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): September 22, 2011
TNP Strategic Retail Trust, Inc.
(Exact Name of Registrant as Specified in Charter)
| | | | |
| Maryland | | 000-54376 | | 90-0413866 |
(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
1900 Main Street, Suite 700
Irvine, California 92614
(Address of Principal Executive Offices, including Zip Code)
Registrant’s telephone number, including area code: (949) 833-8252
Not applicable
(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 registrant 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)) |
Item 9.01 Financial Statements and Exhibits.
On September 28, 2011, TNP Strategic Retail Trust, Inc. (the “Company”) filed a Current Report on Form 8-K reporting the Company’s acquisition of a fee simple interest in a multi-tenant necessity retail center located in Hesperia, California commonly known as Topaz Marketplace (the “Topaz property”) through TNP SRT Topaz Marketplace, LLC, a wholly owned indirect subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership. The Company is filing this Current Report on Form 8-K/A to amend the Current Report on Form 8-K filed on September 28, 2011 to provide the required financial information related to the Company’s acquisition of an indirect interest in Topaz Marketplace.
(a) Financial Statements of Real Estate Property Acquired.
The following financial statements are submitted at the end of this Current Report on Form 8-K/A and are filed herewith.
| | | | | | |
| | | | | Page | |
Topaz Marketplace | | | | |
| | |
| I. | | Independent Auditors’ Report | | | 1 | |
| II. | | Statements of Revenues and Certain Expenses for the Six Months Ended June 30, 2011 (unaudited) and For the Year Ended December 31, 2010 | | | 2 | |
| III. | | Notes to Statements of Revenues and Certain Expenses for the Six Months Ended June 30, 2011 (unaudited) and For the Year Ended December 31, 2010 | | | 3 | |
| |
| (b) Unaudited Pro Forma Financial Information. | | | | |
| |
| The following financial information is submitted at the end of this Current Report on Form 8-K/A and is furnished herewith. | | | | |
| |
TNP Strategic Retail Trust, Inc. and Subsidiaries | | | | |
| | |
| I. | | Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2011 | | | 7 | |
| II. | | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2010 | | | 8 | |
| III. | | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2011 | | | 9 | |
| IV. | | Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2011, Unaudited Pro Forma Statements of Operations for the Year Ended December 31, 2010 and the Six Months Ended June 30, 2011 | | | 10 | |
(c) Shell Company Transactions.
Not applicable
(d) Exhibits.
None
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors
TNP Strategic Retail Trust, Inc.
We have audited the accompanying statement of revenues and certain expenses of Topaz Marketplace, or the Property, for the year ended December 31, 2010. This statement of revenues and certain expenses is the responsibility of the Property’s management. Our responsibility is to express an opinion on the statement of revenues and certain expenses 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 statement of revenues and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues and certain expenses, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement of revenues and certain expenses. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, as described in Note 1 to the statement of revenues and certain expenses, and is not intended to be a complete presentation of the Property’s revenues and expenses.
In our opinion, the statement of revenues and certain expenses presents fairly, in all material respects, the revenues and certain expenses as described in Note 1 to the statement of revenues and certain expenses of Topaz Marketplace for the year ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
/s/ KMJ Corbin & Company LLP
Costa Mesa, California
November 2, 2011
1
TOPAZ MARKETPLACE
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
For the Six Months Ended June 30, 2011 (unaudited) and
For The Year Ended December 31, 2010
| | | | | | | | |
| | | For the Six
Months Ended
June 30, 2011
(unaudited) | | | For the Year Ended
December 31, 2010 | |
Revenue: | | | | | | | | |
Rental income | | $ | 722,000 | | | $ | 1,350,000 | |
| | | | | | | | |
Certain expenses: | | | | | | | | |
Building and ground maintenance | | | 22,000 | | | | 50,000 | |
Real estate taxes | | | 70,000 | | | | 140,000 | |
Electricity, water and gas utilities | | | 26,000 | | | | 54,000 | |
Property management fees | | | 21,000 | | | | 40,000 | |
Insurance | | | 7,000 | | | | 13,000 | |
General and administrative | | | 28,000 | | | | 55,000 | |
| | | | | | | | |
Total certain expenses | | | 174,000 | | | | 352,000 | |
| | | | | | | | |
Revenues in excess of certain expenses | | $ | 548,000 | | | $ | 998,000 | |
| | | | | | | | |
The accompanying notes are an integral part of the statements of revenues and certain expenses.
