Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K AMENDMENT - DC Industrial Liquidating Trust | d307905d8ka.htm |
| EX-99.1 - FINANCIAL STATEMENTS OF REAL ESTATE PROPERTY ACQUIRED - DC Industrial Liquidating Trust | d307905dex991.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 year ended December 31, 2010, filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2011, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed with the SEC on November 10, 2011.
The accompanying unaudited pro forma condensed consolidated balance sheet presents our historical financial information as of September 30, 2011, as adjusted for (i) the purchase of one of the industrial buildings in the Chicago Industrial Portfolio and eight industrial buildings in the Regional Industrial Portfolio, as described below and (ii) the Subsequent Financing Transactions as defined below, as if these transactions had occurred on September 30, 2011.
The accompanying unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2011, and for the year ended December 31, 2010, combine our historical operations with the purchase of each of the real property and financing transactions described below, as if those transactions had occurred on January 1, 2010, with the exception of the acquisition of the Renton Distribution Center and the related mortgage note payable, which are included in the historical financial information from the date of the respective transactions.
On June 30, 2010, the Company acquired a 100% fee interest in the Renton Distribution Center located in the Kent Valley submarket of Seattle, Washington. The Renton Distribution Center consists of approximately 127,000 square feet of rentable area. The total aggregate acquisition cost was $12.6 million, exclusive of additional transfer taxes, due diligence and closing costs. Prior to our acquisition of the Renton Distribution Center, it was owner-occupied, and our current tenant, DHL Global Forwarding, was not a prior tenant. Therefore, prior period financial statements for the Renton Distribution Center 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 Distribution Center 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 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 Distribution Center. 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 aggregate acquisition cost of Bell Gardens was approximately $15.5 million, exclusive of additional transfer taxes, due diligence and closing costs. The Company funded the acquisition using proceeds from its public offering of common stock.
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 aggregate acquisition cost of the Bay Area Portfolio was approximately $60.0 million, exclusive of additional transfer taxes, due diligence and closing costs. The Company funded the acquisition using proceeds from its public offering of common stock 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 aggregate acquisition cost of the Portland Portfolio was approximately $28.0 million, exclusive of additional transfer taxes, due diligence and closing costs. The Company funded the acquisition using proceeds from its public offering of common stock 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 “Suwanee Point”). The total aggregate acquisition cost of the Suwanee Point buildings was approximately $14.2 million, exclusive of additional transfer taxes, due diligence and closing costs. The Company funded the acquisition using proceeds from its public offering of common stock 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 Indian Avenue Distribution Center”). The total aggregate acquisition cost of the Inland Empire Indian Avenue Distribution Center 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 “Brandon Woods Distribution Center”). The total aggregate acquisition cost of the Brandon Woods Distribution Center 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 (“Rock Quarry 1 and 2”). The total aggregate acquisition cost of Rock Quarry 1 and 2 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 aggregating approximately 147,000 square feet on 8.9 acres (the “Eagle Falls Distribution Center”). The total aggregate acquisition cost of the Eagle Falls Distribution Center 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, 2011, the Company acquired a 100% fee interest in one industrial building located in Hagerstown, Maryland aggregating approximately 824,000 square feet on 70.3 acres (the “Hagerstown Distribution Center”). The total aggregate acquisition cost of the Hagerstown Distribution Center 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.
On June 17, 2011, the Company acquired a 100% fee interest in two industrial buildings and a 100% leasehold interest in a third industrial building, aggregating approximately 2.0 million square feet on 143.2 acres. The buildings are located in Atlanta, Georgia; York, Pennsylvania; and Houston, Texas (collectively referred to as the “Regional Distribution Portfolio”). The total aggregate purchase price was approximately $111.8 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its public offering of common stock and debt financing.
On June 24, 2011, under the terms of a definitive agreement to acquire a 100% fee interest in nine industrial buildings aggregating approximately 1.4 million square feet on 108.8 acres located in Chicago, Illinois which the Company refers to herein as the “Chicago Industrial Portfolio,” the Company acquired six of the nine industrial buildings of the Chicago Industrial Portfolio aggregating approximately 1.1 million square feet on 84.8 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $80.5 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its public offering of common stock and debt financing.
