SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 1999
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
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(Exact name of registrant as specified in its charter)
Massachusetts 13-2755856
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
60 Cutter Mill Road, Great Neck, New York 11010
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 516-466-3100
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Shares of Beneficial New York Stock Exchange
Interest, $3.00 Par Value
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
Indicate by check mark whether the registrant (l) 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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in PART III of this Form 10-K or any
amendment to this Form 10-K [ ]
The aggregate market value of voting stock of the registrant held by
non-affiliates was approximately $26,616,000 as of December 1, 1999.
As of December 1, 1999 the registrant had 7,165,263 Shares of Beneficial
interest out-standing, excluding treasury shares.
<PAGE>
Documents Incorporated By Reference
PART III
Item 10 - Directors and Executive Officers To be included in
of the Registrant the Proxy Statement
to be filed pursuant
Item 11 - Executive Compensation to Regulation 14A
not later than
Item 12 - Security Ownership of Certain January 28, 2000,
Beneficial Owners and Management except for information
concerning executive
Item 13 - Certain Relationships and Related officers, which is
Transactions included in Part I.
PART IV - See Item 14.
<PAGE>
PART I
Item l. Business.
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General
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BRT Realty Trust ("BRT") is a real estate investment trust organized in
1972 under the laws of the Commonwealth of Massachusetts. Its primary business
activity is to originate and hold for investment for its own account, senior
real estate mortgage loans secured by income producing real property and, to a
lesser extent, junior real estate mortgage loans secured by income producing
real property and senior mortgage loans secured by undeveloped real property.
BRT emphasizes loans with terms ranging from six months to three years to
persons requiring short term funds, among other reasons, for the acquisition of
a property, the purchase (normally at a discount) of a mortgage applicable to a
property owned by the borrower, rehabilitating a property or converting a
commercial property to residential use. BRT does not finance new construction.
At September 30, 1999 BRT had $44,682,000 principal amount of loans
outstanding, 83% of which were secured by properties located in New York City,
Nassau and Suffolk counties.
The major portion of the mortgage loans originated and held by BRT bear
interest at a floating rate related to the prime rate. The interest rate adjusts
when the prime rate changes. Since borrowings BRT makes under its outstanding
Credit Agreement (discussed below under the caption "Investment Policy") are
related to prime or Libor, BRT minimizes interest rate fluctuation risks.
Interest on mortgage loans held by BRT is payable monthly and BRT usually holds
escrows, also paid monthly, for real estate taxes. BRT receives an origination
fee on all mortgage loans it originates and an extension fee in connection with
the extension of most loans. These fees are paid at the time a loan is funded or
extended. Origination and extension fees are taken into income over the life of
the commitment and/or the loan. If a loan is not taken by the borrower, the fee
is recognized at the expiration of the commitment. A non-refundable processing
fee is received on substantially all commitments.
Commencing in April 1998, BRT, through BRT Funding Corp. (a
wholly-owned subsidiary), started originating longer term senior real estate
mortgage loans secured by income producing real property, primarily multi-family
properties. These loans provide for a fixed rate of interest, have an initial
five-year term and provide for amortization of principal over 20 to 25 years.
The borrower is usually afforded the option to extend the loan for an additional
five years at a market rate of interest. BRT Funding Corp. receives an
origination fee and an additional fee if the loan is extended. In 1999 BRT
Funding Corp. sold to a banking institution, at par, senior participations in
$9,399,000 principal amount of loans originated by it (47% of the principal
amount of loans originated by BRT Funding Corp. on the date the sale was
consummated), with BRT Funding Corp. retaining a junior participation in the
loans sold. The senior participant acquired, at par, between 70% and 90% of the
face value of each loan, with BRT Funding Corp. retaining between 10% and 30%.
The interest rate paid to the institution acquiring the senior participation is
somewhat less than the interest rate provided for in the applicable loan
documents, thereby enhancing the return on the retained junior position.
However, since the junior position is subordinate to the payment in full of the
senior position, it is a riskier investment and in the event of a default under
the mortgage, the Trust will have to determine if it will protect its position
by paying out the senior portion and in the event of a default it may lose all
or part of its investment. As of September 30, 1999, the Trust held $1,520,000
principal amount of junior participations in loans originated by BRT Funding
Corp., all of which are performing at September 30, 1999. In view of the highly
competitive market for this conventional lending activity, BRT Funding Corp. has
not been active in this market since December 1998, but if competitive
conditions change it may once again seek this type of business.
At September 30, 1999 BRT's mortgage portfolio consisted of 46 mortgage
loans totaling $43,301,000 in aggregate principal amount (net of allowances of
$1,381,000), representing 51% of BRT's total assets. At September 30, 1999 all
outstanding loans were earning interest. Of the principal amount of loans
outstanding at September 30, 1999, 95% represented first mortgage loans and 5%
represented second mortgage and wrap-around loans and junior participations in
loans originated by BRT Funding Corp. All of the mortgage loans originated by
BRT in the year ended September 30, 1999 were first mortgage loans.
In the year ended September 30, 1999, in addition to originating
mortgage loans, BRT was engaged in managing its loan portfolio, supervising and
maintaining real estate owned by BRT (real estate acquired by BRT in foreclosure
actions or by deed in lieu of foreclosure) and leasing and selling real estate
owned. Approximately, 8% of BRT's total assets at year ended September 30, 1999
or an aggregate of $6,416,000 (after valuation allowances) was represented by
real estate assets. Approximately 18% of BRT's net investment assets (either
real estate loans or real estate assets) related to cooperative apartments at
September 30, 1999.
At September 30, 1999 approximately 34% of BRT's total assets was
represented by cash and cash equivalents. In fiscal 1999, particularly the later
half of the year, the Trust experienced an increased level of competition in
mortgage lending activities. The competition was primarily in terms of rate and
in the amounts lenders were willing to lend vis-a-vis the underlying value of
the real estate (loan to value ratio). The Trust, adhering to its underwriting
policies and procedures, originated approximately the same principal amount of
new loans in fiscal 1999 ($25,182,000) as there were principal repayments
($25,561,000). As a result of this factor and cash generated during the year
from the sale of loans, securities and real property, the Trust has $28,757,000
of cash and cash equivalents available for its lending activities at September
30, 1999 without use of the credit facility.
With respect to real estate which BRT has taken back in foreclosure or
deed in lieu thereof, it is BRT's policy to offer for sale all such real estate
at prices which management believes represents fair value in the geographic area
in which the property is located. If BRT's management determines that it will
not, in the near term, be able to sell a specific parcel of real estate at an
acceptable price, management may seek first mortgage financing secured by that
specific parcel of real estate. In many instances in the past number of years,
BRT, through an independent contractor, has caused a property to be renovated,
engaged in leasing activities, negotiated and completed the sale of real estate
owned, (if the selling price is deemed acceptable by management) and provided
purchase money financing in order to facilitate the sale of real estate owned.
