Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG) Files An 8-K Completion of Acquisition or Disposition of Assets
ITEM 2.01
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COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS |
On December 7, 2016, Bluerock Residential Growth REIT, Inc. (the
Company) filed, with the U.S. Securities and Exchange Commission
(the SEC), a Current Report on Form 8-K dated December 1, 2016
(the Form 8-K) in conjunction with the acquisition of 98%
indirect equity interest in a 320-unit apartment community known
as Roswell City Walk, located in Roswell, Georgia.
This Current Report on Form 8-K/A (the Form 8-K/A) amends Item
9.01 of the Form 8-K to present certain financial statements of
Roswell City Walk, which financial statements are filed as an
exhibit hereto. This Form 8-K/A should be read in conjunction
with the Form 8-K.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
| (a) |
Financial Statements of Real Estate Acquired Roswell City Walk Independent Auditors Report
Historical Statements of Revenues and Certain Direct
Notes to Historical Statements of Revenues and Certain |
| (b) |
Pro Forma Financial Information Bluerock Residential Growth REIT, Inc.
Pro Forma Condensed Consolidated Balance Sheet as of
Notes to Pro Forma Condensed Consolidated Balance Sheet as
Pro Forma Condensed Consolidated Statement of Operations
Notes to Pro Forma Condensed Consolidated Statement of
Pro Forma Condensed Consolidated Statement of Operations
Notes to Pro Forma Condensed Consolidated Statement of |
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Statements in this Current Report on Form 8-K, including
intentions, beliefs, expectations or projections relating to
items such as the long-term performance of the Companys portfolio
are 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 current expectations and assumptions with respect to,
among other things, future economic, competitive and market
conditions and future business decisions that may prove incorrect
or inaccurate. Important factors that could cause actual results
to differ materially from those in the forward looking statements
include the risks described under the heading Risk Factors in the
Companys Annual Report on Form 10-K filed with the SEC on
February 24, 2016 and its other filings with the SEC.
| (c) | Exhibit No. | Description |
| 23.1 | Consent of BDO USA, LLP |
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Independent Auditors Report
Board of Directors and Stockholders
Bluerock Residential Growth REIT, Inc.
New York, New York
We have audited the accompanying Historical Statement of Revenues
and Certain Direct Operating Expenses for the year ended December
31, 2015 of Roswell City Walk (the Property) and the related
notes (Historical Statement).
Managements Responsibility for the Historical Statement
Management is responsible for the preparation and fair
presentation of the Historical Statement 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 Historical Statement that are free from
material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on the Historical
Statement 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 Historical Statement is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the Historical Statement.
The procedures selected depend on the auditors judgment,
including the assessment of the risks of material misstatement of
the Historical Statement, whether due to fraud or error. In
making those risk assessments, the auditor considers internal
control relevant to the entitys preparation and fair presentation
of the Historical 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
entitys 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 Historical Statement.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
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Opinion
In our opinion, the Historical Statement referred to above
presents fairly, in all material respects, the revenues and
certain direct operating expenses of Roswell City Walk for the
year ended December 31, 2015, in accordance with accounting
principles generally accepted in the United States of America.
Emphasis of Matter
The accompanying Historical Statement was prepared for the
purpose of complying with Rule 3-14 of the U.S. Securities and
Exchange Commission Regulation S-X, as described in Note 2, and
is not intended to be a complete presentation of Roswell City
Walks revenues and expenses. Our opinion is not modified with
respect to this matter.
/s/ BDO USA, LLP
New York, New York
February 13, 2017
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Roswell City Walk
Historical Statements of Revenues and
Certain Direct Operating Expense
(Dollars in thousands)
| Year Ended December 31, 2015 | Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Revenues | ||||||||||||
| Rental income | $ | 1,698 | $ | 3,663 | $ | |||||||
| Other rental revenue | ||||||||||||
| Total Revenues | 1,955 | 4,049 | ||||||||||
| Certain Direct Operating Expenses | ||||||||||||
| Property operating expenses | ||||||||||||
| Property taxes | ||||||||||||
| Total Certain Direct Operating Expenses | 1,071 | 1,714 | ||||||||||
| Revenues in Excess of Certain Direct Operating Expenses | $ | $ | 2,335 | $ |
See accompanying notes to historical statements of revenues
and
certain direct operating expenses.
