-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, d3YS6wM0DmA/UlU5yY5i/jYqtiwDYyTMdM7duqdjZTyCOd3jLTrbuquC+mwKkP+I v/a3sB4L4dP/oVUFau3u+Q== 0000014846-94-000010.txt : 19940817 0000014846-94-000010.hdr.sgml : 19940817 ACCESSION NUMBER: 0000014846-94-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRT REALTY TRUST CENTRAL INDEX KEY: 0000014846 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 132755856 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07172 FILM NUMBER: 94543486 BUSINESS ADDRESS: STREET 1: 60 CUTTER MILL RD STREET 2: SUITE 303 CITY: GREAT NECK STATE: NY ZIP: 11021-3190 BUSINESS PHONE: 5164663100 FORMER COMPANY: FORMER CONFORMED NAME: BERG ENTERPRISES REALTY GROUP DATE OF NAME CHANGE: 19750724 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1994 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 1-7172 BRT REALTY TRUST (Exact name of registrant as specified in its charter) Massachusetts 13-2755856 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 60 Cutter Mill Road, Great Neck, NY 11021 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(516) 466-3100 Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date. 7,346,624 Shares of Beneficial Interest, $3 par value, and 1,030,000 shares of Series A cumulative convertible preferred stock, $1 par value outstanding on August 8, 1994 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days. Yes __X___ No______ BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands Except For Per Share Data)
June 30, Sept 30, 1994 1993 -------- -------- (Unaudited) (Audited) Assets: Real estate loans - Note 3: Earning interest, less unearned income of $16 and $589 $ 83,493 $ 95,353 Not earning interest 7,056 26,750 -------- ------- 90,549 122,103 Less allowance for possible losses 11,186 22,637 ------- ------- 79,363 99,466 Real estate owned - Note 4: Foreclosed properties held for sale, (except for $14,401 and $14,303 less accumulated depreciation of $368 and $146, which is held long term for the production of income) 55,423 51,162 Less valuation allowance 2,717 3,229 ------- ------- 52,706 47,933 ------- ------- Cash and cash equivalents 4,890 1,962 Investments in U.S. Government obligations, at cost, which approximates market 3,556 7,094 Restricted cash 1,635 1,709 Interest receivable 758 893 Other assets 3,519 3,160 ------- ------- Total assets $146,427 $162,217 ======= ======= /TABLE [CAPTION] Liabilities and Shareholders' Equity Liabilities: Notes payable $ 79,283 $ 92,785 Loans and mortgages payable, nonrecourse 6,808 10,308 Accounts payable and accrued liabilities, including deposits of $2,598 and $2,331 4,182 3,935 ------- ------- Total Liabilities 90,273 107,028 Deferred revenues 43 90 Shareholders' Equity - Note 2: Preferred shares - $1 par value: Authorized 10,000 shares, Issued - 1,030 shares 1,030 1,030 Shares of beneficial interest, $3 par value: Authorized number of shares-unlimited Issued - 7,538 shares 22,614 22,614 Additional paid-in capital net of distributions of $4,631 and $4,428 84,251 84,454 Accumulated deficit (49,449) (50,664) ------- ------- 58,446 57,434 Cost of 192 treasury shares of beneficial interest (2,335) (2,335) ------- ------- Total shareholders' equity 56,111 55,099 ------- ------- Total liabilities and share- holders' equity $146,427 $162,217 ======= ======= See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands)
Three Months Ended Nine Months Ended June 30, June 30, 1994 1993 1994 1993 ---- ---- ---- ---- Revenues: Interest and fees on real estate loans $ 2,283 $ 3,035 $ 7,127 $10,171 Operating income on real estate owned 2,273 1,683 7,288 3,578 Gain on sale of fore- closed properties held for sale 1,356 29 1,507 161 Gain on sale of marketable securities - - - 115 Other, primarily investment income 71 81 240 248 ------- ------- ------ ------ Total Revenues 5,983 4,828 16,162 14,273 ------- ------- ------ ------ Expenses: Interest-notes payable, loans payable and subordinated notes 1,712 1,887 5,059 5,860 Provision for possible loan losses - 211 1,390 1,711 Provision for valuation adjustment 993 1,413 993 3,138 Advisor's fee 265 320 825 999 General and administrative 889 753 2,520 2,549 Operating expenses relating to real estate owned including interest on mortgages 1,218 768 3,787 2,062 Depreciation and amortization 113 125 373 227 ------- ------- ------- ------ Total Expenses 5,190 5,477 14,947 16,546 ------- ------- ------- ------ Net Income (Loss) $ 793 $ (649) $ 1,215 $(2,273) ======= ======= ======= ====== Calculation of net income (loss) applicable to common shareholders: Net Income (Loss) $ 793 $ (649) $ 1,215 $(2,273) Less: distribution on preferred stock 68 - 203 - Net income (loss) ------- ------- ------- ------ applicable to common shareholders $ 725 $ (649) $ 1,012 $(2,273) ======= ======= ======= ====== Income (loss) per share