8-K/A: Current report filing
Published on May 12, 2016
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 11, 2016
REXFORD INDUSTRIAL REALTY, INC.
(Exact name of registrant as specified in its charter)
Maryland |
001-36008 |
46-2024407 |
||
|
(State or other jurisdiction of
incorporation)
|
(Commission File Number) |
(IRS Employer Identification No.) |
||
11620 Wilshire Boulevard, Suite 1000, Los Angeles, California |
90025 |
|
(Address of principal executive offices) |
(Zip Code) |
|
Registrant’s telephone number, including area code: (310) 966-1680
N/A
(Former name or former address, if changed since last report.)
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 (see General Instructions A.2.):
o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
This Form 8-K/A amends and supplements the registrant’s Form 8-K, filed on April 11, 2016 reporting the acquisition of an industrial portfolio (“REIT Portfolio”) consisting of nine properties acquired from a single-seller (the “Original Filing”), to include the historical financial statements and pro forma information required by Item 9.01(a) and (b) of Form 8-K. This Form 8-K/A should be read in conjunction with the Original Filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) |
Financial Statements of the Portfolio Under Rule 3-14 of Regulation S-X |
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Report of Independent Auditors |
||||
Statements of Revenues and Certain Expenses for the three months ended March 31, 2016 (unaudited) and the year ended December 31, 2015 |
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Notes to the Statements of Revenues and Certain Expenses |
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(b) |
Unaudited Pro Forma Condensed Consolidated Information |
|||
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2016 |
||||
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2016 |
||||
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements |
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(c) |
Exhibits |
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23.1* |
Consent of Ernst & Young LLP |
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* Filed herewith |
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Report of Independent Auditors
The Board of Directors and Stockholders of Rexford Industrial Realty, Inc.
We have audited the accompanying statement of revenues and certain expenses (“the financial statement”) of the Rexford Industrial Portfolio (“the REIT Portfolio”) for the year ended December 31, 2015, and the related notes to the financial statement.
Management’s Responsibility for the Financial Statement
Management is responsible for the preparation and fair presentation of the financial statement in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statement that are free of material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates, made by management, as well as evaluating the overall presentation of the financial statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the statement of revenues and certain expenses referred to above presents fairly, in all material respects, the revenues and certain expenses as described in Note 1 of the REIT Portfolio’s financial statement for the year ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statement, the statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of the REIT Portfolio’s revenues and expenses. Our opinion is not modified with respect to this matter.
/S/ Ernst & Young LLP
Los Angeles, California
April 11, 2016
REIT PORTFOLIO
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
THREE MONTHS ENDED MARCH 31, 2016 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2015
(in thousands)
Three Months Ended March 31, 2016 |
Year Ended December 31, 2015 |
||||||||
RENTAL REVENUES |
|||||||||
Rental revenues |
$ |
2,206 |
$ |
6,933 |
|||||
Tenant reimbursements |
713 |
2,761 |
|||||||
TOTAL RENTAL REVENUES |
2,919 |
9,694 |
|||||||
CERTAIN OPERATING EXPENSES |
|||||||||
Property expenses |
812 |
3,461 |
|||||||
TOTAL OPERATING EXPENSES |
812 |
3,461 |
|||||||
REVENUES IN EXCESS OF CERTAIN OPERATING EXPENSES |
$ |
2,107 |
$ |
6,233 |
|||||
REIT PORTFOLIO
NOTES TO THE STATEMENTS OF REVENUES AND CERTAIN EXPENSES
1. |
BACKGROUND AND BASIS OF PRESENTATION |
The accompanying statements of revenues and certain expenses present the results of operations of an industrial portfolio consisting of nine properties (the “REIT Portfolio”) for the three months ended March 31, 2016 (unaudited) and the year ended December 31, 2015. The REIT Portfolio was acquired by Rexford Industrial Realty, Inc., through its operating partnership, Rexford Industrial Realty, L.P. from a third-party seller on April 15, 2016 for approximately $191 million. The table below sets forth relevant information with respect to the properties in the REIT Portfolio at the time of acquisition (unaudited).
