-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DlT/E5KqFdGTFd9MSNoGYurpu1GLAjgKOeOPIvuqy719EmzJM4cUr5L/Lp0cB1zO y5HuPDTT5gZaKSmeSst01A== 0000014846-96-000016.txt : 19960813 0000014846-96-000016.hdr.sgml : 19960813 ACCESSION NUMBER: 0000014846-96-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRT REALTY TRUST CENTRAL INDEX KEY: 0000014846 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [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: 96608122 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, 1996 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. 8,755,424 Shares of Beneficial Interest, $3 par value, outstanding on August 5, 1996 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)
June 30, September 30, 1996 1995 --------- --------- (Unaudited) (Audited) Assets: Real estate loans - Note 3: Earning interest, less unearned income $ 36,589 $ 44,136 Not earning interest 5,905 7,154 -------- -------- 42,494 51,290 Less allowance for possible losses 7,798 9,084 -------- -------- 34,696 42,206 -------- -------- Real estate owned: Foreclosed properties held for sale 49,761 52,029 Less valuation allowance 2,128 2,460 -------- -------- 47,633 49,569 -------- -------- Cash and cash equivalents 6,568 7,385 Restricted cash 139 558 Interest receivable 391 594 Other assets 4,071 4,203 -------- -------- Total assets $ 93,498 $104,515 ======== ======== Liabilities and Shareholders' Equity Liabilities: Notes payable $ 6,000 $ 22,900 Loans and mortgages payable, nonrecourse 24,957 20,756 Accounts payable and accrued liabilities, including deposits of $1,494 and $1,967 2,327 3,131 ------- ------- Total liabilities 33,284 46,787 ------- ------- 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 - 7,939 shares 23,817 22,614 Additional paid-in capital net of distributions of $5,171 and $4,968 83,917 83,914 Accumulated deficit (46,215) (47,495) ------- ------- 62,549 60,063 Cost of 192 treasury shares of beneficial interest (2,335) (2,335) ------- ------- Total shareholders' equity 60,214 57,728 Total liabilities and ------- ------- shareholders' equity $ 93,498 $104,515 ======= ======= See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands except for Per Share Data)
Three Months Ended Nine Months Ended June 30, June 30, 1996 1995 1996 1995 ----------------- --------------- Revenues: Interest and fees on real estate loans $ 1,022 $ 2,106 $ 3,511 $ 6,282 Operating income on real estate owned 2,248 1,965 6,475 6,151 Other, primarily investment income 77 166 233 420 ------ ------ ------ ------ Total revenues 3,347 4,237 10,219 12,853 ------ ------ ------ ------ Expenses: Interest-notes payable and loans payable 240 1,287 1,080 4,269 Provision for possible loan losses - - - 1,021 Provision for valuation adjustment - - - 178 Advisor's fee 148 182 477 608 General and administrative 646 783 2,098 2,381 Operating expenses relating to real estate owned including interest on mortgages of $503 and $69 for the three month and $1,459 and $253 for the nine month periods, respectively 1,643 1,636 5,241 4,868 Depreciation and amortization 70 156 270 465 ------ ------ ------ ------ Total expenses 2,747 4,044 9,166 13,790 ------ ------ ------ ------ Income (loss) before gain on sale of foreclosed properties held for sale 600 193 1,053 ( 937) Gain on sale of foreclosed properties held for sale - - 227 2,868 ------ ------ ------ ------ Net income $ 600 $ 193 $1,280 $1,931 ====== ====== ====== ====== Calculation of net income applicable to common shareholders: Net income $ 600 $ 193 $1,280 $1,931 Less: distribution on preferred stock 68 68 203 203 ------ ------ ------ ------ Net income applicable to common shareholders $ 532 $ 125 $1,077 $1,728 ====== ====== ====== ====== Earnings per share of Beneficial Interest - Note 2: Primary Income (loss) before gain on sale of foreclosed properties held for sale applicable to common shareholders $0.07 $0.02 $0.11 $( .15) Gain on sale of foreclosed properties held for sale - - 0.03 0.39 ------ ------ ------ ------ Net income applicable to common shareholders $0.07 $0.02 $0.14 $0.24 ====== ====== ====== ====== Fully Diluted $0.07 $0.02 $0.14 $0.24 ====== ====== ====== ====== Weighted average number of common shares outstanding - Note 2: Primary 7,734,577 7,346,624 7,512,329 7,346,624 ========= ========= ========= ========= Fully Diluted 8,773,432 7,346,624 7,512,329 7,346,624 ========= ========= ========= ========= STATEMENT OF ACCUMULATED DEFICIT Accumulated deficit, beginning of period $(46,815) $(48,731) $(47,495)$(50,469) Net income 600 193 1,280 1,931 Accumulated deficit, ------ ------ ------ ------ end of period $(46,215) $(48,538) $(46,215)$(48,538) ====== ====== ====== ====== 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, ------------------ 1996 1995 ---- ---- Cash flow from operating activities: Net income $1,280 $1,931 Adjustments to reconcile net income