See accompanying notes to financial statement.
Brickyard Shopping Center
Notes to Statement of Revenues and Certain Expenses
For the fiscal year ended June 30, 2004
For the three months ended September 30, 2004 (unaudited)
1. Basis of Presentation
Presented herein is the statement of revenues and certain expenses related to the operation of the Brickyard Shopping Center, located in Berlin, CT (the “Property”). The Property contains approximately 275,000 square feet of gross leasable area. Cedar Shopping Centers, Inc. acquired the Property in December 2004.
The accompanying financial statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate properties. Accordingly, the financial statement excludes certain expenses because they may not be comparable to those expected to be incurred in the proposed future operations of the Property. Items excluded consist of interest and depreciation and amortization which are not directly related to future operations.
2. Use of Estimates
The preparation of the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the statement of revenues and certain expenses and accompanying notes. Actual results could differ from those estimates.
3. Revenue Recognition
The Property is being leased to tenants under operating leases. Minimum rental income is recognized on a straight-line basis over the terms of the leases. The excess of the amounts due pursuant to the underlying leases over the amount recognized was approximately $45,000 for the fiscal year ended June 30, 2004 and $23,000 for the three months ended September 30, 2004 (unaudited).
4. Property Operating Expenses
Property operating expenses for the fiscal year ended June 30, 2004 include approximately $45,000 for insurance, $104,000 for snow removal, $49,000 for utilities, $60,000 for repair and maintenance costs, $55,000 for security, $11,000 for professional fees, and $122,000 for other costs.
Property operating expenses for the three months ended September 30, 2004 (unaudited) include $12,000 for insurance, $3,000 for utilities, $6,000 for repair and maintenance costs, $14,000 for security, $2,000 for professional fees, and $18,000 for other costs.
5. Management Fees
The property was managed by a third party management company pursuant to an agreement which provided for management fees of 1.5% of monthly net receipts, as defined.
6. Significant Tenants
Significant tenants include Sam’s Club, The Home Depot and Syms, which constituted approximately 97% of base rents for the fiscal year ended June 30, 2004.
7. Future Minimum Lease Payments
Future minimum lease payments to be received under non-cancelable operating leases for the years ending June 30 are as follows:
Brickyard Shopping Center
Notes to Statement of Revenues and Certain Expenses
For the fiscal year ended June 30, 2004
For the three months ended September 30, 2004 (unaudited)
(Continued)
| 2005 | | $ | 2,109,000 | |
| 2006 | | | 2,017,000 | |
| 2007 | | | 2,020,000 | |
| 2008 | | | 2,022,000 | |
| 2009 | | | 2,030,000 | |
| Thereafter | | | 1,779,000 | |
| | |
|
| |
| Total | | $ | 11,977,000 | |
| | |
|
| |
The lease agreements generally contain provisions for reimbursement of real estate taxes and operating expenses, on a pro rata basis, as well as for fixed increases in rent.
8. Interim Unaudited Financial Information
The statement of revenues and certain expenses for the three months ended September 30, 2004 are unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the statement of revenues and certain expenses for this interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.
Cedar Shopping Centers, Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2004
(Unaudited)
The following unaudited pro forma condensed consolidated balance sheet is presented as if Cedar Shopping Centers, Inc. (the “Company”) had (1) acquired the Property, and (2) completed the previously-reported November 1, 2004 acquisition of Franklin Village Plaza, both as of September 30, 2004. This financial statement should be read in conjunction with the unaudited pro forma condensed consolidated statements of income, and the Company’s historical financial statements and notes thereto as filed on Form 10-K for the year ended December 31, 2003 and on Form 10-Q for the nine months ended September 30, 2004. The pro forma condensed consolidated balance sheet is unaudited and is not necessarily indicative of what the actual financial position would have been had the Company acquired Brickyard Shopping Center and completed the acquisition of Franklin Village Plaza as of September 30, 2004, nor does it purport to represent the future financial position of the Company.
| | | Cedar Shopping
Centers, Inc.
