EX-99.3 6 ny20005185x1_ex99-3.htm EXHIBIT 99.3
Exhibit 99.3

GRIFFIN REALTY TRUST, INC.
 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

On August 26, 2022 (the “Effective Date”), various subsidiaries (the “GRT Sellers”) of Griffin Realty Trust, Inc. (“GRT”) and various subsidiaries (the “Office Buyers”) of Galaxy REIT LLC, a newly formed Delaware limited liability company that is expected to qualify as a real estate investment trust, entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”), pursuant to which, on the Effective Date, the GRT Sellers sold a 41-property office portfolio (the "Office Portfolio") to the Office Buyers (the “Office Portfolio Sale”). The purchase price for the Office Portfolio Sale was $1.132 billion in cash, subject to customary prorations and credits as set forth in the Purchase and Sale Agreement. GRT will retain a 49% interest in the Office Portfolio as described below.

The Office Portfolio is comprised of 53 buildings and one land parcel and includes properties with shorter weighted average lease terms and higher estimated future capital expenses in relation to the balance of GRT’s other assets. The assets in the Office Portfolio are located in various markets across the United States and are generally leased to single tenants.

GRT intends to utilize the net proceeds from the Office Portfolio Sale primarily to pay off debt to best position GRT to facilitate subsequent steps in GRT’s strategic monetization process.

GRT, through a subsidiary, will hold its remaining 49 percent interest in the Office Portfolio through a newly-formed joint venture (the “Office Joint Venture”). As of the Effective Date, GRT's interest in the Office Joint Venture will be deconsolidated and will be accounted for using the equity method.

The pro forma information should be read in conjunction with the historical consolidated financial statements and notes thereto of GRT included in its Annual Report on Form 10-K for the year ended December 31, 2021 and its Quarterly Report on Form 10-Q for the period ended June 30, 2022.

The following unaudited pro forma financial statements are based on our historical consolidated financial statements as adjusted to give effect to the Office Portfolio Sale and the repayment of debt with the net proceeds of the Office Portfolio Sale and associated debt breakage costs. The unaudited pro forma consolidated balance sheet as of June 30, 2022 gives effect to the transactions as if they had occurred on June 30, 2022. The unaudited pro forma consolidated statements of operations for the six months ended June 30, 2022 and twelve months ended December 31, 2021 give effect to the disposition as it if had occurred on January 1, 2021. The pro forma adjustments include transaction accounting adjustments to reflect the accounting for the Office Portfolio Sale, joint venture formation, and related debt repayment in accordance with US GAAP. The assumptions used and the pro forma adjustments derived from such assumptions are based on currently available information, and we believe such assumptions are reasonable under the circumstances.

The unaudited consolidated pro forma financial information is being presented for informational purposes and does not purport to represent what our actual financial condition or results of operations would have been had the Office Portfolio Sale and the repayment of debt with the net proceeds of the Office Portfolio Sale and associated debt breakage costs and other adjustments described herein occurred as of June 30, 2022 in the case of the unaudited pro forma consolidated balance sheet or on January 1, 2021 in the case of the unaudited pro forma consolidated statements of operations, nor does it purport to represent GRT's results of operations or financial position for any future period.

1
GRIFFIN REALTY TRUST, INC.
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
June 30, 2022
(in thousands, except unit amounts)

   
`
    
Disposition of
          
Repayment of
          
Pro Forma
  
   
GRT (1)
    
Office Portfolio
          
Debt
          
GRT
  
ASSETS
                                    
Cash and cash equivalents
  
$
202,655
    
$
889,424
      
(2
)
  
$
(856,598
)
    
(6
)
  
$
235,481
  
Restricted cash
    
19,638
      
—
              
—
              
19,638
  
Real estate:
                                                
Land
    
573,306
      
(179,721
)
    
(3
)
    
—
              
393,585
  
Building and improvements
    
4,029,828
      
(1,091,217
)
    
(3
)
    
—
              
2,938,611
  
Tenant origination and absorption cost
    
853,542
      
(237,763
)
    
(3
)
    
—
              
615,779
  
Construction in progress
    
4,581
      
(767
)
    
(3
)
    
—
              
3,814
  
Total real estate
    
5,461,257
      
(1,509,468
)
            
—
              
3,951,789
  
Less: accumulated depreciation and amortization
    
(1,066,176
)
    
401,533
      
(3
)
    
—
              
(664,643
)
Total real estate, net
    
4,395,081
      
(1,107,935
)
            
—
              
3,287,146
  
Intangible assets, net
    
40,179
      
(3,823
)
    
(3
)
    
—
              
36,356
  
Deferred rent receivable
    
111,507
      
(34,446
)
    