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Roswell City Walk
Notes to Historical Statements of Revenues and Certain
Direct Operating Expenses
| 1. | Business |
Roswell City Walk (the Property), a multi-family apartment
community located in Roswell, Georgia, was acquired to a purchase
agreement between an affiliate of Bluerock Residential Holdings,
L.P. (Bluerock Residential Growth REIT, Inc.s operating
partnership) and GGT LMI City Walk GA, LLC on December 1, 2016.
| 2. | Basis of Presentation |
The accompanying Historical Statements of Revenues and Certain
Direct Operating Expenses (Historical Statements) have been
prepared for the purpose of complying with Rule 3-14 of the
United States Securities and Exchange Commission Regulation S-X
and are not intended to be a complete presentation of the
Propertys revenues and expenses. The Historical Statements have
been prepared on the accrual basis of accounting and requires
management of the Property to make estimates and assumptions that
affect the reported amounts of the revenues and expenses during
the reporting periods. Actual results may differ from those
estimates.
In preparation of the accompanying Historical Statements,
subsequent events were evaluated for recognition and disclosure
through February 13, 2017, which is the date the Historical
Statements were available to be issued.
| 3. | Unaudited Interim Information |
In the opinion of the Propertys management, all adjustments,
consisting only of normal and recurring adjustments, necessary
for a fair presentation (in accordance with the Basis of
Presentation as described in Note 2) have been made to the
accompanying unaudited amounts for the nine month periods ended
September 30, 2016 and 2015.
| 4. | Revenues |
The Property contains 320 units that are rented to tenants under
various lease agreements that are generally one year in length.
All leases are accounted for as operating leases. Rental income
is recognized as earned over the life of the lease agreements on
a straight-line basis. Some of the leases include provisions
under which the Property is reimbursed for certain operating
costs. Revenue related to these reimbursed costs is recognized in
the period the applicable costs are incurred and billed to
tenants to the lease agreements and is netted with Property
Operating Expense in the Historical Statements. Other rental
revenue in the Historical Statements consists of charges billed
to tenants for pet, administrative, application and other fees
and is recognized when earned.
| 5. | Certain Direct Operating Expenses |
Certain direct operating expenses include only those costs
expected to be comparable to the proposed future operations of
the Property. Property operating costs include administrative,
maintenance, marketing, personnel costs, utilities, taxes and
insurance, repairs, and improvements. Costs such as depreciation,
amortization, interest, and professional fees are excluded.
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
Unaudited Pro Forma Condensed Consolidated Financial
Statements Information
The following unaudited pro forma condensed consolidated
financial statements of Bluerock Residential Growth REIT, Inc.
(together with its consolidated subsidiaries, the Company, we,
our or us) should be read in conjunction with our historical
audited consolidated financial statements as of and for the year
ended December 31, 2015, and as of and for the nine months ended
September 30, 2016 (unaudited), and the related notes thereto.
The unaudited pro forma condensed consolidated balance sheet, as
of September 30, 2016, and statements of operations for the year
ended December 31, 2015, and nine months ended September 30,
2016, have been prepared to provide pro forma financial
information with regard to the City Walk Apartments acquisition
on December 1, 2016, which the Company expects to consolidate and
includes pro forma information for each of the transactions
described below for which pro forma information has been provided
in previous filings. The unaudited pro forma financial
information gives effect to:
| (1) |
The purchase of a 98.0% direct interest in Tenside
The completion of the Companys underwritten offering of
The completion of the Companys underwritten offering of
The completion of the Companys underwritten offering of
The completion of the Companys underwritten offering of
The completion of the Companys underwritten offering of |
| (2) |
The sale of the Companys 100.00% direct equity interest in
The sale of the Companys 75.0% indirect equity interest in |
The pro forma condensed consolidated balance sheet assumes that
the Roswell City Walk acquisition and the April 2016 Series A
Preferred Offering, the May 2016 Series A Preferred Offering, the
Series C Preferred Offering and the Series D Preferred Offering
transactions referred to above occurred on January 1, 2015.
The pro forma consolidated statements of operations assume the
transactions referred to above occurred on January 1, 2015.
