Attached files
| file | filename |
|---|---|
| EX-99.1 - Owens Realty Mortgage, Inc. | exhibit99-1.htm |
| 8-K - Owens Realty Mortgage, Inc. | orm8k091416.htm |
Exhibit 99.2
Unaudited Pro Forma Condensed Consolidated Financial Statements
On March 16, 2016, Owens Realty Mortgage, Inc. (the "Company") entered into a Purchase Agreement and Deposit Receipt (the "Purchase Agreement"), as amended on June 7, 2016 (the "Amendment"), to sell the property (the "TOTB Property") commonly known as the "Treasures on the Bay" for $75.5 million to Interwest Capital Corporation. The TOTB Property includes the 169 condominium units and 160 apartment units and related land and assets which were held by TOTB Miami, LLC ("TOTB Miami") and TOTB North, LLC ("TOTB North" and together with TOTB Miami "TOTB"). The Company owns an 80.74% interest in TOTB, and the Company's manager, Owens Financial Group, Inc., is the owner of the other 19.26% interest in TOTB.
The Company closed on the sale of the TOTB Property on September 14, 2016.
The foregoing description of the amended Purchase Agreement is not complete and is subject to and qualified in its entirety by reference to the full text of the Purchase Agreement, which was attached as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on March 22, 2016 and the Amendment, which was attached as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on June 8, 2016.
The Company intends to use the majority of its net proceeds from the sale of the TOTB Property to invest in new mortgage loans and/or to reduce Company debt. The accompanying Pro Forma Condensed Consolidated Financial Statements, in accordance with SEC rules and regulations, do not reflect any use of such proceeds.
The accompanying Pro Forma Condensed Consolidated Balance Sheet of the Company is presented as if the TOTB Property (and all related assets and liabilities) had been sold on June 30, 2016. The accompanying unaudited Pro Forma Condensed Consolidated Statements of Income for the six month-period ended June 30, 2016 and for the year ended December 31, 2015 of the Company are presented as if the TOTB Property had been sold on January 1, 2015. The unaudited Pro Forma Condensed Consolidated Balance Sheet is segregated into separate components as follows:
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·
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the historical Consolidated Balance Sheet of the Company;
|
|
·
|
the pro forma details of the sale, including the net cash received and retained earnings from the estimated gain on sale and the elimination of the historical combined financial position of the TOTB Property (and related assets and liabilities), certain mortgage debt that was required to be paid off at the closing of the sale and the related non-controlling interest; and
|
|
·
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the Pro Forma Condensed Consolidated Balance Sheet of the Company.
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The unaudited Pro Forma Condensed Consolidated Statements of Income are segregated into separate components as follows:
|
·
|
the historical Consolidated Statements of Income of the Company;
|
|
·
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the elimination of the historical revenues and expenses of the TOTB Property, including elimination of depreciation on the property and interest expense on the mortgage debt that was required to be paid off at the closing of the sale, as well as the elimination of the related net income attributable to non-controlling interest; and
|
|
·
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the Pro Forma Condensed Consolidated Statements of Income of the Company.
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These Unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with:
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·
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The Company's historical consolidated financial statements and notes thereto as of and for the six-month period ended June 30, 2016, included in the Company's Form 10-Q filed with the SEC on August 8, 2016; and
|
|
·
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The Company's historical consolidated financial statements and notes thereto as of and for the year ended December 31, 2015, included in the Company's Form 10-K filed with the SEC on March 14, 2016.
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In management's opinion, all adjustments necessary to reflect the disposition of the TOTB Property have been made. The following unaudited Pro Forma Condensed Consolidated Balance Sheet does not purport to represent the future financial position of the Company. The unaudited Pro Forma Condensed Consolidated Statements of Income are not necessarily indicative of what the actual results of operations would have been for the six-month period ended June 30, 2016 or for the year ended December 31, 2015 assuming the above transaction had been consummated on January 1, 2015, nor do they purport to represent the future events of operations of the Company.
Owens Realty Mortgage, Inc.
