UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 2011
INLAND DIVERSIFIED REAL ESTATE TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland |
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000-53945 |
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26-2875286 |
2901 Butterfield Road
Oak Brook, Illinois 60523
(Address of Principal Executive Offices)
(630) 218-8000
(Registrants Telephone Number, Including Area Code)
N/A
(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:
£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Explanatory Note.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Inland Diversified Real Estate Trust, Inc. (which may be referred to as the Registrant, the Company, we, our, and us) hereby amends the following Current Reports on Form 8-K to provide the required financial information.
· Current Report on Form 8-K filed on May 5, 2011 to provide the required financial information relating to our acquisition of University Town Center, located in Norman, Oklahoma, as described in that Current Report;
· Current Report on Form 8-K filed on June 7, 2011 to provide the required financial information relating to our acquisition of Perimeter Woods Shopping Center, located in Charlotte, North Carolina, as described in that Current Report; and
· Current Report on Form 8-K filed on June 23, 2011 to provide the required financial information relating to our acquisition of Draper Peaks Shopping Center, located in Draper, Utah, as described in that Current Report.
Item 9.01. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
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Page |
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University Town Center |
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Independent Auditors Report |
F-1 |
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Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-2 |
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Notes to Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-3 |
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Perimeter Woods |
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Independent Auditors Report |
F-5 |
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Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-6 |
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Notes to Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-7 |
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Draper Peaks |
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Independent Auditors Report |
F-9 |
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Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-10 |
Notes to Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-11 |
(b) Pro forma financial information
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Page |
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Pro Forma Consolidated Balance Sheet as of March 31, 2011 (unaudited) |
F-13 |
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Notes to Pro Forma Consolidated Balance Sheet as of March 31, 2011 (unaudited) |
F-15 |
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Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the quarter ended March 31, 2011 (unaudited) |
F-16 |
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Notes to Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the quarter ended March 31, 2011 (unaudited) |
F-18 |
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Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the year ended December 31, 2010 (unaudited) |
F-19 |
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Notes to Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the year ended December 31, 2010 (unaudited) |
F-21 |
SIGNATURE
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.
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INLAND DIVERSIFIED REAL ESTATE TRUST, INC. | |
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Date: |
June 30, 2011 |
By: |
/s/ Steven T. Hippel |
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Name: |
Steven T. Hippel |
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Title |
Chief Accounting Officer |
Index to Financial Statements
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Page |
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University Town Center |
|
|
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Independent Auditors Report |
F-1 |
|
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Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-2 |
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Notes to Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-3 |
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Perimeter Woods |
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|
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Independent Auditors Report |
F-5 |
|
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Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-6 |
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Notes to Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-7 |
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Draper Peaks |
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|
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Independent Auditors Report |
F-9 |
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Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-10 |
|
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Notes to Historical Summary of Gross Income and Direct Operating Expenses for the three month period ended March 31, 2011 (unaudited) and the year ended December 31, 2010 |
F-11 |
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Pro Forma Financial Information |
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Pro Forma Consolidated Balance Sheet as of March 31, 2011 (unaudited) |
F-13 |
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Notes to Pro Forma Consolidated Balance Sheet as of March 31, 2011 (unaudited) |
F-15 |
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Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the quarter ended March 31, 2011 (unaudited) |
F-16 |
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Notes to Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the quarter ended March 31, 2011 (unaudited) |
F-18 |
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Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the year ended December 31, 2010 (unaudited) |
F-19 |
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Notes to Pro Forma Consolidated Statement of Operations and Other Comprehensive Income for the year ended December 31, 2010 (unaudited) |
F-21 |
Independent Auditors Report
The Board of Directors
Inland Diversified Real Estate Trust, Inc.:
We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) of University Town Center (the Property) for the year ended December 31, 2010. This Historical Summary is the responsibility of management of Inland Diversified Real Estate Trust, Inc. Our responsibility is to express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Propertys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for the inclusion in a Form 8-K/A of Inland Diversified Real Estate Trust, Inc., to be filed with the Securities and Exchange Commission, as described in note 2. It is not intended to be a complete presentation of the Propertys revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in note 2 of University Town Center for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
June 21, 2011
UNIVERSITY TOWN CENTER
Historical Summary of Gross Income and
Direct Operating Expenses
Three month period ended March 31, 2011 (unaudited)
and year ended December 31, 2010
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Three months |
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ended |
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March 31, |
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Year ended |
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2011 |
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December 31, |
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(unaudited) |
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2010 |
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Gross income: |
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|
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Base rental income |
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$ |
644,506 |
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$ |
2,264,255 |
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Operating expense, insurance, and real estate tax recoveries |
|
100,995 |
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436,959 |
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Total gross income |
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745,501 |
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2,701,214 |
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Direct operating expenses: |
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|
|
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Operating expenses |
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90,921 |
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345,354 |
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Insurance |
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15,768 |
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63,521 |
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Real estate taxes |
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62,545 |
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250,179 |
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Total direct operating expenses |
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169,234 |
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659,054 |
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Excess of gross income over direct operating expenses |
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$ |
576,267 |
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$ |
2,042,160 |
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See accompanying notes to historical summary of gross income and direct operating expenses.
UNIVERSITY TOWN CENTER
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Three month period ended March 31, 2011 (unaudited)
and year ended December 31, 2010
(1) Business
University Town Center (the Property) is located in Norman, Oklahoma. The Property has approximately 159,000 square feet (unaudited) of gross leasable area and was approximately 98% leased at December 31, 2010. The Property is leased to a total of 30 tenants. Inland Diversified Real Estate Trust, Inc. (IDRETI), through its wholly owned subsidiary Inland Diversified Norman University, L.L.C., acquired the Property on April 29, 2011 from UTC I, LLC, an unaffiliated third party.
(2) Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) has been prepared for the purpose of complying with Rule 3-14 of the Securities and Exchange Commission (SEC) Regulation S-X and for inclusion in the Form 8-K/A of IDRETI to be filed with the SEC and is not intended to be a complete presentation of the Propertys revenues and expenses. The Historical Summary has been prepared on the accrual basis of accounting and requires management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.
The unaudited Historical Summary for the three months ended March 31, 2011 has been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, it does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of IDRETI, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The Historical Summary for the three months ended March 31, 2011 is not necessarily indicative of the expected results for the entire year ended December 31, 2011.
