Exhibit 99.2
PRO FORMA FINANCIAL INFORMATION OF GTJ REIT, INC.
Page
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 2007 (unaudited).................................................1
Pro Forma Condensed Consolidated Statement of Income
for the year ended December 31, 2007 (unaudited)..............................2
Notes to Pro Forma Condensed Consolidated Financial
Statements (unaudited)........................................................3
GTJ REIT, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2007
(unaudited)
(in thousands)
The following unaudited pro forma condensed consolidated balance sheet is
presented as if GTJ REIT, Inc. ("the Company") had acquired 8 Farm Springs Road,
Farmington, Connecticut (the "Property")as of December 31, 2007. This financial
statement should be read in conjunction with the unaudited pro forma condensed
consolidated statement of income and the Company's historical financial
statements and notes thereto as filed on Form 10-K for the year ended December
31, 2007. 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 the property as of December 31, 2007, nor does it
purport to present the future financial position of the Company.
At December 31, 2007
-------------------------------------------------------------
ASSETS GTJ REIT (a) Pro forma Pro forma
adjustments (b) (c)
--------------- -------------------- --------------------
Real estate at cost:
Land $ 85,051 $ 3,533 $ 88,584
Buildings and improvements 7,974 16,248 24,222
------------------ -------------------- --------------------
93,025 19,781 112,806
Less: accumulated depreciation and amortization (6,036) - (6,036)
------------------ -------------------- --------------------
Net real estate for investment 86,989 19,781 106,770
Cash and cash equivalents 11,920 - 11,920
Available for sale securities 4,815 - 4,815
Restricted cash 2,852 - 2,852
Accounts receivable 8,477 - 8,477
Other assets, net 6,259 - 6,259
Deferred charges, net of accumulated amortization 2,462 - 2,462
Intangible assets, net of accumulated amortization - 3,614 3,614
Machinery and equipment, net 923 - 923
------------------ -------------------- --------------------
Total assets $ 124,697 $ 23,395 148,092
================== ==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured revolving credit facility $ 20,000 $ 23,395 $ 43,395
Accounts payable and accrued expenses 2,170 - 2,170
Unpaid losses and loss adjustment expenses 2,959 - 2,959
Other liabilities, net 5,355 - 5,355
------------------ -------------------- --------------------
30,484 23,395 53,879
------------------ -------------------- --------------------
Stockholders' equity 94,213 - 94,213
------------------ -------------------- --------------------
Total liabilities and stockholders' equity $ 124,697 $ 23,395 $ 148,092
================== ==================== ====================
Refer to the accompanying notes to pro forma condensed consolidated
financial statements.
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GTJ REIT, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2007
(unaudited)
(in thousands)
The following unaudited pro forma condensed consolidated statement of income is
presented as if the Company had acquired the property as of January 1, 2007.
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, 2007. The pro forma condensed consolidated statement of
income is unaudited and is not necessarily indicative of what the actual results
of operations would have been had the Company acquired the property as of
January 1, 2007, nor does it purport to represent the future results of
operations of the Company.
Year Ended December 31, 2007
----------------------------------------------------------------------------------
Historical (a) Acquisition (b) Pro Forma
Adjustments(c) Pro forma
------------------- ------------------ ------------------- -------------------
Revenues:
Property rentals $ 9,451 $ 2,284 $ (818) $ 10,917
Other 33,621 - - 33,621
------------------- ------------------ ------------------- -----------------
43,072 2,284 (818) 44,538
------------------- ------------------ ------------------- -----------------
Expenses:
Rental expenses - 245 - 245
Operating expenses 35,854 - - 35,854
Depreciation and amortization 566 - 789 (e) 1,355
------------------- ------------------ ------------------- -----------------
36,420 245 789 37,454
------------------- ------------------ ------------------- -----------------
Operating income (loss): 6,652 2,039 (1,607) 7,084
Non-operating expenses:
Interest expense (711) - (1,535)(d) (2,246)
Amortization of deferred financing
Costs (101) - - (101)
Interest income 887 - - 887
Other 127 - - 127
------------------ ------------------- -------------------- -----------------
Total non-operating income and
Expenses 202 - (1,535) (1,333)
Income (loss) from continuing operations
before income taxes and equity in earnings
of affiliated companies 6,854 2,039 (3,142) 5,751
Provision for income taxes (1,190) - - (1,190)
Equity in earnings of affiliated companies,
net of tax 60 - - 60
------------------- ------------------ ------------------- -----------------
Income from continuing operations 5,724 2,039 (3,142) 4,621
Discontinued operation:
Loss from operations of discontinued
operation, net of taxes (324) - - (324)
------------------- ------------------ ------------------- -----------------
Net income $ 5,400 $ 2,039 $ (3,142) $ 4,297
=================== ================== =================== =================
Income per share - basic and diluted:
Income from continuing operations $ 0.70 $ 0.57
=================== =================
Loss from operations of discontinued
operation, net of taxes $ (0.04) $ (0.04)
=================== =================
Net income $ 0.66 $ 0.53
=================== =================
Weighted average common shares outstanding
- - basic and diluted 8,126,995 8,126,995
=================== =================
Refer to the accompanying notes to pro forma condensed consolidated
financial statements.