to net cash provided by operating activities: Provision for possible loan losses - 1,021 Provision for valuation adjustment - 178 Amortization and depreciation 270 465 Gain on sale of foreclosed properties (227) (2,868) Decrease in interest receivable 203 672 Decrease (increase) in prepaid expenses 229 (470) (Decrease)increase in accounts payable and accrued liabilities (312) 37 Decrease (increase) in rent and other receivables (46) 32 Decrease in escrow deposits 74 823 Increase in deferred costs (417) (75) Other 125 (117) ------ ------ Net cash provided by operating activities 1,179 1,629 ------ ------ Cash flows from investing activities: Collections from real estate loans 8,084 21,860 Proceeds from participating lenders 125 25 Additions to real estate loans (405) (214) Repayments to participating lenders - (5,213) Net costs capitalized to real estate owned (1,259) (7,381) Proceeds from real estate owned 2,953 10,930 Decrease in deposits payable (473) (684) Decrease in investment in U.S. Government obligations - 1,979 Other 72 (140) ------ ------ Net cash provided by investing activities 9,097 21,162 ------ ------ Cash flow from financing activities: Bank repayments (16,900) (21,892) Payoff/paydown of loan and mortgages payable (599) (756) Proceeds from mortgages payables 4,800 - Exercise of stock options 1,408 - Decrease in restricted cash 419 5,205 Other (221) (205) ------ ------ Net cash used in financing activities (11,093) (17,648) ------ ------ Net increase (decrease) in cash and cash equivalents (817) 5,143 Cash and cash equivalents at beginning of period 7,385 1,174 Cash and cash equivalents at ------ ------ end of period $6,568 $6,317 ====== ======
BRT REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (In Thousands)
Nine Months Ended June 30, --------------- 1996 1995 ---- ---- Supplemental disclosure of cash flow information: Cash paid during the period for interest expense $ 2,789 $ 4,811 ======= ======= Supplemental schedule of noncash investing and financing activities: Transfer of nonearning real estate loans to foreclosed properties at fair market value $ 34 $ 2,310 Recognition of allowance for previously provided loan losses 1,286 866 Recognition of valuation allowance upon sale of real estate owned 332 - Purchase money mortgages from sale of real estate owned (net of a $850 wrap mortgage in the prior period) 327 3,994 Write-off of nonrecourse mortgage payable upon relinquishment of real estate owned - 1,005 Recognition of valuation allowance upon relinquishment of real estate owned - 436 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, 1996 and for the three and nine months ended June 30, 1996 and 1995 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, 1996 are not necessarily indicative of the results for the full year. Certain items on the consolidated financial statements for the preceding periods 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. For financial statement and economic purposes, the majority-owned real estate entity is wholly-owned and presented accordingly. 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 included in the Trust's Annual Report on Form 10-K for the year ended September 30, 1995. Note 2 - Shareholders' Equity 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 purpose 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, 1996 and 1995, respectively. The preferred stock was converted to shares of beneficial interest subsequent to June 30, 1996. Fully diluted earnings per share of beneficial interest amounts are based on an increased number of common shares that would be outstanding assuming the exercise of common share options and 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, 1996 is dilutive with the addition of 1,030,000 shares upon conversion of the preferred stock and 8,855 shares, upon exercise of the common share options. The fully diluted computation is not materially dilutive or anti-dilutive for the nine months ended June 30, 1996 as well as three and nine months ended June 30, 1995. Stock Options On May 20, 1991 40,000 options to purchase shares of beneficial interest were granted to the independent Trustees of the Trust, under the 1988 Stock Option Plan. In April and May 1996, said options were exercised at $3.629 per share, increasing shareholders equity by $145,150. Note 3 - Real Estate Loans If all loans classified as non-earning were earning interest at their contractual rates for the three and nine month periods ended June 30, 1996 and 1995, interest income would have increased by approximately $190,000 and $564,000 in the respective periods in 1996, and $338,000 and $1,009,000 in the respective periods in 1995. 