(3) Gross Income
The Property leases retail space under various lease agreements with its tenants. All leases are accounted for as operating leases. The leases include provisions under which the Property is reimbursed for common area, real estate tax, and insurance expenses. Revenue related to these reimbursed expenses is recognized in the period the applicable expenses are incurred and billed to tenants pursuant to the lease agreements. Certain leases contain renewal options at various periods at various rental rates.
Although certain leases may provide for tenant occupancy during periods for which no rent is due and/or increases exist in minimum lease payments over the term of the lease, rental income accrues for the full period of occupancy on a straight-line basis. Related adjustments increased base rental income by $56,589 (unaudited) for the three month period ended March 31, 2011 and increased base rental income by $92,212 for the year ended December 31, 2010.
UNIVERSITY TOWN CENTER
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Three month period ended March 31, 2011 (unaudited)
and year ended December 31, 2010
Minimum rents to be received from tenants under operating leases, with remaining lease terms ranging from two to twelve years, as of December 31, 2010, are as follows:
Year: |
|
|
| |
2011 |
|
$ |
2,351,667 |
|
2012 |
|
2,388,990 |
| |
2013 |
|
2,205,220 |
| |
2014 |
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1,881,142 |
| |
2015 |
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1,662,701 |
| |
Thereafter |
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4,304,630 |
| |
Total |
|
$ |
14,794,350 |
|
(4) Direct Operating Expenses
Direct operating expenses include only those expenses expected to be comparable to the proposed future operations of the Property. Repairs and maintenance expenses are charged to operations as incurred. Expenses such as depreciation, amortization and interest expense related to mortgage debt not assumed, and professional fees are excluded from the Historical Summary.
(5) Related-Party Transactions
Collett & Associates (Collett), an affiliate of UTC I, LLC, provided property management services to the Property. Collett established an agreement with the Property in which the Property would pay a management fee of 4% of collected revenue earned by the Property. The Property incurred management fees of $30,818 (unaudited) and $106,522, which are included in operating expenses for the three month period ended March 31, 2011 and the year ended December 31, 2010, respectively. These management fees may not be comparable to the management fees charged to the Property by IDRETI.
(6) Subsequent Events
Subsequent to December 31, 2010 and through June 21, 2011, the date through which management evaluated subsequent events and on which date the Historical Summary was issued, management did not identify any subsequent events requiring additional disclosure.
Independent Auditors Report
The Board of Directors
Inland Diversified Real Estate Trust, Inc.:
We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) of Perimeter Woods (the Property) for the year ended December 31, 2010. This Historical Summary is the responsibility of management of Inland Diversified Real Estate Trust, Inc. Our responsibility is to express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Propertys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for the inclusion in a Form 8-K/A of Inland Diversified Real Estate Trust, Inc., to be filed with the Securities and Exchange Commission, as described in note 2. It is not intended to be a complete presentation of the Propertys revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in note 2 of Perimeter Woods for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
June 23, 2011
PERIMETER WOODS
Historical Summary of Gross Income and
Direct Operating Expenses
Three month period ended March 31, 2011 (unaudited)
and year ended December 31, 2010
|
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Three months |
|
|
| ||
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ended |
|
|
| ||
|
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March 31, |
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Year ended |
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|
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2011 |
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December 31, |
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|
|
(unaudited) |
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2010 |
| ||
Gross income: |
|
|
|
|
| ||
Base rental income |
|
$ |
1,133,435 |
|
$ |
4,461,227 |
|
Operating expense, insurance, and real estate tax recoveries |
|
109,595 |
|
469,001 |
| ||
Total gross income |
|
1,243,030 |
|
4,930,228 |
| ||
Direct operating expenses: |
|
|
|
|
| ||
Operating expenses |
|
117,562 |
|
433,678 |
| ||
Insurance |
|
7,055 |
|
28,219 |
| ||
Interest expense |
|
679,016 |
|
2,739,427 |
| ||
Real estate taxes |
|
44,275 |
|
156,744 |
| ||
Total direct operating expenses |
|
847,908 |
|
3,358,068 |
| ||
Excess of gross income over direct operating expenses |
|
$ |
395,122 |
|
$ |
1,572,160 |
|
See accompanying notes to historical summary of gross income and direct operating expenses.
PERIMETER WOODS
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Three Month Period ended March 31, 2011 (Unaudited)
and Year ended December 31, 2010
(1) Business
Perimeter Woods (the Property) is located in Charlotte, North Carolina. The Property has approximately 300,000 square feet (unaudited) of gross leasable area and was approximately 98% leased at December 31, 2010. The Property is leased to a total of ten tenants. Inland Diversified Real Estate Trust, Inc. (IDRETI), through its wholly owned subsidiary, Inland Diversified Charlotte Perimeter Woods, L.L.C., acquired the Property on June 1, 2011 from Perimeter Woods Development, L.L.C., an unaffiliated third party.
(2) Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) has been prepared for the purpose of complying with Rule 3-14 of the Securities and Exchange Commission (SEC) Regulation S-X and for inclusion in the Form 8-K/A of IDRETI to be filed with the SEC and is not intended to be a complete presentation of the Propertys revenues and expenses. The Historical Summary has been prepared on the accrual basis of accounting and requires management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.
The unaudited Historical Summary for the three months ended March 31, 2011 has been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, it does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of IDRETI, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The Historical Summary for the three months ended March 31, 2011 is not necessarily indicative of the expected results for the entire year ended December 31, 2011.
(3) Gross Income
The Property leases retail space under various lease agreements with its tenants. All leases are accounted for as operating leases. The leases include provisions under which the Property is reimbursed for common area, real estate tax, and insurance expenses. Revenue related to these reimbursed expenses is recognized in the period the applicable expenses are incurred and billed to tenants pursuant to the lease agreements. Certain leases contain renewal options at various periods at various rental rates.
Although certain leases may provide for tenant occupancy during periods for which no rent is due and/or increases exist in minimum lease payments over the term of the lease, rental income accrues for the full period of occupancy on a straight-line basis. Related adjustments increased base rental income by $41,624 (unaudited) for the three months ended March 31, 2011 and increased base rental income by $165,263 for the year ended December 31, 2010.
