UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 6, 2020
Preferred Apartment Communities, Inc.
(Exact Name of Registrant as Specified in its Charter)
Maryland 001-34995 27-1712193
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
3284 Northside Parkway NW, Suite 150, Atlanta, GA 30327
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code: (770) 818-4100
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))
Trading Symbol
Common Stock, par value $.01 per share APTS NYSE
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Series A Redeemable Preferred Stock, par value $0.01 per share
Warrant to Purchase Common Stock, par value $0.01 per share
Series M Redeemable Preferred Stock, par value $0.01 per share
Series A1 Redeemable Preferred Stock, par value $0.01 per share
Series M1 Redeemable Preferred Stock, par value $0.01 per share
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.01 Completion of Acquisition or Disposition of Assets.
On November 3, 2020, PCC TALLAHASSEE, LLC, a Delaware limited liability company ("Tallahassee Seller"), PCC ORLANDO, LLC, a Delaware limited liability company ("Orlando Seller"), PCC COLLEGE STATION, LLC, a Delaware limited liability company ("College Station Seller"), PCC LUBBOCK, LLC, a Delaware limited liability company ("Lubbock Seller"), PCC WACO, LLC, a Delaware limited liability company ("Waco Seller"), PCC TEMPE, LLC, a Delaware limited liability company ("Tempe Seller"), HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware limited liability company ("Kennesaw Seller"), and HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia limited liability company ("Charlotte Seller", and together with Tallahassee Seller, Orlando Seller, College Station Seller, Lubbock Seller, Waco Seller, Tempe Seller and Kennesaw Seller, jointly and severally, "Seller"), each an indirect, wholly-owned subsidiary of Preferred Apartment Communities Operating Partnership, L.P. ("PAC-OP"), completed the disposition of its fee simple interests in its portfolio of eight student housing communities and other student-housing related assets (collectively, the "Student Housing Portfolio") to TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company ("Purchaser"), an unrelated third party. The aggregate purchase price paid by the Purchaser to Seller was approximately $478.7 million, exclusive of disposition-related transaction costs. Preferred Apartment Communities, Inc. (the "Company") is the general partner of, and as of June 30, 2020, owner of an approximate 98.5% interest in, PAC-OP. Since the assets of Seller exceeded 10% of the consolidated assets of the Company as of December 31, 2019, the transaction is deemed to be a significant disposition under the asset test from Regulation S-X 1-02(w). The Company therefore submits this Current Report on Form 8-K to provide certain financial information related to its disposition of the Student Housing Portfolio required by Item 9.01(b) of Form 8-K.
Item 7.01 Regulation FD Disclosure.
The Company issued a press release on November 3, 2020 regarding the disposition of the Student Housing Portfolio. A copy of that press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information contained in this Item 7.01, including the information contained in the press release attached as Exhibit 99.1 hereto, is being “furnished" and shall not be deemed to be “filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Reference to the Company’s website in the press release attached as Exhibit 99.1 to this Current Report on Form 8-K do not incorporate by reference the information on such website into this Current Report on Form 8-K and the Company disclaims any such incorporation by reference.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Financial Statements 1
Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2020 2
Unaudited Pro Forma Consolidated Statement of Operations
for the six-month period ended June 30, 2020 3
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended December 31, 2019 4
Notes to Unaudited Pro Forma Consolidated Financial Statements 5
Signature 8
(d) Exhibits.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements have been prepared to provide pro forma information with regard to a certain real estate disposition transaction. On November 3, 2020, PCC TALLAHASSEE, LLC, a Delaware limited liability company ("Tallahassee Seller"), PCC ORLANDO, LLC, a Delaware limited liability company ("Orlando Seller"), PCC COLLEGE STATION, LLC, a Delaware limited liability company ("College Station Seller"), PCC LUBBOCK, LLC, a Delaware limited liability company ("Lubbock Seller"), PCC WACO, LLC, a Delaware limited liability company ("Waco Seller"), PCC TEMPE, LLC, a Delaware limited liability company ("Tempe Seller"), HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware limited liability company ("Kennesaw Seller"), and HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia limited liability company ("Charlotte Seller", and together with Tallahassee Seller, Orlando Seller, College Station Seller, Lubbock Seller, Waco Seller, Tempe Seller and Kennesaw Seller, jointly and severally, "Seller"), each an indirect, wholly-owned subsidiary of Preferred Apartment Communities Operating Partnership, L.P. ("PAC-OP"), completed the disposition of its fee simple interests in its portfolio of eight student housing communities and other student housing related assets (collectively, the "Student Housing Portfolio") to TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company ("Purchaser"), an unrelated third party. The aggregate purchase price paid by the Purchaser to Seller was approximately $478.7 million, exclusive of disposition-related transaction costs.
