Exhibit 99.2
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On April 28, 2016 (the “Distribution Date”), InvenTrust Properties Corp. (the “Company”) completed the previously announced spin-off (“Spin-off”) of Highlands REIT, Inc. (“Highlands”) through a taxable pro-rata distribution by the Company of 100% of the outstanding common stock, $0.01 per value per share of Highlands owned by it to holders of record of the Company’s common stock as of the close of business on April 25, 2016 (the “Record Date”). Each holder of record of the Company’s common stock received one share of Highlands’ common stock for every one share of the Company’s common stock held at the close of business on the Record Date.
The following unaudited pro forma consolidated financial statements are based upon the historical financial statements for the Company, adjusted to reflect the Spin-off.
INVENTRUST PROPERTIES, CORP.
(A Maryland Corporation)
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 2015
(Dollar amounts in thousands, except share amounts)
| Consolidated Company (a) | Pro Forma Consolidated Company | |||||||||||
| December 31, 2015 | Highlands Pro Forma Adjustments | December 31, 2015 | ||||||||||
Assets | ||||||||||||
Investment properties: | ||||||||||||
Land | $ | 774,040 | $ | (138,665 | ) (e) | $ | 635,375 | |||||
Building and other improvements | 3,285,698 | (637,952 | ) (e) | 2,647,746 | ||||||||
Construction in progress | 72,122 | — | 72,122 | |||||||||
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Total | 4,131,860 | (776,617 | ) (e) | 3,355,243 | ||||||||
Less accumulated depreciation | (663,865 | ) | 165,037 | (e) | (498,828 | ) | ||||||
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Net investment properties | 3,467,995 | (611,580 | ) (e) | 2,856,415 | ||||||||
Cash and cash equivalents | 203,285 | (20,000 | ) (f) | 183,285 | ||||||||
Restricted cash and escrows | 16,499 | (3,647 | ) (e) | 12,852 | ||||||||
Investment in marketable securities | 177,431 | — | 177,431 | |||||||||
Investment in unconsolidated entities | 182,511 | — | 182,511 | |||||||||
Accounts and rents receivable | 44,653 | (11,918 | ) (e) | 32,735 | ||||||||
Intangible assets, net | 71,131 | (12,090 | ) (e) | 59,041 | ||||||||
Deferred costs and other assets | 46,796 | (5,113 | ) (e) | 41,683 | ||||||||
Assets of discontinued operations | 3,118 | — | 3,118 | |||||||||
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Total assets | $ | 4,213,419 | $ | (664,348 | ) | $ | 3,549,071 | |||||
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Liabilities | ||||||||||||
Debt | $ | 1,878,653 | $ | (405,994 | ) (e) | $ | 1,472,659 | |||||
Accounts payable and accrued expenses | 92,447 | (26,043 | ) (e) | 66,404 | ||||||||
Distributions payable | 28,013 | — | 28,013 | |||||||||
Intangible liabilities, net | 42,688 | (4,668 | ) (e) | 38,020 | ||||||||
Other liabilities | 22,858 | (1,464 | ) (e) | 21,394 | ||||||||
Liabilities of discontinued operations | 57 | — | 57 | |||||||||
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Total liabilities | 2,064,716 | (438,169 | ) | 1,626,547 | ||||||||
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Commitments and contingencies | ||||||||||||
Stockholders’ Equity | ||||||||||||
Preferred stock, $.001 par value | — | — | — | |||||||||
Common stock, $.001 par value | 862 | — | 862 | |||||||||
Additional paid in capital | 6,066,583 | (226,179 | ) (g) | 5,840,404 | ||||||||
Accumulated distributions in excess of net loss | (3,956,032 | ) | — | (3,956,032 | ) | |||||||
Accumulated other comprehensive income | 37,290 | — | 37,290 | |||||||||
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Total stockholders’ equity | 2,148,703 | (226,179 | ) | 1,922,524 | ||||||||
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Total liabilities and equity | $ | 4,213,419 | $ | (664,348 | ) | $ | 3,549,071 | |||||
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See accompanying notes to the pro forma consolidated financial statements
INVENTRUST PROPERTIES, CORP.
