Attached files
file | filename |
---|---|
8-K/A - AMENDMENT TO FORM 8-K - Carey Watermark Investors Inc | a12-18418_38ka.htm |
EX-99.1 - EX-99.1 - Carey Watermark Investors Inc | a12-18418_3ex99d1.htm |
EX-99.2 - EX-99.2 - Carey Watermark Investors Inc | a12-18418_3ex99d2.htm |
Exhibit 99.3
INDEX TO PRO FORMA FINANCIAL STATEMENTS
Carey Watermark Investors Incorporated: |
|
|
|
Pro Forma Condensed Consolidated Financial Information |
|
|
|
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2012 (Unaudited) |
3 |
Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2011 (Unaudited) |
4 |
Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2012 (Unaudited) |
5 |
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) |
6 |
CAREY WATERMARK INVESTORS INCORPORATED
The pro forma condensed consolidated financial statements of Carey Watermark Investors Incorporated (we, us, and our), which are unaudited, have been prepared based on our historical financial statements. Our pro forma condensed consolidated balance sheet as of March 31, 2012 has been prepared as if the significant investments entered into during the second quarter of 2012 (noted herein) had been entered into as of March 31, 2012. The pro forma condensed consolidated statements of operations for the year ended December 31, 2011 and three months ended March 31, 2012 have been prepared as if the significant investments subsequent to March 31, 2012 and related financings (noted herein) had occurred on January 1, 2011. In addition, adjustments have been recorded to reflect our asset management expense. Pro forma adjustments are intended to reflect what the effect would have been, had we held our ownership interest as of January 1, 2011, less amounts which have been recorded in the historical consolidated statements of operations. In our opinion, all adjustments necessary to reflect the effects of these investments have been made. The pro forma condensed consolidated financial information should be read in conjunction with the historical consolidated financial statements and notes thereto of our Annual Report on Form 10-K for the year ended December 31, 2011 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2012.
The pro forma information is not necessarily indicative of the financial condition or results of operations had the investments occurred on January 1, 2011, nor are they necessarily indicative of the financial position, cash flows or results of operations of future periods.
CAREY WATERMARK INVESTORS INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2012
(Unaudited)
|
|
|
|
Pro Forma |
|
|
Pro Forma |
|
|
|
| ||||||||||||
|
|
|
|
Adjustments |
|
|
Adjustments |
|
|
|
| ||||||||||||
|
|
Historical |
|
(Hampton Inn) |
|
|
(Hilton Garden Inn) |
|
|
Pro Forma |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Investments in real estate: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Hotels, at cost |
|
$ |
- |
|
$ |
12,500,000 |
|
A |
$ |
17,584,500 |
|
A |
$ |
30,084,500 |
| ||||||||
Net investments in hotels |
|
- |
|
12,500,000 |
|
|
17,584,500 |
|
|
30,084,500 |
| ||||||||||||
Equity investments in real estate |
|
33,240,628 |
|
- |
|
|
- |
|
|
33,240,628 |
| ||||||||||||
Net investments in real estate |
|
33,240,628 |
|
12,500,000 |
|
|
17,584,500 |
|
|
63,325,128 |
| ||||||||||||
Cash and cash equivalents |
|
18,647,880 |
|
(12,500,000) |
|
A |
(16,176,382) |
|
A |
|
3,961,457 |
| |||||||||||
|
|
|
|
7,930,581 |
|
B |
11,000,000 |
|
B |
|
| ||||||||||||
|
|
|
|
|
|
|
(3,553,024) |
|
C |
|
| ||||||||||||
|
|
|
|
(601,571) |
|
A |
(786,027) |
|
A |
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Due from affiliates |
|
59,869 |
|
- |
|
|
- |
|
|
59,869 |
