Published on December 14, 2015
Exhibit 99 - Unaudited pro forma condensed consolidated financial statements
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Upon receiving the deregistration order from the Securities and Exchange Commission declaring that the Company has ceased to be an investment company, the Company will prepare financial statements on a consolidated basis to include the financial position, results of operations, and cash flows of the Company and its wholly owned subsidiaries, rather than by the current investment company fair valuation approach.
The following table presents the Company's unaudited pro forma balance sheet and has been prepared as if the deregistration order was effective on September 30, 2015 and the unaudited pro forma statement of operations of the Company for the nine months ended September 30, 2015 assumes that the deregistration order was effective on January 1, 2015.
The unaudited pro forma financial statements are based upon available information and upon certain assumptions, as set forth in the notes to the unaudited pro forma financial statements that the Company believes are reasonable under the circumstances. The unaudited pro forma financial statements presents the Company's change in status from an investment company to an operating company no longer regulated as an investment company under the Investment Company Act of 1940 (the "Act"). These unaudited pro forma financial statements do not purport to represent what the Company's financial position or results of operations would actually have been if the deregistration order in fact had occurred on such dates or at the beginning of such periods or the Company's financial position or results of operations for any future dates or periods.
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2015
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2015
|
Pro Forma Adjustments
|
|||||||||||||||||
|
SELF
|
Self Storage
|
Pro Forma
|
|||||||||||||||
|
Historical (A)
|
Properties (B)
|
Other
|
Combined
|
||||||||||||||
|
Assets
|
|||||||||||||||||
|
Property, plant and equipment - self storage
|
$
|
-
|
$
|
26,580,264
|
6,346,525
|
(C)
|
$
|
32,926,789
|
|||||||||
|
Investments, at value
|
|||||||||||||||||
|
Wholly owned subsidiaries (cost $27,739,573 )
|
33,864,574
|
-
|
(33,864,574
|
)
|
(D)
|
-
|
|||||||||||
|
Unaffiliated issuers (cost $5,307,842)
|
6,717,910
|
-
|
(6,717,910
|
)
|
(E) (F)
|
-
|
|||||||||||
|
Cash / Cash and cash equivalents
|
29,754
|
989,901
|
2,829,049
|
(E)
|
3,848,704
|
||||||||||||
|
Available-for-sale securities
|
-
|
-
|
3,888,861
|
(F)
|
3,888,861
|
||||||||||||
|
Accounts receivable
|
-
|
102,635
|
-
|
102,635
|
|||||||||||||
|
Dividends receivable
|
13,203
|
-
|
-
|
13,203
|
|||||||||||||
|
Due from subsidiaries
|
1,919
|
(1,919
|
)
|
(G)
|
-
|
||||||||||||
|
Prepaid expenses and other assets
|
15,933
|
227,400
|
-
|
243,333
|
|||||||||||||
|
Total assets
|
$
|
40,643,293
|
$
|
27,900,200
|
$
|
(27,519,968
|
)
|
$
|
41,023,525
|
||||||||
|
Liabilities
|
|||||||||||||||||
|
Accounts payable and accrued expenses
|
$
|
149,481
|
$
|
316,829
|
(1,919
|
)
|
(G)
|
$
|
464,391
|
||||||||
|
Due to affiliates
|
61,781
|
-
|
-
|
61,781
|
|||||||||||||
|
Deferred revenue
|
-
|
65,322
|
-
|
65,322
|
|||||||||||||
|
Total liabilities
|
211,262
|
382,151
|
(1,919
|
)
|
591,494
|
||||||||||||
|
Net Assets / Stockholders Equity
|
|||||||||||||||||
|
Capital stock and additional paid in capital
|
33,159,940
|
-
|
-
|
33,159,940
|
|||||||||||||
|
Undistributed net investment loss
|
(262,978
|
)
|
-
|
-
|
(262,978
|
)
|
|||||||||||
|
Net unrealized appreciation on investments
|
7,535,069
|
-
|
(7,535,069
|
)
|
(D) (H)
|
-
|
|||||||||||
|
Member capital
|
-
|
27,739,573
|
(27,739,573
|
)
|
(D)
|
-
|
|||||||||||
|
Accumulated other comprehensive income
|
-
|
-
|
1,410,068
|
(H)
|
1,410,068
|
||||||||||||
|
Retained earnings (deficit)
|
-
|
(221,524
|
)
|
6,346,525
|
(C)
|
6,125,001
|
|||||||||||
|
Total net assets / stockholders equity
|
40,432,031
|
27,518,049
|
(27,518,049
|
)
|
40,432,031
|
||||||||||||
|
Total liabilities and net assets / stockholders equity
|
$
|
40,643,293
|
$
|
27,900,200
|
$
|
(27,519,968
|
)
|
$
|
41,023,525
|
||||||||
See notes to unaudited pro forma condensed consolidated financial statements.
