UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K/A

(Amendment No. 1)

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 9, 2012

 

 

TNP Strategic Retail Trust, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Maryland   000-54376   90-0413866

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

1900 Main Street, Suite 700

Irvine, California 92614

(Address of Principal Executive Offices, including Zip Code)

Registrant’s telephone number, including area code: (949) 833-8252

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ 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))

 

 

 


Item 9.01  Financial Statements and Exhibits.

On January 12, 2012, TNP Strategic Retail Trust, Inc. (the “Company”) filed a Current Report on Form 8-K reporting the Company’s acquisition of a fee simple interest in a multi-tenant necessity retail center located in Fontana, California commonly known as Morningside Marketplace (the “Morningside property”) through TNP SRT Morningside Marketplace LLC, a wholly owned indirect subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership. The Company is filing this Current Report on Form 8-K/A to amend the Current Report on Form 8-K filed on January 12, 2012 to provide the required financial information related to the Company’s acquisition of its interest in the Morningside property.

(a) Financial Statements of Real Estate Property Acquired.

 

         Page  

Morningside Marketplace

  

I.

  Independent Auditors’ Report      2   

II.

  Statements of Revenues and Certain Expenses for the Nine Months Ended September 30, 2011 (unaudited) and for the Year Ended December 31, 2010      3   

III.

  Notes to Statements of Revenues and Certain Expenses for the Nine Months Ended September 30, 2011 (unaudited) and for the Year Ended December  31, 2010      4   

(b) Unaudited Pro Forma Financial Information.

  
TNP Strategic Retail Trust, Inc. and Subsidiaries   

I.

  Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2011      9   

II.

  Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2010      10   

III.

  Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2011      11   

IV.

  Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September  30, 2011, and Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December 31, 2010 and the Nine Months Ended September 30, 2011      12   

(c) Shell Company Transactions.

Not applicable

(d) Exhibits.

None

 

1


INDEPENDENT AUDITORS’ REPORT

To the Board of Directors

TNP Strategic Retail Trust, Inc.

We have audited the accompanying statement of revenues and certain expenses of Morningside Marketplace, or the Property, for the year ended December 31, 2010. This statement of revenues and certain expenses is the responsibility of the Property’s management. Our responsibility is to express an opinion on the statement of revenues and certain expenses 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 statement of revenues and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues and certain expenses, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement of revenues and certain expenses. We believe that our audit provides a reasonable basis for our opinion.

The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, as described in Note 1 to the statement of revenues and certain expenses, and is not intended to be a complete presentation of the Property’s revenues and expenses.

In our opinion, the statement of revenues and certain expenses presents fairly, in all material respects, the revenues and certain expenses as described in Note 1 to the statement of revenues and certain expenses of the Property for the year ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

/s/ KMJ Corbin & Company LLP

Costa Mesa, California

March 26, 2012

 

2


MORNINGSIDE MARKETPLACE

STATEMENTS OF REVENUES AND CERTAIN EXPENSES

For the Nine Months Ended September 30, 2011 (unaudited) and

For The Year Ended December 31, 2010

 

     For the Nine
Months Ended
September 30, 2011

(unaudited)
     For the Year
Ended
December 31, 2010
 

Revenues:

     

Rental income

   $ 1,225,000       $ 1,784,000   
  

 

 

    

 

 

 

Certain expenses:

     

Building and ground maintenance

     83,000         111,000   

Real estate taxes

     74,000         99,000   

Electricity, water and gas utilities

     73,000         87,000   

Property management fees

     38,000         50,000   

Insurance

     7,000         6,000   

General and administrative

     44,000         48,000   
  

 

 

    

 

 

 

Total certain expenses

     319,000         401,000   
  

 

 

    

 

 

 

Revenues in excess of certain expenses

   $ 906,000       $ 1,383,000   
  

 

 

    

 

 

 

The accompanying notes are an integral part of the statements of revenues and certain expenses.

 

3


MORNINGSIDE MARKETPLACE

NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES

For the Nine Months Ended September 30, 2011 (unaudited) and

For The Year Ended December 31, 2010

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

The accompanying statement of revenues and certain expenses includes the operations of Morningside Marketplace, or the Property, a multi-tenant retail center located in Fontana, California. The Property has approximately 88,000 gross leaseable square feet and was 96% occupied as of September 30, 2011 (unaudited) and December 31, 2010.