(3
)
    
—
              
77,061
  
Deferred leasing costs, net
    
48,835
      
(20,852
)
    
(3
)
    
—
              
27,983
  
Goodwill
    
229,948
      
—
              
—
              
229,948
  
Due from affiliates
    
226
      
—
              
—
              
226
  
Right of use asset
    
39,997
      
(3,661
)
    
(3
)
    
—
              
36,336
  
Investment in unconsolidated entities
    
—
      
159,906
      
(4
)
    
—
              
159,906
  
Interest rate swap asset
    
21,905
      
—
              
—
              
21,905
  
Other assets
    
39,045
      
(3,773
)
    
(3
)
    
—
              
35,272
  
Total assets
  
$
5,149,016
    
$
(125,160
)
          
$
(856,598
)
          
$
4,167,258
  
LIABILITIES AND EQUITY
                                                
Debt, net
  
$
2,529,228
    
$
—
            
$
(841,223
)
    
(6
)
  
$
1,688,005
  
Restricted reserves
    
8,417
      
(1,157
)
    
(3
)
    
—
              
7,260
  
Distributions payable
    
12,078
      
—
              
—
              
12,078
  
Due to affiliates
    
1,690
      
—
              
—
              
1,690
  
Intangible liabilities, net
    
27,420
      
(3,299
)
    
(3
)
    
—
              
24,121
  
Lease liability
    
52,244
      
(5,673
)
    
(3
)
    
—
              
46,571
  
Accrued expenses and other liabilities
    
110,815
      
(20,964
)
    
(3
)
    
—
              
89,851
  
Total liabilities
    
2,741,892
      
(31,093
)
            
(841,223
)
            
1,869,576
  
Commitments and contingencies
                                                
Perpetual convertible preferred shares
    
125,000
      
—
              
—
              
125,000
  
Noncontrolling interests subject to redemption; 556,099 units as of June 30, 2022
    
4,671
      
—
              
—
              
4,671
  
Stockholders’ equity:
                                                
Common stock, $0.001 par value; 800,000,000 shares authorized; 324,740,552 shares outstanding in the aggregate as of June 30, 2022
    
325
      
—
              
—
              
325
  
Additional paid-in capital
    
2,954,932
      
—
              
—
              
2,954,932
  
Cumulative distributions
    
(979,028
)
    
—
              
—
              
(979,028
)
Accumulated earnings
    
69,927
      
(94,067
)
    
(5
)
    
(15,375
)
    
(7
)
    
(39,515
)
Accumulated other comprehensive loss
    
21,078
      
—
              
—
              
21,078
  
Total stockholders’ equity
    
2,067,234
      
(94,067
)
            
(15,375
)
            
1,957,792
  
Noncontrolling interests
    
210,219
      
—
              
—
              
210,219
  
Total equity
    
2,277,453
      
(94,067
)
            
(15,375
)
            
2,168,011
  
Total liabilities and equity
  
$
5,149,016
    
$
(125,160
)
          
$
(856,598
)
          
$
4,167,258
  

2
GRIFFIN REALTY TRUST, INC.
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
June 30, 2022
(in thousands, except unit amounts)


 I.
Adjustments to Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2022


(1)
Represents GRT's unaudited consolidated balance sheet as of June 30, 2022.
(2)
Represents the estimated net proceeds for the Office Portfolio Sale, calculated below, inclusive of estimated transaction costs for the Office Portfolio Sale.
(3)
Represents the elimination of assets and liabilities associated with the Office Portfolio Sale.
(4)
Represents our estimated initial equity investment in the Office Joint Venture.
(5)
Represents the estimated loss on sale of real estate for the Office Portfolio Sale. See detail below.

   
Office Portfolio Sale
  
Estimated proceeds
  
$
1,132,372
  
Capital expenditure reserve
    
(67,680
)
Office joint venture contribution
    
(159,906
)
Net proceeds (exclusive of transaction costs)
    
904,786
  
Transaction costs
    
(15,362
)
Net proceeds (inclusive of transaction costs)
    
889,424
  
Historical GAAP cost basis
    
(1,143,397
)
Office joint venture contribution
    
159,906
  
Estimated loss on real estate:
  
$
(94,067
)

(6)
Represents the repayment of debt and related debt breakage costs as shown below:

Loan
  
Contractual Interest Rate
    
Loan Balance at 6/30/2022
    
Repayment of Debt
    
Debt Breakage Costs
    
Total Debt Repayment and Debt Breakage Costs
  
Midland Mortgage Loan
    
3.94
%
  
$
94,856
    
$
94,856
    
$
945
    
$
95,801
  
BOA Loan
    
3.77
%
    
375,000
      
375,000
      
12,297
      
387,297
  
Total Mortgage Debt
            
469,856
      
469,856
      
13,242
      
483,098
  
                                         
Revolving Credit Facility
  
LIBO Rate + 1.45%
      
373,500
      
373,500
      
—
      
373,500
  
Total
            
843,356
      
843,356
    
$
13,242
    
$
856,598
  
Unamortized Deferred Financing Costs and Discounts, net
            
(7,682
)
    
(2,133
)
                
Debt, Net
          
$
835,674
    
$
841,223
                  

(7)
Represents debt breakage costs of approximately $13.3 million and approximately $2.1 million of write-offs in deferred financing costs and debt premiums, net.

3
GRIFFIN REALTY TRUST, INC.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 2022
(in thousands, except share and per share amounts)

   
Historical GRT
    
Disposition of Office Portfolio
          
Office Joint Venture
          
Repayment of Debt
          
Pro Forma GRT
  
Revenues:
                                                
Rental income
  
$
239,262
    
$
(77,902
)
    
(1
)
  
$
—
          
$
—
          
$
161,360
  
Expenses:
                                                            
Property operating expense
    
29,378
      
(13,928
)
    
(1
)
    
—
            
—
            
15,450
  
Property tax expense
    
21,515
      
(9,803
)
    
(1
)
    
—
            
—
            
11,712
  
Property management fees to non-affiliates
    
2,084
      
(872
)
    
(1
)
    
—
            
—
            
1,212
  
General and administrative expenses
    
18,415
      
—
              
—
            
—
            
18,415
  
Corporate operating expenses to affiliates
    
925
      
—
              
—
            
—
            
925
  
Depreciation and amortization
    
112,842
      
(30,154
)
    
(1
)
    
—
            
—
            
82,688
  
Impairment provision
    
75,557
      
—
              
—
            
—
            
75,557
  
Total expenses
    
260,716
      
(54,757
)
            
—
            
—
            
205,959
  
Income (loss) from operations
    
(21,454
)
    
(23,145
)
            
—
            
—
            
(44,599
)
Other income (expense):
                                                            
Interest expense
    
(44,033
)
    
—
              
—
            
13,744
      
(3
)
    
(30,289
)
Other income (loss), net
    
47
      
(22
)
    
(1
)
    
—
            
—
              
25
  
Loss from investment in unconsolidated entities
    
—
      
—
              
(6,765
)
    
(2
)
    
—
              
(6,765
)
Transaction expense
    
(8,428
)
    
—
              
—
              
—
              
(8,428
)
Net income (loss)
    
(73,868
)
    
(23,167
)
            
(6,765
)
            
13,744
              
(90,056
)
Distributions to redeemable preferred shareholders
    
(5,031
)
    
—
              
—
              
—
              
(5,031
)
Less: Net (income) loss attributable to noncontrolling interests
    
6,933
      
—
              
—
              
982
      
(4
)
    
7,915
  
Net income (loss) attributable to controlling interest
  
$
(71,966
)
  
$
(23,167
)
          
$
(6,765
)
          
$
14,726
            
$
(87,172
)
Distributions to redeemable noncontrolling interests attributable to common stockholders
    
(88
)
                                                    
(88
)
Net income (loss) attributable to common stockholders
  
$
(72,054
)
                                                  
$
(87,260
)
Net income (loss) per share, basic and diluted
  
$
(0.22
)
                                                  
$
(0.27
)
Weighted average number of common shares outstanding: basic and dilutive
    
324,681,375
                                                      
324,681,375
  

4
GRIFFIN REALTY TRUST, INC.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 2022
(in thousands, except share and per share amounts)

II. Adjustments to the Unaudited Pro Forma Consolidated Statement of Operations for the Six Months Ended June 30, 2022


(1)
Represents the elimination of income and expenses associated with the Office Portfolio Sale.
(2)
Represents the expected Pro forma adjustment to record our percentage of the joint ventures net income assuming the Office Portfolio Sale occurred on January 1, 2021. This is composed of the following: (1) straight-line rental income assuming the JV formation occurred on January 1, 2021; (2) depreciation and amortization expense using the relative fair values from our preliminary purchase price allocation that was calculated based on an estimated useful life of 40 years for building and improvements and the weighted average lease term for lease intangibles; (3) asset management fee expense that will be owed to the asset manager of the Office JV; and (4) interest expense and amortization of deferred financing costs relating to the $930.8 million Office Joint Venture term loan that has an interest rate of Secured Overnight Financing Rate (“SOFR”) + 4.25% with a 3% cap. Deferred financing costs are being amortized over three years.
(3)
Represents the elimination of interest expense related to the debt pay down of approximately $843.4 million, which was repaid at closing of the Office Portfolio Sale.
(4)
Represents the estimated loss attributed to noncontrolling interest based on pro forma adjustments.