2
TOPAZ MARKETPLACE
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
For the Six Months Ended June 30, 2011 (unaudited) and
For The Year Ended December 31, 2010
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Organization
The accompanying statements of revenues and certain expenses include the operations of Topaz Marketplace, or the Property, a multi-tenant retail center located in Hesperia, California. The Property has approximately 53,000 gross leaseable square feet and was 92% occupied as of June 30, 2011 (unaudited) and December 31, 2010.
Basis of Presentation
The accompanying statements of revenues and certain expenses have been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission, or the SEC, which requires certain information with respect to real estate operations to be included with certain filings with the SEC. The statements of revenues and certain expenses include the historical revenues and certain operating expenses of the Property, exclusive of items which may not be comparable to the proposed future operations of the Property. Material amounts that would not be directly attributable to future operating results of the Property are excluded, and therefore, the statements of revenues and certain expenses are not intended to be a complete presentation of the Property’s revenues and expenses. Items excluded consist of interest expense, depreciation and amortization and federal and state income taxes.
The accompanying statements of revenues and certain expenses are not representative of the actual operations for the periods presented, as certain expenses that may not be comparable to the expenses expected to be incurred by TNP Strategic Retail Trust, Inc., or the Company, in the future operations of the Property have been excluded.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The leases are classified as operating leases and minimum rents are reco—gnized on a straight-line basis over the terms of the lease (including rent holidays). Tenant reimbursements for real estate taxes, common area maintenance and other recoverable costs are recognized as rental income in the period that the expenses are incurred.
Repairs and Maintenance
Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized.
Property Management Fees
For the six months ended June 30, 2011 and for the year ended December 31, 2010, the owners of the Property contracted with a related entity to manage the Property for a fee of 4% of base rent revenues. For the six months ended June 30, 2011 (unaudited) and for the year ended December 31, 2010, the Property incurred $21,000 and $40,000, respectively, in property management fees.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and certain expenses during the reporting periods. Actual results could differ materially from those estimates.
Unaudited Interim Information
The statement of revenues and certain expenses for the six months ended June 30, 2011 is unaudited. In the opinion of management, such financial statement reflects all adjustments necessary for a fair presentation of results of the interim period. All such adjustments are of a normal recurring nature.
3
NOTE 3 – LEASES
The Property has entered into operating lease agreements with tenants that expire through 2028. The aggregate annual future minimum lease payments to be received under the existing non-cancelable operating leases as of June 30, 2011 are as follows:
| | | | |
Years Ending December 31, | | Minimum
Lease
Payments | |
2011(1) | | $ | 561,000 | |
2012 | | | 1,148,000 | |
2013 | | | 1,118,000 | |
2014 | | | 1,049,000 | |
2015 | | | 909,000 | |
Thereafter | | | 6,967,000 | |
| | | | |
| | $ | 11,752,000 | |
| | | | |
| (1) | For the period from July 1, 2011 to December 31, 2011 |
The leases also require reimbursement of the tenants’ share of common area expenses, real estate taxes and other expenses, which are not included in the amounts above. The tenant leases generally include tenant renewal options that can extend the lease terms.
NOTE 4 – TENANT CONCENTRATION
For the six months ended June 30, 2011, the Property had three tenants collectively occupying 59.8% (unaudited) of the total gross leasable area, which accounted for 60.9% (unaudited) of the total base rent.
| | | | | | | | | | | | |
Tenant Name | | Date of Lease
Expiration | | | Aggregate Base
Rent For The Six Months
Ended June 30, 2011
(unaudited) | | | % Aggregate Base
Rent For The Six Months
Ended June 30, 2011
(unaudited) | |
Fresh and Easy Neighborhood Market | | | 8/6/2028 | | | $ | 136,000 | | | | 22.8 | % |
Western Sizzlin Wood Grill Buffet | | | 10/22/2023 | | | $ | 124,000 | | | | 20.8 | % |
Total Renal Care | | | 8/31/2018 | | | $ | 103,000 | | | | 17.3 | % |
Aggregate base rent is based on contractual base rent from leases in effect as of June 30, 2011. If these tenants were to default on their leases and substitute tenants are not found, future revenue of the Property would be materially and adversely impacted.