Basis of Presentation

The accompanying statements of revenues and certain expenses have been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission, or the SEC, which requires certain information with respect to real estate operations to be included with certain filings with the SEC. The statements of revenues and certain expenses include the historical revenues and certain operating expenses of the Property, exclusive of items which may not be comparable to the proposed future operations of the Property. Material amounts that would not be directly attributable to future operating results of the Property are excluded, and therefore, the statements of revenues and certain expenses are not intended to be a complete presentation of the Property’s revenues and expenses. Items excluded consist of interest expense, depreciation and amortization and federal and state income taxes.

The accompanying statements of revenues and certain expenses are not representative of the actual operations for the periods presented, as certain expenses that may not be comparable to the expenses expected to be incurred by TNP Strategic Retail Trust, Inc., or the Company, in the future operations of the Property have been excluded.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The leases at the Property are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases (including rent holidays). Tenant reimbursements for real estate taxes, common area maintenance and other recoverable costs are recognized as rental income in the period that the expenses are incurred.

Repairs and Maintenance

Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized.

Property Management Fees

During the nine months ended September 30, 2011 and year ended December 31, 2010, the owners of the Property contracted with a related entity to manage the Property for a fee equal to 3% of Gross Receipts (as defined). For the nine months ended September 30, 2011 and for the year ended December 31, 2010, the Property incurred total property management fees of $38,000 (unaudited) and $50,000, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and certain expenses during the reporting periods. Actual results could differ materially from those estimates.

Unaudited Interim Information

The statement of revenues and certain expenses for the nine months ended September 30, 2011 is unaudited. In the opinion of management, such financial statement reflects all adjustments necessary for a fair presentation of results of the interim period. All such adjustments are of a normal recurring nature.

 

4


NOTE 3 – LEASES

The Property has entered into operating lease agreements with tenants that expire through 2022. The aggregate annual future minimum lease payments to be received under the existing non-cancelable operating leases as of September 30, 2011 are as follows:

 

Years Ending December 31,

   Minimum
Lease
Payments
 

2011(1)

   $ 386,000   

2012

     1,391,000   

2013

     1,258,000   

2014

     1,254,000   

2015

     1,239,000   

Thereafter

     6,421,000   
  

 

 

 
   $ 11,949,000   
  

 

 

 

 

(1) For the period from October 1, 2011 to December 31, 2011

The leases at the Property also require reimbursement of the tenants’ proportional share of common area expenses, real estate taxes and other expenses, which are not included in the amounts above. The tenant leases generally include tenant renewal options that can extend the lease terms.

NOTE 4 – TENANT CONCENTRATION

For the nine months ended September 30, 2011, the Property had one tenant occupying 66% (unaudited) of the total gross leaseable area, which accounted for 45% (unaudited) of the total base rent.

 

Tenant Name

   Date of Lease
Expiration
     Aggregate Base
Rent For The Nine Months
Ended September 30, 2011
(unaudited)
     % Aggregate Base
Rent For The Nine Months
Ended September 30, 2011
(unaudited)
 

Ralphs Grocery Company

     10/31/2021       $ 496,000         45

Aggregate base rent is based on contractual base rent from the lease in effect as of September 30, 2011. If this tenant was to default on its lease and a substitute tenant is not found, future revenue of the Property would be materially and adversely impacted.

For the year ended December 31, 2010, the Property had one tenant occupying 66% of the total gross leaseable area, which accounted for 45% of the total base rent.

 

Tenant Name

   Date of Lease
Expiration
     Aggregate Base
Rent For The Year
Ended December  31,
2010
     % Aggregate Base
Rent For The Year
Ended December  31,
2010
 

Ralphs Grocery Company

     10/31/2021       $ 661,000         45

Aggregate base rent is based on contractual base rent from the lease in effect as of December 31, 2010. If this tenant was to default on its lease and a substitute tenant is not found, future revenue of the Property would be materially and adversely impacted.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Litigation

The Property may be subject to legal claims in the ordinary course of business. Management is not aware of potential claims of which the outcome is likely to have a material adverse effect on the Property’s results of operations or financial condition.