of Beneficial Interest - Note 2: Primary $ .10 $ (.09) $ .14 $ (.31) ======= ======= ======= ====== Fully Diluted $ .09 $ (.09) $ .14 $ (.31) ======= ======= ======= ====== Weighted average number of common shares outstanding - Note 2: Primary 7,346,624 7,346,624 7,346,624 7,346,624 ========= ========= ========= ========= Fully Diluted 8,445,109 7,346,624 7,346,624 7,346,624 ========= ========= ========= ========= STATEMENTS OF ACCUMULATED DEFICIT Accumulated deficit, beginning of period $(50,242) $(48,220) $(50,664)$(46,596) Net Income (Loss) 793 (649) 1,215 (2,273) ------- ------- ------- ------ Accumulated deficit, end of period $(49,449) $(48,869) $(49,449)$(48,869) ======= ======= ======= ====== See accompanying notes to consolidated financial statements.
BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Nine Months Ended June 30, ---------------- 1994 1993 ---- ---- Cash flow from operating activities: Net income (loss) $ 1,215 $( 2,273) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision for possible loan losses 1,390 1,711 Provision for valuation adjustment 993 3,138 Amortization and depreciation 373 227 Recognition of discount upon premature payoff of real estate loan ( 565) - Gain on sale of foreclosed properties (1,507) ( 161) Gain on sale of marketable securities - ( 115) Capitalization of earned interest income to loan balance in accordance with agreements ( 13) ( 24) Decrease in interest receivable 135 629 (Decrease) increase in accounts payable and accrued liabilities ( 87) 496 Decrease in deferred revenues ( 47) ( 159) (Increase) decrease in rent and other receivables ( 72) 272 (Increase) decrease in escrow deposits( 334) 717 Increase in deferred costs - ( 74) Other ( 105) ( 498) ------- ------- Net cash provided by operating activities 1,376 3,886 ------- ------- Cash flows from investing activities: Collections from real estate loans 15,302 24,893 Proceeds from participating lenders - 172 Additions to real estate loans ( 903) ( 2,685) Repayments to participating lenders (5,470) (13,527) Net costs capitalized to real estate owned (1,022) ( 1,567) Proceeds from sale of real estate owned 8,769 3,502 Increase (decrease) in deposits payable 267 ( 411) Decrease (increase) in investment in U.S. Government obligations 3,538 ( 5,039) Sale of marketable securities - 345 Other 1 ( 14) ------- ------- Net cash provided by investing activities 20,482 5,669 ------- ------- Cash flow from financing activities: Bank repayments (13,502) (11,015) Payoff/paydown of loan and mortgages payable ( 5,366) ( 109) Decrease in restricted cash 74 161 Other ( 136) ( 11) ------- ------- Net cash used in financing activities (18,930) (10,974) ------- ------- Net increase (decrease) in cash and cash equivalents 2,928 ( 1,419) Cash and cash equivalents at beginning of period 1,962 2,884 ------- ------- Cash and cash equivalents at end of period $ 4,890 $ 1,465 ======= ======= See Accompanying Notes to Consolidated Financial Statements
BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Nine Months Ended June 30, ---------------- 1994 1993 ---- ---- Supplemental disclosure of cash flow information: Cash paid during the period for interest expense $ 5,679 $ 5,817 ====== ====== Supplemental schedule of noncash investing and financing activities: Transfer of nonearning real estate loans to foreclosed properties at fair market value, including in-substance foreclosures $17,745 $19,532 Nonrecourse mortgage obligations relating to property acquired through foreclosure, including in-substance foreclosures 609 1,005 Transfer of third-party senior participating interest in a real estate loan to a mortgage payable upon acquisition of a property through foreclosure 1,495 - Recognition of valuation allowance upon sale of real estate owned 1,505 - Recognition of allowance for previously provided loan losses 12,842 3,715 Purchase money mortgages from sale of real estate owned 5,279 666 See Accompanying Notes to Consolidated Financial Statements. BRT REALTY TRUST AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 1 - Basis of Preparation The accompanying interim unaudited consolidated financial statements as of June 30, 1994 and for the three and nine months ended June 30, 1994 and 1993 reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for such interim periods. The results of operations for the three and nine months ended June 30, 1994 are not necessarily indicative of the results for the full year. Certain items on the consolidated financial statements for the preceding period have been reclassified to conform with the current consolidated financial statements. The consolidated financial statements include the accounts of BRT Realty Trust, its wholly-owned subsidiaries, and its majority-owned or controlled real estate entities. Material intercompany items and