Pro Forma Condensed Consolidated Balance Sheet
June 30, 2016
(Unaudited)
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Assets
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(A)
As
Reported
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(B)
TOTB
Disposition
|
Pro Forma
|
|||||||
|
Cash and cash equivalents
|
$
|
747,494
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$
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33,045,873
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B1
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$
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33,793,367
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|||
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Restricted cash
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8,954,472
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(454,472
|
)
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8,500,000
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||||||
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Loans, net
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117,799,946
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—
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117,799,946
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|||||||
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Interest and other receivables
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2,186,080
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(19,113
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)
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2,166,967
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||||||
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Other assets, net
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893,316
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(65,311
|
)
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828,005
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||||||
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Deferred financing costs, net
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276,250
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—
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276,250
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|||||||
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Deferred tax assets, net
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7,368,835
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7,368,835
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||||||||
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Investment in limited liability company
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2,141,342
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—
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2,141,342
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|||||||
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Real estate held for sale
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119,713,119
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(54,526,938
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)
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65,186,181
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||||||
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Real estate held for investment, net
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43,136,122
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—
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43,136,122
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|||||||
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Total assets
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$
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303,216,976
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$
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(22,019,961
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)
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$
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281,197,015
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|||
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Liabilities and Equity
|
||||||||||
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Liabilities:
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||||||||||
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Dividends payable
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$
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819,798
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$
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—
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$
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819,798
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||||
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Due to Manager
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334,554
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—
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334,554
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|||||||
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Accounts payable and accrued liabilities
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6,170,485
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(865,091
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)
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5,305,394
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||||||
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Deferred gains
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209,662
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—
|
209,662
|
|||||||
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Lines of credit payable
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38,747,415
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—
|
38,747,415
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|||||||
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Notes and loans payable on real estate
|
49,453,984
|
(32,392,264
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)
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17,061,720
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||||||
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Total liabilities
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95,735,898
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(33,257,355
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)
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62,478,543
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||||||
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Equity:
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||||||||||
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Stockholders' equity:
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||||||||||
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Common stock
|
111,981
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—
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111,981
|
|||||||
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Additional paid-in capital
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182,437,522
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—
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182,437,522
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|||||||
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Treasury stock
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(12,852,058
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)
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—
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(12,852,058
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)
|
|||||
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Retained earnings
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33,495,951
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15,525,076
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B2
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49,021,027
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||||||
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Total stockholders' equity
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203,193,396
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15,525,076
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218,718,472
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|||||||
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Noncontrolling interests
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4,287,682
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(4,287,682
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)
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—
|
||||||
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Total equity
|
207,481,078
|
11,237,394
|
218,718,472
|
|||||||
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Total liabilities and equity
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$
|
303,216,976
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$
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(22,019,961
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)
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$
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281,197,015
|
|||
See accompanying notes
Owens Realty Mortgage, Inc.
Pro Forma Condensed Consolidated Statement of Income
Six Months Ended June 30, 2016
(Unaudited)
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(C)
As
Reported
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(D)
TOTB Disposition
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Pro Forma
|
|||||||
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Revenues:
|
|||||||||
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Interest income on loans
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$
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4,239,020
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$
|
—
|
$ |
4,239,020
|
|||
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Rental and other income from real estate properties
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4,591,401
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(1,795,846
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)
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2,795,555
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|||||
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Income from investment in limited liability company
|
87,310
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—
|
87,310
|
||||||
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Total revenues
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8,917,731
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(1,795,846
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)
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7,121,885
|
|||||
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Expenses:
|
|||||||||
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Management fees to Manager
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1,590,664
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—
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1,590,664
|
||||||
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Servicing fees to Manager
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144,606
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—
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144,606
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||||||
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General and administrative expense
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903,345
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—
|
903,345
|
||||||
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Rental and other expenses on real estate properties
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3,839,307
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(1,316,240
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)
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2,523,067
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|||||
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Depreciation and amortization
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652,920
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—
|
652,920
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||||||
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Interest expense
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1,688,755
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(704,707
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)
|
984,048
|
|||||
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Provision for loan losses
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385,995
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—
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385,995
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||||||
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Impairment losses on real estate properties
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2,110,150
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—
|
2,110,150
|
||||||
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Total expenses
|
11,315,742
|
(2,020,947
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)
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9,294,795
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|||||
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Operating loss
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(2,398,011
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)
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225,101
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(2,172,910
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)
|
||||
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Gain on sales of real estate, net
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4,838,815
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—
|
4,838,815
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||||||
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Net income before income tax benefit
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2,440,804
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225,101
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2,665,905
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||||||
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Income tax benefit
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7,368,835
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—
|
7,368,835
|
||||||
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Net income
|
9,809,639
|
225,101
|
10,034,740
|
||||||
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Less: Net income (loss) attributable to noncontrolling interests
|
43,355
|
(43,355
|
)
|
—
|
|||||
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Net income attributable to common stockholders
|
$
|
9,852,994
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$
|
181,746
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$
|
10,034,740
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|||
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Per common share data:
|
|||||||||
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Basic and diluted earnings per common share
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$
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0.96
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$
|
0.98
|
|||||
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Basic and diluted weighted average number of common shares outstanding
|
10,247,477
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10,247,477
|
|||||||
See accompanying notes
Owens Realty Mortgage, Inc.
