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): December 15, 2003

 

DIVIDEND CAPITAL TRUST INC.

(Exact name of small business issuer as specified in its charter)

 

 

 

Item 2. Acquisition or Disposition of Assets

 

Purchase of the Park West, Pinnacle and DFW Facilities.  We filed a Form 8-K dated December 15, 2003, on December 30, 2003 with regard to the acquisition of six distribution facilities located in Hebron, Kentucky, a submarket of Cincinnati (“Park West”) and Dallas, Texas (“Pinnacle” and “DFW”), without the requisite financial information. Accordingly, we are filing this Form 8-K/A to include that financial information.

 

1

 

Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Real Estate Property Acquired:
Park West, Pinnacle and DFW Distribution Facilities:
	Independent Auditors’ Report
	Combined Statements of Revenue and Certain Expenses for the Nine Months Ended September 30, 2003 (Unaudited) and for the Year Ended December 31, 2002
	Notes to Combined Statements of Revenue and Certain Expenses
(b) Unaudited Pro Forma Financial Information:
	Pro Forma Financial Information (Unaudited)
	Pro Forma Consolidated Balance Sheet as of September 30, 2003 (Unaudited)
	Pro Forma Consolidated Statements of Operations for the Nine Months Ended September 30, 2003 (Unaudited)
	Pro Forma Consolidated Statements of Operations for the Year Ended December 31, 2002 (Unaudited)
	Notes to Pro Forma Consolidated Financial Statements (Unaudited)
(c) Statement of Estimated Taxable Operating Results and Cash to be Made Available by Operations for the Year ended December 31, 2002 (Unaudited)
	Note to Statement of Estimated Taxable Operating Results and Cash to be Made Available by Operations (Unaudited)

 

(d) Exhibits:

 

Exhibit Number		Exhibit Title
99.1		Press Release dated December 16, 2003

 

2

 

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 thereunto duly authorized.

 

			DIVIDEND CAPITAL TRUST INC.
March 1, 2004
			By:	/s/	Evan H. Zucker
					Evan H. Zucker
					Chief Executive Officer

 

3

 

Independent Auditors’ Report

 

The Board of Directors

Dividend Capital Trust Inc.:

 

We have audited the accompanying combined statement of revenue and certain expenses of the Park West, Pinnacle and DFW Distribution Facilities located in Hebron, Kentucky and Dallas, Texas (together the Properties) for the year ended December 31, 2002. This financial statement is the responsibility of the Property’s management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

The combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in the Current Report on Form 8-K/A of Dividend Capital Trust Inc., as described in note 2. The presentation is not intended to be a complete presentation of the Property’s revenue and expenses.

 

In our opinion, the combined financial statement referred to above presents fairly, in all material respects, the combined revenue and certain expenses of the Park West, Pinnacle and DFW Distribution Facilities for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

 

	/s/ KPMG LLP
Denver, Colorado
December 19, 2003

 

F-1

 

Park West, Pinnacle and DFW Distribution Facilities

 

Combined Statements of Revenue and Certain Expenses

 

		For the Nine Months Ended September 30, 2003			For the Year Ended December 31, 2002
		(Unaudited)
REVENUE:
Rental revenue		$	3,130,351		$	2,645,527
Other revenue		908,052			701,477
Total revenue		4,038,403			3,347,004
CERTAIN EXPENSES:
Property taxes		579,667			693,267
Repairs and maintenance		78,854			93,536
Management fees		103,266			88,915
Other operating expenses		409,046			496,805
Total expenses		1,170,833			1,372,523
EXCESS OF REVENUE OVER CERTAIN EXPENSES		$	2,867,570		$	1,974,481

 

The accompanying notes are an intergral part of these financial statements

 

F-2

 

Park West, Pinnacle and DFW Distribution Facilities

Notes to Combined Statements of Revenue and Certain Expenses

as of December 31, 2002

 

Note 1—Business

 

The accompanying combined statements of revenue and certain expenses reflects the operations of the Park West, Pinnacle and DFW Distribution Facilities (together the “Properties”) for the nine months ended September 30, 2003 and for the year ended December 31, 2002. Completed in 2001 and 2003, the Properties contain six one-story distribution facilities. Three buildings are located in Dallas, Texas (Pinnacle and DFW) and three buildings are located in Hebron, KY, a submarket of Cincinnati (Park West).