transactions have been eliminated. Many of the wholly-owned subsidiaries were organized to take title to various properties acquired by BRT Realty Trust. BRT Realty Trust and its subsidiaries are hereinafter referred to as the "Trust". These statements should be read in conjunction with the consolidated financial statements and related notes which are incorporated by reference in the Trust's Annual Report on Form 10-K for the year ended September 30, 1993. Note 2 - Per Share Data Primary earnings per share of beneficial interest is based upon the weighted average number of common shares and the assumed equivalent shares outstanding during each period, after giving effect to dividends relating to the Trust's preferred stock. The preferred stock, issued on September 14, 1993, is not considered a common stock equivalent for the purposes of computing primary earnings per share. The assumed exercise of outstanding share options, using the treasury stock method, is not materially dilutive for the primary earnings per share computation for the three and nine months ended June 30, 1994, and is anti-dilutive for the three and nine months ended June 30, 1993. Fully diluted earnings per share of beneficial interest amounts are based on an increased number of shares that would be outstanding assuming the exercise of common share options during each period, and additionally in 1994, the conversion of preferred stock to shares of beneficial interest at the period end market price. The fully diluted per share computation for the three months ended June 30, 1994 is dilutive, when 68,485 shares of beneficial interest were assumed outstanding. As for the nine months ended June 30, 1994 and the three and nine months ended June 30, 1993, the fully diluted earnings per share of beneficial interest amounts are anti-dilutive, and therefore such amounts are not presented. Note 3 - Real Estate Loans If all loans classified as nonearning were earning interest at their contractual rates for the three and nine month periods ended June 30, 1994 and 1993, interest income would have increased by approximately $147,000 and $477,000 in the respective periods in 1994, and $602,000 and $1,416,000 in the respective periods in 1993. Note 4 - Real Estate Owned During the quarter ended June 30, 1994, the Trust consummated sales of real estate owned, resulting in an aggregate gain of approximately $1,356,000. These transactions were as follows: (i) Two apartment/retail buildings located in midtown Manhattan - sold to One Liberty Properties, Inc. ("One Liberty"), a related party, for a consideration of $5,525,000. This property was encumbered by a non-recourse mortgage of approximately $2,637,000. The transaction and sales price were approved by the Board of Trustees of the Trust, including the independent trustees, subject to receipt of an independent appraisal. After receipt of the independent appraisal substantiating the purchase price of $5,525,000, the transaction was completed, resulting in a gain to the Trust of approximately $625,000. Simultaneous with the consummation of the transaction, the mortgage of approximately $2,637,000 was satisfied. The property was sold subject to a long-term net lease with a current annual rent of $550,000, which annual rent increases by $50,000 every five years (the next increase will be in 1999). For a period of ten years from closing, the Trust will receive fifty percent of any premium which One Liberty receives under the lease as a result of the conversion of the leasehold position to cooperative ownership. One Liberty owns 203,767 shares of beneficial interest and 1,030,000 shares of preferred stock of the Trust, and has approximately 14.7% of the total voting power of the Trust. (ii) Retail building in Long Island City - sold for a net sales price of approximately $1,125,000 (including a purchase money mortgage of $860,000 taken back by the Trust). This transaction resulted in a gain of approximately $375,000. (iii)Retail building located in New York, New York - sold for a net sales price of approximately $933,000, resulting in a gain of approximately $184,000. (iv) Two individual cooperative apartments located in New York, New York - sold for approximately $120,000 resulting in a gain of approximately $99,000. Subsequent to this transaction, the Trust, still holds the unsold shares and related proprietary lease applicable to one cooperative apartment in said apartment building. (v) Apartment/retail building located in New York, New York - sold for a net sales price of approximately $516,000 (including a purchase money mortgage of $350,000 taken back by the Trust). This transaction resulted in a gain of approximately $72,000. (vi) Apartment building located in New York, New York - sold for a net sales price of approximately $752,000 (including a purchase money mortgage of approximately $499,000 taken back by the Trust), resulting in a loss of approximately $8,000. (vii)Unsold shares and related proprietary leases in a cooperative apartment building located in West New York, New Jersey - sold in bulk for a net sales price of approximately $170,000. This transaction resulted in a gain of approximately $17,000. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Trust was engaged in the business of making and participating in senior and junior real estate mortgage loans, secured by income producing property and to a lesser extent by unimproved real property. The Trust's investment policy emphasized short-term mortgage loans. Repayments of real estate loans in the amount of $42,430,000 are due during the twelve months ending June 30, 1995, including $10,328,000 which are due on demand. Over the past number of months, there has been some pick up in real estate lending by institutional lenders and an improvement in the market for real estate. Nevertheless, it is still difficult to refinance existing mortgages and to sell properties. Accordingly, the Trust cannot project the principal amount of loans which will be paid down and/or paid off over the next twelve months. In appropriate circumstances, the Trust will extend a loan on a month to month or fixed term basis. Effective September 23, 1992 the Trust entered into an Amended and Restated Credit Agreement ("Restated Credit Agreement") with five banks. The Restated Credit Agreement extends the maturity date of the loan to June 30, 1995, with the Trust having the right to extend for two additional one year terms, if it satisfies certain conditions, principally making certain mandatory payments and meeting certain ratios. The Trust satisfied the June 30, 1994 mandatory prepayment requirement. Assuming the Trust exercises its right to extend for two additional one year terms, as of July 31, 1994, the Trust has satisfied the June 30, 1995 mandatory prepayment requirement, and 38% of the mandatory prepayment due by June 30, 1996. The Restated Credit Agreement precludes the Trust from engaging in any lending activities except for taking back purchase money mortgages in connection with the sale of real estate. Under the Restated Credit Agreement, commencing July 1, 1994, the Trust is required to apply 75% of capital event proceeds (proceeds from the sale of real property and mortgages receivable and from pay downs or payoffs of real estate loans) to reduce the principal balance due to the banks and the balance of 25% is deposited in a cash collateral account maintained with the agent bank. The agent bank under the Restated Credit Agreement is required to disburse funds to the Trust from the cash collateral account upon requisition by the Trust, provided there is no monetary default under the Restated Credit Agreement. To the extent the cash collateral account exceeds $9,000,000 at the end of any month or $10,000,000 within a month, such excess is to be applied to reduce principal. To the extent the cash collateral account is reduced below $9,000,000, the Trust can utilize a portion of capital event proceeds and excess operating cash flow to build the account up to $9,000,000. The Restated Credit Agreement also requires a segregated interest reserve account as part of the $9,000,000 cash collateral account, amounting to three months interest payments ($1,635,000 at June 30, 1994). In addition, the Trust maintains its own operating accounts, into which all operating revenues are deposited and from which all operating expenses are paid and to the extent the operating accounts exceed $500,000 at the end of any month, the excess is deposited into the cash collateral account. During the nine months ended June 30, 1994, the Trust had an increase in cash provided by investing activities, as a result of collections from real estate loans of $9,832,000 (net of repayments to participating lenders of $5,470,000) and proceeds from the sale of real estate owned of $8,769,000, net of purchase money mortgages of $5,279,000. The cash provided by investing activities was used in part to reduce the bank debt outstanding to $79,283,000 at June 30, 1994, a reduction of $13,502,000 from September 30, 1993. The Trust also paid off loans and mortgages payable in the amount of $4,822,000, $4,237,000 of which was satisfied in conjunction with two sales of real estate owned. The Trust intends to satisfy its short term liquidity needs from cash flow generated from interest on outstanding real estate loans, net cash flow generated from the operation of properties (all of which were acquired as a result of foreclosure, by deed in lieu of foreclosure, or pursuant to a confirmed plan of reorganization) and from the funds in the cash collateral account. In the opinion of Management, the Restated Credit