UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 25, 2013
iSTAR FINANCIAL INC.
(Exact name of registrant as specified in its charter)
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Maryland |
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1-15371 (Commission File Number) |
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95-6881527 |
1114 Avenue of the Americas, 39th Floor
New York, NY 10036
(Address of principal executive offices)
(Zip code)
Registrant’s telephone number, including area code: (212) 930-9400
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets
On April 19, 2013, iStar Financial, Inc. (the “Company”) completed the sale of its 24% equity interest in LNR Property LLC (“LNR”) and received $220 million in proceeds. The sale was part of a larger transaction whereby the Company and other sellers (together, the “Owners”) sold 100% of the common stock of LNR to Starwood Property Trust Inc. and investment firm Starwood Capital Group (together, “Starwood”) pursuant to the Unit Purchase Agreement (“Purchase Agreement”) entered into by the Owners and Starwood on January 23, 2013 for an aggregate purchase price of $1.1 billion.
On April 22, 2013, the Company issued a press release regarding the completion of the sale of LNR. A copy of this press release is included as Exhibit 99.2 to the Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
(a) Pro forma financial information
See Exhibit 99.1 to this Current Report on Form 8-K.
(b) Exhibits
The following exhibits are filed with this report:
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Exhibit |
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Description |
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99.1 |
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Unaudited Pro Forma Condensed Consolidated Financial Statements of iStar Financial Inc.: Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012; Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012 Notes to Pro Forma Condensed Consolidated Financial Statements |
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99.2 |
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Press Release |
Forward Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which cause actual results or outcomes to differ materially from those contained in the forward-looking statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in our other SEC filings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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iSTAR FINANCIAL INC. |
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Date: April 25, 2013 |
/s/ JAY SUGARMAN |
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Jay Sugarman |
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Chairman and Chief Executive Officer |
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Unaudited Pro Forma Condensed Consolidated Financial Statements of iStar Financial Inc.: Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012; Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012 Notes to Pro Forma Condensed Consolidated Financial Statements |
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99.2 |
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Press Release |
Exhibit 99.1
Index to Pro Forma Financial Information
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Page |
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Unaudited Pro Forma Condensed Consolidated Financial Statements of iStar Financial, Inc. |
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Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012 |
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1 |
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Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012 |
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2 |
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Notes to the Pro Forma Condensed Consolidated Financial Statements |
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3 |
iStar Financial Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2012
(In thousands, except share data)
(Unaudited)
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As |
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Pro Forma |
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Pro Forma |
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ASSETS |
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Real Estate |
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Real estate, at cost |
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$ |
3,226,648 |
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$ |
— |
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$ |
3,226,648 |
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Less: accumulated depreciation |
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(427,625 |
) |
— |
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(427,625 |
) | |||
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Real estate, net |
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2,799,023 |
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— |
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2,799,023 |
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Real estate available and held for sale |
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635,865 |
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— |
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635,865 |
| |||
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3,434,888 |
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— |
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3,434,888 |
| |||
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Loans receivable, net |
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1,829,985 |
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— |
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1,829,985 |
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Other investments |
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398,843 |
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(205,773 |
) |
B |
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193,070 |
| |||
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Cash and cash equivalents |
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256,344 |
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195,101 |
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C |
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451,445 |
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Restricted cash |
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36,778 |
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— |
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36,778 |
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Accrued interest and operating lease income receivable, net |
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15,226 |
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— |
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15,226 |
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Deferred operating lease income receivable |
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84,735 |
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— |
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84,735 |
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Deferred expenses and other assets, net |
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93,990 |
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25,180 |
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D |
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119,170 |
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Total assets |
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$ |
6,150,789 |
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$ |
14,508 |
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$ |
6,165,297 |
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LIABILITIES AND EQUITY |
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Liabilities: |
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Accounts payable, accrued expenses and other liabilities |
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$ |
132,460 |
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$ |
— |
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$ |
132,460 |
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Debt obligations, net |
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4,691,494 |
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— |
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4,691,494 |
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Total liabilities |
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4,823,954 |
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— |
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4,823,954 |
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Commitments and contingencies |
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— |
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— |
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— |
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Redeemable noncontrolling interests |
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13,681 |
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— |
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13,681 |
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Equity: |
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iStar Financial Inc. shareholders’ equity: |
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Preferred Stock Series D, E, F, G and I, liquidation preference $25.00 per share |
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22 |
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— |
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22 |
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High Performance Units |
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9,800 |
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— |
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9,800 |
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Common Stock, $0.001 par value, 200,000 shares authorized, 142,699 issued and 83,782 outstanding at December 31, 2012 and 140,028 issued and 81,920 outstanding at December 31, 2011 |
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143 |
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— |
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143 |
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Additional paid-in capital |
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3,832,780 |
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— |
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3,832,780 |
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Retained earnings (deficit) |
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(2,360,647 |
) |
16,411 |
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E |