Because of the favorable real estate and mortgage market, BRT did not have to
provide purchase money mortgage financing in fiscal 1999 to facilitate property
sales.
In the year ended September 30, 1999 BRT disposed of real estate, other
than cooperative apartments, having an aggregate net book value of $11,886,000,
for an aggregate consideration of $14,547,000 resulting in a gain on sale of
$2,661,000. During the year ended September 30, 1999 BRT sold shares (and
assigned the related proprietary leases) in cooperative apartments resulting in
net proceeds of approximately $3,180,000 resulting in a gain on sale of
$1,313,000. Prior to the year ended September 30, 1999, the Trust provided
purchase money financing to facilitate the sale of cooperative apartments. In
the fiscal year ending September 30, 1998 BRT sold to an unrelated lending
institution, on a non-recourse basis, its portfolio of mortgages receivable
taken back in connection with the sale of cooperative apartments ($1,542,000
principal amount), but no such mortgages were provided in the fiscal year ended
September 30, 1999 due to the favorable market for selling cooperative
apartments in the New York metropolitan area, where substantially all apartments
owned are located, and a favorable mortgage lending environment.
Investment Policy
- -----------------
BRT's investment policy emphasizes short-term senior real estate
mortgage loans secured by first liens on income producing real property.
Commencing in April, 1998, BRT expanded its investment policy by originating
"conventional" senior real estate loans secured by income producing real
property, primarily multi-family residential properties. In April 1999,
approximately 47% of BRT's "conventional" senior real estate loan portfolio was
sold at par, on a senior/junior basis to another institution (the Trust retained
the junior portion in each instance) and in view of significant competition in
this type of lending (as it relates primarily to interest rates and loan to
value ratios), the Trust ceased to be active in this lending activity in
December 1998.
From time-to-time, BRT will make a junior real estate loan secured by
income producing real property and senior real estate mortgage loans secured by
undeveloped real property. Junior mortgage loans are subordinate to one or more
prior liens. Junior mortgage loans may be wrap-around loans which are subject to
prior underlying mortgage indebtedness. In the case of a wrap-around mortgage
loan, the principal amount on which interest payable is calculated is the
outstanding balance under the prior existing mortgage loan plus the amount
actually advanced under the wrap-around loan. The terms of a wrap-around loan
normally require that a borrower make principal and interest payments directly
to BRT and BRT in turn pays the holder of the prior mortgage loan. It is not the
present intent of BRT's management to cause BRT to invest in any mortgages
secured by property located outside the United States and Puerto Rico.
The Trust, from time to time, has originated a participating mortgage
loan. A participating mortgage loan provides for a floating interest rate which
is somewhat less than the rate charged by the Trust on short term mortgages,
will be for a longer term (normally five years), and will provide for the Trust
to participate in the incremental value of the property securing the loan either
at the time of sale, refinancing or at maturity. A participating loan will
usually be a first mortgage loan. In the current fiscal year, the Trust intends
to become more active in seeking to originate participating mortgage loans.
There were no participating mortgage loans outstanding at September 30, 1999.
BRT has no fixed policy or limitation upon the amount or percentage of
its assets which it may invest in a single mortgage loan. However, as a general
business guideline, BRT does not generally make loans to one borrower where the
amount involved exceeds 10% of BRT's total assets. During the year ended
September 30, 1999 the average loan originated was approximately $1,259,000 and
the largest loan originated was $ 3,000,000.
Loan approvals are based on a review of a loan application that is
prepared and submitted by the borrower, site visits to the property by at least
one of the officers of BRT or BRT Funding Corp., a title review of the
underlying property, in-house property appraisals, a review of the financial
statements of a prospective borrower, an engineering inspection, a Phase I
environmental report, and final approval by a loan committee made up of
executive officers of BRT. BRT does not require a property appraisal by an
independent appraiser.
The Trust uses its own capital for investing in mortgage loans. In
addition, it has arranged for a credit facility to make funds available for real
estate mortgage lending. In May, 1999 the Trust entered into a revolving credit
agreement ("Credit Agreement") with TransAmerica Business Credit Corporation
("TransAmerica"), which provides that the Trust may borrow a maximum of
$45,000,000 on a revolving basis (funds can be borrowed, repaid and borrowed
again). The credit facility matures May 18, 2002. The Trust pays a fee ("unused
fee") to TransAmerica of .125% per annum, payable monthly, on the difference
between the loan balance and the maximum loan amount of $45,000,000. Borrowings
under the Credit Agreement bear interest at either Libor plus 3.25% or prime
plus .50%, adjusted monthly. Subject to certain timing and size requirements the
Trust can choose between the two interest rates. The loan is collateralized by
specific receivables and the Trust's equity in specific real property. The loan
amount can never exceed 80% of approved collateral. The Trust, can substitute
collateral for pledged collateral. The Trust is required to maintain a
$70,000,000 tangible net worth (as defined) and it cannot permit the interest
coverage ratio (net income plus interest expense to interest expense) to be less
than 1.75:1.00 over specified periods. The Credit Agreement contains additional
affirmative and negative covenants, all of which have been and continue to be
met. As at September 30, 1999 there was $331,000 outstanding under the Credit
Agreement.
The mortgage loans which BRT originates are not ordinarily insured. BRT
will obtain a guarantee or "walk-away guarantee" from the principal or
principals of the borrower for most loans originated. A "walk-away guarantee"
provides in substance that the guarantee of the guarantor terminates if the
borrower conveys the property to BRT, provided that at the time of conveyance
interest and amortization payments to BRT are current, real estate taxes are
current and outstanding bills related to the property's operations are current.
The "walk-away guarantee" is intended to provide an incentive to the principal
of a borrower to deed a property to BRT, thereby eliminating the need for a
foreclosure, in situations in which the borrower is not financially able or
capable of operating the property and runs the risk of losing the property in a
foreclosure.