(A Maryland Corporation)
Unaudited Pro Forma Consolidated Statement of Operations
Year ended December 31, 2015
(Dollar amounts in thousands, except per share data)
| Consolidated Company | Pro Forma Consolidated Company | |||||||||||
| December 31, 2015 (b) | Highlands Pro Forma Adjustments | December 31, 2015 | ||||||||||
Income: | ||||||||||||
Rental income | $ | 370,662 | $ | (88,804 | ) (h) | $ | 281,858 | |||||
Tenant recovery income | 69,668 | (11,214 | ) (h) | 58,454 | ||||||||
Other property income | 9,714 | (398 | ) (h) | 9,316 | ||||||||
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Total income | $ | 450,044 | $ | (100,416 | ) | $ | 349,628 | |||||
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Expenses: | ||||||||||||
General and administrative expenses | 78,218 | (501 | ) (i) | 77,717 | ||||||||
Property operating expenses | 77,610 | (9,234 | ) (j) | 68,376 | ||||||||
Real estate taxes | 50,870 | (8,887 | ) (j) | 41,983 | ||||||||
Depreciation and amortization | 150,401 | (32,519 | ) (j) | 117,882 | ||||||||
Provision for asset impairment | 108,154 | — | 108,154 | |||||||||
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Total expenses | $ | 465,253 | $ | (51,141 | ) | $ | 414,112 | |||||
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Operating loss | $ | (15,209 | ) | $ | (49,275 | ) | $ | (64,484 | ) | |||
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Interest and dividend income | 11,774 | (1 | ) (l) | 11,773 | ||||||||
Gain on sale of investment properties | 40,682 | 197 | (l) | 40,879 | ||||||||
Loss on extinguishment of debt | (4,568 | ) | — | (4,568 | ) | |||||||
Other income | 19,447 | 11 | (l) | 19,458 | ||||||||
Interest expense | (94,572 | ) | 26,291 | (m) | (68,281 | ) | ||||||
Loss on contribution to joint venture | (12,919 | ) | — | (12,919 | ) | |||||||
Equity in earnings of unconsolidated entities | 35,167 | — | 35,167 | |||||||||
Gain, (loss) and (impairment) of investment in unconsolidated entities, net | 326 | — | 326 | |||||||||
Realized gain, (loss) and (impairment) on securities, net | 20,459 | — | 20,459 | |||||||||
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Income (loss) from continuing operations before income taxes | $ | 587 | $ | (22,777 | ) | $ | (22,190 | ) | ||||
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Income tax expense | (1,916 | ) | 36 | (n) | (1,880 | ) | ||||||
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Net loss from continuing operations | $ | (1,329 | ) | $ | (22,741 | ) | $ | (24,070 | ) | |||
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Net loss per common share, from continuing operations, basic and diluted | $ | — | $ | (0.03 | ) | |||||||
Weighted average number of common shares outstanding, basic and diluted | 861,830,627 | 861,830,627 | ||||||||||
See accompanying notes to the pro forma consolidated financial statements
INVENTRUST PROPERTIES, CORP.