Agreement, by its terms, and the mechanics of the cash collateral account, provide adequate funds for the Trust to operate its business, to protect its receivables and to operate its real estate (which includes making necessary capital improvements), and sufficient time to dispose of assets and apply the net proceeds therefrom to reduce the amounts outstanding under the Restated Credit Agreement. Results of Operations The Trust's loan portfolio at June 30, 1994, before giving effect to the allowance for possible losses was $90,549,000, of which $7,056,000 (8% of total real estate loans) is categorized as nonearning, as compared to $122,103,000 at September 30, 1993, of which $26,750,000 (22% of total real estate loans) is categorized as nonearning. The $31,554,000 decrease in the loan portfolio is due to a combination of an increase in real estate owned as a result of completion of foreclosure actions and receipt of deeds in lieu of foreclosure, repayments of principal on real estate loans (net of repayments to participating lenders) and a settlement with the holder of a first mortgage for $161,000, which represented the net book value on a real estate loan on which the Trust had reserved approximately $10,000,000 in the quarter ended September 30, 1990. Real estate owned (prior to a valuation allowance of $2,717,000) increased to $55,423,000 at June 30, 1994 from $51,162,000 (prior to a valuation allowance of $3,229,000) at September 30, 1993. The increase of $4,261,000 in real estate owned is primarily a result of real estate acquired by foreclosure or deed in lieu of foreclosure at the aggregate estimated fair value of approximately $17,745,000, offset by the sale of real estate owned, with an aggregate cost basis of approximately $13,541,000 (prior to a valuation allowance of $1,505,000). Interest and fees on real estate loans decreased for the nine and three month periods ended June 30, 1994 to $7,127,000 and $2,283,000 from $10,171,000 and $3,035,000 for the comparable periods in the prior fiscal year. These decreases were a result of a number of events which occurred during the nine and three months ended June 30, 1993, including receipt of past due and accumulated interest of $440,000 upon refinancing by a borrower, a collection of approximately $586,000 from court appointed receivers who operated properties securing certain loans, receipt of an $800,000 fee ($400,000 of which was received during quarter ended June 30, 1993) from a borrower as part of a workout and additional interest of $325,000 received upon repayment of two participating real estate loans secured by properties located in Texas. Interest and fees on real estate loans was also reduced in the 1994 periods as compared to the 1993 periods due to a decrease in earning real estate loans, as a result of loan payoffs and properties securing real estate loans becoming real estate owned. These decreases were offset in part during the current nine month period by the recognition of an unamortized discount of $565,000 upon early payoff of a real estate loan, as well as the collection of approximately $480,000 ($283,000 of which was received during the three months ended June 30, 1994) from court appointed receivers who operated properties securing certain loans. Operating income on real estate owned increased during the nine months ended June 30, 1994 by $3,710,000 to $7,288,000 from $3,578,000 for the comparable period in Fiscal 1993. There was also an increase during the quarter ended June 30, 1994 to $2,273,000 from $1,683,000 for the prior comparable period, an increase of $590,000. These increases were a result of an increase in the number of properties acquired in foreclosure or by deed in lieu of foreclosure. Gain on sale of foreclosed properties held for sale for the nine months ended June 30, 1994, was $1,507,000, $1,356,000 of which occurred during the quarter ended June 30, 1994, as compared to $161,000 for the nine months ended June 30, 1993, $29,000 of which occurred during the third quarter of Fiscal 1993. It is the policy of the Trust to offer for sale all real estate owned at prices which management believes represents fair value in the geographic area in which the property is located. The nine months ended June 30, 1993 include a gain on the sale of marketable securities of $115,000. There was no comparable gain during the nine months ended June 30, 1994. Interest expense decreased for the nine and three month periods ended June 30, 1994 to $5,059,000 and $1,712,000 from $5,860,000 and $1,887,000 for the comparable periods in the prior fiscal year. These decreases were the result of paydowns on notes payable and subordinated note, offset in part by an increase in the average prime rate. The expenses for the nine months ended June 30, 1994 include a provision for possible loan losses