Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated balance sheet as of September 30, 2001
was prepared on the basis that the exchange offer as described below had
occurred on September 30, 2001. The unaudited pro forma combined consolidated
statements of operations for the nine months ended September 30, 2001 and for
the year ended December 31, 2000 have been prepared on the basis that the
exchange offer as described below had occurred on January 1, 2001 and January
1, 2000, respectively.
You should read this information in conjunction with our consolidated
financial information and the accompanying notes and Management's Discussion
and Analysis of Financial Condition and Results of Operations, which are
included in our Annual Report on Form 10-K for the year ended December 31,
2000. The unaudited pro forma consolidated financial data does not purport to
represent what our results of operations would actually have been if the
exchange offer occurred on the dates specified, or purport to project our
results of operations for any future period or date. The pro forma adjustments
are based on available information and adjustments that our management believes
are reasonable. In the opinion of our management, all adjustments have been
made that are necessary to present fairly the unaudited pro forma consolidated
data. We can give you no assurances that the transactions referred to in the
assumptions will take place or, if they do take place, that they will take
place on the terms specified in the assumptions.
We propose to make the exchange offer described below as part of our plan to
refinance the old debentures. If we proceed with the exchange offer, we will
establish the interest rate, conversion price, maturity and other basic terms
based on market conditions at the time and with the assistance of our financial
advisors.To the extent that not all of the old debentures are tendered pursuant
to the exchange offer or the principal amount of our 8% convertible
subordinated debentures due 2001 ("old debentures") that we are able to accept
in the exchange offer is limited by proration, we may also seek to effect a
direct placement or a public offering for cash of convertible subordinated
debentures due 2009 ("new debentures") and Series B preferred stock, the net
proceeds of which we will use to redeem or purchase some or all of the old
debentures that remain outstanding after the completion of the exchange offer.
The result of these transactions will be that the old debentures will be
refinanced by the issuance of all new debentures, all Series B preferred stock
or a combination of new debentures and Series B preferred stock, but the exact
amount of new debentures, if any, and Series B preferred stock, if any, issued
will depend upon a number of factors, including the principal amount of old
debentures tendered in the exchange offer, the election of holders of old
debentures who participate in the exchange offer, and whether all new
debentures and all shares of Series B preferred stock or a combination of new
debentures and Series B preferred stock are sold in a direct placement or
public offering. Accordingly, we are unable to predict whether the old
debentures will be refinanced by the issuance of all new debentures, all Series
B preferred stock, or a combination of new debentures and Series B preferred
stock. Moreover, depending on market conditions and our need for capital, we
may issue new debentures, Series B preferred stock, or a combination that
exceeds the principal amount of the old debentures. For purposes of the
preparation of the following pro forma financial statements, we have made the
following assumptions:
. $32,327,000 principal amount of the old debentures are refinanced by
the issuance of $32,327,000 principal amount of 9% convertible
subordinated debentures due 2009 (the maximum principal amount of new
debentures that may be issued in the exchange offer);
. interest eliminated on the retirement of the old debentures will be
$2,586,000 per annum;
. interest expense on the new debentures will be approximately $2,909,000
per annum; and
. reduction in amortization of deferred issuance costs of $22,000 per
annum.
For further information, see our Registration Statement on Form S-4 (File
No. 333-72208), as amended, filed with the Securities and Exchange Commission.
F-1
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
Adjustments
September 30, for the
2001 Transaction Pro Forma
------------- ----------- ------------
ASSETS
Real estate investments:
Land................................. $ 52,502,000 $ 52,502,000
Buildings and improvements........... 212,001,000 212,001,000
------------ --- ------------
264,503,000 264,503,000
Cash, cash equivalents and receivables
and other assets (A).................. 12,107,000 12,107,000
------------ --- ------------
Total Assets....................... $276,610,000 $276,610,000
============ === ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Mortgage notes payable................. $111,776,000 $111,776,000
Notes payable, accounts payable and
other liabilities..................... 36,274,000 36,274,000
------------ --- ------------
148,050,000 148,050,000
Convertible subordinated debentures
(A)................................... 61,878,000 61,878,000
------------ --- ------------
Total Liabilities.................. 209,928,000 209,928,000
SHAREHOLDERS' EQUITY
Series A preferred stock, 40,000 shares
authorized, none issued............... -- --
Series B preferred stock, liquidation
preference $25 per share, 2,476,000
shares authorized, none issued (A).... -- --
Common stock, par value $0.0001 per
share, 51,484,000 shares authorized,
8,368,000 shares issued and
outstanding........................... 1,000 1,000
Excess stock, par value $0.0001 per
share, 16,000,000 shares authorized,
none issued........................... -- --
Additional paid-in capital............. 121,917,000 121,917,000
Cumulative net income (A).............. 42,336,000 42,336,000
Cumulative distributions paid.......... (97,572,000) (97,572,000)
------------ --- ------------
Total Shareholders' Equity......... 66,682,000 66,682,000
------------ --- ------------
Total Liabilities and Shareholders'
Equity............................ $276,610,000 $276,610,000
============ ============
F-2
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months
Ended Adjustments
September 30, for the
2001 Transaction Pro Forma
------------- ----------- -----------
OPERATING REVENUE
Rents and other income.............. $39,302,000 $39,302,000
OPERATING EXPENSES
Management & leasing fees........... 2,025,000 2,025,000
Utilities........................... 1,725,000 1,725,000
Real estate taxes................... 2,948,000 2,948,000