(A Maryland Corporation)
Unaudited Pro Forma Consolidated Statement of Operations
Year ended December 31, 2014
(Dollar amounts in thousands, except per share data)
| Consolidated Company | Pro Forma Consolidated Company | |||||||||||
| December 31, 2014 (c) | Highlands Pro Forma Adjustments | December 31, 2014 | ||||||||||
Income: | ||||||||||||
Rental income | $ | 377,067 | $ | (90,001 | ) (h) | $ | 287,066 | |||||
Tenant recovery income | 66,046 | (12,200 | ) (h) | 53,846 | ||||||||
Other property income | 9,361 | (629 | ) (h) | 8,732 | ||||||||
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Total income | $ | 452,474 | $ | (102,830 | ) | $ | 349,644 | |||||
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Expenses: | ||||||||||||
General and administrative expenses | 64,332 | (352 | ) (i) | 63,980 | ||||||||
Property operating expenses | 91,111 | (12,081 | ) (j) | 79,030 | ||||||||
Real estate taxes | 45,604 | (8,136 | ) (j) | 37,468 | ||||||||
Depreciation and amortization | 153,737 | (30,292 | ) (j) | 123,445 | ||||||||
Business manager fee | 2,605 | — | 2,605 | |||||||||
Provision for asset impairment | 80,774 | (77,555 | ) (k) | 3,219 | ||||||||
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Total expenses | $ | 438,163 | $ | (128,416 | ) | $ | 309,747 | |||||
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Operating income | $ | 14,311 | $ | 25,586 | $ | 39,897 | ||||||
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Interest and dividend income | 12,713 | (3 | ) (l) | 12,710 | ||||||||
Gain on sale of investment properties | 73,232 | 2,937 | (l) | 76,169 | ||||||||
Gain on extinguishment of debt | 34,515 | (11,964 | ) (l) | 22,551 | ||||||||
Other income | 2,669 | (483 | ) (l) | 2,186 | ||||||||
Interest expense | (120,668 | ) | 29,269 | (m) | (91,399 | ) | ||||||
Equity in earnings of unconsolidated entities | 81,179 | — | 81,179 | |||||||||
Gain, (loss) and (impairment) of investment in unconsolidated entities, net | 56,352 | — | 56,352 | |||||||||
Realized gain, (loss) and (impairment) on securities, net | 43,025 | — | 43,025 | |||||||||
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Income from continuing operations before income taxes | $ | 197,328 | $ | 45,342 | $ | 242,670 | ||||||
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Income tax expense | (917 | ) | 112 | (n) | (805 | ) | ||||||
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Net income from continuing operations | $ | 196,411 | $ | 45,454 | $ | 241,865 | ||||||
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Net income per common share, from continuing operations, basic and diluted | $ | 0.22 | $ | 0.28 | ||||||||
Weighted average number of common shares outstanding, basic and diluted | 878,064,982 | 878,064,982 | ||||||||||
See accompanying notes to the pro forma consolidated financial statements
INVENTRUST PROPERTIES, CORP.
(A Maryland Corporation)
Pro Forma Consolidated Statement of Operations
Year ended December 31, 2013
(Dollar amounts in thousands, except per share data)
| Consolidated Company | Pro Forma Consolidated Company | |||||||||||
| December 31, 2013 (d) | Highlands Pro Forma Adjustments | December 31, 2013 | ||||||||||
Income: | ||||||||||||
Rental income | $ | 377,876 | $ | (94,609 | ) (h) | $ | 283,267 | |||||
Tenant recovery income | 71,207 | (13,137 | ) (h) | 58,070 | ||||||||
Other property income | 7,202 | (657 | ) (h) | 6,545 | ||||||||
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Total income | 456,285 | (108,403 | ) | 347,882 | ||||||||
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Expenses: | ||||||||||||
General and administrative expenses | 48,318 | (95 | ) (i) | 48,223 | ||||||||
Property operating expenses | 84,735 | (12,446 | ) (j) | 72,289 | ||||||||
Real estate taxes | 50,380 | (9,980 | ) (j) | 40,400 | ||||||||
Depreciation and amortization | 167,071 | (40,043 | ) (j) | 127,028 | ||||||||
Business manager fee | 37,962 | — | 37,962 | |||||||||
Provision for asset impairment | 195,680 | (185,359 | ) (k) | 10,321 | ||||||||
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Total expenses | 584,146 | (247,923 | ) | 336,223 | ||||||||
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Operating (loss) income | $ | (127,861 | ) | $ | 139,520 | $ | 11,659 | |||||
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Interest and dividend income | 18,855 | (1,004 | ) (l) | 17,851 | ||||||||
Gain on sale of investment properties | 14,001 | — | (l) | 14,001 | ||||||||
Loss on extinguishment of debt | (472 | ) | 50 | (l) | (422 | ) | ||||||
Other income | 3,627 | (889 | ) (l) | 2,738 | ||||||||
