Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 FINANCIALS RIVERGATE - Wheeler Real Estate Investment Trust, Inc. | ex991rivergate.htm |
| EX-23.1 - EXHIBIT 23.1 AUDITOR CONSENT RIVERGATE - Wheeler Real Estate Investment Trust, Inc. | ex231rivergate.htm |
| 8-K/A - 8-K/A RIVERGATE 3-14 - Wheeler Real Estate Investment Trust, Inc. | rivergate3-14financials8xka.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial statements have been prepared to provide pro forma information with regard to the acquisition of Rivergate Shopping Center (“the Property”), which Wheeler Real Estate Investment Trust, Inc. and Subsidiaries (“Wheeler REIT” or the “Company”), through WHLR-Rivergate, LLC, its wholly-owned subsidiary, obtained the right to acquire through a Purchase and Sale Agreement on September 21, 2016. WHLR-Rivergate, LLC completed the acquisition on December 21, 2016.
The unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 gives effect to the acquisition of the Property as if it occurred on September 30, 2016. The Wheeler REIT column as of September 30, 2016 represents the actual balance sheet presented in the Company’s Quarterly Report on Form 10-Q (“Form 10-Q”) filed on November 9, 2016 with the Securities and Exchange Commission (“SEC”) for the period. The pro forma adjustments column includes the preliminary estimated impact of purchase accounting and other adjustments for the periods presented.
The unaudited pro forma condensed consolidated statements of operations for the Company and the Property for the nine months ended September 30, 2016 and the year ended December 31, 2015 give effect to the Company's acquisition of the Property, as if it had occurred on the first day of the earliest period presented. The Wheeler REIT column for the nine months ended September 30, 2016 represents the results of operations presented in the Company's Form 10-Q. The Wheeler REIT column for the year ended December 31, 2015 represents the results of operations presented in the Company’s Annual Report on Form 10-K (“Form 10-K”) filed with the SEC on March 10, 2016. The Property column includes the full year’s operating activity for the Property for the year ended December 31, 2015 and nine months' operating activity for the nine months ended September 30, 2016, as the Property was acquired subsequent to September 30, 2016 and, therefore, was not included in the Company’s historical financial statements. The pro forma adjustments columns include the impact of purchase accounting and other adjustments for the periods presented.
The unaudited pro forma condensed consolidated financial statements have been prepared by the Company's management based upon the historical financial statements of the Company and of the acquired Property. Since the acquisition transaction closed during the fourth quarter of 2016, the Property will be included in the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, to be filed with the SEC. These pro forma statements may not be indicative of the results that actually would have occurred had the anticipated acquisition been in effect on the dates indicated or which may be obtained in the future.
In management's opinion, all adjustments necessary to reflect the effects of the Property acquisition have been made. These unaudited pro forma condensed consolidated financial statements are for informational purposes only and should be read in conjunction with the historical financial statements of the Company, including the related notes thereto, which were filed with the SEC on March 10, 2016 as part of its Form 10-K for the year ended December 31, 2015 and on November 9, 2016 as part of its Form 10-Q for the nine months ended September 30, 2016.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2016
Wheeler | Pro Forma | Pro Forma | ||||||||||||
REIT | Adjustments | Consolidated | ||||||||||||
(A) | (B) | |||||||||||||
ASSETS: | ||||||||||||||
Investment properties, net | $ | 292,212,257 | $ | 33,351,132 | $ | 325,563,389 | ||||||||
Cash and cash equivalents | 35,816,636 | (13,037,500 | ) | 22,779,136 | ||||||||||
Restricted cash | 10,309,397 | — | 10,309,397 | |||||||||||
Rents and other tenant receivables, net | 3,235,105 | — | 3,235,105 | |||||||||||
Related party receivables | 1,365,950 | — | 1,365,950 | |||||||||||
Notes receivable | 12,000,000 | — | 12,000,000 | |||||||||||
Goodwill | 5,485,823 | — | 5,485,823 | |||||||||||
Assets held for sale | 365,880 | — | 365,880 | |||||||||||
Above market lease intangible, net | 7,718,507 | 1,222,348 | 8,940,855 | |||||||||||
Deferred costs and other assets, net | 36,098,994 | 3,266,619 | 39,365,613 | |||||||||||
Total Assets | $ | 404,608,549 | $ | 24,802,599 | $ | 429,411,148 | ||||||||
LIABILITIES: | ||||||||||||||
Mortgages and other indebtedness | $ | 231,767,262 | $ | 24,212,500 | $ | 255,979,762 | ||||||||