On August 4, 2011, the Company completed the acquisition of one of the remaining industrial buildings in the Chicago Industrial Portfolio, aggregating approximately 82,000 square feet on 4.5 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $6.4 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its public offering of common stock and debt financing.
On August 25, 2011, the Company completed the acquisition of one of the remaining industrial buildings in the Chicago Industrial Portfolio, aggregating approximately 145,000 square feet on 9.5 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $9.6 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its public offering of common stock and debt financing assumed by the Company.
On December 13, 2011, the Company, through one of its wholly-owned subsidiaries, completed the acquisition of the remaining industrial building in the Chicago Industrial Portfolio, aggregating approximately 65,000 square feet on 4.9 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $5.2 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its public offering of common stock and debt financing assumed by the Company.
On December 15, 2011, the Company’s, through one of its wholly-owned subsidiaries completed the acquisition of eight industrial buildings aggregating approximately 1.6 million square feet on 88.2 acres. The buildings are located in certain submarkets of Fort Lauderdale, Florida; Atlanta, Georgia; and Dallas, Texas (collectively, the “Regional Industrial Portfolio”). The total aggregate purchase price was approximately $104.5 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its public offering of common stock and debt financing.
2
The Company entered into the following financing transactions prior to September 30, 2011, and these transactions are included in the historical condensed consolidated unaudited balance sheet as of September 30, 2011: (i) $7.6 million mortgage note payable secured by the Renton Distribution Center 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; (iv) $17.3 million mortgage note payable secured by the Portland Portfolio on September 30, 2010; (v) $7.8 million mortgage note payable secured by Suwanee Point on November 1, 2010; (vi) $45.0 million mortgage note payable secured by the Inland Empire Indian Avenue Distribution Center on December 29, 2010; (vii) $9.0 million mortgage note payable secured by the Brandon Woods Distribution Center on December 30, 2010; (viii) $12.4 million mortgage note payable secured by the Rock Quarry 1 and 2 on January 19, 2011; (ix) $6.2 million mortgage note payable secured by the Eagle Falls Distribution Center on January 19, 2011; (x) $23.4 million mortgage note payable secured by the Hagerstown Distribution Center on January 27, 2011; (xi) $66.9 million mortgage note payable secured by the Regional Distribution Portfolio on June 17, 2011; (xii) $43.1 million mortgage note payable secured by the six industrial buildings in the Chicago Industrial Portfolio that closed on June 24, 2011; (xiii) assumption of a $6.2 million mortgage note payable secured by the industrial building in the Chicago Industrial Portfolio that closed on August 4, 2011; and (xiv) assumption of a $6.3 million mortgage note payable secured by the industrial building in the Chicago Industrial Portfolio that closed on August 25, 2011.
The Company also entered into the following financing transactions (the “Subsequent Financing Transactions”) after September 30, 2011: (i) assumption of a $4.5 million mortgage note payable secured by the industrial building in the Chicago Industrial Portfolio that closed on December 13, 2011; and (ii) $61.0 million mortgage note payable secured by the eight industrial buildings in the Regional Industrial Portfolio that closed on December 15, 2011.
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.
