EX-99.3
Published on April 11, 2016
Exhibit 99.3
REXFORD INDUSTRIAL REALTY, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
AS OF DECEMBER 31, 2015
The following unaudited pro forma financial information of Rexford Industrial Realty, Inc. (the Company) is based on the historical financial statements of the Company. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2015 is based on the Companys consolidated balance sheet and reflects the subsequent expected acquisition of the industrial portfolio consisting of nine properties (the REIT Portfolio) and the related borrowings on the revolving credit facility and the term loan as if such transactions had occurred on December 31, 2015. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2015 has been prepared to reflect the incremental effect of the REIT Portfolio by the Company as if such transaction had occurred on January 1, 2015.
The unaudited pro forma financial information is not necessarily indicative of what the Companys results of operations or financial condition would have been assuming the acquisition of the REIT Portfolio had occurred at the beginning of the periods presented, nor is it indicative of the Companys results of operations or financial condition for future periods. In managements opinion, all adjustments necessary to reflect the effects of these transactions have been made. The unaudited pro forma financial information and accompanying notes should be read in conjunction with the Companys consolidated financial statements included on Form 10-K for the year ended December 31, 2015.
REXFORD INDUSTRIAL REALTY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2015
(in thousands except share and per share data)
| Rexford Industrial | Acquisition of | Pro Forma Rexford | ||||||||||
| Realty, Inc. (A) | Portfolio (B) | Industrial Realty, Inc. | ||||||||||
| ASSETS |
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| Investments in real estate, net |
$ | 1,085,143 | $ | 180,871 | 1,266,014 | |||||||
| Cash and cash equivalents |
5,201 | | 5,201 | |||||||||
| Rents and other receivables, net |
3,040 | | 3,040 | |||||||||
| Deferred rent receivable, net |
7,827 | | 7,827 | |||||||||
| Deferred leasing costs, net |
5,331 | 5,331 | ||||||||||
| Deferred loan costs, net |
1,445 | 1,445 | ||||||||||
| Acquired lease intangible assets, net |
30,383 | 12,357 | 42,740 | |||||||||
| Acquired indefinite-lived intangible |
5,271 | | 5,271 | |||||||||
| Other assets |
5,523 | | 5,523 | |||||||||
| Investment in unconsolidated real estate entities |
4,087 | | 4,087 | |||||||||
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| Total Assets |
$ | 1,153,251 | $ | 193,228 | $ | 1,346,479 | ||||||
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| LIABILITIES & EQUITY |
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| Liabilities |
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| Notes payable |
$ | 418,154 | $ | 191,000 | $ | 609,154 | ||||||
| Interest rate swap liability |
3,144 | | 3,144 | |||||||||
| Accounts payable, accrued expenses and other liabilities |
12,631 | 505 | 13,136 | |||||||||
| Dividends payable |
7,806 | | 7,806 | |||||||||
| Acquired lease intangible liabilities, net |
3,387 | 2,103 | 5,490 | |||||||||
| Tenant security deposits |
11,539 | 11,539 | ||||||||||
| Prepaid rents |
2,846 | | 2,846 | |||||||||
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| Total Liabilities |
459,507 | 193,608 | 653,115 | |||||||||
| Equity |
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| Rexford Industrial Realty, Inc. stockholders equity |
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| Common Stock, $0.01par value 490,000,000 authorized and 55,598,684 outstanding as of December 31, 2015 |
$ | 553 | | 553 | ||||||||
| Additional paid in capital |
722,722 | | 722,722 | |||||||||
| Cumulative distributions in excess of earnings |
(48,103 | ) | (505 | ) | (48,608 | ) | ||||||
| Accumulated other comprehensive loss |
(3,033 | ) | | (3,033 | ) | |||||||
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| Total stockholders equity |
672,139 | (505 | ) | 671,634 | ||||||||
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| Noncontrolling interests |
21,605 | 125 | 21,730 | |||||||||
| Total Equity |
693,744 | (380 | ) | 693,364 | ||||||||
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| Total Liabilities and Equity |
$ | 1,153,251 | $ | 193,228 | $ | 1,346,479 | ||||||
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REXFORD INDUSTRIAL REALTY, INC.