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 short term senior and junior real estate mortgages, secured by income producing property and to a lesser extent by unimproved real property. Repayments of real estate loans in the amount of $24,797,000 are due during the twelve months ending June 30, 1997, including $12,448,000 which is due on demand. There is presently an environment that is somewhat favorable for obtaining mortgage financing secured by real estate and for selling real estate, but the Trust cannot project the portion of loans maturing during the twelve months ending June 30, 1997 which will be paid or the portion which will be extended for a fixed term or on a month to month basis. In September, 1992, the Trust entered into an Amended and Restated Credit Agreement ("Restated Credit Agreement") with five banks and extended the maturity date to June 30, 1997. The Restated Credit Agreement precluded the Trust from engaging in any lending activities except for purchase money mortgages in connection with the sale of real estate. At June 30, 1996 the Trust was in compliance with its covenants under the Restated Credit Agreement. On August 2, 1996, the Trust paid off in full its remaining debt obligation due under the Restated Credit Agreement. The Trust at the present time is negotiating a credit facility in order to become active in mortgage lending activities. The Trust will continue to manage its existing loan portfolio, supervise, refurbish and maintain real estate owned, arrange and negotiate first mortgage loans secured by such real estate owned and where appropriate negotiate the sale of real estate owned. The short term liquidity needs of the Trust will be satisfied from interest received on outstanding real estate loans, net cash flow generated from the operation of properties and cash and cash equivalents available. The Trust's Board of Trustees has authorized the purchase from time to time of up to 250,000 shares of Beneficial Interest of the Trust. The Trust will obtain funds for purchases of its shares from its accumulated funds formerly held in the Cash Collateral Account. From July 8, 1996 to date 21,700 shares have been purchased at an aggregate cost of $117,600. During the nine months ended June 30, 1996, the Trust had an increase in cash provided by investing activities, as a result of collections from real estate loans of $8,084,000 and proceeds from the sale of real estate owned of $2,953,000, not including purchase money mortgages of $327,000. The $9,097,000 provided by investing activities, the $4,800,000 from the financing of real estate owned and the receipt of approximately $1,408,000 from the exercise of employee stock options was used to reduce bank debt by $16,900,000 to $6,000,000 at June 30, 1996. As of August 2, 1996 the full $6,000,000 was repaid to the banks primarily from funds received from the payoff of real estate loans, and the sale of and the refinance of real estate owned. Results of Operations The Trust's loan portfolio at June 30, 1996, before giving effect to the allowance for possible losses, was $42,494,000, of which $5,905,000 (14% of total real estate loans) was categorized as non-earning, as compared to $51,290,000 at September 30, 1995, of which $7,154,000 (14% of total real estate loans) was categorized as non-earning. The $8,796,000 decrease in the loan portfolio since September 30, 1995 is due to receipt of $5,400,000 from the refinancing of a portion of a first mortgage held by the Trust on a cooperative apartment complex in Queens, New York, payoff of real estate loans aggregating approximately $2,090,000 and partial recovery on a fully reserved mortgage receivable having a book balance of approximately $1,286,000 prior to allowance for possible losses. Interest and fees on real estate loans decreased to $3,511,000 and $1,022,000 for the nine and three months ended June 30,1996 as compared to $6,282,000 and $2,106,000 for the nine and three months ended June 30, 1995. These decreases of $2,771,000 and $1,084,000, respectively, were primarily due to a decrease in earning real estate loans as a result of payoffs, including the payoff of two loans secured by property located in the Texas marketplace which produced additional interest of approximately $1,000,000 based upon the Trust's profit participation in the quarter ended March 31, 1995,and a property securing a real estate loan becoming real estate owned. Operating income on real estate owned increased by $324,000 and $283,000 to $6,475,000 and $2,248,000 for the nine and three months ended June 30, 1996 as compared to $6,151,000 and $1,965,000 for the comparable nine and three month periods in the prior fiscal year. These increases were principally the result of income generated from an office building in Fairway, Kansas, acquired in October 1995 and an increase in rental income at the Dover, Delaware property, as a result of improved occupancy directly attributable to the conversion of this property from a regional mall to an office park, offset in part by the sale of a number of