PERIMETER WOODS
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Three Month Period ended March 31, 2011 (Unaudited)
and Year ended December 31, 2010
Minimum rents to be received from tenants under operating leases, with remaining lease terms ranging from three to twelve years, as of December 31, 2010, are as follows:
Year: |
|
|
| |
2011 |
|
$ |
4,368,384 |
|
2012 |
|
4,387,744 |
| |
2013 |
|
4,349,079 |
| |
2014 |
|
4,370,916 |
| |
2015 |
|
4,321,245 |
| |
Thereafter |
|
32,841,979 |
| |
|
|
$ |
54,639,347 |
|
(4) Direct Operating Expenses
Direct operating expenses include only those expenses expected to be comparable to the proposed future operations of the Property. Repairs and maintenance expenses are charged to operations as incurred. Expenses such as depreciation, amortization, and professional fees are excluded from the Historical Summary.
(5) Interest Expense
Inland Diversified Charlotte Perimeter Woods, L.L.C. assumed the mortgage loan secured by the Property in connection with the acquisition. This mortgage loan had an original balance of $46,500,000. The mortgage loan balance is approximately $45,011,000 (unaudited) and $45,170,000, as of March 31, 2011 and December 31, 2010, respectively. At the time of the closing, Perimeter Woods Development, L.L.C. made a payment to reduce the principal balance to $39,390,000. The loan bears an interest rate of 6.02%, and has a maturity date of September 1, 2018. The loan is an amortizing loan through June 30, 2012, at which time a payment is required to reduce the principal balance to $33,330,000, after which the loan is interest-only.
(6) Related-Party Transactions
Collett & Associates (Collett), an affiliate of Perimeter Woods Development, L.L.C., provided property management services to the Property. Collett established an agreement with the Property in which the Property would pay a management fee of 4% of collected revenue earned by the Property. The Property incurred management fees of $54,141 (unaudited) and $182,673, which are included in operating expenses for the three month period ended March 31, 2011 and the year ended December 31, 2010, respectively. These management fees may not be comparable to the management fees charged to the Property by IDRETI.
(7) Subsequent Events
Subsequent to December 31, 2010 and through June 23, 2011, the date through which management evaluated subsequent events and on which date the Historical Summary was issued, management did not identify any subsequent events requiring additional disclosure.
Independent Auditors Report
The Board of Directors
Inland Diversified Real Estate Trust, Inc.:
We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) of Draper Peaks (the Property) for the year ended December 31, 2010. This Historical Summary is the responsibility of management of Inland Diversified Real Estate Trust, Inc. Our responsibility is to express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Propertys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for the inclusion in a Form 8-K/A of Inland Diversified Real Estate Trust, Inc., to be filed with the Securities and Exchange Commission, as described in note 2. It is not intended to be a complete presentation of the Propertys revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in note 2 of Draper Peaks for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
June 21, 2011
DRAPER PEAKS
Historical Summary of Gross Income and
Direct Operating Expenses
Three month period ended March 31, 2011 (unaudited)
and year ended December 31, 2010
|
|
Three months |
|
|
| ||
|
|
ended |
|
Year ended |
| ||
|
|
March 31, 2011 |
|
December 31, |
| ||
|
|
(unaudited) |
|
2010 |
| ||
Gross income: |
|
|
|
|
| ||
Base rental income |
|
$ |
867,843 |
|
$ |
3,604,965 |
|
Operating expense, insurance, and real estate tax recoveries |
|
192,867 |
|
899,150 |
| ||
Other income |
|
2,387 |
|
9,547 |
| ||
Total gross income |
|
1,063,097 |
|
4,513,662 |
| ||
Direct operating expenses: |
|
|
|
|
| ||
Operating expenses |
|
118,444 |
|
559,750 |
| ||
Insurance |
|
15,000 |
|
50,085 |
| ||
Real estate taxes |
|
134,120 |
|
536,830 |
| ||
Total direct operating expenses |
|
267,564 |
|
1,146,665 |
| ||
Excess of gross income over direct operating expenses |
|
$ |
795,533 |
|
$ |
3,366,997 |
|
See accompanying notes to historical summary of gross income and direct operating expenses.
DRAPER PEAKS
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Three month period ended March 31, 2011 (unaudited)
and year ended December 31, 2010
(1) Business
Draper Peaks (the Property) is located in Draper, Utah. The Property has approximately 230,000 square feet (unaudited) of gross leasable area and was approximately 89% leased at December 31, 2010. The Property is leased to a total of 42 tenants. Inland Diversified Real Estate Trust, Inc. (IDRETI), through its wholly owned subsidiary Inland Diversified Draper Peaks, L.L.C., acquired the Property on June 17, 2011 from Draper Peaks, L.L.C., an unaffiliated third party.
(2) Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) has been prepared for the purpose of complying with Rule 3-14 of the Securities and Exchange Commission (SEC) Regulation S-X and for inclusion in the Form 8-K/A of IDRETI to be filed with the SEC and is not intended to be a complete presentation of the Propertys revenues and expenses. The Historical Summary has been prepared on the accrual basis of accounting and requires management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.
The unaudited Historical Summary for the three months ended March 31, 2011 has been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, it does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of IDRETI, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The Historical Summary for the three months ended March 31, 2011 is not necessarily indicative of the expected results for the entire year ended December 31, 2011.
(3) Gross Income
The Property leases retail space under various lease agreements with its tenants. All leases are accounted for as operating leases. The leases include provisions under which the Property is reimbursed for common area, real estate tax, and insurance expenses. Revenue related to these reimbursed expenses is recognized in the period the applicable expenses are incurred and billed to tenants pursuant to the lease agreements. Certain leases contain renewal options at various periods at various rental rates.
Although certain leases may provide for tenant occupancy during periods for which no rent is due and/or increases exist in minimum lease payments over the term of the lease, rental income accrues for the full period of occupancy on a straight-line basis. Related adjustments decreased base rental income by $21,111 (unaudited) for the three month period ended March 31, 2011 and increased base rental income by $90,689 for the year ended December 31, 2010.
DRAPER PEAKS
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Three month period ended March 31, 2011 (unaudited)
and year ended December 31, 2010
Minimum rents to be received from tenants under operating leases, with remaining lease terms ranging from one to twelve years, as of December 31, 2010, are as follows:
Year: |
|
|
| ||
2011 |
|
$ |
3,437,522 |
| |
2012 |
|
3,163,274 |
| ||
2013 |
|
2,728,791 |
| ||
2014 |
|
2,163,171 |
| ||
2015 |
|
1,853,883 |
| ||
Thereafter |
|
4,898,673 |
| ||
Total |
|
$ |
18,245,314 |
| |
(4) Direct Operating Expenses
Direct operating expenses include only those expenses expected to be comparable to the proposed future operations of the Property. Repairs and maintenance expenses are charged to operations as incurred. Expenses such as depreciation, amortization and interest expense related to mortgage debt not assumed, and professional fees are excluded from the Historical Summary.