Historical (a) | | Completed
Transaction
(b) | | Acquired
Property
(c) (d) | | Pro forma
September 30,
2004 | |
| | |
| |
| |
| |
| |
Assets | | | | | | | | | | | | | |
| Real estate | | | | | | | | | | | | | |
| Land | | $ | 75,272,000 | | $ | 14,502,000 | | $ | 5,642,000 | | $ | 95,416,000 | |
| Buildings and improvements | | | 329,369,000 | | | 58,007,000 | | | 22,638,000 | | | 410,014,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
| | | | 404,641,000 | | | 72,509,000 | | | 28,280,000 | | | 505,430,000 | |
| Less accumulated depreciation | | | (13,060,000 | ) | | — | | | — | | | (13,060,000 | ) |
| | |
|
| |
|
| |
|
| |
|
| |
| Real estate, net | | | 391,581,000 | | | 72,509,000 | | | 28,280,000 | | | 492,370,000 | |
| Cash and cash equivalents | | | 7,093,000 | | | — | | | — | | | 7,093,000 | |
| Cash at joint ventures and restricted cash | | | 6,243,000 | | | 127,000 | | | — | | | 6,370,000 | |
| Rents and other receivables, net | | | 3,762,000 | | | — | | | — | | | 3,762,000 | |
| Other assets | | | 5,639,000 | | | 133,000 | | | 43,000 | | | 5,815,000 | |
| Deferred charges, net | | | 8,599,000 | | | 133,000 | | | — | | | 8,732,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
Total Assets | | | 422,917,000 | | | 72,902,000 | | | 28,323,000 | | | 524,142,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
Liabilities and Shareholders’ Equity | | | | | | | | | | | | | |
| Mortgage loans payable | | | 148,602,000 | | | 43,500,000 | | | — | | | 192,102,000 | |
| Secured revolving credit facility | | | 28,950,000 | | | 29,159,000 | | | 28,254,000 | | | 86,363,000 | |
| Accounts payable, accrued expenses, and other | | | 6,843,000 | | | 243,000 | | | 69,000 | | | 7,155,000 | |
| Deferred liabilities | | | 19,857,000 | | | | | | — | | | 19,857,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
Total Liabilities | | | 204,252,000 | | | 72,902,000 | | | 28,323,000 | | | 305,477,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
| Minority interests | | | 12,201,000 | | | — | | | — | | | 12,201,000 | |
| Limited partners’ interest in consolidated Operating Partnership | | | 4,095,000 | | | — | | | — | | | 4,095,000 | |
| Shareholders’ Equity | | | 202,369,000 | | | — | | | — | | | 202,369,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
Total Liabilities and Shareholders' Equity | | $ | 422,917,000 | | $ | 72,902,000 | | $ | 28,323,000 | | $ | 524,142,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
See accompanying notes to pro forma condensed consolidated financial statements.
Cedar Shopping Centers, Inc.
Pro Forma Condensed Consolidated Statements of Income
For the year ended December 31, 2003
For the nine months ended September 30, 2004
(Unaudited)
The following unaudited pro forma condensed consolidated statements of income are presented as if the Company had acquired Brickyard Shopping Center, concluded its 2003 public equity offering and related transactions, and acquired the properties it purchased throughout 2003 and 2004, as if all these transactions were completed as of January 1, 2003. These financial statements should be read in conjunction with the Company’s historical financial statements and notes thereto as filed on Form 10-K for the year ended December 31, 2003 and on Form 10-Q for the nine months ended September 30, 2004. The pro forma condensed consolidated statements of income are unaudited and are not necessarily indicative of what the actual results of operations would have been had the Company acquired Brickyard Shopping Center, concluded its 2003 public offering and related transactions, acquired the properties it purchased throughout 2003 and 2004, all as of January 1, 2003, nor does it purport to represent the results of operations of the Company for future periods.
| | | For the year ended December 31, 2003 | |
| | |
| |
| | | Cedar Shopping
Centers, Inc.
