UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported): March 15, 2017
RICH UNCLES REAL ESTATE INVESTMENT TRUST I
(Exact name of registrant as specified in its charter)
California | 000-55623 | 47-4156046 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
3090 Bristol Street, Suite 550, Costa Mesa, CA 92626 (Address of principal executive offices) (Zip Code) (855) 742-4862 (Registrant’s telephone number, including area code) |
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)) |
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.¨
Explanatory Note
Rich Uncles Real Estate Investment Trust I (the “Company”) filed a current report on Form 8-K on March 21, 2017 (the “Original Form 8-K) reporting its acquisition on March 15, 2017 of a 106,592 square foot, two-story office building in Rancho Cordova, California that is triple-net leased to Sutter Health.
This Amended Current Report on Form 8-K/A is being filed for the purposes of amending the Original Form 8-K to provide (i) the financial information related to such acquisition and (ii) certain additional pro forma financial information with respect to such acquisition. No other changes have been made to the Original Form 8-K.
Item 9.01. Financial Statements and Exhibits
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(a) | Financial Statements of Businesses Acquired | |
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| The audited financial statements of Sutter Health are available and can be accessed at www.sutterhealth.org/pdf/financials/sutter-health-financials-2016.pdf. | |
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(b) | Unaudited Pro Forma Consolidated Information | |
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| Unaudited Pro Forma Consolidated Statements of Operations for the Three Months Ended March 31, 2017 and the Year Ended December 31, 2016. | 4 |
| Footnotes to the Unaudited Pro Forma Consolidated Statements of Operations | |
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Note: | | |
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| No Pro Forma Consolidated Balance Sheet is presented in this Amended Current Report on Form 8-K/A as the acquisition of the Sutter Health property was reflected in the unaudited consolidated balance sheet included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. | |
RICH UNCLES REAL ESTATE INVESTMENT TRUST I
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND THE YEAR ENDED DECEMBER 31, 2016
The following Unaudited Pro Forma Consolidated Statements of Operations for the three months ended March 31, 2017 and the year ended December 31, 2016 are presented as if the Company’s acquisition of the Sutter Health property had occurred as of the beginning of the earliest period presented. These unaudited pro forma consolidated financial statements should be read in conjunction with the Company’s historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. The Pro Forma Consolidated Statements of Operations are unaudited and are not necessarily indicative of what the actual results of operations would have been had the Company’s acquisition of the Sutter Health property occurred as of the beginning of the period presented, nor does it purport to present the future results of operations of the Company.
RICH UNCLES REAL ESTATE INVESTMENT TRUST I
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2017
| | Rich Uncles Real Estate Investment Trust I (1) | | | Sutter Health (2) | | | Pro Forma Rich Uncles Real Estate Investment Trust I | |
REVENUE: | | | | | | | | | | | | |
Rental income | | $ | 2,392,795 | | | | 391,883 | (a) | | | 2,784,678 | |
Tenant recoveries | | | 333,472 | | | | 113,359 | (b) | | | 446,831 | |
Total revenue | | | 2,726,267 | | | | 505,242 | | | | 3,231,509 | |
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EXPENSES: | | | | | | | | | | | | |
Fees to affiliates | | | 162,201 | | | | 33,599 | (e) | | | 195,800 | |
General and administrative | | | 149,665 | | | | - | | | | 149,665 | |
Depreciation and amortization | | | 1,218,074 | | | | 302,419 | (c) | | | 1,520,493 | |
Interest expense | | | 461,200 | | | | 119,075 | (d) | | | 580,275 | |
Property expenses | | | 340,959 | | | | 47,115 | (b) | | | 388,074 | |
Total expenses | | | 2,332,099 | | | | 502,208 | | | | 2,834,307 | |
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Other income – interest income | | | 280 | | | | - | | | | 280 | |
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Net income | | $ | 394,448 | | | | 3,034 | | | | 397,482 | |
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Net income per share, basic and diluted | | $ | 0.05 | | | | | | | | 0.05 | |
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Weighted – average number of common shares outstanding, basic and diluted | | | 8,318,101 | | | | | | | | 8,318,101 | |
See accompanying footnotes of Unaudited Pro Forma Consolidated Statements of Operations.