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
Unaudited Pro Forma Condensed Consolidated Financial
Statements Information
(Continued)
Our pro forma financial information is not necessarily indicative
of what our actual financial position and results of operations
would have been as of the date and for the periods indicated, nor
does it purport to represent our future financial position or
results of operations.
The pro forma financial statements do not reflect the following:
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the operations of the Estates at Perimeter, Grove at Waterford, Berry Hill, Oak Crest Villas, North Park Towers, and Springhouse at Newport News properties in the statement of operations, as these assets have been sold; and |
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the net proceeds from the sale of the North Park Towers Property and the Springhouse at Newport News Property and subsequent reinvestment; and |
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the investment of net proceeds from the October 2015 Series A Preferred Offering, the April 2016 Series A Preferred Offering, the May 2016 Series A Preferred Offering, the Series C Preferred Offering and the Series D Preferred Offering. |
All completed acquisitions are accounted for using the
acquisition method of accounting. The fair value of these assets
and liabilities is allocated in accordance with Accounting
Standards Codification 805, Business Combinations (ASC 805). The
purchase prices were allocated to the acquired assets and
liabilities based on their estimated fair values at the dates of
acquisition. The preliminary measurements of fair value reflected
below are subject to change. The Company expects to finalize the
purchase price allocations as soon as practicable, but no later
than one year from each propertys respective acquisition date.
These unaudited pro forma condensed consolidated financial
statements are prepared for informational purposes only. In
managements opinion, all material adjustments necessary to
reflect the effects of the transactions referred to above, have
been made. Our pro forma condensed consolidated financial
statements are based on assumptions and estimates considered
appropriate by the Companys management. However, they are not
necessarily indicative of what our consolidated financial
condition or results of operations actually would have been
assuming the transactions referred to above had occurred as of
the dates indicated, nor do they purport to represent our
consolidated financial position or results of operations for
future periods.
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE
SHEET
AS OF SEPTEMBER 30, 2016
(In thousands, except share and per share
amounts)
| BluerockResidential GrowthREIT,INC. Historical (a) | RoswellCityWalk (b) | SeriesAPreferred Offering (c) | SeriesCPreferred Offering (d) | SeriesDPreferred Offering (e) | Disposals/Heldfor SaleItems (f) | ProForma Total | ||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||
| Net Real Estate Investments | ||||||||||||||||||||||||||||
| Land | $ | 89,330 | $ | 8,423 | $ | – | $ | – | $ | – | $ | – | $ | 97,753 | ||||||||||||||
| Building and improvements | 626,854 | 64,791 | – | – | – | – | 691,645 | |||||||||||||||||||||
| Furniture, fixtures and equipment | 21,615 | 1,458 | – | – | – | – | 23,073 | |||||||||||||||||||||
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Total Gross Operating Real Estate Investments |
737,799 | 74,672 | – | – | – | – | 812,471 | |||||||||||||||||||||
| Accumulated depreciation | (35,266 | ) | – | – | – | – | – | (35,266 | ) | |||||||||||||||||||
| Total Net Real Estate Investments | 702,533 | 74,672 | – | – | – | – | 777,205 | |||||||||||||||||||||
| Cash and cash equivalents | 130,521 | (24,905 | ) | – | – | 68,620 | (816 | ) | 173,420 | |||||||||||||||||||
| Restricted cash | 24,751 | – | – | – | – | (12,155 | ) | 12,596 | ||||||||||||||||||||
| Due from affiliates | – | – | – | – | – | |||||||||||||||||||||||
| Accounts receivables, prepaid and other assets | 10,313 | – | – | – | – | (13 | ) | 10,300 | ||||||||||||||||||||
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Preferred equity investments and investments in unconsolidated real estate joint ventures |
92,558 | – | – | – | – | – | 92,558 | |||||||||||||||||||||
| In-place lease intangible assets, net | 1,269 | 1,327 | – | – | – | – | 2,596 | |||||||||||||||||||||
| Total Assets | $ | 962,906 | $ | 51,094 | $ | – | $ | – | $ | 68,620 | $ | (12,984 | ) | $ | 1,069,636 | |||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||
