UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 16, 2010
Strategic Storage Trust, Inc.
(Exact name of Company as specified in its charter)
Commission File Number: 000-53644
| | |
| Maryland | | 32-0211624 |
| (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
111 Corporate Drive, Suite 120, Ladera Ranch, California 92694
(Address of principal executive offices)
(877) 327-3485
(Company’s telephone number)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Table of Contents
EXPLANATORY NOTE:
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Strategic Storage Trust, Inc., a Maryland Corporation (the “Registrant”), hereby amends its Current Report on Form 8-K dated December 16, 2010, for the purpose of filing the financial statements and pro forma financial information with respect to the Registrant’s acquisition of two self storage facilities from two unaffiliated third parties in accordance with Rule 3-14 and Article 11 of Regulation S-X, respectively.
In accordance with Rule 3-14 and Article 11 of Regulation S-X, the Registrant hereby files the following financial statements and pro forma financial information, respectively.
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Stockholders
Strategic Storage Trust, Inc.
Ladera Ranch, California
We have audited the accompanying combined statements of revenue and certain operating expenses (the “Historical Summary”) of the properties located in Hawthorne, California and Long Beach, California (together, the “Los Angeles Properties”), for the year ended December 31, 2009. The Historical Summary is the responsibility of the Los Angeles Properties’ management. Our responsibility is to express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in Form 8-K/A and in the Registration Statement on Form S-11 of Strategic Storage Trust, Inc.) as described in Note 1 and is not intended to be a complete presentation of the Los Angeles Properties’ revenue and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the combined revenue and certain operating expenses described in Note 1 of the Los Angeles Properties for the year ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
The accompanying Historical Summary has been reissued to reflect that the Los Angeles Properties were acquired from two unaffiliated entities, rather than from Dickens Properties, LLC, in Note 1.
/s/ Reznick Group, P.C.
Baltimore, Maryland
March 14, 2011
3
LOS ANGELES PROPERTIES
COMBINED STATEMENTS OF REVENUE AND
CERTAIN OPERATING EXPENSES
Year Ended December 31, 2009 and Nine Months Ended September 30, 2010 (unaudited)
| | | | | | | | |
| | | Year Ended | | | Period Ended | |
| | | | September 30, | |
| | | December 31, | | | 2010 | |
| | | 2009 | | | (Unaudited) | |
| | |
REVENUE | | | | | | | | |
Net rental revenue | | $ | 2,844,164 | | | $ | 2,106,769 | |
Other operating income | | | 137,407 | | | | 113,273 | |
| | |
Total revenue | | | 2,981,571 | | | | 2,220,042 | |
| | |
CERTAIN OPERATING EXPENSES | | | | | | | | |
Property operating expenses | | | 267,370 | | | | 212,767 | |
Salaries and related expenses | | | 307,119 | | | | 233,110 | |
Marketing expense | | | 58,540 | | | | 36,552 | |
Real estate taxes | | | 285,838 | | | | 216,571 | |
Property insurance | | | 20,435 | | | | 15,029 | |
| | |
Total certain operating expenses | | | 939,302 | | | | 714,029 | |
| | |
Revenue in excess of certain operating expenses | | $ | 2,042,269 | | | $ | 1,506,013 | |
See notes to statements of revenue and certain operating expenses.
4
LOS ANGELES PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE
AND CERTAIN OPERATING EXPENSES
Year ended December 31, 2009 and
Period ended September 30, 2010 (Unaudited)
Note 1. Organization and Basis of Presentation
The accompanying combined statements of revenue and certain operating expenses include the revenue and certain operating expenses of two self storage properties located in Hawthorne, California and Long Beach, California (together, the “Los Angeles Properties”) acquired from two unaffiliated entities. Strategic Storage Trust, Inc. (the “Company”) acquired the Los Angeles Properties on December 16, 2010, for a purchase price of $26 million, plus closing costs and acquisition fees. On the date of acquisition, the Los Angeles Properties contained approximately 1,600 storage units.