Environmental Matters

In connection with the ownership and operation of real estate, the Property may be potentially liable for costs and damages related to environmental matters. The Property has not been notified by any governmental authority of any non-compliance, liability or other claim, and management is not aware of any other environmental condition that it believes will have a material adverse effect on the Property’s results of operations.

 

5


Other Matters

Other commitments and contingencies include the usual obligations of a real estate property in the normal course of business. In the opinion of management, these matters are not expected to have a material adverse effect on the Property’s financial position and/or results of operations.

NOTE 6 – SUBSEQUENT EVENT

On January 9, 2012, the Company, through TNP SRT Morningside Marketplace, LLC, a wholly owned indirect subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership, purchased the Property for an aggregate purchase price of $18,050,000, plus closing costs.

 

6


TNP STRATEGIC RETAIL TRUST, INC.

Unaudited Pro forma Condensed Consolidated Financial Statements

For the Nine Months Ended September 30, 2011 and

For The Year Ended December 31, 2010

As used herein, “we,” “us,” and “Company” refers to TNP Strategic Retail Trust, Inc. On January 9, 2012, we acquired the Morningside Marketplace (the “Morningside Property”) for an aggregate purchase price of $18,050,000, exclusive of closing costs. TNP SRT Morningside Marketplace, LLC, an indirect wholly owned subsidiary of TNP Strategic Retail Operating Partnership, L.P., the Company’s operating partnership (the “Operating Partnership”), financed the payment of the purchase price for the Morningside Property with (1) proceeds from the Company’s initial public offering, (2) approximately $11,953,300 in funds borrowed under the Company’s existing revolving credit agreement with KeyBank National Association (“KeyBank”), (3) approximately $1,200,000 in funds borrowed from SMB Equity, LLC, (the “SMB Loan”) ,a third party lender, and (4) approximately $1,355,000 million in funds borrowed from the Company’s sponsor and other affiliates of the Company. An acquisition fee of approximately $451,250 was paid to the Company’s external advisor, TNP Strategic Retail Advisor, LLC (the “Advisor”), in connection with the acquisition of the Morningside Property.

On December 21, 2011, we acquired a fee simple interest in a portion of a multi-tenant necessity retail center located in Fayettville, Georgia, a submarket of Atlanta, Georgia, commonly known as the Summit Point Shopping Center (the “Summit Point Property”), through TNP SRT Summit Point, LLC (“TNP SRT Summit Point”), an indirect subsidiary of the Operating Partnership from an unaffiliated third party seller. TNP SRT Summit Point acquired the Summit Point Property for an aggregate cash purchase price of $16,750,000, exclusive of closing costs, or approximately $174.52 per square foot. TNP SRT Summit Point financed the payment of the purchase price with (1) proceeds from the Company’s initial public offering, (2) the issuance of preferred membership interests in the direct parent of TNP SRT Summit Point and (3) the proceeds of a loan in the aggregate principal amount of $12,500,000 (the “Summit Point Loan”) from JPMorgan Chase Bank, National Association.

On December 16, 2011, TNP SRT Constitution Trail, LLC, a subsidiary of the Operating Partnership (“TNP SRT Constitution”) refinanced a portion of the Torchlight Loan (defined below), with the proceeds of a loan in the aggregate principal amount of $10,000,000 (the “Constitution Trail Loan”) from American National Insurance Company, a Texas insurance company (“American National”). The Constitution Trail Loan is evidenced by a promissory note issued by TNP SRT Constitution Trail in favor of American National in the aggregate principal amount of $10,000,000. The proceeds of the Constitution Trail Loan were used by TNP SRT Constitution to retire approximately $10,000,000 of principal outstanding on the Torchlight Loan. A principal amount of approximately $5,587,000 remains outstanding on the Torchlight Loan.

On October 21, 2011, we acquired fee title to the Constitution Trail Centre (the “Constitution Trail Property”) pursuant to a consent foreclosure proceeding. In connection with TNP SRT Constitution’s acquisition of the Constitution Trail Property, TNP SRT Constitution acquired a mortgage loan (the “Torchlight Loan”) from TL DOF III Holding Corporation, an unaffiliated third party lender (the “Constitution Trail Lender”), evidenced by a promissory note in the aggregate principal amount of $15,543,696. The Torchlight Loan is secured by Constitution Trail Property.