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2015
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2015
|
Pro Forma Adjustments
|
|||||||||||||||||
|
SELF
|
Self Storage
|
Pro Forma
|
|||||||||||||||
|
Historical (AA)
|
Properties (BB)
|
Other
|
Combined
|
||||||||||||||
|
Investment Income / Revenue
|
|||||||||||||||||
|
Rental revenue
|
$
|
-
|
$
|
3,213,814
|
$
|
3,213,814
|
|||||||||||
|
Other property related revenue
|
-
|
114,794
|
114,794
|
||||||||||||||
|
Dividends
|
|||||||||||||||||
|
Wholly-owned subsidiaries
|
1,140,000
|
-
|
(1,140,000
|
)
|
(CC)
|
-
|
|||||||||||
|
Unaffiliated issuers
|
122,041
|
-
|
(122,041
|
)
|
(DD)
|
-
|
|||||||||||
|
Total investment income / Total revenue
|
1,262,041
|
3,328,608
|
(1,262,041
|
)
|
3,328,608
|
||||||||||||
|
Expenses
|
|||||||||||||||||
|
Compensation and benefits
|
539,709
|
346,564
|
886,273
|
||||||||||||||
|
Property operating expenses
|
-
|
871,664
|
871,664
|
||||||||||||||
|
Depreciation and amortization
|
-
|
473,626
|
473,626
|
||||||||||||||
|
General and administrative
|
-
|
133,893
|
198,046
|
(EE)
|
331,939
|
||||||||||||
|
Professional services
|
-
|
-
|
77,720
|
(FF)
|
77,720
|
||||||||||||
|
Occupancy and other office expenses
|
95,105
|
-
|
(95,105
|
)
|
(EE)
|
-
|
|||||||||||
|
Registration
|
62,956
|
-
|
(62,956
|
)
|
(EE)
|
-
|
|||||||||||
|
Bookkeeping and pricing
|
58,045
|
-
|
(58,045
|
)
|
(GG)
|
-
|
|||||||||||
|
Auditing
|
31,955
|
-
|
(31,955
|
)
|
(FF)
|
-
|
|||||||||||
|
Directors
|
29,765
|
-
|
(29,765
|
)
|
(FF)
|
-
|
|||||||||||
|
Stockholder communications
|
17,678
|
-
|
(17,678
|
)
|
(EE)
|
-
|
|||||||||||
|
Legal
|
16,000
|
-
|
(16,000
|
)
|
(FF)
|
-
|
|||||||||||
|
Insurance
|
8,190
|
-
|
(8,190
|
)
|
(EE)
|
-
|
|||||||||||
|
Transfer agent
|
7,940
|
-
|
(7,940
|
)
|
(EE)
|
-
|
|||||||||||
|
Custodian
|
7,870
|
-
|
(7,870
|
)
|
(GG)
|
-
|
|||||||||||
|
Other
|
6,177
|
-
|
(6,177
|
)
|
(EE)
|
-
|
|||||||||||
|
Total expenses
|
881,390
|
1,825,747
|
(65,915
|
)
|
2,641,222
|
||||||||||||
|
Net investment income / Income from operations
|
380,651
|
1,502,861
|
(1,196,126
|
)
|
687,386
|
||||||||||||
|
Realized and Unrealized Gain (Loss) / Other Income
|
|||||||||||||||||
|
Dividend income
|
-
|
-
|
122,041
|
(DD)
|
122,041
|
||||||||||||
|
Net realized gain on investments in unaffiliated issuers
|
900,368
|
-
|
900,368
|
||||||||||||||
|
Net unrealized appreciation (depreciation)
|
|||||||||||||||||
|
Wholly owned subsidiaries
|
2,570,001
|
-
|
(2,570,001
|
)
|
(HH)
|
-
|
|||||||||||
|
Unaffiliated issuers
|
(73,627
|
)
|
-
|
73,627
|
(HH)
|
-
|
|||||||||||
|
Net realized and unrealized gain / Other income
|
3,396,742
|
-
|
(2,496,374
|
)
|
900,368
|
||||||||||||
|
Net increase in net assets resulting from operations / Net income before taxes
|
3,777,393
|
1,502,861
|
(3,692,500
|
)
|
1,587,754
|
||||||||||||
|
Income taxes (a)
|
-
|
47,330
|
47,330
|
||||||||||||||
|
Net increase in net assets resulting from operations / Net income
|
$
|
3,777,393
|
$
|
1,455,531
|
$
|
(3,692,500
|
)
|
$
|
1,540,424
|
||||||||
|
Earnings per share
|
$
|
0.21
|
|||||||||||||||
|
Weighted average shares outstanding
|
7,416,766
|
||||||||||||||||
(a) As a real estate investment trust, the Company is not subject to federal income tax with respect to that portion of its income which meets certain criteria and is distributed annually to stockholders, however the Company is subject to certain state and local taxes.
See notes to unaudited pro forma condensed consolidated financial statements.
SELF STORAGE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated financial statements have been prepared to show the Company's change in status from an investment company fair valuation accounting approach to an operating company consolidated basis to include the accounts of the Company and its wholly owned subsidiaries SSG Bolingbrook LLC ("Bolingbrook"), SSG Dolton LLC ("Dolton"), SSG Merrillville LLC ("Merrillville"), SSG Rochester LLC ("Rochester"), SSG Sadsbury LLC ("Sadsbury"), SSG Summerville I LLC ("Summerville I"), SSG Summerville II LLC ("Summerville II"), and SSG Operations LLC ("SSG Ops") (collectively the "Self Storage Properties"). All intercompany balances and transactions have been eliminated in consolidation.
2. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(A) Historical Unaudited Statement of Assets and Liabilities. Represents the historical accounting of assets and liabilities of the Company as a registered investment company with its investments carried at fair value as of September 30, 2015.
(B) Represents the unaudited combined balance sheets of the Company's Self Storage Properties as of September 30, 2015. Each subsidiary except for Operations, owns and operates a self storage facility and each subsidiary maintains its own accounting books and records separate from the Company. Prior to the change in status as a registered investment company the Company recorded its investment in the Self Storage Properties at fair value and recorded the changes in the fair value as an unrealized gain or loss. Upon the effective date of the deregistration (assumed to be on September 30, 2015) of the Company as a registered investment company, the fair value accounting as a registered investment company will no longer apply to the Company, rather the Company will present on a consolidated basis, the underlying assets and liabilities of the Self Storage Properties. The Company's initial carrying value of the net assets of the Self Storage Properties will be the fair value on the effective date of the change in status.
|
Combined Balance Sheets
|
Bolingbrook
|
Dolton
|
Merrillville
|
Rochester
|
Sadsbury
|
Summerville I
|
Summerville II
|
SSG Ops
|
|
|
Assets
|
|||||||||
|
Property, plant and equipment - self storage
|
$26,580,264
|
$5,527,336
|
$4,910,391
|
$4,627,961
|
$3,492,268
|
$4,549,504
|
$2,218,484
|
$1,242,309
|
$12,011
|
|
Cash and cash equivalents
|
989,901
|
151,008
|
228,547
|
159,568
|
195,821
|
117,784
|
91,336
|
45,837
|
-
|
|
Accounts receivable
|
102,635
|
7,986
|
20,115
|
27,449
|
9,019
|
8,662
|
15,216
|
14,188
|
-
|
|
Prepaid expenses and other assets
|
227,400
|
9,622
|
11,141
|
10,284
|
90,446
|
89,946
|
9,694
|
6,267
|
-
|
|
Total assets
|
$27,900,200
|
$5,695,952
|
$5,170,194
|
$4,825,262
|
$3,787,554
|
$4,765,896
|
$2,334,730
|
$1,308,601
|
$12,011
|
|
Liabilities and member capital
|
|||||||||
|
Accounts payable and accrued expenses
|
$316,829
|
$89,238
|
$71,178
|
$75,509
|
$5,883
|
$10,304
|
$38,038
|
$23,717
|
$2,962
|
|
Deferred revenue
|
65,322
|
8,874
|
8,841
|
7,104
|
14,047
|
10,291
|
11,469
|
4,696
|
-
|
|
Total liabilities
|
382,151
|
98,112
|
80,019
|
82,613
|
19,930
|
20,595
|
49,507
|
28,413
|
2,962
|
|
Member Capital
|
|||||||||
|
Member capital
|
27,739,573
|
5,700,000
|
5,100,000
|
4,825,000
|
3,750,000
|
4,750,000
|
2,300,000
|
1,300,000
|
14,573
|
|
Retained earnings (deficit)
|
(221,524)
|
(102,160)
|
(9,825)
|
(82,351)
|
17,624
|
(4,699)
|
(14,777)
|
(19,812)
|
(5,524)
|
|
Total member capital
|
27,518,049
|
5,597,840
|
5,090,175
|
4,742,649
|
3,767,624
|
4,745,301
|
2,285,223
|
1,280,188
|
9,049
|
|
Total liabilities and member capital
|
$27,900,200
|
$5,695,952
|
$5,170,194
|
$4,825,262
|
$3,787,554
|
$4,765,896
|
$2,334,730
|
$1,308,601
|
$12,011
|
(C) Represents the adjustment to the historical net assets of the Self Storage Properties (as detailed in Note B) to fair value on the effective date of the Company's deregistration as an investment company under the Act which is assumed to be effective September 30, 2015.
|
Fair value of the Self Storage Properties on the effective date of the change in status
|
$ 33,864,574
|
||||
|
Total net assets of the combined Self Storage Properties
|
|||||
|
Property, plant and equipment – self storage
|
$ 26,580,264
|
||||
|
Cash and cash equivalents
|
989,901
|
||||
|
Accounts receivable
|
102,635
|
||||
|
Prepaid expenses and other assets
|
227,400
|
||||
|
Accounts payable and accrued expenses
|
( 316,829
|
) | |||
|
Deferred revenue
|
( 65,322
|
) |
27,518,049
|
||
|
Adjustment to record at fair value the net assets of the Self Storage Properties on the effective date of the change in status
|
$ 6,346,525
|
||||
(D) Represents the elimination of carrying the ownership of the Self Storage Properties as an investment at fair value as a registered investment company.
(E) Represents the reclassification of the Company's investment in a money market fund which is deemed a cash equivalent to cash and cash equivalents.
(F) Represents the reclassification of common and preferred stock investments in securities to available-for-sale securities. Such investments will be accounted for at fair value with unrealized changes in fair value reflected as a separate component of "Other Comprehensive Income" a component of stockholders' equity.