The accompanying Unaudited Pro Forma Consolidated Balance Sheet is presented as of June 30, 2020 and the Unaudited Pro Forma Consolidated Statements of Operations of the Company are presented for the six-month period ended June 30, 2020 and the year ended December 31, 2019 (the "Pro Forma Periods"), and include certain pro forma adjustments to illustrate the estimated effect of the Company's disposition of the Student Housing Portfolio as described in Note 1. This pro forma consolidated financial information is presented for informational purposes only and does not purport to be indicative of the Company's financial results as if the transaction reflected herein had occurred on the date or been in effect during the period indicated. This pro forma consolidated 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, 2019 and on Form 10-Q for the six months ended June 30, 2020.
1
Preferred Apartment Communities, Inc. | ||||||||||||||||||||
Unaudited Pro Forma Consolidated Balance Sheet | ||||||||||||||||||||
As of June 30, 2020 | ||||||||||||||||||||
(In thousands, except per-share par values) | PAC REIT Historical | Disposition of Student Housing Portfolio | PAC REIT Pro Forma | |||||||||||||||||
Assets | ||||||||||||||||||||
Real estate | ||||||||||||||||||||
Land | $ | 671,687 | $ | (61,149) | A | $ | 610,538 | |||||||||||||
Building and improvements | 3,375,631 | (390,521) | A | 2,985,110 | ||||||||||||||||
Tenant improvements | 174,565 | — | 174,565 | |||||||||||||||||
Furniture, fixtures, and equipment | 354,340 | (67,342) | A | 286,998 | ||||||||||||||||
Construction in progress | 22,539 | (435) | A | 22,104 | ||||||||||||||||
Gross real estate | 4,598,762 | (519,447) | 4,079,315 | |||||||||||||||||
Less: accumulated depreciation | (503,467) | 52,487 | A | (450,980) | ||||||||||||||||
Net real estate | 4,095,295 | (466,960) | A | 3,628,335 | ||||||||||||||||
Real estate loan investments, net | 306,026 | — | 306,026 | |||||||||||||||||
Real estate loan investments to related parties, net | 2,568 | (2,568) | A | — | ||||||||||||||||
Total real estate and real estate loan investments, net | 4,403,889 | (469,528) | 3,934,361 | |||||||||||||||||
Cash and cash equivalents | 60,101 | 251,730 | B | 311,831 | ||||||||||||||||
Restricted cash | 56,333 | (4,949) | A | 51,384 | ||||||||||||||||
Notes receivable | 7,758 | — | 7,758 | |||||||||||||||||
Note receivable and revolving lines of credit due from related parties | 9,011 | — | 9,011 | |||||||||||||||||
Accrued interest receivable on real estate loans | 23,046 | (1,208) | A | 21,838 | ||||||||||||||||
Acquired intangible assets, net of amortization | 145,187 | — | 145,187 | |||||||||||||||||
Deferred loan costs on Revolving Line of Credit | 950 | — | 950 | |||||||||||||||||
Deferred offering costs | 4,088 | — | 4,088 | |||||||||||||||||
Tenant lease inducements | 19,103 | — | 19,103 | |||||||||||||||||
Tenant receivables and other assets | 89,817 | (2,648) | A | 87,169 | ||||||||||||||||
Total assets | $ | 4,819,283 | $ | (226,603) | $ | 4,592,680 | ||||||||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Mortgage notes payable, net | $ | 2,762,291 | $ | (214,999) | A | $ | 2,547,292 | |||||||||||||
Revolving line of credit | 92,500 | — | 92,500 | |||||||||||||||||
Unearned purchase option termination fees | 1,585 | — | 1,585 | |||||||||||||||||
Deferred revenue | 37,862 | — | 37,862 | |||||||||||||||||
Accounts payable and accrued expenses | 56,143 | (3,764) | A | 52,379 | ||||||||||||||||
Deferred liability to Former Manager | 23,168 | — | 23,168 | |||||||||||||||||
Contingent liability due to Former Manager | 14,880 | — | 14,880 | |||||||||||||||||
Accrued interest payable | 7,927 | (808) | A | 7,119 | ||||||||||||||||