The accompanying combined statements of revenue and certain operating expenses were prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for the acquisition of real estate properties. The combined statements of revenue and certain operating expenses are not representative of the actual operations of the Los Angeles Properties for the periods presented, because certain operating expenses that may not be comparable to the expenses to be incurred in the proposed future operations of the Los Angeles Properties have been excluded. Expenses excluded generally consist of management fees, interest and debt related costs, depreciation and amortization expense, interest income, income taxes and certain other allocated corporate expenses not directly related to the operations of the Los Angeles Properties. Therefore the combined statements of revenue and certain operating expenses may not be comparable to a statement of operations for the Los Angeles Properties after its acquisition by the Company. Except as noted above, management of the Los Angeles Properties is not aware of any material factors relating to the Los Angeles Properties for the year ended December 31, 2009 or the period ended September 30, 2010, that would cause the reported combined financial information not to be indicative of future operating results.
Note 2. Summary of Significant Accounting Policies
Basis of Accounting
The combined statements of revenue and certain operating expenses have been prepared using the accrual method of accounting on the basis of presentation described in Note 1. As such, revenue is recorded when earned and expenses are recognized when incurred.
Revenue Recognition
Rental revenue is recognized when due over the lease terms, which are generally month-to-month leases. Other operating income, consisting primarily of late fees and ancillary revenue, is recognized when earned.
Property Operations
Certain operating expenses represent the direct expenses of operating the Los Angeles Properties and consist primarily of common area maintenance, utilities, real estate taxes, insurance, general and administrative and other operating expenses that are expected to continue in the ongoing operation of the Los Angeles Properties.
5
LOS ANGELES PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE
AND CERTAIN OPERATING EXPENSES - CONTINUED
Year ended December 31, 2009 and
Period ended September 30, 2010 (Unaudited)
Use of Estimates
The preparation of the accompanying combined statements of revenue and certain operating expenses in accordance with accounting principles generally accepted in the United States of America requires management of the Los Angeles Properties to make certain estimates and assumptions that affect the reported amounts of revenue and certain operating expenses during the reporting periods. Actual results could differ from those estimates.
Advertising
Advertising costs are charged to expense as incurred.
6
STRATEGIC STORAGE TRUST, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2009 and Period Ended September 30, 2010 (Unaudited)
The following unaudited pro forma consolidated balance sheet gives effect to an acquisition of two self storage facilities purchased from two unaffiliated entities (the “Los Angeles Properties”) on December 16, 2010 as if it was completed as of September 30, 2010 by Strategic Storage Trust, Inc., a Maryland Corporation (the “Company”). The following unaudited pro forma consolidated statements of operations are based on the historical consolidated statements of operations of the Company and the historical statements of operations of the Los Angeles Properties. The unaudited pro forma consolidated statement of operations for the year ended December 31, 2009 gives effect to this acquisition as if it was completed as of January 1, 2009. The unaudited pro forma consolidated statement of operations for the period ended September 30, 2010 gives effect to this acquisition as if it was completed as of January 1, 2010.
The information included in the “Strategic Storage Trust, Inc. Historical” column of the unaudited pro forma consolidated statement of operations for the year ended December 31, 2009 sets forth the Company’s historical consolidated statement of operations which are derived from the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the period ended December 31, 2009. The information included in the “Strategic Storage Trust, Inc. Historical” column of the unaudited pro forma consolidated balance sheet as of September 30, 2010 and the unaudited pro forma consolidated statement of operations for the period ended September 30, 2010 sets forth the Company’s historical consolidated balance sheet and statement of operations which are derived from the Company’s unaudited consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q filed with the SEC for the period ended September 30, 2010.
The unaudited pro forma adjustments are based on available information and certain assumptions that the Company believes are reasonable and factually supportable. These unaudited pro forma financial statements do not purport to represent what the actual financial position or results of operations of the Company would have been assuming such transaction had been completed as set forth above nor does it purport to represent the results of operations of the Company for future periods.
You should read the unaudited pro forma consolidated financial statements set forth below in conjunction with the audited and unaudited consolidated financial statements and related notes of the Company included in the SEC filings discussed above.
7
STRATEGIC STORAGE TRUST, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of September 30, 2010
| | | | | | | | | | | | |
| | | Strategic Storage
Trust, Inc.
Historical | | | Completed
Facilities
Acquisition
Note (2) | | | Strategic Storage
Trust, Inc.