(G) Represents the elimination of the intercompany receivables and payables among the Company and its subsidiaries.
(H) Represents the adjustment to reclassify the unrealized gain on the Company's investments in available-for-sale securities to pro forma accumulated other comprehensive income.
SELF STORAGE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(AA) Historical Unaudited Statement of Operations. Represents the historical accounting of the Company's statement of operations as a registered investment company with its investments carried at fair value for the nine months ended September 30, 2015.
(BB) Represents the unaudited combined statements of income of the Company's Self Storage Properties for the nine months ended September 30, 2015. Each subsidiary except for SSG Ops, owns and operates a self storage facility and each subsidiary maintains its own accounting books and records separate from the Company. Prior to the change in status as a registered investment company the Company recorded the change in the fair value of its Self Storage Properties as an unrealized gain or loss in the statement of operations. Upon the effective date of the deregistration (assumed to be January 1, 2015) of the Company as a registered investment company, the Company will consolidate the revenues and expenses of the Self Storage Properties presented in the statement of operations and no longer fair value the Self Storage Properties.
|
Combined
|
||||||||||||||||||||||||||||||||||||
|
Statements of
|
Summerville
|
Summerville
|
||||||||||||||||||||||||||||||||||
|
Income
|
Bolingbrook
|
Dolton
|
Merrillville
|
Rochester
|
Sadsbury
|
I
|
|
II
|
SSG Ops
|
|||||||||||||||||||||||||||
|
Revenue
|
||||||||||||||||||||||||||||||||||||
|
Rental revenue
|
$
|
3,213,814
|
$
|
482,609
|
$
|
551,045
|
$
|
458,680
|
$
|
732,002
|
$
|
457,199
|
$
|
344,256
|
$
|
188,023
|
$
|
-
|
||||||||||||||||||
|
Other property related revenue
|
114,794
|
14,161
|
25,252
|
15,110
|
24,124
|
18,678
|
11,631
|
5,838
|
-
|
|||||||||||||||||||||||||||
|
Total revenue
|
3,328,608
|
496,770
|
576,297
|
473,790
|
756,126
|
475,877
|
355,887
|
193,861
|
-
|
|||||||||||||||||||||||||||
|
Expenses
|
||||||||||||||||||||||||||||||||||||
|
Property operating expenses
|
871,664
|
137,515
|
120,727
|
98,021
|
229,678
|
151,380
|
86,332
|
48,011
|
-
|
|||||||||||||||||||||||||||
|
Depreciation and amortization
|
473,626
|
96,719
|
87,780
|
84,734
|
64,293
|
76,199
|
40,801
|
23,100
|
-
|
|||||||||||||||||||||||||||
|
Compensation and benefits
|
346,564
|
49,005
|
38,716
|
44,335
|
71,988
|
81,167
|
47,777
|
13,576
|
-
|
|||||||||||||||||||||||||||
|
General and administrative
|
133,893
|
13,486
|
16,763
|
16,236
|
30,226
|
23,657
|
16,794
|
11,207
|
5,524
|
|||||||||||||||||||||||||||
|
Total expenses
|
1,825,747
|
296,725
|
263,986
|
243,326
|
396,185
|
332,403
|
191,704
|
95,894
|
5,524
|
|||||||||||||||||||||||||||
|
Net income before taxes
|
1,502,861
|
200,045
|
312,311
|
230,464
|
359,941
|
143,474
|
164,183
|
97,967
|
(5,524
|
)
|
||||||||||||||||||||||||||
|
Income taxes
|
47,330
|
-
|
-
|
38,342
|
-
|
-
|
4,494
|
4,494
|
-
|
|||||||||||||||||||||||||||
|
Net income
|
$
|
1,455,531
|
$
|
200,045
|
$
|
312,311
|
$
|
192,122
|
$
|
359,941
|
$
|
143,474
|
$
|
159,689
|
$
|
93,473
|
$
|
(5,524
|
)
|
|||||||||||||||||
(CC) Represents the elimination of the fair value accounting as a registered investment company for the underlying Self Storage Properties and providing for the underlying revenue and expenses of the Self Storage Properties (as detailed in Note BB) on a consolidated basis as of the Company's deregistration as an investment company under the Act, which is assumed to be January 1, 2015.
(DD) Represents the reclassification of dividend income from the unaffiliated issuers to Other Income.
(EE) Represents the reclassification of the following historical expenses of the Company incurred for the nine months ended September 30, 2015 to General and administrative.
|
General and administrative
|
$198,046
|
|
|
Occupancy and other office expenses
|
95,105
|
|
|
Registration
|
62,956
|
|
|
Stockholder communications
|
17,678
|
|
|
Transfer agent
|
7,940
|
|
|
Insurance
|
8,190
|
|
|
Other
|
6,177
|
|
(FF) Represents the reclassification of the following historical expenses of the Company incurred for the nine months ended September 30, 2015 to Professional services.
|
Professional services
|
$77,720
|
||
|
Legal
|
16,000
|
||
|
Directors
|
29,765
|
||
|
Auditing
|
31,955
|
||
(GG) Represents the adjustment to eliminate the expenses which are attributable to the Company operating as an investment company.