Property Address |
City |
Number of
Buildings
|
Asset Type |
Year Built/ Renovated |
Rentable
Square
Feet
|
Number of
Leases
|
Occupancy |
|||||||||
12131 Western Avenue |
Garden Grove |
1 |
Warehouse / Distribution / Manufacturing |
1987/2007 |
207,953 |
(1) |
1 |
100% |
||||||||
2811 S Harbor Boulevard |
Santa Ana |
1 |
Manufacturing |
1977/2015 |
126,796 |
1 |
100% |
|||||||||
2700-2722 S Fairview Street |
Santa Ana |
1 |
Manufacturing / Office |
1964/1984 |
116,575 |
2 |
100% |
|||||||||
9 Holland |
Irvine |
1 |
Manufacturing / Distribution |
1980/2013 |
180,981 |
2 |
100% |
|||||||||
20 Icon |
Lake Forest |
1 |
Distribution |
1999/2015 |
102,299 |
1 |
100% |
|||||||||
11127 Catawba Avenue |
Fontana |
1 |
Distribution |
2015 |
145,750 |
1 |
100% |
|||||||||
15996 Jurupa Avenue |
Fontana |
1 |
Warehouse / Distribution |
2015 |
212,660 |
1 |
—% |
(2) |
||||||||
16425 Gale Avenue |
City of Industry |
1 |
Warehouse / Distribution |
1976 |
325,800 |
2 |
100% |
|||||||||
13550 Stowe Drive |
Poway |
1 |
Warehouse |
1991 |
112,000 |
1 |
100% |
|||||||||
9 |
1,530,814 |
12 |
86.1% |
|||||||||||||
(1) |
The total rentable square feet for this building is 207,953. However, as of March 31, 2016 the current tenant is occupying 192,609 square feet. |
(2) |
The lease was executed as of March 31, 2016 but tenant did not take possession until April 1, 2016. |
The accompanying statement of revenues and certain expenses has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the statement is not representative of the actual operations for the period presented as revenues and certain operating expenses, which may not be directly attributable to the revenues and expenses expected to be incurred through the future operations of the REIT Portfolio, have been excluded. Such items include depreciation, amortization, interest expense, interest income, and amortization of above and below market leases. References to year built/renovated, square footage and occupancy rates are unaudited and excluded from the auditors’ opinion.
2. SIGNIFICANT ACCOUNTING POLICES
Revenue Recognition
The REIT Portfolio recognizes rental revenue from tenants on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset.
REIT PORTFOLIO
NOTES TO THE STATEMENTS OF REVENUES AND CERTAIN EXPENSES
Tenant reimbursements related to reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the applicable expenses are incurred. The reimbursements are recognized and presented gross, as the REIT Portfolio is generally the primary obligor with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk.
Use of Estimates
A number of estimates and assumptions have been made relating to the reporting and disclosure of revenues and certain expenses during the reporting period to prepare the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.
3. MINIMUM FUTURE LEASE RENTALS
There are various lease agreements in place with tenants to lease space in the REIT Portfolio. As of March 31, 2016, the minimum future cash rents receivable under non-cancelable operating leases in each of the next five years and thereafter are as follows (unaudited and in thousands):
Years Ending December 31 |
|||
2016 |
7,530 |
||
2017 |
8,548 |
||
2018 |
8,799 |
||
2019 |
8,856 |
||
2020 |
7,503 |
||
Thereafter |
10,045 |
||
Total |
51,281 |
||
Leases generally require reimbursement of the tenant's proportional share of common area, real estate taxes and other operating expenses, which are excluded from the amounts above.
4. TENANT CONCENTRATIONS
For the three months ended March 31, 2016 (unaudited), three tenants represented 52% of the REIT Portfolio’s rental revenue. For the year ended December 31, 2015, two tenants represented 49% of the Portfolio’s rental revenue.
5. MANAGEMENT FEES
The REIT Portfolio incurred approximately $63,000 (unaudited) and $182,000 of management fees during the three months ended March 31, 2016 and the year ended December 31, 2015, respectively. The Seller had entered into a management agreement with a related party management company upon initial purchase of the properties. The management company performed management services including leasing, operating, supervising and maintaining the Seller’s real estate investments. Management fees are calculated as 2.5% on all rents collected each month.
The Company has no affiliation with the management company. The management agreements were terminated upon purchase of the REIT Portfolio.
6. SUBSEQUENT EVENTS
Subsequent events were evaluated through April 11, 2016, the date the financial statements were available to be issued.
REXFORD INDUSTRIAL REALTY, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2016 is based on Rexford Industrial Realty, Inc.’s (the “Company”) historical consolidated balance sheet and reflects the subsequent completion of an underwritten public offering of 10,350,000 shares of common stock, the establishment of a new incremental term loan in an aggregate principal amount of $100 million and the acquisition of a nine property industrial portfolio from a single seller (the “REIT Portfolio”), as if such transactions had occurred on March 31, 2016. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2016 and the year ended December 31, 2015 have 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 Company’s 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 Company’s results of operations or financial condition for future periods. In management’s 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 Company’s consolidated financial statements included on Form 10-K for the year ended December 31, 2015 and Quarterly Report on Form 10-Q for the three months ended March 31, 2016.
