Form 8-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 24, 2013

 

 

Terreno Realty Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   001-34603   27-1262675
(State or other jurisdiction
of incorporation)
 

(Commission

File Number)

  (IRS Employer
Identification No.)

101 Montgomery Street, Suite 200

San Francisco, CA 94104

(Address of principal executive offices) (Zip Code)

(415) 655-4580

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


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Item 8.01. Other Events.

In connection with our filing on or about the date hereof of a registration statement on Form S-3, we are filing this Current Report on Form 8-K to present certain additional disclosures to be incorporated by reference therein, including disclosures relating to:

 

   

Certain historical financial statements related to certain of our completed acquisitions; and

 

   

Certain unaudited pro forma financial information regarding our completed acquisitions.

Item 9.01. Financial Statements and Exhibits

 

(a) Financial Statements Under Rule 3-14 of Regulation S-X

 

(i) Statements of Revenues and Certain Expenses of America’s Gateway

  

Report of Independent Auditors

     4   

Statements of Revenues and Certain Expenses for the three months ended March  31, 2013 (unaudited) and the year ended December 31, 2012

     6   

Notes to the Statements of Revenues and Certain Expenses

     7   

(ii) Statements of Revenues and Certain Expenses of Route 100

  

Report of Independent Auditors

     9   

Statements of Revenues and Certain Expenses for the three months ended March  31, 2013 (unaudited) and the year ended December 31, 2012

     11   

Notes to the Statements of Revenues and Certain Expenses

     12   

(iii) Statements of Revenues and Certain Expenses of Manhattan Beach

  

Report of Independent Auditors

     14   

Statements of Revenues and Certain Expenses for the period from January 1, 2012 to April  30, 2012 (unaudited) and the year ended December 31, 2011

     16   

Notes to the Statements of Revenues and Certain Expenses

     17   

(iv) Statements of Revenues and Certain Expenses of 26th Street

  

Report of Independent Auditors

     19   

Statements of Revenues and Certain Expenses for the six months ended June  30, 2012 (unaudited) and the year ended December 31, 2011

     21   

Notes to the Statements of Revenues and Certain Expenses

     22   

(v) Statements of Revenues and Certain Expenses of South Main

  

Report of Independent Auditors

     24   

Statements of Revenues and Certain Expenses for the period from January 1, 2012 to November  30, 2012 (unaudited) and the year ended December 31, 2011

     26   

Notes to the Statements of Revenues and Certain Expenses

     27   

 

(b) Unaudited Pro Forma Condensed Consolidated Information

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2013

     31   

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2013

     32   

Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2013

     33   

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2013

     34   


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Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2012

     35   

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2012

     36   

 

(d) Exhibits

 

Exhibit

Number

  

Title

23.1*    Consent of Independent Auditors

 

* Filed herewith

 

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Report of Independent Auditors

The Board of Directors and Stockholders of

Terreno Realty Corporation

We have audited the accompanying statement of revenues and certain expenses of America’s Gateway (the “Property”), for the year ended December 31, 2012, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues and certain expenses that are free of 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. 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 of 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 control relevant to the entity’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 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 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 revenues and certain expenses described in Note 1 of America’s Gateway for the year ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

 

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Basis of Accounting

As described in Note 1 to the financial statements, the statement of revenues and certain expenses of the Property have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Form 8-K of Terreno Realty Corporation, and is not intended to be a complete presentation of the Property’s revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

San Francisco, California

June 24, 2013

 

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America’s Gateway

Statements of Revenues and Certain Expenses

For the Three Months Ended March 31, 2013 (unaudited)

and the Year Ended December 31, 2012

(in thousands)

 

     For the Three Months
Ended March 31, 2013
(unaudited)
     For the Year Ended
December 31, 2012
 

Revenues:

     

Rental

   $ 323       $ 1,743   

Tenant reimbursements

     83         387   
  

 

 

    

 

 

 

Total revenues

     406         2,130   

Certain expenses:

     

Property operating expenses

     110         460   

Real estate taxes

     98         286   
  

 

 

    

 

 

 

Total expenses

     208         746   
  

 

 

    

 

 

 

Revenues in excess of certain expenses

   $ 198       $ 1,384   
  

 

 

    

 

 

 

See accompanying notes to statements of revenues and certain expenses.

 

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America’s Gateway

Notes to Statements of Revenues and Certain Expenses

For the Three Months Ended March 31, 2013 (unaudited)

and the Year Ended December 31, 2012

 

1. Background and Basis of Presentation

The accompanying statements of revenues and certain expenses present the results of operations of America’s Gateway (the “Property”) for the three months ended March 31, 2013 (unaudited) and the year ended December 31, 2012. The Property was acquired by a wholly-owned subsidiary of Terreno Realty Corporation from a third-party seller, The Realty Associates Fund VI, L.P., on May 22, 2013 for approximately $23.7 million. The Property is located in Miami, Florida and consists of six multi-tenant industrial buildings containing 306,924 square feet (unaudited), which were approximately 70% leased to 15 tenants (unaudited) at the time of acquisition.

