UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 11, 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 October 14, 2011, TNP Strategic Retail Trust, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Form 8-K”) reporting the Company’s acquisition of a fee simple interest in a multi-tenant necessity retail center located in Kissimmee, Florida commonly known as Osceola Village (the “Osceola Property”) through TNP SRT Osceola Village, LLC, a wholly owned subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership. On December 27, 2011, the Company filed an amendment to the Form 8-K to provide financial information related to the Company’s acquisition of its interest in Osceola Village which included an audited statement of revenues and certain expenses for the six months ended December 31, 2010. The Company is filing this Current Report on Form 8-K/A to amend the Form 8-K filed on October 14, 2011 and the Form 8-K/A filed on December 27, 2011 to provide the required financial information related to the Company’s acquisition of an indirect interest in Osceola Village, including an audited statement of revenues and certain expenses for the full year ended December 31, 2010.
(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 | |
Osceola Village | | | | |
| | |
I. | | Independent Auditors’ Report | | | 3 | |
II. | | Statements of Revenues and Certain Expenses for the Nine Months Ended September 30, 2011 (unaudited) and for the Year Ended December 31, 2010 | | | 4 | |
III. | | Notes to Statements of Revenues and Certain Expenses for the Nine Months Ended September 30, 2011 (unaudited) and for the Year Ended December 31, 2010 | | | 5 | |
|
| (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 September 30, 2011 | | | 10 | |
II. | | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2010 | | | 11 | |
III. | | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2011 | | | 12 | |
IV. | | Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2011, Unaudited Pro Forma Statements of Operations for the Year Ended December 31, 2010 and the Nine Months Ended September 30, 2011 | | | 13 | |
(c) Shell Company Transactions.
Not applicable
(d) Exhibits.
None
2
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 Osceola Village, 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 Osceola Village 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
January 12, 2012
3
OSCEOLA VILLAGE
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
For the Nine Months Ended September 30, 2011 (unaudited) and
For The Year Ended December 31, 2010
| | | | | | | | |
| | | For the Nine
Months Ended
September 30, 2011
(unaudited) | | | For the Year
Ended
December 31, 2010 | |
Revenue: | | | | | | | | |
Rental income | | $ | 1,371,000 | | | $ | 1,720,000 | |
| | | | | | | | |
Certain expenses: | | | | | | | | |
Building and ground maintenance | | | 75,000 | | | | 121,000 | |
Real estate taxes | | | 255,000 | | | | 337,000 | |
Electricity, water and gas utilities | | | 63,000 | | | | 97,000 | |
Property management fees | | | 60,000 | | | | 102,000 | |
Insurance | | | 44,000 | | | | 58,000 | |
General and administrative | | | 30,000 | | | | 52,000 | |
| | | | | | | | |
Total certain expenses | | | 527,000 | | | | 767,000 | |
| | | | | | | | |
Revenues in excess of certain expenses | | $ | 844,000 | | | $ | 953,000 | |
| | | | | | | | |
The accompanying notes are an integral part of the statements of revenues and certain expenses.
4
OSCEOLA VILLAGE
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
For the Nine Months Ended September 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 Osceola Village, or the Property, a multi-tenant retail center located in Osceola County, Florida. The Property has approximately 117,000 gross leaseable square feet and was approximately 79% and 77% occupied as of September 30, 2011 (unaudited) and December 31, 2010, respectively.
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 recognized on a straight-line basis over the terms of the leases (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
From January 1, 2010 to June 4, 2010, the owners of the Property contracted with two unrelated third-party property managers to manage the Property for a monthly fee totaling $50,000. Effective June 4, 2010, the owners of the Property contracted with a related entity to manage the Property for a fee equal to 4.5% of Gross Receipts (as defined in the Property Management Agreement) totaling $52,000. For the nine months ended September 30, 2011 (unaudited) and for the year ended December 31, 2010, the Property incurred property management fees of $60,000 and $102,000, respectively.
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 nine months ended September 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.