REXFORD INDUSTRIAL REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2016
(in thousands - except share and per share data)
(Unaudited)
Rexford Industrial Realty, Inc. (A) |
Equity Offering (B) |
Acquisition of REIT Portfolio (C) |
Pro Forma Rexford Industrial Realty, Inc. |
||||||||||||
ASSETS |
|||||||||||||||
Investments in real estate, net |
$ |
1,106,635 |
$ |
— |
$ |
180,871 |
$ |
1,287,506 |
|||||||
Cash and cash equivalents |
6,402 |
175,122 |
(148,324 |
) |
33,200 |
||||||||||
Rents and other receivables, net |
2,939 |
— |
— |
2,939 |
|||||||||||
Deferred rent receivable, net |
8,670 |
— |
— |
8,670 |
|||||||||||
Deferred leasing costs, net |
6,001 |
— |
— |
6,001 |
|||||||||||
Deferred loan costs, net |
1,296 |
— |
— |
1,296 |
|||||||||||
Acquired lease intangible assets, net |
28,802 |
— |
12,357 |
41,159 |
|||||||||||
Acquired indefinite-lived intangible |
5,271 |
— |
— |
5,271 |
|||||||||||
Other assets |
5,580 |
— |
— |
5,580 |
|||||||||||
Acquisition related deposit |
400 |
— |
— |
400 |
|||||||||||
Investment in unconsolidated real estate entities |
4,144 |
— |
— |
4,144 |
|||||||||||
Total Assets |
1,176,140 |
175,122 |
44,904 |
1,396,166 |
|||||||||||
LIABILITIES & EQUITY |
|||||||||||||||
Liabilities |
|||||||||||||||
Notes payable |
444,010 |
— |
42,676 |
486,686 |
|||||||||||
Interest rate swap liability |
4,949 |
— |
— |
4,949 |
|||||||||||
Accounts payable, accrued expenses and other liabilities |
14,897 |
— |
20 |
14,917 |
|||||||||||
Dividends payable |
7,814 |
— |
— |
7,814 |
|||||||||||
Acquired lease intangible liabilities, net |
3,307 |
— |
2,103 |
5,410 |
|||||||||||
Tenant security deposits |
11,995 |
— |
— |
11,995 |
|||||||||||
Prepaid rents |
2,667 |
— |
— |
2,667 |
|||||||||||
Total Liabilities |
489,639 |
— |
44,799 |
534,438 |
|||||||||||
Equity |
|||||||||||||||
Rexford Industrial Realty, Inc. stockholders' equity |
|||||||||||||||
Common Stock, $0.01 par value 490,000,000 authorized and 55,657,428 outstanding and 66,007,428 outstanding on a pro forma basis as of March 31, 2016, respectively |
554 |
104 |
— |
658 |
|||||||||||
Additional paid in capital |
723,074 |
175,018 |
— |
898,092 |
|||||||||||
Cumulative distributions in excess of earnings |
(54,192 |
) |
— |
(20 |
) |
(54,212 |
) |
||||||||
Accumulated other comprehensive loss |
(4,728 |
) |
— |
— |
(4,728 |
) |
|||||||||
Total stockholders' equity |
664,708 |
175,122 |
(20 |
) |
839,810 |
||||||||||
Noncontrolling interests |
21,793 |
— |
125 |
21,918 |
|||||||||||
Total Equity |
686,501 |
175,122 |
105 |
861,728 |
|||||||||||
Total Liabilities and Equity |
$ |
1,176,140 |
$ |
175,122 |
$ |
44,904 |
$ |
1,396,166 |
|||||||
REXFORD INDUSTRIAL REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2016
(in thousands - except share and per share data)
(Unaudited)
Rexford Industrial Realty, Inc. (AA) |
Acquisition of REIT Portfolio (BB) |
Pro Forma Rexford Industrial Realty, Inc. |
|||||||||
RENTAL REVENUES |
|||||||||||
Rental income |
$ |
23,499 |
$ |
2,284 |
$ |
25,783 |
|||||
Tenant reimbursements |
3,558 |
713 |
4,271 |
||||||||
Other income |
313 |
— |
313 |
||||||||
TOTAL RENTAL REVENUES |
27,370 |
2,997 |
30,367 |
||||||||
Management, leasing and development services |
134 |
— |
134 |
||||||||
TOTAL REVENUES |
27,504 |
2,997 |
30,501 |
||||||||
OPERATING EXPENSES |
|||||||||||
Property expenses |
7,543 |
812 |
8,355 |
||||||||
General and administrative |
3,602 |
— |
3,602 |
||||||||
Depreciation and amortization |
11,214 |
2,954 |
14,168 |
||||||||
TOTAL OPERATING EXPENSES |
22,359 |
3,766 |
26,125 |
||||||||
OTHER EXPENSE |
|||||||||||
Acquisition expenses |
475 |
(164 |
) |
311 |
|||||||
Interest expense |
3,254 |
539 |
(EE) |
3,793 |
|||||||
TOTAL OTHER EXPENSE |
3,729 |
375 |
4,104 |
||||||||
TOTAL EXPENSES |
26,088 |
4,141 |
