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EX-23.1 - EXHIBIT 23.1 - RAMCO GERSHENSON PROPERTIES TRUSTa50478940ex23_1.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, DC 20549
 
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):  September 6, 2012
 

 
RAMCO-GERSHENSON PROPERTIES TRUST
(Exact name of registrant as specified in its Charter)
 

 
Maryland
 
1-10093
 
13-6908486
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation)
 
File Number)
 
Identification No.)
 
 
31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan
 
48334
(Address of principal executive offices)
 
(Zip Code)
 
Registrant's telephone number, including area code
(248) 350-9900
 
 
 
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 2.01                      Completion of Acquisition of Disposition of Assets

On September 6, 2012, Ramco-Gershenson Properties Trust, Inc. (RGPT) through its majority-owned partnership subsidiary, Ramco-Gershenson Properties, L.P. (RGPLP) completed the acquisition of Shoppes of Lakeland (“Lakeland”), a 183,842 square foot shopping center, located in Lakeland, Florida from a joint venture in which RGPLP has a 7% equity interest.  The purchase price was $28 million, excluding transaction costs.  The purchase was funded with borrowings under RGPLP's revolving line of credit.

Financial statements required to comply with the rules and regulations of the SEC, including Rule 3-14 of Regulations S-X for the purchase and pro forma financial statements reflecting the effect of this purchase, are included herein under item 9.01.

Item 9.01                      Financial Statements and Exhibits
 
(a)
Financial Statements of Businesses Acquired.
   
 
Lakeland
   
 
Report of Independent Registered Public Accounting Firm.
   
 
Statements of Revenues and Certain Expenses for the nine months ended September 30, 2012 (unaudited) and the years ended December 31, 2011, 2010 and 2009.
   
 
Notes to Statements of Revenues and Certain Expenses.
   
   
(b)
Unaudited Pro Forma Financial Information
   
 
Ramco-Gershenson Properties Trust, Inc.
   
 
Pro Forma Condensed Consolidated Statement of Operations for the nine months ended
 
September 30, 2012 (unaudited.)
   
 
Notes and adjustments to Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2012 (unaudited.)
   
 
Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2011 (unaudited.)
   
 
Notes and adjustments to Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2011 (unaudited.)
   
(d)
Exhibits.
   
 
23.1           Consent of Independent Registered Public Accounting Firm
 
 
2

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

 
To the Board of Trustees and Shareholders of
Ramco-Gershenson Properties Trust
 
We have audited the accompanying statements of revenues and certain expenses (the “Statements”) of Shoppes of Lakeland (the “Company”) for the years ended December 31, 2011, 2010 and 2009. These Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Statements based on our audits.
 
We conducted our audits 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 Statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as it relates to the Statements as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting as it relates to the Statements.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statements. We believe that our audits provide a reasonable basis for our opinion.
 
The accompanying Statements were prepared for the purpose of complying with the rules and regulations of the United States Securities and Exchange Commission (for inclusion in this Form 8-K of Ramco-Gershenson Properties Trust) as discussed in Note 1 to the Statements and is not intended to be a complete presentation of the Company’s revenues and expenses.
 
In our opinion, the Statements present fairly, in all material respects, the revenues and certain expenses discussed in Note 1 to the Statements for the years ended December 31, 2011, 2010 and 2009, in conformity with accounting principles generally accepted in the United States of America.



/s/ GRANT THORNTON LLP
Southfield, Michigan
November 16, 2012
 
 
3

 
 
SHOPPES OF LAKELAND
 
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
 
(in thousands)
 
   
   
   
For the Nine Months Ended September 30, 2012
   
For the Year Ended
December 31, 2011
   
For the Year Ended
December 31, 2010
   
For the Year Ended
December 31, 2009
 
   
(unaudited)
                   
REVENUES:
                       
  Minimum rent
  $ 1,572     $ 1,970     $ 1,939     $ 1,925  
  Recovery Income from tenants
    385       492       479       508  
  Other property income
    2       65       10       1  
Total Revenues
    1,959       2,527       2,428       2,434  
                                 
CERTAIN EXPENSES:
                               
  Property Operating Expenses
    243       280       304       274  
  Property taxes
    89       174       186       202  
  General and administrative
    5       4       6       7  
Total Certain operating expenses
    337       458       496       483  
                                 
Revenues in excess of certain expenses
  $ 1,622     $ 2,069     $ 1,932     $ 1,951  
 
 
4

 
 
Shoppes of Lakeland
Notes to the Statements of Revenues and Certain Expenses
For the Nine Months Ended September 30, 2012 (unaudited) and the
Years Ended December 31, 2011 2010 and 2009
(dollars in thousands)

1.
Business and Basis of Presentation
 
On September 6, 2012, Ramco-Gershenson Properties Trust, Inc. (RGPT) through its majority-owned partnership subsidiary, Ramco-Gershenson Properties, L.P. (RGPLP) completed the acquisition of Shoppes of Lakeland (“Lakeland”) located in Lakeland, Florida from a joint venture in which RGPLP has a 7% equity interest.  The purchase price was $28 million, excluding transaction costs.