(HH) Represents the adjustment to net unrealized appreciation to eliminate the income statement effect that was previously recorded by the Company under its existing accounting policy as an investment company, assuming that the deregistration order was effective on January 1, 2015. Available-for-sale securities would have been accounted for at fair value with unrealized changes in fair value recorded as a separate component of "other comprehensive income", a component of stockholders' equity.
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Upon receiving the deregistration order from the Securities and Exchange Commission declaring that the Company has ceased to be an investment company, the Company will prepare financial statements on a consolidated basis to include the financial position, results of operations, and cash flows of the Company and its wholly owned subsidiaries, rather than by the current investment company fair valuation approach.
The following table presents the Company's unaudited pro forma balance sheet and has been prepared as if the deregistration order was effective on December 31, 2014 and the unaudited pro forma statement of operations of the Company for the year ended December 31, 2014 assumes that the deregistration order was effective on January 1, 2014.
The unaudited pro forma financial statements are based upon available information and upon certain assumptions, as set forth in the notes to the unaudited pro forma financial statements that the Company believes are reasonable under the circumstances. The unaudited pro forma financial statements presents the Company's change in status from an investment company to an operating company no longer regulated as an investment company under the Investment Company Act of 1940 (the "Act"). These unaudited pro forma financial statements do not purport to represent what the Company's financial position or results of operations would actually have been if the deregistration order in fact had occurred on such dates or at the beginning of such periods or the Company's financial position or results of operations for any future dates or periods.
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2014
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2014
|
Pro Forma Adjustments
|
|||||||||||||||||
|
SELF
|
Self Storage
|
Pro Forma
|
|||||||||||||||
|
Historical (A)
|
Properties (B)
|
Other
|
Combined
|
||||||||||||||
|
Assets
|
|||||||||||||||||
|
Property, plant and equipment - self storage
|
$
|
-
|
$
|
26,375,343
|
$
|
4,092,055
|
(C)
|
$
|
30,467,398
|
||||||||
|
Investments, at value
|
|||||||||||||||||
|
Wholly owned subsidiaries (cost $27,275,000 )
|
30,830,000
|
-
|
(30,830,000
|
)
|
(D)
|
-
|
|||||||||||
|
Unaffiliated issuers (cost $5,899,986)
|
7,383,682
|
-
|
(7,383,682
|
)
|
(E) (F)
|
-
|
|||||||||||
|
Cash / Cash and cash equivalents
|
29,754
|
535,385
|
3,421,192
|
(E)
|
3,986,331
|
||||||||||||
|
Available-for-sale securities
|
-
|
-
|
3,962,490
|
(F)
|
3,962,490
|
||||||||||||
|
Accounts receivable
|
-
|
87,996
|
-
|
87,996
|
|||||||||||||
|
Dividends receivable
|
13,202
|
-
|
-
|
13,202
|
|||||||||||||
|
Due from subsidiaries
|
3,372
|
(3,372
|
)
|
(G)
|
-
|
||||||||||||
|
Prepaid expenses and other assets
|
10,195
|
122,065
|
-
|
132,260
|
|||||||||||||
|
Total assets
|
$
|
38,270,205
|
$
|
27,120,789
|
$
|
(26,741,317
|
)
|
$
|
38,649,677
|
||||||||
|
Liabilities
|
|||||||||||||||||
|
Accounts payable and accrued expenses
|
$
|
125,223
|
$
|
308,665
|
(3,372
|
)
|
(G)
|
$
|
430,516
|
||||||||
|
Due to affiliates
|
44,074
|
219
|
-
|
44,293
|
|||||||||||||
|
Deferred revenue
|
-
|
73,960
|
-
|
73,960
|
|||||||||||||
|
Total liabilities
|
169,297
|
382,844
|
(3,372
|
)
|
548,769
|
||||||||||||
|
Net Assets / Stockholders Equity
|
|||||||||||||||||
|
Capital stock and additional paid in capital
|
33,159,940
|
-
|
-
|
33,159,940
|
|||||||||||||
|
Undistributed net investment loss
|
(97,728
|
)
|
-
|
-
|
(97,728
|
)
|
|||||||||||
|
Net unrealized appreciation on investments
|
5,038,696
|
-
|
(5,038,696
|
)
|
(D) (H)
|
-
|
|||||||||||
|
Member capital
|
-
|
27,275,000
|
(27,275,000
|
)
|
(D)
|
-
|
|||||||||||
|
Accumulated other comprehensive income
|
-
|
-
|
1,483,696
|
(H)
|
1,483,696
|
||||||||||||
|
Retained earnings (deficit)
|
-
|
(537,055
|
)
|
4,092,055
|
(C)
|
3,555,000
|
|||||||||||
|
Total net assets / stockholders equity
|
38,100,908
|
26,737,945
|
(26,737,945
|
)
|
38,100,908
|
||||||||||||
|
Total liabilities and net assets / stockholders equity
|
$
|
38,270,205
|
$
|
27,120,789
|
$
|
(26,741,317
|
)
|
$
|
38,649,677
|
||||||||
See notes to unaudited pro forma condensed consolidated financial statements.
