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| TPGI > SEC Filings for TPGI > Form 8-K/A on 3-Dec-2012 | All Recent SEC Filings |
3-Dec-2012
Financial Statements and Exhibits
In accordance with Rule 3-14 and Article 11 of Regulation S-X, the Company hereby files the following financial statement and pro forma financial information relating to the Austin Portfolio:
(a) Financial statements of business acquired Report of Independent Auditors Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2012 (unaudited) and each of the three years in the period ended December 31, 2011 Notes to Combined Statements of Revenues and Certain Expenses
(b) Unaudited pro forma financial information Pro forma condensed consolidated balance sheet of Thomas Properties Group, Inc. as of June 30, 2012 Pro forma condensed consolidated statement of operations of Thomas Properties Group, Inc. for the six months ended June 30, 2012 Pro forma condensed consolidated statement of operations of Thomas Properties Group, Inc. for the year ended December 31, 2011 Notes to pro forma condensed consolidated financial statements of Thomas Properties Group, Inc.
(c) Exhibits EX-23.1 Consent of Ernst & Young LLP
To the Board of Directors of Thomas Properties Group, Inc.:
We have audited the accompanying combined statements of revenues and certain expenses (as defined in Note 1) of the Austin Portfolio ("the Austin Portfolio") for the three years in the period ended December 31, 2011. These statements of revenues and certain expenses are the responsibility of the Austin Portfolio's management. Our responsibility is to express an opinion on the combined statements of revenues and certain expenses based on our audits.
We conducted our audits 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 combined statements of revenues and certain expenses are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statements of revenues and certain expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the combined statements of revenues and certain expenses. We believe that our audits provide a reasonable basis for our opinion.
The accompanying combined statements of revenues and certain expenses of the Austin Portfolio were prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for inclusion in a Form 8-K/A of Thomas Properties Group, Inc. and are not intended to be a complete presentation of the revenues and expenses of the Austin Portfolio.
In our opinion, the combined statements of revenues and certain expenses referred to above present fairly, in all material respects, the revenues and certain expenses of the Austin Portfolio for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Los Angeles, California
December 3, 2012
The Austin Portfolio
Combined Statements of Revenues and Certain Expenses
(In thousands)
For the six
months ended For the year ended December 31,
June 30, 2012 2011 2010 2009
(unaudited)
Revenues:
Rental $ 27,387 $ 55,865 $ 55,398 $ 59,528
Tenant reimbursements 16,541 30,405 30,048 33,591
Other 4,706 8,479 8,372 10,273
Total revenues 48,634 94,749 93,818 103,392
Certain expenses:
Rental property operating
and
maintenance 14,097 27,901 27,882 28,150
Real estate taxes 8,942 16,383 15,878 17,490
Interest expense 19,218 38,537 38,536 38,534
Total certain expenses 42,257 82,821 82,296 84,174
Revenue in excess of
certain expenses $ 6,377 $ 11,928 $ 11,522 $ 19,218
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See accompanying notes to combined statements of revenues and certain expenses.
The Austin Portfolio Notes to Combined Statements of Revenues and Certain Expenses For the six months ended June 30, 2012 (unaudited) and the years ended December 31, 2011, 2010 and 2009
1. Basis of Presentation
The accompanying combined statements of revenues and certain expenses relate to the combined operations for the following eight office properties, collectively the Austin Portfolio, located in downtown and suburban Austin, Texas:
•Frost Bank Tower
•300 West 6th Street
•San Jacinto Center
•One Congress Plaza
•One American Center
•Park Centre
•Westech 360
•Great Hills Plaza
On September 18, 2012, TPG/CalSTRS Austin, LLC ("Austin Portfolio"), a Delaware limited liability company, owned by TPG Austin Partner, LLC (50%) and the California State Teachers' Retirement System (50%) acquired all of the equity interests in TPG-Austin Portfolio Holdings, LLC, the indirect owner of the Austin Portfolio. TPG Austin Partner, LLC, a limited liability company owned by Thomas Properties Group, L.P. ("TPG") and Madison International Realty, was formed for the purpose of acquiring a 50% interest in TPG/CalSTRS Austin, LLC. The purchase price for the Austin Portfolio was approximately $859.0 million. As part of the transaction, TPG/CalSTRS Austin, LLC assumed five existing first mortgage loans totaling $626.0 million.