In the event of a default by the borrower on a mortgage loan, BRT will
have to foreclose the mortgage or protect its investment through negotiations
with the borrower and or other interested parties which may involve further cash
outlays. During a mortgage foreclosure proceeding BRT will usually not receive
interest payments under its mortgage. Foreclosure proceedings in certain
jurisdictions, including New York State, can take a considerable period of time
(up to two years in many instances). In addition, if the borrower files for
protection under the federal bankruptcy laws during the foreclosure process,
delays may be greater than two years. In the usual foreclosure proceeding, BRT
will seek to have a receiver appointed by the Court to preserve the rental
income stream and provide for the maintenance of the property. At the conclusion
of the foreclosure process (after the property is sold at auction to a third
party purchaser or acquired by BRT) the amounts collected by the receiver, less
costs and expenses of operating the property and the receiver's fees, are paid
over to BRT. During the year ended September 30, 1999 there were no foreclosure
proceedings commenced or pending.
The mortgages owned by BRT may in certain circumstances be subordinate
to mechanics' liens or governmental liens and in instances in which BRT invests
in junior mortgage loans, sells senior participations in loans (retaining the
junior portion) or invests in wrap-around loans the mortgages securing BRT's
loans are subordinate to the liens of senior mortgages or senior participations.
At September 30, 1999 approximately 8% of BRT's real estate mortgages were
represented by junior mortgages, junior participations or wrap-around mortgage
loans. In the event the underlying asset value is not sufficient to satisfy both
the senior and junior lienholder, the junior lienholder could lose all or a
portion of its investment. In certain cases, BRT may find it advisable to make
additional payments in order to maintain the current status of prior liens or to
discharge them entirely or to make working capital advances to support current
operations. It is possible that the total amount which may be recovered in cases
in which BRT holds a junior lien or participation may be less than its total
investment less allowances for possible losses.
<PAGE>
Current Loan Status
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As of September 30, 1999 BRT had 46 mortgage loans in its mortgage
portfolio, totaling $44,682,000 in aggregate principal amount and $43,301,000
after allowances for possible losses. During the year ended September 30, 1999
$25,182,000 of mortgage loans were originated, $25,561,000 of outstanding loans
were repaid and $7,860,000 principal amount of outstanding loans were sold at
par. The three largest mortgage loans outstanding, at September 30, 1999
represent 3.5%, 3.1%, and 2.7%, respectively of the BRT's total assets. No other
mortgage loan accounted for more than 2.6% of BRT's total assets at September
30, 1999.
Information regarding BRT's mortgage loans outstanding at September 30,
1999:
<TABLE>
<CAPTION>
Prior No. of
Total(1) Liens Loans
-------- ----- -----
(Amounts in thousands)
<S> <C> <C> <C>
First Mortgage Loans:
Long-term:
Residential $ 2,337 $ - 9
Shopping centers 4,835 - 5
Office building 1,068 - 1
Short-term (five years or less):
Shopping centers/retail 3,554 - 4
Industrial buildings 5,728 - 3
Office buildings 8,419 - 5
Residential (multiple family units) 13,770 - 14
Hotel 2,724 - 2
Miscellaneous 212 - 2
Second Mortgage Loans
and wraparound mortgages 2,035 313 1
--------- -------- --------
$44,682 $ 313 46
======= ====== ==
</TABLE>
(1) All loans outstanding at September 30, 1999 were earning interest.
At the year ended September 30, 1999 BRT had an allowance for possible
losses on its real estate mortgage loans of $1,381,000 compared to an allowance
of $2,041,000 at September 30, 1998. In determining the allowance for possible
loan losses, BRT takes into account numerous factors including a market
evaluation of the underlying collateral, the underlying property's estimated
cash flow during the projected holding period and estimated sales value computed
by applying an expected capitalization rate to the stabilized net operating
income of the specific property, less estimated selling costs. BRT also takes
into account the extent of liquidity in the real estate industry, particularly
in the New York metropolitan area, where approximately 83% of the portfolio is
located. Management reviews the loan portfolio on a quarterly basis to determine
if allowances are needed.
When a mortgage loan is in default, BRT may acquire the underlying
property through foreclosure or may take other legal action as is necessary to
protect its investment. In negotiated workouts BRT seeks to acquire title to a
property and in certain cases affords the borrower the opportunity to reacquire
the property at a fixed price over a specified period of time.
Real Estate Assets
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The only significant real property owned by BRT during the year ended
September 30, 1999 (significant meaning a property with a book value amounting
to 10% or more of total assets) was an office center and retail mall located in
Dover, Delaware. The Company contributed this property to a limited liability
company, effective September 1, 1999, after receiving a distribution of
$4,620,000 from the other member. Accordingly, the Trust's net investment in
this property results in it no longer being deemed a significant property at
September 30, 1999.
The property is a 474,000 square foot enclosed facility (formerly a
shopping mall) containing a combination of both office and retail space located
on approximately 58 acres. The total site owned contains approximately 90 acres.
The property is located on Route 113, approximately two miles from the Delaware
state capital complex. In addition to the enclosed facility there are five free
standing buildings on the property containing approximately 55,000 square feet
of rentable space. The property was converted by the Trust to an office complex
with the two former "anchor" retail locations converted and redeveloped to
office space for a major insurance company and a major bank; a 10 year lease
expiring December 31, 2004 (with options to renew totaling ten years) was
entered into with a major insurance company for approximately 68,613 square feet
of space, and a 10 year lease expiring March 31, 2005 (with options to renew
totaling ten years) was entered into with a major bank for 79,000 square feet of
space. Each of the two tenants at the "anchor" locations has an option to expand
its space and a right to early termination. If the insurance company exercises
its early termination right, which it can do at any time, it must pay an amount
equal to the rentals due to the lease expiration date, discounted to present
value. The bank has an early termination right, during its sixth lease year. If
the bank exercises its early termination right, it must pay a specified
termination fee. No other tenant occupies ten percent or more of the rentable
space at this facility. Tenants occupying outparcels at the property include an
automotive center, a day care center, the Delaware National Guard and a credit
union. There is no major retail tenant at the property.
On October 15, 1999, effective September 1, 1999, the Trust and a
subsidiary of KIMCO Realty, Inc. ("KIMCO"), entered into a limited liability
company venture ("LLC") to develop the Trust's 90 acres (which includes 32 acres
of undeveloped land) and 40 acres contiguous to the Trust's property, which the
LLC, through KIMCO, has an option to purchase. The activities of the LLC will be
to continue to lease the existing structures as office space and to develop the
underdeveloped acreage as a retail center. As part of the organization of the
LLC, KIMCO funded the LLC with $4,620,000, which was then distributed to the
Trust's subsidiary (which owned fee title to the 90 acre site) for its
contribution of the property to the LLC. Any requirements for funding of the
LLC, over and above borrowings, will be made equally by BRT and KIMCO on a
voluntary basis and all profits, losses and cash distributions will be shared
equally by the Trust and KIMCO. KIMCO, through a KIMCO subsidiary, will be the
managing member of the LLC. There have been no retail development activities at
this site since the commencement of the LLC. The activities of the LLC to date
have been operation and leasing of the existing facilities and feasibility
studies related to the retail development of the property and the adjoining
parcel (i.e. environmental studies, surveys, zoning evaluation, etc.).