Lakeland is 183,842 square foot community shopping center anchored by Michaels, Staples, Ashley Furniture, Petco, and an anchor-owned Target.

The accompanying statements of revenues and certain expenses (the “Statements”) have been prepared on the accrual basis of accounting.  The Statements have been prepared for the purpose of complying with the rules and regulations of the United States Securities and Exchange Commission ("SEC"), Regulation S-X, Rule 3-14, and for inclusion in a Current Report on Form 8-K of RGPT.  The Statements are not intended to be a complete presentation of the revenues and expenses of Lakeland.  Certain expenses, primarily depreciation and amortization, interest, property management fees and other costs not directly related to the future operations of Lakeland have been excluded.

The statement of revenues and certain expenses for the nine months ended September 30, 2012 is unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the revenues and certain expenses for the interim period have been included. Revenues and certain expenses for the interim period are not necessarily indicative of the results that may be expected for the full year.

We have evaluated whether any subsequent events have occurred up through the time of issuing these statements on November 16, 2012.
 
2.
Summary of Significant Accounting Policies

Revenue Recognition

Our shopping center space is generally leased to retail tenants under leases that are classified as operating leases. We recognize minimum rents using the straight-line method over the terms of the leases commencing when the tenant takes possession of the space and when construction of landlord funded improvements is substantially complete. Certain of the leases also provide for contingent percentage rental income which is recorded on an accrual basis once the specified sales target is achieved. The leases also provide for recoveries from tenants of CAM, real estate taxes and other operating expenses. These recoveries are estimated and recognized as revenue in the period the recoverable costs are incurred or accrued.

Property Operating Expenses

Property operating expenses represent the direct expenses of operating the property and include maintenance, utilities, and repair costs that are expected to continue in the ongoing operations of Lakeland.  Expenditures for maintenance and repairs are charged to operations as incurred.
 
 
5

 
 
Use of Estimates

The preparation of the Statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts in the Statements and accompanying footnotes. Actual results could differ from those estimates.

3.
Future Minimum Rental Income

Shopping center space at Lakeland is leased to tenants and certain anchors pursuant to lease agreements.  Tenant leases typically provide for minimum rent and other charges to cover operating costs.  Future minimum rent under non-cancellable operating leases in effect at December 31, 2011 are as follows:
 
       
       
Year Ending December 31,
 
       
     2012
  $ 2,052  
     2013
    2,022  
     2014
    1,397  
     2015
    644  
     2016
    426  
     Thereafter
    1,086  
             Total
  $ 7,627  
         
 
 
6

 
 
RAMCO-GERSHENSON PROPERTIES TRUST
PRO FORMA FINANCIAL INFORMATION INTRODUCTION
(Unaudited)

The unaudited condensed consolidated balance sheet as of September 30, 2012 presented in the Registrant’s Form 10-Q for the nine months ended September 30, 2012 includes the September 6, 2012 acquisition of Lakeland.

The accompanying unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2012 and the year ended December 31, 2011 are presented as if the acquisition of Lakeland occurred on January 1, 2011.

These unaudited pro forma condensed consolidated statements should be read in connection with the historical consolidated financial statements and notes thereto filed with the U.S Securities and Exchange Commission.  In management’s opinion, all adjustments necessary to reflect the significant effects of these transactions have been made. These statements are based on assumptions and estimates considered appropriate by our management; however, they are unaudited and are not necessarily, and should not be assumed to be, an indication of our financial position or results of operations that would have been achieved had the acquisitions been completed as of the dates indicated or that may be achieved in the future.
 