Pro Forma
Note (3) | |
| ASSETS | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 56,877,587 | | | $ | (26,545,494) | a | | $ | 30,332,093 | |
Real estate facilities: | | | | | | | | | | | | |
Land | | | 65,896,165 | | | | 8,070,000 | b | | | 73,966,165 | |
Buildings | | | 126,873,051 | | | | 14,695,996 | b | | | 141,569,047 | |
Site improvements | | | 14,986,419 | | | | 1,334,004 | b | | | 16,320,423 | |
| | | | | | | | | | | | |
| | | 207,755,635 | | | | 24,100,000 | | | | 231,855,635 | |
Accumulated depreciation | | | (5,227,718) | | | | - | | | | (5,227,718) | |
| | | | | | | | | | | | |
| | | 202,527,917 | | | | 24,100,000 | | | | 226,627,917 | |
Construction in progress | | | 526,953 | | | | - | | | | 526,953 | |
| | | | | | | | | | | | |
Real estate facilities, net ($17,246,373 related to VIEs) | | | 203,054,870 | | | | 24,100,000 | | | | 227,154,870 | |
Escrow receivable | | | 506,400 | | | | - | | | | 506,400 | |
Prepaid expenses | | | - | | | | 30,619 | d | | | 30,619 | |
Deferred financing costs, net of accumulated amortization | | | 1,927,803 | | | | - | | | | 1,927,803 | |
Intangible assets, net of accumulated amortization | | | 13,710,384 | | | | 1,900,000 | b | | | 15,610,384 | |
Restricted cash | | | 1,939,418 | | | | - | | | | 1,939,418 | |
Investments in unconsolidated joint ventures | | | 9,271,900 | | | | - | | | | 9,271,900 | |
Other assets | | | 1,663,132 | | | | - | | | | 1,663,132 | |
| | | | | | | | | | | | |
Total assets | | $ | 288,951,494 | | | $ | (514,875) | | | $ | 288,436,619 | |
| | | | | | | | | | | | |
| | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
Secured promissory notes ($10,149,826 related to VIEs) | | $ | 115,057,136 | | | $ | - | | | $ | 115,057,136 | |
Accounts payable and accrued liabilities | | | 5,416,456 | | | | 214,741 | d | | | 5,631,197 | |
Due to affiliates | | | 407,332 | | | | - | | | | 407,332 | |
Distributions payable | | | 1,367,679 | | | | - | | | | 1,367,679 | |
| | | | | | | | | | | | |
Total liabilities | | | 122,248,603 | | | | 214,741 | | | | 122,463,344 | |
| | | | | | | | | | | | |
Commitments and contingencies | | | | | | | | | | | | |
Redeemable common stock | | | 2,507,071 | | | | - | | | | 2,507,071 | |
Stockholders’ equity: | | | | | | | | | | | | |
Strategic Storage Trust, Inc. stockholder’s equity: | | | | | | | | | | | | |
Common stock, $0.001 par value; 700,000,000 shares authorized; 24,177,656 shares issued and outstanding at September 30, 2010 | | | 24,178 | | | | - | | | | 24,178 | |
Additional paid-in capital | | | 190,215,480 | | | | - | | | | 190,215,480 | |
Distributions | | | (16,258,194) | | | | - | | | | (16,258,194) | |
Accumulated deficit | | | (16,706,352) | | | | (729,616) | c | | | (17,435,968) | |
| | | | | | | | | | | | |
Total Strategic Storage Trust, Inc. stockholders’ equity | | | 157,275,112 | | | | (729,616) | | | | 156,545,496 | |
| | | | | | | | | | | | |
Noncontrolling interest in operating partnership | | | 50,862 | | | | - | | | | 50,862 | |
Other noncontrolling interests | | | 6,869,846 | | | | - | | | | 6,869,846 | |
| | | | | | | | | | | | |
Total noncontrolling interests | | | 6,920,708 | | | | - | | | | 6,920,708 | |
| | | | | | | | | | | | |
Total stockholders’ equity | | | 164,195,820 | | | | (729,616) | | | | 163,466,204 | |
| | | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 288,951,494 | | | $ | (514,875) | | | $ | 288,436,619 | |
| | | | | | | | | | | | |
See notes to unaudited pro forma consolidated financial statements.