The accompanying statements of revenues and certain expenses have been prepared on the accrual basis of accounting. The statements of revenues and certain expenses have been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission and for inclusion in this Current Report on Form 8-K of Terreno Realty Corporation and are not intended to be a complete presentation of the revenues and expenses of the Property for the three months ended March 31, 2013 and the year ended December 31, 2012 as certain expenses, primarily depreciation and amortization expense and other costs not comparable to the proposed future operations of the Property have been excluded. Management is not aware of any material factors at the Property other than those disclosed above, that would cause the reported financial information not to be necessarily indicative of future operating results.

 

2. Summary of Significant Accounting Policies

Revenue Recognition

Rental revenues from operating leases are recorded on a straight-line basis over the terms of the leases. Tenant reimbursements represent recoveries from tenants for utilities and certain property maintenance expenses. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.

Property Operating Expenses

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

 

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Use of Estimates

The preparation of the statements of revenues and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the statements of revenues and certain expenses.

Interim Statements

The statement of revenues and certain expenses for the three months ended March 31, 2013 is unaudited, however, in the opinion of management of Terreno Realty Corporation, all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year of the operation of the Property.

Tenant Concentration

For the year ended December 31, 2012, one tenant accounted for approximately 17% of rental revenues.

Future Minimum Rental Income

Future minimum rents to be received under non-cancelable lease agreements as of December 31, 2012 were as follows (in thousands):

 

2013

   $  1,318   

2014

     932   

2015

     524   

2016

     336   

2017

     152   
  

 

 

 

Total

   $ 3,262   
  

 

 

 

 

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Report of Independent Auditors

The Board of Directors and Stockholders of

Terreno Realty Corporation

We have audited the accompanying statement of revenues and certain expenses of Route 100 (the “Property”), for the year ended December 31, 2012, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues and certain expenses that are free of 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. 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 of 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 control relevant to the entity’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 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 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 revenues and certain expenses described in Note 1 of Route 100 for the year ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

 

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Basis of Accounting

As described in Note 1 to the financial statements, the statement of revenues and certain expenses of the Property have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Form 8-K of Terreno Realty Corporation, and is not intended to be a complete presentation of the Property’s revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

San Francisco, California

June 24, 2013

 

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Route 100

Statements of Revenues and Certain Expenses

For the Three Months Ended March 31, 2013 (unaudited)

and the Year Ended December 31, 2012

(in thousands)

 

     For the Three Months
Ended March 31, 2013
(unaudited)
     For the Year Ended
December 31, 2012
 

Revenues:

     

Rental

   $ 300       $ 1,243   

Tenant reimbursements

     56         281   
  

 

 

    

 

 

 

Total revenues

     356         1,524   

Certain expenses:

     

Property operating expenses

     60         288   

Real estate taxes

     42         167   
  

 

 

    

 

 

 

Total expenses

     102         455   
  

 

 

    

 

 

 

Revenues in excess of certain expenses

   $ 254       $ 1,069   
  

 

 

    

 

 

 

See accompanying notes to statements of revenues and certain expenses.

 

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Route 100

Notes to Statements of Revenues and Certain Expenses

For the Three Months Ended March 31, 2013 (unaudited)

and the Year Ended December 31, 2012

 

1. Background and Basis of Presentation

The accompanying statements of revenues and certain expenses present the results of operations of Route 100 (the “Property”) for the three months ended March 31, 2013 (unaudited) and the year ended December 31, 2012. The Property was acquired by a wholly-owned subsidiary of Terreno Realty Corporation from a third-party seller, Fund VI/Kaiser I and III L.L.C., on June 12, 2013 for approximately $16.7 million. The Property is located in Elkridge, Maryland and consists of two multi-tenant industrial buildings containing 348,810 square feet (unaudited), which were approximately 64% leased to seven tenants (unaudited) at the time of acquisition.

The accompanying statements of revenues and certain expenses have been prepared on the accrual basis of accounting. The statements of revenues and certain expenses have been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission and for inclusion in this Current Report on Form 8-K of Terreno Realty Corporation and are not intended to be a complete presentation of the revenues and expenses of the Property for the three months ended March 31, 2013 and the year ended December 31, 2012 as certain expenses, primarily depreciation and amortization expense and other costs not comparable to the proposed future operations of the Property have been excluded. Management is not aware of any material factors at the Property other than those disclosed above, that would cause the reported financial information not to be necessarily indicative of future operating results.

 

2. Summary of Significant Accounting Policies

Revenue Recognition

Rental revenues from operating leases are recorded on a straight-line basis over the terms of the leases. Tenant reimbursements represent recoveries from tenants for utilities and certain property maintenance expenses. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.

Property Operating Expenses

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

 

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Use of Estimates

The preparation of the statements of revenues and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the statements of revenues and certain expenses.

Interim Statements

The statement of revenues and certain expenses for the three months ended March 31, 2013 is unaudited, however, in the opinion of management of Terreno Realty Corporation, all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year of the operation of the Property.