 
7

 
 
RAMCO-GERSHENSON PROPERTIES TRUST
 
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
 
(In thousands, except per share amounts)
 
(Unaudited)
 
                           
   
Historical (1)
   
Statement of
Revenues and
Certain
Expenses -
Lakeland (2)
   
Pro Forma
Adjustments
   
Pro Forma
 
REVENUE
                         
Minimum rent
  $ 66,340     $ 1,572     $ (103 ) (3)(4)   $ 67,809  
Percentage rent
    378       -       -         378  
Recovery income from tenants
    23,270       385       (38 ) (4)     23,617  
Other property income
    1,672       2       -         1,674  
Management and other fee income
    2,935       -       (159 ) (4)     2,776  
TOTAL REVENUE
    94,595       1,959       (300 )       96,254  
                                   
EXPENSES
                                 
Real estate taxes
    12,847       89       (13 ) (4)     12,923  
Recoverable operating expense
    11,275       243       (19 ) (4)     11,499  
Other non-recoverable operating expense
    1,956       -                 1,956  
Depreciation and amortization
    28,990       -       679   (5)     29,669  
General and administrative expense
    14,746       5       -         14,751  
TOTAL EXPENSES
    69,814       337       647         70,798  
                                   
INCOME BEFORE OTHER INCOME AND EXPENSES AND TAX
    24,781       1,622       (947 )       25,456  
                                   
OTHER INCOME AND EXPENSES
                                 
Other income, net
    171       -       -         171  
Gain on sale of real estate
    69       -       -         69  
Earnings from unconsolidated joint ventures
    2,084       -       (27 ) (4)     2,057  
Interest expense
    (19,509 )     -       (399 ) (6)     (19,908 )
Amortization of deferred financing fees
    (1,108 )     -       -         (1,108 )
Provision for impairment on equity investments in unconsolidated joint ventures
    (294 )     -       -         (294 )
Deferred gain recognized
    845       -       -         845  
INCOME FROM CONTINUING OPERATIONS BEFORE TAX
    7,039       1,622       (1,373 )       7,288  
Income tax benefit
    18       -       -         18  
INCOME FROM CONTINUING OPERATIONS
    7,057       1,622       (1,373 )       7,306  
                                   
NET INCOME
    7,057       1,622       (1,373 )       7,306  
Net loss (income) attributable to noncontrolling partner interest
    86       -       (12 )       74  
NET INCOME ATTRIBUTABLE TO RPT
    7,143       1,622       (1,385 )       7,380  
Preferred share dividends
    (5,438 )     -       -         (5,438 )
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
  $ 1,705     $ 1,622     $ (1,385 )     $ 1,942  
                                   
EARINGS PER COMMON SHARE (7)
                                 
Continuing operations - basic
  $ 0.04                       $ 0.05  
Continuing operations - diluted
  $ 0.04                       $ 0.05  
                                   
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
                                 
Basic
    42,834                         42,834  
Diluted
    43,115                         43,115  
 
 
8

 
 
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES AND ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
(Unaudited)

(1)
Represents the consolidated continuing operations of the Registrant for the nine months ended September 30, 2012.  Revenues and expenses related to discontinued operations are not included.  See the historical consolidated financial statements and notes thereto presented in the Registrant’s Form 10-Q for the nine months ended September 30, 2012.
 
(2)
Represents the revenues and certain expenses of Lakeland for the nine months ended September 30, 2012 as presented in the statement of revenues and certain expenses included in this Form 8-K.
 
(3)
Represents the net adjustments to record tenant rents on a straight-line basis from the acquisition date over the remaining term of the in-place leases.
 
(4)
Represents adjustments to the historical statement for Shoppes of Lakeland activity from the date of acquisition through September 30, 2012 captured in the Statement of Revenues and Certain Expenses for the nine months ended September 30, 2012.
 
(5)
Represents the estimated depreciation and amortization of the acquired assets on a straight-line basis.  Tenant improvements and the value of in-place leases are depreciated over the remaining lives of the related leases.  Buildings are depreciated over the estimated remaining useful lives which are 40 years.  In addition we have site improvements that are depreciated over 10-30 years.
 
(6)
Represents the estimated interest expense on the increase in the balance of the revolving line of credit utilized to fund the acquisitions.  The assumed interest rate for the period is 1.9% which is the interest rate as of September 30, 2012.
 
(7)
Earnings per share is calculated in accordance with Accounting Standards Codification 260 – “Earnings per Share,” which requires the allocation of non-controlling interest between continuing and discontinued operations.  The historical earnings per share amounts are the amounts reported in the Registrant’s Form 10-Q for the nine months ended September 30, 2012.
 