5
NOTE 3 – LEASES
The Property has entered into operating lease agreements with tenants that have terms that expire through 2028. The aggregate annual future minimum lease payments to be received under the existing non-cancelable operating leases as of September 30, 2011 are as follows:
| | | | |
Years Ending December 31, | | Minimum
Lease
Payments | |
2011(1) | | $ | 440,000 | |
2012 | | | 1,809,000 | |
2013 | | | 1,820,000 | |
2014 | | | 1,746,000 | |
2015 | | | 1,658,000 | |
Thereafter | | | 10,159,000 | |
| | | | |
| | $ | 17,632,000 | |
| | | | |
| (1) | For the period from October 1, 2011 to December 31, 2011 |
The leases at the Property also require reimbursement of the tenants’ proportional 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 CONCENTRATIONS
For the nine months ended September 30, 2011, the Property had two tenants collectively occupying 65% (unaudited) of the total gross leasable area, which accounted for 78% (unaudited) of the total base rent.
| | | | | | | | | | | | |
Tenant Name | | Date of Lease
Expiration | | | Aggregate Base
Rent For The Nine Months
Ended September 30, 2011
(unaudited) | | | % Aggregate Base
Rent For The Nine Months
Ended September 30, 2011
(unaudited) | |
Publix Super Markets, Inc. | | | 10/31/2028 | | | $ | 419,000 | | | | 42 | % |
Gregg Appliances, Inc. | | | 10/31/2018 | | | $ | 360,000 | | | | 36 | % |
Aggregate base rent is based on contractual base rent from leases in effect as of September 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 two tenants collectively occupying 65% of the Property’s total gross leaseable area, which accounted for 78% 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 | |
Publix Super Markets, Inc. | | | 10/31/2028 | | | $ | 559,000 | | | | 42 | % |
Gregg Appliances, Inc. | | | 10/31/2018 | | | $ | 480,000 | | | | 36 | % |
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.
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.
6
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 October 11, 2011, the Company, through TNP SRT Osceola Village, LLC, a wholly owned subsidiary of TNP Strategic Retail Operating Partnership, LP, the Company’s operating partnership, purchased the Property for a purchase price of $21,800,000, plus closing costs.
7
TNP STRATEGIC RETAIL TRUST, INC.
Unaudited Pro forma Condensed Consolidated Financial Statements
For the Nine Months Ended September 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 October 11, 2011, we acquired a fee simple interest in a multi-tenant necessity retail center located in Kissimmee, Florida commonly known as Osceola Village, or the Osceola Property, through TNP SRT Osceola Village, LLC, or TNP SRT Osceola Village, a wholly owned subsidiary of TNP Strategic Retail Operating Partnership, LP, or the Operating Partnership, pursuant to a Purchase and Sale Agreement and Joint Escrow Instructions, by and between TNP SRT Osceola Village and So Wehren Holding Corp., a third party seller. TNP SRT Osceola Village acquired the Osceola Property for an aggregate purchase price of $21,800,000, exclusive of closing costs, or approximately $187 per square foot. TNP SRT Osceola Village financed the payment of the purchase price for the Osceola Property with (1) proceeds from our initial public offering and (2) the proceeds of a loan in the aggregate principal amount of $19,000,000 (the “Osceola Loan”) from American National Insurance Company, a Texas insurance company.
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 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 our initial public offering and (2) approximately $8,000,000 in funds borrowed under our existing revolving credit agreement (as amended from time to time, the “Credit Agreement”) with KeyBank National Association.
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, or the Cochran Property, through TNP SRT Cochran Bypass, LLC, or TNP SRT Cochran Bypass, a wholly owned subsidiary of the Operating Partnership, from an affiliated third party seller. TNP SRT Cochran Bypass acquired the Cochran Property 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 (the “Senior Loan”) secured by the Cochran Property 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 the Cochran Property in the current principal amount of $775,000, (the “Junior Loan”), and (3) a carryback promissory note from the affiliated seller of the Cochran Property in an amount of $579,000, (the “Carryback Promissory Note”).
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 the Pinehurst Property, through TNP SRT Pinehurst East, LLC, or TNP SRT Pinehurst East, a wholly owned subsidiary of the Operating Partnership, from an unaffiliated third party seller. TNP SRT Pinehurst East acquired the Pinehurst Property 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 the Pinehurst Property with (1) proceeds from our initial public offering, (2) approximately $9,750,000 in funds borrowed under the Credit Agreement, and (3) the issuance of approximately 287,472 units of the Operating Partnership’s common limited partnership interests (the “Units”) to certain of the sellers who elected to receive Units for an aggregate value of approximately $2,587,000.
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, or the Craig Property, 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 the Craig Property 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 the Craig Property with (1) proceeds from our initial public offering and (2) approximately $8,750,000 in funds borrowed under the Credit Agreement.
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 September 30, 2011. In management’s opinion, all adjustments necessary to reflect the transactions have been made. The accompanying unaudited pro forma condensed consolidated balance sheet is presented as if we acquired the Osceola Property, as of September 30, 2011. The accompanying unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2010 and the nine months ended September 30, 2011 are presented as if we acquired the Osceola Property, the Topaz Property, the Cochran Property, the Pinehurst Property, and the Craig Property 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 these properties as of January 1, 2010.