Historical (a) | | Completed
Transactions
(b) | | Acquired
Property
(c) | | Pro forma Adjustments
(d) | | Pro forma | |
| | |
| |
| |
| |
| |
| |
| Revenues | | $ | 26,506,000 | | $ | 27,331,000 | | $ | 2,952,000 | | $ | 138,000 | | $ | 56,927,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Expenses: | | | | | | | | | | | | | | | | |
| Operating, maintenance and management | | | 7,190,000 | | | 5,236,000 | | | 452,000 | | | (44,000 | ) | | 12,834,000 | |
| Real estate and other property-related taxes | | | 2,861,000 | | | 2,404,000 | | | 338,000 | | | — | | | 5,603,000 | |
| General and administrative | | | 3,161,000 | | | 15,000 | | | — | | | — | | | 3,176,000 | |
| Interest | | | 9,412,000 | | | 5,754,000 | | | — | | | 987,000 | | | 16,153,000 | |
| Depreciation and amortization | | | 5,023,000 | | | 5,192,000 | | | — | | | 566,000 | | | 10,781,000 | |
| Costs incurred acquiring external advisor | | | 11,960,000 | | | (11,960,000 | ) | | — | | | — | | | — | |
| Early extenguishment of debt | | | 6,935,000 | | | (6,935,000 | ) | | — | | | — | | | — | |
| Other | | | 1,893,000 | | | (1,893,000 | ) | | — | | | — | | | — | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Total expenses | | | 48,435,000 | | | (2,187,000 | ) | | 790,000 | | | 1,509,000 | | | 48,547,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Income (loss) before the following: | | | (21,929,000 | ) | | 29,518,000 | | | 2,162,000 | | | (1,371,000 | ) | | 8,380,000 | |
| Minority interests | | | (983,000 | ) | | 135,000 | | | — | | | — | | | (848,000 | ) |
| Limited partners' interest | | | 1,637,000 | | | (1,816,000 | ) | | — | | | (21,000 | ) | | (200,000 | ) |
| Preferred distribution requirements, net of limited partners’ interest | | | (76,000 | ) | | 76,000 | | | — | | | — | | | — | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Net income (loss) | | $ | (21,351,000 | ) | $ | 27,913,000 | | $ | 2,162,000 | | $ | (1,392,000 | ) | $ | 7,332,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Basic and fully diluted net income (loss) per share | | $ | (7.09 | ) | | | | | | | | | | $ | 2.44 | |
| | |
|
| | | | | | | | | | |
|
| |
| Average number of common shares outstanding | | | 3,010,000 | | | | | | | | | | | | 3,010,000 | |
| | |
|
| | | | | | | | | | |
|
| |
See accompanying notes to pro forma condensed consolidated financial statements.
Cedar Shopping Centers, Inc.
Pro Forma Condensed Consolidated Statements of Income
For the year ended December 31, 2003
For the nine months ended September 30, 2004
(Unaudited)
(Continued)
| | | Centers, Inc.
