
| Total Expenses |
853,728 | 3,293,484 | 8,745,624 | 12,892,836 | ||||||||||||
| Operating Income (Loss) |
(853,728 | ) | 13,181,365 | (9,469,878 | ) | 2,857,759 | ||||||||||
| OTHER INCOME AND EXPENSE |
||||||||||||||||
| Net interest income (expense) and other |
— | — | (5,021,869 | )(5) | (5,021,869 | ) | ||||||||||
| Net income (loss) |
(853,728 | ) | 13,181,365 | (14,491,747 | ) | (2,164,110 | ) | |||||||||
| Net loss attributable to noncontrolling interests |
776,168 | — | — | 776,168 | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ | (77,560 | ) | $ | 13,181,365 | $ | (14,491,747 | ) | $ | (1,387,942 | ) | |||||
| Weighted average shares outstanding |
N/A | 18,339,891 | (6) | |||||||||||||
| Net loss per common share - basic and diluted |
N/A | $ | (0.08 | ) | ||||||||||||
The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
5
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Unaudited)
| Company Historical (1) |
Acquisitions (2) | Pro Forma Adjustments |
Consolidated Pro Forma |
|||||||||||||
| REVENUE |
||||||||||||||||
| Rental revenue |
$ | 810,330 | $ | 16,042,364 | $ | (844,515 | )(3) | $ | 16,008,179 | |||||||
| Reimbursement and other revenue |
— | 3,929,208 | — | 3,929,208 | ||||||||||||
| Total Revenue |
810,330 | 19,971,572 | (844,515 | ) | 19,937,387 | |||||||||||
| OPERATING EXPENSES |
||||||||||||||||
| Rental expense |
70,045 | 1,650,734 | — | 1,720,779 | ||||||||||||
| Real estate taxes |
120,500 | 2,501,468 | — | 2,621,968 | ||||||||||||
| Real estate depreciation and amortization expense |
262,154 | — | 8,441,187 | (3) | 8,703,341 | |||||||||||
| Organization expenses |
1,557 | — | — | 1,557 | ||||||||||||
| General and administrative expenses |
1,246,964 | — | — | 1,246,964 | ||||||||||||
| Asset management fees, related party |
112,933 | — | 1,668,017 | (4) | 1,780,950 | |||||||||||
| Acquisition-related expenses, related party |
2,322,000 | — | (2,322,000 | )(3) | — | |||||||||||
| Acquisition-related expenses |
839,668 | — | (839,668 | )(3) | — | |||||||||||
| Total Expenses |
4,975,821 | 4,152,202 | 6,947,536 | 16,075,559 | ||||||||||||
| Operating Income (Loss) |
(4,165,491 | ) | 15,819,370 | (7,792,051 | ) | 3,861,828 | ||||||||||
| OTHER INCOME AND EXPENSE |
||||||||||||||||
| Net interest income (expense) and other |
(134,101 | ) | — | (5,749,812 | )(5) | (5,883,913 | ) | |||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ | (4,299,592 | ) | $ | 15,819,370 | $ | (13,541,863 | ) | $ | (2,022,085 | ) | |||||
| Weighted average shares outstanding |
2,482,855 | 18,339,891 | (6) | |||||||||||||
| Net loss per common share - basic and diluted |
$ | (1.73 | ) | $ | (0.11 | ) | ||||||||||
The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
6
INDUSTRIAL INCOME TRUST INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (MAY 19, 2009) TO DECEMBER 31, 2009 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2010
(Unaudited)
| (1) | Reflects our historical condensed consolidated statements of operations for the period from Inception (May 19, 2009) to December 31, 2009, and for the nine months ended September 30, 2010. Please refer to our historical consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 26, 2010, and our Quarterly Report on Form 10-Q filed with the SEC on November 15, 2010. |
| (2) | The tables below set forth the incremental impact of the properties acquired by us on rental revenue and rental expense. The amounts presented are based on the historical operations of the properties and management’s estimates. Included in rental revenue is base rent, presented on a straight-line basis. The straight-line rent adjustment resulted in an increase to rental income of approximately $ 2.4 million and $0.7 million for the period from Inception (May 19, 2009) to December 31, 2009, and for the nine months ended September 30, 2010, respectively. Included in reimbursement and other revenue are rental expense recoveries and other revenues. The amounts presented for rental expense include: (i) operating expenses, (ii) insurance expense, and (iii) property management fees. |
| Revenue Impact: |
For the Period from Inception (May 19, 2009) to December 31, 2009 (a) |
For the Nine Months Ended September 30, 2010 |
||||||||||||||||||
| Acquisition |
Acquisition Date | Incremental Rental Revenue |
Incremental Reimbursement Revenue |
Incremental Rental Revenue |
Incremental Reimbursement Revenue |
|||||||||||||||
| Bell Gardens |
August 25, 2010 | $ | 812,527 | $ | 121,461 | $ | 896,447 | $ | 145,969 | |||||||||||
| Bay Area Portfolio |
September 1, 2010 | 2,655,394 | 850,331 | 2,737,665 | 934,909 | |||||||||||||||
| Portland Portfolio |
September 30, 2010 | 1,847,377 | 506,516 | 2,204,156 | 600,363 | |||||||||||||||
| Atlanta Portfolio |