2
GTJ REIT, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2007:
(a) Reflects the Company's historical balance sheet as of December 31, 2007, as
previously filed.
(b) Reflects the acquisition of the Property. The consideration was $23,395,000,
which was funded through borrowings under the Company's secured revolving credit
facility.
(c) The Company accounted for the acquisition in accordance with Statements of
Financial Accounting Standards No. 141, "Business Combinations", and is
currently in the process of analyzing the fair value of the Property's in-place
lease.
Pro Forma Condensed Consolidated Statement of Income For the Year Ended December
31, 2007:
(a) Reflects the Company's historical operations for the year ended December 31,
2007, as previously filed.
(b) Reflects the operations of the Property for the year ended December 31,
2007.
(c) Upon the acquisition of real estate properties, the fair value of the real
estate purchased is allocated to the acquired tangible assets (consisting of
land, buildings and buildings improvements) and identified intangible assets and
liabilities (consisting of above-market and below-market leases and in-place
leases) in accordance with SFAS No. 141, "Business Combinations." The Company
hired an independent appraisers to determine the fair value of acquired assets
and liabilities. The fair value of the tangible assets of an acquired property
considers the value of the property "as-if-vacant." The fair value reflects the
depreciated replacement cost of the asset. In allocating purchase price to
identified intangible assets and liabilities of an acquired property, the value
of above-market and below-market leases are estimated based on the differences
between (i) contractual rentals and the estimated market rents over the
applicable lease term discounted back to the date of acquisition utilizing a
discount rate adjusted for the credit risk associated with the respective
tenants and (ii) the estimated cost of acquiring such leases giving effect to
the Company's history of providing tenant improvements and paying leasing
commissions, offset by a vacancy period during which such space would be
leased. The aggregate value of in-place leases is measured by the excess of (i)
the purchase price paid for a property after adjusting existing in-place leases
to market rental rates over (ii) the estimated fair value of the property
"as-if-vacant," determined as set forth above.
Above and below market leases acquired are recorded at their fair
value. The capitalized above-market lease values are amortized as a reduction
of rental revenue over the remaining term of the respective leases and the
capitalized below-market lease values are amortized as an increase to rental
revenue over the remaining term of the respective leases. The value of in-place
leases is based on the Company's evaluation of the specific characteristics of
each tenant's lease. Factors considered include estimates of carrying costs
during expected lease-up periods, current market conditions, and costs to
execute similar leases. The value of in-place leases are amortized over the
remaining term of the respective leases. If a tenant vacates its space prior to
its contractual expiration date, any unamortized balance of the related
intangible asset is expensed.
The total cost was $23,395,000, of which $19,781,000, based on third party
valuations, was allocated to real estate properties. In accordance with SFAS No.
141, based on third party valuations, intangibles associated with the purchases
of real estate were allocated as follows: $2,183,000 to in-place lease
intangibles and $1,431,000 to above market leases (both included in Intangible
Assets in the accompanying pro forma condensed consolidated balance sheet).
These costs are amortized over the remaining lives of the associated leases in
place at the time of acquisition, approximately 4 years. Amortization expense
related to these intangible assets was $818,000.
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(d) Reflects interest expense on $23,395,000 of increased borrowings under the
Company's secured revolving credit facility, at an interest rate of 6.59%.
(e) Reflects $789,000 of depreciation related to the acquired real estate
assets.
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