Form 8-K/A date of report 02-08-22 true 0001755755 0001755755 2022-02-08 2022-02-08

 

 

 

 

 

 

 

 

 

Registrant’s telephone number, including area code: (214) 276-6300

 

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:

 

 

 

 

 

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

In its Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 14, 2022 (the “Initial Report”), VineBrook Homes Trust, Inc. reported that it completed the acquisition of approximately 3,000 single-family rental homes located across eight states, from certain unaffiliated third parties. This Current Report on Form 8-K/A amends and supplements the Initial Report to provide the historical financial statement and unaudited pro forma information required by Item 9.01(a) and (b) of Form 8-K. This Form 8-K/A should be read in conjunction with the Initial Report.

 

(a) Financial Statement.

 

 

(b) Pro Forma Financial Information.

 

 

 

INDEPENDENT AUDITOR’S REPORT

 

To the Shareholders and the Board of Directors

VineBrook Homes Trust, Inc.

Dallas, TX

 

 

We have audited the accompanying historical statement of revenues and certain direct operating expenses of the Prager Portfolio (the "Properties") for the year ended December 31, 2021, and the related notes to the financial statement.

 

In our opinion, the accompanying financial statement presents fairly, in all material respects, the revenues and certain direct operating expenses of the Prager Portfolio for the year ended December 31, 2021 in accordance with accounting principles generally accepted in the United States of America and in accordance with applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired.

 

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statement section of our report. We are required to be independent of the Properties and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

 

We draw attention to Note 2 to the accompanying financial statement, which describes that the historical statement of revenues and certain direct operating expenses of the Properties were prepared for the purpose of complying with the rules of the Securities and Exchange Commission (for the inclusion on Form 8-K/A of VineBrook Homes Trust, Inc.) and is not intended to be a complete presentation of the Properties' revenues and certain direct operating expenses. Our opinion has not been modified with respect to this matter.

 

 

Management is responsible for the preparation and fair presentation of the financial statement in accordance with accounting principles generally accepted in the United States of America and in accordance with applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial statement that is free from material misstatement, whether due to fraud or error.

 

In preparing the financial statement, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Properties' ability to continue as a going concern within one year after the date that the financial statement is available to be issued.

 

 

Our objectives are to obtain reasonable assurance about whether the financial statement is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statement.

 

In performing an audit in accordance with GAAS, we:

 

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

 

/s/ Frazier & Deeter, LLC

March 31, 2022

Atlanta, Georgia

 

 

THE PRAGER PORTFOLIO

HISTORICAL STATEMENT OF REVENUES AND CERTAIN

DIRECT OPERATING EXPENSES

 

 

 

See accompanying notes to the historical financial statement

 

 

THE PRAGER PORTFOLIO

NOTES TO HISTORICAL STATEMENT OF REVENUES AND CERTAIN

DIRECT OPERATING EXPENSES

 

 

 

On February 8, 2022, the operating partnership of VineBrook Homes Trust, Inc. (the “Company”), VineBrook Homes Operating Partnership, L.P. (the “OP”), completed the previously disclosed acquisition of approximately 3,000 single-family rental homes across eight states, with the largest concentration in the southeastern United States (the “Prager Portfolio”). The Prager Portfolio was acquired for a purchase price of approximately $352.7 million as a result of post-closing adjustments. In connection with the acquisition of the Prager Portfolio, on February 8, 2022, the OP also completed the previously disclosed acquisition of the assets used in the management of the acquired portfolio pursuant to an asset purchase agreement with the management company of the acquired portfolio which is included in the purchase price of the Prager Portfolio noted previously. Also in connection with the acquisition of the Prager Portfolio, on February 8, 2022, the Company additionally paid approximately $31.4 million in debt extinguishment costs and $3.7 million in closing costs.