On June 29, 2011, we acquired an indirect interest in three distressed mortgage loans from M&I Marshall & Ilsley Bank, a Wisconsin state-chartered bank (the “Mortgage Lender”), in the original aggregate principal amount of $42,467,593 (collectively, the “Mortgage Loans”). The Mortgage Loans were made in favor of Constitution Trail, LLC, an unaffiliated third party borrower (the “Borrower”), and were secured by the Constitution Trail Property, a multi-tenant retail center located in McLean County, Illinois, a suburb of Bloomington, Illinois. The Borrower was in default under the Mortgage Loans as of the acquisition date of the Mortgage Loans. On June 29, 2011, TNP SRT Constitution took over the foreclosure proceedings against the Borrower which were previously begun by the Mortgage Lender.

On October 11, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located in Kissimmee, Florida, commonly known as Osceola Village, through TNP SRT Osceola Village, LLC, (“TNP SRT Osceola Village”), a wholly owned subsidiary of the Operating Partnership from an unaffiliated third party seller. TNP SRT Osceola Village acquired Osceola Village for an aggregate purchase price of $21,800,000, exclusive of closing costs, or approximately $187 per square foot. TNP SRT Osceola Village financed the payment of the purchase price for the Osceola Property with (1) proceeds from our initial public offering and (2) the proceeds of a loan in the aggregate principal amount of $19,000,000 (the “Osceola Loan”) from American National.

On September 23, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located in Hesperia, California, commonly known as Topaz Marketplace through TNP SRT Topaz Marketplace, LLC (“TNP SRT Topaz”), a wholly

 

7


owned indirect subsidiary of the Operating Partnership from an unaffiliated third party seller. TNP SRT Topaz acquired the Topaz Marketplace for an aggregate purchase price of approximately $13,500,000, exclusive of closing costs and certain fees payable to the seller, or approximately $268 per square foot. TNP SRT Topaz financed the payment of the purchase price for Topaz Marketplace with (1) proceeds from our initial public offering and (2) approximately $8,000,000 in funds borrowed under our existing revolving credit agreement (as amended from time to time, the “Credit Agreement”) with KeyBank National Association.

On July 19, 2011, we acquired a fee simple interest in a single-tenant necessity retail center located at 40 J.A. Cochran Bypass in Chester, South Carolina, commonly known as Cochran Bypass, through TNP SRT Cochran Bypass, LLC (“TNP SRT Cochran Bypass”), a wholly owned subsidiary of the Operating Partnership, from an affiliated third party seller. TNP SRT Cochran Bypass acquired Cochran Bypass for aggregate consideration of $2,585,000, comprised of (1) an assumption of all outstanding obligations on and after the closing date of the senior loan from First South Bank (the “Senior Loan”) secured by Cochran Bypass in the aggregate principal amount of $1,220,000, (2) an assumption of all outstanding obligations on and after the closing date of a junior loan from TNP 2008 Participating Notes Program, LLC, a fund affiliated with our sponsor, Thompson National Properties, LLC, (“TNP”), secured by Cochran Bypass in the current principal amount of $775,000, (the “Junior Loan”), and (3) a carryback promissory note from TNP, the affiliated seller of Cochran Bypass, in an amount of $579,000, (the “Carryback Promissory Note”).

On May 26, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located at 901 West Interstate Avenue, Bismark, North Dakota, commonly known as Pinehurst Square East through TNP SRT Pinehurst East, LLC, (“TNP SRT Pinehurst East”), a wholly owned subsidiary of the Operating Partnership, from an unaffiliated third party seller. TNP SRT Pinehurst East acquired Pinehurst Square East for an aggregate purchase price of $15,000,000, exclusive of closing costs. TNP SRT Pinehurst East financed the payment of the purchase price for Pinehurst Square East with (1) proceeds from our initial public offering, (2) approximately $9,750,000 in funds borrowed under the Credit Agreement, and (3) the issuance of approximately 287,472 units of the Operating Partnership’s common limited partnership interests (the “Units”) to certain of the sellers who elected to receive Units for an aggregate value of approximately $2,587,000.