(5) Mortgage Loans
The Property was encumbered by two mortgage loans. The mortgage loans had an aggregate original principal balance of $44,000,000. As of March 31, 2011 and December 31, 2010, the aggregate balance was approximately $39,700,000 (unaudited) and $40,000,000, respectively. As a condition of the Property acquisition, Draper Peaks, L.L.C. was required to make a principal payment of approximately $14,300,000. At the Property acquisition closing, Inland Diversified Draper Peaks, L.L.C. assumed the mortgage loans. Due to the principal payment, the historical interest expense was not expected to be comparable to the proposed future interest expense of the Property; as such, the historical interest expense has been excluded from the Historical Summary.
(6) Related-Party Transactions
The Boyer Company, L.C. (Boyer) and Arbor Commercial Real Estate, L.C. (Arbor), affiliates of Draper Peaks, L.L.C., provided property management services to the Property. Boyer and Arbor established agreements with the Property in which the Property would pay a management fee of 4% of collected revenue earned by the Property. Boyer and Arbor share the management fee equally. The Property incurred management fees of $43,500 (unaudited) and $168,722 and which are included in operating expenses for the three month period ended March 31, 2011 and the year ended December 31, 2010, respectively. These management fees may not be comparable to the management fees charged to the Property by IDRETI.
(7) Subsequent Events
Subsequent to December 31, 2010 and through June 21, 2011, the date through which management evaluated subsequent events and on which date the Historical Summary was issued, management did not identify any subsequent events requiring additional disclosure.
Inland Diversified Real Estate Trust, Inc.
Pro Forma Consolidated Balance Sheet
March 31, 2011
(unaudited)
The following unaudited pro forma Consolidated Balance Sheet is presented as if the acquisitions or financings had occurred on March 31, 2011.
This unaudited pro forma Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been at March 31, 2011, nor does it purport to represent our future financial position. Pro Forma adjustments have been made for the significant properties that were purchased or financed subsequent to March 31, 2011. The pro forma adjustments were made for Northcrest Shopping Center, Prattville Town Center, University Town Center, Perimeter Woods and Draper Peaks.
The Company does not consider any potential property acquisitions to be probable under Rule 3-14 of Regulation S-X.
Inland Diversified Real Estate Trust, Inc.
Pro Forma Consolidated Balance Sheet
March 31, 2011
(unaudited)
|
|
|
|
Pro Forma |
|
|
| |||
|
|
Historical |
|
Adjustments |
|
|
| |||
|
|
(A) |
|
(B) |
|
Pro Forma |
| |||
Assets |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
Net investment properties (C) |
|
$ |
475,514,264 |
|
$ |
124,778,173 |
|
$ |
600,292,437 |
|
Cash and cash equivalents (E) |
|
35,403,891 |
|
56,251,626 |
|
91,655,517 |
| |||
Restricted cash and escrows |
|
9,999,591 |
|
|
|
9,999,591 |
| |||
Investment in marketable securities |
|
7,429,305 |
|
|
|
7,429,305 |
| |||
Investment in unconsolidated entities |
|
80,461 |
|
|
|
80,461 |
| |||
Accounts and rents receivable, net |
|
3,231,583 |
|
|
|
3,231,583 |
| |||
Acquired lease intangibles, net (C) (D) |
|
97,473,058 |
|
15,299,190 |
|
112,772,248 |
| |||
Deferred costs, net |
|
4,899,455 |
|
|
|
4,899,455 |
| |||
Other assets |
|
1,158,402 |
|
|
|
1,158,402 |
| |||
Total assets |
|
$ |
635,190,010 |
|
$ |
196,328,989 |
|
$ |
831,518,999 |
|
|
|
|
|
|
|
|
| |||
Liabilities and Equity |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
Mortgages, credit facility and securities margin payable (C) |
|
$ |
292,592,465 |
|
$ |
123,085,106 |
|
$ |
415,677,571 |
|
Accrued offering expenses |
|
244,650 |
|
|
|
244,650 |
| |||
Accounts payable and accrued expenses (F) |
|
1,806,332 |
|
35,797 |
|
1,842,129 |
| |||
Distributions payable |
|
1,671,918 |
|
|
|
1,671,918 |
| |||
Accrued real estate taxes payable |
|
2,065,824 |
|
|
|
2,065,824 |
| |||
Deferred investment property acquisition obligations (C) (G) |
|
22,317,114 |
|
8,542,627 |
|
30,859,741 |
| |||
Other liabilities |
|
2,767,313 |
|
|
|
2,767,313 |
| |||
Acquired below market lease intangibles, net (C) (D) |
|
12,303,468 |
|
2,477,855 |
|
14,781,323 |
| |||
Due to related parties |
|
2,954,248 |
|
|
|
2,954,248 |
| |||
Total liabilities |
|
338,723,332 |
|
134,141,385 |
|
472,864,717 |
| |||
|
|
|
|
|
|
|
| |||
Equity: |
|
|
|
|
|
|
| |||
Preferred stock |
|
|
|
|
|
|
| |||
Common stock (H) |
|
34,357 |
|
6,578 |
|
40,935 |
| |||
Additional paid in capital, net of offering costs (H) |
|
306,791,781 |
|
62,181,026 |
|
368,972,807 |
| |||
Accumulated distributions and net loss (I) |
|
(15,136,974 |
) |
|
|
(15,136,974 |
) | |||
Accumulated other comprehensive income |
|
313,820 |
|
|
|
313,820 |
| |||
Total company stockholders equity |
|
292,002,984 |
|
62,187,604 |
|
354,190,588 |
| |||
Noncontrolling interests |
|
4,463,694 |
|
|
|
4,463,694 |
| |||
Total equity |
|
296,466,678 |
|
62,187,604 |
|
358,654,282 |
| |||
Total liabilities and equity |
|
$ |
635,190,010 |
|
$ |
196,328,989 |
|
$ |
831,518,999 |
|
See accompanying notes to pro forma consolidated balance sheet.
Inland Diversified Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Balance Sheet
March 31, 2011
(unaudited)
(A) The historical column represents the Companys Consolidated Balance Sheet as of March 31, 2011 as filed with the Securities and Exchange Commission on Form 10-Q.