Dividends and partnership distributions payable | 20,570 | — | 20,570 | |||||||||||||||||
Acquired below market lease intangibles | 57,793 | — | 57,793 | |||||||||||||||||
Prepaid rent, security deposits, and other liabilities | 34,568 | (2,802) | A | 31,766 | ||||||||||||||||
Total liabilities | 3,109,287 | (222,373) | 2,886,914 | |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Stockholders' equity | ||||||||||||||||||||
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; | ||||||||||||||||||||
2,026 shares issued; 1,991 shares outstanding at June 30, 2020 | 20 | — | 20 | |||||||||||||||||
Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares | ||||||||||||||||||||
authorized; 68 shares issued and outstanding June 30, 2020 | — | — | — | |||||||||||||||||
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; | ||||||||||||||||||||
106 shares issued; 93 shares outstanding at June 30, 2020 | 1 | — | 1 | |||||||||||||||||
Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares | ||||||||||||||||||||
authorized; 5 shares issued and outstanding at June 30, 2020 | — | — | — | |||||||||||||||||
Common Stock, $0.01 par value per share; 400,067 shares authorized; 49,283 shares issued and | ||||||||||||||||||||
outstanding at June 30, 2020 | 493 | — | 493 | |||||||||||||||||
Additional paid-in capital | 1,917,212 | — | 1,917,212 | |||||||||||||||||
Accumulated (deficit) earnings | (206,724) | (3,690) | A, C | (210,414) | ||||||||||||||||
Total stockholders' equity | 1,711,002 | (3,690) | 1,707,312 | |||||||||||||||||
Non-controlling interest | (1,006) | (540) | A | (1,546) | ||||||||||||||||
Total equity | 1,709,996 | (4,230) | 1,705,766 | |||||||||||||||||
Total liabilities and equity | $ | 4,819,283 | $ | (226,603) | $ | 4,592,680 | ||||||||||||||
The accompanying notes are an integral part of this consolidated pro forma financial statement.
2
Preferred Apartment Communities, Inc. | |||||||||||||||||||||||
Unaudited Pro Forma Consolidated Statement of Operations | |||||||||||||||||||||||
For the Six Months Ended June 30, 2020 | |||||||||||||||||||||||
Disposition of | PAC REIT | ||||||||||||||||||||||
PAC REIT | Student Housing | ||||||||||||||||||||||
(In thousands, except per-share par values) | Historical | Portfolio | Pro Forma | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental and other property revenues | $ | 223,440 | $ | (24,373) | AA | $ | 199,067 | ||||||||||||||||
Interest income on loans and notes receivable | 23,846 | — | 23,846 | ||||||||||||||||||||
Interest income on note from related party | 3,141 | (387) | AA | 2,754 | |||||||||||||||||||
Miscellaneous revenues | 3,952 | — | 3,952 | ||||||||||||||||||||
Total revenues | 254,379 | (24,760) | 229,619 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Property operating and maintenance | 33,641 | (5,317) | AA | 28,324 | |||||||||||||||||||
Property salary and benefits to related party | 10,911 | (1,901) | AA | 9,010 | |||||||||||||||||||
Property management costs | 3,045 | (277) | AA | 2,768 | |||||||||||||||||||
Real estate taxes and insurance | 32,031 | (3,460) | AA | 28,571 | |||||||||||||||||||
General and administrative | 15,211 | (56) | AA | 15,155 | |||||||||||||||||||
Equity compensation to directors and executives | 476 | — | 476 | ||||||||||||||||||||
Depreciation and amortization | 101,302 | (10,285) | AA | 91,017 | |||||||||||||||||||
Asset management and general and administrative | |||||||||||||||||||||||
expense fees to related party | 3,099 | (312) | AA | 2,787 | |||||||||||||||||||
Provision for expected credit losses | 5,615 | (387) | AA | 5,228 | |||||||||||||||||||
Management internalization expense | 179,251 | — | 179,251 | ||||||||||||||||||||