Interest expense | (133,454 | ) | 32,699 | (m) | (100,755 | ) | ||||||
Equity in earnings of unconsolidated entities | 11,474 | — | 11,474 | |||||||||
Gain, (loss) and (impairment) of investment in unconsolidated entities, net | (2,957 | ) | — | (2,957 | ) | |||||||
Realized gain, (loss) and (impairment) on securities, net | 31,539 | — | 31,539 | |||||||||
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(Loss) income from continuing operations before income taxes | (185,248 | ) | 170,376 | (14,872 | ) | |||||||
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Income tax expense | (1,231 | ) | 91 | (n) | (1,140 | ) | ||||||
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Net (loss) income from continuing operations | $ | (186,479 | ) | $ | 170,467 | $ | (16,012 | ) | ||||
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Net loss per common share, from continuing operations, basic and diluted | $ | (0.21 | ) | $ | (0.02 | ) | ||||||
Weighted average number of common shares outstanding, basic and diluted | 899,842,722 | 899,842,722 | ||||||||||
See accompanying notes to the pro forma consolidated financial statements
INVENTRUST PROPERTIES, CORP.
Notes to Pro Forma Consolidated Financial Statements (Unaudited)
1) Basis of Presentation
The unaudited pro forma financial information is presented to illustrate the effect of the Spin-off on the Company’s historical financial position and operating results. The unaudited pro forma consolidated balance sheet is as of December 31, 2015 and is based upon our historical statements after giving effect to the Spin-off as if it had occurred on December 31, 2015. The unaudited pro forma consolidated statement of operations for the years ended December 31, 2015, 2014 and 2013 are based upon our historical statements for such periods after giving effect to the Spin-off as if it had occurred on January 1 of the earliest period presented. The unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and notes thereto of the Company contained in the Annual Report on Form 10-K for the year ended December 31, 2015.
The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported had the Spin-off been completed as of the dates presented, and should not be taken as representation of our future consolidated results of operations or financial condition. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable under the circumstances; however, actual amounts could differ.
2) Pro Forma adjustments
| (a) | Reflects the Company’s consolidated balance sheet as of December 31, 2015. |
| (b) | Reflects the Company’s historical consolidated statement of operations for the year ended December 31, 2015. |
| (c) | Reflects the Company’s historical consolidated statement of operations for the year ended December 31, 2014. |
| (d) | Reflects the Company’s historical consolidated statement of operations for the year ended December 31, 2013. |
For references (e) through (n)—On the Distribution Date, the Company completed the previously announced Spin-off.
| (e) | Reflects the elimination of assets and liabilities of Highlands as of December 31, 2015. |
| (f) | Reflects an adjustment, such that following the capital contribution from the Company, Highlands will hold approximately $20 million in cash. |
| (g) | Reflects the pro forma recapitalization of our equity. As of the Record Date, we distributed the net assets of our investment in Highlands through the distribution of shares of Highlands’ common stock. Each holder of record of the Company’s common stock received one share of Highlands’ common stock for every one share of the Company’s common stock held at the close of business on the Record Date. |
| (h) | Reflects the elimination of rental income, tenant recovery income and other property income of Highlands. |
| (i) | Reflects the elimination of general and administrative expense of Highlands related to general corporate expense. |
| (j) | Reflects the elimination of expenses of Highlands that are necessary for and associated with revenue producing activities, such as property operating expense and real estate taxes. |
| (k) | Reflects the elimination of asset impairment charges of investment properties of Highlands. |
| (l) | Reflects the elimination of interest and dividend income, other income, gain on the sale of investment properties and gain (loss) on the extinguishment of debt associated with Highlands. |
| (m) | Reflects the elimination of interest expense incurred on debt directly attributable to investment properties of Highlands. |
| (n) | Reflects the elimination of income tax expense directly attributable to Highlands. |
