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Section 1: 8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

____________________

 

FORM 8-K/A

____________________

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): February 28, 2019 (December 17, 2018)

____________________

 

Plymouth Industrial REIT Inc.
(Exact name of registrant as specified in its charter)

____________________

 

Maryland 001-38106 27-5466153
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)

(I.R.S. Employer
Identification No.)

     
 

260 Franklin Street, 7th Floor

Boston, MA

02110

 
  (Address of Principal Executive Offices)
(Zip Code)
 
     
  (617) 340-3814  
(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:

 

  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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Explanatory Note

 

On December 17, 2018, Plymouth Industrial REIT, Inc. (the “Company”) announced that on December 14, 2018, it completed the previously announced acquisition of a 20-building light industrial and flex property located in Jacksonville, Florida (the “Jacksonville Properties”) for an aggregate purchase price of $97.1 million, consisting of approximately $34 million in cash from the proceeds of the Company’s issuance of its Series B Convertible Preferred Stock and $63.1 million funded from borrowings under the loan agreement between KeyBank National Association and Plymouth Industrial OP, LP and certain of its subsidiaries.

 

This Current Report on Form 8-K/A amends Item 9.01 of the original Form 8-K filed on December 17, 2018 to present the historical financial statements and the unaudited pro forma financial information required to be filed by Item 9.01 (a) and (b), for the Company’s acquisition of the Jacksonville Properties.

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial Statements of Business Acquired

 

The statements of revenues and certain operating expenses of the Jacksonville Properties for the nine months ended September 30, 2018 (unaudited) and the year ended December 31, 2017, along with the accompanying notes to the statements of revenues and certain operating expenses for the periods presented, are filed as Exhibit 99.1 to this Current Report on Form 8-K/A and are incorporated by reference herein.

 

(b) Pro-forma Financial Information

 

This Current Report on Form 8-K/A includes the Company’s unaudited pro forma condensed consolidated balance sheet as of September 30, 2018, the Company’s unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2018 and for the year ended December 31, 2017 and notes to the unaudited pro forma condensed consolidated financial statements. This unaudited condensed consolidated financial information is filed as Exhibit 99.2 to this Current Report on Form 8-K/A and is incorporated herein by reference.

 

This unaudited pro forma financial information is not necessarily indicative of the expected financial position or results of the Company’s operations for any future period. Differences could result from numerous factors, including future changes in the Company’s portfolio of investments, changes in interest rates, changes in the Company’s capital structure, changes in property level operating expenses, changes in property level revenues, including rents expected to be received from the Company’s existing leases or leases the Company may enter into during and after 2018, and for other reasons.

 

(d) Exhibits

 

23.1 Consent of Independent Auditors
   
99.1 Statements of revenues and certain operating expenses of the Jacksonville Properties for the nine months ended September 30, 2018 (unaudited) and the year ended December 31, 2017, and the notes to the statements of revenues and certain operating expenses for the periods presented.
   
99.2 Unaudited pro forma condensed consolidated balance sheet as of September 30, 2018, unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2018 and for the year ended December 31, 2017 and notes to the unaudited pro forma condensed consolidated financial statements.
   

 

 

 

 

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.

 

  Plymouth Industrial REIT Inc.
     
     
  By: /s/  Jeffrey E. Witherell          
    Jeffrey E. Witherell
    Chief Executive Officer

 

Dated: February 28, 2019

 

 

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Section 2: EX-23.1 (CONSENT OF INDEPENDENT AUDITORS)

Exhibit 23.1

 

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement of Plymouth Industrial REIT, Inc. on Form S-3 (File No. 333-226438) of our report dated February 27, 2019 with respect to our audit of the Statements of Revenues and Certain Expenses of Jacksonville Properties for the year ended December 31, 2017.

