Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - NorthStar Asset Management Group Inc. | nsam-8xkaahi152015.htm |
| EX-99.2 - EXHIBIT 99.2 - NorthStar Asset Management Group Inc. | exhibit992ah123112fs1.htm |
| EX-99.3 - EXHIBIT 99.3 - NorthStar Asset Management Group Inc. | exhibit993ah123111fs1.htm |
| EX-99.5 - EXHIBIT 99.5 - NorthStar Asset Management Group Inc. | exhibit995ahiproforma.htm |
| EX-99.1 - EXHIBIT 99.1 - NorthStar Asset Management Group Inc. | exhibit991ahi123113fs1.htm |
| EX-23.1 - EXHIBIT 23.1 - NorthStar Asset Management Group Inc. | ex231bvwconsent1.htm |
Exhibit 99.4
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
Unaudited Financial Statements
For the Nine Months Ended September 30, 2014 and 2013
TABLE OF CONTENTS
UNAUDITED FINANCIAL STATEMENTS
For the Nine Months ended September 30, 2014 and 2013
Unaudited Consolidated Balance Sheets | 2 - 3 | |
Unaudited Consolidated Statements of Income | 4 | |
Unaudited Consolidated Statements of Changes in Equity | 5 | |
Unaudited Consolidated Statements of Cash Flows | 6 | |
Notes to the Unaudited Financial Statements | 7 - 12 | |
AMERICAN HEALTHCARE INVESTORS LLC
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS | September 30, 2014 | December 31, 2013 | ||||||
(Unaudited) | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 2,336,675 | $ | 11,538,617 | ||||
Accounts receivable | 2,409,164 | 2,997,587 | ||||||
Prepaid expenses and deposits | 274,706 | 35,353 | ||||||
Investment in marketable securities | 1,751,698 | 1,557,045 | ||||||
TOTAL CURRENT ASSETS | 6,772,243 | 16,128,602 | ||||||
PROPERTY AND EQUIPMENT, net | 112,957 | 167,648 | ||||||
LONG TERM ASSETS | ||||||||
Investment in real estate | 2,000,000 | 2,000,000 | ||||||
Prepaid expenses - long term | 432,499 | 517,852 | ||||||
Security deposit | 60,340 | 56,682 | ||||||
TOTAL LONG TERM ASSETS | 2,492,839 | 2,574,534 | ||||||
TOTAL ASSETS | $ | 9,378,039 | $ | 18,870,784 | ||||
Page 2
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND MEMBERS’ EQUITY | September 30, 2014 | December 31, 2013 | ||||||
(Unaudited) | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 529,459 | $ | 206,490 | ||||
Income taxes payable | - | 178,000 | ||||||
Accrued wages and bonuses | 2,553,942 | 1,361,322 | ||||||
Accrued expenses | - | 20,000 | ||||||
TOTAL CURRENT LIABILITIES | 3,083,401 | 1,765,812 | ||||||
TOTAL LIABILITIES | 3,083,401 | 1,765,812 | ||||||
MEMBERS' EQUITY | ||||||||
Controlling interest in equity | 5,512,032 | 16,243,853 | ||||||
Non-controlling interest in equity | 782,606 | 861,119 | ||||||
TOTAL MEMBERS' EQUITY | 6,294,638 | 17,104,972 | ||||||
TOTAL LIABILITIES & MEMBERS' EQUITY | $ | 9,378,039 | $ | 18,870,784 | ||||
Page 3
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC
AND SUBSIDIARIES
CONSOLIDATED UNAUDITED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
REVENUE | $ | 24,497,878 | $ | 35,479,686 | ||||
EXPENSES | 9,238,827 | 7,553,846 | ||||||
OPERATING INCOME | 15,259,051 | 27,925,840 | ||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 15,259,051 | 27,925,840 | ||||||
PROVISION FOR INCOME TAXES | (180,000 | ) | (145,000 | ) | ||||
INCOME INCLUDING NON-CONTROLLING INTEREST | 15,079,051 | 27,780,840 | ||||||
NON-CONTROLLING INTEREST IN EARNINGS | (5,860,872 | ) | (8,041,200 | ) | ||||
NET INCOME | $ | 9,218,179 | $ | 19,739,640 | ||||
Page 4
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
Controlling Interest | Non-Controlling Interest | Total Members' Equity | ||||||||||
December 31, 2012 | $ | 5,146,731 | $ | 804,057 | $ | 5,950,788 | ||||||
Capital Contributed During the Year | — | — | — | |||||||||
Net Income | 31,298,937 | — | 31,298,937 | |||||||||
Income of Non-controlling Interest | — | 13,205,593 | 13,205,593 | |||||||||