3
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2011
(Unaudited)
| (dollars in thousands) |
Company Historical (1) |
Acquisition Transactions (2) |
Financing Transactions |
Consolidated Pro Forma |
||||||||||||
| ASSETS |
||||||||||||||||
| Investment in property, net |
$ | 736,475 | $ | 110,369 | $ | — | $ | 846,844 | ||||||||
| Investment in unconsolidated joint venture |
47,603 | — | — | 47,603 | ||||||||||||
| Cash and cash equivalents |
18,275 | (44,351 | ) | 185,276 | (3) | 159,200 | ||||||||||
| Restricted cash |
782 | — | — | 782 | ||||||||||||
| Straight-line rent and accounts receivable, net |
3,058 | — | — | 3,058 | ||||||||||||
| Notes Receivable |
5,912 | — | — | 5,912 | ||||||||||||
| Deferred financing costs, net |
3,785 | 131 | — | 3,916 | ||||||||||||
| Other assets |
10,882 | — | — | 10,882 | ||||||||||||
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| Total Assets |
$ | 826,772 | $ | 66,149 | $ | 185,276 | $ | 1,078,197 | ||||||||
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| LIABILITIES AND EQUITY |
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| Liabilities |
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| Accounts payable and other accruals |
$ | 6,347 | $ | 1,659 | $ | — | $ | 8,006 | ||||||||
| Debt |
423,771 | 65,480 | (4) | — | 489,251 | |||||||||||
| Tenant prepaids and security deposits |
5,678 | — | — | 5,678 | ||||||||||||
| Due to affiliates |
6,526 | — | — | 6,526 | ||||||||||||
| Distributions payable |
6,670 | — | — | 6,670 | ||||||||||||
| Intangible lease liabilities, net |
926 | 669 | — | 1,595 | ||||||||||||
| Other liabilities |
234 | — | — | 234 | ||||||||||||
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| Total Liabilities |
450,152 | 67,808 | — | 517,960 | ||||||||||||
| Equity |
||||||||||||||||
| Preferred stock |
— | — | — | — | ||||||||||||
| Common stock, $0.01 par value |
480 | — | 209 | (3) | 689 | |||||||||||
| Additional paid-in capital |
421,117 | — | 185,067 | (3) | 606,184 | |||||||||||
| Accumulated deficit and other accumulated comprehensive loss |
(44,978 | ) | (1,659 | ) | — | (46,637 | ) | |||||||||
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| Total Stockholders’ Equity |
376,619 | (1,659 | ) | 185,276 | 560,236 | |||||||||||
| Noncontrolling interests |
1 | — | — | 1 | ||||||||||||
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| Total Equity |
376,620 | (1,659 | ) | 185,276 | 560,237 | |||||||||||
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| Total Liabilities and Equity |
$ | 826,772 | $ | 66,149 | $ | 185,276 | $ | 1,078,197 | ||||||||
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The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
4
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, 2011. 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 10, 2011. |
| (2) | Subsequent to September 30, 2011, we acquired nine buildings comprising approximately 1.7 million square feet on 93.1 acres. One building is part of the Chicago Industrial Portfolio, which contains a total of nine buildings. Eight of the buildings comprise the Regional Industrial Portfolio. The purchase price of the nine buildings acquired after September 30, 2011, was approximately $109.7 million, exclusive of additional transfer taxes, due diligence and other closing costs. The following table sets forth the preliminary purchase price allocations of the acquired properties: |
| Acquisition (dollars in thousands) |
Acquisition Date |
Land | Buildings | Intangible Lease Assets |
Intangible Lease Liabilities |
Contract Purchase Price |
||||||||||||||||
| Chicago Industrial Portfolio |
December 13, 2011 | $ | 961 | $ | 3,850 | $ | 389 | $ | — | $ | 5,200 | |||||||||||
| Regional Industrial Portfolio |
December 15, 2011 | 18,772 | 73,869 | 12,528 | (669 | ) | 104,500 | |||||||||||||||
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| Total |
$ | 19,733 | $ | 77,719 | $ | 12,917 | $ | (669 | ) | $ | 109,700 | |||||||||||
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These acquisitions were financed using proceeds from our offering of common stock and debt financing. We utilized approximately $44.2 million of net offering proceeds to fund the acquisitions; $4.5 million of the purchase price of these properties was obtained through the assumption of a loan agreement and $61.0 million of the purchase price of these properties was obtained through mortgage notes payable as further described in Note 4. We incurred approximately $1.7 million in acquisition costs related to these acquisitions.