 

The accompanying historical statement of revenues and certain direct operating expenses (the “Historical Summary”) includes the revenues and certain direct operating expenses of the Prager Portfolio. See the table below for more information about the Prager Portfolio:

 

 

 

The accompanying Historical Summary has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (the “SEC”), and is not intended to be a complete presentation of the Prager Portfolio’s revenues and expenses.

 

The accompanying historical statement of revenues and certain direct operating expenses is presented in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with the provisions of Rule 3-14 of Regulation S-X promulgated by the SEC. Accordingly, the statement excludes historical income and expenses that are not comparable to the proposed future operations of the Prager Portfolio such as depreciation, amortization, interest, casualty gain (loss) and corporate expenses. Therefore, the statement will not be comparable to the statements of operations of the Prager Portfolio after their acquisition by the Company and is not intended to be a complete representation of the Prager Portfolio’s revenues and expenses.

 

 

 

 

The Prager Portfolio contains single-family rental homes under various lease agreements with residents, typically with terms of 12 months or less. All leases are accounted for as operating leases. Rental income is recognized as earned over the life of the lease agreements on a straight-line basis. Some of the leases include provisions under which the Prager Portfolio is reimbursed for certain operating costs. Revenue related to these reimbursed costs is recognized in the period the applicable costs are incurred and billed to residents pursuant to the lease agreements. Other rental income consists of administrative, application and other fees and is recognized when earned.

 

 

Certain direct operating expenses include only those costs expected to be comparable to the proposed future operations of the Prager Portfolio. Operating costs include utilities, repairs and maintenance, insurance, property tax and other general costs associated with operating the Prager Portfolio. Costs such as depreciation, amortization, interest, casualty gain (loss) and corporate expenses are excluded from the Historical Summary.

 

 

The preparation of financial statements, as described in Note 2 and in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

 

 

THE PRAGER PORTFOLIO

NOTES TO HISTORICAL STATEMENT OF REVENUES AND CERTAIN

DIRECT OPERATING EXPENSES

 

 

 

The Prager Portfolio may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition.

 

 

The Company is not aware of any material environmental liabilities relating to the Prager Portfolio that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environment laws and regulations or other environmental conditions with respect to the Prager Portfolio could result in future environmental liabilities.

 

 

 

In preparation of the accompanying Historical Summary, subsequent events were evaluated for recognition or disclosure through the date the Historical Summary was issued.

 

 

VINEBROOK HOMES TRUST, INC.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

 

The following unaudited pro forma information should be read in conjunction with the Company’s historical consolidated financial statements and the notes thereto as filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 23, 2022. In addition, this unaudited pro forma information should be read in conjunction with the historical statement of revenues and certain direct operating expenses and the notes thereto of the Prager Portfolio, which are included herein.

 

The following unaudited pro forma consolidated balance sheet as of December 31, 2021 has been prepared to give effect to the acquisition of the Prager Portfolio, which occurred on February 8, 2022, as if the acquisition occurred on December 31, 2021.

 

The following unaudited pro forma consolidated statement of operations for the year ended December 31, 2021 has been prepared to give effect to the acquisition of the Prager Portfolio as if the acquisition occurred on January 1, 2021.

 

These unaudited pro forma consolidated financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the acquisition of the Prager Portfolio been consummated on January 1, 2021 or December 31, 2021.

 

In the opinion of the Company’s management, all adjustments necessary to reflect the effect of the transaction described above have been included in the pro forma consolidated financial statements.

 

 

VINEBROOK HOMES TRUST, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of December 31, 2021

(in thousands, except share and per share amounts)

 

 

See accompanying notes to the unaudited pro forma consolidated financial statements

 

 

VINEBROOK HOMES TRUST, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2021

(in thousands, except per share amounts)

 

 

 

See accompanying notes to the unaudited pro forma consolidated financial statements

 

 

VINEBROOK HOMES TRUST, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

Additionally, the adjustment reflects the amortization of deferred financing costs incurred in connection with the aforementioned Bridge Facility.

 

 

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 hereunto duly authorized.

 

 

Date: March 31, 2022