Tenant Concentration

For the year ended December 31, 2012, three tenants accounted for approximately 50% of rental revenues.

Future Minimum Rental Income

Future minimum rents to be received under non-cancelable lease agreements as of December 31, 2012 were as follows (in thousands):

 

2013

   $ 989   

2014

     777   

2015

     382   

2016

     182   
  

 

 

 

Total

   $ 2,330   
  

 

 

 

 

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Report of Independent Auditors

The Board of Directors and Stockholders of

Terreno Realty Corporation

We have audited the accompanying statement of revenues and certain expenses of Manhattan Beach (the “Property”), for the year ended December 31, 2011, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues and certain expenses that are free of 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. 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 of 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 control relevant to the entity’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 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 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 revenues and certain expenses described in Note 1 of Manhattan Beach for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

 

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Basis of Accounting

As described in Note 1 to the financial statements, the statement of revenues and certain expenses of the Property have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Form 8-K of Terreno Realty Corporation, and is not intended to be a complete presentation of the Property’s revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

San Francisco, California

June 24, 2013

 

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Manhattan Beach

Statements of Revenues and Certain Expenses

For the Period from January 1, 2012 to April 30, 2012 (unaudited)

and the Year Ended December 31, 2011

(in thousands)

 

     For the Period from
January 1, 2012 to April 30,  2012
(unaudited)
     For the Year Ended
December 31, 2011
 

Revenues:

     

Rental

   $ 310       $ 969   

Tenant reimbursements

     15         46   
  

 

 

    

 

 

 

Total revenues

     325         1,015   

Certain expenses:

     

Property operating expenses

     11         30   

Real estate taxes

     15         46   
  

 

 

    

 

 

 

Total expenses

     26         76   
  

 

 

    

 

 

 

Revenues in excess of certain expenses

   $ 299       $ 939   
  

 

 

    

 

 

 

See accompanying notes to statements of revenues and certain expenses.

 

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Manhattan Beach

Notes to Statements of Revenues and Certain Expenses

For the Period from January 1, 2012 to April 30, 2012 (unaudited)

and the Year Ended December 31, 2011

 

1. Background and Basis of Presentation

The accompanying statements of revenues and certain expenses present the results of operations of Manhattan Beach (the “Property”) for the period from January 1, 2012 to April 30, 2012 (unaudited) and the year ended December 31, 2011. The Property was acquired by a wholly-owned subsidiary of Terreno Realty Corporation from a third-party seller, Robert Leonard 1983 Trust, on July 31, 2012 for approximately $14.2 million. The Property is located in Redondo Beach, California and consists of one industrial building containing 103,200 square feet (unaudited), which was 100% leased to one tenant (unaudited) at the time of acquisition.

The accompanying statements of revenues and certain expenses have been prepared on the accrual basis of accounting. The statements of revenues and certain expenses have been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission and for inclusion in this Current Report on Form 8-K of Terreno Realty Corporation and are not intended to be a complete presentation of the revenues and expenses of the Property for the period from January 1, 2012 to April 30, 2012 and the year ended December 31, 2011 as certain expenses, primarily depreciation and amortization expense and other costs not comparable to the proposed future operations of the Property have been excluded. Management is not aware of any material factors at the Property other than those disclosed above, that would cause the reported financial information not to be necessarily indicative of future operating results.

 

2. Summary of Significant Accounting Policies

Revenue Recognition

Rental revenues from operating leases are recorded on a straight-line basis over the terms of the leases. Tenant reimbursements represent recoveries from tenants for utilities and certain property maintenance expenses. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.

Property Operating Expenses

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

 

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Use of Estimates

The preparation of the statements of revenues and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the statements of revenues and certain expenses.

Interim Statements

The statement of revenues and certain expenses for the period from January 1, 2012 to April 30, 2012 is unaudited, however, in the opinion of management of Terreno Realty Corporation, all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year of the operation of the Property.

Tenant Concentration

For the year ended December 31, 2011, one tenant accounted for 100% of rental revenues.

Future Minimum Rental Income

Future minimum rents to be received under non-cancelable lease agreements as of December 31, 2011 were as follows (in thousands):

 

2012

   $ 900   

2013

     998   

2014

     998   
  

 

 

 

Total

   $ 2,896   
  

 

 

 

 

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Report of Independent Auditors

The Board of Directors and Stockholders of

Terreno Realty Corporation

We have audited the accompanying statement of revenues and certain expenses of 26th Street (the “Property”), for the year ended December 31, 2011, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues and certain expenses that are free of 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. 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 of 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 control relevant to the entity’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 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 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 revenues and certain expenses described in Note 1 of 26th Street for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

 

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Basis of Accounting

As described in Note 1 to the financial statements, the statement of revenues and certain expenses of the Property have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Form 8-K of Terreno Realty Corporation, and is not intended to be a complete presentation of the Property’s revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

San Francisco, California

June 24, 2013

 

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26th Street

Statements of Revenues and Certain Expenses

For the Six Months Ended June 30, 2012 (unaudited)

and the Year Ended December 31, 2011

(in thousands)

 

     For the Six Months
Ended June 30, 2012
(unaudited)
     For the Year Ended
December 31, 2011
 

Revenues:

     

Rental

   $ 502       $ 1,002   

Tenant reimbursements

     67         134   
  

 

 

    

 

 

 

Total revenues

     569         1,136   

Certain expenses:

     

Property operating expenses

     25         46   

Real estate taxes

     67         134   

Interest expense

     183         373   
  

 

 

    

 

 

 

Total expenses

     275         553   
  

 

 

    

 

 

 

Revenues in excess of certain expenses

   $ 294       $ 583   
  

 

 

    

 

 

 

See accompanying notes to statements of revenues and certain expenses.