Administrative expenses............. 1,912,000 1,912,000
Operations & maintenance............ 5,946,000 5,946,000
Other operating expenses............ 2,571,000 2,571,000
Depreciation and amortization....... 8,481,000 8,481,000
----------- -----------
Total Operating Expenses.............. 25,608,000 25,608,000
----------- -----------
INCOME FROM OPERATIONS................ 13,694,000 13,694,000
Interest expense...................... 11,581,000 $226,000(B) 11,807,000
----------- -----------
NET INCOME BEFORE GAIN ON SALE OF REAL
ESTATE............................... $ 2,113,000 $ 1,887,000
Gain on sale of real estate........... 506,000 506,000
----------- -----------
NET INCOME............................ 2,619,000 2,393,000
=========== ===========
BASIC AND DILUTED EARNINGS PER SHARE.. $ 0.32 $ 0.29
=========== ===========
Weighted average shares of common
stock outstanding.................... 8,204,000 8,204,000
=========== ===========
F-3
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Year Ended Adjustments
December 31, for the
2000 Transaction Pro Forma
------------ ----------- -----------
OPERATING REVENUE
Rents and other income............... $51,441,000 $51,441,000
OPERATING EXPENSES
Management & leasing fees............ 2,613,000 2,613,000
Utilities............................ 2,246,000 2,246,000
Real estate taxes.................... 3,933,000 3,933,000
Administrative expenses.............. 2,648,000 2,648,000
Operations & maintenance............. 7,689,000 7,689,000
Other operating expenses............. 2,961,000 2,961,000
Depreciation and amortization........ 11,173,000 11,173,000
----------- -----------
Total Operating Expenses............... 33,263,000 33,263,000
----------- -----------
INCOME FROM OPERATIONS................. 18,178,000 18,178,000
Interest expense....................... 15,850,000 $301,000(B) 16,151,000
----------- -----------
NET INCOME............................. $ 2,328,000 $ 2,027,000
=========== ===========
BASIC AND DILUTED EARNINGS PER SHARE... $ 0.29 $ 0.25
=========== ===========
Weighted average shares of common stock
outstanding........................... 7,950,000 7,950,000
=========== ===========
F-4
Notes to Unaudited Pro Forma Financial Data
(A) At September 30, 2001, the Company had approximately $447,000 of
unamortized deferred financing costs remaining on its balance sheet
associated with the old debentures. If the Company issues $32,327,000 of
new debentures and at least 340,000 shares of Series B preferred stock in
the exchange offer, the Company would record $447,000 as an extraordinary
item for the write-off of unamortized debt costs. This charge is a non-cash
item, is non-recurring, and will not affect reported funds from operations.
(B) Represents the net increase of interest expense resulting from the exchange
of the old debentures for new debentures.
(C) We and real estate industry analysts utilize the concept of funds from
operations ("FFO") as an important analytical measure of a real estate
investment trust's financial performance, with FFO being defined by us and
the National Association of Real Estate Investment Trusts ("NAREIT") as net
income, excluding gains or losses from sales of property and those items
defined as extraordinary under accounting principles generally accepted in
the United States of America ("GAAP"), plus depreciation on real estate
assets, and after adjustments for unconsolidated partnerships to reflect
funds from operations on the same basis. Our management believes the
following additional adjustments are relevant to evaluating our future
operating performance. The following additional adjustments that eliminate
the impact of certain items, are based on estimates and assumptions made
and believed by us to be reasonable and are inherently uncertain and
subject to change. The supplemental adjustments do not comply with the
regulations published by the Securities and Exchange Commission relating to
the presentation of pro forma financial data. The following calculations
should not be viewed as indicative of actual or future results. Pro forma
FFO was calculated as follows:
Year Ended Weighted
December 31, Average
2000 Shares
------------ ---------
Basic FFO as reported........................... $12,907,000 7,950,000
Additional interest expense..................... (301,000) --
----------- ---------
Pro forma FFO available to shares of common
stock.......................................... $12,606,000 7,950,000
=========== =========
(D) If we issue $32,327,000 of new debentures in the exchange offer, any
additional exchanges of old debentures would be for Series B preferred
stock. For each $5,000,000 of preferred stock we exchange for old
debentures, the effect on our September 30, 2001 balance sheet will be that
convertible subordinated debentures will be decreased by $5,000,000, total
liabilities will be decreased by $5,000,000, Series B preferred stock will
be increased by $5,000,000, and total shareholders equity will be increased
by $5,000,000. Similarly, the effect of the assumed issuance of $5,000,000
of Series B preferred stock on our pro forma results of operations for the
nine months ended September 30, 2001 (assuming a 10% dividend rate) would
be to decrease interest expense by $300,000, to increase pro forma net
income by $300,000, to decrease net income available to common stockholders
by $75,000 or $0.01 per share; and the effect of the assumed issuance of
$5,000,000 of Series B preferred stock on the Company's pro forma results
of operations for the year ended December 31, 2000 would be to decrease
interest expense by $400,000, to increase pro forma net income by $400,000,
to decrease net income available to common stockholders by $100,000 or
$0.01 per share.
(E) The pro forma financial statements above assume the issuance of $32,327,000
of new debentures. If the exchange offer results in a lesser amount of new
debentures being issued, there will be no effect on our pro forma balance
sheet, except for a greater amount of old debentures remaining outstanding.
Similarly, the effect of the assumed issuance of $5,000,000 less of new
debentures on our pro forma results of operations for the nine months ended
September 30, 2001 would be to decrease interest expense by $37,500, to
increase pro forma net income by $37,500, to increase net income available
to common stockholders by $37,500 or less than $0.01 per share; and the
effect of the assumed issuance of $5,000,000 less of new debentures on the
Company's pro forma results of operations for the year ended December 31,
2000 would be to decrease interest expense by $50,000, to increase pro
forma net income by $50,000, to increase net income available to common
stockholders by $50,000 or less than $0.01 per share.
F-5