| (3) | Cash and cash equivalents of $185.3 million under financing transactions consist of proceeds from our common stock offering. Since September 30, 2011, we have issued approximately 20.9 million shares of common stock through February 10, 2012. This resulted in gross common stock offering proceeds received, from October 1, 2011 through February 10, 2012, of $206.6 million, less offering costs of $21.3 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, 2011, we assumed financing arrangements for approximately $4.5 million of mortgage notes payable and entered into $61.0 million in mortgage notes payable in connection with the acquisitions described in Note 2. We have capitalized approximately $0.1 million of costs associated with these financing arrangements; these costs will be amortized over the expected term of the financing arrangements. The following table sets forth the key terms of these financing arrangements: |
| Property Debt Secured By (dollars in thousands) |
Issuance Date (a) | Maturity Date | Interest Rate |
Amount Financed |
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| Chicago Industrial Portfolio (a) |
December 13, 2011 | March 11, 2017 | 5.77 | % | $ | 4,480 | ||||||||||
| Regional Industrial Portfolio |
December 15, 2011 | January 5, 2019 | 3.90 | % | 61,000 | |||||||||||
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| Total |
$ | 65,480 | ||||||||||||||
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| (a) | This loan was assumed from the seller of the Chicago Industrial Portfolio acquisition that was completed on December 13, 2011. |
5
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011
(Unaudited)
| (in thousands, except per share data) |
Company Historical (1) |
Acquisitions (2) | Pro Forma Adjustments |
Consolidated Pro Forma |
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| REVENUE |
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| Rental revenue |
$ | 33,051 | $ | 15,046 | $ | (878 | )(3) | $ | 47,219 | |||||||
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| Total revenue |
33,051 | 15,046 | (878 | ) | 47,219 | |||||||||||
| OPERATING EXPENSES |
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| Rental expenses |
6,848 | 3,395 | — | 10,243 | ||||||||||||
| Real estate related depreciation and amortization expense |
13,768 | — | 8,229 | (3) | 21,997 | |||||||||||
| General and administrative expenses |
2,708 | — | — | 2,708 | ||||||||||||
| Asset management fees, related party |
3,137 | — | 1,374 | (4) | 4,511 | |||||||||||
| Acquisition-related expenses, related party |
8,532 | — | (5,529 | )(3) | 3,003 | |||||||||||
| Acquisition-related expenses |
5,649 | — | (3,126 | )(3) | 2,523 | |||||||||||
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| Total operating expenses |
40,642 | 3,395 | 948 | 44,985 | ||||||||||||
| Other expenses: |
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| Equity in loss of unconsolidated joint venture |
(912 | ) | — | — | (912 | ) | ||||||||||
| Interest (expense) income and other |
(9,543 | ) | — | (5,159 | )(5) | (14,702 | ) | |||||||||
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| Total other expenses |
(10,455 | ) | — | (5,159 | ) | (15,614 | ) | |||||||||
| Net loss |
(18,046 | ) | 11,651 | (6,985 | ) | (13,380 | ) | |||||||||
| Net loss attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
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| Net loss attributable to common stockholders |
$ | (18,046 | ) | $ | 11,651 | $ | (6,985 | ) | $ | (13,380 | ) | |||||
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| Weighted average shares outstanding |
31,855 | 69,019 | (6) | |||||||||||||
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| Net loss per common share - basic and diluted |
$ | (0.57 | ) | $ | (0.19 | ) | ||||||||||
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The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
6
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010
(Unaudited)
| (in thousands, except per share data) |