| ||||||||||||
Restricted cash |
|
- |
|
- |
|
|
3,553,024 |
|
C |
3,553,024 |
| ||||||||||||
Other assets |
|
758,208 |
|
- |
|
|
- |
|
|
758,208 |
| ||||||||||||
Total assets |
|
$ |
52,706,585 |
|
$ |
7,329,010 |
|
|
$ |
11,622,091 |
|
|
$ |
71,657,686 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Limited and non-recourse debt |
|
$ |
- |
|
$ |
7,930,581 |
|
B |
$ |
11,000,000 |
|
B |
$ |
18,930,581 |
| ||||||||
Accounts payable, accrued expenses and other liabilities |
|
442,916 |
|
- |
|
|
- |
|
|
442,916 |
| ||||||||||||
Due to affiliates |
|
1,179,038 |
|
- |
|
|
- |
|
|
1,179,038 |
| ||||||||||||
Distributions payable |
|
533,211 |
|
- |
|
|
- |
|
|
533,211 |
| ||||||||||||
Total liabilities |
|
2,155,165 |
|
7,930,581 |
|
|
11,000,000 |
|
|
21,085,746 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Equity: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Common stock |
|
6,011 |
|
- |
|
|
- |
|
|
6,011 |
| ||||||||||||
Additional paid-in capital |
|
53,356,155 |
|
- |
|
|
- |
|
|
53,356,155 |
| ||||||||||||
Distributions in excess of accumulated losses |
|
(2,810,746) |
|
(601,571) |
|
A |
- |
|
|
(3,412,317) |
| ||||||||||||
Total Carey Watermark Investors Incorporated shareholders equity |
|
50,551,420 |
|
(601,571) |
|
|
- |
|
|
49,949,849 |
| ||||||||||||
Noncontrolling interest |
|
- |
|
- |
|
|
1,408,118 |
|
A |
1,408,118 |
| ||||||||||||
|
|
- |
|
- |
|
|
(786,027) |
|
A |
(786,027) |
| ||||||||||||
Total equity |
|
50,551,420 |
|
(601,571) |
|
|
622,091 |
|
|
50,571,940 |
| ||||||||||||
Total liabilities and equity |
|
$ |
52,706,585 |
|
$ |
7,329,010 |
|
|
$ |
11,622,091 |
|
|
$ |
71,657,686 |
| ||||||||
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
CAREY WATERMARK INVESTORS INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2011
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Pro Forma |
|
|
|
| ||||
|
|
|
|
Pro Forma |
|
|
Pro Forma |
|
|
Adjustments |
|
|
|
| ||||
|
|
|
|
Adjustments |
|
|
Adjustments |
|
|
(Weighted |
|
|
|
| ||||
|
|
Historical |
|
(Hampton Inn) |
|
|
(Hilton Garden Inn) |
|
|
Average Shares) |
|
|
Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Hotel Revenue |
|
$ |
- |
|
$ |
3,697,818 |
|
D |
$ |
7,483,168 |
|
D |
|
|
|
$ |
11,180,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Hotel expenses: |
|
- |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Room |
|
- |
|
(774,096) |
|
E |
(2,003,077) |
|
E |
|
|
|
(2,777,173) |
| ||||
Food and beverage |
|
- |
|
- |
|
|
(675,748) |
|
E |
|
|
|
(675,748) |
| ||||
Depreciation and amortization |
|
- |
|
(552,862) |
|
E |
(583,239) |
|
E |
|
|
|
(1,136,101) |
| ||||
Sales and marketing |
|
- |
|
(466,422) |
|
E |
(697,684) |
|
E |
|
|
|
(1,164,106) |
| ||||
Repairs and maintenance |
|
- |
|
(174,814) |
|
E |
(457,884) |
|
E |
|
|
|
(632,698) |
| ||||
General and administrative |
|
- |
|
(281,824) |
|
E |
(718,420) |
|
E |
|
|
|
(1,000,244) |
| ||||
Utilities |
|
- |
|
(238,866) |
|
E |
(291,923) |
|
E |
|
|
|
(530,789) |
| ||||
Other |
|
- |
|
(454,075) |
|
E |
(1,179,069) |
|
E |
|
|
|
(1,633,144) |
| ||||
General and administrative |
|
(1,612,111) |
|
- |
|
|
- |
|
|
|
|
|
(1,612,111) |
| ||||
Property expenses |
|
(170,694) |
|
(73,862) |
|
F |
(94,983) |
|
F |
|
|
|
(339,539) |
| ||||
|
|
(1,782,805) |
|
(3,016,821) |
|
|
(6,702,027) |
|
|
|
|
|
(11,501,653) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other Income and (Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income from equity investments in real estate |
|
1,081,590 |
|
- |
|
|
- |
|
|
|
|
|
1,081,590 |
| ||||
Interest expense |
|
(10,642) |
|
(402,036) |
|
B |
(587,627) |
|
B |
|
|
|
(1,000,305) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