 

The Properties were acquired by Dividend Capital Trust Inc. and subsidiary (the “Company”) on December 15, 2003 for a combined purchase price of approximately $63.6 million.

 

Note 2—Basis of Presentation

 

The accompanying combined statements of revenue and certain expenses has been prepared for the purpose of complying with Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for inclusion in the Current Report on Form 8-K/A of Dividend Capital Trust Inc. and is not intended to be a complete presentation of the Properties’ revenues and expenses.  The financial statements of the Properties have been combined for presentation purposes due to the acquisitions being related acquisitions.

 

The accounting records of the Properties are maintained on the accrual basis. The accompanying combined statements of revenue and certain expenses was prepared in accordance with accounting principles generally accepted in the United States of America pursuant to the rules and regulations of the Securities and Exchange Commission.  These statements exclude certain expenses such as mortgage interest, depreciation and amortization, professional fees and other costs not directly related to future operations of the Properties.

 

The preparation of financial statements 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Interim Information (unaudited)

 

In the opinion of management, the unaudited information as of September 30, 2003 included herein contains all the adjustments necessary, which are of a normal recurring nature, to present fairly the revenue and certain expenses for the nine months ended September 30, 2003. Results of interim periods are not necessarily indicative of results to be expected for the year. Management is not aware of any material factors that would cause the information included herein to not be indicative of future operating results.

 

Note 3—Operating Leases

 

The Properties’ revenue is obtained from tenant rental payments as provided for under non-cancelable operating leases. As of December 31, 2003, the Properties were “net” leased to 15 tenants. “Net” means that the tenants are responsible for repairs, maintenance, property taxes, utilities, insurance and other operating costs while we as landlord, have responsibility for capital repairs or replacement of

 

F-3

 

specific structural components of a property such as the roof of the building, the truck court and parking areas, as well as the interior floor or slab of the building. The Company records rental revenue for the full term of the lease on a straight-line basis. In this case, where the minimum rental payments increase over the life of the lease, the Company records a receivable due from tenants for the difference between the amount of revenue recorded and the amount of cash received.

 

Future minimum rental payments due under the leases, excluding tenant reimbursements of operating expenses, as of December 31, 2002, are as follows:

 

 

Tenant reimbursements of operating expenses are included in other revenue on the accompanying combined statements of revenue and certain expenses.

 

As of December 31, 2002, the Property was leased to various tenants which operate in various industries such as manufacturing, distribution and transportation of goods.  As of December 31, 2002, Sandvik Inc., International Truck and Engine Corp. and Associated Sales and Bag Company represented 10% or more of the aggregate future rental revenues to be received by the Properties or 10% or more of the gross leasable space provided by the Properties.  The following table describes these tenants and terms of their respective lease agreements.

 

Tenant		Leased Square Feet		Percent of Properties		Annualized Rental Revenue			Percent of Properties		Lease Expiration		Rental Increases		Industry/Business
Sandvik Inc.		99,092		7.5	%	$	485,551		10.0	%	9/30/12		10/01/07 - $558,879		High-technology material engineering and manufacturing
International Truck and Engine Corp.		280,000		21.2	%	$	882,000		18.2	%	12/15/12		12/01/08 - $988,400		Manufacturing and distribution of midsized trucks, school buses, diesel engines and replacement parts
Associated Sales and Bag Company		133,332		10.1	%	$	413,328		8.5	%	1/31/09		None		Distribution of packaging and shipping supplies
Total		512,424		38.8	%	$	1,780,879		36.7	%

 

F-4

 

Dividend Capital Trust Inc. and Subsidiary

Pro Forma Financial Information

(Unaudited)

 

The accompanying unaudited pro forma consolidated balance sheet presents the historical financial information of the Company as of September 30, 2003 as adjusted for the previous acquisitions of the Rancho Business Center, Mallard Lake and West by Northwest, all made subsequent to September 30, 2003, and the Park West, Pinnacle and DFW acquisitions as if these transactions had occurred on September 30, 2003.