 

 

 

/s/ Frazier & Deeter, LLC

Atlanta, Georgia

February 27, 2019

 

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Section 3: EX-99 (STATEMENTS OF REVENUES AND CERTAIN OPERATING EXPENSES OF THE JACKSONVILLE PROPERTIES)

Exhibit 99.1

 

 

 

 

 

JACKSONVILLE PROPERTIES

STATEMENTS OF REVENUES AND
CERTAIN OPERATING EXPENSES

FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2018 (UNAUDITED) AND THE
YEAR ENDED DECEMBER 31, 2017 (AUDITED)

 

 

 

 

JACKSONVILLE PROPERTIES

Table of Contents

 

  Page
Independent Auditors' Report 1 - 2
Financial Statements:  
Statements of Revenues and Certain Operating Expenses 3
Notes to Statements of Revenues and Certain Operating Expenses 4 - 6

 

 

 

 

 

INDEPENDENT AUDITORS' REPORT

 

 

To the Members of Plymouth Industrial REIT, Inc.
Atlanta, Georgia

 

We have audited the accompanying statement of revenues and certain operating expenses of the Jacksonville Properties (the "Properties") for the year ended December 31, 2017, and the related notes to the financial statement.

 

Management's Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of this financial statement in accordance with accounting principles generally accepted in the United States of America and in accordance with applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial statement that is free from material misstatement, whether due to fraud or error.

 

Auditors' Responsibility

 

Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statement, 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 financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 financial statement.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Page 1 

 

Opinion

 

In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain operating expenses of the Properties for the year ended December 31, 2017, in accordance with accounting principles generally accepted in the United States of America and in accordance with applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired.

 

Emphasis of Matter

 

We draw attention to Note 2 to the accompanying financial statement, which describes that the statement of revenues and certain operating expenses of the Properties was prepared for the purpose of complying with the rules of the Securities and Exchange Commission (for the inclusion on Form 8-K of Plymouth Industrial REIT, Inc.) and is not intended to be a complete presentation of the Properties' revenues and expenses. Our opinion has not been modified with respect to this matter.

 

/s/ Frazier & Deeter, LLC

Atlanta, Georgia

February 27, 2019

Page 2 

 

JACKSONVILLE PROPERTIES

Statements of Revenues and Certain Operating Expenses

 

   Nine Months
Ended
September 30,
2018
(Unaudited)
   Year Ended
December 31,
2017
(Audited)
 
Revenues:          
Rental revenue  $6,311,938   $7,747,366 
Tenant reimbursements   2,481,127    3,044,973 
Other revenue   56,599    1,807 
Total revenues   8,849,664    10,794,146 
Certain operating expenses:          
Property management fee   286,297    373,222 
Selling, general, & administrative   543,152    591,320 
Miscellaneous expense   45,309    64,271 
Repairs and maintenance   468,262    711,513 
Utilities   208,194    289,334 
Property tax   982,343    1,271,647 
Insurance   137,003    139,736 
Total certain operating expenses   2,670,560    3,441,043 
Revenues in excess of certain operating expenses  $6,179,104   $7,353,103 

 

 

 

The accompanying notes are an integral part
of the statements of revenues and certain operating expenses.

 

Page 3 

 

JACKSONVILLE PROPERTIES

Notes to Statements of Revenues and Certain Operating Expenses

For the Nine Months Ended September 30, 2018 (Unaudited) and the Year Ended December 31, 2017 (Audited)

Note 1 - Description of real estate property acquired:

On December 14, 2018, Plymouth Industrial REIT Incorporated ("Plymouth") acquired the Jacksonville Properties (the "Properties") from Commonwealth Commercial Properties (the "Company"). The Properties are comprised of three separate business parks, totaling approximately 1,100,000 square feet. Total consideration for the acquisition was approximately $97.1 million.