(Loss) income from operations before income taxes |
|
(711,857) |
|
278,961 |
|
|
193,514 |
|
|
|
|
|
(239,382) |
| ||||
Provision for income taxes |
|
- |
|
(79,704) |
|
G |
(69,823) |
|
G |
|
|
|
(149,527) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net (loss) income |
|
(711,857) |
|
199,257 |
|
|
123,691 |
|
|
|
|
|
(388,909) |
| ||||
Loss attributable to noncontrolling interests |
|
- |
|
- |
|
|
678,676 |
|
A |
|
|
|
678,676 |
| ||||
Net (loss) income attributable to CWI Stockholders |
|
$ |
(711,857) |
|
$ |
199,257 |
|
|
$ |
802,367 |
|
|
|
|
|
$ |
289,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares outstanding |
|
2,630,328 |
|
|
|
|
|
|
|
3,380,572 |
|
H |
6,010,900 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted net (loss) income per share attributable to CWI Stockholders |
|
$ |
(0.27) |
|
|
|
|
|
|
|
|
|
|
$ |
0.05 |
|
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
CAREY WATERMARK INVESTORS INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2012
(Unaudited)
|
|
|
|
|
|
|
|
Pro Forma |
|
|
| ||||
|
|
|
|
Pro Forma |
|
Pro Forma |
|
Adjustments |
|
|
| ||||
|
|
|
|
Adjustments |
|
Adjustments |
|
(Weighted |
|
|
| ||||
|
|
Historical |
|
(Hampton Inn) |
|
(Hilton Garden Inn) |
|
Average Shares) |
|
Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Hotel Revenue |
|
$ |
- |
|
$ |
722,401 |
D |
$ |
2,060,882 |
D |
|
|
$ |
2,783,283 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other Revenue |
|
|
|
|
|
|
|
|
|
|
| ||||
Other real estate income |
|
52,500 |
|
- |
|
- |
|
|
|
52,500 |
| ||||
|
|
52,500 |
|
- |
|
- |
|
|
|
52,500 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
| ||||
Hotel expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||
Room |
|
- |
|
(164,532) |
E |
(495,924) |
E |
|
|
(660,456) |
| ||||
Food and beverage |
|
- |
|
- |
|
(151,654) |
E |
|
|
(151,654) |
| ||||
Depreciation and amortization |
|
- |
|
(138,216) |
E |
(144,225) |
E |
|
|
(282,441) |
| ||||
Sales and marketing |
|
- |
|
(102,625) |
E |
(185,480) |
E |
|
|
(288,105) |
| ||||
Repairs and maintenance |
|
- |
|
(43,971) |
E |
(119,620) |
E |
|
|
(163,591) |
| ||||
General and administrative |
|
- |
|
(71,774) |
E |
(168,420) |
E |
|
|
(240,194) |
| ||||
Utilities |
|
- |
|
(45,302) |
E |
(66,161) |
E |
|
|
(111,463) |
| ||||
Other |
|
- |
|
(100,475) |
E |
(377,140) |
E |
|
|
(477,615) |
| ||||
General and administrative |
|
(607,504) |
|
- |
|
- |
|
|
|
(607,504) |
| ||||
Property expenses |
|
(82,476) |
|
(18,717) |
F |
(23,746) |
F |
|
|
(124,939) |
| ||||
|
|
(689,980) |
|
(685,612) |
|
(1,732,370) |
|
|
|
(3,107,962) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other Income and (Expenses) |
|
|
|
|
|
|
|
|
|
|
| ||||
Income from equity investments in real estate |
|
416,603 |
|
- |
|
- |
|
|
|
416,603 |
| ||||
Interest expense |
|
- |
|
(99,132) |
B |
(146,878) |
B |
|
|
(246,010) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
(Loss) income from operations before income taxes |
|
(220,877) |
|
(62,343) |
|
181,634 |
|
|
|
(101,586) |
| ||||
Provision for income taxes |
|
- |
|
(12,861) |
G |
(66,193) |
G |
|
|
(79,054) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net (loss) income |
|
(220,877) |
|
(75,204) |
|
115,441 |
|
|
|
(180,640) |
| ||||
Loss attributable to noncontrolling interests |
|
- |
|
- |
|
103,051 |
A |
|
|
103,051 |
| ||||
Net (loss) income attributable to CWI Stockholders |
|
$ |
(220,877) |
|
$ |
(75,204) |
|
$ |
218,492 |
|
|
|
$ |
(77,589) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares outstanding |
|
5,334,873 |
|
|
|
|
|
676,027 |
H |
6,010,900 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted net loss per share attributable to CWI Stockholders |