 

The accompanying unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2003 and the year ended December 31, 2002 combine the historical operations of the Company with the historical operations of acquired properties, with the exception of Rancho Business Center,  as if these transactions had occurred on January 1, 2002.  Rancho Business Center was acquired with no operating history and as such no activity associated with Rancho Business Center has been assumed in the presentation of the unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2003 and the year ended December 31, 2002.

 

The unaudited pro forma consolidated financial statements have been prepared by the Company’s management based upon the historical financial statements of the Company and of the individually acquired properties. These pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. The pro forma financial statements should be read in conjunction with the historical financial statements included in the Company’s previous filings with the Securities and Exchange Commission.

 

F-5

 

Dividend Capital Trust Inc. and Subsidiary

Pro Forma Consolidating Balance Sheet

As of September 30, 2003

(Unaudited)

 

		DCT Historical			Rancho Business Center			Mallard Lake			West by Northwest			Park West, Pinnacle and DFW			Pro Forma Adjustments			Pro Forma Consolidated
ASSETS
Real Estate		$	34,876,256		$	9,281,409	(b)	$	10,122,156	(b)	$	7,526,436	(b)	$	61,327,691	(b)	$	—		$	123,133,948
Intangible lease costs		4,560,182			556,985		(b)	1,247,414		(b)	1,070,491		(b)	5,727,995		(b)	—			13,163,067
Acc. Dep. & Amort		(428,668		)	—			—			—			—			—			(428,668		)
Net Investment in Real Estate		39,007,770			9,838,394			11,369,570			8,596,927			67,055,686			—			135,868,347
Cash and cash equivalents		16,415,362			(9,775,841		)(a)	(11,087,705		)(a)	(7,668,438		)(a)	(25,146,429		)(a)	46,487,728		(j)	9,224,677
Other assets, net		1,551,852			12,832		(c)(d)	(231,865		)(d)	(348,232		)(d)	287,288		(e)	—			1,271,875
Total Assets		$	56,974,984		$	75,385		$	50,000		$	580,257		$	42,196,545		$	46,487,728		$	146,364,899
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Accounts Payable & Accrued Expenses		$	591,531		$	30,385	(f)	$	—	(f)	$	164,399	(f)	$	—		$	—		$	786,315
Dividends Payable		695,850			—			—			—			—			—			695,850
Other liabilities		458,699			45,000		(g)	50,000		(g)	415,858		(h)	370,097		(h)	—			1,339,654
Intangible Lease Liability, net		127,421			—			—			—			1,326,448		(b)	—			1,453,869
Total Mortgage Note Payable		—			—			—			—			40,500,000		(i)	—			40,500,000
Total Liabilities		1,873,501			75,385			50,000			580,257			42,196,545			—			44,775,688
Minority Interest		1,000			—			—			—			—			—			1,000
Shareholders' Equity:
Common Stock		63,981			—			—			—			—			53,129		(j)	117,110
Additional Paid-in-Capital		55,920,950			—			—			—			—			46,434,599		(j)	102,355,549
Distributions in Excess of Earnings		(884,448		)	—			—			—			—			—			(884,448		)
Total Shareholders' Equity		55,100,483			—			—			—			—			46,487,728		(j)	101,588,211
Total Liabilities & Shareholders’ Equity		$	56,974,984		$	75,385		$	50,000		$	580,257		$	42,196,545		$	46,487,728		$	146,364,899

 