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2014
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2014
|
Pro Forma Adjustments
|
|||||||||||||||||
|
SELF
|
Self Storage
|
Pro Forma
|
|||||||||||||||
|
Historical (AA)
|
Properties (BB)
|
Other
|
Combined
|
||||||||||||||
|
Investment Income / Revenue
|
|||||||||||||||||
|
Rental revenue
|
$
|
-
|
$
|
3,851,751
|
$
|
3,851,751
|
|||||||||||
|
Other property related revenue
|
-
|
128,109
|
128,109
|
||||||||||||||
|
Dividends
|
|||||||||||||||||
|
Wholly owned subsidiaries
|
2,178,000
|
-
|
(2,178,000
|
)
|
(CC)
|
-
|
|||||||||||
|
Unaffiliated issuers (net of $2,270 foreign tax withholding)
|
259,401
|
-
|
(259,401
|
)
|
(DD)
|
-
|
|||||||||||
|
Total investment income / Total revenue
|
2,437,401
|
3,979,860
|
(2,437,401
|
)
|
3,979,860
|
||||||||||||
|
Expenses
|
|||||||||||||||||
|
Property operating expenses
|
-
|
1,313,489
|
1,313,489
|
||||||||||||||
|
Compensation and benefits
|
778,843
|
463,870
|
1,242,713
|
||||||||||||||
|
Depreciation and amortization
|
-
|
711,095
|
711,095
|
||||||||||||||
|
Professional services
|
-
|
-
|
268,989
|
(EE)
|
268,989
|
||||||||||||
|
General and administrative
|
-
|
27,825
|
165,893
|
(FF)
|
193,718
|
||||||||||||
|
Occupancy and other office expenses
|
110,396
|
-
|
(110,396
|
)
|
(FF)
|
-
|
|||||||||||
|
Bookkeeping and pricing
|
84,123
|
-
|
(84,123
|
)
|
(GG)
|
-
|
|||||||||||
|
Auditing
|
38,985
|
-
|
(38,985
|
)
|
(EE)
|
-
|
|||||||||||
|
Directors
|
39,236
|
-
|
(39,236
|
)
|
(EE)
|
-
|
|||||||||||
|
Stockholder communications
|
24,607
|
-
|
(24,607
|
)
|
(FF)
|
-
|
|||||||||||
|
Legal
|
190,768
|
-
|
(190,768
|
)
|
(EE)
|
-
|
|||||||||||
|
Insurance
|
13,630
|
-
|
(13,630
|
)
|
(FF)
|
-
|
|||||||||||
|
Transfer agent
|
14,600
|
-
|
(14,600
|
)
|
(FF)
|
-
|
|||||||||||
|
Custodian
|
9,815
|
-
|
(9,815
|
)
|
(GG)
|
-
|
|||||||||||
|
Other
|
2,660
|
-
|
(2,660
|
)
|
(FF)
|
-
|
|||||||||||
|
Interest on bank credit facility
|
3,395
|
-
|
(3,395
|
)
|
(GG)
|
-
|
|||||||||||
|
Total expenses
|
1,311,058
|
2,516,279
|
(97,333
|
)
|
3,730,004
|
||||||||||||
|
Net investment income / Income from operations
|
1,126,343
|
1,463,581
|
(2,340,068
|
)
|
249,856
|
||||||||||||
|
Realized and Unrealized Gain (Loss) / Other Income
|
|||||||||||||||||
|
Dividend income
|
-
|
-
|
259,401
|
(DD)
|
259,401
|
||||||||||||
|
Net realized gain on investments in unaffiliated issuers
|
1,505,832
|
-
|
1,505,832
|
||||||||||||||
|
Net unrealized appreciation
|
|||||||||||||||||
|
Wholly owned subsidiaries
|
3,092,500
|
-
|
(3,092,500
|
)
|
(HH)
|
-
|
|||||||||||
|
Unaffiliated issuers
|
364,113
|
-
|
(364,113
|
)
|
(HH)
|
-
|
|||||||||||
|
Net realized and unrealized gain / Other income
|
4,962,445
|
-
|
(3,456,613
|
)
|
1,505,832
|
||||||||||||
|
Net increase in net assets resulting from operations / Net income before taxes
|
6,088,788
|
1,463,581
|
(5,796,681
|
)
|
1,755,688
|
||||||||||||
|
Income taxes (a)
|
-
|
27,582
|
27,582
|
||||||||||||||
|
Net increase in net assets resulting from operations / Net income
|
$
|
6,088,788
|
$
|
1,435,999
|
$
|
(5,796,681
|
)
|
$
|
1,728,106
|
||||||||
|
Earnings per share
|
$
|
0.23
|
|||||||||||||||
|
Weighted average shares outstanding
|
7,416,766
|
||||||||||||||||
(a) As a real estate investment trust , the Company is not subject to federal income tax with respect to that portion of its income which meets certain criteria and is distributed annually to stockholders, however the Company is subject to certain state and local taxes.
See notes to unaudited pro forma condensed consolidated financial statements.