|
$ |
(0.04) |
|
|
|
|
|
|
|
$ |
(0.01) |
|
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The pro forma condensed consolidated statement of operations for the year ended December 31, 2011 was derived from the historical audited consolidated financial statements as of and for the year ended December 31, 2011 included in our Annual Report on Form 10-K. The pro forma condensed consolidated balance sheet as of March 31, 2012 and the pro forma condensed consolidated statement of operations for the three months ended March 31, 2012 were derived from the unaudited consolidated financial statements included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2012.
Note 2. Pro Forma Adjustments
A. Investments
On May 31, 2012, we completed the acquisition of the Hampton Inn (the Hampton Inn) from NMG-Braintree, LLC, an unaffiliated third party, for $12,500,000. The 4-story, 103-room select service hotel is located in Braintree, Massachusetts. The hotel is managed by StepStone Hospitality. In connection with this acquisition, we paid acquisition costs of $601,571. Acquisition costs were expensed and are reflected as a reduction to distributions in excess of accumulated losses in the accompanying pro forma condensed consolidated balance sheet.
On June 8, 2012, we obtained a controlling interest in the Hilton Garden Inn New Orleans French Quarter/CBD venture (the Hilton Garden Inn). The non-controlling interest is held by HRI Properties (HRI), an unaffiliated third party and the former property owner. The 155-room select service hotel is located in New Orleans, Louisiana. The hotel is managed by HRI Lodging, Inc., an affiliate of HRI. We acquired an 87.56% controlling interest in the venture for a capital contribution of $9,910,000. Our investment was made in the form of a preferred equity interest that carries a cumulative preferred dividend of 8.5% per year and is senior to HRIs equity interest. The noncontrolling interest was recorded at its fair value of $1,408,118. Our pro forma loss attributable to noncontrolling interests would be approximately $678,676 and $103,051, for the year ended December 31, 2011 and the three months ended March 31, 2012, respectively, based upon our cumulative 8.5% preferred dividend on our capital contribution of $9,910,000. The pro forma condensed consolidated statements of operations do not include acquisition costs of $786,027, which were reflected on the pro forma condensed consolidated balance sheet as of March 31, 2012. Had these costs been absorbed by the venture partner, the amount of losses absorbed by the venture partner during the periods presented would have been reduced up to that amount. The venture, which we consolidate, acquired the property for $17,584,500 and paid acquisition costs of $786,027.
B. Debt
We acquired the Hampton Inn property through a wholly-owned, taxable real estate investment trust subsidiary, or TRS, subject to a mortgage in the amount of up to $9,800,000, of which $7,930,581 was drawn upon purchase. The mortgage has an initial 36-month term plus options for two 12-month extensions and a maturity date of May 31, 2015. The interest rate is effectively fixed at 5.0% for the first 36 months. The loan is interest-only for the first 12 months and has a 25-year amortization period thereafter. We have reflected a pro forma adjustment for the year ended December 31, 2011 related to interest expense of $402,036. Additionally, we have reflected a pro forma adjustment for interest expense of $99,132 for the three months ended March 31, 2012 in order to reflect what the expense would have been had the investment and related financing been made on January 1, 2011.