On March 30, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located at 655 W. Craig Road, in North Las Vegas, Nevada, commonly known as Craig Promenade, through TNP SRT Craig Promenade, LLC (“TNP SRT Craig Promenade”), a wholly owned indirect subsidiary of the Operating Partnership, from an unaffiliated third party seller. TNP SRT Craig Promenade acquired Craig Promenade for an aggregate purchase price of $12,800,000, exclusive of closing costs. TNP SRT Craig Promenade financed the payment of the purchase price for Craig Promenade with (1) proceeds from our initial public offering and (2) approximately $8,750,000 in funds borrowed under the Credit Agreement.

The accompanying unaudited pro forma condensed consolidated financial statements (including the notes thereto) are qualified in their entirety by reference to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended December 31, 2010 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. In management’s opinion, all adjustments necessary to reflect the transactions have been made. The accompanying unaudited pro forma condensed consolidated balance sheet is presented as if we acquired the Morningside Property, Constitution Trail Property, Osceola Village and the Summit Point Property as of September 30, 2011. The accompanying unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2010 and the nine months ended September 30, 2011 are presented as if we acquired the Morningside Property, Summit Point Property, Constitution Trail Property, Osceola Village, Topaz Marketplace, Cochran Bypass, Pinehurst Square East, and Craig Promenade on January 1, 2010. The accompanying pro forma adjustments assume that we raised sufficient net offering proceeds in our initial public offering at a price of $10.00 per share to fund the purchase of the these properties as of January 1, 2010.

The accompanying unaudited pro forma condensed consolidated financial statements are unaudited and are subject to a number of estimates, assumptions, and other uncertainties, and do not purport to be indicative of the actual results of operations that would have occurred had the acquisition reflected therein in fact occurred on the date specified, nor do such financial statements purport to be indicative of the results of operations that may be achieved in the future. In addition, the unaudited pro forma condensed consolidated financial statements include pro forma allocations of the purchase price of the Morningside Property, Summit Point Property, Constitution Trail Property, Osceola Village, Topaz Marketplace, Cochran Bypass, Pinehurst Square East, and Craig Promenade based upon preliminary estimates of the fair value of the assets acquired and liabilities assumed in connection with the acquisition and are subject to change.

 

8


TNP STRATEGIC RETAIL TRUST, INC.

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2011

 

     As of
September 30, 2011
as Reported (A)
   
Pro Forma
Adjustments
(B)
    Pro Forma
as of
September 30,
2011
 

ASSETS

      

Investment in Real Estate

      

Land

   $ 28,671,000      $ 22,287,000      $ 50.958,000   

Building and Building Improvements

     53,340,000        49,510,000        102,850,000   

Tenant Improvements

     2,705,000        4,203,000        6,908,000   
  

 

 

   

 

 

   

 

 

 
     84,716,000        76,000,000        160,716,000   

Accumulated Depreciation

     (2,546,000     (18,000     (2,564,000
  

 

 

   

 

 

   

 

 

 

Investments in real estate, net

     82,170,000        75,982,000        158,152,000   

Investments in mortgage notes receivable, net

     18,000,000        —          18,000,000   
  

 

 

   

 

 

   

 

 

 

Investments in real estate and mortgage assets, net

     100,170,000        75,982,000        176,152,000   

Cash and Cash Equivalents

     1,387,000        1,000        1,388,000   

Restricted Cash

     1,346,000        721,000        2,067,000   

Prepaid Expenses and Other Assets

     578,000        208,000        786,000   

Accounts Receivable

     904,000        148,000        1,052,000   

Acquired Lease intangibles, net

     10,314,000        10,125,000        20,439,000   

Deferred Costs

      

Organization and Offering

     1,477,000        —          1,477,000   

Financing Fees, net

     1,272,000        1,427,000        2,699,000   
  

 

 

   

 

 

   

 

 

 

Total deferred costs, net

     2,749,000        1,427,000        4,176,000   
  

 

 

   

 

 

   

 

 

 

Assets held for sale

     3,194,000        —          3,194,000   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 120,642,000      $ 88,612,000      $ 209,254,000   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Liabilities:

      