 
9

 
 
RAMCO-GERSHENSON PROPERTIES TRUST
 
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
FOR THE YEAR ENDED DECEMBER 31, 2011
 
(In thousands, except per share amounts)
 
(Unaudited)
 
                           
   
Historical (1)
   
Statement of
Revenues and
Certain
Expenses -
Lakeland (2)
   
Pro Forma
Adjustments
   
Pro Forma
 
REVENUE
                         
Minimum rent
  $ 81,958     $ 1,970     $ 235   (3)   $ 84,163  
Percentage rent
    256       -       -         256  
Recovery income from tenants
    30,813       492       -         31,305  
Other property income
    4,167       65       -         4,232  
Management and other fee income
    4,126       -       (158 ) (4)     3,968  
TOTAL REVENUE
    121,320       2,527       77         123,924  
                                   
EXPENSES
                                 
Real estate taxes
    17,253       174       -         17,427  
Recoverable operating expense
    15,438       280       -         15,718  
Other non-recoverable operating expense
    3,704       -       -         3,704  
Depreciation and amortization
    36,255       -       905   (5)     37,160  
General and administrative expense
    19,650       4       -         19,654  
TOTAL EXPENSES
    92,300       458       905         93,663  
                                   
INCOME BEFORE OTHER INCOME AND EXPENSES AND TAX
    29,020       2,069       (828 )       30,261  
                                   
OTHER INCOME AND EXPENSES
                                 
Other expense, net
    (257 )     -       -         (257 )
Gain on sale of real estate
    2,441       -       -         2,441  
Earnings from unconsolidated joint ventures
    1,669       -       (12 ) (4)     1,657  
Interest expense
    (28,138 )     -       (784 ) (6)     (28,922 )
Amortization of deferred financing fees
    (1,869 )     -       -         (1,869 )
Provision for impairment
    (27,800 )     -       -         (27,800 )
Provision for impairment on equity investments in unconsolidated joint ventures
    (9,611 )     -       -         (9,611 )
Loss on early extinguishment of debt
    (1,968 )     -       -         (1,968 )
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAX
    (36,513 )     2,069       (1,624 )       (36,068 )
Income tax provision
    (795 )     -       -         (795 )
(LOSS) INCOME FROM CONTINUING OPERATIONS
    (37,308 )     2,069       (1,624 )       (36,863 )
                                   
NET (LOSS) INCOME
    (37,308 )     2,069       (1,624 )       (36,863 )
Net loss (income) attributable to noncontrolling partner interest
    1,928       -       (28 )       1,900  
NET INCOME (LOSS) ATTRIBUTABLE TO RPT
    (35,380 )     2,069       (1,652 )       (34,963 )
Preferred share dividends
    (5,244 )     -       -         (5,244 )
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS
  $ (40,624 )   $ 2,069     $ (1,652 )     $ (40,207 )
                                   
LOSS PER COMMON SHARE (7)
                                 
Continuing operations - basic
  $ (1.05 )                     $ (1.05 )
Continuing operations - diluted
  $ (1.05 )                     $ (1.05 )
                                   
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
                                 
Basic
    38,466                         38,466  
Diluted
    38,466                         38,466  
                                   
See accompanying notes.
                                 
 
 
10

 
 
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES AND ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATED
 STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2011
(Unaudited)

(1)
Represents the condensed consolidated continuing operations of the Registrant for the year ended December 31, 2011.  Revenues and expenses related to discontinued operations are not included.  See the historical consolidated financial statements and notes thereto presented in the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011.
   
(2)
Represents the revenues and certain expenses of Lakeland for the year ended December 31, 2011 as presented in the statement of revenues and certain expenses included in this Form 8-K.
   
(3)
Represents the net adjustments to record tenant rents on a straight-line basis from the acquisition date over the remaining term of the in-place leases.
   
(4)
Represents adjustment for the year to date management fees related to Lakeland recorded in the historical statement.
   
(5)
Represents the estimated depreciation and amortization of the acquired assets on a straight-line basis.  Tenant improvements and the value of in-place leases are depreciated over the remaining lives of the related leases.  Buildings are depreciated over the estimated remaining useful lives which are 40 years.  In addition we have site improvements that are depreciated over 10-30 years.
   
(6)
Represents the estimated interest expense on the increase in the balance of the revolving line of credit utilized to fund the acquisitions.  The assumed interest rate for the period is 2.8% which is the interest rate as of December 31, 2011.
   
(7)
Earnings per share is calculated in accordance with Accounting Standards Codification 260 – “Earnings per Share,” which requires the allocation of non-controlling interest between continuing and discontinued operations.  The historical earnings per share amounts are the amounts reported in the Registrant’s Form 10-K for the year ended December 31, 2011.
 
 
11

 
 
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.
 
 
RAMCO-GERSHENSON PROPERTIES TRUST
 
       
Date:  November 16, 2012
By:
/s/GREGORY R. ANDREWS  
 
Gregory R. Andrews
 
  Chief Financial Officer and Secretary  
 
 
12

 
 
EXHIBIT INDEX

Exhibit
Description
   
23.1
Consent of Independent Registered Public Accounting Firm
 
 
13