We acquired the Hilton Garden Inn property through a wholly-owned TRS subject to a non-recourse mortgage in the amount of $11,000,000. The mortgage requires monthly principal and interest payments beginning August 1, 2012 and has a 30-year amortization period thereafter. The interest rate is fixed at 5.3% and the maturity date is July 1, 2019. We have reflected a pro forma adjustment for the year ended December 31, 2011 related to interest expense of $587,627. Additionally, we have reflected a pro forma adjustment for interest expense of $146,878 for the three months ended March 31, 2012 in order to reflect what the expense would have been had the investment and related financing been made on January 1, 2011.
CAREY WATERMARK INVESTORS INCORPORATED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
C. Restricted Cash
As part of the franchise agreement with Hilton Garden Inn, we are required to make renovations to the hotel. Accordingly, our subsidiary placed $3,553,024 into lender-held escrow accounts primarily to fund our commitment for the renovations, which are expected to be completed by September 2013.
D. Hotel Revenue
Our hotel revenue is comprised primarily of hotel room revenue. We have reflected a pro forma adjustment for the year ended December 31, 2011 related to such revenue of $3,697,818 related to the Hampton Inn investment and $7,483,168 related to the Hilton Garden Inn investment. Additionally, we have reflected a pro forma adjustment of $722,401 related to the Hampton Inn investment and $2,060,882 for the Hilton Garden Inn investment for the three months ended March 31, 2012 in order to reflect what the revenue would have been had the investments been made on January 1, 2011.
E. Hotel Expenses
Hotel expenses for the Hampton Inn for the year ended December 31, 2011 and the three months ended March 31, 2012 were as follows: room expenses of $774,096 and $164,532, respectively; repairs and maintenance of $174,814 and $43,971, respectively; utilities of $238,866 and $45,302, respectively; sales and marketing of $466,422 and $102,625, respectively; general and administrative expenses of $281,824 and $71,774, respectively; other expenses of $454,075 and $100,475, respectively; and depreciation and amortization of $552,862 and $138,216, respectively.
Hotel expenses for the Hilton Garden Inn for the year ended December 31, 2011 and the three months ended March 31, 2012 were as follows: room expenses of $2,003,077 and $495,924, respectively; food and beverage expense of $675,748 and $151,654, respectively; repairs and maintenance of $457,884 and $119,620, respectively; utilities of $291,923 and $66,161, respectively; sales and marketing of $697,684 and $185,480, respectively; general and administrative expenses of $718,420 and $168,420, respectively; other expenses of $1,179,069 and $377,140, respectively; and depreciation and amortization of $583,239 and $144,225, respectively.
All hotel expenses are those incurred by the property except for depreciation and amortization, which are depreciated on a straight-line basis based on the purchase price allocation using an estimated useful life not to exceed 40 years for building and building improvements and two to ten years for furniture, fixtures and equipment.
F. Transactions with the Advisor
We pay our advisor an annual asset management fee equal to 0.50% of the aggregate average market value of our investments. Asset management fees are reflected in property expenses in the accompanying pro forma condensed consolidated statements of operations. We have reflected a pro forma adjustment for the year ended December 31, 2011 related to annual fees of $73,862 associated with the Hampton Inn investment and $94,983 associated with the Hilton Garden Inn investment. Additionally, we have reflected a pro forma adjustment for asset management fees of $18,717 associated with the Hampton Inn investment and $23,746 associated with the Hilton Garden Inn investment for the three months ended March 31, 2012 in order to reflect what the fee would have been had the investments been made on January 1, 2011.
G. Provision for Income Taxes
We have reflected a pro forma adjustment for the year ended December 31, 2011 reflecting our income tax provision of $79,704 related to the Hampton Inn investment and $69,823 related to the Hilton Garden Inn investment based upon an estimated effective tax rate which takes into account the fact that certain activities are taxable and other activities are pass-through items for income tax purposes. Additionally, we have reflected a pro forma adjustment of $12,861 related to the Hampton Inn investment and $66,193 for the Hilton Garden Inn investment for the three months ended March 31, 2012 in order to reflect what the income tax provision would have been had the investments been made on January 1, 2011.
H. Weighted Average Shares
The pro forma weighted average shares outstanding for the year ended December 31, 2011 and three months ended March 31, 2012 totaled 6,010,900 shares and were determined as if all shares issued since our inception through March 31, 2012 were issued on January 1, 2011.