In the opinion of management the property is adequately covered by
insurance.
<PAGE>
The occupancy rate of this property (including the five free standing
buildings) since BRT acquired title in October 1993 and the effective annual
rental per square foot is as follows:
Fiscal Year End Base Rental Per
September 30, Occupancy Rate Square Foot Occupied
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1994 38% $5.07
1995 53% $5.08
1996 63% $6.38
1997 66% $5.61
1998 63% $6.56
1999 68% $6.63
The schedule of lease expirations for each of the next ten fiscal years
for this property (including the five outparcels) is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended # of Tenants Whose Total Area Annual Base % of Gross Annual
September 30, Leases Expire* Covered Rental Base Rental
------------- -------------- ------- ------ -----------
<S> <C> <C> <C> <C>
2000 27 89,629 638,848 31.1
2001 4 12,025 229,137 11.1
2002 2 3,700 29,600 1.4
2003 5 35,409 248,984 12.1
2004 1 4,500 54,000 2.6
2005 2 147,613 699,589 34.0
2006 0 - - -
2007 0 - - -
2008 0 - - -
2009 0 - - -
</TABLE>
*All information provided assumes that the two major anchor tenants who
occupy a total of 147,613 square feet do not exercise their right to terminate
prior to lease expiration. The fiscal year ended September 30, 2000 includes all
month to month tenants and tenants occupying space under short term leases. BRT
has converted many tenants to month to month tenancies and entered into short
term leases to provide it with the flexibility to assemble large blocks of space
for larger users of space.
The realty tax rate in Dover is based on applying four mil rates to the
assessed valuation. Real estate taxes with respect to this property were
$157,000 for the last tax year.
In July 1995 two separate but related loans aggregating $9,250,000 were
closed with respect to this property; one loan in the original principal amount
of $6,000,000 is collateralized by a first mortgage on the building occupied by
the insurance company and the other loan in the original principal amount of
$3,250,000 is collateralized by the building leased to the bank. Both loans are
cross collateralized and are secured by a mortgage on the balance of the
enclosed portion of the property. The loans mature on July 1, 2005, provide for
a fixed interest rate of 8.07% and provide an amortization schedule intended to
fully amortize the loans over the ten year period. The principal balance due on
these mortgages at September 30, 1999 was $6,757,000. This mortgage loan may be
prepaid, in full or in part at any time provided that a prepayment premium
calculated to give the Lender a specified yield to maturity (discounted to
present value) is paid. The LLC will be responsible for complying with these
mortgages.
The following sets forth information concerning other real estate owned
by BRT (such real estate not being significant) as of September 30, 1999:
Rock Springs, Wyoming
---------------------
A 151,105 square foot shopping center, consisting of 138,191 square
feet of retail space (30 retail stores), 12,914 square feet of office space, a
free standing restaurant and a free standing kiosk. BRT holds a leasehold
interest in this property. This property is no longer encumbered by mortgage
debt, with the Trust having prepaid the mortgage on this property in November,
1999. The retail space was 97% occupied and the office space was 77% occupied at
September 30, 1999.
Cooperative Apartment Units
---------------------------
At September 30, 1999, BRT owned 64 cooperative apartment units having
a book value of $16,000 in 3 separate projects: one containing 61 units located
in Manhattan, 2 units located in Nassau County and 1 unit located in Suffolk
County, New York. During the year ended September 30, 1999 the sales market for
cooperative units in the New York metropolitan area was positive. BRT sold 43
cooperative apartment units in the year ending September 30, 1999. Cooperative
apartment units owned by the Trust which are subject to New York City "rent
control" or "rent stabilization" laws and regulations are leased pursuant to
such laws and regulations until they are available for sale, and "market" units
are leased for terms of 1 to 2 years, with a selective number of market units
being held vacant for sale. At September 30, 1999, 92% of the cooperative
apartment units owned by BRT were occupied.
Competition
- -----------
With respect to it's real estate lending activities, BRT competes for
acceptable investments with other REITs, commercial banks, savings and loan
associations, conduits, pension funds and mortgage banking firms. Competition
for mortgage loans, particularly conventional mortgages secured by multi-family
residential properties, is highly competitive, with lenders competing on rate,
fees, amounts committed, term and service. Due to the competitive nature of the
lending market in 1999 and the policy of BRT to consistently apply its
underwriting standards and procedures to the loans it makes, the repayment of
outstanding loans in fiscal 1999 exceeded by $379,000 the principal amount of
loans originated in fiscal 1999.
With respect to real estate acquired by foreclosure and held for sale,
BRT competes for tenants and potential purchasers of such properties with owners
of comparable real property in the areas in which the properties are located.
With respect to the cooperative units owned by BRT, there is a great deal of
competition for purchasers and, pending the sale of cooperative units,
substantially all the units are offered for rental for terms up to two years,
although it is noted that the market for sale of cooperative apartment units
improved significantly in 1998 and 1999. At present, the apartment rental market
in the areas in which BRT owns cooperative apartments is satisfactory.
Employees
- ---------
BRT has 10 full-time employees, of which 4 are engaged primarily in
loan origination activities. In addition, BRT has entered into an agreement with
REIT Management Corp. pursuant to which REIT Management Corp. acts as its
advisor. At the present time, REIT Management, subject to supervision of BRT's
Board of Trustees, administers BRT's portfolio of mortgages receivables, engages
in negotiations in workout situations with respect to non-earning and delinquent
loans and supervises and provides support services in litigation activities.
REIT Management Corp. also supervises the maintenance, leasing, sale and/or
financing of real estate owned by BRT. In addition, REIT Management Corp.
participates in originating, investigating and evaluating investment
opportunities. Reference is made to BRT's Proxy Statement to be filed pursuant
to Regulation 14A for information concerning the amount and method of computing
REIT Management Corp.'s fee.
In the years ended September 30, 1999 and 1998, BRT engaged entities,
including entities affiliated with REIT Management Corp., to manage properties
acquired by BRT in foreclosure or deed in lieu of foreclosure. The management
services include, among other things, rent billing and collection, accounting,
maintenance, contractor negotiation, construction management, sales, leasing and
mortgage brokerage. In management's judgment the fees paid to REIT Management
Corp. and entities affiliated with REIT Management Corp. are competitive with or
less than fees that would be charged for comparable services by unrelated
entities. The real estate management services provided diminished significantly
from the fiscal year ended September 30, 1998 to the fiscal year ended September
30, 1999 as BRT disposed of properties and cooperative apartments acquired in
foreclosure or by deed in lieu of foreclosure.
