iStar Financial Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2012
(In thousands, except per share data)
(Unaudited)
| | For the Year Ended December 31, 2012 | |
| | As
Reported | | Pro Forma
Adjustments
(G) | | | | Pro Forma | |
Revenue: | | | | | | | | | |
Operating lease income | | $ | 219,019 | | $ | | | | | $ | 219,019 | |
Interest income | | 133,410 | | — | | | | 133,410 | |
Other income | | 48,043 | | — | | | | 48,043 | |
Total revenue | | 400,472 | | — | | | | 400,472 | |
Costs and expenses: | | | | | | | | | |
Interest expense | | 355,097 | | — | | | | 355,097 | |
Real estate expense | | 151,827 | | — | | | | 151,827 | |
Depreciation and amortization | | 69,350 | | — | | | | 69,350 | |
General and administrative | | 80,856 | | — | | | | 80,856 | |
Provision for loan losses | | 81,740 | | — | | | | 81,740 | |
Impairment of assets | | 13,778 | | — | | | | 13,778 | |
Other expense | | 17,266 | | — | | | | 17,266 | |
Total costs and expenses | | 769,914 | | — | | | | 769,914 | |
Income (loss) before earnings from equity method investments and other items | | (369,442 | ) | — | | | | (369,442 | ) |
Gain (loss) on early extinguishment of debt, net | | (37,816 | ) | — | | | | (37,816 | ) |
Earnings from equity method investments | | 103,009 | | (60,669 | ) | H | | 42,340 | |
Income (loss) from continuing operations before income taxes | | (304,249 | ) | (60,669 | ) | | | (364,918 | ) |
Income tax (expense) benefit | | (8,445 | ) | 2,219 | | I | | (6,226 | ) |
Income (loss) from continuing operations | | (312,694 | ) | (58,450 | ) | | | (371,144 | ) |
Income (loss) from discontinued operations | | (19,465 | ) | — | | | | (19,465 | ) |
Gain from discontinued operations | | 27,257 | | — | | | | 27,257 | |
Income from sales of residential property | | 63,472 | | — | | | | 63,472 | |
Net income (loss) | | (241,430 | ) | (58,450 | ) | | | (299,880 | ) |
Net (income) loss attributable to noncontrolling interests | | 1,500 | | — | | | | 1,500 | |
Net income (loss) attributable to iStar Financial Inc. | | (239,930 | ) | (58,450 | ) | | | (298,380 | ) |
Preferred dividends | | (42,320 | ) | | | | | (42,320 | ) |
Net income (loss) allocable to HPU holders and Participating Security holders | | 9,253 | | — | | | | 9,253 | |
Net income (loss) allocable to common shareholders | | $ | (272,997 | ) | $ | (58,450 | ) | | | $ | (331,447 | ) |
| | | | | | | | | |
Per common share data: | | | | | | | | | |
Income (loss) attributable to iStar Financial Inc. from continuing operations (1): | | | | | | | | | |
Basic and diluted | | $ | (3.35 | ) | | | | | $ | (4.05 | ) |
Weighted average number of common shares — basic & diluted | | 83,742 | | | | | | 83,742 | |
Per HPU share data: | | | | | | | | | |
Income (loss) attributable to iStar Financial Inc. from continuing operations (1): | | | | | | | | | |
Basic and diluted | | $ | (633.94 | ) | | | | | $ | (766.47 | ) |
Weighted average number of HPU shares—basic and diluted | | 15 | | | | | | 15 | |
Explanatory Note:
(1) For the year ended December 31, 2012, pro forma income (loss) attributable to iStar Financial Inc. from continuing operations and allocable to the common shareholder and HPU holders was ($339,214) and ($11,497), respectively, on both a basic and dilutive basis.
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
2
iStar Financial Inc.
Notes to the Pro Forma Condensed Consolidated Financial Statements
(unaudited)
On April 19, 2013, iStar Financial, Inc. (the “Company”) completed the sale of its 24% equity interest in LNR Property LLC (“LNR”) and received $220 million in proceeds. The sale was part of a larger transaction whereby the Company and other sellers (together, the “Owners”) sold 100% of the common stock of LNR to Starwood Property Trust Inc. and investment firm Starwood Capital Group (together, “Starwood”) pursuant to the Unit Purchase Agreement (“Purchase Agreement”) entered into by the Owners and Starwood on January 23, 2013 for an aggregate purchase price of $1.1 billion.
Basis of Presentation
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012 has been prepared to reflect the effect of the LNR transaction as if it had occurred on December 31, 2012. The accompanying unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012, are presented assuming the LNR transaction had been completed on January 1, 2012.
In management’s opinion, all material adjustments necessary to reflect the impact of the LNR transaction have been made in the accompanying unaudited pro forma Condensed Consolidated Financial Statements. The accompanying unaudited Pro Forma Condensed Consolidated Financial Statements are not necessarily indicative of the financial condition, results of operations or cash flows that would have been reported had the transactions occurred on the dates specified, nor are they indicative of the Company’s future financial condition or results of operations. The unaudited pro forma adjustments are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K.
The unaudited condensed consolidated pro forma financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Unaudited Pro Forma Adjustments
The pro forma adjustments have been prepared to reflect the following:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012:
(A) Adjustments reflect the effect of the LNR transaction as if it had occurred on December 31, 2012.
(B) Reflects the elimination of the carrying value of the investment assuming the investment was sold on December 31, 2012.
(C) Reflects the cash proceeds received on April 19, 2013.
(D) Reflects proceeds held in escrow as part of the sale for potential indemnification obligations. The Company is not currently aware that any material indemnifications claims are probable of occurring.
(E) Reflects net impact to retained earnings (deficit) after adjusting for changes to assets, liabilities and accumulated other comprehensive income (loss).
(F) Reflects the realization of the Company’s share in LNR’s accumulated other comprehensive income (loss) as of December 31, 2012.
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012:
(G) Adjustment reflects the effect of the LNR transaction as if it had occurred on January 1, 2012.
(H) Reflects the removal of the 2012 earnings from the LNR investment that was recognized by the Company during 2012.
(I) Reflects the reversal of tax expenses that was attributable to the LNR equity in earnings recognized by the Company in 2012.
3