Total operating expenses | 384,582 | (21,995) | 362,587 | ||||||||||||||||||||
Waived asset management and | |||||||||||||||||||||||
general and administrative expense fees | (1,136) | 282 | AA | (854) | |||||||||||||||||||
Net operating expenses | 383,446 | (21,713) | 361,733 | ||||||||||||||||||||
Operating income (loss) | (129,067) | (3,047) | (132,114) | ||||||||||||||||||||
Interest expense | 60,729 | (5,402) | AA | 55,327 | |||||||||||||||||||
Loss on extinguishment of debt | (6,156) | — | (6,156) | ||||||||||||||||||||
Gain on the sale of real estate loan investment | 479 | — | 479 | ||||||||||||||||||||
Net (loss) income | (195,473) | 2,355 | (193,118) | ||||||||||||||||||||
Less consolidated net (loss) income attributable | |||||||||||||||||||||||
to non-controlling interests | 3,407 | (39) | BB | 3,368 | |||||||||||||||||||
Net (loss) income attributable to the Company | (192,066) | 2,316 | (189,750) | ||||||||||||||||||||
Dividends to preferred stockholders | (68,692) | — | (68,692) | ||||||||||||||||||||
Earnings attributable to unvested restricted stock | (13) | — | (13) | ||||||||||||||||||||
Net (loss) income attributable to common stockholders | $ | (260,771) | $ | 2,316 | $ | (258,455) | |||||||||||||||||
Net (loss) income per share of Common Stock | |||||||||||||||||||||||
attributable to common stockholders, basic and diluted | $ | (5.47) | $ | (5.42) | |||||||||||||||||||
Weighted average number of shares of Common | |||||||||||||||||||||||
Stock outstanding, basic and diluted | 47,674 | 47,674 |
The accompanying notes are an integral part of this consolidated pro forma financial statement.
3
Preferred Apartment Communities, Inc. | |||||||||||||||||||||||
Unaudited Pro Forma Consolidated Statement of Operations | |||||||||||||||||||||||
For the Year Ended December 31, 2019 | |||||||||||||||||||||||
Disposition of | PAC REIT | ||||||||||||||||||||||
PAC REIT | Student Housing | ||||||||||||||||||||||
(In thousands, except per-share par values) | Historical | Portfolio | Pro Forma | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental and other property revenues | $ | 406,916 | $ | (46,648) | AA | $ | 360,268 | ||||||||||||||||
Interest income on loans and notes receivable | 49,542 | — | 49,542 | ||||||||||||||||||||
Interest income on note from related party | 11,946 | (618) | AA | 11,328 | |||||||||||||||||||
Miscellaneous revenues | 2,023 | — | 2,023 | ||||||||||||||||||||
Total revenues | 470,427 | (47,266) | 423,161 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Property operating and maintenance | 59,845 | (11,251) | AA | 48,594 | |||||||||||||||||||
Property salary and benefits to related party | 20,693 | (4,561) | AA | 16,132 | |||||||||||||||||||
Property management costs | 13,981 | (1,862) | AA | 12,119 | |||||||||||||||||||
Real estate taxes and insurance | 56,832 | (6,439) | AA | 50,393 | |||||||||||||||||||
General and administrative | 5,772 | (4) | AA | 5,768 | |||||||||||||||||||
Equity compensation to directors and executives | 1,223 | — | 1,223 | ||||||||||||||||||||
Depreciation and amortization | 185,065 | (22,007) | AA | 163,058 | |||||||||||||||||||
Asset management and general and administrative | |||||||||||||||||||||||
expense fees to related party | 33,516 | (3,796) | AA | 29,720 | |||||||||||||||||||
Loan loss allowance | 2,038 | (1,624) | AA | 414 | |||||||||||||||||||
Management internalization expense | 2,988 | — | 2,988 | ||||||||||||||||||||
Total operating expenses | 381,953 | (51,544) | 330,409 | ||||||||||||||||||||
Waived asset management and | |||||||||||||||||||||||
general and administrative expense fees | (11,764) | 3,202 | AA | (8,562) | |||||||||||||||||||