Company Historical (1) |
Acquisitions (2) | Pro Forma Adjustments |
Consolidated Pro Forma |
||||||||||||
| Revenues: |
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| Rental revenues |
$ | 4,104 | $ | 48,811 | $ | (2,411 | )(3) | $ | 50,504 | |||||||
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| Total revenues |
4,104 | 48,811 | (2,411 | ) | 50,504 | |||||||||||
| Operating expenses: |
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| Rental expenses |
994 | 11,314 | — | 12,308 | ||||||||||||
| Organization expenses |
2 | — | — | 2 | ||||||||||||
| Real estate related depreciation and amortization expense |
1,577 | — | 23,573 | (3) | 25,150 | |||||||||||
| General and administrative expenses |
1,899 | — | — | 1,899 | ||||||||||||
| Asset management fees, related party |
428 | — | 3,499 | (4) | 3,927 | |||||||||||
| Acquisition-related expenses, related party |
4,527 | — | (4,527 | )(3) | — | |||||||||||
| Acquisition-related expenses |
1,914 | — | (1,914 | )(3) | — | |||||||||||
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| Total operating expenses |
11,341 | 11,314 | 20,631 | 43,286 | ||||||||||||
| Other expenses: |
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| Equity in loss of unconsolidated joint venture |
— | — | — | — | ||||||||||||
| Interest (expense) income and other |
(988 | ) | — | (15,820 | )(5) | (16,808 | ) | |||||||||
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| Total other expenses |
(988 | ) | — | (15,820 | ) | (16,808 | ) | |||||||||
| Net loss |
(8,225 | ) | 37,497 | (38,862 | ) | (9,590 | ) | |||||||||
| Net loss attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
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| Net loss attributable to common stockholders |
$ | (8,225 | ) | $ | 37,497 | $ | (38,862 | ) | $ | (9,590 | ) | |||||
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| Weighted average shares outstanding |
4,738 | 69,019 | (6) | |||||||||||||
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| Net loss per common share - basic and diluted |
$ | (1.74 | ) | $ | (0.14 | ) | ||||||||||
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The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
7
INDUSTRIAL INCOME TRUST INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND FOR THE
YEAR ENDED DECEMBER 31, 2010
(Unaudited)
| (1) | Reflects our historical condensed consolidated statements of operations for the nine months ended September 30, 2011, and for the year ended December 31, 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 10, 2011, and our Annual Report on Form 10-K filed with the SEC on February 25, 2011. |
| (2) | The tables below set forth the incremental impact of the following 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 incremental increase to rental income of approximately $2.2 million and $5.9 million for the nine months ended September 30, 2011, and for the year ended December 31, 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: (dollars in thousands) |
Acquisition Date |
For the Nine Months Ended September 30, 2011 |
For the Year Ended December 31, 2010 |
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| Acquisition |
Incremental Rental Revenue |
Incremental Reimbursement Revenue |
Incremental Rental Revenue |
Incremental Reimbursement Revenue |
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| Bell Gardens |
August 25, 2010 | $ | — | $ | — | $ | 896 | $ | 146 | |||||||||
| Bay Area Portfolio |
September 1, 2010 | — | — | 2,738 | 935 | |||||||||||||
| Portland Portfolio |
September 30, 2010 | — | — | 2,204 | 600 | |||||||||||||
| Suwanee Point |
November 1, 2010 | — | — | 903 | 183 | |||||||||||||
| Inland Empire Indian Avenue Distribution Center |
December 29, 2010 | — | — | 6,426 | 1,674 | |||||||||||||
| Brandon Woods Distribution Center |
December 30, 2010 | — | — | 1,449 | 173 | |||||||||||||
| Rock Quarry 1 and 2 |
January 19, 2011 | 72 | 11 | 2,069 | 434 | |||||||||||||
| Eagle Falls Distribution Center |
January 19, 2011 | 36 | 2 | 1,034 | 280 | |||||||||||||