 

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26th Street

Notes to Statements of Revenues and Certain Expenses

For the Six Months Ended June 30, 2012 (unaudited)

and the Year Ended December 31, 2011

 

1. Background and Basis of Presentation

The accompanying statements of revenues and certain expenses present the results of operations of 26th Street (the “Property”) for the six months ended June 30, 2012 (unaudited) and the year ended December 31, 2011. The Property was acquired by a wholly-owned subsidiary of Terreno Realty Corporation from a third-party seller, G&R Avborne Miami, LLC, on September 25, 2012 for approximately $12.1 million. As part of this acquisition, the subsidiary assumed a mortgage loan with an outstanding principal amount of $6.2 million with a fixed annual interest rate of 5.8%. The Property is located in Miami, Florida and consists of two industrial buildings containing 137,594 square feet (unaudited), which were 100% leased to one tenant (unaudited) at the time of acquisition.

The accompanying statements of revenues and certain expenses have been prepared on the accrual basis of accounting. The statements of revenues and certain expenses have been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission and for inclusion in this Current Report on Form 8-K of Terreno Realty Corporation and are not intended to be a complete presentation of the revenues and expenses of the Property for the six months ended June 30, 2012 and the year ended December 31, 2011 as certain expenses, primarily depreciation and amortization expense and other costs not comparable to the proposed future operations of the Property have been excluded. Interest expense is included as a mortgage loan in the amount of $6.2 million was assumed as part of the acquisition and is considered part of the ongoing operations of the property. Management is not aware of any material factors at the Property other than those disclosed above, that would cause the reported financial information not to be necessarily indicative of future operating results.

 

2. Summary of Significant Accounting Policies

Revenue Recognition

Rental revenues from operating leases are recorded on a straight-line basis over the terms of the leases. Tenant reimbursements represent recoveries from tenants for utilities and certain property maintenance expenses. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.

Property Operating Expenses

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

 

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Use of Estimates

The preparation of the statements of revenues and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the statements of revenues and certain expenses.

Interim Statements

The statement of revenues and certain expenses for the six months ended June 30, 2012 is unaudited, however, in the opinion of management of Terreno Realty Corporation, all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year of the operation of the Property.

Tenant Concentration

For the year ended December 31, 2011, one tenant accounted for 100% of rental revenues.

Future Minimum Rental Income

Future minimum rents to be received under non-cancelable lease agreements as of December 31, 2011 were as follows (in thousands):

 

2012

   $  1,015   

2013

     1,035   

2014

     1,056   

2015

     1,067   

2016

     1,088   

Thereafter

     2,393   
  

 

 

 

Total

   $ 7,654   
  

 

 

 

 

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Report of Independent Auditors

The Board of Directors and Stockholders of

Terreno Realty Corporation

We have audited the accompanying statement of revenues and certain expenses of South Main (the “Property”), for the year ended December 31, 2011, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues and certain expenses that are free of 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. 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 of 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 control relevant to the entity’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 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 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 revenues and certain expenses described in Note 1 of South Main for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

 

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Basis of Accounting

As described in Note 1 to the financial statements, the statement of revenues and certain expenses of the Property have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Form 8-K of Terreno Realty Corporation, and is not intended to be a complete presentation of the Property’s revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

San Francisco, California

June 24, 2013

 

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South Main

Statements of Revenues and Certain Expenses

For the Period from January 1, 2012 to November 30, 2012 (unaudited)

and the Year Ended December 31, 2011

(in thousands)

 

     For the Period from
January 1, 2012 to
November 30, 2012
(unaudited)
     For the Year Ended
December 31, 2011
 

Revenues:

     

Rental

   $ 91       $ 98   

Tenant reimbursements

     18         19   
  

 

 

    

 

 

 

Total revenues

     109         117   

Certain expenses:

     

Real estate taxes

     21         23   
  

 

 

    

 

 

 

Total expenses

     21         23   
  

 

 

    

 

 

 

Revenues in excess of certain expenses

   $ 88       $ 94   
  

 

 

    

 

 

 

See accompanying notes to statements of revenues and certain expenses.