Distributions | (20,201,815 | ) | (13,148,531 | ) | (33,350,346 | ) | ||||||
December 31, 2013 | 16,243,853 | 861,119 | 17,104,972 | |||||||||
Capital Contributed During the Year | — | — | — | |||||||||
Net Income | 9,218,179 | — | 9,218,179 | |||||||||
Income of Non-controlling Interest | — | 5,860,872 | 5,860,872 | |||||||||
Distributions | (19,950,000 | ) | (5,939,385 | ) | (25,889,385 | ) | ||||||
September 30, 2014 (unaudited) | $ | 5,512,032 | $ | 782,606 | $ | 6,294,638 | ||||||
Page 5
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income including non-controlling interest | $ | 15,079,051 | $ | 27,780,840 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation | 54,691 | 41,018 | ||||||
Marketable securities received as fees | (194,653 | ) | (1,484,626 | ) | ||||
Changes in assets and liabilities | ||||||||
Decrease in accounts receivable | 588,423 | (249,144 | ) | |||||
Increase in other current assets | (4,000 | ) | — | |||||
Decrease in prepaid expenses and deposits | — | 265,330 | ||||||
Increase in security deposit | (3,658 | ) | (4,181 | ) | ||||
Increase in accounts payable and accrued expenses | 302,969 | 246,414 | ||||||
Decrease in income taxes payable | (178,000 | ) | (200,000 | ) | ||||
Increase in accrued wages | 1,192,620 | 502,331 | ||||||
Net cash provided by operating activities | 16,837,443 | 26,897,982 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Real estate deposit | (150,000 | ) | — | |||||
Purchase of investment in real estate | — | (395,000 | ) | |||||
Purchase of fixed assets | — | (134,426 | ) | |||||
Net cash used by financing activities | (150,000 | ) | (529,426 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Member distributions - controlling interest | (19,950,000 | ) | (15,750,000 | ) | ||||
Member distributions - non-controlling interest | (5,939,385 | ) | (8,518,469 | ) | ||||
Net cash used by financing activities | (25,889,385 | ) | (24,268,469 | ) | ||||
Net decrease in cash | (9,201,942 | ) | 2,100,087 | |||||
CASH, BEGINNING OF YEAR | 11,538,617 | 4,121,224 | ||||||
CASH, END OF YEAR | $ | 2,336,675 | $ | 6,221,311 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
Cash paid during the year for taxes | $ | 357,371 | $ | 350,605 | ||||
Page 6
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
American Healthcare Investors LLC
American Healthcare Investors LLC (“AHI”) is a Delaware LLC that was founded in 2011 by Jeffrey Hanson, Danny Prosky & Mathieu Streiff. The company focuses on providing real estate services to its clients including but not limited to acquiring, managing, and accounting for clinical healthcare real estate.
AHI Management Services Inc.
AHI Management Services Inc., a Delaware corporation is a 100% owned subsidiary of American Healthcare Investors. AHI Management Services was formed to handle property management and leasing services for programs managed by AHI. AHI Management Services collects property management fees, leasing commissions and construction management fees on an ongoing basis and remits the funds to AHI. There is a service agreement between the two companies where AHI provides all of the services of the subsidiary and in return, earns all of the fees paid out to AHI Management Services.
Griffin-American Healthcare REIT II Sub-Advisor
Griffin-American Healthcare REIT II Sub-Advisor is a joint venture between American Healthcare Investors, LLC (75%) and Griffin-American Healthcare REIT Advisor, LLC (25%). The sub-advisor was formed specifically to handle advisory services for Griffin-American Healthcare REIT II. All fees, with the exception of fees paid directly to AHI Management Services, are paid to the sub-advisor and distributions to the two partners are paid out per a joint venture agreement.