For the year ended December 31, 2010, the Property had three tenants occupying 59.8% of the Property’s total gross leaseable area, which accounted for 65.5% of the total base rent.
| | | | | | | | | | | | |
Tenant Name | | Date of Lease
Expiration | | | Aggregate Base
Rent For The Year
Ended December 31,
2010 | | | % Aggregate Base
Rent For The Year
Ended December 31,
2010 | |
Fresh and Easy Neighborhood Market | | | 8/6/2028 | | | $ | 272,000 | | | | 24.6 | % |
Western Sizzlin Wood Grill Buffet | | | 10/22/2023 | | | $ | 248,000 | | | | 22.3 | % |
Total Renal Care | | | 8/31/2018 | | | $ | 206,000 | | | | 18.6 | % |
Aggregate base rent is based on contractual base rent from leases in effect as of December��31, 2010. If these tenants were to default on their leases and substitute tenants were not found, future revenue of the Property would be materially and adversely impacted.
4
NOTE 5 – COMMITMENTS AND CONTINGENCIES
Litigation
The Property may be subject to legal claims in the ordinary course of business. Management is not aware of potential claims, of which the outcome is likely to have a material adverse effect on the Property’s results of operations or financial condition.
Environmental Matters
In connection with the ownership and operation of real estate, the Property may be potentially liable for costs and damages related to environmental matters. The Property has not been notified by any governmental authority of any non-compliance, liability or other claim, and management is not aware of any other environmental condition that it believes will have a material adverse effect on the Property’s results of operations.
Other Matters
Other commitments and contingencies include the usual obligations of a real estate property in the normal course of business. In the opinion of management, these matters are not expected to have a material adverse effect on the Property’s financial position and/or results of operations.
NOTE 6 – SUBSEQUENT EVENT
On September 23, 2011, the Company, through TNP SRT Topaz Marketplace, LLC, an indirect wholly owned subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership, purchased the Property for a purchase price of $13,500,000, plus closing costs.
5
TNP STRATEGIC RETAIL TRUST, INC.
Unaudited Pro forma Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2011 and
For The Year Ended December 31, 2010
As used herein, “we,” “us,” and “Company” refers to TNP Strategic Retail Trust, Inc. On September 23, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located in Hesperia, California commonly known as Topaz Marketplace, or the Topaz Property, through TNP SRT Topaz Marketplace, LLC, or TNP SRT Topaz, a wholly owned indirect subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership, or the Operating Partnership, from an unaffiliated third party seller. TNP SRT Topaz acquired the Topaz Property for an aggregate purchase price of approximately $13,500,000, exclusive of closing costs and certain fees payable to the seller, or approximately $268 per square foot. TNP SRT Topaz financed the payment of the purchase price for the Topaz Property with (1) proceeds from the Company’s initial public offering and (2) approximately $8,000,000 in funds borrowed under the Company’s existing revolving credit agreement (as amended from time to time, the “Credit Agreement”) with KeyBank National Association. The accompanying unaudited pro forma condensed consolidated financial statements (including the notes thereto) are qualified in their entirety by reference to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended December 31, 2010 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011. In management’s opinion, all adjustments necessary to reflect the transactions have been made.
On July 19, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located at 40 J.A. Cochran Bypass in Chester, South Carolina commonly known as Cochran Bypass through TNP SRT Cochran Bypass, LLC, or TNP SRT Cochran Bypass, a wholly owned indirect subsidiary of the Operating Partnership, from an affiliated third party seller. TNP SRT Cochran Bypass acquired Cochran Bypass for aggregate consideration of $2,585,000, comprised of (1) an assumption of all outstanding obligations on and after the closing date of the senior loan from First South Bank secured by Cochran Bypass in the aggregate principal amount of $1,220,000, (2) an assumption of all outstanding obligations on and after the closing date of a junior loan from TNP 2008 Participating Notes Program, LLC, a fund affiliated with our sponsor, secured by Cochran Bypass in the current principal amount of $775,000, and (3) a carryback promissory note from the affiliated seller of Cochran Bypass in an amount of $579,000.
On May 26, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located at 901 West Interstate Avenue, Bismark, North Dakota commonly known as Pinehurst Square East, or Pinehurst East, through TNP SRT Pinehurst East, LLC, or TNP SRT Pinehurst East, a wholly owned indirect subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership, or the Operating Partnership, from an unaffiliated third party seller. TNP SRT Pinehurst East acquired Pinehurst East for an aggregate purchase price of $15,000,000, exclusive of closing costs. TNP SRT Pinehurst East financed the payment of the purchase price for Pinehurst East with (1) proceeds from our initial public offering and (2) approximately $9,750,000 in funds borrowed under the Company’s existing revolving credit agreement, or the Credit Agreement with KeyBank National Association. The accompanying unaudited pro forma condensed consolidated financial statements (including the notes thereto) are qualified in their entirety by reference to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended December 31, 2010 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011. In management’s opinion, all adjustments necessary to reflect the transactions have been made.