Net operating expenses | 370,189 | (48,342) | 321,847 | ||||||||||||||||||||
Operating income before gain on sale of trading investment | 100,238 | 1,076 | 101,314 | ||||||||||||||||||||
Gain on sale of trading investment | 1,567 | — | 1,567 | ||||||||||||||||||||
Operating income | 101,805 | 1,076 | 102,881 | ||||||||||||||||||||
Interest expense | 111,964 | (14,758) | AA | 97,206 | |||||||||||||||||||
Change in fair value of net assets of consolidated VIEs | |||||||||||||||||||||||
from mortgage-backed pools | 1,831 | — | 1,831 | ||||||||||||||||||||
Loss on extinguishment of debt | (84) | — | (84) | ||||||||||||||||||||
Gain on the sale of real estate loan investment | 954 | — | 954 | ||||||||||||||||||||
Net (loss) income | (7,458) | 15,834 | 8,376 | ||||||||||||||||||||
Less consolidated net (loss) income attributable | |||||||||||||||||||||||
to non-controlling interests | 214 | (294) | BB | (80) | |||||||||||||||||||
Net (loss) income attributable to the Company | (7,244) | 15,540 | 8,296 | ||||||||||||||||||||
Dividends to preferred stockholders | (113,772) | — | (113,772) | ||||||||||||||||||||
Earnings attributable to unvested restricted stock | (17) | — | (17) | ||||||||||||||||||||
Net (loss) income attributable to common stockholders | $ | (121,033) | $ | 15,540 | $ | (105,493) | |||||||||||||||||
Net (loss) income per share of Common Stock | |||||||||||||||||||||||
attributable to common stockholders, basic and diluted | $ | (2.73) | $ | (2.38) | |||||||||||||||||||
Weighted average number of shares of Common | |||||||||||||||||||||||
Stock outstanding, basic and diluted | 44,265 | 44,265 |
The accompanying notes are an integral part of this consolidated pro forma financial statement.
4
Preferred Apartment Communities, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements
1.Basis of Presentation
On November 3, 2020, Preferred Apartment Communities, Inc. (the “Company”), closed on the sale of its eight student housing properties listed below and a real estate loan investment partially financing Haven 12, a student housing property located adjacent to Mississippi State University in Starkville, Mississippi (the “Student Housing Portfolio”) to an unrelated third party for an aggregate purchase price of approximately $478.7 million, exclusive of closing costs.
Student Housing Property | Beds | University | Location | |||||||||||||||||
North by Northwest | 679 | Florida State University | Tallahassee, FL | |||||||||||||||||
SoL | 639 | Arizona State University | Tempe, AZ | |||||||||||||||||
Stadium Village | 792 | Kennesaw State University | Atlanta, GA | |||||||||||||||||
Ursa | 840 | Baylor University | Waco, TX | |||||||||||||||||
The Tradition | 808 | Texas A&M University | College Station, TX | |||||||||||||||||
Knightshade | 894 | University of Central Florida | Orlando, FL | |||||||||||||||||
The Bloc | 556 | Texas Tech University | Lubbock, TX | |||||||||||||||||
Rush | 887 | University of North Carolina-Charlotte | Charlotte, NC | |||||||||||||||||
Total | 6,095 |
The Unaudited Pro Forma Consolidated Balance Sheet includes three columns. The first column labeled "PAC REIT Historical" represents the actual financial position of the Company as of June 30, 2020. The second column, entitled "Disposition of Student Housing Portfolio" represents the pro forma adjustments required in order to reflect the balance sheet impact of the removal of the disposed assets as if the transaction had occurred on June 30, 2020, as described in note 2. The third column, entitled "PAC REIT Pro Forma" presents the pro forma condensed consolidated balance sheet of the Company as of June 30, 2020, excluding the Student Housing Portfolio and real estate loan investment.
