-----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, SYVBHs+pmMezha95X7TOA55ImgkZ93wG3tCWFz8g6Fs7ywikawJH6GfJSvKgGTC4 4y3KYw/sLXiIbemS4JYfxA== 0000014846-94-000006.txt : 19940518 0000014846-94-000006.hdr.sgml : 19940518 ACCESSION NUMBER: 0000014846-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940511 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: 94527311 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 March 31, 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, New York 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 May 9, 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______ Part 1 - FINANCIAL INFORMATION Item 1.Financial Statements BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands Except For Per Share Data)
March 31, Sept 30, 1994 1993 _______ _______ (Unaudited) (Audited) Assets: Real estate loans - Note 3: Earning interest, less unearned income of $17 and $589 $ 82,306 $ 95,353 Not earning interest 8,473 26,750 ________ _______ 90,779 122,103 Less allowance for possible losses 12,593 22,637 ________ _______ 78,186 99,466 Real estate owned - Note 4: ________ _______ Foreclosed properties held for sale, (except for $14,324 and $14,303 less accumulated depreciation of $292 and $146, which is held long term for the production of income) 63,047 51,162 Less valuation allowance 1,954 3,229 ________ _______ 61,093 47,933 ________ _______ Cash and cash equivalents 1,770 1,962 Investments in U.S. Government obligations, at cost, which approximates market 4,335 7,094 Restricted cash 1,490 1,709 Interest receivable 810 893 Other assets 3,095 3,160 ________ _______ Total assets $150,779 $162,217 ======== ======== /TABLE
Liabilities and Shareholders' Equity Liabilities: Notes payable $ 82,188 $ 92,785 Loans and mortgages payable, nonrecourse 9,637 10,308 Accounts payable and accrued liabilities, including deposits of $1,850 and $2,331 3,510 3,935 ________ ________ Total Liabilities 95,335 107,028 Deferred revenues 58 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 $4,563 and $4,428 84,319 84,454 Accumulated deficit (50,242) (50,664) ________ _______ 57,721 57,434 Cost of 192 treasury shares of beneficial interest (2,335) (2,335) ______ _______ Total shareholders' equity 55,386 55,099 _______ _______ Total liabilities and shareholders' equity $150,779 $162,217 ======= ======= See Accompanying Notes to Consolidated Financial Statements. /TABLE BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands)
Three Months Ended Six Months Ended March 31, March 31, 1994 1993 1994 1993 ________ ________ ________ ________ Revenues: Interest and fees on real estate loans $ 2,717 $ 3,857 $ 4,844 $ 7,136 Operating income on real estate owned 2,808 1,054 5,015 1,895 Gain on sale of fore- closed properties held for sale 5 - 151 132 Gain on sale of marketable securities - - - 115 Other, primarily investment income 103 76 169 167 _____ _____ _____ _____ Total Revenues 5,633 4,987 10,179 9,445 _____ _____ _____ _____ Expenses: Interest-notes payable, loans payable and subordinated notes 1,600 1,927 3,347 3,973 Provision for possible loan losses 952 - 1,390 1,500 Provision for valuation adjustment - 1,725 - 1,725 Advisor's fee 272 335 560 679 General and administrative 818 813 1,631 1,796 Operating expenses relating to real estate owned including interest on mortgages 1,431 754 2,569 1,294 Depreciation and amortization 136 51 260 102 _____ _____ _____ _____ Total Expenses 5,209 5,605 9,757 11,069 _____ _____ _____ _____ Net Income (Loss) $ 424 $ (618) $ 422 $(1,624) ===== ===== ===== ===== Calculation of net income (loss) applicable to common shareholders: Net Income (Loss) $ 424 $ (618) $ 422 $(1,624) Less: distribution on preferred stock 68 - 135 - _____ _____ _____ _____ Net Income (Loss) applicable to common shareholders $ 356 $ (618) $ 287 $(1,624) ===== ===== ===== ===== Income (Loss) Per Share of Beneficial Interest - Note 2 $ .05 $ (.08) $ .04 $ (.22) ===== ===== ===== ===== Weighted average number of common shares outstanding 7,346,624 7,346,624 7,346,624 7,346,624 ========= ========= ========= ========= STATEMENTS OF ACCUMULATED DEFICIT Accumulated deficit, beginning of period $(50,666) $(47,602) $(50,664)$(46,596) Net Income (Loss) 424 (618) 422 (1,624) Accumulated deficit, _______ ______ ______ ______ end of period $(50,242) $(48,220) $(50,242)$(48,220) ====== ====== ====== ====== See accompanying notes to consolidated financial statements.
BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Six Months Ended March 31, _________________ 1994 1993 ____ ____ Cash flow from operating activities: Net income (loss) $ 422 $( 1,624) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision for possible loan losses 1,390 1,500 Provision for valuation adjustment - 1,725 Amortization and depreciation 260 102 Recognition of discount upon premature payoff of real estate loan (565) - Gain on sale of foreclosed properties ( 151) ( 132) Gain on sale of marketable securities - ( 115) Capitalization of earned interest income to loan balance in accordance with agreements ( 10) ( 24) Decrease in interest receivable 83 874 (Decrease) increase in accounts payable and accrued liabilities ( 11) 396 (Decrease) increase in deferred revenues ( 32) 90 (Increase) decrease in rent and other receivables ( 118) 226 Decrease in escrow deposits 343 842 Increase in deferred costs - ( 74) Other ( 273) ( 194) ______ ______ Net cash provided by operating activities 1,338 3,592 ______ ______ Cash flows from investing activities: Collections from real estate loans 14,558 24,318 Proceeds from participating lenders - 119 Additions to real estate loans ( 846) (1,550) Repayments to participating lenders (5,460) (13,483) Net costs capitalized to real estate owned ( 548) ( 708) Proceeds from sale of real estate owned 1,472 2,000 Decrease in deposits payable ( 481) ( 688) Decrease (increase) in investment in U.S. Government obligations 2,759 (5,282) Sale of marketable securities - 345 Other ( 1) ( 20) ______ ______ Net cash provided by investing activities 11,453 5,051 ______ ______ Cash flow from financing activities: Bank repayments (10,597) (10,000) Payoff of loan and mortgages payable ( 2,185) - Decrease in restricted cash 219 150 Other ( 420) ( 79) ______ ______ Net cash used in financing activities (12,983) ( 9,929) ______ ______ Net decrease in cash and cash equivalents ( 192) (1,286) Cash and cash equivalents at beginning of period 1,962 2,884 Cash and cash equivalents at ______ ______ end of period $ 1,770 $ 1,598 ====== ====== /TABLE BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Six Months Ended March 31, _________________ 1994 1993 ____ ____ Supplemental disclosure of cash flow information: Cash paid during the period for interest expense $ 3,828 $ 3,761 ====== ====== 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 $ 2,618 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 1,275 - Recognition of allowance for previously provided loan losses 11,434 1,465 Purchase money mortgages from sale of real estate owned 3,427 511 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 March 31, 1994 and for the three and six months ended March 31, 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 six months ended March 31, 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 six and three months ended March 31, 1994, and is anti-dilutive for the six and three months ended March 31, 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. Since the fully dilutive earnings per share of beneficial interest amounts are not materially dilutive or are anti-dilutive, 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 six month periods ended March 31, 1994 and 1993, interest income would have increased by approximately $229,000 and $347,000 in the respected periods in 1994, and $807,000 and $1,635,000 in the respective periods in 1993. Note 4 - Real Estate Owned During the quarter ended March 31, 1994, the Trust consummated the sale of unsold shares and related proprietary leases on rent stabilized and rent controlled units in a cooperative apartment building located in the Bronx, New York. The 36 "cooperative apartments" were sold for a net sales price of approximately $196,000, including a purchase money mortgage of $180,000. The net proceeds were used to reduce the existing basis in the asset. The Trust still holds 17 market "cooperative apartments" in said cooperative apartment building. Also during the three months ended March 31, 1994, the Trust sold a professional building located in Scarsdale, New York, for a net sales price of approximately $132,000, resulting in a gain on sale of approximately $5,000. 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 $32,246,000 are due during the twelve months ending March 31, 1995, including $11,415,000 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. However, 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. As of May 9, 1994, the Trust has satisfied the June 30, 1994 mandatory prepayment requirement, and 62% of the mandatory prepayment due by June 30, 1995. 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, the Trust is required to apply 55% (increasing to 75% after June 30, 1994) 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 45% (25% after June 30, 1994) 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 ($1,490,000 at March 31, 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 six months ended March 31, 1994, the Trust had an increase in cash provided by investing activities, as a result of collections from real estate loans of $9,098,000 (net of repayments to participating lenders of $5,460,000) and proceeds from the sale of real estate owend of $1,472,000, net of purchase money mortgages of $3,427,000. The cash provided by investing activities was used in part to reduce the bank debt outstanding to $82,188,000 at March 31, 1994, a reduction of $10,597,000 from September 30, 1993. The Trust also paid off loans and mortgages payable in the amount of $2,185,000, $1,600,000 of which was satisfied in conjunction with the sale of cooperative apartments in a garden apartment development, located in Suffolk County, New York. Cash and cash equivalents (including investments in U.S. Government obligations, at cost, which approximates market) decreased to $6,105,000 at March 31, 1994 from $9,056,000 at September 30, 1993. This decrease of $2,951,000 was primarily a result of the voluntary principal prepayment made by the Trust to reduce its bank debt by an additional $3,500,000. 