Historical (a) | | Transactions
(b) | | Property
(c) | | Adjustments
(d) | | Pro forma | |
| | |
| |
| |
| |
| |
| |
| Revenues | | $ | 36,406,000 | | $ | 6,472,000 | | $ | 2,168,000 | | $ | 114,000 | | $ | 45,160,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Expenses: | | | | | | | | | | | | | | | | |
| Operating, maintenance and management | | | 7,746,000 | | | 1,247,000 | | | 374,000 | | | (33,000 | ) | | 9,334,000 | |
| Real estate and other property-related taxes | | | 3,707,000 | | | 443,000 | | | 241,000 | | | — | | | 4,391,000 | |
| General and administrative | | | 2,333,000 | | | — | | | — | | | — | | | 2,333,000 | |
| Interest | | | 7,561,000 | | | 2,979,000 | | | — | | | 740,000 | | | 11,280,000 | |
| Depreciation and amortization | | | 8,714,000 | | | 1,446,000 | | | — | | | 425,000 | | | 10,585,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Total expenses | | | 30,061,000 | | | 6,115,000 | | | 615,000 | | | 1,132,000 | | | 37,923,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Income before the following: | | | 6,345,000 | | | 357,000 | | | 1,553,000 | | | (1,018,000 | ) | | 7,237,000 | |
| Minority interests | | | (858,000 | ) | | — | | | — | | | — | | | (858,000 | ) |
| Limited partners’ interest | | | (147,000 | ) | | (9,000 | ) | | — | | | (14,000 | ) | | (170,000 | ) |
| Preferred distribution requirements, net of limited partners’ interest | | | (886,000 | ) | | — | | | — | | | — | | | (886,000 | ) |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Net income | | $ | 4,454,000 | | $ | 348,000 | | $ | 1,553,000 | | $ | (1,032,000 | ) | $ | 5,323,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Basic and fully diluted net income per share | | $ | 0.27 | | | | | | | | | | | $ | 0.32 | |
| | |
|
| | | | | | | | | | |
|
| |
| Average number of common shares outstanding | | | 16,456,000 | | | | | | | | | | | | 16,456,000 | |
| | |
|
| | | | | | | | | | |
|
| |
See accompanying notes to pro forma condensed consolidated financial statements.
Cedar Shopping Centers, Inc.
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2004
| (a) | Reflects the Company’s historical balance sheet as of September 30, 2004 (unaudited), as previously filed. |
| | |
| (b) | Reflects the November 1, 2004 acquisition of Franklin Village Plaza. |
| | |
| (c) | Reflects the acquisition of the Brickyard Shopping Center. |
| | |
| (d) | The Company intends to account for the acquisition in accordance with Statements of Financial Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangibles”, and is currently in the process of analyzing the fair value of Brickyard Shopping Center’s in-place leases. No value has yet been assigned to the leases and, therefore, the purchase price allocation is preliminary and subject to change. |
| | |
| | Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2003 |
| | |
| (a) | Reflects the Company’s historical operations for the year ended December 31, 2003, as previously filed. |
| | |
| (b) | Reflects the Company’s 2003 public offering, related transactions, and properties acquired throughout 2003 and 2004, as if all these transactions were completed as of January 1, 2003. |
| | |
| (c) | Reflects the operations of the Brickyard Shopping Center for the year ended December 31, 2003. |
| | |
| (d) | Reflects an increase in revenues (straight-line rents), interest, depreciation and amortization, and limited partners’ interest, and a reduction in operating expenses (management fees), with respect to Brickyard Shopping Center. The Company intends to account for the acquisition in accordance with Statements of Financial Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangibles”, and is currently in the process of analyzing the fair value of Brickyard Shopping Center’s in-place leases. No value has yet been assigned to the leases and, therefore, the purchase price allocation is preliminary and subject to change. |
| | |
| | Pro Forma Condensed Consolidated Statement of Income for the nine months ended September 30, 2004 |
| | |
| (a) | Reflects the Company’s historical operations for the nine months ended September 30, 2004 (unaudited), as previously filed. |
| | |
| (b) | Reflects properties acquired during 2004, as if these transactions were completed as of January 1, 2003. |
| | |
| (c) | Reflects the operations of Brickyard Shopping Center for the period from January 1, 2004 through September 30, 2004. |
| | |
| (d) | Reflects an increase in revenues (straight-line rents), interest, depreciation and amortization, and limited partners’ interest, and a reduction in operating expenses (management fees) with respect to Brickyard Shopping Center. The Company intends to account for the acquisition in accordance with Statements of Financial Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangibles”, and is currently in the process of analyzing the fair value of Brickyard Shopping Center’s in-place leases. No value has yet been assigned to the leases and, therefore, the purchase price allocation is preliminary and subject to change. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed on its behalf by the undersigned hereunto duly authorized.
CEDAR SHOPPING CENTERS, INC. |
| | |
/s/ THOMAS J. O’ KEEFFE | |
| |
Thomas J. O’Keeffe | |
Chief Financial Officer | |
| | |
| Dated: February 23, 2005 | |