On March 30, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located at 655 W. Craig Road, in North Las Vegas, Nevada commonly known as Craig Promenade through TNP SRT Craig Promenade, LLC, or TNP SRT Craig Promenade, a wholly owned indirect subsidiary of the Operating Partnership, from an unaffiliated third party seller. TNP SRT Craig Promenade acquired Craig Promenade for an aggregate purchase price of $12,800,000, exclusive of closing costs. TNP SRT Craig Promenade financed the payment of the purchase price for Craig Promenade with (1) proceeds from the Company’s initial public offering and (2) approximately $8,750,000 in funds borrowed under the Company’s existing revolving credit agreement.
The accompanying unaudited pro forma condensed consolidated balance sheet is presented as if we acquired Topaz Marketplace, Cochran Bypass, Pinehurst East, and Craig Promenade as of June 30, 2011, as applicable.
The accompanying unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2010 and the six months ended June 30, 2011 are presented as if we acquired Topaz Marketplace, Cochran Bypass, Pinehurst Square East, and Craig Promenade on January 1, 2010, as applicable. The accompanying pro forma adjustments assume that we raised sufficient net offering proceeds in our initial public offering at a price of $10.00 per share to fund the purchase of the Topaz property and Cochran Bypass properties as of January 1, 2010.
The accompanying unaudited pro forma condensed consolidated financial statements are unaudited and are subject to a number of estimates, assumptions, and other uncertainties, and do not purport to be indicative of the actual results of operations that would have occurred had the acquisition reflected therein in fact occurred on the date specified, nor do such financial statements purport to be indicative of the results of operations that may be achieved in the future. In addition, the unaudited pro forma condensed consolidated financial statements include pro forma allocations of the purchase price of Topaz property and Cochran Bypass based upon preliminary estimates of the fair value of the assets acquired and liabilities assumed in connection with the acquisition and are subject to change.
6
TNP STRATEGIC RETAIL TRUST, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2011
| | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2011 as
Reported (A) | | | Total Prior
Acquisitions
Pro Forma
Adjustments
(B) | | | Pro Forma
Six Months
Ended
June 30,
2011 | |
ASSETS | | | | | | | | | | | | |
Investment in Real Estate | | | | | | | | | | | | |
Land | | $ | 25,979,000 | | | $ | 2,895,000 | | | $ | 28,874,000 | |
Building and Building Improvements | | | 40,557,000 | | | | 11,909,000 | | | | 52,466,000 | |
Tenant Improvements | | | 2,333,000 | | | | 295,000 | | | | 2,628,000 | |
| | | | | | | | | | | | |
| | | 68,869,000 | | | | 15,099,000 | | | | 83,968,000 | |
Accumulated Depreciation | | | (1,886,000 | ) | | | (10,000 | ) | | | (1,896,000 | ) |
| | | | | | | | | | | | |
Investments in real estate, net | | | 66,983,000 | | | | 15,089,000 | | | | 82,072,000 | |
Investments in mortgage notes receivable, net | | | 18,000,000 | | | | — | | | | 18,000,000 | |
| | | | | | | | | | | | |
Investments in real estate and mortgage assets, net | | | 84,983,000 | | | | 15,089,000 | | | | 100,072,000 | |
Cash and Cash Equivalents | | | 581,000 | | | | — | | | | 581,000 | |
Restricted Cash | | | 436,000 | | | | — | | | | 436,000 | |
Prepaid Expenses and Other Assets | | | 684,000 | | | | 5,000 | | | | 689,000 | |
Accounts Receivable | | | 825,000 | | | | 14,000 | | | | 839,000 | |
Acquired Lease intangibles, net | | | 9,020,000 | | | | 1,917,000 | | | | 10,937,000 | |
Deferred Costs | | | | | | | | | | | | |
Organization and Offering | | | 1,590,000 | | | | — | | | | 1,590,000 | |
Financing Fees, net | | | 1,350,000 | | | | | | | | 1,350,000 | |
| | | | | | | | | | | | |
Total deferred costs, net | | | 2,940,000 | | | | | | | | 2,940,000 | |
| | | | | | | | | | | | |
Assets held for sale | | | 4,533,000 | | | | — | | | | 4,533,000 | |
| | | | | | | | | | | | |
Total assets | | $ | 104,002,000 | | | $ | 17,025,000 | | | $ | 121,027,000 | |
| | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDER’S EQUITY | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | |
Accounts payable and accrued expenses | | $ | 1,144,000 | | | | 146,000 | | | | 1,290,000 | |
Amounts due to affiliates | | | 2,443,000 | | | | — | | | | 2,443,000 | |
Other liabilities | | | 401,000 | | | | 25,000 | | | | 426,000 | |
Notes payable | | | 74,566,000 | | | | 10,600,000 | | | | 85,166,000 | |
Acquired below market lease intangibles, net | | | 2,708,000 | | | | 939,000 | | | | 3,647,000 | |
| | | | | | | | | | | | |
Total liabilities | | | 81,262,000 | | | | 11,710,000 | | | | 92,972,000 | |
| | | | | | | | | | | | |
Commitments and contingencies | | | | | | | | | | | | |
Equity: | | | | | | | | | | | | |
Preferred stock, $0.01 par value per share; 50,000,000 shares authorized; none issued and outstanding as of June 30, 2011 and December 31, 2010, respectively | | | — | | | | — | | | | — | |
Common stock, $0.01 par value per share; 400,000,000 shares authorized, 3,516,034 and 2,382,317 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively | | | 35,000 | | | | 6,000 | | | | 41,000 | |
Additional paid-in capital | | | 31,814,000 | | | | 6,026,000 | | | | 37,840,000 | |
Accumulated deficit | | | (10,531,000 | ) | | | (717,000 | )(C) | | | (11,248,000 | ) |
| | | | | | | | | | | | |
Total stockholders’ equity | | | 21,318,000 | | | | 5,315,000 | | | | 26,633,000 | |
Non-controlling interests | | | 1,422,000 | | | | — | | | | 1,422,000 | |
| | | | | | | | | | | | |
Total equity | | | 22,740,000 | | | | 5,315,000 | | | | 28,055,000 | |
| | | | | | | | | | | | |
Total liabilities and equity | | $ | 104,002,000 | | | $ | 17,025,000 | | | $ | 121,027,000 | |
| | | | | | | | | | | | |
7
TNP STRATEGIC RETAIL TRUST, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For The Year Ended December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Year Ended
December 31, 2010 (D) | | | Topaz Marketplace
Pro Forma
Adjustments (E) | | | Cochran Bypass
Pro Forma
Adjustments (E) | | | Pinehurst Square
East Pro Forma
Adjustments (E) | | | Craig Promenade
Pro Forma
Adjustments (E) | | | Pro forma for the
Year Ended
December 31, 2010 | |
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 4,633,000 | | | $ | 1,350,000 | (F) | | $ | 297,000 | (F) | | $ | 1,712,000 | (F) | | $ | 1,432,000 | (F) | | $ | 9,424,000 | |
Other property income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Revenue | | | 4,633,000 | | | | 1,350,000 | | | | 297,000 | | | | 1,712,000 | | | | 1,432,000 | | | | 9,424,000 | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Operating and maintenance | | | 2,014,000 | | | | 297,000 | (G)(H) | | | 69,000 | (G)(H) | | | 503,000 | (G)(H) | | | 359,000 | (G)(H) | | | 3,242,000 | |
General and administrative | | | 1,730,000 | | | | 55,000 | | | | 41,000 | | | | 95,000 | | | | 14,000 | | | | 1,935,000 | |
Depreciation and amortization | | | 2,024,000 | | | | 652,000 | (I) | | | 126,000 | (I) | | | 877,000 | (I) | | | 612,000 | (I) | | | 4,291,000 | |
Acquisition Expenses | | | 1,353,000 | | | | 648,000 | | | | 38,000 | | | | 440,000 | | | | 410,000 | | | | 2,889,000 | |
Interest Expense | | | 2,009,000 | | | | 506,000 | (J) | | | 216,000 | (J) | | | 558,000 | (J) | | | 985,000 | (J) | | | 4,274,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Expenses | | | 9,130,000 | | | | 2,158,000 | | | | 490,000 | | | | 2,473,000 | | | | 2,380,000 | | | | 16,631,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loss before other income (expense) | | | (4,497,000 | ) | | | (808,000 | ) | | | (193,000 | ) | | | (761,000 | ) | | | (948,000 | ) | | | (7,207,000 | ) |
Other income and expense | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income | | | 4,000 | | | | — | | | | — | | | | — | | | | — | | | | 4,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loss before discontinued operations | | | (4,493,000 | ) | | | (808,000 | ) | | | (193,000 | ) | | | (761,000 | ) | | | (948,000 | ) | | | (7,203,000 | ) |
Income (loss) from discontinued operations | | | 101,000 | | | | — | | | | — | | | | — | | | | — | | | | 101,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | | (4,392,000 | ) | | | (808,000 | ) | | | (193,000 | ) | | | (761,000 | ) | | | (948,000 | ) | | | (7,102,000 | ) |