8
STRATEGIC STORAGE TRUST, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2009
| | | | | | | | | | | | | | | | |
| | | Strategic Storage
Trust, Inc.
Historical | | | Completed
Facilities
Acquisition
Note (4) | | | Pro Forma
Adjustments
Note (5) | | | Strategic Storage
Trust, Inc.
Pro Forma | |
Revenues: | | | | | | | | | | | | | | | | |
Self storage rental income | | $ | 7,706,662 | | | $ | 2,844,164 | | | $ | - | | | $ | 10,550,826 | |
Ancillary operating income | | | 168,481 | | | | 137,407 | | | | - | | | | 305,888 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 7,875,143 | | | | 2,981,571 | | | | - | | | | 10,856,714 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Property operating expenses | | | 3,123,018 | | | | 939,302 | | | | 19,874 | 1 | | | 4,082,194 | |
Property operating expenses - affiliates | | | 857,864 | | | | - | | | | 438,894 | 2 | | | 1,296,758 | |
General and administrative | | | 1,882,260 | | | | - | | | | - | | | | 1,882,260 | |
Depreciation | | | 1,690,189 | | | | - | | | | 553,286 | 3 | | | 2,243,475 | |
Intangible amortization expense | | | 2,601,212 | | | | - | | | | 891,667 | 3 | | | 3,492,879 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 10,154,543 | | | | 939,302 | | | | 1,903,721 | | | | 12,997,566 | |
| | | | | | | | | | | | | | | | |
Operating income (loss) | | | (2,279,400) | | | | 2,042,269 | | | | (1,903,721) | | | | (2,140,852) | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense | | | (1,877,750) | | | | - | | | | (700,219) | 4 | | | (2,577,969) | |
Deferred financing amortization expense | | | (165,121) | | | | - | | | | (40,469) | 5 | | | (205,590) | |
Property acquisition expenses - affiliates | | | (1,564,792) | | | | - | | | | (650,000) | 6 | | | (2,214,792) | |
Other property acquisition expenses | | | (1,765,090) | | | | - | | | | (79,616) | 6 | | | (1,844,706) | |
Equity in earnings of real estate ventures | | | 240,956 | | | | - | | | | - | | | | 240,956 | |
Interest income | | | 5,217 | | | | - | | | | - | | | | 5,217 | |
Other | | | 1,461 | | | | - | | | | - | | | | 1,461 | |
| | | | | | | | | | | | | | | | |
Net loss | | | (7,404,519) | | | | 2,042,269 | | | | (3,374,025) | | | | (8,736,275) | |
Less: Net loss attributable to the noncontrolling interest in our operating partnership. | | | 23,186 | | | | - | | | | 5,660 | 7 | | | 28,846 | |
Net loss attributable to other noncontrolling interests | | | 78,437 | | | | - | | | | - | | | | 78,437 | |
| | | | | | | | | | | | | | | | |
Net loss attributable to Strategic Storage Trust, Inc. | | $ | (7,302,896) | | | $ | 2,042,269 | | | $ | (3,368,365) | | | $ | (8,628,992) | |
| | | | | | | | | | | | | | | | |
Net loss per share - basic | | $ | (1.00) | | | | | | | | | | | $ | (0.97) | |
Net loss per share - diluted | | $ | (1.00) | | | | | | | | | | | $ | (0.97) | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding - basic | | | 7,272,042 | | | | | | | | 1,591,021 | 8 | | | 8,863,063 | |
Weighted average shares outstanding - diluted | | | 7,272,042 | | | | | | | | 1,591,021 | | | | 8,863,063 | |
| | | | | | | | | | | | | | | | |
See notes to unaudited pro forma consolidated financial statements.
9
STRATEGIC STORAGE TRUST, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Period Ended September 30, 2010
| | | | | | | | | | | | | | | | |
| | | Strategic Storage
Trust, Inc.
Historical | | | Completed
Facilities
Acquisition
Note (4) | | | Pro Forma
Adjustments
Note (5) | | | Strategic Storage
Trust, Inc.
