Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Whitestone REIT | exhibit991blvdplacefinanci.htm |
| EX-23.1 - EXHIBIT 23.1 - Whitestone REIT | exhibit231pkfconsent-blvdp.htm |
| 8-K/A - 8-K/A - Whitestone REIT | wsr8-kblvdplace3142017x08.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following pro forma condensed consolidated financial statements have been prepared to provide pro forma information with regard to the acquisition of BLVD Place (the “Property”), which Whitestone REIT (“Whitestone”), through Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), its majority-owned subsidiary, acquired from an unrelated party on May 26, 2017.
The unaudited pro forma consolidated balance sheet as of March 31, 2017 reflects the financial position of Whitestone as if the acquisition of the Property and related financing had been completed on March 31, 2017. The unaudited pro forma condensed consolidated statements of income for Whitestone and the Property for the twelve months ended December 31, 2016 and the three months ended March 31, 2017, give effect to Whitestone's acquisition of the Property, as if it had occurred on January 1, 2016. The pro forma adjustments column presented on the pro forma consolidated statements of income for the year ended December 31, 2016 includes the financial information for the Property for the entire year. The pro forma adjustments column presented on the pro forma consolidated statements of income for the three months ended March 31, 2017 includes the financial information for the Property for the full three months, as if the Property was acquired subsequent to March 31, 2017 and therefore was not included in Whitestone's historical financial statements.
The unaudited pro forma condensed consolidated financial statements have been prepared by Whitestone's management based upon the historical financial statements of Whitestone REIT and its subsidiaries and of the Property. These pro forma statements may not be indicative of the results that actually would have occurred had the acquisition of the Property been completed on the date 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 statements are for informational purposes only and should be read in conjunction with the historical financial statements of Whitestone REIT and its subsidiaries, including the related notes thereto, which were filed with the Securities and Exchange Commission as part of Whitestone's Annual Report on Form 10-K for the year ended December 31, 2016 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.
WHITESTONE REIT AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2017
(unaudited)
(in thousands, except per share data)
Whitestone REIT | BLVD Place | Pro Forma Consolidated | ||||||||||
(A) | (B) | |||||||||||
ASSETS | ||||||||||||
Real estate assets, at cost | ||||||||||||
Property | $ | 924,280 | $ | 165,338 | $ | 1,089,618 | ||||||
Accumulated depreciation | (112,418 | ) | — | (112,418 | ) | |||||||
Total real estate assets | 811,862 | 165,338 | 977,200 | |||||||||
Cash and cash equivalents | 6,503 | — | 6,503 | |||||||||
Restricted cash | 156 | — | 156 | |||||||||
Marketable securities | 517 | — | 517 | |||||||||
Escrows and acquisition deposits | 5,740 | — | 5,740 | |||||||||
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 20,680 | — | 20,680 | |||||||||
Unamortized lease commissions and loan costs | 7,857 | — | 7,857 | |||||||||
Prepaid expenses and other assets | 3,519 | — | 3,519 | |||||||||
Total assets | $ | 856,834 | $ | 165,338 | $ | 1,022,172 | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Liabilities: | ||||||||||||
Notes payable | $ | 555,399 | $ | 80,000 | $ | 635,399 | ||||||
Accounts payable and accrued expenses | 18,044 | 7,338 | 25,382 | |||||||||
Tenants' security deposits | 6,279 | — | 6,279 | |||||||||
Dividends and distributions payable | 8,883 | — | 8,883 | |||||||||
Total liabilities | 588,605 | 87,338 | 675,943 | |||||||||
Commitments and contingencies: | — | — | — | |||||||||
Equity: | ||||||||||||
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of March 31, 2017 | — | — | — | |||||||||
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 29,871,458 issued and outstanding as of March 31, 2017 | 30 | — | 30 | |||||||||
Additional paid-in capital | 403,783 | 78,000 | 481,783 | |||||||||
Accumulated deficit | (148,828 | ) | — | (148,828 | ) | |||||||
Accumulated other comprehensive gain | 1,565 | — | 1,565 | |||||||||
Total Whitestone REIT shareholders' equity | 256,550 | 78,000 | 334,550 | |||||||||
Noncontrolling interests: | ||||||||||||
Redeemable operating partnership units | 11,641 | — | 11,641 | |||||||||
Noncontrolling interest in Consolidated Partnership | 38 | — | 38 | |||||||||
Total noncontrolling interests | 11,679 | — | 11,679 | |||||||||
Total equity | 268,229 | 78,000 | 346,229 | |||||||||
Total liabilities and equity | $ | 856,834 | $ | 165,338 | $ | 1,022,172 | ||||||
See accompanying note to unaudited pro forma condensed consolidated financial statements.