<PAGE>
EXECUTIVE OFFICERS OF REGISTRANT
--------------------------------
The following sets forth the executive officers of BRT. The business
history of officers who are also Trustees will be provided in BRT's proxy
statement to be filed pursuant to Regulation 14A not later than January 28,
2000.
Name Office
- ---- ------
Fredric H. Gould (*) Chairman of the Board and
Chief Executive Officer
Jeffrey A. Gould (*) President and Chief Operating Officer
Simeon Brinberg Senior Vice President;
Secretary
Eugene J. Keely Vice President
Matthew J. Gould (*) Senior Vice President
David W. Kalish Senior Vice President, Finance
George E. Zweier Vice President, Chief Financial Officer
Mark H. Lundy Vice President
Israel Rosenzweig Vice President
Seth Kobay Vice President; Treasurer
(*)Fredric H. Gould is Jeffrey A. and Matthew J. Gould's father.
Simeon Brinberg (age 66), has been Secretary of BRT since February,
1983 and Senior Vice President since November, 1988. From 1961 to September,
1988 he was a partner in the law firm of Bachner, Tally, Polevoy, Misher &
Brinberg and its predecessor. In October, 1988 Mr. Brinberg became a Vice
President of BRT and a Vice President of Georgetown Partners, Inc., the managing
general partner of Gould Investors L.P. Gould Investors L.P. is primarily
engaged in the ownership and operation of real estate properties held for
investment. In June, 1989 he became a Vice President of One Liberty Properties,
Inc., a real estate investment trust engaged in the ownership of "net leased"
real property. Mr. Brinberg is a director of CK Witco Corporation.
Eugene J. Keely (age 64) has been a Vice President of BRT since May
1983.
<PAGE>
Matthew J. Gould (age 40) was President of One Liberty Properties, Inc.
from June, 1989 to December 1999. In December 1999 he became a Director and
Senior Vice President of One Liberty Properties, Inc. He has been a Vice
President of BRT since 1986 and became a Senior Vice President in March 1993. He
has been President of Georgetown Partners, Inc., the managing general partner of
Gould Investors L.P. since March 1996 and since December 1999 he is devoting a
substantial portion of his business time to the business of Gould Investors L.P.
In addition, Mr. Gould has been a Vice President of REIT Management Corp., BRT's
advisor, since 1986, and a Vice President of Majestic Property Management Corp.
and related entities engaged in real property management and leasing since 1986.
David W. Kalish (age 52) was Vice President and Chief Financial Officer of
BRT from June, 1990 until August, 1998. Since August, 1998, Mr. Kalish has been
Senior Vice President, Finance of BRT. He has also been Vice President and Chief
Financial Officer of One Liberty Properties, Inc. and Georgetown Partners, Inc.
since June, 1990. For more than five years prior to June, 1990, Mr. Kalish, a
certified public accountant, was a partner of Buchbinder Tunick & Company, and
its predecessors.
George E. Zweier (age 35) has been employed by BRT since June 1998 and
was elected Vice President, Chief Financial Officer in August, 1998. For
approximately five years prior to joining BRT, Mr. Zweier, a certified public
accountant, was an accounting officer with the Bank of Tokyo - Mitsubishi
Limited, in New York and for more than five years prior thereto he was an
accounting and audit officer with the Dime Savings Bank of New York, Uniondale,
New York.
Mark H. Lundy (age 37) has been a Vice President of BRT since 1993. He has
been Secretary of One Liberty Properties, Inc. since June, 1993 and a Vice
President of Georgetown Partners, Inc. since July, 1990. Mr. Lundy is a member
of the bars of New York and Washington, D.C.
Israel Rosenzweig (age 52) has been President of BRT Funding Corp. since
its organization in April, 1998 and a Senior Vice President of BRT since April,
1998. He has been a Vice President of Georgetown Partners, Inc. and One Liberty
Properties, Inc. since May, 1997. From December 1993 to April 1997 Mr.
Rosenzweig was Executive Vice President and a Director of Bankers Federal FSB
which was acquired by Dime Savings Bank in April, 1997. He is a Director of
Nautica Enterprises, Inc.
Seth Kobay (age 45) has been Vice President and Treasurer of BRT since
March 1994. In addition, Mr. Kobay, a certified public accountant, has been the
Vice President of Operations of Georgetown Partners, Inc. for more than the past
five years.
<PAGE>
Item 2. Properties.
----------
BRT's executive offices are located at 60 Cutter Mill Road, Great Neck,
New York, where it currently occupies approximately 12,000 square feet with
Gould Investors L.P., REIT Management Corp., One Liberty Properties, Inc. and
other related entities and an additional 1,762 square feet at 60 Cutter Mill
Road is occupied by BRT Funding Corp., BRT's wholly-owned subsidiary. The
building is owned by an affiliate of Gould Investors L.P. BRT contributed
$58,000 to the annual rent of $293,000 paid by Gould Investors L.P., REIT
Management Corp., One Liberty Properties, Inc., and related entities in the year
ended September 30, 1999 and paid direct rental of $60,000 on the additional
1,762 square feet occupied by BRT Funding Corp.
For a description of real estate acquired by BRT in foreclosure, see
Item 1, Business; Real Estate Assets.
Item 3. Legal Proceedings.
-----------------
BRT is not a defendant in any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
There were no matters submitted during the fourth quarter of the year
ended September 30, 1999 to a vote of BRT's security holders.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Matters
-------------------------------------------------------------
The shares of Beneficial Interest ("Beneficial Shares") of BRT are
listed on the New York Stock Exchange. The following table shows for the
quarters indicated, the high and low sales prices of the Beneficial Shares on
the New York Stock Exchange as reported on the Composite Tape.
Fiscal Year Ended September 30, High Low
------------------------------- ---- ---
1999
First Quarter 6 1/8 5 7/8
Second Quarter 7 6
Third Quarter 8 3/8 6 7/8
Fourth Quarter 8 3/4 7 13/16
1998
First Quarter 9 1/8 7 11/16
Second Quarter 8 5/8 7 5/8
Third Quarter 7 7/8 6 13/16
Fourth Quarter 8 3/8 5 13/16
As of December 1, 1999 there were approximately 1,206 holders of record
of BRT's Beneficial Shares.
BRT did not declare any cash distributions to common shareholders
during the years ended September 30, 1998 and 1999.