Pro Forma Condensed Consolidated Statement of Income
Year Ended December 31, 2015
(Unaudited)
|
(C)
As
Reported
|
(D)
TOTB Disposition
|
Pro Forma
|
|||||||
|
Revenues:
|
|||||||||
|
Interest income on loans
|
$
|
8,277,004
|
$
|
—
|
$ |
8,277,004
|
|||
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Rental and other income from real estate properties
|
12,791,096
|
(3,608,594
|
)
|
9,182,502
|
|||||
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Income from investment in limited liability company
|
175,451
|
—
|
175,451
|
||||||
|
Total revenues
|
21,243,551
|
(3,608,594
|
)
|
17,634,957
|
|||||
|
Expenses:
|
|||||||||
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Management fees to Manager
|
2,051,134
|
—
|
2,051,134
|
||||||
|
Servicing fees to Manager
|
186,467
|
—
|
186,467
|
||||||
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General and administrative expense
|
1,278,994
|
—
|
1,278,994
|
||||||
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Rental and other expenses on real estate properties
|
8,510,110
|
(2,084,623
|
)
|
6,425,487
|
|||||
|
Depreciation and amortization
|
2,052,181
|
(448,604
|
)
|
1,603,577
|
|||||
|
Interest expense
|
1,938,113
|
(689,784
|
)
|
1,248,329
|
|||||
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Bad debt expense from uncollectible rent
|
152,805
|
—
|
152,805
|
||||||
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Recovery of loan losses
|
(1,026,909
|
)
|
—
|
(1,026,909
|
)
|
||||
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Impairment losses on real estate properties
|
1,589,434
|
—
|
1,589,434
|
||||||
|
Total expenses
|
16,732,329
|
(3,223,011
|
)
|
13,509,318
|
|||||
|
Operating income
|
4,511,222
|
(385,583
|
)
|
4,125,639
|
|||||
|
Gain on sales of real estate, net
|
21,818,553
|
—
|
21,818,553
|
||||||
|
Net income before income tax expense
|
26,329,775
|
(385,583
|
)
|
25,944,192
|
|||||
|
Income tax expense
|
93,335
|
—
|
93,335
|
||||||
|
Net income
|
26,236,440
|
(385,583
|
)
|
25,850,857
|
|||||
|
Less: Net income attributable to noncontrolling interests
|
(2,667,324
|
)
|
74,263
|
(2,593,061
|
)
|
||||
|
Net income attributable to common stockholders
|
$
|
23,569,116
|
$
|
(311,320
|
)
|
$
|
23,257,796
|
||
|
Per common share data:
|
|||||||||
|
Basic and diluted earnings per common share
|
$
|
2.22
|
$
|
2.20
|
|||||
|
Basic and diluted weighted average number of common shares outstanding
|
10,594,807
|
10,594,807
|
|||||||
See accompanying notes
Owens Realty Mortgage, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
| (A) | Reflects the consolidated balance sheet of the Company as contained in its historical consolidated financial statements included in the Form 10-Q as of and for the six months ended June 30, 2016 previously filed with the SEC. |
| (B) | Represents the elimination of the assets and related liabilities of the properties sold. These adjustments also include net cash received at closing after repayment of debt owed on the properties. |
| (B1) | Represents the net proceeds received by the Company upon the sale of the TOTB Property, including distribution of remaining cash from operations held by TOTB (net of amounts distributed to non-controlling interest) as if the sale occurred on June 30, 2016. |
| (B2) | Represents the estimated gain on sale recognized by the Company upon completion of the sale of the TOTB Property as if the sale occurred on June 30, 2016 and was calculated as follows: |
|
Sales price
|
$
|
75,500,000
|
|
|
Less: Estimated closing costs
|
(1,427,049
|
)
|
|
|
Less: TOTB Property net carrying amount as of June 30, 2016
|
(54,526,938
|
)
|
|
|
Less: Write off of deferred financing costs as of June 30, 2016
|
(317,531
|
)
|
|
|
Total estimated gain as of June 30, 2016
|
19,228,482
|
||
|
Less: Net gain attributable to non-controlling interest
|
(3,703,406
|
)
|
|
|
Net gain attributable to Owens Realty Mortgage, Inc.
|
$
|
15,525,076
|
| (C) | Reflects the consolidated statements of income of the Company as contained in the historical consolidated financial statements included in its Form 10-Q as of and for the six months ended June 30, 2016 and its Form 10-K as of and for the year ended December 31, 2015 previously filed with the SEC on March 14, 2016 and August 8, 2016, respectively. |
| (D) | Reflects the elimination of the actual historical results of operations of the TOTB Property (revenues and expenses) for the six months ended June 30, 2016 and for the year ended December 31, 2015 as if the disposition occurred on January 1, 2015. The estimated gain of $19,228,482 is not included in the pro forma consolidated statement of income for the year ended December 31, 2015 as it represents a non-recurring item that results directly from the transaction and will be included in the consolidated financial results of the Company within twelve months of the transaction. |