RICH UNCLES REAL ESTATE INVESTMENT TRUST I
FOOTNOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2017
| (1) | Reflects the Company’s unaudited historical operations for the period indicated as previously filed. |
| (2) | Reflects the Company’s operations of the Sutter Health property for the period indicated. |
Pro forma adjustments have been made to the historical results of operations of the Sutter Health property for the following items:
| · | Straight-line rental income for the Sutter Health lease, |
| · | Increased property taxes as a result of the acquisition and the related tenant recovery, |
| · | Depreciation and amortization of the assets acquired, |
| · | Interest expense on the $14,850,000 mortgage note that is secured by the property, and |
| (a) | Reflects the straight-line rental income for the Sutter Health property calculated assuming the lease commences on the date the Sutter Health property was acquired by the Company. |
| (b) | Reflects the additional tenant reimbursement and property tax expense assuming the Sutter Health property is reassessed at the purchase price. |
| (c) | The Company has preliminarily allocated the fair value of the identifiable assets and liabilities. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of 47 years for the building, seven years for fixtures and building improvements, and the remaining lease term for tenant improvements, in-place lease intangibles and above-market lease intangibles. |
| (d) | Reflects the interest expense on the $14,850,000 mortgage note payable secured by the Sutter Health property that bears interest at 4.50% per annum. |
| (e) | Reflects the asset management fee payable to an affiliate of the Company. |
RICH UNCLES REAL ESTATE INVESTMENT TRUST I
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
| | Rich Uncles Real Estate Investment Trust I (1) | | | Sutter Health (2) | | | Pro Forma Rich Uncles Real Estate Investment Trust I | |
REVENUE: | | | | | | | | | | | | |
Rental income | | $ | 5,549,034 | | | | 2,026,321 | (a) | | | 7,575,355 | |
Tenant recoveries | | | 865,558 | | | | 478,186 | (b) | | | 1,343,744 | |
Total revenue | | | 6,414,592 | | | | 2,504,507 | | | | 8,919,099 | |
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EXPENSES: | | | | | | | | | | | | |
Fees to affiliates | | | 1,212,698 | | | | 162,000 | (e) | | | 1,374,698 | |
General and administrative | | | 2,060,017 | | | | - | | | | 2,060,017 | |
Depreciation and amortization | | | 3,134,979 | | | | 1,659,975 | (c) | | | 4,794,954 | |
Interest expense | | | 768,122 | | | | 608,217 | (d) | | | 1,376,339 | |
Property expenses | | | 994,503 | | | | 471,810 | (b) | | | 1,466,313 | |
Acquisition costs | | | 135,822 | | | | - | | | | 135,822 | |
Total expenses | | | 8,306,141 | | | | 2,902,002 | | | | 11,208,143 | |
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Other income – interest income | | | 161 | | | | - | | | | 161 | |
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Net income | | $ | (1,891,388 | ) | | | (397,495 | ) | | | (2,288,883 | ) |
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Net income per share, basic and diluted | | $ | (0.28 | ) | | | | | | | (0.34 | ) |
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Weighted – average number of common shares outstanding, basic and diluted | | | 6,692,800 | | | | | | | | 6,692,800 | |
See accompanying footnotes of Unaudited Pro Forma Consolidated Statements of Operations.
RICH UNCLES REAL ESTATE INVESTMENT TRUST I
FOOTNOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
| (1) | Reflects the Company’s unaudited historical operations for the period indicated as previously filed. |
| (2) | Reflects the Company’s operations of the Sutter Health property for the period indicated. |
Pro forma adjustments have been made to the historical results of operations of the Sutter Health property for the following items:
| · | Straight-line rental income for the Sutter Health lease, |
| · | Increased property taxes as a result of the acquisition and the related tenant recovery, |
| · | Depreciation and amortization of the principal assets, |
| · | Interest expense on the $14,850,000 mortgage note that is seconded by the property, and |
| (a) | Reflects the straight-line rental income for the Sutter Health property calculated assuming the lease commences on the date the Sutter Health property was acquired by the Company. |
| (b) | Reflects the additional tenant reimbursement and property tax expense assuming the Sutter Health property is reassessed at the purchase price. |
| (c) | The Company has preliminarily allocated the fair value of the identifiable assets and liabilities. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of 47 years for the building, seven years for fixtures and building improvements, and the remaining lease term for tenant improvements, in-place lease intangibles and above-market lease intangibles. |
| (d) | Reflects the interest expense on the $14,850,000 mortgage note payable secured by the Sutter Health property that bears interest at 4.50% per annum. |
| (e) | Reflects the asset management fee payable to an affiliate of the Company. |
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.
| Rich Uncles Real Estate Investment Trust I |
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Date: March 14, 2018 | By: /s/ John H. Davis |
| John H. Davis |
| Chief Financial Officer |