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(2,344,236 |
) | |||
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Accumulated other comprehensive income (loss) |
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(1,185 |
) |
(1,903 |
) |
F |
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(3,088 |
) | |||
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Treasury stock, at cost, $0.001 par value, 58,917 shares at December 31, 2012 and 58,108 shares at December 31, 2011 |
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(241,969 |
) |
— |
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(241,969 |
) | |||
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Total iStar Financial Inc. shareholders’ equity |
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1,238,944 |
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14,508 |
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1,253,452 |
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Noncontrolling interests |
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74,210 |
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— |
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74,210 |
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Total equity |
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1,313,154 |
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14,508 |
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1,327,662 |
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Total liabilities and equity |
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$ |
6,150,789 |
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$ |
14,508 |
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6,165,297 |
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The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
iStar Financial Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2012
(In thousands, except per share data)
(Unaudited)
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For the Year Ended December 31, 2012 |
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As |
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Pro Forma |
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Pro Forma |
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Revenue: |
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Operating lease income |
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$ |
219,019 |
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$ |
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$ |
219,019 |
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Interest income |
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133,410 |
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— |
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133,410 |
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Other income |
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48,043 |
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— |
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48,043 |
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Total revenue |
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400,472 |
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— |
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400,472 |
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Costs and expenses: |
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Interest expense |
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355,097 |
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— |
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355,097 |
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Real estate expense |
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151,827 |
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— |
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151,827 |
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Depreciation and amortization |
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69,350 |
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— |
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69,350 |
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General and administrative |
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80,856 |
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— |
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80,856 |
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Provision for loan losses |
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81,740 |
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— |
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81,740 |
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Impairment of assets |
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13,778 |
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— |
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13,778 |
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Other expense |
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17,266 |
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— |
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17,266 |
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Total costs and expenses |
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769,914 |
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— |
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769,914 |
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Income (loss) before earnings from equity method investments and other items |
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(369,442 |
) |
— |
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(369,442 |
) | |||
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Gain (loss) on early extinguishment of debt, net |
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(37,816 |
) |
— |
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(37,816 |
) | |||
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Earnings from equity method investments |
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103,009 |
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(60,669 |
) |
H |
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42,340 |
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Income (loss) from continuing operations before income taxes |
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(304,249 |
) |
(60,669 |
) |
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(364,918 |
) | |||
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Income tax (expense) benefit |
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(8,445 |
) |
2,219 |
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I |
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(6,226 |
) | |||
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Income (loss) from continuing operations |
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(312,694 |
) |
(58,450 |
) |
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(371,144 |
) | |||
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Income (loss) from discontinued operations |
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(19,465 |
) |
— |
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(19,465 |
) | |||
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Gain from discontinued operations |
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27,257 |
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— |
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27,257 |
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Income from sales of residential property |
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63,472 |
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— |
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63,472 |
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Net income (loss) |
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(241,430 |
) |
(58,450 |
) |
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(299,880 |
) | |||
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Net (income) loss attributable to noncontrolling interests |
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1,500 |
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— |
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|
1,500 |
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Net income (loss) attributable to iStar Financial Inc. |
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(239,930 |
) |
(58,450 |
) |
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(298,380 |
) | |||
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Preferred dividends |
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(42,320 |
) |
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(42,320 |
) | |||
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Net income (loss) allocable to HPU holders and Participating Security holders |
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9,253 |
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— |
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9,253 |
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Net income (loss) allocable to common shareholders |
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$ |
(272,997 |
) |
$ |
(58,450 |
) |
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$ |
(331,447 |
) |
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Per common share data: |
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Income (loss) attributable to iStar Financial Inc. from continuing operations (1): |
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Basic and diluted |
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$ |
(3.35 |
) |
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$ |
(4.05 |
) | |
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Weighted average number of common shares — basic & diluted |
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83,742 |
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83,742 |
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Per HPU share data: |
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Income (loss) attributable to iStar Financial Inc. from continuing operations (1): |
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Basic and diluted |
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$ |
(633.94 |
) |
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$ |
(766.47 |
) | |
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Weighted average number of HPU shares—basic and diluted |
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15 |
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15 |
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Explanatory Note:
(1) For the year ended December 31, 2012, pro forma income (loss) attributable to iStar Financial Inc. from continuing operations and allocable to the common shareholder and HPU holders was ($339,214) and ($11,497), respectively, on both a basic and dilutive basis.