BRT qualifies as a real estate investment trust for Federal income tax
purposes. In order to maintain that status, it is required to distribute to its
shareholders at least 95% of its annual taxable income. Management believes that
as a result of accumulated tax losses BRT will not be required to make cash
distributions to maintain its real estate investment trust status until its
accumulated tax losses have been fully used or shall expire. Accumulated tax
losses were $20,835,000 at December 31, 1998 and are projected to be
approximately $9,800,000 at December 31, 1999. The accumulated tax losses begin
to expire in 2006. The resumption of cash distributions and the amount and
timing of future distributions, if any, will be at the discretion of the Board
of Trustees and will depend upon BRT's financial condition, earnings, business
plan, cash flow and other factors. The credit agreement with TransAmerica
provides that the Trust may pay cash distributions to the extent necessary to
maintain its status as an entity taxed as a real estate investment trust for
federal income taxes provided the Trust is not in monetary default under the
Credit Agreement or any other indebtedness.
<PAGE>
Item 6. Selected Financial Information
The following table, not covered by the report of the independent
auditors, sets forth selected historical financial data of BRT for each of the
fiscal periods in the five years ended September 30, 1999. This table should be
read in conjunction with the detailed information and financial statements of
BRT appearing elsewhere herein.
<TABLE>
<CAPTION>
Fiscal Years Ended
September 30,
1999 1998 1997 1996 1995
----- ---- ---- ---- ----
(In thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C>
Operating statement data:
Total revenues $12,173 $10,197 $17,155 $13,556 $16,637
Provision for possible
loan losses - - - - 1,010
Provision for
valuation adjustment - - - - 178
Income (loss) before
gain on sale of real estate loans
and foreclosed properties and
available-for-sale securities 5,058 4,241 6,646 1,776 (522)
Net income 11,646 13,588 7,333 2,246 2,974
Calculation of net income
applicable to common
shareholders:
Net income 11,646 13,588 7,333 2,246 2,974
Less: distributions
on preferred shares - - - 203 270
Net income
applicable to common
shareholders 11,646 13,588 7,333 2,043 2,704
Income per
beneficial share:
Basic 1.63 1.72 .86 .26 .37
Diluted 1.61 1.71 .86 .26 .35
Balance sheet data:
Total assets 84,609 85,810 80,315 89,613 104,515
Earning real
estate loans (1) 44,682 51,175 40,030 32,813 43,456
Non-earning real
estate loans (1) - - 3,835 5,905 7,154
Real estate assets (1) 6,765 17,235 24,706 48,438 53,389
Notes payable-credit
facility 331 5,500 - - 22,900
Loans and mortgages
Payable 841 8,494 11,562 25,391 20,756
Shareholders' equity 80,624 69,747 66,537 60,892 57,728
(1) Earning and non-earning loans and real estate owned are presented without
deduction of the related allowance for possible losses or valuation allowance.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
Liquidity and Capital Resources
- -------------------------------
BRT engages in the business of originating and holding for
investment senior real estate mortgages, secured by income producing property
and to a lesser extent junior real estate mortgage loans secured by income
producing property and senior mortgage loans secured by unimproved real
property. It's investment policy emphasizes short-term mortgage loans. It also
has originated longer term senior real estate mortgages secured by multifamily
apartment properties. In the fiscal year ending September 30, 1999 it sold, at
par, senior participations in a portion of these longer term mortgage loans to
an institution, retaining a junior participation in these loans in its
portfolio. Repayments of real estate loans in the amount of $28,559,000 are due
during the twelve months ending September 30, 2000, including $3,369,000 of
which is due on demand. The availability of mortgage financing secured by real
property and the market for selling real estate is cyclical. Accordingly, BRT
cannot project the portion of loans maturing during the next twelve months which
will be paid or the portion of loans which will be extended for a fixed term or
on a month to month basis.
In May 1999 the Trust entered into a $45,000,000 credit facility
with TransAmerica Business Credit Corporation ("TransAmerica"). The facility, a
revolving credit facility, permits the Trust to borrow, repay and borrow again.
Interest is charged on the outstanding principal balance at the lower of prime
plus .50% or Libor plus 3 1/4% adjusted monthly and matures on May 18, 2002. The
Trust can use funds borrowed under this facility to originate and acquire
mortgage loans and for ongoing working capital. Borrowings under the credit
facility are secured by approved receivables and real estate assets held by the
Trust, and the credit agreement provides that the loan amount will never exceed
80% of approved collateral. There was $331,000 outstanding under the credit
facility at September 30, 1999.
During the twelve months ended September 30, 1999, BRT generated
cash of $5,904,000 from operating activities, $3,907,000 from the sale of real
estate owned, $25,561,000 from collections from real estate loans, $7,860,000
from the sale of loan participations and $3,463,000 from the sale of securities.
These funds in addition to cash on hand, were used primarily to fund real estate
loans of $25,182,000, to paydown mortgages payable on real estate of $896,000
and to paydown the credit facility by $5,169,000. In the year ended September
30, 1999, repayment of the principal amount due on outstanding loans exceeded
new originations by $379,000. As a result, the Trust retained the cash generated
from the sale of real estate loans, securities and real properties and at
September 30, 1999 it had $28,757,000 of cash and cash investments on hand and
only $331,000 outstanding under its credit facility.
Management believes there will be no effect on BRT's liquidity
relating to the year 2000 issue because during the last quarter of the 1997
fiscal year BRT acquired computer hardware and software to process its
accounting and real estate management information. The computer software is
capable of handling all issues relating to the year 2000. BRT has also reviewed
the impact of the failure of its tenants or suppliers to be year 2000 compliant.
Based upon its review and the nature of BRT's business, the inability of its
tenants and/or suppliers to be year 2000 compliant will not have a material,
adverse effect on BRT's business.
BRT will satisfy its liquidity needs in the year ending September
30, 2000 from cash and cash investments on hand, the credit facility with
TransAmerica, interest and principal payments received on outstanding real
estate loans and net cash flow generated from the operation and sale of real
estate assets.
<PAGE>
Results of Operations
- ---------------------
1999 vs. 1998
- -------------
Interest and fees on real estate loans increased to $7,283,000 for
the year ended September 30, 1999 as compared to $5,267,000 for the year ended
September 30, 1998. The increase of $2,016,000 was primarily the result of
interest and fees earned on the origination of new loans and the full effect of
loans originated at the end of the prior fiscal year.