Liabilities associated with assets held for sale | 1,350,000 | — | 1,350,000 | |||||||||||
Below market lease intangibles | 8,718,947 | 590,099 | 9,309,046 | |||||||||||
Accounts payable, accrued expenses and other liabilities | 10,147,839 | — | 10,147,839 | |||||||||||
Total Liabilities | 251,984,048 | 24,802,599 | 276,786,647 | |||||||||||
Commitments and contingencies | — | — | — | |||||||||||
Series D cumulative convertible preferred stock | 38,014,257 | — | 38,014,257 | |||||||||||
EQUITY: | ||||||||||||||
Series A preferred stock | 452,971 | — | 452,971 | |||||||||||
Series B convertible preferred stock | 40,710,868 | — | 40,710,868 | |||||||||||
Common stock | 679,404 | — | 679,404 | |||||||||||
Additional paid-in capital | 222,725,476 | — | 222,725,476 | |||||||||||
Accumulated deficit | (160,594,653 | ) | — | (160,594,653 | ) | |||||||||
Noncontrolling interest | 10,636,178 | — | 10,636,178 | |||||||||||
Total Equity | 114,610,244 | — | 114,610,244 | |||||||||||
Total Liabilities and Equity | $ | 404,608,549 | $ | 24,802,599 | $ | 429,411,148 | ||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2016
Wheeler REIT | Properties | Pro Forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
(A) | (B) | (C) | |||||||||||||||||
REVENUES: | |||||||||||||||||||
Rental revenues | $ | 23,787,801 | $ | 2,151,687 | $ | (59,963 | ) | (1) | $ | 25,879,525 | |||||||||
Asset management fees | 623,340 | — | — | 623,340 | |||||||||||||||
Commissions | 833,516 | — | — | 833,516 | |||||||||||||||
Tenant reimbursements and other revenues | 6,887,918 | 357,775 | — | 7,245,693 | |||||||||||||||
Total Revenues | 32,132,575 | 2,509,462 | (59,963 | ) | 34,582,074 | ||||||||||||||
OPERATING EXPENSES AND CERTAIN | |||||||||||||||||||
OPERATING EXPENSES OF THE ACQUIRED PROPERTY: | |||||||||||||||||||
Property operations | 8,498,715 | 475,885 | — | 8,974,600 | |||||||||||||||
Non-REIT management and leasing services | 1,351,640 | — | — | 1,351,640 | |||||||||||||||
Depreciation and amortization | 15,306,331 | — | 1,247,397 | (2 | ) | 16,553,728 | |||||||||||||
Provision for credit losses | 196,311 | — | — | 196,311 | |||||||||||||||
Corporate general & administrative | 6,290,460 | 43,082 | — | 6,333,542 | |||||||||||||||
Total Operating Expenses and Certain Operating | |||||||||||||||||||
Expenses of the Acquired Property | 31,643,457 | 518,967 | 1,247,397 | 33,409,821 | |||||||||||||||
Operating Income (Loss) and Excess of Acquired | |||||||||||||||||||
Revenues Over Certain Operating Expenses | 489,118 | 1,990,495 | (1,307,360 | ) | 1,172,253 | ||||||||||||||
Interest income | 301,378 | — | — | 301,378 | |||||||||||||||
Interest expense | (9,801,442 | ) | — | (671,897 | ) | (3 | ) | (10,473,339 | ) | ||||||||||
Net Income (Loss) from Continuing Operations | (9,010,946 | ) | 1,990,495 | (1,979,257 | ) | (8,999,708 | ) | ||||||||||||
Less: Net income (loss) from continuing operations attributable to noncontrolling interests | (842,915 | ) | — | 1,051 | (4) | (841,864 | ) | ||||||||||||
Net Income (Loss) from Continuing Operations Attributable to Wheeler REIT | $ | (8,168,031 | ) | $ | 1,990,495 | $ | (1,980,308 | ) | $ | (8,157,844 | ) | ||||||||
Net (loss) from continuing operations per share: | |||||||||||||||||||
Basic and diluted | $ | (0.12 | ) | $ | (0.12 | ) | |||||||||||||
Net (loss) from continuing operations per unit: | |||||||||||||||||||
Basic and diluted | $ | (0.16 | ) | $ | (0.16 | ) | |||||||||||||
Weighted-average outstanding: | |||||||||||||||||||
Common shares | 67,155,184 | 67,155,184 | |||||||||||||||||
Common units | 5,367,945 | 5,367,945 | |||||||||||||||||
Basic and diluted | 72,523,129 | 72,523,129 | |||||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2015
Wheeler REIT | Properties | Pro Forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
(D) | (E) | (C) | |||||||||||||||||
REVENUES: | |||||||||||||||||||
Rental revenues | $ | 20,553,870 | $ | 2,580,635 | $ | (332,601 | ) | (1) | $ | 22,801,904 | |||||||||
Asset management fees | 588,990 | — | — | 588,990 | |||||||||||||||
Commissions | 361,984 | — | — | 361,984 | |||||||||||||||
Tenant reimbursements and other revenues | 6,229,361 | 454,291 | — | 6,683,652 | |||||||||||||||
Total Revenues | 27,734,205 | 3,034,926 | (332,601 | ) | 30,436,530 | ||||||||||||||
OPERATING EXPENSES AND CERTAIN | |||||||||||||||||||
OPERATING EXPENSES OF THE ACQUIRED PROPERTY: | |||||||||||||||||||
Property operations | 8,351,456 | 605,095 | — | 8,956,551 | |||||||||||||||
Non-REIT management and leasing services | 1,110,705 | — | — | 1,110,705 | |||||||||||||||
Depreciation and amortization | 16,882,462 | — | 1,838,506 | (2 | ) | 18,720,968 | |||||||||||||
Provision for credit losses | 243,029 | — | — | 243,029 | |||||||||||||||
Corporate general & administrative | 13,480,089 | 58,115 | — | 13,538,204 | |||||||||||||||
Total Operating Expenses and Certain Operating | |||||||||||||||||||