Griffin-American Healthcare REIT III Advisor, LLC
Griffin-American Healthcare REIT III Advisor is a joint venture between American Healthcare Investors, LLC (75%) and Griffin-Capital REIT Holdings LLC (25%). The advisor was formed specifically to handle advisory services for Griffin-American Healthcare REIT III. All fees, with the exception of fees paid directly to AHI Management Services, are paid to the advisor and distributions to the two partners are paid out per a joint venture agreement.
Principles of consolidation
The consolidated financial statements include the accounts of AHI, AHI Management Services, Inc., Griffin- American Healthcare REIT Sub-Advisor and Griffin-American Healthcare REIT III Advisor, LLC. All material intercompany transactions have been eliminated.
Cash
For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months of less.
Page 7
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)
Accounts receivable and allowance for doubtful Accounts
Trade accounts receivable are stated at the amount management expects to collect from customers. Management provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance based on its assessment of the current status of individual accounts. As of September 30, 2014 and December 31, 2013, all accounts receivable were considered collectible.
Property and equipment
Property and equipment is stated at cost. Depreciation of property and equipment is provided on the straight line basis over the estimated useful lives of the related assets, generally three to five years.
Income Taxes
The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under these provisions, the Company does not pay federal corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal income taxes on their respective shares of the Company’s taxable income. The State of California requires an S-Corporation to pay income taxes at the rate of 1.5% of state taxable income or $800 whichever is greater. Therefore, a provision for state income taxes will be provided in the financial statements as required.
The Company accounts for income taxes under provisions of Financial Accounting Standards Board ASC
740, whereby deferred taxes are provided on temporary differences arising from assets and liabilities whose bases are different for financial reporting and income tax purposes. As of September 30, 2014 and December 31, 2013, the Company has no material timing differences. The Company has prepared an analysis of all open tax positions, a determination as to their certainty and measurement or any uncertain tax positions taken or expected to be taken. As of September 30, 2014 and December 31, 2013, the Company does not have any uncertain tax positions that would result in a change to income taxes recognized in the Company’s financial statements.
Revenue Recognition
The Company earns its revenue from providing property management and leasing services on a monthly basis and handling advisory services for Griffin-American Healthcare REIT II.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Comprehensive Income
For the nine months ended September 30, 2014 and 2013, there was no difference between net income and comprehensive income.
Page 8
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)
Advertising Costs
Advertising costs are charged to operations when incurred. Advertising expense for the nine months ended September 30, 2014 and 2013 was $1,614 and $1,570, respectively.
NOTE 2. ACCOUNTS RECEIVABLE
September 30, 2014 | December 31, 2013 | |||||||
Trade | $ | 2,409,164 | $ | 2,981,457 | ||||
Allowance for doubtful accounts | — | — | ||||||
$ | 2,409,164 | $ | 2,981,457 | |||||
Accounts receivable are carried at original invoice amount and are written off when deemed uncollectible. Based on management’s evaluation of uncollected accounts receivable at the end of each year, an allowance for doubtful accounts was deemed unnecessary as of September 30, 2014. There was no bad debt expense in 2014.
NOTE 3. MACHINERY AND EQUIPMENT
Equipment consists of the following:
September 30, 2014 | December 31, 2013 | |||||||
Computer equipment | $ | 33,119 | $ | 33,119 | ||||
Furniture and Fixtures | 119,195 | 119,195 | ||||||
Leasehold Improvements | 27,156 | 27,156 | ||||||
Office equipment | 29,225 | 29,225 | ||||||
Software | 19,096 | 19,096 | ||||||
Vehicles | 39,925 | 39,925 | ||||||
267,716 | 267,716 | |||||||
Less accumulated depreciation | (154,759 | ) | (100,068 | ) | ||||
$ | 112,957 | $ | 167,648 | |||||
Depreciation expense was $54,691 and $41,018 for the nine months ended September 30, 2014 and 2013, respectively.