30,229 |
||||||||
Equity in income from unconsolidated real estate entities |
61 |
— |
61 |
||||||||
NET INCOME (LOSS) |
1,477 |
(1,144 |
) |
333 |
|||||||
Less: net (income) loss attributable to noncontrolling interest |
(52 |
) |
42 |
(10 |
) |
||||||
NET INCOME (LOSS) ATTRIBUTABLE TO REXFORD INDUSTRIAL REALTY, INC. |
1,425 |
(1,102 |
) |
323 |
|||||||
Less: earnings allocated to participating securities |
(78 |
) |
— |
(78 |
) |
||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ |
1,347 |
$ |
(1,102 |
) |
$ |
245 |
||||
Net income available to common stockholders per share - basic and diluted |
$ |
0.02 |
$ |
— |
|||||||
Weighted average shares of common stock outstanding - basic |
55,269,598 |
65,619,598 |
|||||||||
Weighted average shares of common stock outstanding - diluted |
55,416,947 |
65,766,947 |
|||||||||
REXFORD INDUSTRIAL REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2015
(in thousands - except share and per share data)
(Unaudited)
Pro Forma Rexford Industrial Realty, Inc. before Acquisition of Portfolio (CC) |
Acquisition of Portfolio (DD) |
Pro Forma Rexford Industrial Realty, Inc. |
|||||||||
RENTAL REVENUES |
|||||||||||
Rental revenues |
$ |
81,114 |
$ |
7,343 |
$ |
88,457 |
|||||
Tenant reimbursements |
10,479 |
2,761 |
13,240 |
||||||||
Other income |
1,013 |
— |
1,013 |
||||||||
TOTAL RENTAL REVENUES |
92,606 |
10,104 |
102,710 |
||||||||
Management, leasing and development services |
584 |
— |
584 |
||||||||
Interest income |
710 |
— |
710 |
||||||||
TOTAL REVENUES |
93,900 |
10,104 |
104,004 |
||||||||
OPERATING EXPENSES |
|||||||||||
Property expenses |
25,000 |
3,461 |
28,461 |
||||||||
General and administrative |
15,016 |
— |
15,016 |
||||||||
Depreciation and amortization |
41,837 |
7,778 |
49,615 |
||||||||
TOTAL OPERATING EXPENSES |
81,853 |
11,239 |
93,092 |
||||||||
OTHER (INCOME) EXPENSE |
|||||||||||
Acquisition expenses |
2,136 |
— |
2,136 |
||||||||
Interest expense |
8,453 |
2,155 |
(EE) |
10,608 |
|||||||
TOTAL OTHER EXPENSE |
10,589 |
2,155 |
12,744 |
||||||||
TOTAL EXPENSES |
92,442 |
13,394 |
105,836 |
||||||||
Equity in income from unconsolidated real estate entities |
93 |
— |
93 |
||||||||
Gain from early repayment of note receivable |
581 |
— |
581 |
||||||||
Loss on extinguishment of debt |
(182 |
) |
— |
(182 |
) |
||||||
NET INCOME (LOSS) |
1,950 |
(3,290 |
) |
(1,340 |
) |
||||||
Net (income) loss attributable to noncontrolling interests |
(76 |
) |
120 |
44 |
|||||||
NET INCOME (LOSS) ATTRIBUTABLE TO REXFORD INDUSTRIAL REALTY, INC. |
1,874 |
(3,170 |
) |
(1,296 |
) |
||||||
Less: earnings allocated to participating securities |
(223 |
) |
— |
(223 |
) |
||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ |
1,651 |
$ |
(3,170 |
) |
$ |
(1,519 |
) |
|||
Net Income (loss) attributable to common stockholders per share - basic and diluted |
$ |
0.03 |
$ |
(0.02 |
) |
||||||
Weighted average shares of common stock outstanding - basic and diluted |
54,024,923 |
64,374,923 |
|||||||||
1. |
Balance sheet adjustments |
(A) |
Represents the unaudited historical balance sheet of Rexford Industrial Realty, Inc. (the “Company,” “we,” "our," or “us”) as of March 31, 2016. See the historical consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016. |
(B) |
On April 15, 2016, we completed an underwritten public offering (the "Equity Offering") of 10,350,000 shares of our common stock, $0.01 par value per share (the “Common Stock”), for net proceeds of approximately $175.1 million, after |
REXFORD INDUSTRIAL REALTY, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
deducting the underwriting discount and estimated expenses payable by us, which includes the proceeds from the underwriters exercise in full of their option to purchase an additional 1,350,000 shares of Common Stock.