Accounts payable and accrued expenses

   $ 2,310,000        287,000        2,597,000   

Amounts due to affiliates

     1,537,000        39,000        1,576,000   

Other liabilities

     482,000        133,000        615,000   

Notes payable

     82,917,000        47,107,000        130,024,000   

Acquired below market lease intangibles, net

     3,375,000        1,213,000        4,588,000   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     90,621,000        48,779,000        139,400,000   
  

 

 

   

 

 

   

 

 

 

Commitments and contingencies

      

Equity:

      

Preferred stock, $0.01 par value per share; 50,000,000 shares authorized; none issued and outstanding as of September 30, 2011 and December 31, 2010, respectively

     —          —          —     

Common stock, $0.01 par value per share; 400,000,000 shares authorized, 4,591,090 and 2,382,317 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively

     46,000        33,000        79,000   

Additional paid-in capital

     40,858,000        33,491,000        74,349,000   

Accumulated deficit

     (12,589,000     6,309,000 (C)      (6,280,000
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     28,315,000        39,833,000        68,148,000   

Non-controlling interests

     1,706,000        —          1,706,000   
  

 

 

   

 

 

   

 

 

 

Total equity

     30,021,000        39,833,000        69,854,000   
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 120,642,000      $ 88,612,000      $ 209,254,000   
  

 

 

   

 

 

   

 

 

 

 

9


TNP STRATEGIC RETAIL TRUST, INC.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For The Year Ended December 31, 2010

 

    For the
Year  Ended
December 31,
2010
(D)
    Morningside
Marketplace
Pro  Forma
Adjustments
(E)
    Summit Point
Pro  Forma
Adjustments
(E)
    Constitution
Trail
Pro  Forma
Adjustments
(E)
    Osceola
Village
Pro  Forma
Adjustments
(E)
    Topaz
Marketplace
Pro  Forma
Adjustments
(E)
    Cochran
Bypass
Pro  Forma
Adjustments
(E)
    Pinehurst
Square
East  Pro Forma
Adjustments
(E)
    Craig
Promenade
Pro  Forma
Adjustments
(E)
    Pro forma
for  the
Year Ended
December 31,
2010
 

Revenue:

                   

Rental income

  $ 4,793,000        1,784,000 (F)      1,657,000 (F)    $ 2,292,000 (F)    $ 1,892,000 (F)    $ 1,350,000 (F)    $ 297,000 (F)    $ 1,712,000 (F)    $ 1,432,000 (F)    $ 17,209,000   

Other property income

    —          —          —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenue

    4,793,000        1,784,000        1,657,000        2,292,000        1,892,000        1,350,000        297,000        1,712,000        1,432,000        17,209,000   

Expenses:

                   

Operating and maintenance

    2,037,000        353,000 (G)(H)      437,000 (G)(H)      764,000 (G)(H)      708,000 (G)(H)      297,000 (G)(H)      69,000 (G)(H)      503,000 (G)(H)      359,000 (G)(H)      5,527,000   

General and administrative

    1,732,000        48,000        38,000        23,000        38,000        55,000        41,000        95,000        14,000        2,084,000   

Depreciation and amortization

    2,072,000        784,000 (I)      907,000 (I)      763,000 (I)      569,000 (I)      652,000 (I)      126,000 (I)      877,000 (I)      612,000 (I)      7,362,000   

Acquisition Expenses

    1,353,000        474,000        700,000        647,000        822,000        648,000        38,000        440,000        410,000        5,532,000   

Interest Expense

    2,009,000        657,000 (J)      731,000 (J)      958,000 (J)      1,572,000 (J)      506,000 (J)      216,000 (J)      558,000 (J)      985,000 (J)      8,192,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Expenses

    9,203,000        2,316,000        2,813,000        3,155,000        3,709,000        2,158,000        490,000        2,473,000        2,380,000        28,697,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before other income (expense)

    (4,410,000     (532,000     (1,156,000     (863,000     (1,817,000     (808,000     (193,000     (761,000     (948,000     (11,488,000

Other income and expense

    —          —          —          —          —          —          —          —          —          —     

Interest income

    4,000        —          —          —          —          —          —          —          —          4,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before discontinued operations

    (4,406,000     (532,000     (1,156,000     (863,000     (1,817,000     (808,000     (193,000     (761,000     (948,000     (11,484,000   