(B) The pro forma adjustments column includes adjustments related to our significant acquisitions or mortgage financings which occurred after March 31, 2011 and are detailed below as follows:
|
|
Northcrest |
|
Prattville Town |
|
University Town |
| |||
Net investment properties |
|
$ |
|
|
$ |
|
|
$ |
31,977,000 |
|
|
|
|
|
|
|
|
| |||
Intangible assets, net |
|
$ |
|
|
$ |
|
|
$ |
2,856,329 |
|
|
|
|
|
|
|
|
| |||
Intangible liabilities, net |
|
$ |
|
|
$ |
|
|
$ |
849,515 |
|
|
|
|
|
|
|
|
| |||
Deferred investment property acquisition obligations |
|
$ |
|
|
$ |
|
|
$ |
1,703,460 |
|
|
|
|
|
|
|
|
| |||
Mortgages, credit facility and securities margin payable |
|
$ |
18,720,000 |
|
$ |
18,890,000 |
|
$ |
22,180,000 |
|
|
|
Perimeter |
|
Draper Peaks |
|
Pro Forma |
| |||
Net investment properties |
|
$ |
53,091,000 |
|
$ |
39,710,173 |
|
$ |
124,778,173 |
|
|
|
|
|
|
|
|
| |||
Intangible assets, net |
|
$ |
4,763,349 |
|
$ |
7,679,512 |
|
$ |
15,299,190 |
|
|
|
|
|
|
|
|
| |||
Intangible liabilities, net |
|
$ |
97,765 |
|
$ |
1,530,575 |
|
$ |
2,477,855 |
|
|
|
|
|
|
|
|
| |||
Deferred investment property acquisition obligations |
|
$ |
2,431,843 |
|
$ |
4,407,324 |
|
$ |
8,542,627 |
|
|
|
|
|
|
|
|
| |||
Mortgages, credit facility and securities margin payable |
|
$ |
39,390,000 |
|
$ |
23,905,106 |
|
$ |
123,085,106 |
|
(C) The pro forma adjustments reflect the acquisition or mortgage financing of the following properties by the Company. No pro forma adjustment have been made for prorations as the amounts are not significant.
|
|
Net assets |
|
Mortgages, credit facility, |
| ||
Property |
|
acquired |
|
and securities margin payable |
| ||
Northcrest Shopping Center |
|
$ |
|
|
$ |
18,720,000 |
|
Prattville Town Center |
|
|
|
18,890,000 |
| ||
University Town Center |
|
32,280,354 |
|
22,180,000 |
| ||
Perimeter Woods |
|
55,324,741 |
|
39,390,000 |
| ||
Draper Peaks |
|
41,451,786 |
|
23,905,106 |
| ||
|
|
$ |
129,056,881 |
|
$ |
123,085,106 |
|
|
|
|
|
|
| ||
Allocation of net investments in properties: |
|
|
|
|
| ||
Land |
|
$ |
25,624,764 |
|
|
| |
Building and improvements |
|
99,153,409 |
|
|
| ||
Acquired lease intangible assets, net |
|
15,299,190 |
|
|
| ||
Acquired lease intangible liabilities, net |
|
(2,477,855 |
) |
|
| ||
Deferred investment property acquisition obligations |
|
(8,542,627 |
) |
|
| ||
Total |
|
$ |
129,056,881 |
|
|
|
Allocations are preliminary and subject to change.
(D) Acquired intangibles represent above and below market leases and the difference between the property valued with existing in-place leases and the property valued as if vacant. The value of the acquired intangibles will be amortized over the lease term. Allocations are preliminary and subject to change.
(E) Pro forma cash proceeds of $56,251,626 represents the cash received from the issuance of equity and mortgage financings through June 17, 2011 less the pro forma net acquisition price of investments in real estate.
(F) Estimated accrued acquisition related costs for the property acquisitions included in (B).
(G) The acquisitions described in (B) include earnout components to the purchase price, meaning the Company did not pay a portion of the purchase price of the properties at closing, although the Company owns the entire property. These earnout components are recorded at the estimated fair value at the date of the property acquisition. The Company is not obligated to pay these contingent purchase price amounts unless spaces which were vacant at the time of acquisition are later rented within the time limits and other agreed terms set forth in the acquisition agreements. The earnout payments are based on a predetermined formula applied to rental income received. The earnout agreements have a limited obligation period of three years from the date of acquisition.
(H) Additional offering proceeds of $62,187,604, net of additional offering costs of $6,068,702, are reflected as received as of March 31, 2011 based on offering proceeds actually received as of June 17, 2011. Offering costs consist principally of registration costs, printing and selling costs, including commissions.
(I) No pro forma adjustments have been made for the additional payment of distributions resulting from the additional proceeds raised by the Company.
Inland Diversified Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations and Other Comprehensive Income
For the quarter ended March 31, 2011
(unaudited)
The following unaudited pro forma Consolidated Statement of Operations and Other Comprehensive Income is presented to give effect to the acquisitions or financings of the properties indicated in Note (B) of the Notes to the pro forma Consolidated Statement of Operations and Other Comprehensive Income as though they occurred on January 1, 2010. Pro forma adjustments have been made for significant properties that were purchased or financed subsequent to December 31, 2010. The pro forma adjustments were made for Northcrest Shopping Center, Prattville Town Center, Landstown Commons, University Town Center, Perimeter Woods and Draper Peaks.
The Company does not consider any potential property acquisitions to be probable under Rule 3-14 of Regulation S-X.
This unaudited pro forma Consolidated Statement of Operations and Other Comprehensive Income is not necessarily indicative of what the actual results of operations would have been for the three months ended March 31, 2011, nor does it purport to represent our future results of operations.