NOTE 4. INVESTMENT IN MARKETABLE SECURITIES AND REAL ESTATE
Generally accepted accounting principles establish a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy under generally accepted accounting principles are described below:
Page 9
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)
Level 1 - Quoted market prices in active markets for identical assets or liabilities
Level 2 – Observable market based inputs or unobservable inputs corroborated by market data
Level 3 – Unobservable inputs reflecting the reporting entity’s own assumptions
The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques followed need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used as of September 30, 2014 and December 31, 2013.
Equity Securities - The Company received a portion of its fees in the form of stock of Griffin-American Healthcare REIT II. The shares were received at the most recent offering price of $10.22 per share less 10% for a net cost of $9.198. As of September 30, 2014 the Company held 160,119 shares in Griffin American Healthcare REIT II shares which it values at its cost basis of $1,472,777. The REIT shares were being offered through October 2013 at $10.22 per share; therefore, the Company has valued these shares using Level 1 inputs.
In addition, the Company receives a portion of its fees in the form of stock of Griffin-American Healthcare REIT III. The shares are received at the most recent offering price of $10.00 per share less 10% for a net cost of $9.00. As of September 30, 2014 the Company held 8,547 shares in Griffin-American Healthcare REIT III shares which it values at its cost basis of $76,922.
Lastly, as of September 30, 2014, the Company held 22,222 shares in Griffin-American Healthcare REIT III and 222 units of its operating partnership, both of which it values at their cost basis of $202,000, which is equivalent to the offering price of $10.00 per share less 10% for a net cost of $9.00. The REIT shares are being offered at $10.00 per share; therefore, the Company has valued these shares using Level 1 inputs.
Investment Property - The Company purchased an investment property located in Mammoth, CA in August
2013. The Company obtained the property for $2,000,000. The seller is currently offering similar properties at prices which exceed the Company’s cost basis; therefore the Company has valued this investment using Level 2 inputs.
Page 10
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)
NOTE 5. INCOME TAXES
The Company’s income tax expense consists of the following:
Nine Months September 30, | ||||||||
2014 | 2013 | |||||||
(unaudited) | (unaudited) | |||||||
Provision for California Franchise Tax | $ | 167,410 | $ | 132,410 | ||||
Provision for California LLC tax | 12,590 | 12,590 | ||||||
$ | 180,000 | $ | 145,000 | |||||
The Company’s has no material timing differences that would result in deferred tax assets or liabilities.
NOTE 6. COMMITMENTS AND CONTINGENCIES—FACILITIES LEASE
The building in which the Company operates is being leased for a sixty month period starting August 1,
2013. The lease calls for monthly payments of $40,835 in the first year and escalates per the lease agreement for the subsequent years until the lease expires. Total rent payments for the nine months ended September 30, 2014 and 2013 were $368,373 and $81,670 respectively.
The following is a schedule of future minimum lease payments required under the lease as of September 30, 2014:
October 1, 2014 - December 31, 2014 | $ | 126,167 | ||
2015 | 510,957 | |||
2016 | 526,233 | |||
2017 | 542,046 | |||
2018 | 321,706 | |||
$ | 2,027,109 | |||
NOTE 7. PHANTOM STOCK PLAN
The Company has adopted a Phantom Stock Plan. The Plan grants shares of Griffin-American Healthcare REIT II to certain employees. The shares vest two years from the grant date or a listing/sale of the REIT. The Company granted 24,462 shares in January 2013, 28,500 shares in September 2013 and 28,000 in January 2014. These shares are valued at $9.198 per share which is the price the Company received these shares at. The granting of these shares resulted in an expense of $271,790 and $84,240 for the nine months ended September 30, 2014 and 2013, respectively.
Page 11
See accompanying notes.
AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)
NOTE 8. SUBSEQUENT EVENTS
The Company has evaluated subsequent events for purposes of recognition or disclosure in the financial statements through November 3, 2014, which is the date the financial statements were available to be issued. No significant subsequent events have been identified that would require adjustment of or disclosure in the accompanying financial statements.
Page 12
See accompanying notes.