Note 2 - Basis of accounting:

The accompanying statements of revenues and certain operating expenses are presented in conformity with accounting principles generally accepted in the United States of America and in accordance with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission (the "SEC"), which requires certain information with respect to real estate operations be included with certain filings with the SEC. Accordingly, the statements exclude certain historical income and expenses that are not comparable to the proposed future operations of the property such as certain ancillary income, amortization, depreciation, interest and corporate expenses. Therefore, the statements will not be comparable to the statements of operations of the Properties after their acquisition by Plymouth and are not intended to be a complete representation of the Properties' revenues and expenses.

Note 3 - Significant accounting policies:

Revenue

Revenues are comprised primarily of rent (including amortization of deferred rent), tenant reimbursement of operating expenses (recoveries), and other ancillary revenue. As a lessor, the Company has retained substantially all of the risks and benefits of ownership of the Properties and accounts for its leases with its tenants as operating leases. Income on leases, which includes scheduled increases in rental rates during the lease term and/or abated rent payments for various periods following the tenant's lease commencement date, is recognized on a straight-line basis over the terms of the respective leases when collectability is reasonably assured. A deferred rent receivable is recognized, representing the excess of rental revenue recognized on a straight-line basis over cash received pursuant to the applicable lease provisions, net of amounts that may become uncollectible in the future. The adjustment to this receivable is reflected in the "rental revenue" line item in the statements of revenues and certain operating expenses.

 

Page 4 

 

JACKSONVILLE PROPERTIES

Notes to Statements of Revenues and Certain Operating Expenses - Continued

For the Nine Months Ended September 30, 2018 (Unaudited) and the Year Ended December 31, 2017 (Audited)

Note 3 - Significant Accounting Policies - continued:

 

Revenue - continued

The Properties' leases generally provide for the reimbursement of operating expenses, or in certain cases increases in operating expenses above a base year amount, payable to the Company in equal installments throughout the year based on estimated operating expenses, and are recorded as revenue. Any differences between the estimated operating expenses and actual amounts incurred are adjusted at year end. No significant adjustments were required as of September 30, 2018 or December 31, 2017.

 

Use of estimates

The preparation of the statements of revenues and certain operating expenses in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and certain operating expenses during the reporting periods. Actual results could differ from those estimates.

 

Subsequent events

Subsequent events have been evaluated through February 27, 2019, the date the accompanying statements of revenues and certain operating expenses were issued.

Note 4 - Future minimum rental commitments:

Future minimum rental revenue for non-cancelable operating leases (base rents) excluding tenant reimbursements of operating expenses as of December 31, 2017 are as follows (in thousands):

 

   Year Ended
December 31,
 
2018  $7,685,898 
2019   8,155,782 
2020   7,499,322 
2021   5,716,987 
2022   3,692,308 
Thereafter   8,516,135 
Total  $41,266,432 

Page 5 

 

JACKSONVILLE PROPERTIES

Notes to Statements of Revenues and Certain Operating Expenses - Continued

For the Nine Months Ended September 30, 2018 (Unaudited) and the Year Ended December 31, 2017 (Audited)

Note 5 - Interim unaudited financial information:

The statement of revenues and certain operating expenses for the nine months ended September 30, 2018 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal, recurring adjustments) necessary for the fair presentation of the financial statement for the interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.

 

Page 6 

 

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Section 4: EX-99 (UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS)

Exhibit 99.2

 

 

PLYMOUTH INDUSTRIAL REIT INC.

Overview to Unaudited Pro Forma Condensed Consolidated Financial Statements

The accompanying unaudited pro forma condensed consolidated financial statements have been derived from the historical condensed consolidated financial statements of the Company. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2018 is presented to reflect adjustments to the Company’s historical balance sheet as if the Company’s Jacksonville Portfolio acquisition and the Series B Preferred Stock offering were completed on September 30, 2018. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2018 and for the year ended December 31, 2017 are presented as if the Jacksonville Portfolio acquisition and the Series B Preferred Stock offering were completed on the first day of the period presented.