F-6

 

Dividend Capital Trust Inc. and Subsidiary

Pro Forma Statement of Operations

For the Nine Months Ended September 30, 2003

(Unaudited)

 

		DCT Corporate			Chickasaw Facility			Mallard Lake			West by Northwest			Park West, Pinnacle and DFW			Pro Forma Adjustments(1)			Consolidated
REVENUE:
Rental revenue		$	960,115		$	598,888	(1)	$	721,989	(1)	$	212,318	(1)	$	3,154,540	(1)	$	—		$	5,647,850
Other income		50,748			203,143		(1)	1,275		(1)	119,761		(1)	908,052		(1)	—			1,282,979
Total Income		1,010,863			802,031			723,264			332,079			4,062,592			—			6,930,829
EXPENSES:
Operating Expenses		88,978			217,995		(1)	11,757		(1)	228,019		(1)	1,170,833		(1)	—			1,717,582
Depreciation & amortization		428,391			362,726		(1)	201,060		(1)	155,606		(1)	2,353,591		(1)	—			3,501,374
Interest expense		164,263			—			—			—			1,518,750		(1)	—			1,683,013
General and administrative  expenses		223,491			—			—			—			—			—			223,491
Total Operating Expenses		905,123			580,721			212,817			383,625			5,043,174			—			7,125,460
NET INCOME (LOSS)		$	105,740		$	221,310		$	510,447		$	(51,546	)	$	(980,582	)	$	—		$	(194,631	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic		2,160,712															9,550,237		(2)	11,710,949
Diluted		2,180,712															9,550,237		(2)	11,730,949
NET INCOME (LOSS) PER COMMON SHARE
Basic and Diluted		$	0.05																	$	(0.02	)

 

F-7

 

Dividend Capital Trust Inc. and Subsidiary

Pro Forma Statement of Operations

For the Year Ended December 31, 2002

(Unaudited)

 

		DCT Corporate				Chickasaw Facility			Mallard Lake Facility			West by Northwest Facility			Park West, Pinnacle and DFW			Pro Forma Adjustments(1)			Consolidated
REVENUE:
Rental revenue		$	—			$	649,849	(1)	$	957,577	(1)	$	707,684	(1)	$	2,677,779	(1)	$	—		$	4,992,889
Other income		155				91,381		(1)	14,412		(1)	292,636		(1)	701,477		(1)	—			1,100,061
Total Income		155				741,230			971,989			1,000,320			3,379,256			—			6,092,950
EXPENSES:
Operating Expenses		—				262,178		(1)	23,252		(1)	296,467		(1)	1,372,523		(1)	—			1,954,420
Depreciation & amortization		—				725,453		(1)	268,079		(1)	207,475		(1)	3,138,121		(1)	—			4,339,128
Interest expense		—				—			—			—			2,025,000		(1)	—			2,025,000
General and administrative  expenses		212,867				—			—			—			—			—			212,867
Total Operating Expenses		212,867				987,631			291,331			503,942			6,535,644			—			8,531,415
NET INCOME (LOSS) before minority interest		(212,712			)	(246,401		)	680,658			496,378			(3,156,388		)	—			(2,438,465		)
Minority Interest		200,000				—			—			—			—			—			200,000
NET INCOME (LOSS)		$	(12,712		)	$	(246,401	)	$	680,658		$	496,378		$	(3,156,388	)	$	—		$	(2,238,465	)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic		200																11,710,749		(2)	11,710,949
Diluted		200																11,730,749		(2)	11,730,949
NET INCOME (LOSS) PER COMMON SHARE
Basic and Diluted		$		(63.56	)																$	(0.19	)

 

F-8

 

Dividend Capital Trust Inc. and Subsidiary

 

Notes to Pro Forma Consolidated Financial Statements

 

(Unaudited)

 

Pro Forma Consolidated Balance Sheet as of September 30, 2003:

 

 