 

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Table of Contents

South Main

Notes to Statements of Revenues and Certain Expenses

For the Period from January 1, 2012 to November 30, 2012 (unaudited)

and the Year Ended December 31, 2011

 

1. Background and Basis of Presentation

The accompanying statements of revenues and certain expenses present the results of operations of South Main (the “Property”) for the period from January 1, 2012 to November 30, 2012 (unaudited) and the year ended December 31, 2011. The Property was acquired by a wholly-owned subsidiary of Terreno Realty Corporation from a third-party seller, which consisted of five family trusts, on December 20, 2012 for approximately $12.8 million. The Property is located in Carson, California, consists of 9.6 acres (unaudited) and is 100% ground leased to a third party (the “Lessor”) until June 30, 2015. There are three industrial buildings containing 186,000 square feet (unaudited), which were 100% leased by the Lessor to two tenants (unaudited) at the time of acquisition.

The accompanying statements of revenues and certain expenses have been prepared on the accrual basis of accounting. The statements of revenues and certain expenses have been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission and for inclusion in this Current Report on Form 8-K of Terreno Realty Corporation and are not intended to be a complete presentation of the revenues and expenses of the Property for the period from January 1, 2012 to November 30, 2012 and the year ended December 31, 2011 as certain expenses, primarily depreciation and amortization expense and other costs not comparable to the proposed future operations of the Property have been excluded. Management is not aware of any material factors at the Property other than those disclosed above, that would cause the reported financial information not to be necessarily indicative of future operating results.

 

2. Summary of Significant Accounting Policies

Revenue Recognition

Rental revenues from the ground lease are recorded on a straight-line basis over the term of the lease. Tenant reimbursements represent recoveries from tenants for property taxes. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.

Use of Estimates

The preparation of the statements of revenues and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the statements of revenues and certain expenses.

 

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Table of Contents

Interim Statements

The statement of revenues and certain expenses for the period from January 1, 2012 to November 30, 2012 is unaudited, however, in the opinion of management of Terreno Realty Corporation, all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year of the operation of the Property.

Tenant Concentration

For the year ended December 31, 2011, ground lease payments from one lessee accounted for 100% of rental revenues.

Future Minimum Rental Income

Future minimum rents to be received under non-cancelable lease agreements as of December 31, 2011 were as follows (in thousands):

 

2012

   $  101   

2013

     126   

2014

     126   

2015

     63   
  

 

 

 

Total

   $ 416   
  

 

 

 

 

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF TERRENO REALTY CORPORATION

Terreno Realty Corporation (the “Company”) commenced operations with the completion of its initial public offering (“IPO”) of 8,750,000 shares of common stock and a concurrent private placement of an aggregate of 350,000 shares of common stock to its executive officers at a price per share of $20.00 on February 16, 2010. The net proceeds of the IPO and concurrent private placement were approximately $169.8 million after deducting the full underwriting discount of approximately $10.5 million and other offering expenses of approximately $1.7 million. On January 13, 2012, the Company completed a public follow-on offering of 4,000,000 shares of common stock at a price per share of $14.25. On February 13, 2012, the Company sold an additional 61,853 shares of common stock at a price per share of $14.25 upon the exercise by underwriters of their option to purchase additional shares. The net proceeds of the offering, after deducting the underwriting discount and offering expenses, were approximately $54.7 million. On February 19, 2013, the Company completed an additional follow-on offering of 5,750,000 shares of common stock at a price per share of $16.60. The net proceeds of the offering, after deducting the underwriting discount and offering expenses, were approximately $90.8 million.

On July 19, 2012, the Company completed an offering of 1,840,000 shares of 7.75% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), including the sale of 240,000 shares upon the exercise by the underwriters of their option to purchase additional shares, at a price per share of $25.00. The net proceeds of the preferred offering, after deducting the underwriting discount and estimated offering expenses, were approximately $44.3 million.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2013 is based on the Company’s consolidated balance sheet and reflects the subsequent acquisitions of America’s Gateway and Route 100 and the related borrowings on the term loan payable and revolving credit facility as if such transactions had occurred on March 31, 2013. The unaudited pro forma condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2013 and the year ended December 31, 2012 have been prepared to reflect the incremental effect of the acquisition of properties by the Company during the period from January 1, 2013 to June 24, 2013 (the “2013 Acquisitions”) and the year ended December 31, 2012 (the “2012 Acquisitions”) as if such transactions had occurred on January 1, 2012.

 

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Table of Contents

The following table summarizes the 2013 and 2012 Acquisitions:

 

Property Name

  

Location

  

Acquisition Date

   Purchase Price
(in thousands)
     Assumed
Debt
 
107th Avenue    Medley, FL    March 6, 2013    $ 5,095       $  —     
SeaTac 8th Ave    Burien, WA    March 21, 2013      6,450         —     
America’s Gateway    Miami, FL    May 22, 2013      23,725         —     
Route 100    Elkridge, MD    June 12, 2013      16,650         —     
        

 

 

    

 

 

 