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
iStar Financial Inc.
Notes to the Pro Forma Condensed Consolidated Financial Statements
(unaudited)
On April 19, 2013, iStar Financial, Inc. (the “Company”) completed the sale of its 24% equity interest in LNR Property LLC (“LNR”) and received $220 million in proceeds. The sale was part of a larger transaction whereby the Company and other sellers (together, the “Owners”) sold 100% of the common stock of LNR to Starwood Property Trust Inc. and investment firm Starwood Capital Group (together, “Starwood”) pursuant to the Unit Purchase Agreement (“Purchase Agreement”) entered into by the Owners and Starwood on January 23, 2013 for an aggregate purchase price of $1.1 billion.
Basis of Presentation
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012 has been prepared to reflect the effect of the LNR transaction as if it had occurred on December 31, 2012. The accompanying unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012, are presented assuming the LNR transaction had been completed on January 1, 2012.
In management’s opinion, all material adjustments necessary to reflect the impact of the LNR transaction have been made in the accompanying unaudited pro forma Condensed Consolidated Financial Statements. The accompanying unaudited Pro Forma Condensed Consolidated Financial Statements are not necessarily indicative of the financial condition, results of operations or cash flows that would have been reported had the transactions occurred on the dates specified, nor are they indicative of the Company’s future financial condition or results of operations. The unaudited pro forma adjustments are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K.
The unaudited condensed consolidated pro forma financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Unaudited Pro Forma Adjustments
The pro forma adjustments have been prepared to reflect the following:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012:
(A) Adjustments reflect the effect of the LNR transaction as if it had occurred on December 31, 2012.
(B) Reflects the elimination of the carrying value of the investment assuming the investment was sold on December 31, 2012.
(C) Reflects the cash proceeds received on April 19, 2013.
(D) Reflects proceeds held in escrow as part of the sale for potential indemnification obligations. The Company is not currently aware that any material indemnifications claims are probable of occurring.
(E) Reflects net impact to retained earnings (deficit) after adjusting for changes to assets, liabilities and accumulated other comprehensive income (loss).
(F) Reflects the realization of the Company’s share in LNR’s accumulated other comprehensive income (loss) as of December 31, 2012.
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012:
(G) Adjustment reflects the effect of the LNR transaction as if it had occurred on January 1, 2012.
(H) Reflects the removal of the 2012 earnings from the LNR investment that was recognized by the Company during 2012.
(I) Reflects the reversal of tax expenses that was attributable to the LNR equity in earnings recognized by the Company in 2012.
Exhibit 99.2
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iStar Financial Inc. |
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1114 Avenue of the Americas |
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New York, NY 10036 |
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(212) 930-9400 |
|
News Release |
investors@istarfinancial.com |
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COMPANY CONTACTS |
[NYSE: SFI] |
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David M. DiStaso |
Jason Fooks |
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Chief Financial Officer |
Investor Relations |
iStar Financial Completes Sale of LNR
NEW YORK — April 22, 2013 — iStar Financial Inc. (NYSE: SFI) announced today that it has completed the sale of its 24% equity interest in LNR Property LLC (“LNR”) and received $220 million in net proceeds. The sale was part of a larger transaction whereby the Company and LNR’s other co-owners sold 100% of LNR to Starwood Property Trust Inc. and investment firm Starwood Capital Group for an aggregate purchase price of $1.05 billion.
The Company said that it intends to utilize the net proceeds from the sale of LNR to grow its investment originations activity.
* * *
iStar Financial Inc. (NYSE: SFI) is a fully-integrated finance and investment company focused on the commercial real estate industry. The Company provides custom-tailored investment capital to high-end private and corporate owners of real estate and invests directly across a range of real estate sectors. The Company, which is taxed as a real estate investment trust (“REIT”), has invested more than $35 billion over the past two decades. Additional information on iStar Financial is available on the Company’s website at www.istarfinancial.com.
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