MVP REIT II, Inc. (CVE:MVP) Files An 8-K Financial Statements and Exhibits

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MVP REIT II, Inc. (CVE:MVP) Files An 8-K Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

The following financial statements are being file in connection
with the acquisition of certain property as described in Item
8.01 as required by Sections 210.3-14 and 210.11-01 of Regulation
S-X.
(a)
Financial Statements of Property Acquired
Report of Independent Registered Public Accounting Firm
Statements of Revenues and Certain Operating Expenses for
the Nine Months Ended September 30, 2016 (unaudited) and
the Year Ended December 31, 2015
Notes to the Statements of Revenues and Certain Operating
Expenses for the Nine Months Ended September 30, 2016
(unaudited) and the Year Ended December 31, 2015
(b)
Unaudited Pro Forma Financial Information
Pro Forma Condensed Combined Balance Sheet (unaudited)
September 30, 2016
Pro Forma Condensed Combined Statement of Operations
(unaudited) for the Nine Months Ended September 30, 2016
Pro Forma Condensed Combined Statement of Operations
(unaudited) for the Period From May 4, 2015 (Inception)
Through December 31, 2015
(c)
Shell Company Transactions
None
(d)
Exhibits
None
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of MVP REIT II, Inc.
We have audited the accompanying statement of revenues and
certain operating expenses of Center Parking Associate (“Center
Parking”) for the year ended December 31, 2015. MVP REIT II,
Inc.’s management is responsible for the statement of revenues
and certain operating expenses. Our responsibility is to express
an opinion on the statement of revenues and certain operating
expenses on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of Center Parking’s internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain operating
expenses was prepared for the purpose of complying with the rules
and regulations of the Securities and Exchange Commission for
inclusion in a Form 8-K to be filed by MVP REIT II, Inc., and is
not intended to be a complete presentation of Center Parking’s
revenues and expenses.
In our opinion, the statement of revenues and certain operating
expenses referred to above present fairly, in all material
respects, the revenues and certain operating expenses of Center
Parking for the year ended December 31, 2015, in conformity with
accounting principles generally accepted in the United States of
America.
/s/ RBSM LLP
New York, New York
March 10, 2017
CENTER PARKING ASSOCIATES LIMITED PARTNERSHIP
Statements of Revenues and Certain Operating Expenses
For the Nine Months Ended September 30, 2016 (unaudited)
And the Year Ended December 31, 2015
September 30, 2016
(unaudited)
December 31, 2015
Revenue
Transient (daily) parking revenue
$
2,012,860
$
2,130,508
Corporate and individual parking revenue
2,289,387
2,462,580
Coupon, validation and other facility revenue
143,562
116,048
Revenues – other
18,929
—
Facility income
14,525
29,343
4,479,263
4,738,479
Operating Expenses
Payroll expense
450,407
508,470
Credit card discount
61,777
59,334
Repairs maintenance supplies
109,599
101,686
Utilities
50,132
67,868
Taxes and licenses
527,162
626,725
Office expense
89,007
32,552
Insurance
50,608
75,237
Professional fees
81,552
23,111
1,420,244
1,494,983
Net income
$
3,059,019
$
3,243,496
See notes to Statements of Revenues and Certain Operating
Expenses
CENTER PARKING ASSOCIATES LIMITED PARTNERSHIP
Notes to Statements of Revenues and Certain Operating Expenses
For the Nine Months Ended September 30, 2016 (unaudited)
And the Year Ended December 31, 2015
1.
Business
Center Parking Associates Limited Partnership (the
“Partnership”) was formed on July 12, 1977, under the Michigan
Uniform Limited Partnership Act and acquired a certain parcel of
real estate in Detroit, Michigan. The Partnership constructed and
now operates a 1,275 space parking garage thereon.
2.
Basis of Presentation
The Statements of Revenue and Certain Operating Expenses (the
“Historical Summary”) has been prepared for the purpose of
complying with Rule 3-14 of Regulation S-X, promulgated by the
Securities and Exchange Commission, and is not intended to be a
complete presentation of the Property’s revenue and expenses.
The Historical Summary has been prepared on the accrual basis of
accounting and requires management to make estimates and
assumptions that affect the reported amounts of the revenue and
expenses during the reporting period. Actual results may differ
from those estimates.
The unaudited Historical Summary for the nine months ended
September 30, 2016 has been prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”) for interim
financial information. Accordingly, it does not include all of
the information and footnotes required by GAAP for complete
financial statements.
3.
Revenue
The Partnership recognizes daily and special event parking
revenue at the point of sale. The Partnership has parking license
agreements in which it invoices customers and recognizes revenue
on a monthly basis to terms of each of the agreements.
4.
Certain Operating Expenses
Certain operating expenses include only those expenses expected
to be comparable to the proposed future operations of the
Property. Repairs and maintenance expenses are charged to
operations as incurred. Expenses such as depreciation and
amortization are excluded from the accompanying Historical
Summary.
5.
