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GRT > SEC Filings for GRT > Form 8-K on 20-Sep-2013All Recent SEC Filings

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Form 8-K for GLIMCHER REALTY TRUST


20-Sep-2013

Other Events, Financial Statements and Exhibits


ITEM 8.01 Other Events
On June 25, 2013, GRT WSP-LC Holdings LLC ("Purchaser"), an affiliate of Glimcher Realty Trust (the "Registrant"), completed its purchase of the 60% joint venture interest in Glimcher WestShore Holdings, LLC ("WestShore Holdings") for $111.8 million (the "Purchase Price"). The aforementioned joint venture interest was acquired from an affiliate of Blackstone Real Estate Partners VI ("Blackstone"). The Purchaser's execution of the purchase and sale agreement with the Blackstone affiliate was previously reported on a Form 8-K filed by the Registrant with the Securities and Exchange Commission ("SEC") on June 6, 2013. With this acquisition, WestShore Holdings became a wholly-owned affiliate of the Registrant. WestShore Holdings is the indirect parent company of Glimcher Westshore, LLC ("Glimcher Westshore"), a Delaware limited liability company that is the fee owner and operator of WestShore Plaza ("WestShore"), an enclosed regional mall with approximately 1.1 million square feet of gross leasable area that is located in Tampa, Florida. As a result of this transaction, the Registrant indirectly owns 100% of the interests in Glimcher Westshore, including ownership and control of WestShore.

The Purchase Price is comprised of Blackstone's pro-rata share of the $119.6 million mortgage debt (the "Loan") encumbering the Property, which the Registrant assumed in connection with the transaction, and the cash purchase price of $40 million. The Loan remained in place after the transaction was completed and is now included with the Registrant's other long-term indebtedness for its consolidated real estate entities.
Financial statements required to comply with the rules and regulations of the SEC, including Rule 3-14 of Regulation S-X for the purchase of the joint venture interest (which individually is not considered significant within the meaning of Rule 3-14 of Regulation S-X), and pro forma financial statements reflecting the effect of this purchase are included herein under Item 9.01.

Forward Looking Statements

This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy. Future events and actual results, financial and otherwise, may differ from the results discussed in the forward-looking statements. Risks and other factors that might cause differences, some of which could be material, include, but are not limited to, economic and market conditions, tenant bankruptcies, bankruptcies of joint venture (JV) partners, rejection of leases by tenants in bankruptcy, financing and development risks, construction and lease-up delays, cost overruns, the level and volatility of interest rates, the rate of revenue increases versus expense increases, the financial stability of tenants within the retail industry, the failure of the Registrant to make additional investments in regional mall properties and redevelopment of properties, the failure to acquire properties as and when anticipated, the failure to fully recover tenant obligations for common area maintenance, taxes and other property expenses, failure to comply or remain in compliance with covenants in our debt instruments, failure to achieve projected returns on our development properties during the stabilization periods than our development properties historically have due to rent reduction arrangements with development tenants, inability to exercise available extension options on debt instruments, failure of the Registrant to qualify as real estate investment trust, termination of existing JV arrangements, conflicts of interest with our existing JV partners, the failure to sell mall and community centers and the failure to sell such properties when anticipated, the failure to achieve estimated sales prices and proceeds from the sale of malls, increases in impairment charges, additional impairment charges, as well as other risks listed in this news release and from time to time in the Registrant's reports filed with the SEC or otherwise publicly disseminated by the Registrant.




ITEM 9.01 Financial Statements and Exhibits
(a) Financial Statements

Glimcher Westshore, LLC
Independent Auditor's Report
Statements of Revenues and Certain Expenses for the period from January 1, 2013 to June 24, 2013 and the year ended December 31, 2012. Notes to Statements of Revenues and Certain Expenses.
(b) Pro Forma Financial Information for the Registrant and its Subsidiaries (Unaudited).

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2013. Notes and adjustments to Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2013.
Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 2013.
Notes and adjustments to Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 2013.
Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012.
Notes and adjustments to Pro Forma Condensed Consolidated Statement of Operations for year ended December 31, 2012.
(c) Pro Forma Statement of Estimated Taxable Operating Results and Cash to be Made Available by Operations.

(d) Exhibits.

23.1 Consent of BDO USA, LLP.


Independent Auditor's Report

Board of Trustees and Shareholders
Glimcher Realty Trust
Columbus, Ohio

We have audited the accompanying statement of revenues and certain expenses of Glimcher Westshore, LLC for the year ended December 31, 2012.