| Hagerstown Distribution Center |
January 27, 2011 | 232 | 35 | 3,168 | 576 | |||||||||||||
| Regional Distribution Portfolio |
June 17, 2011 | 3,923 | 424 | 6,091 | 1,135 | |||||||||||||
| Chicago Industrial Portfolio |
(a) | 3,342 | 564 | 5,097 | 1,439 | |||||||||||||
| Regional Industrial Portfolio |
December 15, 2011 | 4,878 | 1,527 | 6,929 | 2,232 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 12,483 | $ | 2,563 | $ | 39,004 | $ | 9,807 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | The Chicago Industrial Portfolio closed in tranches, the first closing occurring on June 24, 2011, the second on August 4, 2011, the third on August 25, 2011 and the fourth on December 13, 2011. |
8
| Expense Impact: (dollars in thousands) |
Acquisition Date |
For the Nine Months Ended September 30, 2011 |
For the Year Ended December 31, 2010 |
|||||||||||||||
| Acquisition |
Incremental Rental Expense |
Incremental Real Estate Taxes |
Incremental Rental Expense |
Incremental Real Estate Taxes |
||||||||||||||
| Bell Gardens |
August 25, 2010 | $ | — | $ | — | $ | 85 | $ | 118 | |||||||||
| Bay Area Portfolio |
September 1, 2010 | — | — | 305 | 689 | |||||||||||||
| Portland Portfolio |
September 30, 2010 | — | — | 282 | 332 | |||||||||||||
| Suwanee Point |
November 1, 2010 | — | — | 127 | 95 | |||||||||||||
| Inland Empire Indian Avenue Distribution Center |
December 29, 2010 | — | — | 532 | 1,143 | |||||||||||||
| Brandon Woods Distribution Center |
December 30, 2010 | — | — | 66 | 149 | |||||||||||||
| Rock Quarry 1 and 2 |
January 19, 2011 | 9 | 6 | 262 | 185 | |||||||||||||
| Eagle Falls Distribution Center |
January 19, 2011 | 3 | 6 | 75 | 169 | |||||||||||||
| Hagerstown Distribution Center |
January 27, 2011 | 9 | 22 | 370 | 275 | |||||||||||||
| Regional Distribution Portfolio |
June 17, 2011 | 202 | 361 | 720 | 980 | |||||||||||||
| Chicago Industrial Portfolio |
(a) | 496 | 567 | 806 | 1,133 | |||||||||||||
| Regional Industrial Portfolio |
December 15, 2011 | 773 | 941 | 1,280 | 1,136 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 1,492 | $ | 1,903 | $ | 4,910 | $ | 6,404 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | The Chicago Industrial Portfolio closed in tranches, the first closing occurring on June 24, 2011, the second on August 4, 2011, the third on August 25, 2011 and the fourth on December 13, 2011. |
| (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-market lease assets are amortized as a reduction in rental revenue over the corresponding lease term. Below-market lease liabilities are amortized as an increase to rental revenue over the corresponding lease term, plus any applicable fixed-rate renewal option periods. The net adjustment of amortization of above and below market lease intangible assets and liabilities for the nine months ended September 30, 2011, resulted in a net decrease to rental revenue of approximately $0.9 million. The net adjustment of amortization of above and below market lease intangible assets and liabilities for the year ended December 31, 2010, resulted in a net decrease to rental revenue of approximately $2.4 million. In addition, for the nine months ended September 30, 2011, and for the year ended December 31, 2010, we had incurred acquisition costs of approximately $8.7 million and $6.4 million, respectively, related to these 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. |
9
| Acquisition (dollars in thousands) |
Acquisition Date |
For the Nine Months
Ended September 30, 2011 |
For the Year Ended December 31, 2010 |
|||||||||||||||
| 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 |
|||||||||||||||
| Bell Gardens |
August 25, 2010 | $ | — | $ | — | $ | 275 | $ | 93 | |||||||||
| Bay Area Portfolio |
September 1, 2010 | — | — | 1,243 | 104 | |||||||||||||
| Portland Portfolio |
September 30, 2010 | — | — | 1,678 | 64 | |||||||||||||
| Suwanee Point |
November 1, 2010 | — | — | 543 | 102 | |||||||||||||
| Inland Empire Indian Avenue Distribution Center |
December 29, 2010 | — | — | 2,788 | 231 | |||||||||||||
