Form 8-K/A
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K/A

(Amendment No. 1)

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): January 29, 2015

 

 

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/A 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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This Form 8-K/A amends and supplements the registrant’s Form 8-K, filed on February 4, 2015 reporting the acquisition of V Street (the “Initial Report”), to include the historical financial statements and pro forma financial information required by Item 9.01(a) and (b) of Form 8-K. This Form 8-K/A should be read in conjunction with the Initial Report.

Item 9.01. Financial Statements and Exhibits

 

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

  

(i) Statement of Revenues and Certain Expenses of V Street

  

Report of Independent Auditors

     3   

Statement of Revenues and Certain Expenses for the year ended December 31, 2014

     5   

Notes to the Statement of Revenues and Certain Expenses

     6   

(b) Unaudited Pro Forma Condensed Consolidated Information

  

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2014

     9   

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2014

     10   

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2014

     11   

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December  31, 2014

     12   

(d) Exhibits

 

Exhibit

Number

  

Title

23.1*    Consent of Independent Auditor

 

* 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 V Street (the “Property”), for the year ended December 31, 2014, 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 statement of revenues and certain expenses described in Note 1 of V Street for the year ended December 31, 2014, 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/A 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
March 16, 2015

 

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V Street

Statement of Revenues and Certain Expenses

For the Year Ended December 31, 2014

(in thousands)

 

Revenues:

Rental

$ 5,347   

Tenant Reimbursements

  1,612   
  

 

 

 

Total revenues

  6,959   

Certain expenses:

Property operating expenses

  1,188   

Real estate taxes

  638   
  

 

 

 

Total expenses

  1,826   
  

 

 

 

Revenues in excess of certain expenses

$ 5,133   
  

 

 

 

See accompanying notes to statement of revenues and certain expenses.

 

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V Street

Notes to Statement of Revenues and Certain Expenses

For the Year Ended December 31, 2014

1. Background and Basis of Presentation

The accompanying statement of revenues and certain expenses present the results of operations of V Street (the “Property”) for the year ended December 31, 2014. The Property was acquired by a wholly-owned subsidiary of Terreno Realty Corporation from a third-party seller, SMC-United Industrial Limited Partnership on January 29, 2015 for approximately $115.5 million. The Property is located in Washington, D.C. and consists of six distribution buildings containing 820,207 square feet (unaudited) at the time of acquisition.

The accompanying statement of revenues and certain expenses has been prepared on the accrual basis of accounting. The statement of revenues and certain expenses has 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/A of Terreno Realty Corporation and are not intended to be a complete presentation of the revenues and expenses of the Property for the year ended December 31, 2014 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 statement of revenues and certain expenses in conformity with accounting principles generally accepted in the United States of America 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 statement of revenues and certain expenses.

Tenant Concentration

For the year ended December 31, 2014, two tenants accounted for approximately 50% of total revenues.

Future Minimum Rental Income

Future minimum rents to be received under non-cancelable lease agreements as of December 31, 2014 were as follows (in thousands):

 

2015

$ 5,477   

2016

  4,596   

2017

  3,521   

2018

  2,645   

2019

  1,828   

Thereafter

  2,353   
  

 

 

 

Total

$ 20,420   
  

 

 

 

 

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF TERRENO REALTY CORPORATION

The following unaudited pro forma financial information of Terreno Realty Corporation (the “Company”) is based on the historical financial statements of the Company. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2014 is based on the Company’s consolidated balance sheet and reflects the subsequent acquisitions of 10100 NW 25th, V Street, 9070 Junction and NW 81st and the related borrowings on the term loans payable as if such transactions had occurred on December 31, 2014. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2014 has been prepared to reflect the incremental effect of the acquisition of properties by the Company during the period from January 1, 2015 to March 13, 2015 (the “2015 Acquisitions”) and the year ended December 31, 2014 (the “2014 Acquisitions”) as if such transactions had occurred on January 1, 2014 for the December 31, 2014 statement.

The following table summarizes the 2015 and 2014 Acquisitions (in thousands):

 

Property Name

  

Location

 