properties. Other income, primarily investment income, decreased to $233,000 and $77,000 for the nine and three months ended June 30, 1996 from $420,000 and $166,000 for the nine and three months ended June 30, 1995. These decreases of $187,000 and $89,000 are primarily due to a decrease in cash available to invest in addition to miscellaneous income of approximately $44,000 received during the quarter ended June 30, 1995. Interest expense decreased by $3,189,000 and $1,047,000 to $1,080,000 and $240,000 for the nine and three months ended June 30, 1996 from $4,269,000 and $1,287,000 for the nine and three months ended June 30, 1995 due to the continuing decrease in the outstanding bank debt and the average prime interest rate. The expenses for the nine months ended June 30, 1995 include provisions for possible loan losses of $1,021,000 and provisions for valuation adjustments of $178,000 with no comparable provisions during the nine and three months ended June 30, 1996. Management determined that no additional provisions for possible loan losses or valuation adjustments were required for the three and nine month periods ended June 30, 1996. The Advisor's fee decreased by $131,000 from $608,000 for the nine months ended June 30, 1995 to $477,000 for the nine months ended June 30, 1996 and by $34,000 from $182,000 for the three months ended June 30, 1995 to $148,000 for the comparable period in Fiscal 1996. These decreases were a result of a decrease in total invested assets, the basis on which the advisory fee is calculated. General and administrative expenses decreased to $2,098,000 and $646,000 for the nine and three months ended June 30, 1996 from $2,381,000 and $783,000 for the prior year comparable periods, a decrease of $283,000 and $137,000, respectively. These decreases are primarily the result of a decrease in the Trust's executive compensation and related expenses due to a reduction of staff. These decreases were offset in part by the recognition during the quarter ended March 31, 1996 of approximately $187,000 of additional legal, accounting and investment banking expenses incurred in connection with a potential transaction which did not proceed beyond the negotiation stage and which has been terminated. Operating expenses relating to real estate owned increased by $373,000 and $7,000 from $4,868,000 and $1,636,000 for the nine and three months ended June 30, 1995 to $5,241,000 and $1,643,000 for the nine and three months ended June 30, 1996. These increases were primarily due to an increase in interest on mortgages secured by real estate owned to $1,459,000 and $503,000 for the nine and three months ended June 30, 1996 from $253,000 and $69,000 for the comparable periods in 1995, and the Trust taking title to an office building in October 1995, by deed-in-lieu of foreclosure. These increases were offset in part by a combination of the sale of real estate owned and the completion of extensive repairs at a mixed use property during the fiscal year ended September 30, 1995. Depreciation and amortization decreased by $195,000 and $86,000 for the nine and three month periods ended June 30, 1996 from the comparable periods ended June 30, 1995. This a result of the classification of a mixed use property located in Philadelphia, Pennsylvania from an asset held for the production of income to an asset held for sale, thereby no longer being depreciated. Gain on sale of foreclosed properties for the nine months ended June 30, 1996 was $227,000 as compared to $2,868,000 for the nine months ended June 30, 1995. 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. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K On July 2, 1996, the Trust filed a current report on Form 8-K with the Securities and Exchange Commission to report that its Board of Trustees had authorized the purchase from time to time over the facilities of the New York Stock Exchange, or in private transactions up to 250,000 shares of Beneficial Interest of the Trust. The Trust also reported that on July 1, 1996, the Trust received notice from Gould Investors L.P. ("Gould"), the sole shareholder of its outstanding preferred stock, that Gould had elected to convert the 1,030,000 shares of preferred stock held by it, in accordance with the Trust's governing instruments, into 1,030,000 shares of Beneficial Interest. 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 8/12/96 /s/ Jeffrey Gould - ------- ------------------------------ Date Jeffrey Gould, President and Chief Operating Officer 8/12/96 /s/ David W. Kalish - ------- ------------------------------- Date David W. Kalish, Vice President and Chief Financial Officer EX-27 2
5 1,000 3-MOS SEP-30-1996 APR-01-1996 JUN-30-1996 6,568 0 0 0 0 0 0 0 93,498 0 24,957 23,817 0 1,030 35,367 93,498 0 3,347 0 0 3,347 0 0 600 0 600 0 0 0 600 .07 .07
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