| Mortgages payable | $ | 525,036 | $ | 50,586 | $ | – | $ | – | $ | – | $ | – | $ | 575,622 | ||||||||||||||
| Accounts payable | – | – | – | – | (6 | ) | ||||||||||||||||||||||
| Other accrued liabilities | 14,350 | – | – | – | – | (208 | ) | 14,142 | ||||||||||||||||||||
| Due to affiliates | 2,152 | – | – | – | – | – | 2,152 | |||||||||||||||||||||
| Distributions payable | 5,973 | – | – | – | – | – | 5,973 | |||||||||||||||||||||
| Total Liabilities | 548,025 | 50,586 | – | – | – | (214 | ) | 598,397 | ||||||||||||||||||||
| 8.250% Series A Cumulative Redeemable Preferred Stock | 138,130 | – | – | – | – | 138,191 | ||||||||||||||||||||||
| Series B Redeemable Preferred Stock | 7,698 | – | – | – | – | – | 7,698 | |||||||||||||||||||||
| 7.625% Series C Cumulative Redeemable Preferred Stock | 56,076 | – | – | – | – | 56,160 | ||||||||||||||||||||||
| Stockholders’ Equity | ||||||||||||||||||||||||||||
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Series D Preferred stock, $0.01 par value, liquidation preference $25.00, no shares authorized, no shares issued and outstanding, historical and 4,000,000 shares authorized, 2,850,602 shares issued and outstanding, pro forma |
– | – | – | – | 68,620 | – | 68,620 | |||||||||||||||||||||
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Preferred stock, $0.01 par value, 234,975,000 shares authorized; none issued and outstanding |
– | – | – | – | – | – | – | |||||||||||||||||||||
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Class A common stock, $0.01 par value, 747,586,185 shares authorized; 19,566,437 shares issued and outstanding, historical and pro forma |
– | – | – | – | – | |||||||||||||||||||||||
| Additional paid-in-capital | 254,770 | – | – | – | – | 255,321 | ||||||||||||||||||||||
| Distributions in excess of cumulative earnings | (71,249 | ) | – | (61 | ) | (84 | ) | – | (13,321 | ) | (84,715 | ) | ||||||||||||||||
| Total Stockholders’ Equity | 183,717 | – | (61 | ) | (84 | ) | 68,620 | (12,770 | ) | 239,422 | ||||||||||||||||||
| Noncontrolling Interests | ||||||||||||||||||||||||||||
| Operating Partnership Units | 2,432 | – | – | – | – | – | 2,432 | |||||||||||||||||||||
| Partially Owned Properties | 26,828 | – | – | – | – | 27,336 | ||||||||||||||||||||||
| Total Noncontrolling interests | 29,260 | – | – | – | – | 29,768 | ||||||||||||||||||||||
| Total Equity | 212,977 | (61 | ) | (84 | ) | 68,620 | (12,770 | ) | 269,190 | |||||||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 962,906 | $ | 51,094 | $ | – | $ | – | $ | 68,620 | $ | (12,984 | ) | $ | 1,069,636 |
See Notes to Unaudited Pro Forma Condensed Consolidated Balance
Sheet
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
AS OF SEPTEMBER 30, 2016
| (a) |
Historical consolidated financial information derived from the Companys Quarterly Report on Form 10-Q as of September 30, 2016. |
| (b) |
The purchase of a 98.0% direct interest in Roswell City Walk for a purchase price of $76.0 million, which the Company expects to consolidate on its balance sheet. The Company also expects to consolidate a $51.0 million mortgage loan associated with this acquisition. |
| (c) |
Reflects an adjustment for accretion on the Companys underwritten offerings of 2,700,000 shares of 8.250% Series A Cumulative Redeemable Preferred Stock in April and May 2016. |
| (d) |
Reflects an adjustment for accretion on the Companys underwritten offering of 2,300,000 shares of 7.625% Series C Cumulative Redeemable Preferred Stock on July 19, 2016. |
| (e) |
The completion of the Companys underwritten offering of 2,850,602 shares of 7.125% Series D Preferred Stock on October 13, 2016, or the Series D Preferred Offering, including accretion. |
| (f) |
Reflects the sale of the Companys 75.0% indirect equity interest in the Springhouse at Newport News property, to a non-affiliated buyer, which was included in the Companys historical consolidated balance sheet. The pro forma financial statements do not reflect the net proceeds from the sale of the Springhouse at Newport News asset and the subsequent reinvestment. |
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
| ProFormaAdjustmentsfor | ||||||||||||||||||||||||
| BluerockResidential GrowthREIT,INC. Historical (a) | RoswellCityWalk (b) | TensideApartments (c) | SoldandHeldfor SaleProperties (d) | Otheritems (e) | ProForma Total | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Net rental income | $ | 52,013 | $ | 3,663 | $ | 3,169 | $ | (2,457 | ) | $ | – | $ | 56,388 | |||||||||||