Acquisition Date

   Purchase Price
(in thousands)
     Assumed Debt  

SW 34th Street

   Renton, WA   February 11, 2014    $ 6,600       $ 2,764   

Parkway

   Hanover, MD   March 26, 2014      18,000         —     

Pulaski

   Bayonne, NJ   March 31, 2014      9,200         —     

747 Glasgow

   Inglewood, CA   April 22, 2014      3,450         —     

Hampton

   Capitol Heights, MD   May 13, 2014      18,050         —     

Burroughs

   San Leandro, CA   May 14, 2014      13,328         —     

California

   Corona, CA   June 5, 2014      7,815         —     

Las Hermanas

   Compton, CA   June 12, 2014      4,020         —     

South Main II

   Carson, CA   July 18, 2014      8,500         —     

79th Ave South

   Kent, WA   July 25, 2014      2,770         —     

Auburn 1307

   Auburn, WA   August 22, 2014      9,530         —     

3401 Lind

   Renton, WA   October 3, 2014      9,975         5,657   

900 Hart

   Rahway, NJ   October 8, 2014      7,205         —     

Kent 216th

   Kent, WA   October 24, 2014      9,214         —     

9020 Junction

   Annapolis Junction, MD   December 17, 2014      13,800         —     

11300 NW 131st

   Medley, FL   December 19, 2014      8,925         —     

Terminal Way

   Avenel, NJ   December 25, 2014      7,445         —     

14605 Miller

   Fontana, CA   December 2, 2014      22,899         —     

Park Union City

   Union City, CA   December 10, 2014      23,800         —     

75th Ave

   Landover, MD   December 17, 2014      31,215         —     
       

 

 

    

 

 

 

Subtotal 2014 Acquisitions

  235,741      8,421   

10100 NW 25th

Doral, FL January 23, 2015 $ 9,875    $ —     

V Street

Washington, D.C. January 29, 2015   115,500      —     

9070 Junction

Annapolis Junction, MD February 19, 2015   10,360      —     

NW 81st

Medley, FL February 27, 2015   8,500      —     
       

 

 

    

 

 

 

Subtotal 2015 Acquisitions

  144,235      —     
       

 

 

    

 

 

 

Total

$ 379,976    $ 8,421   
       

 

 

    

 

 

 

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 on 2014 Form 10-K for the year ended December 31, 2014.

 

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Terreno Realty Corporation

Pro Forma Condensed Consolidated Balance Sheet

As of December 31, 2014

(in thousands – except share and per share data)

(Unaudited)

 

     Terreno Realty
Corporation (1)
    V Street (2)     Other 2015
Acquisitions (3)
    Pro Forma
Terreno Realty
Corporation
 

ASSETS

        

Investments in real estate, net

   $ 862,142      $ 115,500      $ 28,735      $ 1,006,377   

Cash and cash equivalents

     197,564        (115,186     (28,648     53,730   

Deferred financing costs, net

     2,986        —          —          2,986   

Other assets, net

     14,074        —          —          14,074   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 1,076,766    $ 314    $ 87    $ 1,077,167   
  

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

Liabilities

Credit facility

$ —      $ —      $ —      $ —     

Term loan payable

  200,000      —        —        200,000   

Mortgage loans payable

  104,501      —        —        104,501   

Security deposits

  5,315      314      87      5,716   

Intangible liabilities

  3,556      —        —        3,556   

Dividends payable

  6,859      —        —        6,859   

Accounts payable and other liabilities

  9,499      —        —        9,499   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

  329,730      314      87      330,131   

Commitments and contingencies

Equity

Stockholders’ equity

Preferred stock: $0.01 par value, 100,000,000 shares authorized, and 1,840,000 (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 42,869,463 shares issued and outstanding

  428      —        —        428   

Additional paid-in capital

  700,755      —        —        700,755   

Retained earnings

  —        —        —        —     

Accumulated other comprehensive loss

  (147   —        —        (147
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

  747,036      —        —        747,036   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

$ 1,076,766    $ 314    $ 87    $ 1,077,167   
  

 

 

   

 

 

   

 

 

   

 

 

 

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 December 31, 2014

(Unaudited)

 

(1) Represents the audited historical consolidated balance sheet of Terreno Realty Corporation (the “Company”) for the year ended December 31, 2014. See the historical consolidated financial statements and notes thereto included in the Company’s 2014 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 11, 2015.
(2) Reflects the acquisition of V Street as if it had occurred on December 31, 2014 for approximately $115.5 million. The acquisition was funded by cash on hand.
(3) Reflects the acquisitions of 10100 NW 25th, 9070 Junction and NW 81st for approximately $28.7 million. The acquisitions were funded by cash on hand.

 

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Terreno Realty Corporation

Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2014

(in thousands – except share and per share data)

(Unaudited)

 

     Terreno Realty
Corporation (1)
    2015
Acquisitions
    2014
Acquisitions
    Pro Forma
Adjustments
    Pro Forma
Terreno Realty
Corporation
 

REVENUES

          

Rental revenues

   $ 68,875      $ 7,379 (2)    $ 12,845 (2)    $ —        $ 76,254   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

  68,875      7,379      12,845      —        76,254   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

COSTS AND EXPENSES

Property operating expenses

  19,161      1,562 (2)    3,775 (2)    —        20,723   

Depreciation and amortization

  19,170      3,195 (2)    2,779 (2)    —        22,365   

General and administrative

  9,496      —        —        —        9,496   

Acquisition costs

  3,740      —        —        (3,740 )(3)    —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

  51,567      4,757      6,554      (3,740   52,584   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INCOME (EXPENSE)

