Unaudited Pro Forma Consolidated Financial Statements
On December 21, 2022, Strategic Realty Trust, Inc. (the “Company”) consummated the disposition of the Sunset & Gardner Joint Venture Property, located in Hollywood, California, to an unrelated third-party, for $12.9 million in cash, before customary closing and transaction costs.
The following unaudited pro forma consolidated financial statements of the Company have been prepared to show the pro forma effect of the disposal of the Sunset & Gardner Joint Venture Property by applying pro forma adjustments to our historical financial information. The unaudited pro forma consolidated financial statements are based upon the historical consolidated financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2021, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2022. The pro forma consolidated balance sheet has been presented as if the sale of the Sunset & Gardner Joint Venture Property had occurred as of September 30, 2022. The pro forma consolidated statements of operations for the nine months ended September 30, 2022 and for the year ended December 31, 2021 are presented as if the sale of the Sunset & Gardner Joint Venture Property had occurred on January 1, 2021.
The following unaudited pro forma consolidated financial information is intended to provide investors with information about the impact of the sale of the Sunset & Gardner Joint Venture Property by showing how specific transactions might have affected historical financial statements, illustrating the scope of the change in the historical financial position and results of operations. This pro forma financial information should not be viewed as indicative of the Company’s financial results in the future and should be read in conjunction with the Company’s financial statements as filed on Form 10-K for the year ended December 31, 2021 and on Form 10-Q for the nine-month period ended September 30, 2022.
STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of September 30, 2022
(in thousands, except shares and per share amounts)
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| Historical (a) | | Transaction (b) | | Pro Forma |
| ASSETS | | | | | |
| Investments in real estate | | | | | |
| Land | $ | 12,374 | | | $ | — | | | $ | 12,374 | |
| Building and improvements | 22,078 | | | — | | | 22,078 | |
| Tenant improvements | 896 | | | — | | | 896 | |
| 35,348 | | | — | | | 35,348 | |
| Accumulated depreciation | (4,619) | | | — | | | (4,619) | |
| Investments in real estate, net | 30,729 | | | — | | | 30,729 | |
| Property under development and development costs | | | | | |
| Land | 12,958 | | | (12,958) | | | — | |
| | | | | |
| Development costs | 687 | | | (687) | | | — | |
| Property under development and development costs | 13,645 | | | (13,645) | | | — | |
| Cash, cash equivalents and restricted cash | 1,076 | | | 3,745 | | (c) | 4,821 | |
| Prepaid expenses and other assets | 202 | | | — | | | 202 | |
| Tenant receivables, net of $19 bad debt reserve | 825 | | | — | | | 825 | |
| Deferred leasing costs, net | 367 | | | — | | | 367 | |
| Lease intangibles, net | 327 | | | — | | | 327 | |
| Assets held for sale | 15,968 | | | — | | | 15,968 | |
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| TOTAL ASSETS | $ | 63,139 | | | $ | (9,900) | | | $ | 53,239 | |
| LIABILITIES AND EQUITY | | | | | |
| LIABILITIES | | | | | |
| Notes payable, net | $ | 42,206 | | | $ | (8,599) | | | $ | 33,607 | |
| Accounts payable and accrued expenses | 628 | | | (101) | | | 527 | |
| Amounts due to affiliates | 28 | | | — | | | 28 | |
| Other liabilities | 183 | | | (2) | | | 181 | |
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| Below-market lease liabilities, net | 113 | | | — | | | 113 | |
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| TOTAL LIABILITIES | 43,158 | | | (8,702) | | | 34,456 | |
| Commitments and contingencies | | | | | |
| EQUITY | | | | | |
| Stockholders’ equity | | | | | |
| Preferred stock, $0.01 par value; 50,000,000 shares authorized, none issued and outstanding | — | | | — | | | — | |
| Common stock, $0.01 par value; 400,000,000 shares authorized; 10,752,966 shares issued and outstanding at September 30, 2022 | 110 | | | — | | | 110 | |
| Additional paid-in capital | 94,644 | | | — | | | 94,644 | |
| Accumulated deficit | (75,069) | | | (1,176) | | | (76,245) | |
| Total stockholders’ equity | 19,685 | | | (1,176) | | | 18,509 | |
| Non-controlling interests | 296 | | | (22) | | | 274 | |
| TOTAL EQUITY | 19,981 | | | (1,198) | | | 18,783 | |
| TOTAL LIABILITIES AND EQUITY | $ | 63,139 | | | $ | (9,900) | | | $ | 53,239 | |
(a)Historical financial information derived from Strategic Realty Trust Inc. Quarterly Report on Form 10-Q as of September 30, 2022.