UNAUDITED PRO FORMA CONDENDSED CONSOLIDATED STATEMENT OF OPERATIONS
AS OF DECEMBER 31, 2015
(in thousands except share and per share data)
| Pro Forma Rexford | ||||||||||||
| Industrial Realty, Inc. | ||||||||||||
| before Acquisition of | Acquisition of | Pro Forma Rexford | ||||||||||
| Portfolio (C) | Portfolio (D) | Industrial Realty, Inc. | ||||||||||
| RENTAL REVENUES |
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| Rental revenues |
$ | 81,114 | $ | 7,343 | $ | 88,457 | ||||||
| Tenant reimbursements |
10,479 | 2,761 | 13,240 | |||||||||
| Other income |
1,013 | | 1,013 | |||||||||
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| TOTAL RENTAL REVENUES |
92,606 | 10,104 | 102,710 | |||||||||
| Management, leasing and development services |
584 | | 584 | |||||||||
| Interest income |
710 | | 710 | |||||||||
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| TOTAL REVENUES |
93,900 | 10,104 | 104,004 | |||||||||
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| OPERATING EXPENSES |
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| Property expenses |
25,000 | 3,461 | 28,461 | |||||||||
| General and administrative |
15,016 | 15,016 | ||||||||||
| Depreciation and amortization |
41,837 | 7,778 | 49,615 | |||||||||
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| TOTAL OPERATING EXPENSES |
81,853 | 11,239 | 93,092 | |||||||||
| OTHER (INCOME) EXPENSE |
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| Acquisition expenses |
2,136 | | 2,136 | |||||||||
| Interest expense |
8,453 | 3,694 | 12,147 | |||||||||
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| TOTAL OTHER EXPENSE |
10,589 | 3,694 | 14,283 | |||||||||
| TOTAL EXPENSES |
92,442 | 14,933 | 107,375 | |||||||||
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| Equity in income (loss) from unconsolidated real estate entities |
93 | | 93 | |||||||||
| Gain from early repayment of note receivable |
581 | | 581 | |||||||||
| Loss on extinguishment of debt |
(182 | ) | | (182 | ) | |||||||
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| NET INCOME (LOSS) FROM CONTINUING OPERATIONS |
1,950 | (4,829 | ) | (2,879 | ) | |||||||
| Net income attributable to noncontrolling interests |
(76 | ) | | (76 | ) | |||||||
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| NET INCOME (LOSS) ATTRIBUTABLE TO REXFORD INDUSTRIAL REALTY, INC. |
1,874 | (4,829 | ) | (2,955 | ) | |||||||
| Less: earnings allocated to participating securities |
(223 | ) | | (223 | ) | |||||||
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| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ | 1,651 | $ | (4,829 | ) | $ | (3,178 | ) | ||||
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| Income (loss) from continuing operations attributable to common stockholders per sharebasic and diluted |
$ | 0.03 | $ | (0.06 | ) | |||||||
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| Weighted average shares of common stock outstandingbasic and diluted |
54,024,923 | 54,024,923 | ||||||||||
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REXFORD INDUSTRIAL REALTY, INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2015
(in thousands except share and per share data)
| 1. | BALANCE SHEET ADJUSTMENTS |
| (A) | Represents the audited historical consolidated balance sheet of Rexford Industrial Realty, Inc. as of December 31, 2015. |
| (B) | Reflects the expected acquisition of the nine property industrial portfolio from a single seller (the REIT Portfolio) as if it had occurred on December 31, 2015 for approximately $191 million. The following is our preliminary purchase price allocation which is subject to change as we complete the purchase price allocation process. |
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| Tangible |
Total Assets | Total Liabilities | ||||||
| Land |
$ | 90,437 | | |||||
| Building(s) |
81,847 | | ||||||
| Site Improvements |
6,977 | | ||||||
| Tenant Improvement Allowance (Origination Costs) |
$ | 1,610 | | |||||
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| Total Tangible |
$ | 180,871 | | |||||
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| Intangible |
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| Leasing Commissions (Origination Costs) |
$ | 2,953 | | |||||
| Legal and Marketing Costs (Origination Costs) |
87 | | ||||||
| Above/(Below) Market Lease Value |
911 | ($ | 2,103 | ) | ||||
| Lease In Place Value |
8,406 | | ||||||
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| Total Intangible |
$ | 12,357 | ($ | 2,103 | ) | |||
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| Fair Value |
$ | 193,228 | ($ | 2,103 | ) | |||
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As previously disclosed, Rexford Industrial Realty, Inc. (the Company), through our operating partnership, Rexford Industrial Realty, L.P. (the Operating Partnership), entered into a $125 million Credit Agreement (the Credit Agreement) on January 14, 2016 with PNC Bank, National Association, as administrative agent, U.S. Bank, National Association, as syndication agent, PNC Capital Markets LLC and U.S. Bank, National Association, as joint lead arrangers and joint bookrunners, and the other lenders named therein. Under the terms of the Credit Agreement, we are permitted to add one or more incremental term loans in an aggregate amount not to exceed $100 million (the Accordion). The Company plans to exercise the Accordion in full and established a new incremental term loan in an aggregate principal amount of $100 million (the Incremental Term Loan). The proceeds of the Incremental Term Loan will be used to partially fund the acquisition of the REIT Portfolio discussed in further detail below.
As previously disclosed, the Company is party to an Amended and Restated Credit Agreement, dated June 11, 2014 (the Credit Facility), among the Company, the Operating Partnership, Bank of America, N.A., as administrative agent, swing line lender, and letter of credit issuer, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets, Inc. as Joint Lead Arrangers and Joint Bookrunners and the other parties named therein.
REXFORD INDUSTRIAL REALTY, INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2015
(in thousands except share and per share data)
The Credit Agreement provides for a $200 million revolving credit facility and a $100 million term loan facility. We expect to borrow approximately $91 million under the revolving credit facility provided by the Credit Agreement to partially fund the acquisition of the REIT Portfolio.
The Company expects to incur approximately $0.5 million in acquisition expenses as part of the acquisition of the REIT Portfolio.
| 2. | INCOME STATEMENT ADJUSTMENTS |
| (C) | Represents the audited historical consolidated operations of the Company for the year ended December 31, 2015. See the historical consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015. |
| (D) | The pro forma adjustments reflect the results of operations for the year ended December 31, 2015 for the REIT Portfolio as if it had been acquired on January 1, 2015. Revenues and direct operating expenses are presented on the accrual basis of accounting. Rental revenues include adjustments for the amortization of the net amount of above- and below-market rents. |
Depreciation and amortization amounts were determined based on managements evaluation of the estimated remaining useful lives of the properties in the REIT Portfolio and intangibles. The values allocated to buildings, site improvements, in-place lease intangibles and tenant improvements are depreciated on a straight-line basis using an estimated remaining life of 10-30 years for buildings, 5-20 years for site improvements, and the shorter of the estimated useful life or respective lease term for in-place lease intangibles and tenant improvements. In utilizing these useful lives for determining the pro forma adjustments, management considered the length of time the property had been in existence, the maintenance history as well as anticipated future maintenance, and any contractual stipulations that might limit the useful life.