5
GRIFFIN REALTY TRUST, INC.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2021
(in thousands, except share and per share amounts)

   
Historical GRT
    
Disposition of Office Portfolio
          
Office Joint Venture
          
Repayment of Debt
          
Pro Forma GRT
  
Revenues:
                                                
Rental income
  
$
459,872
    
$
(163,456
)
    
(1
)
  
$
—
          
$
—
          
$
296,416
  
Expenses:
                                                            
Property operating expense
    
61,259
      
(29,772
)
    
(1
)
    
—
            
—
            
31,487
  
Property tax expense
    
41,248
      
(18,959
)
    
(1
)
    
—
            
—
            
22,289
  
Property management fees to non-affiliates
    
4,066
      
(1,698
)
    
(1
)
    
—
            
—
            
2,368
  
General and administrative expenses
    
40,479
      
—
              
—
            
—
            
40,479
  
Corporate operating expenses to affiliates
    
2,520
      
—
              
—
            
—
            
2,520
  
Impairment provision
    
4,242
                      
—
            
—
            
4,242
  
Depreciation and amortization
    
209,638
      
(64,347
)
    
(1
)
    
—
            
—
            
145,291
  
Total expenses
    
363,452
      
(114,776
)
            
—
            
—
            
248,676
  
Income (loss) from operations
    
96,420
      
(48,680
)
            
—
            
—
            
47,740
  
Other income (expense):
                                                            
Interest expense
    
(85,087
)
    
—
              
—
            
26,280
  
    
(4
)
    
(58,807
)
Loss from extinguishment of debt
    
—
      
—
              
—
            
(13,242
 )
   
(5
)
    
(13,242
 )
Other income (loss), net
    
1,521
      
—
              
—
            
—
              
1,521
  
Loss from investment in unconsolidated entities
    
8
      
—
              
(15,401
)
    
(3
)
    
—
              
(15,393
)
Loss from disposition of assets
    
(326
)
    
(94,067
)
    
(2
)
                    
—
              
(94,393
)
Transaction expense
    
(966
)
    
—
              
—
              
—
              
(966
)
Net income (loss)
    
11,570
      
(142,747
)
            
(15,401
)
            
13,038
              
(133,540
)
Distributions to redeemable preferred shareholders
    
(9,698
)
    
—
              
—
              
—
              
(9,698
)
Less: Net (income) loss attributable to noncontrolling interests
    
(66
)
    
—
              
—
              
12,334
      
(6
)
    
12,268
  
Net income (loss) attributable to controlling interest
  
$
1,806
    
$
(142,747
 )
         
$
(15,401
)
          
$
25,372
            
$
(130,970
)
Distributions to redeemable noncontrolling interests attributable to common stockholders
    
(177
)
                                                    
(177
)
Net income (loss) attributable to common stockholders
  
$
1,629
                                                    
$
(131,147
)
Net income (loss) per share, basic and diluted
  
$
—
                                                    
$
(0.42
)
Weighted average number of common shares outstanding: basic and dilutive
    
309,250,873
                                                      
309,250,873
  


6
GRIFFIN REALTY TRUST, INC.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2021
(in thousands, except share and per share amounts)

III.  Adjustments to Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2021

(1)
Represents the elimination of income and expenses associated with the Office Portfolio Sale.
(2)
Represents the expected loss on the Office Portfolio Sale.
(3)
Represents the expected pro forma adjustment to record our percentage of the joint ventures net income assuming the Office Portfolio Sale occurred on January 1, 2021. This is composed of the following: (1) straight-line rental income assuming the JV formation occurred on January 1, 2021; (2) depreciation and amortization expense using the relative fair values from our preliminary purchase price allocation that was calculated based on an estimated useful life of 40 years for building and improvements and the weighted average lease term for lease intangibles; (3) asset management fee expense that will be owed to the asset manager of the Office JV; and (4) interest expense and amortization of deferred financing costs relating to the $930.8 million Office Joint Venture term loan that has an interest rate of SOFR + 4.25% with a 3% cap. Deferred financing costs are being amortized over three years.
(4)
Represents the elimination of interest expense related to the debt pay down of approximately $843.4 million, which was repaid at closing of the Office Portfolio Sale.
(5)
Represents the debt breakage costs associated with the repayment of the debt.
(6)
Represents the estimated loss attributed to noncontrolling interest based on pro forma adjustments.


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