Form 8-K CTO Realty Growth, Inc. Due: Jul 08

CTO REALTY GROWTH, INC.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The unaudited pro forma consolidated balance sheet as at March 31, 2022, the unaudited pro forma consolidated income statement for the three months ended March 31, 2022 and the unaudited pro forma consolidated income statement for the year ended December 31 2021 presents the effects of the acquisition of the property as if it had taken place on January 1, 2021, being the beginning of the first applicable reporting period.

The acquisition of Madison Yards was financed using (a) cash on hand, (b) the proceeds from the exchange of 1,031 products of the same nature generated by certain of the disposals of properties previously carried out by the Company and (c) the proceeds of the Company’s revolving credit facility. The acquisition was structured as a reverse exchange of the same nature in order to take into account possible future disposals of productive properties by the Company.

Unaudited pro forma financial data. The unaudited pro forma financial statements are based on estimates and assumptions as of the date of this current report on Form 8-K set forth in the notes to the unaudited pro forma financial statements, which are preliminary and were made solely for the purpose develop this pro forma information. The unaudited pro forma financial statements are not necessarily indicative of the financial condition or results of operations that would have been obtained if the acquisition of the property had taken place on the date indicated, nor necessarily indicative of the financial condition or future operating results of the Company. The assumptions underlying the adjustments to the unaudited pro forma financial statements are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma financial statements.

NOTE 2. PRO FORMA ADJUSTMENTS

Pro forma consolidated balance sheet as of March 31, 2022

[A] Represents the fair value of real estate acquired after March 31, 2022 which is allocated to property, plant and equipment acquired, consisting of buildings and improvements, as well as the right-of-use asset related to the land underlying the buildings, and identified intangible lease assets and liabilities, consisting of the value of above- and below-market leases, the value of leases in place and the value of lease costs. The fair value allocation was provided by a third-party valuation company.

The following table represents the breakdown of total acquisition costs for Madison Yards (in thousands):

Breakdown of the purchase price:

Construction and improvements, at cost

$

47,907

Intangible assets

13,836

Other Assets – Right of Use Asset

19,767

Intangible rental debts

(1,063)

Total acquisition cost – Purchase price plus acquisition costs

$

80,447

[B] Represents the sources and uses of funds related to the acquisition of Madison Yards, which occurred after March 31, 2022, and consisted of the use of free cash of $7.5 million, $17.5 million similar exchange proceeds from certain of the property dispositions and a draw on the Company’s unsecured revolving credit facility of $54.5 million for total sources of $79.5 million. The Madison Yards acquisition can be summarized as follows: purchase price of $80.2 million plus closing costs of $0.3 million, for a total acquisition cost of $80.5 million, as as distributed in accordance with the note [A] above, less $1.0 million in credits received at closing which result in an increase in accrued liabilities and other liabilities and deferred revenue of $0.6 million and $0.4 million, respectively, for total uses of $79.5 million.

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