November 1, 2010 | 577,974 | 117,584 | 774,011 | 156,693 | |||||||||||||||
| Inland Empire Building One |
December 29, 2010 | 3,433,383 | 591,033 | 4,283,692 | 1,116,161 | |||||||||||||||
| Baltimore Building One |
December 30, 2010 | 720,817 | 93,639 | 965,734 | 115,340 | |||||||||||||||
| Dallas Portfolio |
January 19, 2011 | 1,149,608 | 257,673 | 1,379,529 | 289,016 | |||||||||||||||
| Tampa Building |
January 19, 2011 | 574,479 | 161,874 | 689,375 | 186,836 | |||||||||||||||
| Baltimore Building Two |
January 27, 2011 | 1,759,796 | 243,383 | 2,111,755 | 383,921 | |||||||||||||||
| Total |
$ | 13,531,355 | $ | 2,943,494 | $ | 16,042,364 | $ | 3,929,208 | ||||||||||||
| (a) | For the period from Inception (May 19, 2009) to December 31, 2009, we reviewed the 12-month historical operations of the acquired properties and determined that there were no significant fluctuations in the monthly revenue and reimbursement revenue during the period. As such, the historical financial statements of the acquired properties have been ratably allocated for the period from Inception (May 19, 2009) to December 31, 2009, for pro forma purposes. |
7
| Expense Impact: |
For the Period from Inception (May 19, 2009) to December 31, 2009 (a) |
For the Nine Months Ended September 30, 2010 |
||||||||||||||||||
| Acquisition |
Acquisition Date | Incremental Rental Expense |
Incremental Real Estate Taxes |
Incremental Rental Expense |
Incremental Real Estate Taxes |
|||||||||||||||
| Bell Gardens |
August 25, 2010 | $ | 92,838 | $ | 107,294 | $ | 84,710 | $ | 117,792 | |||||||||||
| Bay Area Portfolio |
September 1, 2010 | 281,838 | 643,649 | 305,100 | 689,299 | |||||||||||||||
| Portland Portfolio |
September 30, 2010 | 262,631 | 269,212 | 282,172 | 332,165 | |||||||||||||||
| Atlanta Portfolio |
November 1, 2010 | 72,063 | 66,959 | 108,691 | 81,078 | |||||||||||||||
| Inland Empire Building One |
December 29, 2010 | 256,949 | 353,241 | 354,371 | 761,840 | |||||||||||||||
| Baltimore Building One |
December 30, 2010 | 32,965 | 81,026 | 44,322 | 99,342 | |||||||||||||||
| Dallas Portfolio |
January 19, 2011 | 173,976 | 95,714 | 174,643 | 123,651 | |||||||||||||||
| Tampa Building |
January 19, 2011 | 123,086 | 84,845 | 50,029 | 112,786 | |||||||||||||||
| Baltimore Building Two |
January 27, 2011 | 166,789 | 128,409 | 246,696 | 183,515 | |||||||||||||||
| Total |
$ | 1,463,135 | $ | 1,830,349 | $ | 1,650,734 | $ | 2,501,468 | ||||||||||||
| (a) | For the period from Inception (May 19, 2009) to December 31, 2009, we reviewed the 12-month historical operations of the acquired properties and determined that there were no significant fluctuations in the monthly rental expenses and real estate taxes during the period. As such, the historical financial statements of the acquired properties have been ratably allocated for the period from Inception (May 19, 2009) to December 31, 2009, for pro forma purposes. |
| (3) | The following table sets forth the incremental depreciation and amortization expense of the properties acquired by us. Pursuant to the purchase price allocations, building and other costs include amounts allocated to intangible in-place lease assets, above-market lease intangible assets and below-market lease intangible liabilities. The amount allocated to building will be depreciated on a straight-line basis over a period of 20 to 40 years, and the amounts allocated to intangible in-place lease assets will be amortized on a straight-line basis over the lease term. Above or below-market lease intangibles will be amortized on a straight-line basis over the lease term and included in rental revenue. The net adjustment of amortization of above and below market lease intangible assets and liabilities for the period from Inception (May 19, 2009) to December 31, 2009, resulted in a net decrease to rental revenue of approximately $0.7 million. The net adjustment of amortization of above and below market lease intangible assets and liabilities for the nine months ended September 30, 2010, resulted in a net decrease to rental revenue of approximately $0.8 million. In addition, for the nine months ended September 30, 2010, we had incurred acquisition costs of approximately $ 3.2 million related to property acquisitions. These acquisition costs have been excluded from the presentation of the pro forma statement of operations as these costs were directly attributable to property acquisition transactions and are not recurring in nature. |
| For the Period from Inception (May 19, 2009) to December 31, 2009 |
For the Nine Months Ended September 30, 2010 |
|||||||||||||||||||
| Acquisition |
Acquisition Date | Incremental Depreciation and Amortization Expense |
Incremental Amortization of Above/Below Market Lease Intangibles, net |
Incremental Depreciation and Amortization Expense |