(a)           Cash paid for the acquisitions closed subsequent to September 30, 2003 consists of the following:

 

		Rancho Business Center			Mallard Lake			West by Northwest			Park West, Pinnacle and DFW
Purchase Price		$	10,001,955		$	10,978,631		$	8,275,000		$	63,550,000
Closing Costs		5,898			715			445			69,706
Over Funding Due From Title Company		—			—			—			287,288
Acquisition fee paid to affiliate		298,373			329,359			248,250			1,906,500
Less:
Debt proceeds		—			—			—			40,500,000
Earnest money		500,000			221,000			330,000			—
Credit for Tenant Security Deposits		—			—			21,336			167,065
Credit for Tenant Improvement Allowance		—			—			290,000			—
Credit for Pre-paid Rents		—			—			49,522			—
Credit for Real Estate Taxes		30,385			—			164,399			—
Cash paid at closing		9,775,841			11,087,705			7,668,438			25,146,429
Add:
Debt proceeds		—			—			—			40,500,000
Earnest money		500,000			221,000			330,000			—
Credits		30,385			—			525,257			(120,224		)
Estimated remaining closing costs		45,000			50,000			55,000			203,032
Due Diligence costs		12,551			10,865			18,232			—
Total Acquisition Costs		$	10,363,777		$	11,369,570		$	8,596,927		$	65,729,237

 

(b)                                 The purchase price of these acquisitions were allocated to tangible and intangible assets in accordance with SFAS No. 141, “Business Combinations.”

 

(c)                                  This amount consists of a restricted cash item related to an allowance for tenant improvements.

 

(d)                                 These amounts represent deferred acquisition costs that were reclassed to investment in real estate. Deferred acquisition costs are costs incurred prior to the closing of the acquisition such as due diligence costs.

 

(e)                                  This amount represents the amount due from the title company as a result of over funding at closing.

 

(f)                                    These amounts are accruals related to property taxes and other payables assumed at closing for which we were given a credit to reduce cash due upon closing of the property.

 

(g)                                 This amount consists of tenant deposits and management’s estimate on remaining acquisition costs.

 

F-9

 

(h)                                 This amount consists of tenant deposits, management’s estimate on remaining acquisition costs and certain liabilities assumed at closing for commitments associated with new leases such as tenant improvements and leasing commissions.

 

(i)                                     The Company used certain debt financing in the amount of $40.5 million to acquire the Park West, Pinnacle and DFW distribution facilities (see note (3)).

 

(j)                                     A certain amount of capital was raised through the Company’s public offering after September 30, 2003 which was used to fund the Rancho Business Center, Mallard Lake, West by Northwest and Park West, Pinnacle and DFW.  As such, management included the number of shares that were sold subsequent to September 30, 2003 through December 15, 2003, the date of the latest acquisition in order to facilitate adequate funding of these acquisitions.

 

Shares Sold from October 1 through December 15, 2003		5,312,883
Gross Proceeds		$	53,128,832
Less Selling Costs		(6,641,104		)
Net Proceeds		$	46,487,728

 

Pro Forma Consolidated Statements of Operations for the Nine Months Ended September 30, 2003 and for the Twelve Months Ended December 31, 2002:

 

(1)                                  In accordance with Rule 3.14 of Regulation S-X, the following acquisitions required an audit of the statement of revenue and certain expenses. The pro forma adjustments presented are based on the historical information reported within the audited statement of revenue and certain expenses plus certain adjustments as follows:

 

Chickasaw

 