Net loss attributable to non-controlling interest | | | 5,000 | | | | — | | | | — | | | | — | | | | — | | | | 5,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net loss attributable to stockholders | | $ | (4,387,000 | ) | | $ | (808,000 | ) | | $ | (193,000 | ) | | $ | (761,000 | ) | | $ | (948,000 | ) | | $ | (7,097,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net earnings (loss) per share — basic and diluted | | | | | | | | | | | | | | | | | | | | | | | | |
Continuing operations | | $ | (3.03 | ) | | | | | | | | | | | | | | | | | | $ | (1.23 | ) |
Discontinued operations | | $ | 0.07 | | | | | | | | | | | | | | | | | | | $ | 0.02 | |
Weighted-average number of common shares outstanding — basic and diluted | | | 1,483,179 | | | | | | | | | | | | | | | | | | | | 5,871,679 | (K) |
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated statement of operations.
8
TNP STRATEGIC RETAIL TRUST, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For The Six Months Ended June 30, 2011
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Six
Months Ended
June 30, 2011 (D) | | | Topaz
Marketplace
Pro Forma
Adjustments (E) | | | Cochran Bypass
Pro
Forma
Adjustments (E) | | | Pinehurst Square
East
Pro Forma
Adjustments (E) | | | Craig Promenade
Pro
Forma
Adjustments (E) | | | Pro forma for the
Six Months
Ended
June 30, 2011 | |
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 4,056,000 | | | $ | 722,000 | (F) | | $ | 148,000 | (F) | | $ | 681,000 | (F) | | $ | 358,000 | (F) | | $ | 5,965,000 | |
Other property income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Revenue | | | 4,056,000 | | | | 722,000 | | | | 148,000 | | | | 681,000 | | | | 358,000 | | | | 5,965,000 | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Operating and maintenance | | | 1,784,000 | | | | 146,000 | (G)(H) | | | 32,000 | (G)(H) | | | 209,000 | (G)(H) | | | 90,000 | (G)(H) | | | 2,261,000 | |
General and administrative | | | 982,000 | | | | 28,000 | | | | 19,000 | | | | 16,000 | | | | 4,000 | | | | 1,049,000 | |
Depreciation and amortization | | | 1,576,000 | | | | 321,000 | (I) | | | 62,000 | (I) | | | 340,000 | (I) | | | 107,000 | (I) | | | 2,406,000 | |
Acquisition Expenses | | | 1,452,000 | | | | — | | | | — | | | | — | | | | — | | | | 1,452,000 | |
Interest Expense | | | 1,503,000 | | | | 249,000 | (J) | | | 106,000 | (J) | | | 218,000 | (J) | | | 113,000 | (J) | | | 2,189,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Expenses | | | 7,297,000 | | | | 744,000 | | | | 219,000 | | | | 783,000 | | | | 314,000 | | | | 9,357,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loss before other income (expense) | | | (3,241,000 | ) | | | (22,000 | ) | | | (71,000 | ) | | | (102,000 | ) | | | 44,000 | | | | (3,392,000 | ) |
Other income and expense | | | — | | | �� | — | | | | — | | | | — | | | | — | | | | — | |
Interest income | | | 134,000 | | | | — | | | | — | | | | — | | | | — | | | | 134,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loss before discontinued operations | | | (3,107,000 | ) | | | (22,000 | ) | | | (71,000 | ) | | | (102,000 | ) | | | 44,000 | | | | (3,258,000 | ) |
Income (loss) from discontinued operations | | | 86,000 | | | | — | | | | — | | | | — | | | | — | | | | 86,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | $ | (3,021,000 | ) | | $ | (22,000 | ) | | $ | (71,000 | ) | | $ | (102,000 | ) | | $ | 44,000 | | | $ | (3,172,000 | ) |
Net loss attributable to non-controlling interest | | | 137,000 | | | | — | | | | — | | | | — | | | | — | | | | 137,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net loss attributable to common stockholders | | $ | (2,884,000 | ) | | $ | (22,000 | ) | | $ | (71,000 | ) | | $ | (102,000 | ) | | $ | 44,000 | | | $ | (3,035,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net earnings (loss) per share — basic and diluted | | | | | | | | | | | | | | | | | | | | | | | | |
Continuing operations | | $ | (1.06 | ) | | | | | | | | | | | | | | | | | | $ | (0.45 | ) |
Discontinued operations | | $ | 0.03 | | | | | | | | | | | | | | | | | | | $ | 0.01 | |
Weighted-average number of common shares outstanding — basic and diluted | | | 2,805,487 | | | | | | | | | | | | | | | | | | | | 7,193,987 | (K) |
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated statement of operations.