Income (loss) from discontinued operations

    14,000        —          —          —          —          —          —          —          —          14,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

    (4,392,000     (532,000     (1,156,000     (863,000     (1,817,000     (808,000     (193,000     (761,000     (948,000     (11,470,000

Net loss attributable to non-controlling interest

    5,000        —          —          —          —          —          —          —          —          5,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to stockholders

  $ (4,387,000     (532,000     (1,156,000   $ (863,000   $ (1,817,000   $ (808,000   $ (193,000   $ (761,000   $ (948,000   $ (11,465,000
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss) per share — basic and diluted

                   

Continuing operations

  $ (2.97                   $ (0.85

Discontinued operations

  $ 0.01                      $ —     

Weighted-average number of common shares outstanding — basic and diluted

    1,483,179                        13,481,679 (K) 

The accompanying notes are an integral part of the unaudited pro forma condensed consolidated statement of operations.

 

10


TNP STRATEGIC RETAIL TRUST, INC.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For The Nine Months Ended September 30, 2011

 

    For the
Nine Months
Ended
September 30,
2011
(D)
    Morningside
Marketplace
Pro Forma
Adjustments
(E)
    Summit Point
Pro Forma
Adjustments
(E)
    Constitution
Trail
Pro Forma
Adjustments
(E)
    Osceola Village
Pro Forma
Adjustments
(E)
    Topaz
Marketplace
Pro Forma
Adjustments
(E)
    Cochran
Bypass
Pro  Forma
Adjustments
(E)
    Pinehurst
Square
East
Pro Forma
Adjustments
(E)
    Craig
Promenade
Pro Forma
Adjustments
(E)
    Pro forma
for the
Nine Months
Ended
September 30,
2011
 

Revenue:

                   

Rental income

  $ 6,869,000        1,225,000 (F)      1,154,000 (F)    $ 1,875,000 (F)    $ 1,371,000 (F)    $ 1,083,000 (F)    $ 222,000 (F)    $ 681,000 (F)    $ 358,000 (F)    $ 14,838,000   

Other property income

    —          —          —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenue

    6,869,000        1,225,000        1,154,000        1,875,000        1,371,000        1,083,000        222,000        681,000        358,000        14,838,000   

Expenses:

                   

Operating and maintenance

    2,274,000        275,000 (G)(H)      305,000 (G)(H)      668,000 (G)(H)      497,000 (G)(H)      219,000 (G)(H)      48,000 (G)(H)      209,000 (G)(H)      90,000 (G)(H)      4,585,000   

General and administrative

    1,781,000        44,000        68,000        19,000        30,000        42,000        29,000        16,000        4,000        2,033,000   

Depreciation and amortization

    2,835,000        588,000 (I)      680,000 (I)      572,000 (I)      427,000 (I)      483,000 (I)      93,000 (I)      340,000 (I)      107,000 (I)      6,125,000   

Acquisition Expenses

    2,260,000        —          —          —          —          —          —          —          —          2,260,000   

Interest Expense

    3,180,000        493,000 (J)      550,000 (J)      718,000 (J)      1,176,000 (J)      375,000 (J)      160,000 (J)      218,000 (J)      113,000 (J)      6,983,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Expenses

    12,330,000        1,400,000        1,603,000        1,977,000        2,130,000        1,119,000        330,000        783,000        314,000        21,986,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before other income (expense)

    (5,461,000     (175,000     (449,000     (102,000     (759,000     (36,000     (108,000     (102,000     44,000        (7,148,000

Other income and expense

    —          —          —          —          —          —          —          —          —          —     

Interest income

    541,000        —          —          —          —          —          —          —          —          541,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before discontinued operations

    (4,920,000     (175,000     (449,000     (102,000     (759,000     (36,000     (108,000     (102,000     44,000        (6,607,000

Income (loss) from discontinued operations

    521,000        —          —          —          —          —          —          —          —          521,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

  $ (4,399,000     (175,000     (449,000   $ (102,000   $ (759,000   $ (36,000   $ (108,000   $ (102,000   $ 44,000      $ (6,086,000

Net loss attributable to non-controlling interest

    160,000        —          —          —          —          —          —          —          —          160,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

  $ (4,239,000     (175,000     (449,000   $ (102,000   $ (759,000   $ (36,000   $ (108,000   $ (102,000   $ 44,000      $ (5,926,000
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (loss) per share — basic and diluted

                   

Continuing operations

  $ (1.49                   $ (0.41

Discontinued operations

  $ 0.16                      $ 0.03   

Weighted-average number of common shares outstanding — basic and diluted

    3,190,502                        15,946,478 (K) 

The accompanying notes are an integral part of the unaudited pro forma condensed consolidated statement of operations.