		9-Months (e)									12-Months(c)
		Chickasaw Facility*			Pro Forma Adjustments			Total Pro Forma			Chickasaw Facility*			Pro Forma Adjustments			Total Pro Forma
REVENUE:
Rental revenue		$	588,729		$	10,159	(a)	$	598,888		$	629,530		$	20,319	(a)	$	649,849
Other income		203,143			—			203,143			91,381			—			91,381
Total Income		791,872			10,159			802,031			720,911			20,319			741,230
EXPENSES:
Operating Expenses		217,995			—			217,995			262,178			—			262,178
Depreciation & amortization		—			362,726		(b)	362,726			—			725,453		(b)	725,453
Interest expense		—			—			—			—			—			—
General and administrative expenses		—			—			—			—			—			—
Total Operating Expenses		217,995			362,726			580,721			262,178			725,453			987,631
NET INCOME (LOSS)		$	573,877		$	(352,567	)	$	221,310		$	458,733		$	(705,134	)	$	(246,401	)

 

F-10

 

Mallard Lake

 

		9-Months									12-Months
		Mallard Lake Facility*			Pro Forma Adjustments			Total Pro Forma			Mallard Lake Facility*			Pro Forma Adjustments			Total Pro Forma
REVENUE:
Rental revenue		$	721,989		$	—	(a)	$	721,989		$	957,577		$	—	(a)	$	957,577
Other income		1,275			—			1,275			14,412			—			14,412
Total Income		723,264			—			723,264			971,989			—			971,989
EXPENSES:
Operating Expenses		11,757			—			11,757			23,252			—			23,252
Depreciation & amortization					201,060		(b)	201,060			—			268,079		(b)	268,079
Interest expense		—			—			—			—			—			—
General and administrative expenses		—			—			—			—			—			—
Total Operating Expenses		11,757			201,060			212,817			23,252			268,079			291,331
NET INCOME (LOSS)		$	711,507		$	(201,060	)	$	510,447		$	948,737		$	(268,079	)	$	680,658

 

West by Northwest

 

		9-Months									12-Months
		West by Northwest Facility*			Pro Forma Adjustments			Total Pro Forma			West by Northwest Facility*			Pro Forma Adjustments			Total Pro Forma
REVENUE:
Rental revenue		$	212,318	(c)	$	—	(a)	$	212,318		$	707,684	(c)	$	—	(a)	$	707,684
Other income		119,761			—			119,761			292,636			—			292,636
Total Income		332,079			—			332,079			1,000,320			—			1,000,320
EXPENSES:
Operating Expenses		228,019			—			228,019			296,467			—			296,467
Depreciation & amortization		—			155,606		(b)	155,606			—			207,475		(b)	207,475
Interest expense		—			—			—			—			—			—
General and administrative expenses		—			—			—			—			—			—
Total Operating Expenses		228,019			155,606			383,625			296,467			207,475			503,942
NET INCOME (LOSS)		$	104,060		$	(155,606	)	$	(51,546	)	$	703,853		$	(207,475	)	$	496,378

 

F-11

 

Park West, Pinnacle and DFW

 

		9-Months									12-Months
		Park West, Pinnacle and DFW*			Pro Forma Adjustments			Total Pro Forma			Park West, Pinnacle and DFW*			Pro Forma Adjustments			Total Pro Forma
REVENUE:
Rental revenue		$	3,130,351		$	24,189	(a)	$	3,154,540		$	2,645,527		$	32,252	(a)	$	2,677,779
Other income		908,052			—			908,052			701,477			—			701,477
Total Income		4,038,403			24,189			4,062,592			3,347,004			32,252			3,379,256
EXPENSES:
Operating Expenses		1,170,833			—			1,170,833			1,372,523			—			1,372,523
Depreciation & amortization		—			2,353,591		(b)	2,353,591			—			3,138,121		(b)	3,138,121
Interest expense		—			1,518,750		(d)	1,518,750			—			2,025,000		(d)	2,025,000
General and administrative expenses		—			—			—			—			—			—
Total Operating Expenses		1,170,833			3,872,341			5,043,174			1,372,523			5,163,121			6,535,644
NET INCOME (LOSS)		$	2,867,570		$	(3,848,152	)	$	(980,582	)	$	1,974,481		$	(5,130,869	)	$	(3,156,388	)

 

*                                         As Filed Rule 3.14 of Regulation S-X

 

(a)                                  In accordance with SFAS No. 141, these amounts represent the amortization amounts of the above and below market values of the in-place leases. The intangible lease assets and liabilities are amortized over the life of the lease to rental income.

