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| RPT > SEC Filings for RPT > Form 8-K on 11-Mar-2013 | All Recent SEC Filings |
11-Mar-2013
Entry into a Material Definitive Agreement, Creation of a Direc
On March 5, 2013, Ramco-Gershenson Properties Trust, Inc. (RGPT) through its majority-owned partnership subsidiary, Ramco-Gershenson Properties, L.P. (RGPLP), entered into an agreement to acquire its partner's 70% ownership interest in 12 properties owned by Ramco/Lion Venture LP for approximately $151.9 million in cash and the assumption of its partner's pro-rata share of debt of approximately $104.9 million. RGPT currently owns a 30% interest in the properties. Upon closing, RGPT expects to consolidate the 12 properties based upon a value of approximately $366.8 million, together with seven mortgage loans with unpaid principal balances totaling approximately $149.8 million, plus any related assets and liabilities.
The transaction has been approved by the RGPT Board of Directors. It is subject to closing conditions and is expected to close by the end of the second quarter of 2013.
Financial statements required to comply with the rules and regulations of the SEC, including Rule 3-14 of Regulations S-X for real estate properties to be acquired and pro forma financial statements reflecting the effect of the transaction, are included herein under item 9.01.
The following table summarizes the debt to be assumed in the agreement described in Item 1.01
Principal
Balance at
Expected Stated Maturity
Assumption Date Interest Rate Date
(In thousands)
Winchester Center $ 25,408 8.1 % July-13
Mission Bay 42,165 6.6 % July-13
Hunter's Square 33,056 8.2 % August-13
Village Plaza 8,960 5.0 % September-15
Troy Marketplace 21,444 5.9 % June-16
Treasure Coast 8,090 5.5 % June-20
Vista Plaza 10,686 5.5 % June-20
$ 149,809
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All of the mortgages have monthly principal and interest payment obligations.
(a) Financial Statements of Businesses to be Acquired.
Combined Statements of Revenues and Certain Expenses for the years ended December 31, 2012, 2011 and 2010.
(b) Unaudited Pro Forma Financial Information
Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012 (unaudited.)
Notes and adjustments to Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012 (unaudited.)
Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2011 (unaudited.)
Notes and adjustments to Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2011 (unaudited.)
(d) Exhibits.
23.1 Consent of Independent Certified Public Accountants
99.1 Press Release, dated March 11, 2013
Grant Thornton LLP
27777 Franklin Road
Suite 800
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Southfield, Michigan
48034-2366
T 248.262.1950
F 248.350.3582
www.GrantThornton.com
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Board of Directors and Stockholders of
Ramco-Gershenson Properties Trust
We have audited the accompanying combined statements of revenues and certain expenses (the "Combined Statements") of Cocoa Commons, Cypress Point, Hunter's Square Shopping Center, Marketplace of Delray, Mission Bay Plaza, Old Orchard Center, Treasure Coast Commons, Troy Marketplace/Troy II, Village Plaza, Vista Plaza, West Broward Shopping Center, and Winchester Center (the "Pending Acquisition Properties"), to be acquired by Ramco-Gershenson Properties Trust (the "Company"), for each of the three years in the period ended December 31, 2012, and the related notes to the Combined Statements.
Management's responsibility for the statements
Management of the Company is responsible for the preparation and fair presentation of these Combined Statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Combined Statements that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an opinion on the Combined Statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Combined Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Combined Statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Combined Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the Combined Statements 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 Company'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 Combined Statements.
Grant Thornton LLP
U.S. member firm of Grant Thornton International Ltd
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 Combined Statements referred to above present fairly, in all material respects, the revenues and certain expenses described in Note 1 of the Pending Acquisition Properties for each of the three years in the period ended December 31, 2012 in accordance with accounting principles generally accepted in the United States of America.
Emphasis of matter
We draw attention to Note 1 to the Combined Statements, which describes that the accompanying Combined Statements were prepared for the purpose of complying with the rules and regulations of the United States Securities and Exchange Commission (for inclusion in the filing of Form 8-K of Ramco-Gershenson Properties Trust) and are not intended to be a complete presentation of the Pending Acquisition Properties' revenues and certain expenses. Our opinion is not modified with respect to this matter.