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 March 31, 1994, before giving effect to the allowance for possible losses was $90,779,000, of which $8,473,000 (9% 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 $31,324,000 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 $1,954,000) increased to $63,047,000 at March 31, 1994 from $51,162,000 (prior to a valuation allowance of $3,229,000) at September 30, 1993. The increase 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. This increase was offset in part by the sale of cooperative apartments, a retail/apartment building and a professional building, with an aggregate cost basis of approximately $5,628,000 (prior to a valuation allowance of $1,275,000). Interest and fees on real estate loans decreased for the six and three month periods ended March 31, 1994 to $4,844,000 and $2,717,000 from $7,136,000 and $3,857,000 for the comparable periods in the prior fiscal year. These decreases were a result of a number of events which occurred during the six and three months ended March 31, 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 a $400,000 fee 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 fiscal year 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 $197,000 from court appointed receivers who operated properties securing certain loans. Operating income on real estate owned increased during the first half of Fiscal 1994 by $3,120,000 to $5,015,000 from $1,895,000 for the first half of Fiscal 1993. There was also an increase during the quarter ended March 31, 1994 to $2,808,000 from $1,054,000 for the prior comparable period, an increase of $1,754,000. 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 was $151,000 for the first half of Fiscal 1994. This gain was a result of four separate transactions; sale of 201 cooperative apartment units in a residential apartment building located in Suffolk County, New York, sale of a retail/apartment building located in New York, New York, completion of sales of individual cooperative apartments in an apartment building located in New York, New York, and sale of a professional building, located in Scarsdale, New York, completed during the March 31, 1994 quarter. During the six months ended March 31, 1993, gain on sale of foreclosed property held for sale was $132,000, which was a result of the sale of a shopping center in Dayton, Ohio. The six months ended March 31, 1993 include a gain on the sale of marketable securities of $115,000. There was no comparable gain during the first six months of Fiscal 1994. Interest expense decreased for the six and three month periods ended March 31, 1994 to $3,347,000 and $1,600,000 from $3,973,000 and $1,927,000 for the comparable periods in the prior fiscal year. These decreases were the result of paydowns on notes payable and subordinated notes. The expenses for the first half of Fiscal 1994 include a provision for possible loan losses of $1,390,000, as compared to $1,500,000 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. A provision of $497,000 was taken with respect to a real estate loan in which the Trust has a junior leasehold position in the underlying collateral. 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 could adversely effect the Trust's position. The remaining $445,000 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 ceased receiving its monthly interest commencing February, 1994. The $438,000 provision taken during the first quarter of Fiscal 1994 was 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 six months ended March 31, 1993 include a provision for valuation adjustment of $1,725,000, with no comparable provision during the six months ended March 31, 1994. Advisor's fees decreased by $119,000 and $63,000 for the six and three months ended March 31, 1994, as compared to the comparable six 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 first half of Fiscal 1994 by $165,000 to $1,631,000 from $1,796,000 for the first half of Fiscal 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. There was a slight increase in general and administrative expenses during the quarter ended March 31, 1994 to $818,000 from $813,000 for the quarter ended March 31, 1993. This increase was a result of a reimbursement of professional fees of approximately $142,000 received during the quarter ended March 31, 1993 from a borrower with whom a workout was in process, offset in part by a reimbursement of $60,000 during the second quarter of the current fiscal year in conjunction with the payoff of a real estate loan, which at one time had been delinquent. Operating expenses relating to real estate owned increased for the six and three month periods ended March 31, 1994 to $2,569,000 and $1,431,000 from $1,294,000 and $754,000 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 The Trust did not file any reports on Form 8-K during the quarter ended March 31, 1994. 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 5/11/94 /s/ Israel Rosenzweig _______ ____________________________ Date Israel Rosenzweig, President 5/11/94 /s/ David W. Kalish _______ _____________________________ Date David W. Kalish, Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----