Management's Responsibility for the Financial Statement

Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses 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 a statement of revenues and certain expenses that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the statement of revenues and certain expenses based on our audit. We conducted our audit 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 statement of revenues and certain expenses is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement of revenues and certain expenses. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the statement of revenues and certain expenses, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to Glimcher Westshore, LLC's preparation and fair presentation of the statement of revenues and certain expenses 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 controls. 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 statement of revenues and certain expenses.

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 statement of revenues and certain expenses, as described in Note 1, of Glimcher Westshore, LLC for the year ended December 31, 2012, in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with rules and regulations of the U.S. Securities and Exchange Commission and for inclusion in a Current Report on Form 8-K of Glimcher Realty Trust, as described in Note 1 to the statement of revenues and certain expenses, and is not intended to be a complete presentation of Glimcher Westshore, LLC's revenues and expenses.

/s/ BDO USA, LLP

Chicago, Illinois
September 20, 2013


                                           Glimcher Westshore, LLC
                                 Statements of Revenues and Certain Expenses
                                            (dollars in thousands)

                                                                       For the period
                                                                      from January 1,
                                                                      2013 to June 24,     For the year ended
                                                                      2013 (unaudited)     December 31, 2012
Revenues:
  Minimum rents                                                       $        6,577      $           13,684
  Percentage rents                                                                63                     488
  Tenant reimbursements                                                        2,566                   5,495
  Other                                                                          327                     906
Total Revenues                                                                 9,533                  20,573

Expenses:
  Property operating expenses                                                  2,164                   4,626
  Real estate taxes                                                              989                   2,089
  Provision for doubtful accounts                                                 83                     353
  Other operating expenses                                                       117                     313
  General and administrative                                                       9                      17
Total Expenses                                                                 3,362                   7,398
Revenues in excess of certain expenses                                $        6,171      $           13,175


Glimcher Westshore, LLC Notes to the Statements of Revenues and Certain Expenses For the Period from January 1, 2013 to June 24, 2013 (unaudited) and the Year Ended December 31, 2012

(dollars in thousands)

1. Background and Basis Presentation

Glimcher WestShore, LLC ("Glimcher WestShore") was an indirect subsidiary of a 60%/40% joint venture between BRE/GRJV Holdings, LLC, an affiliate of The Blackstone Group ("Blackstone"), and GRT WSP-LC Holdings, LLC, an affiliate of Glimcher Realty Trust (the "Company"), for the purpose of operating and holding for long-term investment the real property and improvements located in Tampa, Florida known as WestShore Plaza ("WestShore"). WestShore is a fully enclosed regional mall with approximately 1.1 million square feet of gross leasable area (unaudited). On June 25, 2013, GRT WSP-LC Holdings, LLC purchased Blackstone's 60% interest in Glimcher Westshore for $111,800. The purchase price is comprised of the assumption of Blackstone's pro rata share of the $119,600 mortgage debt which encumbers WestShore and a cash payment to Blackstone of $40,000. GRT WSP-LC Holdings, LLC owns 100% of the interest in Glimcher Westshore as a result of this acquisition.

The accompanying 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 the Company. The Statements are not intended to be a complete presentation of the revenues and expenses of Glimcher WestShore. Certain expenses, primarily depreciation and amortization, interest, property management fees and other costs not directly related to the future operations of Glimcher WestShore, have been excluded.

The statement of revenues and certain expenses for the period from January 1, 2013 to June 24, 2013 is unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the revenues and certain expenses for the interim period have been included. Revenues and certain expenses for the interim period are not necessarily indicative of the results that may be expected for the full year.

Material subsequent events have been evaluated through September 20, 2013, the date the financial statements were filed with the SEC.

2. Summary of Significant Accounting Policies

Revenue Recognition

Minimum rents are recognized on an accrual basis over the terms of the related leases on a straight-line basis. Percentage rents, which are based on tenants' sales as reported to the Company, are recognized once the sales reported by such tenants exceed any applicable breakpoints as specified in the tenants' leases. The percentage rents are recognized based upon the measurement dates specified in the leases which indicate when the percentage rent is due. Recoveries from tenants for real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period that the applicable costs are incurred.