/S/ GRANT THORNTON LLP
Southfield, Michigan
March 11, 2013
Grant Thornton LLP
U.S. member firm of Grant Thornton International Ltd
THE ACQUIRED PROPERTIES
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
(in thousands)
For the Year For the Year For the Year
Ended December Ended December Ended December
31, 2012 31, 2011 31, 2010
REVENUES:
Minimum rent $ 28,850 $ 29,156 $ 28,127
Percentage rent 52 15 9
Recovery income from tenants 8,353 8,268 7,895
Other property income 599 684 2,303
TOTAL REVENUES 37,854 38,123 38,334
CERTAIN EXPENSES:
Real estate taxes 4,595 4,972 5,255
Recoverable operating expense 4,270 3,835 3,735
Other non-recoverable operating expense 1,963 2,252 2,708
General and administrative 45 - 141
Interest expense 9,768 10,196 11,832
TOTAL CERTAIN EXPENSES 20,641 21,255 23,671
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 17,213 $ 16,868 $ 14,663
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See accompanying notes
The Acquired Properties Notes to the Combined Statements of Revenues and Certain Expenses For the Years Ended December 31, 2012 2011 and 2010
1. Business and Basis of Presentation
On March 5, 2013, Ramco-Gershenson Properties Trust, Inc. (RGPT) through its majority-owned partnership subsidiary, Ramco-Gershenson Properties, L.P. (RGPLP), entered into an agreement to acquire its partner's 70% ownership interest in 12 properties held by Ramco/Lion Venture LP for approximately $151.9 million in cash and the assumption of its partner's pro-rata share of debt of approximately $104.9 million. RGPT currently owns a 30% interest in the properties. Upon closing, RGPT expects to consolidate the 12 properties based upon a value of approximately $366.8 million, together with seven mortgage loans with unpaid principal balances totaling approximately $149.8 million, plus any related assets and liabilities.
The following table details the properties to be acquired:
Total
Property Name Location GLA Anchor Tenants (1)
FLORIDA [8]
Cocoa Commons Cocoa 90,116 Publix
Cypress Point Clearwater 167,280 Burlington Coat Factory,
The Fresh Market
Marketplace of Delray 238,901 Office Depot, Ross Dress
Delray Beach for Less, Winn-Dixie
Mission Bay Boca Raton 263,721 The Fresh Market,
Plaza Golfsmith, LA Fitness
Sports Club, OfficeMax,
Toys "R" Us
Treasure Coast Jensen 92,979 Barnes & Noble,
Commons Beach OfficeMax, Sports
Authority
Village Plaza Lakeland 146,755 Big Lots
Vista Plaza Jensen 109,761 Bed Bath & Beyond,
Beach Michaels, Total Wine &
More
West Broward Plantation 152,973 Badcock, DD's Discounts,
Shopping Center Save-A-Lot, US Postal
Service
MICHIGAN [4]
Hunter's Square Farmington 354,323 Bed Bath & Beyond, Buy
Hills Buy Baby, Loehmann's,
Marshalls, T.J. Maxx
The Shops at Old West 96,994 Plum Market
Orchard Bloomfield
Troy Marketplace Troy 217,754 Airtime Trampoline,
Golfsmith, LA Fitness,
Nordstrom Rack,
PetSmart, (REI)
Winchester Rochester 314,575 Bed Bath & Beyond,
Center Hills Dick's Sporting Goods,
Marshalls, Michaels,
PetSmart, (Kmart)
Total 2,246,132
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(1) Anchor tenants are any tenant greater than or equal to 19,000 square feet. Tenants in parenthesis represent non-company owned gross leaseable area ("GLA").