The following unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) our historical unaudited condensed consolidated financial statements as of September 30, 2018 and for the nine months ended September 30, 2018 and (ii) our condensed consolidated financial statements for the twelve months ended December 31, 2017 in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.

The Company has based the unaudited pro forma adjustments on available information and assumptions that it believes are reasonable. The following unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and are not necessarily indicative of what the Company’s actual financial position would have been as of September 30, 2018 assuming the Jacksonville Portfolio acquisition had been completed on September 30, 2018, what actual results of operations would have been for the nine months ended September 30, 2018 and the year ended December 31, 2017 assuming the Jacksonville Portfolio acquisition was completed on the first day of the period presented, and are not indicative of future results of operations or financial condition and should not be viewed as indicative of future results of operations or financial condition.

 

 

Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2018
(Unaudited and in thousands except for share and per share amounts)

 

   Plymouth   Proceeds   Proceeds from         
   Industrial   from   Jacksonville   Jacksonville   Company 
   REIT, Inc.   offering   Portfolio Loan   Portfolio   Pro Forma 
   (A)   (B)   (C)   (D)     
Assets                         
Real estate properties  $347,065   $       $97,393   $444,458 
Less accumulated depreciation   (36,830)               (36,830)
Real estate properties, net   310,235            97,393    407,628 
                          
Cash   5,966    40,663    63,115    (97,393)   12,351 
Cash held in escrow   3,875                3,875 
Restricted cash   1,716                 1,716 
Deferred leasing intangibles, net   25,057                25,057 
Other assets   6,409                6,409 
Total assets  $353,258   $40,663   $63,115   $   $457,036 
                          
Liabilities, Series A preferred stock and equity (deficit)                         
Liabilities                         
Secured debt, net  $245,627   $(31,170)  $63,115   $0   $277,572 
Borrowings under line of credit, net   35,133                35,133 
Accounts payable, accrued expenses and other liabilities   17,101                17,101 
Deferred lease intangibles, net   6,439                6,439 
Total liabilities   304,300    (31,170)   63,115        336,245 
                          
Preferred stock Series A   48,868                48,868 
Preferred stock Series B       71,833            71,833 
                          
Equity                         
Common stock   49                49 
Additional paid in capital   129,392                 129,392 
Accumulated deficit   (134,283)               (134,283)
Total Plymouth Industrial REIT, Inc. stockholders' equity   (4,842)               (4,842)
Non-controlling Interest   4,932                4,932 
Total equity   90                90 
                          
Total liabilities, Series A preferred stock, Series B preferred stock and equity  $353,258   $40,663   $63,115   $   $457,036 

 

 

Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2018
(Unaudited and in thousands except for share and per share amounts)

 

   Plymouth   Company         
   Industrial   Pro Forma   Jacksonville   Company 
   REIT, Inc.   Adjustments   Portfolio   Pro Forma 
   (A)   (B)   (C)     
Revenues:                
Rental revenue  $26,245   $   $6,312   $32,557 
Tenant recoveries   8,809        2,538    11,347 
Other income   526            526 
Total revenues   35,580        8,850    44,430 
                     
Operating expenses:                    
Property expenses   12,589        2,671    15,260 
General and administrative   4,299            4,299 
Depreciation and amortization   19,235        4,328    23,563 
Total Operating expenses   36,123        6,999    43,122 
                     
Operating income (loss)   (543)       1,851    1,308 
                     
Other expense:                    
Interest expense   11,777        2,127    13,904 
Loss on extinguishment of debt   4,405            4,405 
Total other expense   16,182        2,127    18,309 
Net loss   (16,725)       (276)   (17,001)
Net Loss Attributable to non-controlling interest after preferred stock dividends   (1,709)       (28)   (1,737)
Net loss attributable to Plymouth Industrial REIT, Inc.   (15,016)       (248)   (15,264)
Less Series A preferred stock dividends   (2,868)           (2,868)
Less Series B preferred stock dividends       (1,828)       (1,828)
Less amount attributable to participating securities   (155)           (155)
Net Loss Attributable to common stockholders   (18,039)   (1,828)   (248)   (20,115)
                     