WHITESTONE REIT AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Three Months Ended March 31, 2017
(unaudited)
(in thousands, except per share data)
Whitestone REIT | BLVD Place | Pro Forma Adjustments | Pro Forma Consolidated | |||||||||||||
(A) | (B) | (C) | ||||||||||||||
Property revenues | ||||||||||||||||
Rental revenues | $ | 21,296 | $ | 2,314 | $ | 179 | (1) | $ | 23,789 | |||||||
Other revenues | 6,971 | 1,104 | — | 8,075 | ||||||||||||
Total property revenues | 28,267 | 3,418 | 179 | 31,864 | ||||||||||||
Property expenses | ||||||||||||||||
Property operation and maintenance | 5,494 | 505 | — | 5,999 | ||||||||||||
Real estate taxes | 3,920 | 596 | — | 4,516 | ||||||||||||
Total property expenses | 9,414 | 1,101 | — | 10,515 | ||||||||||||
Other expenses (income) | ||||||||||||||||
General and administrative | 6,169 | — | — | 6,169 | ||||||||||||
Depreciation and amortization | 6,008 | — | 583 | (2) | 6,591 | |||||||||||
Interest expense | 5,153 | — | 744 | (3) | 5,897 | |||||||||||
Interest, dividend and other investment income | (138 | ) | — | — | (138 | ) | ||||||||||
Total other expense | 17,192 | — | 1,327 | 18,519 | ||||||||||||
Income before gain (loss) on sale or disposal of properties or assets and income taxes | 1,661 | 2,317 | (1,148 | ) | 2,830 | |||||||||||
Provision for income taxes | (81 | ) | — | (19 | ) | (4) | (100 | ) | ||||||||
Gain on sale of properties | — | — | — | — | ||||||||||||
Loss on sale or disposal of assets | (23 | ) | — | — | (23 | ) | ||||||||||
Net income | 1,557 | 2,317 | (1,167 | ) | 2,707 | |||||||||||
Redeemable operating partnership units | 53 | — | 41 | (5) | 94 | |||||||||||
Non-controlling interests in Consolidated Partnership | 64 | — | — | 64 | ||||||||||||
Less: Net income attributable to noncontrolling interests | 117 | — | 41 | 158 | ||||||||||||
Net income attributable to Whitestone REIT | $ | 1,440 | $ | 2,317 | $ | (1,208 | ) | $ | 2,549 | |||||||
Basic Earnings Per Share: | $ | 0.05 | $ | 0.07 | ||||||||||||
Diluted Earnings Per Share: | $ | 0.04 | $ | 0.06 | ||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic (6) | 29,416 | 37,435 | ||||||||||||||
Diluted (6) | 30,409 | 38,428 | ||||||||||||||
See accompanying note to unaudited pro forma condensed consolidated financial statements.
WHITESTONE REIT AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2016
(unaudited)
(in thousands, except per share data)
Whitestone REIT | BLVD Place | Pro Forma Adjustments | Pro Forma Consolidated | |||||||||||||
(D) | (E) | (F) | ||||||||||||||
Property revenues | ||||||||||||||||
Rental revenues | $ | 80,068 | $ | 9,504 | $ | 718 | (1) | $ | 90,290 | |||||||
Other revenues | 24,369 | 3,946 | — | 28,315 | ||||||||||||
Total property revenues | 104,437 | 13,450 | 718 | 118,605 | ||||||||||||
Property expenses | ||||||||||||||||
Property operation and maintenance | 19,709 | 1,855 | — | 21,564 | ||||||||||||
Real estate taxes | 14,383 | 2,383 | — | 16,766 | ||||||||||||
Total property expenses | 34,092 | 4,238 | — | 38,330 | ||||||||||||
Other expenses (income) | ||||||||||||||||
General and administrative | 23,922 | — | — | 23,922 | ||||||||||||
Depreciation and amortization | 22,457 | — | 2,332 | (2) | 24,789 | |||||||||||
Interest expense | 19,239 | — | 2,976 | (3) | 22,215 | |||||||||||
Interest, dividend and other investment income | (429 | ) | — | — | (429 | ) | ||||||||||
Total other expense | 65,189 | — | 5,308 | 70,497 | ||||||||||||
Income before gain (loss) on sale or disposal of properties or assets and income taxes | 5,156 | 9,212 | (4,590 | ) | 9,778 | |||||||||||
Provision for income taxes | (289 | ) | — | (74 | ) | (4) | (363 | ) | ||||||||
Gain on sale of properties | 3,357 | — | — | 3,357 | ||||||||||||
Loss on sale or disposal of assets | (96 | ) | — | — | (96 | ) | ||||||||||
Net income | 8,128 | 9,212 | (4,664 | ) | 12,676 | |||||||||||
Redeemable operating partnership units | 182 | — | 102 | (5) | 284 | |||||||||||
Non-controlling interests in Consolidated Partnership | 15 | — | — | 15 | ||||||||||||
Less: Net income attributable to noncontrolling interests | 197 | — | 102 | 299 | ||||||||||||
Net income attributable to Whitestone REIT | $ | 7,931 | $ | 9,212 | $ | (4,766 | ) | $ | 12,377 | |||||||
Basic Earnings Per Share: | $ | 0.26 | $ | 0.33 | ||||||||||||
Diluted Earnings Per Share: | $ | 0.26 | $ | 0.32 | ||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic (6) | 27,618 | 35,637 | ||||||||||||||
Diluted (6) | 28,383 | 36,402 | ||||||||||||||
See accompanying note to unaudited pro forma condensed consolidated financial statements.