Operating income on real estate assets decreased from $4,104,000 for
the year ended September 30, 1998 to $3,425,000 for the year ended September 30,
1999, a decline of $679,000. This decrease was the result of the loss of rental
income upon the sale of properties during the fiscal year. During the year BRT
sold one real estate property and contributed another to a LLC. BRT also sold
its portfolio of purchase money mortgages at the end of fiscal 1998. This sale
resulted in a decrease of interest income in fiscal 1999 of $101,000.
The 1999 fiscal year was favorably affected by revenues of $660,000
recognized from the recovery of previously provided allowances and write offs.
This allowance was related to a loan that paid off in full in the current year.
There were no comparable revenue items in 1998.
Other revenues, primarily investment income, decreased slightly to $805,000
for the year ended September 30, 1999 from $826,000 for the year ended September
30, 1998. The decline was the result of decreased dividends received in 1999
from securities which were sold and a small operating loss on an investment
owned by a limited liability company in which the Trust is a member. Most of
this decline was offset by increased interest income from higher outstanding
cash balances throughout the year.
Interest expense on notes and loans payable increased by $243,000
from $177,000 for the year ended September 30, 1998 to $420,000 for fiscal 1999.
This increase was a direct result of a higher average outstanding balances under
the credit facility during 1999 and fees paid on unused balances.
The Advisor's fee increased to $571,000 for fiscal 1999 from
$519,000 for fiscal 1998 as a result of an increase in average total invested
assets, the basis upon which the advisory fee is calculated.
General and administrative expenses increased by $705,000 from
$2,529,000 for the fiscal year ended September 30, 1998 to $3,234,000 for the
fiscal year ended September 30, 1999. This increase was caused by increased
legal and accounting expenses incurred in connection with the potential
acquisition and/or start up of a financial institution and an increase in salary
and related expenses, caused by increased staffing levels during the current
fiscal year.
Other taxes increased to $386,000 in the year ended September 30,
1999 from zero in the year ended September 30, 1997. This is a result of the
payment of required federal alternative minimum tax.
Operating expenses relating to real estate assets decreased to
$2,137,000 for fiscal 1999 from $2,374,000 for the fiscal year ended September
30, 1998 a decrease of $237,000. This decrease was a result of the sale of
foreclosed properties during the 1999 fiscal year.
Gain on sale of foreclosed properties and mortgage loans for fiscal
1999 was $5,719,000 as compared to $8,090,000 during fiscal 1998. It is the
policy of BRT to offer for sale all foreclosed property at prices which
management believes represents fair value in the geographic area in which the
property is located. Gain on sale of available-for-sale securities was $869,000
for fiscal 1999. During the fiscal year ended September 30, 1998 gains on sale
of available-for-sale securities was $1,257,000.
1998 vs. 1997
- -------------
Interest and fees on real estate loans increased to $5,267,000 for
the year ended September 30, 1998 as compared to $4,877,000 for the year ended
September 30, 1997. The increase of $390,000 was a result of interest earned on
the origination of new loans and an increase in fees generated on these new
loans. Payoffs and paydowns of various earning real estate loans offset these
increases.
Operating income on real estate assets decreased by $4,486,000 to
$4,104,000 for fiscal 1998 from $8,590,000 in the prior fiscal year. This
decrease was the result of the loss of rental income upon the sale of properties
during the fiscal year.
The 1997 fiscal year was favorably affected by revenues of
$3,405,000 recognized from the recovery of previously provided allowances and
write offs. There were no comparable revenue items in 1998.
Other revenues, primarily investment income increased by $543,000 to
$826,000 for the year ended September 30, 1998. This increase is primarily the
result of higher average balances of cash and investments during the year.
Interest expense on notes and loans payable increased by $27,000
from $150,000 for the year ended September 30, 1997 to $177,000 for fiscal 1998.
This increase was a direct result of the use of the credit facility towards the
end fiscal 1998.
The Advisor's fee decreased to $519,000 for fiscal 1998 from
$559,000 for fiscal 1997, a decrease of $40,000. This decrease was a result of a
decrease in total invested assets, the basis on which the advisory fee is
calculated.
General and administrative expenses increased by $273,000 from
$2,256,000 for the fiscal year ended September 30, 1997 to $2,529,000 for the
fiscal year ended September 30, 1998. This increase is primarily the result of
expenses incurred in the operations of the new subsidiary, BRT Funding Corp.,
primarily salaries for new employees commencing in April, 1998.
Operating expenses relating to real estate assets decreased to
$2,374,000 for fiscal 1998 from $6,732,000 for the fiscal year ended September
30, 1997 a decrease of $4,358,000. This decrease was a result of the sale of
foreclosed properties during the 1998 fiscal year.
Depreciation and amortization decreased by $455,000 for the fiscal
year ended September 30, 1998. This decrease was a direct result of the
amortization of the remaining deferred mortgage costs associated with the sale
of various real estate assets in fiscal 1997.
Gain on sale of foreclosed properties and mortgage loans for fiscal
1998 was $8,090,000 as compared to $687,000 during fiscal 1997. It is the policy
of BRT to offer for sale all foreclosed property at prices which management
believes represents fair value in the geographic area in which the property is
located. Gain on sale of available-for-sale securities was $1,257,000 for fiscal
1998. There was no comparable gain in fiscal 1997.
<PAGE>
Item 7A - Market Risk Disclosure
----------------------
BRT has considered the effects of derivatives and exposures to market
risk relating to interest rate, foreign currency exchange rate, commodity price
and equity price risk. BRT has assessed the market risk for its variable rate
debt and variable rate mortgage receivables and believes that a one percent
change in interest rates would have approximately $350,000 effect on income
before taxes.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
This information appears in a separate section of this report following Part
IV.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
None.
PART III
Items 10, 11, 12 and 13 will be included in BRT's proxy statement to be
filed pursuant to Regulation 14A not later than January 28, 2000.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements - The response is submitted in a separate
section of this report following Part IV.
2. Financial Statement Schedules - The response is submitted in a
separate section of this report following Part IV.
3. Exhibits:
3(a). Second Amended and Restated Declaration of BRT dated
June 13, 1972. Incorporated by reference to Exhibit 3A
to Form 10-K for the year ended September 30, 1984.
3(b). First Amendment to Second Amended and Restated
Declaration of BRT dated August 20, 1986. Incorporated
by reference to BRT's Registration Statement on Form
S-2 (No. 33-8125).
3(c). Second Amendment to Second Amended and Restated
Declaration of BRT dated March 2, 1987. Incorporated
by reference to the BRT's Registration Statement on
Form S-2 (No.33-11072).
3(d). Third Amendment to Second Amended and Restated
Declaration of BRT dated March 2, 1988. Incorporated by
reference to Exhibit 3D to Form 10-K for the year ended
September 30, 1988.