Incremental Amortization of Above/Below Market Lease Intangibles, net |
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| Bell Gardens |
August 25, 2010 | $ | 257,576 | $ | 86,973 | $ | 274,748 | $ | 92,771 | |||||||||||
| Bay Area Portfolio |
September 1, 2010 | 1,165,335 | 97,432 | 1,243,024 | 103,927 | |||||||||||||||
| Portland Portfolio |
September 30, 2010 | 1,398,630 | 53,497 | 1,678,357 | 64,196 | |||||||||||||||
| Atlanta Portfolio |
November 1, 2010 | 407,102 | 76,746 | 488,522 | 92,095 | |||||||||||||||
| Inland Empire Building One |
December 29, 2010 | 1,783,253 | (62,775 | ) | 2,139,903 | (75,330 | ) | |||||||||||||
| Baltimore Building One |
December 30, 2010 | 282,975 | (2,835 | ) | 339,570 | (3,402 | ) | |||||||||||||
| Dallas Portfolio |
January 19, 2011 | 688,875 | 55,253 | 826,650 | 66,303 | |||||||||||||||
| Tampa Building |
January 19, 2011 | 197,910 | 120,675 | 237,492 | 144,810 | |||||||||||||||
| Baltimore Building Two |
January 27, 2011 | 1,010,768 | 299,288 | 1,212,921 | 359,145 | |||||||||||||||
| Total |
$ | 7,192,424 | $ | 724,254 | $ | 8,441,187 | $ | 844,515 | ||||||||||||
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| (4) | Asset management fees were calculated as though the properties acquired by us and included in these pro forma financial statements had been managed by Industrial Income Advisors, LLC, our Advisor, since May 19, 2009, the date of our inception. The management fee consists of a monthly fee of one-twelfth of 0.80% of the aggregate cost (including debt, whether borrowed or assumed) before non-cash reserves and depreciation of each real property asset within our portfolio. |
| (5) | We have entered into financing arrangements for approximately $167.9 million of mortgage notes payable. Interest expense presented was calculated based on the terms of the mortgage notes payable as of September 30, 2010. The following table sets forth the calculation for the pro forma adjustments as if these financings were outstanding as of May 19, 2009: |
| Estimated Incremental Interest Expense |
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| Issuance Date |
Maturity Date | Interest Rate |
Amount Financed |
For the Period from Inception (May 19, 2009) to December 31, 2009 |
For the Nine Months Ended September 30, 2010 |
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| August 31, 2010 |
September 1, 2015 | 4.16 | %(a) | $ | 7,560,000 | (b | ) | (b | ) | |||||||||||
| September 30, 2010 |
October 1, 2020 | 4.95 | % | 9,350,000 | 287,945 | 304,148 | ||||||||||||||
| September 1, 2010 |
September 1, 2017 | 4.31 | % | 30,000,000 | 803,983 | 848,220 | ||||||||||||||
| September 30, 2010 |
October 1, 2020 | 4.95 | % | 17,250,000 | 531,236 | 561,129 | ||||||||||||||
| November 1, 2010 |
November 1, 2020 | 4.90 | % | 7,750,000 | 236,250 | 280,529 | ||||||||||||||
| December 29, 2010 |
December 29, 2020 | 5.68 | % | 45,000,000 | 1,591,130 | 1,889,838 | ||||||||||||||
| December 30, 2010 |
December 30, 2020 | 5.68 | % | 9,000,000 | 319,500 | 382,446 | ||||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 12,400,000 | 370,148 | 438,734 | ||||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 6,160,000 | 183,659 | 217,658 | ||||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 23,440,000 | 698,018 | 827,110 | ||||||||||||||
| $ | 167,910,000 | $ | 5,021,869 | $ | 5,749,812 | |||||||||||||||
| (a) | This loan bears interest at a variable interest rate based on one-month LIBOR plus 2.50%. In order to protect against fluctuations in LIBOR, in conjunction with this loan agreement, the Company entered into a five year, LIBOR-based interest rate swap agreement with Wells Fargo as the counterparty. As of September 30, 2010, the interest rate on the loan was effectively fixed at 4.155% for the full term as a result of the swap transaction. |
| (b) | Estimated interest expense for the Renton Industrial Building was excluded from the pro forma statement of operations. Prior to our acquisition of the Renton Industrial Building, it was owner-occupied, and our current tenant, DHL Global Forwarding, was not a prior tenant. Therefore, prior period financial statements for the Renton Industrial Building as a rental property are not available, and pro forma financial information regarding the property’s operations and regarding the financing secured by the property has not been included. |
| (6) | The pro forma weighted average shares of common stock outstanding for the period from Inception (May 19, 2009) to December 31, 2009, and for the nine months ended September 30, 2010, were calculated to reflect all shares sold through January 28, 2011, as if they had been issued on May 19, 2009. |
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