Related Party Transactions
The parking facility is managed by Miller Parking Services,
LLC, which has a minority interest in the Partnership.
to its management agreement, Miller Parking Services, LLC is
entitled to 4.25% of gross revenue collections of the
Partnership. To the extent that gross revenue collections
exceed the prior year’s gross revenue collections, a revenue
incentive fee of 7% of the excess collections is added to the
management fee. Management and revenue incentive fees incurred
for the year ended December 31, 2015 totaled $262,154.
Miller Parking Services, LLC was reimbursed by the Partnership
for common and shared expenses related to salaries and benefits
and other operating expenses totaling $722,033 for the year
ended December 31, 2015. The Partnership had a payable to
Miller Parking Services, LLC totaling $207,757 as of December
31, 2015 related to reimbursable expenses.
6.
Subsequent Events
Subsequent to September 30, 2016 and through date of filing,
management did not identify any subsequent events requiring
additional disclosure.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
MVP REIT II, Inc. (the “Company”) entered into a joint
venture with MVP REIT, Inc. on January 10, 2017 to acquire a
1,275 space multi-level parking garage located in Detroit,
Michigan through MVP Detroit Center Parking, LLC (the
“Property”) for a purchase price of approximately $55.0
million plus closing costs. The purchase was accomplished
through a limited liability company owned jointly by the
Company and MVP REIT, Inc. (collectively, “MVP”). The
Company’s share of the purchase price is approximately $16.0
million plus closing costs and the Company will own an 80%
interest in the limited liability company. In connection with
the purchase, the Property issued a promissory note on the
parking garage in the amount of approximately $35.0 million.
The financing has a maturity date of February 2027 at an
interest rate of 5.520% per annum. The Company paid customary
closing costs in connection with the transaction.
The accompanying Unaudited Pro Forma Condensed Combined Balance
Sheet as of September 30, 2016, reflects the financial position
of the Company as if the acquisition described in the Notes to
the Unaudited Pro Forma Condensed Combined Financial Statements
had been completed on September 30, 2016. The accompanying
Unaudited Pro Forma Condensed Combined Statements of Operations
for the nine months ended September 31, 2016 and the year ended
December 31, 2015 present the results of operations of the
Company as if the transactions described in the Notes to the
Unaudited Pro Forma Condensed Combined Financial Statements had
been completed on January 1, 2016 and 2015, respectively.
The accompanying Unaudited Pro Forma Condensed Combined
Financial Statements are subject to a number of estimates,
assumptions, and other uncertainties, and do not purport to be
indicative of the actual results of operations that would have
occurred had the acquisitions reflected therein in fact
occurred on the dates specified, nor do such financial
statements purport to be indicative of the results of
operations that may be achieved in the future. In addition, the
Unaudited Pro Forma Condensed Combined Financial Statements
include pro forma allocations of the purchase price for the
properties discussed in the accompanying notes based upon
preliminary estimates of the fair values of the assets acquired
and liabilities assumed in connection with the acquisitions and
are subject to change.
MVP REIT II, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2016
MVP REIT II, Inc.
Pro Forma
September 30, 2016
Pro Forma Adjustments
September 30, 2016
(A)
(B)
ASSETS
Cash
$
2,870,000
$
(284,000
)
$
2,586,000
Cash – restricted
—
907,000
907,000
Prepaid expenses
42,000
337,000
379,000
Accounts receivable
71,000
—
71,000
Investments in real estate and fixed assets (C)
Land and improvements
23,459,000
7,000,000
30,459,000
Buildings and improvements
19,767,000
48,000,000
67,767,000
43,226,000
55,000,000
98,226,000
Accumulated depreciation
(46,000
)
—
(46,000
)
Total investments in real estate and fixed assets, net
43,180,000
55,000,000
98,180,000
Other assets
957,000
—
957,000
Investment in equity method investee
602,000
—
602,000
Investment in cost method investee held for sale
836,000
—
836,000
Investment in cost method investee
919,000
—
919,000
Total assets
$
49,477,000
$
55,960,000
$
105,437,000
LIABILITES AND STOCKHOLDERS’ EQUITY
Liabilities
Accounts payable and accrued liabilities
$
599,000
$
—
$
599,000
Due to related parties
41,000
41,000
Deferred revenue
17,000
—
17,000
Note payable and Line of credit issued in Q4 2016(F)
—
10,792,000
10,792,000
Line of Credit (G)
—
9,118,000
9,118,000
Notes payable, net of unamortized loan issuance costs (D)
—
31,463,000
31,463,000
Total liabilities
657,000
51,373,000
52,030,000
Stockholders’ equity
Non-voting, non-participating convertible stock
—
—
—
Common stock
—
—
—
Additional paid-in capital
44,852,000
—
44,852,000
Accumulated deficit
(2,660,000
)
(468,000
)
(3,128,000
)
Total stockholders’ equity
42,192,000
(468,000
)
41,724,000
Non-controlling interest
6,628,000
5,055,000
11,683,000
Total equity
48,820,000
4,587,000
53,407,000
Total liabilities and stockholders’ equity
$
49,477,000
$
55,960,000
$
105,437,000
See notes to unaudited pro forma condensed combined financial
statements.
MVP REIT II, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the nine months ended September 30, 2016
MVP REIT II, Inc.