Loss Per Share  $(4.74)            $(5.29)
Weighted Average Shares Outstanding   3,801,900              3,801,900 

 

 

 

Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2017
(Unaudited and in thousands except for share and per share amounts)

 

   Plymouth   Company         
   Industrial   Pro Forma   Jacksonville   Company 
   REIT, Inc.   Adjustments   Portfolio   Pro Forma 
   (A)   (B)   (C)     
Revenues:                    
Rental revenue  $18,372   $   $7,747   $26,119 
Tenant recoveries   6,443        3,047    9,490 
Other income   3            3 
Total revenues   24,818        10,794    35,612 
                     
Operating expenses:                    
Property expenses   8,205        3,441    11,646 
General and administrative   5,292            5,292 
Depreciation and amortization   13,998        5,770    19,768 
Total Operating expenses   27,495        9,211    36,706 
                     
Operating income (loss)   (2,677)       1,583    (1,094)
                     
Other income (expense):                    
Gain on disposition of equity investment   231            231 
Interest expense   (11,581)       (2,838)   (14,419)
Total other income (expense)   (11,350)       (2,838)   (14,188)
Net loss   (14,027)       (1,255)   (15,282)
Net Loss Attributable to non-controlling interest   (5,320)       (49)   (5,369)
Net loss attributable to Plymouth Industrial REIT, Inc.   (8,707)       (1,206)   (9,913)
Less Series A preferred stock dividends   (723)           (723)
Less Series B preferred stock dividends       (2,438)       (2,438)
Less Amount allocated to participating securities   (128)           (128)
Net Loss Attributable to common stockholders   (9,558)   (2,438)   (1,206)   (13,202)
                     
                     
                     
Loss Per Share  $(4.45)            $(6.14)
                     
Weighted Average Shares Outstanding   2,149,977              2,149,977 

 

 

 

 

Plymouth Industrial REIT, Inc.

 

Notes to Unaudited Pro Forma

Condensed Consolidated Financial Statements

(dollars in thousands)

 

 

1. Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2018

(A) Reflects the historical Condensed Consolidated Balance Sheet of Plymouth Industrial REIT, Inc. as of September 30, 2018

(B) Reflects the net proceeds of $71,833 from the sale of 4,411,764 shares of Series B preferred stock. It also reflects the use of proceeds from the Series B preferred stock to pay off the outstanding KeyBank Term Loan of $31,170.

(C) Reflects proceeds from the $63,115 Key Bank Bridge Loan used in the acquisition of the Jacksonville Portfolio.

(D) Reflects the $97,393 acquisition of the Jacksonville Portfolio as reflected in the Statements of Revenue and Certain Expenses included herein. The pro forma adjustments do not include an allocation of the purchase price to reflect the intangible components of the acquisition as this evaluation is in process and will be reflected in future filings of actual results.

2. Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2018

(A) Reflects the historical Condensed Consolidated Statement of Operations of Plymouth Industrial REIT, Inc. for the nine months ended September 30, 2018.

(B) Reflects the 3.25% stated annual dividend on the 4,411,764 shares of Series B preferred stock

(C) Reflects the results of operations and depreciation and interest expense related to the acquisition of the Jacksonville Portfolio as reflected in the Statements of Revenues and Certain Expenses included herein.

3. Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2017

(A) Reflects the historical Condensed Consolidated Statement of Operations of Plymouth Industrial REIT, Inc. for the year ended December 31, 2017.

(B) Reflects the 3.25% stated annual dividend on the 4,411,764 shares of Series B preferred stock

(C) Reflects the results of operations and depreciation and interest expense related to the acquisition of the Jacksonville Portfolio as reflected in the Statements of Revenues and Certain Expenses included herein.

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