Interest and other income

  1      —        —        —        1   

Interest expense, including amortization

  (6,591   —        (158   (2,245 )(4)    (8,836
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and expenses

  (6,590   —        (158   (2,245   (8,835
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  10,718      2,622      6,134      1,495      14,835   

Preferred stock dividends

  (3,565   —        —        —        (3,565
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income, net of preferred stock dividends

  7,153      2,622      6,134      1,495      11,270   

Allocation to participating securities

  (27   —        —        —        (27
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders, net of preferred stock dividends

$ 7,126    $ 2,622    $ 6,134    $ 1,495    $ 11,243   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER COMMON SHARE - BASIC AND DILUTED:

Income from continuing operations available to common stockholders, net of preferred stock dividends

$ 0.23      —        —        —      $ 0.26   

Income from discontinued operations

  —        —        —        —        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders, net of preferred stock dividends

$ 0.23      —        —        —      $ 0.26   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

  30,433,017      —        —        12,268,767 (5)    42,701,784   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to unaudited pro forma condensed consolidated statement of operations.

 

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Terreno Realty Corporation

Notes to Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2014

(Unaudited)

 

(1) Represents the audited historical consolidated operations of Terreno Realty Corporation (the “Company”) for the year ended December 31, 2014. See the historical consolidated financial statements and notes thereto included in the Company’s 2014 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 11, 2015.
(2) The following table sets forth the incremental rental revenues, operating expenses, depreciation and amortization and interest expense of the 2015 and 2014 Acquisitions for the year ended December 31, 2014 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, 2014 (dollars in thousands).

 

    

Acquisition Date

   Rental
Revenues
     Operating
Expenses
     Depreciation and
Amortization
     Interest Expense      Net (loss) income  

SW 34th Street

   February 11, 2014    $ 72       $ 9       $ 23       $ 15       $ 25   

Parkway

   March 26, 2014      529         152         124         —           253   

Pulaski

   March 31, 2014      211         65         106         —           40   

747 Glasgow

   April 22, 2014      52         31         22         —           (1

Hampton

   May 13, 2014      504         80         234         —           191   

Burroughs

   May 14, 2014      393         89         121         —           183   

California

   June 5, 2014      243         40         111         —           93   

Las Hermanas

   June 12, 2014      135         40         21         —           73   

South Main II

   July 18, 2014      482         163         37         —           282   

79th Ave South

   July 25, 2014      100         79         27         —           (6

Auburn 1307

   August 22, 2014      413         145         179         —           89   

Lind

   October 3, 2014      657         152         112         143         251   

Hart

   October 8, 2014      358         197         74         —           87   

Kent 216

   October 24, 2014      642         175         127         —           341   

Junction

   December 17, 2014      1,226         175         255         —           795   

131st

   December 19, 2014      669         138         146         —           385   

Terminal Way

   December 25, 2014      557         165         110         —           283   

14605 Miller

   December 2, 2014      1,715         394         162         —           1,159   

Park Union City

   December 10, 2014      1,777         541         262         —           974   

75th Ave

   December 17, 2014      2,110         945         527         —           638   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total 2014 Acquisitions

$ 12,845    $ 3,775    $ 2,779    $ 158    $ 6,134   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
    

Acquisition Date

   Rental
Revenues
     Operating
Expenses
     Depreciation and
Amortization
     Interest Expense      Net (loss) income  

25th Street

   January 23, 2015      833         194         270         —           369   

V Street

   January 29, 2015      6,209         1,188         2,704         —           2,317   

9070 Junction

   February 19, 2015      337         180         221         —           (64

NW 81st

   February 27, 2015      —           —           —           —           —     
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total 2015 Acquisitions

$ 7,379    $ 1,562    $ 3,195    $ —      $ 2,622   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

NW 81st was acquired from an unrelated third-party after a sale/leaseback transaction and did not have historical revenues and expenses as the property was owned and operated by the tenant. As such, no property operations have been reflected in the accompanying unaudited pro forma condensed consolidated statement of operations.

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 acquisitions costs as if the 2015 and 2014 Acquisitions had occurred on January 1, 2014.
(4) Reflects the adjustment to interest expense as if the $50.0 million term loan at an interest rate of LIBOR plus the applicable LIBOR margin of 1.75% and the $100.0 million term loan at an interest rate of LIBOR plus the applicable LIBOR margin of 1.50% had occurred on January 1, 2014.
(5) Reflects the adjustment to the basic and diluted weighted average common shares outstanding as if the May 22, 2014 follow-on offering of 8,050,000 shares of common stock at a price per share of $17.75 and the December 9, 2014 follow-on offering of 9,775,000 shares of common stock at a price per share of $19.60 had occurred on January 1, 2014.

 

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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: March 16, 2015 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 Auditor

 

* Filed herewith

 

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