Property Operating Expenses

Property operating expenses represent the direct expenses of operating the property and include maintenance, utilities, and repair costs that are expected to continue in the ongoing operations of Glimcher WestShore. Expenditures for maintenance and repairs are charged to operations as incurred.

Use of Estimates

The preparation of the Statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the Statements and accompanying footnotes. Actual results could differ from those estimates.


Notes to the Statements of Revenues and Certain Expenses For the Period from January 1, 2013 to June 24, 2013 (unaudited) and the Year Ended December 31, 2012

(dollars in thousands)

3. Future Minimum Rental Income

Glimcher WestShore receives rental income from the leasing of retail shopping space at WestShore under operating leases with expiration dates currently through the year 2023. The minimum future base rentals under non-cancelable operating leases as of December 31, 2012 are as follows:

Year Ending December 31,    Amount
          2013             $ 13,211
          2014               12,394
          2015               11,185
          2016                9,616
          2017                8,280
       Thereafter            18,183
         Total             $ 72,869

Minimum future base rentals do not include amounts which may be received from certain tenants based upon a percentage of their gross sales or as reimbursement of real estate taxes and property operating expenses. For the period from January 1, 2013 to June 24, 2013 revenue from the property's largest tenant, Saks Fifth Avenue ("Saks"), was approximately 12.0% of total revenues. For the year ended December 31, 2012 revenue from Saks and AMC Theaters was approximately 11.6% and 10.1% of total revenues, respectively. No other single tenant accounted for more than 10.0% of rental income during the period from January 1, 2013 to June 24, 2013 or the year ended December 31, 2012. On June 30, 2013, Sak's terminated their lease with Glimcher WestShore.


Glimcher Realty Trust Pro Forma Financial Information Introduction

(unaudited)

The acquisition of Glimcher WestShore was reflected in the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2013. The provisional purchase price allocation disclosed in the Company's Form 10-Q was prepared using the best available information at the time of the preparation of those financial statements. Items such as land, building, improvements and equipment, deferred costs, above/below-market lease intangibles, and in-place lease intangibles were recorded at provisional amounts. The accompanying unaudited pro forma consolidated balance sheet as of June 30, 2013 was prepared to reflect the provisional purchase price allocation for Glimcher WestShore based upon additional information the Company has received. Accordingly, those adjustments are presented herein.

The accompanying unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2013, and the year ended December 31, 2012, have been prepared to reflect the effect of the acquisition of the remaining 60% interest in Glimcher WestShore as if the transaction had occurred on January 1, 2012.

The pro forma unaudited consolidated statements of operations have also been adjusted to reflect the results of operations of both University Park Village and Pearlridge Center (collectively, the "Previously Disclosed Acquisitions") for the period from January 1, 2012 through the respective acquisition dates. The acquisitions of Town Center Crossing and Malibu Lumber Yard, which both occurred during 2012, have not been included in the pro forma unaudited consolidated statements of operations as their results do not have a material effect on the financial statements. These acquisitions are reflected in the historical consolidated balance sheet as of June 30, 2013.

These unaudited pro forma condensed consolidated statements should be read in conjunction with 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, 2012 and the Company's report on Form 10-Q for the quarter ended June 30, 2013. In the opinion of management, the pro forma condensed consolidated financial information provides for all adjustments necessary to reflect the effects of the acquisition. As of June 30, 2013, the Company estimated the purchase price allocation for Glimcher WestShore based upon management's best available information at that time. The provisional measurements of fair value reflected in the unaudited proforma consolidated financial statements contained herein continue to be subject to change and such changes could be significant. The Company expects to finalize the purchase price allocation as soon as practical, but no later than one year from the acquisition date.

The pro forma condensed consolidated financial statements are based upon assumptions and estimates considered appropriate by the Company's management; however they are unaudited and are not necessarily, and should not be assumed to be, indicative of the consolidated results that would have occurred if the transaction and adjustments reflected therein had been consummated on the date presented, nor does it purport to represent the financial position, results of operations or cash flows for future periods.