Inland Diversified Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations and Other Comprehensive Income
For the three months ended March 31, 2011
(unaudited)
|
|
|
|
Pro Forma |
|
|
| |||
|
|
Historical |
|
Adjustments |
|
|
| |||
|
|
(A) |
|
(B) |
|
Pro Forma |
| |||
|
|
|
|
|
|
|
| |||
Rental income (C) |
|
$ |
8,921,156 |
|
$ |
4,952,062 |
|
$ |
13,873,218 |
|
Tenant recovery income |
|
2,375,528 |
|
765,778 |
|
3,141,306 |
| |||
Other property income |
|
311,615 |
|
2,387 |
|
314,002 |
| |||
Total income |
|
11,608,299 |
|
5,720,227 |
|
17,328,526 |
| |||
|
|
|
|
|
|
|
| |||
General and administrative expenses |
|
476,953 |
|
|
|
476,953 |
| |||
Acquisition related costs (D) |
|
756,186 |
|
(333,153 |
) |
423,033 |
| |||
Property operating expenses (E) |
|
2,096,996 |
|
1,481,080 |
|
3,578,076 |
| |||
Real estate taxes |
|
1,496,167 |
|
398,198 |
|
1,894,365 |
| |||
Depreciation and amortization (C) |
|
4,246,292 |
|
2,758,377 |
|
7,004,669 |
| |||
Business management fee - related party |
|
|
|
|
|
|
| |||
Total expenses |
|
9,072,594 |
|
4,304,502 |
|
13,377,096 |
| |||
|
|
|
|
|
|
|
| |||
Operating income |
|
2,535,705 |
|
1,415,725 |
|
3,951,430 |
| |||
|
|
|
|
|
|
|
| |||
Interest and dividend income |
|
133,433 |
|
|
|
133,433 |
| |||
Realized loss on sale of marketable securities |
|
(3,812 |
) |
|
|
(3,812 |
) | |||
Interest expense (F) |
|
(2,711,416 |
) |
(2,559,319 |
) |
(5,270,735 |
) | |||
Equity in loss of unconsolidated entities |
|
(46,900 |
) |
|
|
(46,900 |
) | |||
|
|
|
|
|
|
|
| |||
Net loss |
|
(92,990 |
) |
(1,143,594 |
) |
(1,236,584 |
) | |||
|
|
|
|
|
|
|
| |||
Less: net income attributable to noncontrolling interests |
|
(61,367 |
) |
|
|
(61,367 |
) | |||
|
|
|
|
|
|
|
| |||
Net loss attributable to common stockholders |
|
$ |
(154,357 |
) |
$ |
(1,143,594 |
) |
$ |
(1,297,951 |
) |
|
|
|
|
|
|
|
| |||
Net loss income attributable to common stockholders per common share, basic and diluted (G) |
|
$ |
(0.01 |
) |
|
|
$ |
(0.03 |
) | |
Weighted average number of common shares outstanding, basic and diluted (G) |
|
30,128,389 |
|
|
|
40,935,355 |
| |||
|
|
|
|
|
|
|
| |||
Comprehensive income (loss): |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
Net loss |
|
$ |
(92,990 |
) |
$ |
(1,143,594 |
) |
$ |
(1,236,584 |
) |
|
|
|
|
|
|
|
| |||
Other comprehensive income: |
|
|
|
|
|
|
| |||
Unrealized gain on marketable securities |
|
168,431 |
|
|
|
168,431 |
| |||
Unrealized loss on derivatives |
|
(22,564 |
) |
|
|
(22,564 |
) | |||
Loss reclassified into earnings from other comprehensive income |
|
3,812 |
|
|
|
3,812 |
| |||
|
|
|
|
|
|
|
| |||
Comprehensive income (loss) |
|
56,689 |
|
(1,143,594 |
) |
(1,086,905 |
) | |||
Less: comprehensive income attributable to noncontrolling interests |
|
(61,367 |
) |
|
|
(61,367 |
) | |||
Comprehensive loss attributable to common stockholders |
|
$ |
(4,678 |
) |
$ |
(1,143,594 |
) |
$ |
(1,148,272 |
) |
See accompanying notes to pro forma consolidated statement of operations and other comprehensive income.
Inland Diversified Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations and Other Comprehensive Income
For the three months ended March 31, 2011
(unaudited)
(A) The historical column represents the Companys Consolidated Statement of Operations and Other Comprehensive Income for the three months ended March 31, 2011 as filed with the Securities and Exchange Commission on Form 10-Q.
(B) Total pro forma adjustments for significant acquisitions consummated through the date of this filing are as though the properties were acquired January 1, 2010.
Total income, property operating expenses and real estate taxes for the three months March 31, 2011 is based on information provided by the sellers for Northcrest Shopping Center, Prattville Town Center, Landstown Commons, University Town Center, Perimeter Woods and Draper Peaks.
The pro forma adjustments for the three months ended March 31, 2011 are composed of the following adjustments:
|
|
Northcrest |
|
Prattville Town |
|
Landstown |
|
University |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Rental income |
|
$ |
402,274 |
|
$ |
401,517 |
|
$ |
1,535,418 |
|
$ |
647,907 |
|
Tenant recovery income |
|
49,339 |
|
57,067 |
|
255,915 |
|
100,995 |
| ||||
Other property income |
|
|
|
|
|
|
|
|
| ||||
Total income |
|
451,613 |
|
458,584 |
|
1,791,333 |
|
748,902 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Property operating expenses |
|
68,731 |
|
64,521 |
|
286,725 |
|
109,419 |
| ||||
Real estate taxes |
|
15,407 |
|
23,365 |
|
118,486 |
|
62,545 |
| ||||
Depreciation and amortization |
|
290,231 |
|
237,506 |
|
845,928 |
|
345,542 |
| ||||
Total expenses |
|
374,369 |
|
325,392 |
|
1,251,139 |
|
517,506 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
77,244 |
|
133,192 |
|
540,194 |
|
231,396 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
260,690 |
|
263,989 |
|
729,905 |
|
309,738 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
|
$ |
(183,446 |
) |
$ |
(130,797 |
) |
$ |
(189,711 |
) |
$ |
(78,342 |
) |
|
|
Perimeter |
|
Draper Peaks |
|
Total Pro Forma |
| |||
|
|
|
|
|
|
|
| |||
Rental income |
|
$ |
1,118,753 |
|
$ |
846,193 |
|
$ |
4,952,062 |
|
Tenant recovery income |
|
109,595 |
|
192,867 |
|
765,778 |
| |||
Other property income |
|
|
|
2,387 |
|
2,387 |
| |||
Total income |
|
1,228,348 |
|
1,041,447 |
|
5,720,227 |
| |||
|
|
|
|
|
|
|
| |||
Property operating expenses |
|
813,901 |
|
137,783 |
|
1,481,080 |
| |||
Real estate taxes |
|
44,275 |
|
134,120 |
|
398,198 |
| |||
Depreciation and amortization |
|
490,927 |
|
548,243 |
|
2,758,377 |
| |||
Total expenses |
|
1,349,103 |
|
820,146 |
|
4,637,655 |
| |||
|
|
|
|
|
|
|
| |||
Operating income |
|
(120,755 |
) |
221,301 |
|
1,082,572 |
| |||
|
|
|
|
|
|
|
| |||
Interest expense |
|
648,788 |
|
346,209 |
|
2,559,319 |
| |||
|
|
|
|
|
|
|
| |||
Net loss |
|
$ |
(769,543 |
) |
$ |
(124,908 |
) |
$ |
(1,476,747 |
) |
(C) Investment properties will be depreciated on a straight-line basis based upon estimated useful lives of 30 years for buildings and improvements and 15 years for site improvements. The portion of the purchase price allocated to above or below market lease intangibles will be amortized on a straight-line basis over the life of the related leases as an adjustment to rental income. In-place lease intangibles will be amortized on a straight-line basis over the life of the related leases as a component of amortization expense. The purchase price allocation for pro forma financial statement purposes are preliminary and may be subject to change.