8
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 the Osceola Property, the Topaz Property, the Cochran Property, the Pinehurst Property, and the Craig Property 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.
9
TNP STRATEGIC RETAIL TRUST, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2011
| | | | | | | | | | | | |
| | | As of
September 30, 2011 as
Reported (A) | | | Total Prior
Acquisitions
Pro Forma
Adjustments
(B) | | | Pro Forma
As of
September 30,
2011 | |
ASSETS | | | | | | | | | | | | |
Investment in Real Estate | | | | | | | | | | | | |
Land | | $ | 28,671,000 | | | $ | 6,497,000 | | | $ | 35,168,000 | |
Building and Building Improvements | | | 53,340,000 | | | | 12,393,000 | | | | 65,733,000 | |
Tenant Improvements | | | 2,705,000 | | | | 1,007,000 | | | | 3,712,000 | |
| | | | | | | | | | | | |
| | | 84,716,000 | | | | 19,897,000 | | | | 104,613,000 | |
Accumulated Depreciation | | | (2,546,000 | ) | | | — | | | | (2,546,0000 | ) |
| | | | | | | | | | | | |
Investments in real estate, net | | | 82,170,000 | | | | 19,897,000 | | | | 102,067,000 | |
Investments in mortgage notes receivable, net | | | 18,000,000 | | | | — | | | | 18,000,000 | |
| | | | | | | | | | | | |
Investments in real estate and mortgage assets, net | | | 100,170,000 | | | | 19,897,000 | | | | 120,067,000 | �� |
Cash and Cash Equivalents | | | 1,387,000 | | | | — | | | | 1,387,000 | |
Restricted Cash | | | 1,346,000 | | | | — | | | | 1,346,000 | |
Prepaid Expenses and Other Assets | | | 578,000 | | | | 190,000 | | | | 768,000 | |
Accounts Receivable | | | 904,000 | | | | 10,000 | | | | 914,000 | |
Acquired Lease intangibles, net | | | 10,314,000 | | | | 2,242,000 | | | | 12,556,000 | |
Deferred Costs | | | | | | | | | | | | |
Organization and Offering | | | 1,477,000 | | | | — | | | | 1,477,000 | |
Financing Fees, net | | | 1,272,000 | | | | 594,000 | | | | 1,866,000 | |
| | | | | | | | | | | | |
Total deferred costs, net | | | 2,749,000 | | | | 594,000 | | | | 3,343,000 | |
| | | | | | | | | | | | |
Assets held for sale | | | 3,194,000 | | | | — | | | | 3,194,000 | |
| | | | | | | | | | | | |
Total assets | | $ | 120,642,000 | | | $ | 22,933,000 | | | $ | 143,575,000 | |
| | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | |
Accounts payable and accrued expenses | | $ | 2,310,000 | | | | 273,000 | | | | 2,583,000 | |
Amounts due to affiliates | | | 1,537,000 | | | | — | | | | 1,537,000 | |
Other liabilities | | | 482,000 | | | | 54,000 | | | | 536,000 | |
Notes payable | | | 82,917,000 | | | | 19,020,000 | | | | 101,937,000 | |
Acquired below market lease intangibles, net | | | 3,375,000 | | | | 339,000 | | | | 3,714,000 | |
| | | | | | | | | | | | |
Total liabilities | | | 90,621,000 | | | | 19,686,000 | | | | 110,307,000 | |
| | | | | | | | | | | | |
Commitments and contingencies | | | | | | | | | | | | |
Equity: | | | | | | | | | | | | |
Preferred stock, $0.01 par value per share; 50,000,000 shares authorized; none issued and outstanding as of September 30, 2011 and December 31, 2010, respectively | | | — | | | | — | | | | — | |
Common stock, $0.01 par value per share; 400,000,000 shares authorized, 4,591,090 and 2,382,317 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively | | | 46,000 | | | | 4,000 | | | | 50,000 | |
Additional paid-in capital | | | 40,858,000 | | | | 4,129,000 | | | | 44,987,000 | |
Accumulated deficit | | | (12,589,000 | ) | | | (886,000 | )(c) | | | (13,475,000 | ) |
| | | | | | | | | | | | |
Total stockholders’ equity | | | 28,315,000 | | | | 3,247,000 | | | | 31,562,000 | |