9
TNP STRATEGIC RETAIL TRUST, INC.
1. Notes to Unaudited Pro forma Condensed Consolidated Balance Sheet as of June 30, 2011, and Unaudited Pro forma Statements of Operations for the Year Ended December 31, 2010 and the Six Months Ended June 30, 2011
| (A) | As reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011. |
| (B) | Reflects the purchase price of the assets acquired and liabilities incurred or assumed by us in connection with the Topaz Marketplace and Cochran Bypass acquisitions completed subsequent to June 30, 2011. The purchase price allocation is preliminary and is subject to change. |
| (C) | Amount represents the acquisition related expenses incurred at the time of acquisition, not included in the historical results. |
| (D) | Reflects our historical consolidated operations as reported in our Annual Report on Form 10-K for year ended December 31, 2010 and our Quarterly Report on Form 10-Q for the six months ended June 30, 2011, as applicable. |
| (E) | Amounts represent pro forma adjustments, based on historical operations of Topaz Marketplace, Cochran Bypass, Pinehurst Square East, and Craig Promenade which were acquired during the first three quarters of 2011. |
| (F) | Reflects rental revenues based on the historical and pro forma operations for the year ended December 31, 2010 and the six months ended June 30, 2011, as applicable. |
| (G) | Reflects property operating expenses (not reflected in our historical statement of operations for the year ended December 31, 2010 and the six months ended June 30, 2011, as applicable) based on the historical operations of the previous owner. |
| (H) | Included in such amount are property management fees that would be due to our property manager, TNP Property Manager, LLC (“Property Manager”) had Topaz Marketplace, Cochran Bypass, Pinehurst Square East, and Craig Promenade been acquired on January 1, 2010. The property management agreement requires us to pay Property Manager a monthly property management fee of 5% of each of Topaz Marketplace’s, Cochran Bypass’s, Pinehurst Square East’s, and Craig Promenade’s gross revenue. |
| (I) | Amounts represent depreciation and amortization expense on the allocation of the purchase price. Depreciation and amortization expense is recognized using the straight-line method over an estimated useful life of 45 to 47 years for buildings and 3 to 203 months for improvements, in place leases and lease commissions. |
The amounts allocated to above market leases and below market leases are amortized to rental income over the remaining terms of the acquired leases, which range from 3 to 120 months and from 69-203 months, respectively.
The purchase price allocations, and therefore, depreciation and amortization expense, are preliminary and subject to change.
| (J) | Amount represents interest expense and the amortization of the corresponding deferred financing costs on the Credit Agreement, the senior loan, the junior loan, and the carryback promissory note. The Credit Agreement bears interest at a variable rate. |
| (K) | Represents the weighted average number of shares of our common stock from our initial public offering, at $10.00 per share, required to generate sufficient offering proceeds, net of offering costs, to fund the purchase of Topaz Marketplace, Cochran Bypass, Pinehurst Square East, and Craig Promenade. The calculation assumes these proceeds were raised as of January 1, 2010. |
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | |
| | | | TNP STRATEGIC RETAIL TRUST, INC. |
| | | |
| Date: December 8, 2011 | | | | | | |
| | | |
| | | | By: | | /s/ JAMES R. WOLFORD |
| | | | | | James R. Wolford |
| | | | | | Chief Financial Officer, Treasurer & Secretary |
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