| Other property revenues | 2,644 | (141 | ) | – | 3,010 | |||||||||||||||||||
| Total revenues | 54,657 | 4,049 | 3,290 | (2,598 | ) | – | 59,398 | |||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Property operating | 21,519 | 1,842 | 1,238 | (977 | ) | – | 23,622 | |||||||||||||||||
| General and administrative | 4,155 | – | – | – | – | 4,155 | ||||||||||||||||||
| Management fees | 4,495 | – | – | – | – | 4,495 | ||||||||||||||||||
| Acquisition costs | 2,143 | – | – | (1 | ) | – | 2,142 | |||||||||||||||||
| Depreciation and amortization | 22,465 | 1,525 | (f) | (f) | (644 | ) | – | 24,034 | ||||||||||||||||
| Total expenses | 54,777 | 3,367 | 1,926 | (1,622 | ) | – | 58,448 | |||||||||||||||||
| Operating (loss) income | (120 | ) | 1,364 | (976 | ) | – | ||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Other income | – | – | – | – | ||||||||||||||||||||
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Preferred returns and equity in income of unconsolidated real estate joint ventures |
8,617 | – | – | – | – | 8,617 | ||||||||||||||||||
| Gain on sale of real estate investments | 4,947 | – | – | (4,947 | ) | – | – | |||||||||||||||||
| Loss on early extinguishment of debt | (2,393 | ) | – | – | 1,493 | – | (900 | ) | ||||||||||||||||
| Interest expense, net | (14,091 | ) | (1,420 | )(g) | (1,053 | )(h) | – | (16,068 | ) | |||||||||||||||
| Total other income (expense) | (2,894 | ) | (1,420 | ) | (1,053 | ) | (2,958 | ) | – | (8,325 | ) | |||||||||||||
| Net (loss) income | (3,014 | ) | (738 | ) | (3,934 | ) | – | (7,375 | ) | |||||||||||||||
| Preferred stock dividends | (8,391 | ) | – | – | – | (7,587 | ) | (15,978 | ) | |||||||||||||||
| Preferred stock accretion | (568 | ) | – | – | – | (82 | ) | (650 | ) | |||||||||||||||
| Net (loss) income attributable to noncontrolling interests | ||||||||||||||||||||||||
| Operating partnership units | (173 | ) | – | – | – | (168 | ) | (341 | ) | |||||||||||||||
| Partially-owned properties | (73 | ) | (15 | ) | (121 | ) | – | (178 | ) | |||||||||||||||
| Net (loss) income attributable to noncontrolling interests | (246 | ) | (15 | ) | (121 | ) | (168 | ) | (519 | ) | ||||||||||||||
| Net (loss) income attributable to common stockholders | $ | (11,727 | ) | $ | (723 | ) | $ | $ | (3,813 | ) | $ | (7,501 | ) | $ | (23,484 | ) | ||||||||
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Earnings (loss) per common share (i) |
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| Net Loss Per Common Share – Basic | $ | (0.57 | ) | $ | (1.13 | ) | ||||||||||||||||||
| Net Loss Per Common Share – Diluted | $ | (0.57 | ) | $ | (1.13 | ) | ||||||||||||||||||
| Weighted Average Basic Common Shares Outstanding | 20,706,338 | 20,706,338 | ||||||||||||||||||||||
| Weighted Average Diluted Common Shares Outstanding | 20,706,338 | 20,706,338 |
See Notes to Unaudited Pro Forma Condensed Consolidated Statement
of Operations
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
| (a) |
Historical consolidated financial information derived from the Companys quarterly report on Form 10-Q for the nine months ended September 30, 2016. |
| (b) |
Represents adjustments to historical operations of the Company to give effect to the purchase of the Roswell City Walk on December 1, 2016 as if these assets had been acquired on January 1, 2015. Adjustments were derived directly from the propertys actual results of operations, including pro forma adjustments for the nine months ended September 30, 2016. Pro forma adjustments to historical results included: increasing depreciation and amortization $1.52 million and increasing interest expense $1.42 million. |
| (c) |
Represents adjustments to historical operations of the Company to give effect to the purchase of the Tenside Apartments on July 14, 2016 as if these assets had been acquired on January 1, 2015. Adjustments were derived directly from the propertys actual results of operations, including pro forma adjustments for the nine months ended September 30, 2016. Pro forma adjustments to historical results included: increasing depreciation and amortization $0.69 million and increasing interest expense $1.05 million. |
| (d) |
Reflect the sale of the Companys 75.0% indirect equity interest in the Springhouse at Newport News property, to a non-affiliated buyer, which was included in the Companys historical consolidated statement of operations. |
| (e) | Other items have been adjusted to reflect: |