Pro Forma | |
Revenues: | | | | | | | | | | | | | | | | |
Self storage rental income | | $ | 17,977,862 | | | $ | 2,106,769 | | | $ | - | | | $ | 20,084,631 | |
Ancillary operating income | | | 423,178 | | | | 113,273 | | | | - | | | | 536,451 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 18,401,040 | | | | 2,220,042 | | | | - | | | | 20,621,082 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Property operating expenses | | | 7,300,155 | | | | 714,029 | | | | 12,713 | 1 | | | 8,026,897 | |
Property operating expenses - affiliates | | | 1,815,939 | | | | - | | | | 328,203 | 2 | | | 2,144,142 | |
General and administrative | | | 2,072,830 | | | | - | | | | - | | | | 2,072,830 | |
Depreciation | | | 3,537,402 | | | | - | | | | 414,965 | 3 | | | 3,952,367 | |
Intangible amortization expense | | | 5,752,432 | | | | - | | | | 668,750 | 3 | | | 6,421,182 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 20,478,758 | | | | 714,029 | | | | 1,424,631 | | | | 22,617,418 | |
| | | | | | | | | | | | | | | | |
Operating income (loss) | | | (2,077,718) | | | | 1,506,013 | | | | (1,424,631) | | | | (1,996,336) | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense | | | (4,141,879) | | | | - | | | | (526,069) | 4 | | | (4,667,948) | |
Deferred financing amortization expense | | | (176,505) | | | | - | | | | (30,352) | 5 | | | (206,857) | |
Property acquisition expenses - affiliates | | | (1,472,591) | | | | - | | | | (650,000) | 6 | | | (2,122,591) | |
Other property acquisition expenses | | | (927,475) | | | | - | | | | (79,616) | 6 | | | (1,007,091) | |
Equity in earnings of real estate ventures | | | 657,627 | | | | - | | | | - | | | | 657,627 | |
Interest income | | | 9,229 | | | | - | | | | - | | | | 9,229 | |
Other | | | (107,545) | | | | - | | | | - | | | | (107,545) | |
| | | | | | | | | | | | | | | | |
Net loss | | | (8,236,857) | | | | 1,506,013 | | | | (2,710,668) | | | | (9,441,512) | |
Less: Net loss attributable to the noncontrolling interest in our operating partnership. | | | 2,200 | | | | - | | | | 964 | 7 | | | 3,164 | |
Net loss attributable to other noncontrolling interests | | | 335,494 | | | | - | | | | - | | | | 335,494 | |
| | | | | | | | | | | | | | | | |
Net loss attributable to Strategic Storage Trust, Inc. | | $ | (7,899,163) | | | $ | 1,506,013 | | | $ | (2,709,704) | | | $ | (9,102,854) | |
| | | | | | | | | | | | | | | | |
Net loss per share - basic | | $ | (0.39) | | | | | | | | | | | $ | (0.41) | |
Net loss per share - diluted | | $ | (0.39) | | | | | | | | | | | $ | (0.41) | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding - basic | | | 20,468,318 | | | | | | | | 1,591,021 | 8 | | | 22,059,339 | |
Weighted average shares outstanding - diluted | | | 20,468,318 | | | | | | | | 1,591,021 | | | | 22,059,339 | |
| | | | | | | | | | | | | | | | |
See notes to unaudited pro forma consolidated financial statements.
10
STRATEGIC STORAGE TRUST, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2009 and Period Ended September 30, 2010
Note 1. Acquisition
On December 16, 2010, the Company closed on the purchase of the Los Angeles Properties, which consist of two self storage facilities located in Hawthorne, California (“La Cienega”) and Long Beach, California (“Long Beach”) from two unaffiliated entities. The purchase price for the Los Angeles Properties was $26,000,000 plus closing costs and acquisition fees. The Company paid its advisor $650,000 in acquisition fees in connection with this acquisition.
The La Cienega property is an approximately 770-unit self storage facility that sits on approximately 1.7 acres and contains approximately 87,000 rentable square feet located at 12714 S. La Cienega Blvd., Hawthorne, California.
The Long Beach property is an approximately 830-unit self storage facility that sits on approximately 3.7 acres and contains approximately 87,000 rentable square feet located at 8150 Wardlow Road, Long Beach, California.