The accompanying combined statements of revenues and certain expenses (the "Statements") have been prepared on the accrual basis of accounting. The Statements have been prepared for the purpose of complying with the rules and regulations of the United States Securities and Exchange Commission ("SEC"), Regulation S-X, Rule 3-14, and for inclusion in a Current Report on Form 8-K of RGPT. The Statements are not intended to be a complete presentation of the revenues and expenses of the Acquired Properties. Certain expenses, primarily depreciation and amortization, and other costs not directly related to the future operations of the Acquired Properties have been excluded.
Subsequent events
We have evaluated whether any subsequent events have occurred up through the time of issuing these statements on March 11, 2013.
2. Summary of Significant Accounting Policies
Revenue Recognition
Our shopping center space is generally leased to retail tenants under leases that are classified as operating leases. We recognize minimum rents using the straight-line method over the terms of the leases commencing when the tenant takes possession of the space and when construction of landlord funded improvements is substantially complete. Certain of the leases also provide for contingent percentage rental income which is recorded on an accrual basis once the specified sales target is achieved. The leases also provide for recoveries from tenants of common area maintenance expenses, real estate taxes and other operating expenses. These recoveries are estimated and recognized as revenue in the period the recoverable costs are incurred or accrued. Lease termination income is recognized when a lease termination agreement is executed by the parties and the tenant vacates the space. Lease termination income of $0.3 million, $0.3 million, and $1.8 million was recognized in other property income for the years ended December 31, 2012, 2011, and 2010, respectively.
Expenses
Property operating expenses include real estate taxes, recoverable operating expenses such as common area maintenance, insurance premiums, and other non-recoverable expenses such as management fees, bad debt expenses and collection-related legal costs. Real estate taxes and insurance expense are accrued monthly. Expenditures for common area maintenance, management fees, and legal costs are charged to operations as incurred. Allowances for bad debt are taken for accounts receivable balances when we have reason to believe they will be uncollectible.
Use of Estimates
The preparation of the Statements in conformity with generally accepted accounting principles in the United States of America ("GAAP") requires management to make certain estimates and assumptions that affect the reported amounts in the Statements and accompanying footnotes. Actual results could differ from those estimates.
3. Future Minimum Rental Income
The Acquired Properties are leased to tenants pursuant to lease agreements. Tenant leases typically provide for minimum rent and other charges to cover operating costs. Future minimum rent under non-cancellable operating leases in effect at December 31, 2012 are as follows:
Year Ending December 31,
2013 $ 28,317
2014 25,873
2015 23,068
2016 19,828
2017 15,386
Thereafter 59,485
Total $ 171,957
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4. Interest Expense
RGPLP will assume seven mortgage loans secured by certain of the Acquired Properties. The following table includes the significant terms of these mortgages:
Principal Balance as of December 31,
2012
Interest Maturity
2012 2011 2010 Rate Date
Winchester Center $ 25,650 $ 26,550 $ 27,392 8.1 % July-13
Mission Bay 42,320 42,867 43,387 6.6 % July-13
Hunter's Square 33,367 34,519 35,596 8.2 % August-13
Village Plaza 8,998 9,135 9,268 5.0 % September-15
Troy Marketplace 21,517 21,776 21,900 5.9 % June-16
Treasure Coast 8,122 8,244 8,359 5.5 % June-20
Vista Plaza 10,727 10,889 11,042 5.5 % June-20
$ 150,701 $ 153,980 $ 156,944
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All of the mortgages have monthly principal and interest payment obligations.
5. Transactions with Related Parties
RGPT, through its wholly-owned subsidiary, Ramco-Gershenson, Inc., provides property management, leasing, development, and other administrative services to the Acquired Properties.
The accompanying unaudited condensed consolidated balance sheet as of December 31, 2012 has been presented as if the acquisition of the Acquired Properties had occurred on December 31, 2012.
The accompanying unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2012 and 2011 are presented as if the acquisition of The Acquired Properties had occurred on January 1, 2011.
These unaudited pro forma condensed consolidated statements should be read in connection with the historical consolidated financial statements and notes thereto filed with the U.S Securities and Exchange Commission. In management's opinion, all adjustments necessary to reflect the significant effects of these transactions have been made. These statements are based on assumptions and estimates considered appropriate by our management; however, they are unaudited and are not necessarily, and should not be assumed to be, an indication of our financial position or results of operations that would have been achieved had the acquisitions been completed as of the dates indicated or that may be achieved in the future.