(b)Represents adjustments to reflect the disposition of the Sunset & Gardner Joint Venture Property. The sale price was $12.9 million, excluding closing costs and disposition fees.
(c)Represents the amount of proceeds from the Sunset & Gardner Joint Venture Property disposition after third-party closing costs of approximately $0.5 million and the repayment of $8.7 million of outstanding principal due under the Sunset & Gardner Loan.
STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the nine months ended September 30, 2022
(in thousands, except shares and per share amounts)
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| Historical (a) | | Transaction (b) | | Pro Forma |
| Revenue: | | | | | |
| Rental and reimbursements | $ | 2,189 | | | $ | (17) | | | $ | 2,172 | |
| | | | | |
| Expense: | | | | | |
| Operating and maintenance | 1,323 | | | (68) | | | 1,255 | |
| General and administrative | 1,238 | | | (92) | | | 1,146 | |
| Depreciation and amortization | 846 | | | — | | | 846 | |
| | | | | |
| Interest expense | 1,484 | | | 220 | | | 1,704 | |
| Loss on early lease termination | 190 | | | — | | | 190 | |
| Loss on impairment of real estate | 6,035 | | | (3,483) | | | 2,552 | |
| 11,116 | | | (3,423) | | | 7,693 | |
| Operating loss | (8,927) | | | 3,406 | | | (5,521) | |
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| Net loss | (8,927) | | | 3,406 | | | (5,521) | |
| Net loss attributable to non-controlling interests | (165) | | | 64 | | (101) |
| Net loss attributable to common stockholders | $ | (8,762) | | | $ | 3,342 | | | $ | (5,420) | |
| | | | | |
| Loss per common share - basic and diluted | $ | (0.81) | | | $ | 0.31 | | | $ | (0.50) | |
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| Weighted average shares outstanding used to calculate loss per common share - basic and diluted | 10,752,966 | | | 10,752,966 | | | 10,752,966 | |
(a)Historical financial information derived from Strategic Realty Trust Inc. Quarterly Report on Form 10-Q for the nine months ended September 30, 2022.
(b)Amounts represent the historical operations of the Sunset & Gardner Joint Venture Property as reflected in the historical statement of operations of Strategic Realty Trust Inc. for the nine months ended September 30, 2022.
STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2021
(in thousands, except shares and per share amounts)
| | | | | | | | | | | | | | | | | |
| | | |
| Historical (a) | | Transaction (b) | | Pro Forma |
| Revenue: | | | | | |
| Rental and reimbursements | $ | 2,495 | | | $ | — | | | $ | 2,495 | |
| | | | | |
| Expense: | | | | | |
| Operating and maintenance | 2,082 | | | — | | | 2,082 | |
| General and administrative | 1,335 | | | — | | | 1,335 | |
| Depreciation and amortization | 2,085 | | | — | | | 2,085 | |
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| Interest expense | 1,265 | | | 786 | | | 2,051 | |
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| Loss on impairment of real estate | 6,897 | | | (1,270) | | | 5,627 | |
| 13,664 | | | (484) | | | 13,180 | |
| Operating loss | (11,169) | | | 484 | | | (10,685) | |
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| Other income: | | | | | |
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| Net gain on disposal of real estate | 422 | | | — | | | 422 | |
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| Net loss | (10,747) | | | 484 | | | (10,263) | |
| Net loss attributable to non-controlling interests | (211) | | | 9 | | (202) |
| Net loss attributable to common stockholders | $ | (10,536) | | | $ | 475 | | | $ | (10,061) | |
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| Loss per common share - basic and diluted | $ | (0.98) | | | $ | 0.04 | | | $ | (0.94) | |
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| Weighted average shares outstanding used to calculate loss per common share - basic and diluted | 10,740,882 | | | 10,740,882 | | | 10,740,882 | |
(a)Historical audited financial information derived from Strategic Realty Trust Inc. Annual Report on Form 10-K for the year ended December 31, 2021.
(b)Amounts represent the historical operations of the Sunset & Gardner Joint Venture Property as reflected in the historical statement of operations of Strategic Realty Trust Inc. for the year ended December 31, 2021.