                             Glimcher Realty Trust
                 Pro Forma Condensed Consolidated Balance Sheet
                                 June 30, 2013
                                  (unaudited)
                             (dollars in thousands)

                                                                       Pro Forma
                                                Historical (1)        Adjustments            Pro Forma
Assets
Investment in real estate:
Land                                          $        394,451     $           270   (2)   $   394,721
Buildings, improvements and equipment                2,592,069               2,073   (3)     2,594,142
Developments in progress                               105,471                   -             105,471
                                                     3,091,991               2,343           3,094,334
Less accumulated depreciation                          749,552                   -             749,552
   Property and equipment, net                       2,342,439               2,343           2,344,782
Deferred costs, net                                     31,642                 975   (4)        32,617
Investment in and advances to
unconsolidated real estate entities                     71,781                   -              71,781
   Investment in real estate, net                    2,445,862               3,318           2,449,180

Cash and cash equivalents                               19,625                   -              19,625
Restricted cash                                         31,488                   -              31,488
Tenant accounts receivable, net                         32,154                   -              32,154
Deferred expenses, net                                  16,561                   -              16,561
Prepaid and other assets                                51,705               2,932   (5)        54,637
   Total assets                               $      2,597,395     $         6,250         $ 2,603,645

Liabilities and Equity
Mortgage notes payable                        $      1,630,438     $             -         $ 1,630,438
Notes payable                                           95,000                   -              95,000
Accounts payable and accrued expenses                  122,395               6,250   (6)       128,645
Distributions payable                                   20,369                   -              20,369
   Total liabilities                                 1,868,202               6,250           1,874,452
Total equity                                           729,193                   -             729,193
   Total liabilities and equity               $      2,597,395     $         6,250         $ 2,603,645


(1) Represents amounts presented in the Company's Form 10-Q for the quarter ended June 30, 2013.

(2) Adjustment represents the change in the estimated fair value of land based upon a preliminary purchase price valuation the Company has received since the preparation of the June 30, 2013 balance sheet reflected in the Company's Form 10-Q for the quarter ended June 30, 2013.

(3) Adjustment represents the change in the estimated fair value of buildings, tenant improvements, and in-place lease value based upon a preliminary purchase price valuation the Company has received since the preparation of the June 30, 2013 balance sheet reflected in the Company's Form 10-Q for the quarter ended June 30, 2013.

(4) Adjustment represents the change in the estimated fair value of leasing commissions based upon a preliminary purchase price valuation the Company has received since the preparation of the June 30, 2013 balance sheet reflected in the Company's Form 10-Q for the quarter ended June 30, 2013.

(5) Adjustment represents the change in the estimated fair value of above-market leases based upon a preliminary purchase price valuation the Company has received since the preparation of the June 30, 2013 balance sheet reflected in the Company's Form 10-Q for the quarter ended June 30, 2013.

(6) Adjustment represents the change in the estimated fair value of below-market leases based upon a preliminary purchase price valuation the Company has received since the preparation of the June 30, 2013 balance sheet reflected in the Company's Form 10-Q for the quarter ended June 30, 2013.


                             Glimcher Realty Trust
            Pro Forma Condensed Consolidated Statement of Operations
                     For the Six Months Ended June 30, 2013
                                  (unaudited)
        (dollars and shares in thousands, except per share information)

                                                                                                  WestShore
                                                                                                  Holdings
                                                        Previously                              Statement of
                                                         Disclosed         Historical plus      Revenues and
                                                       Acquisitions     Previously Disclosed       Certain         Pro Forma
                                   Historical (1)           (2)             Acquisitions        Expenses (3)      Adjustments            Pro Forma
Revenues:
  Minimum rents                  $        113,147     $          86     $           113,233     $     6,577     $         728    (4 )   $ 120,538
  Percentage rents                          3,980                 2                   3,982              63                 -               4,045
  Tenant reimbursements                    52,633                32                  52,665           2,566                 -              55,231
  Other                                    17,966                 -                  17,966             327              (505 )  (5 )      17,788
   Total revenues                         187,726               120                 187,846           9,533               223             197,602

Expenses:
  Property operating expenses              37,999                 6                  38,005           2,164                 -              40,169
  Real estate taxes                        21,764                33                  21,797             989                 -              22,786
  Provision for doubtful
accounts                                    1,707                 -                   1,707              83                 -               1,790
  Other operating expenses                 16,202                 -                  16,202             117                 -              16,319
  Depreciation and
amortization                               53,376                 -                  53,376               -             5,105    (6 )      58,481
  General and administrative               13,793                 -                  13,793               9                 -              13,802
   Total expenses                         144,841                39                 144,880           3,362             5,105             153,347

   Operating income                        42,885                81                  42,966           6,171            (4,882 )            44,255

. . .
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