Non-controlling interests | | | 1,706,000 | | | | — | | | | 1,706,000 | |
| | | | | | | | | | | | |
Total equity | | | 30,021,000 | | | | 3,247,000 | | | | 33,268,000 | |
| | | | | | | | | | | | |
Total liabilities and equity | | $ | 120,642,000 | | | $ | 22,933,000 | | | $ | 143,575,000 | |
| | | | | | | | | | | | |
10
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) | | | Osceola Village
Pro Forma
Adjustments (E) | | | 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 | | | $ | 1,720,000 | (F) | | $ | 1,350,000 | (F) | | $ | 297,000 | (F) | | $ | 1,712,000 | (F) | | $ | 1,432,000 | (F) | | $ | 11,144,000 | |
Other property income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Revenue | | | 4,633,000 | | | | 1,720,000 | | | | 1,350,000 | | | | 297,000 | | | | 1,712,000 | | | | 1,432,000 | | | | 11,144,000 | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating and maintenance | | | 2,014,000 | | | | 715,000 | (G)(H) | | | 297,000 | (G)(H) | | | 69,000 | (G)(H) | | | 503,000 | (G)(H) | | | 359,000 | (G)(H) | | | 3,957,000 | |
General and administrative | | | 1,730,000 | | | | 52,000 | | | | 55,000 | | | | 41,000 | | | | 95,000 | | | | 14,000 | | | | 1,987,000 | |
Depreciation and amortization | | | 2,024,000 | | | | 569,000 | (I) | | | 652,000 | (I) | | | 126,000 | (I) | | | 877,000 | (I) | | | 612,000 | (I) | | | 4,860,000 | |
Acquisition Expenses | | | 1,353,000 | | | | 822,000 | | | | 648,000 | | | | 38,000 | | | | 440,000 | | | | 410,000 | | | | 3,711,000 | |
Interest Expense | | | 2,009,000 | | | | 1,572,000 | (J) | | | 506,000 | (J) | | | 216,000 | (J) | | | 558,000 | (J) | | | 985,000 | (J) | | | 5,846,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Expenses | | | 9,130,000 | | | | 3,730,000 | | | | 2,158,000 | | | | 490,000 | | | | 2,473,000 | | | | 2,380,000 | | | | 20,361,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss before other income (expense) | | | (4,497,000 | ) | | | (2,010,000 | ) | | | (808,000 | ) | | | (193,000 | ) | | | (761,000 | ) | | | (948,000 | ) | | | (9,217,000 | ) |
Other income and expense | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income | | | 4,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss before discontinued operations | | | (4,493,000 | ) | | | (2,010,000 | ) | | | (808,000 | ) | | | (193,000 | ) | | | (761,000 | ) | | | (948,000 | ) | | | (9,213,000 | ) |
Income (loss) from discontinued operations | | | 101,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 101,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | | (4,392,000 | ) | | | (2,010,000 | ) | | | (808,000 | ) | | | (193,000 | ) | | | (761,000 | ) | | | (948,000 | ) | | | (9,112,000 | ) |
Net loss attributable to non-controlling interest | | | 5,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss attributable to stockholders | | $ | (4,387,000 | ) | | $ | (2,010,000 | ) | | $ | (808,000 | ) | | $ | (193,000 | ) | | $ | (761,000 | ) | | $ | (948,000 | ) | | $ | (9,107,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net earnings (loss) per share — basic and diluted | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Continuing operations | | $ | (3.03 | ) | | | | | | | | | | | | | | | | | | | | | | $ | (1.14 | ) |
Discontinued operations | | $ | 0.07 | | | | | | | | | | | | | | | | | | | | | | | $ | 0.01 | |
Weighted-average number of common shares outstanding — basic and diluted | | | 1,483,179 | | | | | | | | | | | | | | | | | | | | | | | | 8,051,679 | (K) |
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated statement of operations.