SELF STORAGE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated financial statements have been prepared to show the Company's change in status from an investment company fair valuation accounting approach to an operating company consolidated basis to include the accounts of the Company and its wholly owned subsidiaries SSG Bolingbrook LLC ("Bolingbrook"), SSG Dolton LLC ("Dolton"), SSG Merrillville LLC ("Merrillville"), SSG Rochester LLC ("Rochester"), SSG Sadsbury LLC ("Sadsbury"), SSG Summerville I LLC ("Summerville I"), and SSG Summerville II LLC ("Summerville II") (collectively the "Self Storage Properties"). All intercompany balances and transactions have been eliminated in consolidation.
2. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(A) Historical Unaudited Statement of Assets and Liabilities. Represents the historical accounting of assets and liabilities of the Company as a registered investment company with its investments carried at fair value as of December 31, 2014.
(B) Represents the unaudited combined balance sheets of the Company's Self Storage Properties as of December 31, 2014. Each subsidiary owns and operates a self storage facility and each subsidiary maintains its own accounting books and records separate from the Company. Prior to the change in status as a registered investment company the Company recorded its investment in the Self Storage Properties at fair value and recorded the changes in the fair value as an unrealized gain or loss. Upon the effective date of the deregistration (assumed to be on December 31, 2014) of the Company as a registered investment company, the fair value accounting as a registered investment company will no longer apply to the Company, rather the Company will present on a consolidated basis, the underlying assets and liabilities of the Self Storage Properties. The Company's initial carrying value of the net assets of the Self Storage Properties will be the fair value on the effective date of the change in status.
|
Combined
|
Summerville
|
Summerville
|
||||||
|
Balance Sheets
|
Bolingbrook
|
Dolton
|
Merrillville
|
Rochester
|
Sadsbury
|
I
|
II
|
|
|
Assets
|
||||||||
|
Property plant and equipment - self storage
|
$26,375,343
|
$5,535,185
|
$4,995,872
|
$4,709,996
|
$3,488,748
|
$4,155,463
|
$2,234,732
|
$1,255,347
|
|
Cash and cash equivalents
|
535,385
|
180,626
|
109,258
|
72,597
|
127,846
|
13,153
|
19,249
|
12,656
|
|
Accounts receivable
|
87,996
|
4,713
|
21,385
|
28,303
|
7,630
|
7,051
|
11,895
|
7,019
|
|
Prepaid expenses
|
119,065
|
5,919
|
3,901
|
6,349
|
57,488
|
37,703
|
4,887
|
2,818
|
|
Total assets
|
$27,117,789
|
$5,726,443
|
$5,130,416
|
$4,817,245
|
$3,681,712
|
$4,213,370
|
$2,270,763
|
$1,277,840
|
|
Liabilities and member capital
|
||||||||
|
Accounts payable and accrued expenses
|
$308,884
|
$115,045
|
$94,820
|
$68,294
|
$5,253
|
$11,712
|
$8,473
|
$5,287
|
|
Deferred revenue
|
73,960
|
13,603
|
10,732
|
8,424
|
13,775
|
9,833
|
11,756
|
5,837
|
|
Total liabilities
|
382,844
|
128,648
|
105,552
|
76,718
|
19,028
|
21,545
|
20,229
|
11,124
|
|
Member Capital
|
||||||||
|
Member capital
|
27,275,000
|
5,700,000
|
5,100,000
|
4,825,000
|
3,750,000
|
4,300,000
|
2,300,000
|
1,300,000
|
|
Retained earnings (deficit)
|
(537,055)
|
(102,205)
|
(72,136)
|
(84,473)
|
(87,316)
|
(108,175)
|
(49,466)
|
(33,284)
|
|
Total member capital
|
26,737,945
|
5,597,795
|
5,027,864
|
4,740,527
|
3,662,684
|
4,191,825
|
2,250,534
|
1,266,716
|
|
Total liabilities and member capital
|
$27,120,789
|
$5,726,443
|
$5,133,416
|
$4,817,245
|
$3,681,712
|
$4,213,370
|
$2,270,763
|
$1,277,840
|
(C) Represents the adjustment to the historical net assets of the Self Storage Properties (as detailed in Note B) to fair value on the effective date of the Company's deregistration as an investment company under the Act which is assumed to be effective e December 31, 2014.
|
Fair value of the Self Storage Properties on the effective date of the change in status
|
$ 30,830,000
|
|||
|
Total net assets of the combined Self Storage Properties
|
||||
|
Property, plant and equipment – self storage
|
$ 26,375,343
|
|||
|
Cash and cash equivalents
|
535,385
|
|||
|
Accounts receivable
|
87,996
|
|||
|
Prepaid expenses and other assets
|
122,065
|
|||
|
Accounts payable and accrued expenses
|
( 308,665
|
) | ||
|
Due to affiliates
|
( 219
|
) | ||
|
Deferred revenue
|
( 73,960
|
) 26,737,945
|
||
|
Adjustment to record at fair value the net assets of the Self Storage Properties on the effective date of the change in status
|
$ 4,092,055
|
|||
(D) Represents the elimination of carrying the ownership of the Self Storage Properties as an investment at fair value as a registered investment company.
(E) Represents the reclassification of the Company's investment in a money market fund which is deemed a cash equivalent to cash and cash equivalents.
(F) Represents the reclassification of common and preferred stock investments in securities to available-for-sale securities. Such investments will be accounted for at fair value with unrealized changes in fair value reflected as a separate component of "Other Comprehensive Income" a component of stockholders' equity.