The Unaudited Pro Forma Consolidated Statements of Operations include three columns. The first column labeled "PAC REIT Historical" represents the actual results of operations for the six months ended June 30, 2020 and the year ended December 31, 2019. The second column, entitled "Disposition of Student Housing Portfolio" represents the adjustments to remove the historical revenues and expenses of the disposed assets for the periods presented, as described in note 3. The third column, entitled "PAC REIT pro forma" presents the pro forma results of operations of the Company for the six months ended June 30, 2020 and the year ended December 31, 2019, excluding the Student Housing Portfolio. The results presented on the Unaudited Pro Forma Consolidated Statements of Operations assume the sale of the Student Housing Portfolio closed on January 1, 2019 and presents pro forma operating results for the Company for the periods presented.
These Unaudited Pro Forma Financial Statements should not be considered indicative of future results.
5
Preferred Apartment Communities, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements - continued
2. Adjustments to Unaudited Pro Forma Consolidated Balance Sheet
(A) The Company received the sales proceeds and removed the carrying values of the disposed Student Housing Portfolio’s assets and liabilities, as shown in the following table.
(In thousands) | ||||||||
Gross sales price | $ | 478,722 | ||||||
Closing and transaction costs | (7,061) | |||||||
Net sales proceeds | 471,661 | |||||||
Less: Carrying value of real estate assets | (466,960) | |||||||
Less: Carrying value of real estate loan investment | (2,568) | |||||||
Less: Carrying value of other assets | (11,684) | |||||||
Less: Carrying value of unamortized DLCs | (2,053) | |||||||
Plus: Carrying value of other liabilities | 7,374 | |||||||
Proforma loss | (4,230) | |||||||
Less: Attributable to non-controlling interest | 540 | |||||||
Proforma loss attributable to common stockholders | $ | (3,690) | ||||||
(B) The pro forma adjustment to cash was calculated as follows:
(In thousands) | ||||||||
Net proceeds from purchaser | $ | 254,609 | ||||||
less: Cash balances transferred to purchaser | (2,879) | |||||||
Net cash adjustment | $ | 251,730 | ||||||
(C) The adjustment to accumulated deficit consists of the excess of cash received from the seller over the carrying value of the net assets transferred. This adjustment is not reflected in the Unaudited Pro Forma Consolidated Statement of Operations as the effect of the transaction is nonrecurring.
3. Adjustments to Unaudited Pro Forma Consolidated Statements of Operations
The adjustments to the Unaudited Pro Forma Consolidated Statements of Operations for the six-month period ended June 30, 2020 and the year ended December 31, 2019 are as follows:
(AA) These pro forma adjustments remove the actual historical revenues and expenses recorded from the operations of the Student Housing Properties.
6
Preferred Apartment Communities, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements - continued
(BB) Outstanding Class A Units of the Operating Partnership become entitled to pro-rata distributions of profit and allocations of loss as non-controlling interests of the Operating Partnership. The weighted-average percentage of ownership by the non-controlling interests was approximately 1.64% for the six months ended June 30, 2020 and 1.93% for the year ended December 31, 2019. These adjustments reflect the pro-rata adjustment to the amount of net loss attributable to the non-controlling interests.
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SIGNATURE
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.
PREFERRED APARTMENT COMMUNITIES, INC. (Registrant) |
Date: November 6, 2020 | By: | /s/ Jeffrey R. Sprain | ||||||
Jeffrey R. Sprain | ||||||||
Executive Vice President, General Counsel and Corporate Secretary |
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