2013 Acquisitions

           51,920         —     
Global Plaza    Sterling, VA    March 16, 2012    $ 6,100         —     
Garfield    Commerce, CA    May 30, 2012      52,400         —     
Whittier    Whittier, CA    June 12, 2012      16,100         —     
Caribbean    Sunnyvale, CA    July 3, 2012      33,718         —     
78th Avenue    Doral, FL    July 23, 2012      4,200         —     
Manhattan Beach    Redondo Beach, CA    July 31, 2012      14,150         —     
Carlton Court    South San Francisco, CA    August 2, 2012      3,575         —     
Troy Hill    Elkridge, MD    August 17, 2012      6,664         3,628   
26th Street    Miami, FL    September 25, 2012      12,100         6,159   
Sweitzer    Laurel, MD    October 15, 2012      6,950         —     
17600 West Valley Highway    Tukwila, WA    December 14, 2012      8,000         5,045   
631 Brennan    San Jose, CA    December 19, 2012      4,176         —     
South Main    Carson, CA    December 20, 2012      12,750         —     
        

 

 

    

 

 

 

2012 Acquisitions

           180,883         14,832   
        

 

 

    

 

 

 

Total

         $ 232,803       $  14,832   
        

 

 

    

 

 

 

The unaudited pro forma financial information is not necessarily indicative of what the Company’s results of operations or financial condition would have been assuming the acquisition of properties had occurred at the beginning of the periods presented, nor is it indicative of the Company’s results of operations or financial condition for future periods. In management’s opinion, all adjustments necessary to reflect the effects of these transactions have been made. The unaudited pro forma financial information and accompanying notes should be read in conjunction with the Company’s financial statements included in the 2012 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the three months ended March 31, 2013.

 

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Table of Contents

Terreno Realty Corporation

Pro Forma Condensed Consolidated Balance Sheet

As of March 31, 2013

(in thousands – except share and per share data)

(Unaudited)

 

     Terreno Realty
Corporation (1)
    America’s
Gateway (2)
     Route 100 (3)     Pro Forma
Terreno Realty
Corporation
 

ASSETS

         

Investments in real estate, net

   $ 441,210      $ 23,725       $ 16,650      $ 481,585   

Cash and cash equivalents

     18,166        1,491         (101     19,556   

Deferred financing costs, net

     2,412        —           —          2,412   

Other assets, net

     6,291        —           —          6,291   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total assets

   $ 468,079      $ 25,216       $ 16,549      $ 509,844   
  

 

 

   

 

 

    

 

 

   

 

 

 

LIABILITIES AND EQUITY

         

Liabilities

         

Credit facility

   $ —        $ —         $ 16,500      $ 16,500   

Term loan payable

     —          25,000         —          25,000   

Mortgage loans payable

     110,795        —           —          110,795   

Security deposits

     2,290        216         49        2,555   

Intangible liabilities

     4,073        —           —          4,073   

Dividends payable

     2,307        —           —          2,307   

Accounts payable and other liabilities

     4,885        —           —          4,885   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     124,350        25,216         16,549        166,115   

Commitments and contingencies

         

Equity

         

Stockholders’ equity

         

Preferred stock: $0.01 par value, 100,000,000 shares authorized, and 1,840,000 shares (liquidation preference of $25.00 per share) issued and outstanding

     46,000        —           —          46,000   

Common stock: $0.01 par value, 400,000,000 shares authorized, and 19,224,946 shares issued and outstanding

     192        —           —          192   

Additional paid-in capital

     301,797        —           —          301,797   

Accumulated deficit

     (4,260     —           —          (4,260
  

 

 

   

 

 

    

 

 

   

 

 

 

Total stockholders’ equity

     343,729        —           —          343,729   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities and equity

   $ 468,079      $ 25,216       $ 16,549      $ 509,844   
  

 

 

   

 

 

    

 

 

   

 

 

 

See accompanying notes to unaudited pro forma condensed consolidated balance sheet.

 

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Terreno Realty Corporation

Notes to Pro Forma Condensed Consolidated Balance Sheet

As of March 31, 2013

(Unaudited)

 

(1) Represents the unaudited historical consolidated balance sheet of Terreno Realty Corporation (the “Company”) as of March 31, 2013. See the historical consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.

 

(2) Reflects the acquisition of America’s Gateway as if it had occurred on March 31, 2013 for approximately $23.7 million. The acquisition was funded by a $25.0 million term loan borrowing.

 

(3) Reflects the acquisition of Route 100 as if it had occurred on March 31, 2013 for approximately $16.7 million. The acquisition was funded by cash on hand and borrowings under the Company’s revolving credit facility.