(C) |
Reflects the acquisition of the REIT Portfolio as if it had occurred on March 31, 2016 for approximately $191 million. |
The Company has performed a preliminary valuation analysis of the fair market value of the REIT Portfolio’s assets to be acquired and liabilities to be assumed. Using the total consideration for the Acquisition, the Company has estimated the allocations to such assets and liabilities. The following table summarizes the allocation of the primary purchase price as of the transaction closing date, April 15, 2016 (in thousands), which is subject to change as we complete the purchase price allocation process.
Tangible |
Total Assets |
Total Liabilities |
||||||
Land |
$ |
90,437 |
$ |
— |
||||
Buildings |
81,847 |
— |
||||||
Site Improvements |
6,977 |
— |
||||||
Tenant Improvement Allowance (Origination Costs) |
1,610 |
— |
||||||
Total Tangible |
$ |
180,871 |
$ |
— |
||||
Intangible |
||||||||
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 |
— |
||||||
Total Intangible |
$ |
12,357 |
$ |
(2,103 |
) |
|||
Fair Value |
$ |
193,228 |
$ |
(2,103 |
) |
|||
The Company, through its operating partnership, Rexford Industrial Realty, L.P., 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, the Company is permitted to add one or more incremental term loans in an aggregate amount not to exceed $100 million (the “Accordion”). The Company exercised the Accordion in full and established a new incremental term loan in an aggregate principal amount of $100 million (the “Incremental Term Loan”).
In connection with establishment of the Incremental Term Loan, the Company incurred approximately $824,000 of debt issuance costs which are presented as a reduction to Notes Payable.
The proceeds from the Equity Offering and the Incremental Term Loan were partially used to fund the acquisition of the REIT Portfolio and for the repayment of $56.5 million outstanding on our unsecured revolving credit facility.
2. |
Income statement adjustments |
(AA) Represents the unaudited historical consolidated operations of the Company for the three months ended March 31, 2016. See the historical consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.
(BB) The pro forma adjustments reflect the results of operations for the three months ended March 31, 2016 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.
REXFORD INDUSTRIAL REALTY, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Depreciation and amortization amounts were determined based on management’s 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.
Acquisition costs directly attributable to the transaction have been eliminated in a pro forma adjustment. These acquisition costs are nonrecurring charges directly attributable to the purchase business combination.
(CC) 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
(DD) 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 management’s 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.
(EE) |
Reflects the adjustment to interest expense as if the Incremental Term Loan at an interest rate of one-month LIBOR, as of the transaction date, plus the applicable LIBOR margin of 1.60%, had occurred on January 1, 2015. On a pro forma basis, if LIBOR were to increase by 1/8%, interest expense would have increased by and net loss would have increased by $70,000 and $252,000 for the three months ended March 31, 2016 and the year ended December 31, 2015, respectively. Conversely, if LIBOR were to decrease by 1/8%, interest expense would have decreased by and net loss from continuing operations would have decreased by $70,000 and $252,000 for the three months ended March 31, 2016 and the year ended December 31, 2015, respectively. Additionally, the adjustment reflects the amortization of debt issuance costs incurred in connection with the Incremental Term Loan. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Rexford Industrial Realty, Inc. |
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May 12, 2016 |
/s/ Michael S. Frankel
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Michael S. Frankel
Co-Chief Executive Officer
(Principal Executive Officer)
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Rexford Industrial Realty, Inc. |
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May 12, 2016 |
/s/ Howard Schwimmer
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Howard Schwimmer
Co-Chief Executive Officer
(Principal Executive Officer)
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EXHIBIT INDEX
Exhibit Number |
Description |
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23.1 |
Consent of Ernst & Young, LLP |
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