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increasing preferred distributions by $2.39 million to reflect six months of 7.625% Series C Cumulative Redeemable Preferred Stock distributions as if the proceeds of the July 2016 Preferred Offering were received on January 1, 2015. |
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increasing preferred distributions by $0.21 million to reflect four months of 8.250% Series A Cumulative Redeemable Preferred Stock distributions as if the proceeds of the May 2016 Preferred Offering were received on January 1, 2015. |
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increasing preferred distributions by $1.19 million to reflect three months of 8.250% Series A Cumulative Redeemable Preferred Stock distributions as if the proceeds of the April 2016 Preferred Offering were received on January 1, 2015. |
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increasing preferred accretion by $0.08 million for the 8.250% Series A and 7.625% Series C Cumulative Redeemable Preferred Stock distributions. |
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increasing preferred distributions by $3.80 million to reflect nine months of 7.125% Series D Preferred Stock distributions as if the proceeds of the October 2016 Preferred Offering were received on January 1, 2015. |
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the operating partnership units interest in the pro forma adjustments identified in (b), (c), (d) and (e) impacting the consolidated net income (loss). |
| (f) |
Represents depreciation and amortization expense adjustment to historical results for the nine months ended September 30, 2016 based on the preliminary allocation of the purchase price. Depreciation expense is calculated using the straight-line method over the estimated useful lives of 30 35 years for the building, 15 years for building and land improvements and 3-7 years for furniture, fixtures and equipment. Amortization expense on identifiable intangible assets is recognized using the straight-line method over the life of the lease, which is generally less than one year. Amortization expense on the lender loan assumption fees have been recognized using the straight-line method over the life of the remaining term of the mortgages. |
| (g) |
Represents interest expense for the Roswell City Walk estimated to have been incurred on the $51.0 million mortgage loan which bears a fixed interest rate of 3.63% and matures on December 1, 2026, calculated as if the loan was entered into on January 1, 2015. The amounts in the pro forma balance sheet are presented at fair value. |
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| (h) |
Represents interest expense for the Tenside Property estimated to have been incurred on the $52.2 million mortgage loan which bears a fixed interest rate of 3.68% and matures on August 1, 2023, calculated as if the loan was entered into on January 1, 2015. The amounts in the pro forma balance sheet are presented at fair value. |
| (i) |
Loss per share is calculated in accordance with Accounting Standards Codification 260 Earnings per Share. The historical loss per share amounts are the amounts reported in the Registrants Form 10-Q for the nine months ended September 30, 2016. |
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
| ProFormaAdjustmentsfor | ||||||||||||||||||||||||
| BluerockResidential GrowthREIT,INC. Historical (a) | RoswellCityWalk (b) | Tenside Apartments (c) | SoldandHeldfor SaleProperties (d) | Otheritems (e) | ProForma Total | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Net rental income | $ | 42,259 | $ | 1,698 | $ | 5,741 | $ | (6,624 | ) | $ | – | $ | 43,074 | |||||||||||
| Other property revenues | 1,996 | (448 | ) | – | 2,017 | |||||||||||||||||||
| Total revenues | 44,255 | 1,955 | 5,953 | (7,072 | ) | – | 45,091 | |||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Property operating | 17,851 | 1,187 | 2,218 | (3,510 | ) | – | 17,746 | |||||||||||||||||
| General and administrative | 4,108 | – | – | – | – | 4,108 | ||||||||||||||||||
| Management fees | 4,185 | – | – | – | – | 4,185 | ||||||||||||||||||
| Acquisition costs | 3,508 | – | – | (11 | ) | – | 3,497 | |||||||||||||||||
| Depreciation and amortization | 16,226 | 3,362 | (f) | 4,007 | (f) | (1,259 | ) | – | 22,336 | |||||||||||||||
| Total expenses | 45,878 | 4,549 | 6,225 | (4,780 | ) | – | 51,872 | |||||||||||||||||