 

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Table of Contents

Terreno Realty Corporation

Pro Forma Condensed Consolidated Statement of Operations

and Comprehensive Income (Loss)

For the Three Months Ended March 31, 2013

(in thousands – except share and per share data)

(Unaudited)

 

     Terreno Realty
Corporation (1)
    2013
Acquisitions
    Pro Forma
Adjustments
    Pro Forma
Terreno
Realty
Corporation
 

REVENUES

        

Rental revenues

   $ 10,487      $ 1,018 (2)    $ —        $ 11,505   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     10,487        1,018        —          11,505   
  

 

 

   

 

 

   

 

 

   

 

 

 

COSTS AND EXPENSES

        

Property operating expenses

     2,990        349 (2)      —          3,339   

Depreciation and amortization

     2,737        337 (2)      —          3,074   

General and administrative

     1,994        —          —          1,994   

Acquisition costs

     457        —          (457 )(3)      —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     8,178        686        (457     8,407   
  

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INCOME (EXPENSE)

        

Interest and other income

     6        —          —          6   

Interest expense, including amortization

     (1,521     —          (192 )(4)      (1,713
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and expenses

     (1,515     —          (192     (1,707
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     794        332        265        1,391   

Preferred stock dividends

     (891     —           —           (891
  

 

 

   

 

 

   

 

 

   

 

 

 

Net and comprehensive (loss) income available to common stockholders

   $ (97   $ 332      $ 265      $ 500   
  

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER COMMON SHARE—BASIC AND DILUTED:

        

Net (loss) income available to common stockholders

   $ (0.01       $ 0.03   
  

 

 

   

 

 

   

 

 

   

 

 

 

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

     15,792,553          3,258,333 (5)      19,050,886   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to unaudited pro forma condensed consolidated statement of operations and comprehensive income (loss).

 

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Table of Contents

Terreno Realty Corporation

Notes to Pro Forma Condensed Consolidated Statement of Operations

and Comprehensive Income (Loss)

For the Three Months Ended March 31, 2013

(Unaudited)

 

(1) Represents the unaudited historical consolidated operations of Terreno Realty Corporation (the “Company”) for the three months ended March 31, 2013. See the historical condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.

 

(2) The following table sets forth the incremental rental revenues, operating expenses and depreciation and amortization of the 2013 Acquisitions for the three months ended March 31, 2013 based on the historical and pro forma operations of such properties for the periods prior to acquisition by the Company as if the properties were acquired on January 1, 2012 (dollars in thousands).

 

     Acquisition Date      Rental Revenues      Operating Expenses      Depreciation and
Amortization
 

107th Avenue

     March 6, 2013       $ 112       $ 23       $ 34   

SeaTac 8th Ave

     March 21, 2013         152         16         40   

America’s Gateway

     May 22, 2013         405         208         143   

Route 100

     June 12, 2013         349         102         120   
     

 

 

    

 

 

    

 

 

 

Total 2013 Acquisitions

      $ 1,018       $ 349       $ 337   
     

 

 

    

 

 

    

 

 

 

Rental revenues set forth above include adjustments for straight-line rents and amortization of lease intangibles.

 

(3) Reflects the adjustment to acquisitions costs as if the 2013 Acquisitions had occurred on January 1, 2012.

 

(4) Reflects the adjustment to interest expense as if the $25.0 million term loan at an interest rate of LIBOR plus the applicable LIBOR margin of 1.65% and draws of approximately $16.5 million on the Company’s revolving credit facility at an interest rate of LIBOR plus the applicable LIBOR margin of 1.65% had occurred on January 1, 2012 to fund the respective acquisitions.

 

(5) Reflects the adjustment to the basic and diluted weighted average common shares outstanding as if the February 19, 2013 follow-on offering of 5,750,000 shares of common stock at a price per share of $16.60 had occurred on January 1, 2012.

 

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Terreno Realty Corporation

Pro Forma Condensed Consolidated Statement of Operations

and Comprehensive Income (Loss)

For the Year Ended December 31, 2012

(in thousands – except share and per share data)

(Unaudited)

 

     Terreno Realty
Corporation (1)
    2012
Acquisitions
    2013
Acquisitions
    Pro Forma
Adjustments
    Pro Forma
Terreno
Realty
Corporation
 

REVENUES

          

Rental revenues

   $ 31,173      $ 6,858 (2)    $ 4,944 (2)    $ —        $ 42,975   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     31,173        6,858        4,944        —          42,975   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

COSTS AND EXPENSES

          

Property operating expenses

     8,986        1,571 (2)      1,405 (2)      —          11,962   

Depreciation and amortization

     9,133        2,240 (2)      1,423 (2)      —          12,796   

General and administrative

     6,403        —          —          —          6,403   

Acquisition costs

     2,238        —          —          (2,238 )(3)      —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     26,760        3,811        2,828        (2,238     31,161   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INCOME (EXPENSE)

          

Interest and other income

     37        —          —          —          37   

Interest expense, including amortization

     (5,472     (633 )(2)      —   (2)      (783 )(4)      (6,888
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and expenses

     (5,435     (633     —          (783     (6,851
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations

     (1,022     2,414        2,116        1,455        4,963   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations

          

Income from discontinued operations

     1,050        —           —           —           1,050   

Gain on sales of real estate investments

     4,037        —           —           —           4,037   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from discontinued operations

     5,087        —           —           —           5,087   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     4,065        2,414        2,116        1,455        10,050   

Preferred stock dividends

     (1,604     —           —           (1,961 )(5)      (3,565
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net and comprehensive income (loss)

     2,461        2,414        2,116        (506     6,485   

Allocation to participating securities

     (24     —           —           —           (24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net and comprehensive income (loss) available to common stockholders

   $ 2,437      $ 2,414      $ 2,116      $ (506   $ 6,461   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER COMMON SHARE—BASIC AND DILUTED:

          

(Loss) income from continuing operations available to common stockholders

   $ (0.20         $ 0.06   

Income from discontinued operations

     0.39              0.27   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

   $ 0.19            $ 0.34   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

     13,135,440            5,888,794 (6)      19,024,234   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to unaudited pro forma condensed consolidated statement of operations and comprehensive income (loss).