of $1,390,000, as compared to $1,711,000 for the comparable period in the prior fiscal year. During the quarter ended March 31, 1994, $952,000 of the $1,390,000 provision was taken, consisting of, a provision of $497,000, which was taken with respect to a real estate loan in which the Trust has a junior leasehold mortgage. Recently, after an arbitration, there was a significant increase in the ground rent which will have an adverse effect on the borrowers cash flow and therefore adversely effect the Trust's position. The remaining $455,000 provision was taken on the total net equity position in a wrap mortgage secured by a cooperative apartment building. Due to cash flow problems experienced by the cooperative corporation, the Trust, commencing in February 1994, has been experiencing a delinquency of up to 90 days on the monthly interest received. During the first quarter of Fiscal 1994 a $438,000 provision was taken as a result of the termination of negotiations, in late January 1994, with the holder of the first mortgage on a real estate loan in which the Trust holds the junior position, for the Trust to purchase the first mortgage at a discount. The nine months ended June 30, 1994, also include a provision for valuation adjustment of $993,000, as compared to $3,138,000 for the comparable nine month period in the prior year. The entire Fiscal 1994 valuation allowance was taken during the quarter ended June 30, 1994, $900,000 of which was taken with respect to unsold shares and related proprietary leases in three cooperative apartment buildings located in New York, New York. After an extensive revaluation, specifically reviewing projected sales, renovation costs, rental income and maintenance payments, as well as a review of the sales of the cooperative apartments in these buildings and in the New York City area, it was determined that an additional valuation adjustment was required. The remaining $93,000 was taken on undeveloped land located in New York, New York, as a result of recent offers which have been received on said property. Advisor's fees decreased by $174,000 and $55,000 for the nine and three months ended June 30, 1994, as compared to the comparable nine and three months periods in Fiscal 1993. These decreases are a result of a decrease in invested assets, the basis on which the advisory fee is calculated, and a decrease in the real estate loan portion with an increase in the real estate owned portion. A 1% fee is paid on real estate loans, as compared to a 1/2 of 1% fee on real estate owned. General and administrative expenses decreased for the nine months ended June 30, 1994 by $29,000 to $2,520,000 from $2,549,000 for the nine months ended June 30, 1993. This reduction is primarily due to a reduction of professional fees as a result of the completion of many of the foreclosure actions and bankruptcy proceedings. The decrease would have been greater as the prior fiscal year included reimbursement of professional fees of approximately $232,000 from a borrower with whom a workout was in process and a settlement with a previous borrower. There was an increase in general and administrative expenses during the quarter ended June 30, 1994 to $889,000 from $753,000 for the comparable quarter in the prior year. This increase was primarily due to the reimbursement of professional fees of approximately $90,000 during the quarter ended June 30, 1993 as a result of a settlement with a previous borrower. In addition, in the quarter ended June 30, 1994, the Trust repaid to a junior creditor of one of the Trust's borrowers the sum of $95,000 in settlement of claims asserted by a bankruptcy trustee for such creditor, which claims related to payments made to the Trust by such creditor to protect its security interest. Operating expenses relating to real estate owned increased for the nine and three month periods ended June 30, 1994 to $3,787,000 and $1,218,000 from $2,062,000 and $768,000 for the comparable periods in the prior fiscal year. These increases are a direct result of an increase in the number of properties acquired in foreclosure or by deed in lieu of foreclosure. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K On June 28, 1994, the Trust filed a Current Report on Form 8-K with the Securities and Exchange Commission to report that on June 14, 1994, a wholly-owned subsidiary of the Trust indirectly sold for cash the fee interest of a property located in midtown Manhattan to One Liberty Properties, Inc., a related party, for a consideration of $5,525,000. 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. BRT REALTY TRUST Registrant 8/12/94 /s/ Israel Rosenzweig Date Israel Rosenzweig, President 8/12/94 /s/ David W. Kalish Date David W. Kalish, Vice President and Chief Financial Officer
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