(G) Represents the elimination of the intercompany receivables and payables among the Company and its subsidiaries.
(H) Represents the adjustment to reclassify the unrealized gain on the Company's investments in available-for-sale securities to pro forma accumulated other comprehensive income.
SELF STORAGE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(AA) Historical Unaudited Statement of Operations. Represents the historical accounting of the Company's statement of operations as a registered investment company with its investments carried at fair value for the year ended December 31, 2014.
(BB) Represents the unaudited combined statements of income of the Company's Self Storage Properties for the year ended December 31, 2014. Each subsidiary owns and operates a self storage facility and each subsidiary maintains its own accounting books and records separate from the Company. Prior to the change in status as a registered investment company the Company recorded the change in the fair value of its Self Storage Properties as an unrealized gain or loss in the statement of operations. Upon the effective date of the deregistration (assumed to be January 1, 2014) of the Company as a registered investment company, the Company will consolidate the revenues and expenses of the Self Storage Properties presented in the statement of operations and no longer fair value the Self Storage Properties.
|
Combined
|
||||||||||||||||||||||||||||||||
|
Statements of
|
Summerville
|
Summerville
|
||||||||||||||||||||||||||||||
|
Income
|
Bolingbrook
|
Dolton
|
Merrillville
|
Rochester
|
Sadsbury
|
I |
|
II
|
||||||||||||||||||||||||
|
Revenue
|
||||||||||||||||||||||||||||||||
|
Rental revenue
|
$
|
3,851,751
|
$
|
673,951
|
$
|
650,736
|
$
|
570,844
|
$
|
825,962
|
$
|
538,554
|
$
|
374,188
|
$
|
217,516
|
||||||||||||||||
|
Other property related revenue
|
128,109
|
17,129
|
27,519
|
17,415
|
32,745
|
19,812
|
9,263
|
4,226
|
||||||||||||||||||||||||
|
Total revenue
|
3,979,860
|
691,080
|
678,255
|
588,259
|
858,707
|
558,366
|
383,451
|
221,742
|
||||||||||||||||||||||||
|
Expenses
|
||||||||||||||||||||||||||||||||
|
Compensation and benefits
|
463,870
|
61,670
|
48,748
|
54,252
|
108,202
|
104,136
|
68,424
|
18,438
|
||||||||||||||||||||||||
|
Property operating expenses
|
1,313,489
|
214,672
|
206,163
|
126,289
|
358,819
|
176,333
|
146,245
|
84,968
|
||||||||||||||||||||||||
|
Depreciation and amortization
|
711,095
|
153,986
|
139,392
|
133,896
|
83,818
|
86,468
|
69,573
|
43,962
|
||||||||||||||||||||||||
|
General and administrative
|
27,825
|
1,342
|
722
|
76
|
5,396
|
19,407
|
608
|
274
|
||||||||||||||||||||||||
|
Total expenses
|
2,516,279
|
431,670
|
395,025
|
314,513
|
556,235
|
386,344
|
284,850
|
147,642
|
||||||||||||||||||||||||
|
Net income before taxes
|
1,463,581
|
259,410
|
283,230
|
273,746
|
302,472
|
172,022
|
98,601
|
74,100
|
||||||||||||||||||||||||
|
Income taxes
|
27,582
|
-
|
-
|
24,210
|
-
|
-
|
2,023
|
1,349
|
||||||||||||||||||||||||
|
Net income
|
$
|
1,435,999
|
$
|
259,410
|
$
|
283,230
|
$
|
249,536
|
$
|
302,472
|
$
|
172,022
|
$
|
96,578
|
$
|
72,751
|
||||||||||||||||
(CC) Represents the elimination of the fair value accounting as a registered investment company for the underlying Self Storage Properties and providing for the underlying revenue and expenses of the Self Storage Properties (as detailed in Note BB) on a consolidated basis as of the Company's deregistration as an investment company under the Act, which is assumed to be January 1, 2014.
(DD) Represents the reclassification of dividend income from the unaffiliated issuers to Other Income. (EE) Represents the reclassification of the following historical expenses of the Company incurred for the year ended December 31, 2014 to Professional services.
|
Professional services
|
$268,989
|
||
|
Legal
|
190,768
|
||
|
Directors
|
39,236
|
||
|
Auditing
|
38,985
|
||
(FF) Represents the reclassification of the following historical expenses of the Company incurred for the year ended December 31, 2014 to General and administrative.
|
General and administrative
|
$165,893
|
|
|
Occupancy and other office expenses
|
110,396
|
|
|
Stockholder communications
|
24,607
|
|
|
Transfer agent
|
14,600
|
|
|
Insurance
|
13,630
|
|
|
Other
|
2,660
|
|
(GG) Represents the adjustment to eliminate the expenses which are attributable to the Company operating as an investment company.
(HH) Represents the adjustment to net unrealized appreciation to eliminate the income statement effect that was previously recorded by the Company under its existing accounting policy as an investment company, assuming that the deregistration order was effective on January 1, 2014. Available-for-sale securities would have been accounted for at fair value with unrealized changes in fair value recorded as a separate component of "other comprehensive income", a component of stockholders' equity.