 

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Terreno Realty Corporation

Notes to Pro Forma Condensed Consolidated Statement of Operations

and Comprehensive Income (Loss)

For the Year Ended December 31, 2012

(Unaudited)

 

(1) Represents the audited historical consolidated operations of Terreno Realty Corporation (the “Company”) for the year ended December 31, 2012. See the historical consolidated financial statements and notes thereto included in the Company’s 2012 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 15, 2013.

 

(2) The following table sets forth the incremental rental revenues, operating expenses, depreciation and amortization and interest expense of the 2013 and 2012 Acquisitions for the year ended December 31, 2012 based on the historical and pro forma operations of such properties for the periods prior to acquisition by the Company as if the properties were acquired January 1, 2012 (dollars in thousands).

 

     Acquisition Date      Rental Revenues      Operating Expenses      Depreciation and
Amortization
     Interest
Expense
 

Global Plaza

     March 16, 2012       $ —         $ —         $ —         $ —     

Garfield

     May 30, 2012         1,521         515         634         —     

Whittier

     June 12, 2012         —           —           —           —     

Caribbean

     July 3, 2012         1,812         356         302         —     

78th Avenue

     July 23, 2012         —           100         29         —     

Manhattan Beach

     July 31, 2012         651         116         229         —     

Carlton Court

     August 2, 2012         199         49         58         —     

Troy Hill

     August 17, 2012         343         85         173         118   

26th Street

     September 25, 2012         895         117         289         228   

Sweitzer

     October 15, 2012         548         86         274         —     

17600 West Valley Highway

     December 14, 2012         760         82         123         287   

631 Brennan

     December 19, 2012         —           —           —           —     

South Main

     December 20, 2012         129         65         129         —     
     

 

 

    

 

 

    

 

 

    

 

 

 

Total 2012 Acquisitions

      $ 6,858       $ 1,571       $ 2,240       $ 633   
     

 

 

    

 

 

    

 

 

    

 

 

 
     Acquisition Date      Rental Revenues      Operating
Expenses
     Depreciation and
Amortization
     Interest
Expense
 

107th Avenue

     March 6, 2013       $ 628       $ 131       $ 190       $ —     

SeaTac 8th Ave

     March 21, 2013         694         73         183         —     

America’s Gateway

     May 22, 2013         2,127         746         571         —     

Route 100

     June 12, 2013         1,495         455         479         —     
     

 

 

    

 

 

    

 

 

    

 

 

 

Total 2013 Acquisitions

      $ 4,944       $ 1,405       $ 1,423       $ —     
     

 

 

    

 

 

    

 

 

    

 

 

 

Global Plaza, Whittier and 631 Brennan were acquired from unrelated third-parties through a sale/leaseback transaction and did not have historical revenues and expenses as the properties were accepted, owned and operated by the owners. As such, no property operations have been reflected in the accompanying unaudited pro forma condensed consolidated statement of operations and comprehensive income (loss).

Rental revenues set forth above include adjustments for straight-line rents and amortization of lease intangibles.

 

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(3) Reflects the adjustment to acquisition costs as if the 2013 and 2012 Acquisitions had occurred on January 1, 2012.

 

(4) Reflects the adjustment to interest expense as if the $25.0 million term loan at an interest rate of LIBOR plus the applicable LIBOR margin of 1.65% and draws of approximately $16.5 million on the Company’s revolving credit facility at an interest rate of LIBOR plus the applicable LIBOR margin of 1.65% had occurred on January 1, 2012 to fund the respective acquisition.

 

(5) Reflects the adjustment to preferred stock dividends as if the 7.75% Series A Preferred Stock offering of 1,840,000 shares at a price per share of $25.00 had occurred on January 1, 2012.

 

(6) Reflects the adjustment to the basic and diluted weighted average common shares outstanding as if the January 13, 2012 follow-on offering of 4,000,000 shares of common stock at a price per share of $14.25, the February 13, 2012 sale of 61,853 shares of common stock at a price per share of $14.25 upon the exercise by the underwriters of their option to purchase additional shares and the February 19, 2013 follow-on offering of 5,750,000 shares of common stock at a price per share of $16.60 had occurred on January 1, 2012.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

Terreno Realty Corporation

Date: June 24, 2013    

By:

 

  /s/ Jaime J. Cannon

      Jaime J. Cannon
      Chief Financial Officer

 

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Exhibit Index

 

Exhibit

Number

  

Title

23.1*    Consent of Independent Auditors

 

* Filed herewith

 

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