Expenses of the Acquired Property | 40,067,741 | 663,210 | 1,838,506 | 42,569,457 | |||||||||||||||
Operating Income (Loss) and Excess of Acquired | |||||||||||||||||||
Revenues Over Certain Operating Expenses | (12,333,536 | ) | 2,371,716 | (2,171,107 | ) | (12,132,927 | ) | ||||||||||||
Interest expense | (9,043,761 | ) | — | (895,863 | ) | (3 | ) | (9,939,624 | ) | ||||||||||
Net Income (Loss) from Continuing Operations | (21,377,297 | ) | 2,371,716 | (3,066,970 | ) | (22,072,551 | ) | ||||||||||||
Less: Net income (loss) from continuing operations attributable to noncontrolling interests | (1,426,478 | ) | — | (46,393 | ) | (4) | (1,472,871 | ) | |||||||||||
Net Income (Loss) from Continuing Operations Attributable to Wheeler REIT | $ | (19,950,819 | ) | $ | 2,371,716 | $ | (3,020,577 | ) | $ | (20,599,680 | ) | ||||||||
Net (loss) from continuing operations per share: | |||||||||||||||||||
Basic and diluted | $ | (0.51 | ) | $ | (0.53 | ) | |||||||||||||
Net (loss) from continuing operations per unit: | |||||||||||||||||||
Basic and diluted | $ | (0.37 | ) | $ | (0.38 | ) | |||||||||||||
Weighted-average outstanding: | |||||||||||||||||||
Common shares | 38,940,463 | 38,940,463 | |||||||||||||||||
Common units | 3,863,339 | 3,863,339 | |||||||||||||||||
Basic and diluted | 42,803,802 | 42,803,802 | |||||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Pro Forma Balance Sheet
A. | Reflects the unaudited consolidated balance sheet of the Company as of September 30, 2016 included in the Company’s Form 10-Q filed on November 9, 2016. |
B. | Represents the estimated pro forma effect of the Company’s $37.3 million acquisition of the Property, assuming it occurred on September 30, 2016. The Company has initially allocated the purchase price of the acquired Property to land, building and improvements, identifiable intangible assets and to the acquired liabilities based on their preliminary estimated fair values. Identifiable intangibles include amounts allocated to above/below market leases, the value of in-place leases and customer relationships value, if any. The Company estimated fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions that may affect the Property. Factors considered by management in its analysis of estimating the as-if-vacant property value include an estimate of carrying costs during the expected lease-up periods considering market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and estimates of lost rentals at market rates during the expected lease-up periods, tenant demand and other economic conditions. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related expenses. Intangibles related to above/below market leases and in-place lease value are recorded as acquired lease intangibles and are amortized as an adjustment to rental revenue or amortization expense, as appropriate, over the remaining terms of the underlying leases. |
Pro Forma Statements of Operations
A. | Reflects the unaudited consolidated statement of operations of the Company for the nine months ended September 30, 2016 included in the Company's Form 10-Q filed on November 9, 2016, excluding discontinued operations. |
B. | Amounts reflect the unaudited historical operations of the Property for the nine months ended September 30, 2016, unless otherwise noted. |
C. | Represents the estimated unaudited pro forma adjustments related to the acquisition for the period presented. |
(1) | Represents estimated amortization of above/below market leases which are being amortized on a straight-line basis over the remaining terms of the related leases. |
(2) | Represents the estimated depreciation and amortization of the buildings and related improvements, leasing commissions, in place leases and capitalized legal/marketing costs resulting from the preliminary estimated purchase price allocation in accordance with accounting principles generally accepted in the United States of America. The buildings and site improvements are being depreciated on a straight-line basis over their estimated useful lives up to 40 years. The tenant improvements, leasing commissions, in place leases and capitalized legal/marketing costs are being amortized on a straight-line basis over the remaining terms of the related leases. |
(3) | Represents expected interest expense on debt used to finance the acquisition, which is expected to accrue interest at a rate of 3.70% per annum and mature in December 2019. |
(4) | Represents the estimated additional income (loss) attributed to the acquisition of the property for noncontrolling interest ownership. |
D. | Reflects the consolidated statement of operations of the Company for the year ended December 31, 2015 included in the Company's Form 10-K filed on March 10, 2016. |
E. | Amounts reflect the historical operations of the Property for the year ended December 31, 2015, unless otherwise noted. |