| Brandon Woods Distribution Center |
December 30, 2010 | — | — | 453 | (5 | ) | ||||||||||||
| Rock Quarry 1 and 2 |
January 19, 2011 | 92 | 7 | 1,102 | 88 | |||||||||||||
| Eagle Falls Distribution Center |
January 19, 2011 | 26 | 16 | 317 | 193 | |||||||||||||
| Hagerstown Distribution Center |
January 27, 2011 | 138 | (2 | ) | 1,657 | (21 | ) | |||||||||||
| Regional Distribution Portfolio |
June 17, 2011 | 2,203 | 135 | 4,406 | 270 | |||||||||||||
| Chicago Industrial Portfolio |
(a) | 2,572 | 544 | 4,847 | 1,055 | |||||||||||||
| Regional Industrial Portfolio |
December 15, 2011 | 3,198 | 178 | 4,264 | 237 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 8,229 | $ | 878 | $ | 23,573 | $ | 2,411 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | The Chicago Industrial Portfolio closed in tranches, the first closing occurring on June 24, 2011, the second on August 4, 2011, the third on August 25, 2011 and the fourth on December 13, 2011. |
| (4) | Asset management fees were calculated as though the properties acquired by us during 2010 and 2011 had been managed by Industrial Income Advisors, LLC, our Advisor, since January 1, 2010. 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. |
10
| (5) | We have entered into financing arrangements for approximately $356 million of mortgage notes payable. Interest expense presented was calculated based on the terms of the mortgage notes payable as of September 30, 2011. The following table sets forth the calculation for the pro forma adjustments as if these financings were outstanding as of January 1, 2010: |
| Issuance Date (dollars in thousands) |
Maturity Date |
Interest Rate |
Amount Financed |
Estimated Incremental Interest Expense |
||||||||||||||
| For the Nine Months Ended September 30, 2011 |
For the Year Ended December 31, 2010 |
|||||||||||||||||
| August 31, 2010 |
September 1, 2015 | 4.16 | %(a) | $ | 7,560 | (b) | (b) | |||||||||||
| September 30, 2010 |
October 1, 2020 | 4.95 | % | 9,350 | — | 345 | ||||||||||||
| September 1, 2010 |
September 1, 2017 | 4.31 | % | 30,000 | — | 858 | ||||||||||||
| September 30, 2010 |
October 1, 2020 | 4.95 | % | 17,250 | — | 637 | ||||||||||||
| November 1, 2010 |
November 1, 2020 | 4.90 | % | 7,750 | — | 315 | ||||||||||||
| December 29, 2010 |
December 29, 2020 | 5.68 | % | 45,000 | — | 2,577 | ||||||||||||
| December 30, 2010 |
December 30, 2020 | 5.68 | % | 9,000 | — | 518 | ||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 12,400 | 49 | 592 | ||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 6,160 | 24 | 294 | ||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 23,440 | 93 | 1,120 | ||||||||||||
| June 17, 2011 |
July 1, 2021 | 4.70 | % | 66,869 | 1,501 | 3,143 | ||||||||||||
| June 24, 2011 |
July 1, 2021 | 4.70 | % | 43,131 | 1,014 | 2,027 | ||||||||||||
| August 4, 2011 |
June 5, 2017 | 5.61 | % | 6,150 | 233 | 351 | ||||||||||||
| August 25, 2011 |
July 11, 2016 | 6.24 | % | 6,345 | 264 | 401 | ||||||||||||
| December 13, 2011 |
March 11, 2017 | 5.77 | % | 4,480 | 197 | 263 | ||||||||||||
| December 15, 2011 |
January 5, 2019 | 3.90 | % | 61,000 | 1,784 | 2,379 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Total |
$ | 355,885 | $ | 5,159 | $ | 15,820 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| (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, 2011, 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 this financing arrangement was excluded from the pro forma statement of operations as it is secured by the Renton Distribution Center. Prior to our acquisition of the Renton Distribution Center, it was owner-occupied, and our current tenant, DHL Global Forwarding, was not a prior tenant. Therefore, prior period financial statements for the Renton Distribution Center 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 year ended December 31, 2010, and for the nine months ended September 30, 2011, were calculated to reflect all shares sold through February 10, 2012, as if they had been issued on January 1, 2010. |
11