(D) Reduction of acquisition costs associated with the property acquisitions included in (B). The pro forma Consolidated Statement of Operations and Other Comprehensive Income assumes the acquisition of these properties took place on January 1, 2010.
(E) Management fees are calculated as 4.5% of gross revenues pursuant to the new management agreements and are also included in property operating expenses.
(F) The pro forma adjustments relating to incremental interest expense were based on the following debt terms:
|
|
Principal Balance |
|
Interest Rate |
|
Maturity Date |
| |
Northcrest Shopping Center |
|
$ |
18,720,000 |
|
5.48 |
% |
May 1, 2021 |
|
Prattville Town Center |
|
18,890,000 |
|
5.48 |
% |
May 1, 2021 |
| |
Landstown Commons - mortgage |
|
68,375,000 |
|
3.24 |
% |
March 24, 2012 |
| |
Landstown Commons - credit facility |
|
21,000,000 |
|
4.50 |
% |
October 31, 2012 |
| |
University Town Center |
|
22,180,000 |
|
5.48 |
% |
June 1, 2021 |
| |
Perimeter Woods |
|
39,390,000 |
|
6.02 |
% |
September 1, 2018 |
| |
Draper Peaks |
|
23,905,106 |
|
5.74 |
% |
October 1, 2015 |
| |
|
|
$ |
212,460,106 |
|
|
|
|
|
(G) The pro forma weighted average shares of common stock outstanding for the three months ended March 31, 2011 was calculated assuming all shares sold through June 17, 2011 were issued on January 1, 2010.
Inland Diversified Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations and Other Comprehensive Income
For the year ended December 31, 2010
(unaudited)
The following unaudited pro forma Consolidated Statement of Operations and Other Comprehensive Income is presented to give effect to the acquisitions or financings of the properties indicated in Note (B) of the Notes to the pro forma Consolidated Statement of Operations and Other Comprehensive Income as though they occurred on January 1, 2010. Pro Forma adjustments have been made for the significant properties that were purchased or financed subsequent to December 31, 2010. The pro forma adjustments were made for Northcrest Shopping Center, Prattville Town Center, Landstown Commons, University Town Center, Perimeter Woods and Draper Peaks.
The Company does not consider any potential property acquisitions to be probable under Rule 3-14 of Regulation S-X.
This unaudited pro forma Consolidated Statement of Operations and Other Comprehensive Income is not necessarily indicative of what the actual results of operations would have been for the year ended December 31, 2010, nor does it purport to represent our future results of operations.
Inland Diversified Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations and Other Comprehensive Income
For the year ended December 31, 2010
(unaudited)
|
|
|
|
Pro Forma |
|
|
| |||
|
|
Historical |
|
Adjustments |
|
|
| |||
|
|
(A) |
|
(B) |
|
Pro Forma |
| |||
|
|
|
|
|
|
|
| |||
Rental income (C) |
|
$ |
14,323,524 |
|
$ |
21,242,933 |
|
$ |
35,566,457 |
|
Tenant recovery income |
|
3,282,089 |
|
3,493,394 |
|
6,775,483 |
| |||
Other property income |
|
592,839 |
|
9,547 |
|
602,386 |
| |||
Total income |
|
18,198,452 |
|
24,745,874 |
|
42,944,326 |
| |||
|
|
|
|
|
|
|
| |||
General and administrative expenses |
|
1,872,417 |
|
|
|
1,872,417 |
| |||
Acquisition related costs (D) |
|
1,953,181 |
|
333,153 |
|
2,286,334 |
| |||
Property operating expenses (E) |
|
3,321,058 |
|
6,316,772 |
|
9,637,830 |
| |||
Real estate taxes |
|
2,261,995 |
|
1,669,907 |
|
3,931,902 |
| |||
Depreciation and amortization (C) |
|
5,669,357 |
|
12,088,981 |
|
17,758,338 |
| |||
Business management fee - related party |
|
602,802 |
|
|
|
602,802 |
| |||
Total expenses |
|
15,680,810 |
|
20,408,813 |
|
36,089,623 |
| |||
|
|
|
|
|
|
|
| |||
Operating income |
|
2,517,642 |
|
4,337,061 |
|
6,854,703 |
| |||
|
|
|
|
|
|
|
| |||
Interest and dividend income |
|
358,243 |
|
|
|
358,243 |
| |||
Realized loss on sale of marketable securities |
|
(2,532 |
) |
|
|
(2,532 |
) | |||
Interest expense (F) |
|
(4,522,070 |
) |
(11,000,997 |
) |
(15,523,067 |
) | |||
Equity in income of unconsolidated entities |
|
1,361 |
|
|
|
1,361 |
| |||
|
|
|
|
|
|
|
| |||
Net loss |
|
(1,647,356 |
) |
(6,663,936 |
) |
(8,311,292 |
) | |||
|
|
|
|
|
|
|
| |||
Less: net income attributable to noncontrolling interests |
|
(95,633 |
) |
|
|
(95,633 |
) | |||
|
|
|
|
|
|
|
| |||
Net loss attributable to common stockholders |
|
$ |
(1,742,989 |
) |
$ |
(6,663,936 |
) |
$ |
(8,406,925 |
) |
|
|
|
|
|
|
|
| |||
Net loss attributable to common stockholders per common share, basic and diluted (G) |
|
$ |
(0.13 |
) |
|
|
$ |
(0.21 |
) | |
Weighted average number of common shares outstanding, basic and diluted (G) |
|
13,671,936 |
|
|
|
40,935,355 |
| |||
|
|
|
|
|
|
|
| |||
Comprehensive income (loss): |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
Net loss |
|
$ |
(1,647,356 |
) |
$ |
(6,663,936 |
) |
$ |
(8,311,292 |
) |
|
|
|
|
|
|
|
| |||
Other comprehensive income: |
|
|
|
|
|
|
| |||
Unrealized gain on marketable securities |
|
161,609 |
|
|
|
161,609 |
| |||
Loss reclassified into earnings from other comprehensive income |
|
2,532 |
|
|
|
2,532 |
| |||
|
|
|
|
|
|
|
| |||
Comprehensive loss |
|
(1,483,215 |
) |
(6,663,936 |
) |
(8,147,151 |
) | |||
Less: comprehensive income attributable to noncontrolling interests |
|
(95,633 |
) |
|
|
(95,633 |
) | |||
Comprehensive loss attributable to common stockholders |
|
$ |
(1,578,848 |
) |
$ |
(6,663,936 |
) |
$ |
(8,242,784 |
) |
See accompanying notes to pro forma consolidated statement of operations and other comprehensive income.