The accompanying combined statements of revenues and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and, accordingly, are not representative of the actual results of operations of the Austin Portfolio for the six months ended June 30, 2012 and for the years ended December 31, 2011, 2010 and 2009, which may not be comparable to the future operations of the Austin Portfolio.
2. Summary of Significant Accounting Policies and Practices
(a) Revenue Recognition All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases.
(b) Use of Estimates Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenues and certain expenses during the reporting periods to prepare the combined statements of revenues and certain expenses in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.
(c) Unaudited Interim Information The combined statement of revenues and certain expenses for the six months ended June 30, 2012 is unaudited. In the opinion of management, such financial statement reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal recurring nature.
The Austin Portfolio Notes to Combined Statements of Revenues and Certain Expenses For the six months ended June 30, 2012 (unaudited) and the years ended December 31, 2011, 2010 and 2009 - (Continued)
3. Minimum Future Lease Rentals
The Austin Portfolio is subject to various lease agreements with tenants. As of
December 31, 2011, the minimum future cash rents receivable under noncancelable
operating leases in each of the next five years and thereafter, on a cash basis,
are as follows (in thousands):
Year ending December 31:
2012 $ 44,063
2013 41,982
2014 32,919
2015 25,702
2016 19,982
Thereafter 67,345
$ 231,993
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4. Interest Expense
Interest expense is reflected in the combined statements of revenues and certain expenses because TPG/CalSTRS Austin, LLC assumed five existing first mortgage loans totaling $626.0 million.
5. Related Party Transactions
Pursuant to a series of management and leasing agreements, TPG performed
property management and
leasing services for the Austin Portfolio. Management fees were calculated based
on 3.5% of gross
property revenues, paid on a monthly basis. In addition, TPG was reimbursed for
compensation paid to
certain of its employees and direct out-of-pocket expenses. For the six months
ended June 30, 2012 and the years ended December 31, 2011, 2010 and 2009, TPG
charged the Austin Portfolio $1.5 million, $2.8 million, $2.8 million, and $3.0
million, respectively, for property management fees and $0.9 million, $1.8
million, $1.7 million and $1.6 million, respectively, representing the cost of
on-site property management personnel incurred on behalf of the Austin
Portfolio, which are included in operating expenses.
The Austin Portfolio obtained insurance as part of a master insurance policy that included all the properties in which TPG and affiliated entities had an investment or for which they performed investment advisory or property management services. Property insurance premiums were allocated to the Austin Portfolio based on estimated insurable values. Liability insurance premiums were allocated to the Austin Portfolio based on relative square footage. The allocated premium for six months ended June 30, 2012 and the years ended December 31, 2011, 2010 and 2009, of $0.3 million $0.8 million, $0.7 million, and $0.8 million, respectively, is included in operating expenses.
6. Commitments and Contingencies
The Austin Portfolio is subject to legal claims in the ordinary course of
business. Management believes that the ultimate settlement of any existing
potential claims would not have a material impact on the Austin Portfolio's
revenues and certain expenses.
In connection with the ownership and operation of the buildings, the Austin
Portfolio may be potentially liable for costs and damages related to
environmental matters, including asbestos-containing materials that may be
located at the Property. The Austin Portfolio has not been notified by any
governmental authority of any non-compliance, liability or other claim in
connection with any of the buildings, and the Austin Portfolio is not aware of
any other environmental condition with respect to any of the buildings that
management believes will have a material adverse effect on the Austin
Portfolio's revenues and certain expenses.