Note 2. Balance Sheet – Completed Facilities Acquisition
The unaudited pro forma consolidated balance sheet of the Company reflects pro forma adjustments related to the acquisition of the Los Angeles Properties as if it occurred on September 30, 2010.
Note 3. Balance Sheet – Pro Forma Adjustments
| | |
| (a) | | For the purposes of the pro forma consolidated balance sheet, we assumed the Los Angeles Properties were acquired using cash on hand at September 30, 2010. This adjustment reflects the cash on hand at September 30, 2010 needed to close the acquisition on December 16, 2010. |
| |
| (b) | | Adjustment reflects the purchase price of $26,000,000 allocated to land, building, site improvements and intangible assets. The purchase price allocation is preliminary; therefore the allocation between land, building, site improvements and intangible assets is subject to change. |
| |
| (c) | | Adjustment reflects the expensing of acquisition-related transaction costs which are required to be expensed as incurred under GAAP. |
| |
| (d) | | Adjustment to prepaid expenses primarily reflects prepaid property taxes related to the Los Angeles Properties. Adjustment to accounts payable and accrued liabilities reflects unearned rent and other accrued expenses the Company became liable for at the time of acquisition. |
Note 4. Statement of Operations – Completed Facilities Acquisition
This acquisition was completed on December 16, 2010. Therefore, these historical amounts represent unaudited results of the Los Angeles Properties for the year ended December 31, 2009 and the period ended September 30, 2010.
11
STRATEGIC STORAGE TRUST, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS -
CONTINUED
As of and for the Year Ended December 31, 2009 and Period Ended September 30, 2010
Note 5. Statements of Operations – Pro Forma Adjustments
| (1) | Adjustment reflects the estimated increased cost of property taxes as compared to the Los Angeles Properties historical results. |
| (2) | Adjustment reflects the additional fees the Company’s advisor is entitled to pursuant to the Company’s advisory agreement and property management agreement as compared to historical amounts. The Company’s advisor is paid an asset management fee of one-twelfth of one-percent of average invested assets calculated on a monthly basis. The Company’s property manager is paid a monthly fee of 6% of gross revenues, as defined, received from the Company’s properties. |
| (3) | Adjustment reflects the depreciation and amortization expense resulting from the Los Angeles Properties acquired on December 16, 2010. Such depreciation and amortization expense was based on a preliminary purchase price allocation of approximately $8,070,000 to land, $1,334,004 to site improvements, $14,695,996 to building, and $1,900,000 to intangible assets. Depreciation expense on the purchase price allocated to building is recognized using the straight-line method over a 35-year life and the depreciation for the site improvements are recognized straight-lined over a 10-year life. Amortization expense on the purchase price allocated to intangible assets is recognized using the straight-line method over an estimated approximate 25-month life. The purchase price allocation, and therefore depreciation and amortization expense, is preliminary and is subject to change. |
| (4) | Adjustment reflects the interest expense on assumed debt financing of approximately $13,000,000 with an interest rate of approximately 5.42%. The rate and amount are based on an actual financing the Company completed on August 25, 2010, assuming the debt issued to finance the transaction was 50% of the purchase price of the Los Angeles Properties. |
| (5) | Adjustment reflects pro-rata amount of deferred financing amortization on the loan mentioned above. |
| (6) | Adjustment for the year ended December 31, 2009 and period ended September 30, 2010 reflects the expensing of acquisition-related transaction costs, consisting of acquisition expenses paid to affiliates of $650,000 and $650,000, respectively and other property acquisition expenses of $79,616, and $79,616, respectively which are required to be expensed as incurred under GAAP. |
| (7) | Minority interest is adjusted based on the additional pro forma earnings and the pro forma shares outstanding. Such adjustment was based upon a calculation of pro forma net income and pro forma shares outstanding. |
| (8) | The pro forma weighted average shares outstanding were computed based on the weighted average number of shares outstanding during the period adjusted to give effect to the shares assumed to be issued had the acquisition been completed on January 1, 2009 or January 1, 2010, as applicable. |
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Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | | STRATEGIC STORAGE TRUST, INC. |
| | |
| Date: March 29, 2011 | | By: | | /s/ Michael S. McClure |
| | | | Michael S. McClure |
| | | | Chief Financial Officer |
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