| Operating loss | (1,623 | ) | (2,594 | ) | (272 | ) | (2,292 | ) | – | (6,781 | ) | |||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Other income | – | – | – | – | ||||||||||||||||||||
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Preferred returns and equity in income of unconsolidated real estate joint ventures |
6,590 | – | – | – | 6,602 | |||||||||||||||||||
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Equity in gain on sale of real estate asset of unconsolidated joint venture |
11,303 | – | – | (11,303 | ) | – | – | |||||||||||||||||
| Gain on sale of joint venture interests | 2,677 | – | – | (2,677 | ) | – | – | |||||||||||||||||
| Interest expense, net | (11,366 | ) | (1,893 | )(g) | (1,979 | )(h) | 1,426 | – | (13,812 | ) | ||||||||||||||
| Total other income (expense) | 9,266 | (1,893 | ) | (1,979 | ) | (12,542 | ) | – | (7,148 | ) | ||||||||||||||
| Net income (loss) | 7,643 | (4,487 | ) | (2,251 | ) | (14,834 | ) | – | (13,929 | ) | ||||||||||||||
| Preferred stock dividends | (1,153 | ) | (19,808 | ) | (20,961 | ) | ||||||||||||||||||
| Preferred stock accretion | – | – | – | – | (801 | ) | (801 | ) | ||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ||||||||||||||||||||||||
| Operating partnership units | – | – | – | (598 | ) | (563 | ) | |||||||||||||||||
| Partially-owned properties | 5,820 | (90 | ) | (225 | ) | (6,066 | ) | (560 | ) | |||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 5,855 | (90 | ) | (225 | ) | (6,066 | ) | (597 | ) | (1,123 | ) | |||||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | (4,397 | ) | $ | (2,026 | ) | $ | (8,768 | ) | $ | (20,012 | ) | $ | (34,568 | ) | ||||||||
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Earnings (loss) per common share (i) |
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| Net Income (Loss) Per Common Share – Basic | $ | 0.04 | $ | (1.99 | ) | |||||||||||||||||||
| Net Income (Loss) Per Common Share – Diluted | $ | 0.04 | $ | (1.99 | ) | |||||||||||||||||||
| Weighted Average Basic Common Shares Outstanding | 17,404,348 | 17,404,348 | ||||||||||||||||||||||
| Weighted Average Diluted Common Shares Outstanding | 17,417,198 | 17,417,198 |
See Notes to Unaudited Pro Forma Condensed Consolidated Statement
of Operations
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BLUEROCK RESIDENTIAL GROWTH REIT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
| (a) |
Historical consolidated financial information derived from the Companys annual report on Form 10-K for the year ended December 31, 2015. |
| (b) |
Represents adjustments to historical operations of the Company to give effect to the purchase of the Roswell City Walk on December 1, 2016 as if this asset had been acquired on January 1, 2015. Adjustments were derived directly from the propertys actual results of operations, including pro forma adjustments for the year ended December 31, 2015. Pro forma adjustments to historical results included: increasing depreciation and amortization $3.36 million and increasing interest expense $1.89 million. |
| (c) |
Represents adjustments to historical operations of the Company to give effect to the purchase of the Tenside Apartments on July 14, 2016 as if this asset had been acquired on January 1, 2015. Adjustments were derived directly from the propertys actual results of operations, including pro forma adjustments for the year ended December 31, 2015. Pro forma adjustments to historical results included: increasing depreciation and amortization $4.01 million and increasing interest expense $1.98 million. |
| (d) |
Reflects the sale of the Companys 100.00% direct equity interest in the North Park Towers property and the Companys 75.0% indirect equity interest in the Springhouse at Newport News property, both to non-affiliated buyers, which was included in the Companys historical consolidated statement of operations. Additionally, reflects the sales of the Companys 25.00% indirect equity interest in the Estates at Perimeter property and the 42.23% indirect equity interest in the Berry Hill property, to non-affiliated buyers, which were consolidated in the Companys historical consolidated statement of operations, in each case to non-affiliated buyers. |
| (e) | Other items have been adjusted to reflect: |
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the Companys purchase of an additional 13.19% indirect interest in Lansbrook Village, which the Company already has a controlling interest in, as if this additional interest had been acquired on January 1, 2015. |