RAMCO-GERSHENSON PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2012
(In thousands, except per share amounts)
Acquisitions
and Pro
forma
Historical (1) Allocations Pro Forma
ASSETS
Net real estate $ 980,250 $ 339,857 (2) $ 1,320,107
Equity investments in unconsolidated joint
ventures 95,987 (65,100 ) (3) 30,887
Cash and cash equivalents 4,233 - 4,233
Restricted cash 3,892 - 3,892
Accounts receivable, net 7,976 - 7,976
Other assets, net 72,953 29,553 (2) 102,506
TOTAL ASSETS $ 1,165,291 $ 304,310 $ 1,469,601
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages payable $ 541,281 $ 304,310 (4) $ 845,591
Capital lease obligation 6,023 - 6,023
Accounts payable and accrued expenses 21,589 - 21,589
Other liabilities 26,187 26,187
Distributions payable 10,379 - 10,379
TOTAL LIABILITIES 605,459 304,310 909,769
Commitments and Contingencies
Ramco-Gershenson Properties Trust ("RPT")
Shareholders' Equity:
Preferred shares, $0.01 par, 2,000 shares
authorized: 7.25% Series D $ 100,000 $ - $ 100,000
Cumulative Convertible Perpetual Preferred
Shares, (stated at liquidation
preference $50 per share), 2,000 shares issued
and outstanding as of
December 31, 2012 and December 31, 2011
Common shares of beneficial interest, $0.01 par,
80,000 shares authorized, 485 - 485
48,489 and 38,735 shares issued and
outstanding as of December 31, 2012
and 2011, respectively
Additional paid-in capital 683,609 - 683,609
Accumulated distributions in excess of net income (249,070 ) - (249,070 )
Accumulated other comprehensive loss (5,241 ) - (5,241 )
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT 529,783 - 529,783
Noncontrolling interest 30,049 30,049
TOTAL SHAREHOLDERS' EQUITY 559,832 - 559,832
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,165,291 $ 304,310 $ 1,469,601
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The accompanying notes are an integral part of these consolidated financial statements.
(1) As reported in the Registrant's Consolidated Balance Sheet as of December 31, 2012, as presented in the Registrant's Annual Report on Form 10-K for the year ended December 31, 2012.
(2) Represents the pro forma acquisition of the Acquired Properties and the estimated allocation of the $366.8 million purchase price to the assets acquired.
(3) Represents the pro forma adjustment for our 30% ownership in the Acquired Properties, net of debt.
(4) The consideration for the Acquired Properties consists of $149.8 million of debt assumed and $151.9 million in additional borrowing.
In addition to the $149.8 million of contractual debt assumed, the adjustment to mortgage notes payable includes $2.6 million to record the debt assumed at fair value. This additional mortgage premium will be amortized over the remaining life of the loans, with amortization recorded to reduce the monthly interest expense recorded on the loans.
RAMCO-GERSHENSON PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2012
(In thousands, except per share amounts)
(Unaudited)
Statement of
Revenues and
Certain
Expenses - The
Acquired Pro Forma
Historical (1) Properties (2) Adjustments Pro Forma
REVENUE
Minimum rent $ 90,354 $ 28,850 $ 177 (3) $ 119,381
Percentage rent 601 52 - 653
Recovery income from tenants 31,664 8,353 - 40,017
Other property income 2,055 599 - 2,654
Management and other fee income 4,064 - (1,421 ) (4) 2,643
TOTAL REVENUE 128,738 37,854 (1,244 ) 165,348
EXPENSES
Real estate taxes 17,076 4,595 - 21,671
Recoverable operating expense 15,879 4,270 - 20,149
Other non-recoverable operating expense 2,838 1,963 (1,396 ) (4) 3,405
Depreciation and amortization 39,479 - 8,035 (5) 47,514
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