Pro Forma Adjustments
Pro Forma
Revenues
(A)
(B)
Rental revenue
$
676,000
$
2,571,000
$
3,247,000
Total revenues
676,000
2,571,000
3,247,000
Operating expenses
General and administrative
602,000
—
602,000
Acquisition expenses (E)
748,000
—
748,000
Acquisition expenses related party (E)
1,427,000
—
1,427,000
Operation and maintenance
328,000
—
328,000
Seminar
6,000
—
6,000
Depreciation (C)
46,000
923,000
969,000
Total operating expenses
3,157,000
923,000
4,080,000
Income (loss) from operations
(2,481,000
)
1,648,000
(833,000
)
Other income (expense)
Interest expense (D)
(1,000
)
(1,397,000
)
(1,398,000
)
Income from investment in equity method investee
9,000
—
9,000
Total other income (expense)
8,000
(1,397,000
)
(1,389,000
)
Income (loss) from continuing operations
(2,473,000
)
251,000
(2,222,000
)
See notes to unaudited pro forma condensed combined financial
statements.
MVP REIT II, Inc.
Unaudited Pro forma Condensed Combined Statement of Operations
for the
Year ended December 31, 2015
MVP REIT II, Inc.
Pro Forma Adjustments
Pro Forma
Revenues
(A)
(B)
Rental revenue
$
—
$
3,428,000
$
3,428,000
Total revenues
—
3,428,000
3,428,000
Operating expenses
General and administrative
119,000
—
119,000
Organizational costs
6,000
—
6,000
Depreciation (C)
—
1,231,000
1,231,000
Total operating expenses
125,000
1,231,000
1,356,000
Income (loss) from operations
(125,000
)
2,197,000
2,072,000
Other expense
Interest expense (D)
1,000
1,863,000
1,864,000
Total other expense
1,000
1,863,000
1,864,000
Income (loss) from continuing operations
(126,000
)
1,334,000
208,000
See notes to unaudited pro forma condensed combined financial
statements.
MVP REIT II, Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
A.
Reflects the Company’s statements of operations for the
year ended December 31, 2015 and the nine months ended
September 30, 2016. Please refer to the Company’s
historical financial statements and notes thereto
included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2015 and the Company’s
Quarterly Report on Form 10-Q for the nine months ended
September 30, 2016.
B.
Figures reflect the financial position as of September
30, 2016 and the results of the operations for the year
ended December 31, 2015 and for the period from January
1, 2016 through September 30, 2016, unless otherwise
noted. The property is leased by SP Plus Corporation, a
national parking operator, under a net lease agreement
where the Property is responsible for property taxes
above a $572,500 threshold, and SP Plus Corporation pays
for insurance and maintenance costs. SP Plus Corporation
pays annual rent of $3,427,500. In addition, the lease
provides revenue participation with the Property
receiving 80% of gross receipts over $5,000,000. The term
of the lease is for 5 years. The Company owns 80% equity
interest in the MVP Detroit Center Garage, LLC and MVP
REIT owns a 20% equity interest. 20% of net operating
income will be attributable to MVP REIT.
C.
The depreciation expense of the buildings (buildings are
depreciated over 39 years) is based on the purchase price
allocation in accordance with U.S. generally accepted
accounting principles, as if the Company had acquired the
Property on January 1, 2015.
D.
The notes payable balance and related interest expense is
reflective of the Company’s issuance of a promissory
note of $35 million at an annual interest rate of 5.520%.
E.
Costs related to the acquisition of the property are
excluded from the unaudited pro forma condensed combined
statement of operations because such costs are
nonrecurring.
F.
$8,190,000 proceeds from LOC and $2,602,000 proceeds from
note payable received during Q4 2016 outside of closing
of this property.
G.
On October 5, 2016, the Company, through its Operating
Partnership, and MVP REIT (“the REITs”), through a
wholly owned subsidiary (the “Borrowers”) entered into
a credit agreement (the “Unsecured Credit Agreement”)
with KeyBank, National Association (‘KeyBank”) as the
administrative agent and KeyBanc Capital Markets
(“KeyBank Capital Markets”) as the lead arranger. to
the Unsecured Credit Agreement, the Borrowers were
provided with a $30 million unsecured credit facility
(the “Unsecured Credit Facility”), which may be
increased up to $100 million, in minimum increments of
$10 million. The Unsecured Credit Facility has an initial
term of two years, maturing on October 5, 2018, and may
be extended for a one-year period if certain conditions
are met and upon payment of an extension fee. The
Unsecured Credit Facility has an interest rate calculated
based on LIBOR Rate plus 2.25% or Base Rate plus 1.25%,
both as provided in the Unsecured Credit Agreement. The
Base Rate is calculated as the greater of (i) the KeyBank
Prime rate or (ii) the Federal Funds rate plus of 1%.
Payments under the Unsecured Credit Facility are interest
only and are due on the first day of each quarter. The
obligations of the Borrowers of the Unsecured Credit
Agreement are joint and several. The REITs have entered
into cross-indemnification provisions with respect to
their joint and several obligations under the Unsecured
Credit Agreement.


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