<PAGE>
<PAGE>
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______
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<TABLE>
Part 1 - FINANCIAL INFORMATION
Item 1.Financial Statements
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except For Per Share Data)
<CAPTION>
March 31, Sept 30,
1994 1993
_______ _______
(Unaudited) (Audited)
<S> <C> <C>
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
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<PAGE>
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
<S> <C> <C>
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
======= =======
<FN>
See Accompanying Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands)
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1994 1993 1994 1993
________ ________ ________ ________
Revenues: <C> <C> <C> <C>
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)
===== ===== ===== =====
<PAGE>
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)
====== ====== ====== ======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
Six Months Ended
March 31,
_________________
1994 1993
____ ____
<S> <C> <C>
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
______ ______<PAGE>
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
<PAGE>
<PAGE>
<TABLE>
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
Six Months Ended
March 31,
_________________
1994 1993
____ ____
<S> <C> <C>
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
<FN>
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
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.
<PAGE>
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.
<PAGE>
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 <PAGE>
<PAGE>
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.
<PAGE>
<PAGE>
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.
<PAGE>
<PAGE>
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