7. Subsequent Events
Management has evaluated subsequent events related to the Austin Portfolio for recognition of disclosure through December 3, 2012, which is the date the combined statements of revenues and certain expenses were available to be issued and determined that there are no items to disclose.
The following unaudited pro forma condensed consolidated financial statements of Thomas Properties Group, Inc. (the "Company") as of June 30, 2012 and for the six months ended June 30, 2012 and the year ended December 31, 2011 are presented as if the purchase of the Austin Portfolio occurred on June 30, 2012 for the pro forma condensed consolidated balance sheet and on the first day of the period presented for the pro forma condensed consolidated statements of operations. The Company acquired a noncontrolling interest in eight properties, referred to as the Austin Portfolio, on September 18, 2012.
The pro forma condensed consolidated financial information should be read in conjunction with the historical consolidated financial statements of the Company, including the notes thereto, that were filed as part of the Company's annual report on Form 10-K for the year ended December 31, 2011 and our quarterly report on Form 10-Q for the quarter ended June 30, 2012.
The pro forma condensed consolidated financial statements do not purport to represent our financial position or the results of operations that would actually have occurred assuming the purchase of the Austin Portfolio had occurred on June 30, 2012, or on the first day of the periods presented; nor do they purport to project our financial position or results of operations as of any future date or for any future period.
THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2012
(In thousands)
(Unaudited)
Acquisition of the Company Pro
Company Historical Austin Portfolio Forma
(A) (B)
ASSETS
Investments in real estate:
Land and improvements $ 33,077 $ - $ 33,077
Land and improvements-development properties 80,395 - 80,395
Buildings and improvements 316,158 - 316,158
Tenant improvements 39,729 - 39,729
Total investments in real estate 469,359 - 469,359
Less accumulated depreciation (121,430 ) - (121,430 )
Investments in real estate, net 347,929 - 347,929
Condominium units held for sale 44,011 - 44,011
Investments in unconsolidated real estate
entities 2,102 108,674 110,776
Cash and cash equivalents, unrestricted 129,871 (75,523 ) 54,348
Restricted cash 7,721 - 7,721
Rents and other receivables, net 1,369 - 1,369
Receivables from unconsolidated real estate
entities 3,388 - 3,388
Deferred rents 18,696 - 18,696
Deferred leasing and loan costs, net 10,836 - 10,836
Other assets, net 19,004 - 19,004
Total assets $ 584,927 $ 33,151 $ 618,078
LIABILITIES AND EQUITY
Liabilities:
Mortgage loans $ 287,250 $ - $ 287,250
Accounts payable and other liabilities, net 35,241 - 35,241
Prepaid rent and deferred revenue 3,452 - 3,452
Total liabilities 325,943 - 325,943
Commitments and Contingencies - - -
Equity:
Stockholders' equity:
Preferred stock - - -
Common stock 460 - 460
Limited voting stock 123 - 123
Additional paid-in capital 258,205 - 258,205
Retained deficit and dividends (64,522 ) (1,903 ) (66,425 )
Total stockholders' equity 194,266 (1,903 ) 192,363
Noncontrolling interests:
Unitholders in the Operating Partnership 50,153 - 50,153
Partners in consolidated real estate entities 14,565 35,054 49,619
Total noncontrolling interests 64,718 35,054 99,772
Total equity 258,984 33,151 292,135
Total liabilities and equity $ 584,927 $ 33,151 $ 618,078
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See accompanying notes to pro forma condensed consolidated financial information.
THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2012
(In thousands, except share and per share data)
(Unaudited)
Other
Company Acquisition of the Pro Forma
Historical Austin Portfolio Adjustments Company Pro Forma
(C) (D)
Revenues:
Rental $ 15,530 $ - $ - $ 15,530
Tenant reimbursements 10,402 - - 10,402
Parking and other 1,485 - - 1,485
Investment advisory, management,
leasing and
development services 1,664 - - 1,664
Investment advisory, management,
leasing and
development services -
unconsolidated real
estate entities 8,321 - - 8,321
Reimbursement of property personnel
costs 2,867 - - 2,867
Condominium sales 1,964 - - 1,964
Total revenues 42,233 - - 42,233
Expenses:
Property operating and maintenance 12,015 - - 12,015
Real estate and other taxes 3,885 - - 3,885
Investment advisory, management,
leasing and
development services 5,994 - - 5,994
Reimbursable property personnel costs 2,867 - - 2,867
Cost of condominium sales 1,393 - - 1,393
Interest 8,454 - - 8,454
Depreciation and amortization 7,662 - - 7,662
General and administrative 9,131 - - 9,131
Total expenses 51,401 - - 51,401
Interest income 13 13
Equity in net income (loss) of
unconsolidated real
estate entities (816 ) (8,877 ) - (9,693 )
Income (loss) before income taxes and
noncontrolling interests (9,971 ) (8,877 ) - (18,848 )
Benefit (provision) for income taxes (74 ) - - E (74 )
Net income (loss) (10,045 ) (8,877 ) - (18,922 )
Noncontrolling interests' share of
net (income) loss:
Unitholders in the Operating
Partnership 2,591 - 1,566 4,157
Partners in consolidated real estate
entities (470 ) - 2,568 2,098
2,121 - 4,134 F 6,255
TPGI share of net income (loss) $ (7,924 ) $ (8,877 ) $ 4,134 $ (12,667 )
Income (loss) per share-basic and
diluted $ (0.21 ) $ (0.34 )
Weighted average common shares
outstanding-
basic and diluted 37,664,573 37,664,573
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See accompanying notes to pro forma condensed consolidated financial information.
THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2011
(In thousands, except share and per share data)
(Unaudited)
Other
Company Acquisition of the Pro Forma
Historical Austin Portfolio Adjustments Company Pro Forma
(C) (D)
Revenues:
Rental $ 29,693 $ - $ - $ 29,693
Tenant reimbursements 22,437 - - 22,437
Parking and other 2,959 - - 2,959
Investment advisory, management,
leasing and
development services 8,520 - - 8,520
Investment advisory, management,
leasing and
development services -
unconsolidated real
estate entities 17,862 - - 17,862
Reimbursement of property personnel
costs 5,810 - - 5,810
Condominium sales 7,700 - - 7,700
Total revenues 94,981 - - 94,981
Expenses:
Property operating and maintenance 24,589 - - 24,589
Real estate and other taxes 7,469 - - 7,469
Investment advisory, management,
leasing, and
development services 12,754 - - 12,754
Reimbursable property personnel
costs 5,810 - - 5,810
Cost of condominium sales 5,091 - - 5,091
Interest 17,938 - - 17,938
Depreciation and amortization 13,622 - - 13,622
General and administrative 15,434 - - 15,434
Impairment loss 8,095 - - 8,095
Total expenses 110,802 - - 110,802
Interest income 35 35
Equity in net income (loss) of
unconsolidated real
estate entities 19,951 (17,269 ) - 2,682
Gain on sale of real estate 1,258 - - 1,258
Income (loss) before income taxes
and
noncontrolling interests 5,423 (17,269 ) - (11,846 )
Benefit (provision) for income taxes 1,429 - - E 1,429
Net income (loss) 6,852 (17,269 ) - (10,417 )
Noncontrolling interests' share of
net (income) loss:
Unitholders in the Operating
Partnership (1,500 ) - 2,921 1,421
Partners in consolidated real estate
entities 508 - 5,720 6,228
(992 ) - 8,641 F 7,649
TPGI share of net income (loss) $ 5,860 $ (17,269 ) $ 8,641 $ (2,768 )
Income (loss) per share-basic and
diluted $ 0.16 $ (0.08 )
Weighted average common shares
outstanding-basic 36,619,558 36,619,558
Weighted average common shares
outstanding-diluted 36,865,286 36,865,286
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