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increasing preferred distributions by $4.78 million to reflect full year of 8.250% Series A Cumulative Redeemable Preferred Stock distributions as if the proceeds of the October 2015 Preferred Offering were received on January 1, 2015. |
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increasing preferred distributions by $5.57 million to reflect full year of 8.250% Series A Cumulative Redeemable Preferred Stock distributions as if the proceeds of the April 2016 Preferred Offering and May 2016 Preferred Offering were received on January 1, 2015. |
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increasing preferred distributions by $4.38 million to reflect full year of 7.625% Series C Cumulative Redeemable Preferred Stock distributions as if the proceeds of the July 2016 Preferred Offering were received on January 1, 2015. |
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increasing preferred accretion by $0.8 million for the 8.250% Series A and 7.625% Series C Cumulative Redeemable Preferred Stock distributions. |
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increasing preferred distributions by $5.01 million to reflect full year of 7.125% Series D Preferred Stock distributions as if the proceeds of the October 2016 Preferred Offering were received on January 1, 2015. |
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the operating partnership units interest in the pro forma adjustments identified in (b), (c), (d) and (e) impacting the consolidated net income (loss). |
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| (f) |
Represents depreciation and amortization expense adjustment to historical results for the year ended December 31, 2015 based on the preliminary allocation of the purchase price. Depreciation expense is calculated using the straight-line method over the estimated useful lives of 30 35 years for the building, 15 years for building and land improvements and three to seven years for furniture, fixtures and equipment. Amortization expense on identifiable intangible assets is recognized using the straight-line method over the life of the lease, which is generally less than one year. Amortization expense on the lender loan assumption fees have been recognized using the straight-line method over the life of the remaining term of the mortgages. |
| (g) |
Represents interest expense for the Roswell City Walk estimated to have been incurred on the $51.0 million mortgage loan which bears a fixed interest rate of 3.63% and matures on December 1, 2026, calculated as if the loan was entered into on January 1, 2015. The amounts in the pro forma balance sheet are presented at fair value. |
| (h) |
Represents interest expense for the Tenside Apartments estimated to have been incurred on the $52.2 million mortgage loan which bears a fixed interest rate of 3.68% and matures on August 1, 2023, calculated as if the loan was entered into on January 1, 2015. The amounts in the pro forma balance sheet are presented at fair value. |
| (i) |
Earnings (loss) per share is calculated in accordance with Accounting Standards Codification 260 Earnings per Share. The historical earnings per share amounts are the amounts reported in the Registrants Form 10-K for the year ended December 31, 2015. |
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About Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG)
Bluerock Residential Growth REIT, Inc. is a real estate investment trust. The Company’s business consists of investing in and operating multifamily communities. The Company operates through real estate assets segment. Its businesses are conducted through its operating partnership, Bluerock Residential Holdings, L.P. Its principal business objective is to generate risk-adjusted investment returns by assembling a portfolio of apartment properties located in growth markets and by implementing its investment strategies to achieve sustainable long-term growth in both its funds from operations and net asset value. The Company’s portfolio consists of interests in over 20 properties (over 10 operating and approximately six development properties). Its other acquired properties include Springhouse, North Park Towers, Alexan CityCentre, ARIUM Grandewood, Alexan Southside Place, Cheshire Bridge, Sovereign, Flagler Village and Lake Boone Trail. Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG) Recent Trading Information
Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG) closed its last trading session up +0.09 at 13.46 with 226,141 shares trading hands.
