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RPT > SEC Filings for RPT > Form 8-K on 11-Mar-2013All Recent SEC Filings

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Form 8-K for RAMCO GERSHENSON PROPERTIES TRUST


11-Mar-2013

Entry into a Material Definitive Agreement, Creation of a Direc


Item 1.01 Entry Into A Material Definitive Agreement

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.



Item 2.03 Creation Of A Direct Financial Obligation Or An Obligation Under An Off-Balance Sheet Arrangement Of A Registrant

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

All of the mortgages have monthly principal and interest payment obligations.



Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Businesses to be Acquired.

The Acquired Properties

Report of Independent Certified Public Accountants.

Combined Statements of Revenues and Certain Expenses for the years ended December 31, 2012, 2011 and 2010.

Notes to Combined Statements of Revenues and Certain Expenses.


(b) Unaudited Pro Forma Financial Information

Ramco-Gershenson Properties Trust, Inc.

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

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

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

(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,

(In thousands)

2013              $         28,317
2014                        25,873
2015                        23,068
2016                        19,828
2017                        15,386
   Thereafter               59,485
       Total      $        171,957

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,

(In thousands)

                                                                           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

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.


RAMCO-GERSHENSON PROPERTIES TRUST
PRO FORMA FINANCIAL INFORMATION INTRODUCTION
(Unaudited)

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

The accompanying notes are an integral part of these consolidated financial statements.


RAMCO-GERSHENSON PROPERTIES TRUST
NOTES AND ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 2012
(Unaudited)

(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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