 

11


TNP STRATEGIC RETAIL TRUST, INC.

1. Notes to Unaudited Pro forma Condensed Consolidated Balance Sheet as of September 30, 2011, and Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December 31, 2010 and the Nine Months Ended September 30, 2011

 

(A) As reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.

 

(B) Reflects the purchase price of the assets acquired and liabilities incurred or assumed by us in connection with the Morningside Property, the Summit Point Property, the Constitution Trail Property, and the Osceola Village acquisitions completed subsequent to September 30, 2011. The purchase price allocation is preliminary and is subject to change.

 

(C) Amount represents the acquisition related income and expenses incurred at the time of acquisition, not included in the historical results. We recognized a gain of approximately $9.5 million on the acquisition of the Constitution Trail Property.

 

(D) Reflects our historical consolidated operations as reported in our Annual Report on Form 10-K for the year ended December 31, 2010 and our Quarterly Report on Form 10-Q for the nine months ended September 30, 2011, as applicable.

 

(E) Amounts represent pro forma adjustments, based on historical operations of the Morningside Property, the Summit Point Property, the Constitution Trail Property, Osceola Village, Topaz Marketplace, Cochran Bypass, Pinehurst Square East and Craig Promenade which were acquired during the year ended December 31, 2011.

 

(F) Reflects rental revenues based on the historical and pro forma operations for the year ended December 31, 2010 and the nine months ended September 30, 2011, as applicable.

 

(G) Reflects property operating expenses (not reflected in our historical statement of operations for the year ended December 31, 2010 and the nine months ended September 30, 2011, as applicable) based on the historical operations of the previous owner.

 

(H) Included in such amount are property management fees that would be due to our property manager, TNP Property Manager, LLC (“Property Manager”), had the Morningside Property, the Summit Point Property, the Constitution Trail Property, Osceola Village, Topaz Marketplace, Cochran Bypass, Pinehurst Square East and Craig Promenade been acquired on January 1, 2010. Each property management agreement requires us to pay Property Manager a monthly property management fee of 5% of the gross revenue of each of the Morningside Property, the Summit Point Property, the Constitution Trail Property, Osceola Village, Topaz Marketplace, Cochran Bypass, Pinehurst Square East and Craig Promenade.

 

(I) Amounts represent depreciation and amortization expense on the allocation of the purchase price. Depreciation and amortization expense is recognized using the straight-line method over an estimated useful life of 44 to 51 years for buildings and 3 to 211 months for improvements, in place leases and lease commissions.

The amounts allocated to above market leases and below market leases are amortized to rental income over the remaining terms of the acquired leases, which range from 3 to 211 months and from 69-208 months, respectively.

The purchase price allocations, and therefore, depreciation and amortization expense, are preliminary and subject to change.

 

(J) Amount represents interest expense and the amortization of the corresponding deferred financing costs on the Credit Agreement, the Senior Loan, the Junior Loan, the Carryback Promissory Note, the Osceola Loan, the Torchlight Loan, the Constitution Trail Loan, the Summit Point Loan, and the SMB Loan. The Credit Agreement bears interest at a variable rate.

 

(K) Represents the weighted average number of shares of our common stock from our initial public offering, at $10.00 per share, required to generate sufficient offering proceeds, net of offering costs, to fund the purchase of the Morningside Property, the Summit Point Property, the Constitution Trail Property, Osceola Village, Topaz Marketplace, Cochran Bypass, Pinehurst Square East and Craig Promenade. The calculation assumes these proceeds were raised as of January 1, 2010.

 

12


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    TNP STRATEGIC RETAIL TRUST, INC.

 

Date: March 26, 2012

 

       
    By:  

/s/ JAMES R. WOLFORD

 
      James R. Wolford  
      Chief Financial Officer, Treasurer & Secretary  

 

13