11
TNP STRATEGIC RETAIL TRUST, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For The Nine Months Ended September 30, 2011
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Nine
Months Ended
September 30,
2011 (D) | | | Osceola Village
Pro Forma
Adjustments (E) | | | 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
Nine Months
Ended
September 30, 2011 | |
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 6,869,000 | | | $ | 1,371,000 | (F) | | $ | 1,083,000 | (F) | | $ | 222,000 | (F) | | $ | 681,000 | (F) | | $ | 358,000 | (F) | | $ | 10,584,000 | |
Other property income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Revenue | | | 6,869,000 | | | | 1,371,000 | | | | 1,083,000 | | | | 222,000 | | | | 681,000 | | | | 358,000 | | | | 10,584,000 | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating and maintenance | | | 2,274,000 | | | | 497,000 | (G)(H) | | | 219,000 | (G)(H) | | | 48,000 | (G)(H) | | | 209,000 | (G)(H) | | | 90,000 | (G)(H) | | | 3,337,000 | |
General and administrative | | | 1,781,000 | | | | 30,000 | | | | 42,000 | | | | 29,000 | | | | 16,000 | | | | 4,000 | | | | 1,902,000 | |
Depreciation and amortization | | | 2,835,000 | | | | 427,000 | (I) | | | 483,000 | (I) | | | 93,000 | (I) | | | 340,000 | (I) | | | 107,000 | (I) | | | 4,285,000 | |
Acquisition Expenses | | | 2,260,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,260,000 | |
Interest Expense | | | 3,180,000 | | | | 1,176,000 | (J) | | | 375,000 | (J) | | | 160,000 | (J) | | | 218,000 | (J) | | | 113,000 | (J) | | | 5,222,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Expenses | | | 12,330,000 | | | | 2,130,000 | | | | 1,119,000 | | | | 330,000 | | | | 783,000 | | | | 314,000 | | | | 17,006,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss before other income (expense) | | | (5,461,000 | ) | | | (759,000 | ) | | | (36,000 | ) | | | (108,000 | ) | | | (102,000 | ) | | | 44,000 | | | | (6,422,000 | ) |
Other income and expense | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income | | | 541,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 541,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss before discontinued operations | | | (4,920,000 | ) | | | (759,000 | ) | | | (36,000 | ) | | | (108,000 | ) | | | (102,000 | ) | | | 44,000 | | | | (5,881,000 | ) |
Income (loss) from discontinued operations | | | 521,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 521,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | $ | (4,399,000 | ) | | $ | (759,000 | ) | | $ | (36,000 | ) | | $ | (108,000 | ) | | $ | (102,000 | ) | | $ | 44,000 | | | $ | (5,360,000 | ) |
Net loss attributable to non-controlling interest | | | 160,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 160,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss attributable to common stockholders | | $ | (4,239,000 | ) | | $ | (759,000 | ) | | $ | (36,000 | ) | | $ | (108,000 | ) | | $ | (102,000 | ) | | $ | 44,000 | | | $ | (5,200,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net earnings (loss) per share — basic and diluted | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Continuing operations | | $ | (1.49 | ) | | | | | | | | | | | | | | | | | | | | | | $ | (0.60 | ) |
Discontinued operations | | $ | 0.16 | | | | | | | | | | | | | | | | | | | | | | | $ | 0.05 | |
Weighted-average number of common shares outstanding — basic and diluted | | | 3,190,502 | | | | | | | | | | | | | | | | | | | | | | | | 9,759,002 | (K) |
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated statement of operations.
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TNP STRATEGIC RETAIL TRUST, INC.
1. Notes to Unaudited Pro forma Condensed Consolidated Balance Sheet as of September 30, 2011, and Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December 31, 2010 and the Nine Months Ended September 30, 2011
| (A) | As reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. |
| (B) | Reflects the purchase price of the assets acquired and liabilities incurred or assumed by us in connection with the Osceola Property acquisition completed subsequent to September 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 the year ended December 31, 2010 and our Quarterly Report on Form 10-Q for the nine months ended September 30, 2011, as applicable. |
| (E) | Amounts represent pro forma adjustments, based on historical operations of the Osceola Property, the Topaz Property, the Cochran Property, the Pinehurst Property, and the Craig Property which were acquired during the first ten months of 2011. |
| (F) | Reflects rental revenues based on the historical and pro forma operations for the year ended December 31, 2010 and the nine months ended September 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 nine months ended September 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 the Osceola Property, the Topaz Property, the Cochran Property, the Pinehurst Property, and the Craig Property been acquired on January 1, 2010. Each property management agreement requires us to pay Property Manager a monthly property management fee of 5% of each of the Osceola Property’s, the Topaz Property’s, the Cochran Property’s, the Pinehurst Property’s, and the Craig Property’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 51 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, the Carryback Promissory Note, and the Osceola Loan. 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 the Osceola Property, the Topaz Property, the Cochran Property, the Pinehurst Property, and the Craig Property. The calculation assumes these proceeds were raised as of January 1, 2010. |
13
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: January 12, 2012 | | | | | | |
| | | |
| | | | By: | | /s/ JAMES R. WOLFORD |
| | | | | | James R. Wolford |
| | | | | | Chief Financial Officer, Treasurer & Secretary |
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