WHITESTONE REIT AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. | Adjustments to the Unaudited Pro Forma Consolidated Balance Sheet |
A. | Reflects the historical condensed consolidated balance sheet of Whitestone as of March 31, 2017. Please refer to Whitestone's historical consolidated financial statements and notes thereto included in Whitestone's Quarterly Report on Form 10-Q for the three months ended March 31, 2017. |
B. | The figures reflect the acquisition of the Property for a purchase price of approximately $158.0 million, including $80.0 million of asset level mortgage financing and approximately $78.0 million of Whitestone's $99.9 million in net proceeds from Whitestone's April 25, 2017 sale of 8,018,500 common shares at a public offering price per share of $13.00. Whitestone also recognized approximately $7.3 million related to in-place leases. |
2. | Adjustments to the Unaudited Pro Forma Consolidated Statements of Operations |
A. | Reflects the historical condensed consolidated statements of operations of Whitestone for the three months ended March 31, 2017. Please refer to Whitestone's historical consolidated financial statements and notes thereto included in Whitestone's Quarterly Report on Form 10-Q for the three months ended March 31, 2017. |
B. | Reflects the statement of revenues and certain operating expenses of the Property for the three months ended March 31, 2017. |
C. | The adjustments to the unaudited pro forma consolidated statements of operations for the three months ended March 31, 2017 are as follows: |
1. | The figure for the Property represents the estimated revenue adjustment for in-place leases for the three months ended March 31, 2017. |
2. | The figure for the Property represents the depreciation of the building (over 39 years) based on the purchase price allocation in accordance with U.S. generally accepted accounting principles, assuming the acquisition of the Property took place on January 1, 2016. |
3. | The figure for the Property represents the interest expense based on the $80.0 million non-recourse loan secured by the Property at a fixed interest rate of 3.72% per annum, assuming the acquisition of the Property took place on January 1, 2016. |
4. | The figure for the Property represents the Texas Margin tax expense, which is computed by applying the applicable tax rate (0.75% for Whitestone) to the profit margin, which is determined for Whitestone as total revenue less a 30% standard deduction. |
5. | The figure for the Property represents the net income attributable to limited partners in the Operating Partnership. As of March 31, 2017, limited partners owned a 3.58% interest in the Operating Partnership. The limited partners ownership percentage does not reflect the sale of 8,018,500 common shares in April 2017, assuming the sale of the common shares took place on January 1, 2016, as the related impact on ownership percentage is minimal. |
6. | Pro forma weighted averages reflect the sale of 8,018,500 common shares in April 2017, a portion of the proceeds of which was used to fund a portion of the purchase price of the Property, assuming the sale of the common shares took place on January 1, 2016. |
D. | Reflects the historical condensed consolidated statements of operations of Whitestone for the year ended December 31, 2016. Please refer to Whitestone's historical consolidated financial statements and notes thereto included in Whitestone's Annual Report on Form 10-K for the year ended December 31, 2016. |
E. | Reflects the statement of revenues and certain operating expenses of the Property for the year ended December 31, 2016. |
WHITESTONE REIT AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
F. | The adjustments to the unaudited pro forma consolidated statements of operations for the year ended December 31, 2016 are as follows: |
1. | The figure for the Property represents the estimated revenue adjustment for in-place leases for the year ended December 31, 2016. |
2. | The figure for the Property represents the depreciation of the building (over 39 years) based on the purchase price allocation in accordance with U.S. generally accepted accounting principles, assuming the acquisition of the Property took place on January 1, 2016. |
3. | The figure for the Property represents the interest expense based on the $80.0 million non-recourse loan secured by the Property at a fixed interest rate of 3.72% per annum, assuming the acquisition of the Property took place on January 1, 2016. |
4. | The figure for the Property represents the Texas Margin tax expense, which is computed by applying the applicable tax rate (0.75% for Whitestone) to the profit margin, which is determined for Whitestone as total revenue less a 30% standard deduction. |
5. | The figure for the Property represents the net income attributable to limited partners in the Operating Partnership. As of December 31, 2016, limited partners owned a 2.24% interest in the Operating Partnership. The limited partners ownership percentage does not reflect the sale of 8,018,500 common shares in April 2017, assuming the sale of the common shares took place on January 1, 2016, as the related impact on ownership percentage is minimal. |
6. | Pro forma weighted averages reflect the sale of 8,018,500 common shares in April 2017, a portion of the proceeds of which was used to fund a portion of the purchase price of the Property, assuming the sale of the common shares took place on January 1, 2016. |