 

(b)                                 Depreciation and amortization expense for the Pro Forma periods presented is based on the allocation of the purchase price between tangible and intangible assets. The Company depreciates these assets on a straight-line basis over the estimated useful life of the assets. The following table represents the allocation of the total cost of the Company’s properties:

 

		Depreciation or Amortization Period		Consolidated
Land		N/A		$	15,986,243
Buildings		40 Years		94,099,446
Land Improvements		20 Years		6,170,188
Tenant Improvements		Term of the Lease		6,878,070
Intangible Lease and Acquisition Costs		Average Life of Lease		11,727,964
Total Cost				$	134,861,911

 

(c)                                  One of the property’s two tenants vacated their space during December 2002. There were no adjustments made to the historical financial information that would consider this vacant space during 2003.

 

F-12

 

(d)                                 Interest expense for the Pro Forma periods presented was calculated given the terms of our mortgage note. The following table sets forth the calculation for the pro forma adjustments as if the notes were outstanding as of January 1, 2002:

 

(e)                                  These proforma amounts only reflect the operating results prior to acquisition as the actual operating results since acquition are reflected in the Capital companies historical operating results.

 

							Pro Forma Amounts
Amount			Note		Interest Rate		For the Nine Month Period			For the Twelve Month Period
$	40,500,000		Mortgage Note		Annual interest rate equal to 5.0%		$	1,518,750		$	2,025,000
Total							$	1,518,750		$	2,025,000

 

(2)                                                                                  For purposes of calculating the pro forma weighted average number of common shares outstanding, management determined the number of shares sold as of the latest acquisition, Park West, Pinnacle and DFW, which was December 15, 2003. As the pro forma financial information presented assumes these acquisitions occurred on January 1, 2002, the number of shares outstanding as of December 15, 2003 are assumed to have been outstanding as of January 1, 2002 as well.

 

F-13

 

Dividend Capital Trust Inc. and Subsidiary

 

Statement of Estimated Taxable Operating Results and Cash

to be Made Available by Operations

For the Year Ended December 31, 2002

(Unaudited)

 

The following represents an estimate of the taxable operating results and cash to be made available by operations expected to be generated by the Company (including the operations of the recently acquired properties) based upon the pro forma consolidated statement of operations for the year ended December 31, 2002.  These estimated results do not purport to represent results of operations for these properties in the future and were prepared on the basis described in the accompanying note, which should be read in conjunction herewith.

 

Revenue		$	5,272,596
Expenses
Operating expenses		1,954,420
Depreciation and amortization expense		3,362,771
Interest expense		2,025,000
General and administrative expenses		212,867
Total expenses		7,555,058
Estimated Taxable Operating Loss		$	2,282,462
Add Depreciation and amortization expense		3,362,771
Estimated Cash to be Made Available by Operations		$	1,080,309

 

F-14

 

Dividend Capital Trust Inc. and Subsidiary

 

Note to Statement of Estimated Taxable Operating Results

And Cash to be Made Available by Operations

For the Year Ended December 31, 2002

(Unaudited)

 

Note 1 – Basis of Presentation

 

Depreciation has been estimated based upon an allocation of the purchase price of the Properties to land, building, land improvements and building improvements and assuming (for tax purposes) a 39.5-year, 20-year and 10-year useful life, respectively, for the depreciable assets applied on a straight-line method.

 

No income taxes have been provided because the Company is organized and operates in such a manner so as to qualify as a Real Estate Investment Trust (“REIT”) under the provisions of the Internal Revenue Code (the “Code”).  Accordingly, the Company generally will not pay Federal income taxes provided that distributions to its stockholders equal at least the amount of its REIT taxable income as defined under the Code.

 

F-15