Inland Diversified Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations and Other Comprehensive Income
For the year ended December 31, 2010
(unaudited)
(A) The historical column represents the Companys Consolidated Statement of Operations and Other Comprehensive Income for the year December 31, 2010 as filed with the Securities and Exchange Commission on Form 10-K.
(B) Total pro forma adjustments for significant acquisitions consummated through the date of this filing are as though the properties were acquired January 1, 2010.
Total income, property operating expenses and real estate taxes for the year ended December 31, 2010 is based on information provided by the sellers for Northcrest Shopping Center, Prattville Town Center, Landstown Commons, University Town Center, Perimeter Woods and Draper Peaks.
The pro forma adjustments for the year ended December 31, 2010 are composed of the following adjustments:
|
|
Northcrest |
|
Prattville Town |
|
Landstown |
|
University |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Rental income |
|
$ |
2,121,791 |
|
$ |
2,111,671 |
|
$ |
6,810,741 |
|
$ |
2,277,860 |
|
Tenant recovery income |
|
260,995 |
|
301,878 |
|
1,125,411 |
|
436,959 |
| ||||
Other property income |
|
|
|
|
|
|
|
|
| ||||
Total income |
|
2,382,786 |
|
2,413,549 |
|
7,936,152 |
|
2,714,819 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Property operating expenses |
|
363,573 |
|
341,309 |
|
1,303,243 |
|
423,908 |
| ||||
Real estate taxes |
|
81,502 |
|
123,597 |
|
521,055 |
|
250,179 |
| ||||
Depreciation and amortization |
|
1,741,385 |
|
1,425,036 |
|
3,383,712 |
|
1,382,168 |
| ||||
Total expenses |
|
2,186,460 |
|
1,889,942 |
|
5,208,010 |
|
2,056,255 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
196,326 |
|
523,607 |
|
2,728,142 |
|
658,564 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
1,056,996 |
|
1,070,267 |
|
3,582,940 |
|
1,255,817 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
|
$ |
(860,670 |
) |
$ |
(546,660 |
) |
$ |
(854,798 |
) |
$ |
(597,253 |
) |
|
|
Perimeter |
|
Draper Peaks |
|
Total Pro Forma |
| |||
|
|
|
|
|
|
|
| |||
Rental income |
|
$ |
4,402,503 |
|
$ |
3,518,367 |
|
$ |
21,242,933 |
|
Tenant recovery income |
|
469,001 |
|
899,150 |
|
3,493,394 |
| |||
Other property income |
|
|
|
9,547 |
|
9,547 |
| |||
Total income |
|
4,871,504 |
|
4,427,064 |
|
24,745,874 |
| |||
|
|
|
|
|
|
|
| |||
Property operating expenses |
|
3,240,511 |
|
644,228 |
|
6,316,772 |
| |||
Real estate taxes |
|
156,744 |
|
536,830 |
|
1,669,907 |
| |||
Depreciation and amortization |
|
1,963,708 |
|
2,192,972 |
|
12,088,981 |
| |||
Total expenses |
|
5,360,963 |
|
3,374,030 |
|
20,075,660 |
| |||
|
|
|
|
|
|
|
| |||
Operating income |
|
(489,459 |
) |
1,053,034 |
|
4,670,214 |
| |||
|
|
|
|
|
|
|
| |||
Interest expense |
|
2,631,085 |
|
1,403,892 |
|
11,000,997 |
| |||
|
|
|
|
|
|
|
| |||
Net loss |
|
$ |
(3,120,544 |
) |
$ |
(350,858 |
) |
$ |
(6,330,783 |
) |
(C) Investment properties will be depreciated on a straight-line basis based upon estimated useful lives of 30 years for buildings and improvements and 15 years for site improvements. The portion of the purchase price allocated to above or below market lease intangibles will be amortized on a straight-line basis over the life of the related leases as an adjustment to rental income. In-place lease intangibles will be amortized on a straight-line basis over the life of the related leases as a component of amortization expense. The purchase price allocation for pro forma financial statement purposes are preliminary and may be subject to change.
(D) Increase of acquisition costs associated with the property acquisitions included in (B). The pro forma Consolidated Statement of Operations and Other Comprehensive Income assumes the acquisition of these properties took place on January 1, 2010.
(E) Management fees are calculated as up to 4.5% of gross revenues pursuant to the new management agreements and are also included in property operating expenses.
(F) The pro forma adjustments relating to incremental interest expense were based on the following debt terms:
|
|
Principal Balance |
|
Interest Rate |
|
Maturity Date |
| |
Northcrest Shopping Center |
|
$ |
18,720,000 |
|
5.48 |
% |
May 1, 2021 |
|
Prattville Town Center |
|
18,890,000 |
|
5.48 |
% |
May 1, 2021 |
| |
Landstown Commons - mortgage |
|
68,375,000 |
|
3.24 |
% |
March 24, 2012 |
| |
Landstown Commons - credit facility |
|
21,000,000 |
|
4.50 |
% |
October 31, 2012 |
| |
University Town Center |
|
22,180,000 |
|
5.48 |
% |
June 1, 2021 |
| |
Perimeter Woods |
|
39,390,000 |
|
6.02 |
% |
September 1, 2018 |
| |
Draper Peaks |
|
23,905,106 |
|
5.74 |
% |
October 1, 2015 |
| |
|
|
$ |
212,460,106 |
|
|
|
|
|
(G) The pro forma weighted average shares of common stock outstanding for the year ended December 31, 2010 was calculated assuming all shares sold through June 17, 2011 were issued on January 1, 2010.