3(e). By-laws-Incorporated by reference to BRT's Registration
Statement on Form S-2 (No. 33-8125).
10(a). Advisory Agreement dated February 7, 1983 between the
BRT and REIT Management Corp. Incorporated by reference
to BRT's Registration Statement on Form S-2 (No.
33-8125).
10(b). Credit Agreement with TransAmerica Business Credit
Corporation dated as of May 18, 1999. Incorporated by
reference to Exhibit 7(c) to Form 8-K filed on May 27,
1999.
10. Subsidiaries - Each subsidiary is 100% owned by BRT.
Exhibit 10 is filed with this Form 10-K.
27. Financial Data Schedule - Filed with electronic filing.
(b) Reports on Form 8-K:
On September 2, 1999 registrant filed in 8-K Item 5
"Other Events", to report the signing of a non binding
letter of intent to acquire a controlling interest in
Reliance Bank, an independent community bank located in
White Plains, New York.
An 8-K was filed on October 13, 1999 to report the
termination, by mutual agreement, of the non binding
letter of intent reported above.
(c) Exhibits - See Item 14(a) 3., above.
(d) See Item 14(a) 2., above.
<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
Date: December 20, 1999 By: (S) Jeffrey A. Gould
----------------------
Jeffrey A. Gould
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
(S) Fredric H. Gould Chairman of the Board December 20, 1999
- --------------------
Fredric H. Gould (Principal Executive
Officer)
(S) Jeffrey A. Gould President and Trustee December 20, 1999
- ---------------------
Jeffrey A. Gould
(S) Patrick J. Callan Trustee December 20, 1999
- ---------------------
Patrick J. Callan
(S) Arthur Hurand Trustee December 20, 1999
- -------------------
Arthur Hurand
(S) Gary Hurand Trustee December 20, 1999
- ------------------
Gary Hurand
- ------------------ Trustee December ,1999
David Herold
(S) Herbert C. Lust Trustee December 20, 1999
- -------------------
Herbert C. Lust II
(S) Marshall Rose Trustee December 20, 1999
- -------------------
Marshall Rose
(S) George E. Zweier Vice President December 20, 1999
- -------------------
George E. Zweier (Principal Financial
and Accounting Officer)
<PAGE>
Annual Report on Form 10-K
Item 8, Item 14(a)(1) and (2)
Index to Consolidated Financial Statements and Consolidated Financial Statement
Schedules
The following consolidated financial statements of BRT Realty Trust are included
in Item 8:
Page No.
Report of Independent Auditors F-1
Consolidated Balance Sheets as of September 30,
1999 and 1998 F-2
Consolidated Statements of Income for the
three years ended September 30, 1999, 1998 and 1997 F-3
Consolidated Statements of Shareholders' Equity
for the three years ended September 30, 1999,
1998 and 1997 F-4
Consolidated Statements of Cash Flows for the
three years ended September 30, 1999, 1998 and 1997 F-5-6
Notes to Consolidated Financial Statements F-7-20
Consolidated Financial Statement Schedules for the year
ended September 30, 1999:
III - Real Estate and Accumulated Depreciation F-21-22
IV - Mortgage Loans on Real Estate F-23-24
All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or the notes
thereto.
<PAGE>
EXHIBIT 10
SUBSIDIARIES
COMPANY STATE OF INCORPORATION
- ------- -----------------------
Hoboken Front Corp. New Jersey
Huntington-Park Corporation New York
Forest Green Corporation New York
Realty 49 Corp. New York
TRB No. 1 Corp. New York
TRB No. 2 Corp. New York
TRB Ft. Wright Corp. New York
TRB Cutter Mill Corp. New York
White Plains Realty Corp. New York
Kew Gardens Realty Corp. New York
Blue Realty Corp. Delaware
3581 Broadway Realty Corp. New York
620 West 172nd Street Realty Corp. New York
Multiple Property Realty Corp. New York
119 Madison Avenue Realty Corp. New York
TRB No. 3 Owners Corp. Wyoming
1090 Boston Post Road Realty Corp. New York
TRB 96th Street Corp. New York
Remson Point Realty Corp. New York
TRB 13 Eighth Avenue Corp. New York
Casa Wrap Holding Corp. Florida
TRB Valley Corp. New York
76 Madison Avenue Realty Corp. New York
2101 Church Avenue Realty Corp. New York
TRB Cruger Avenue Corp. New York
TRB Fairway Office Center Corp. Kansas
TRB East 33rd Street Corp. New York
TRB Abbotts Corp. Pennsylvania
TRB Greenpoint Avenue Realty Corp. New York
TRB Seattle Inc. Washington
TRB Ashbourne Road Corp. Pennsylvania
BRT Funding Corp. New York
TRB 69th Street Corp. New York
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Shareholders
BRT Realty Trust
We have audited the accompanying consolidated balance sheets of BRT Realty Trust
and Subsidiaries (the "Trust") as of September 30, 1999 and 1998, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended September 30, 1999. Our audits
also included the consolidated financial statement schedules listed in the Index
at Item 14(a). These consolidated financial statements and consolidated
schedules are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these consolidated financial statements and
consolidated schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of BRT
Realty Trust and Subsidiaries at September 30, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 30, 1999, in conformity with generally
accepted accounting principles. Also, in our opinion, the related consolidated
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
ERNST & YOUNG LLP
New York, New York
December 2, 1999
<PAGE>
<TABLE>
<CAPTION>
BRT REALTY TRUST AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in thousands)
ASSETS
September 30,
-------------
1999 1998
-------------- -------------
<S> <C> <C>
Real estate loans - Notes 2, 4 and 5:
Earning interest $ 44,682 $ 51,175
Less allowance for possible losses 1,381 2,041
------------ -----------
43,301 49,134
----------- ----------
Real estate assets - Notes 3 and 5:
Foreclosed properties held for sale 3,057 16,622
Investment in real estate ventures 3,708 613
------------- ------------
6,765 17,235
Less valuation allowance 349 349
------------- ------------
6,416 16,886
------------ ----------
Cash and cash equivalents 28,757 13,949
Securities available-for-sale at market - 3,364
Due from Venture - Note 3 4,620 -
Other assets 1,515 2,488
------------- -----------
TOTAL ASSETS $ 84,609 $ 85,821
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Note payable - Credit Facility - Note 5 $ 331 $ 5,500
Mortgages payable - Note 5 841 8,494
Accounts payable and accrued liabilities including
deposits of $1,465 and $1,085 2,813 2,080
----------- -----------
Total liabilities 3,985 16,074
----------- ----------
Commitments and contingencies - Notes 2, 3, 4, 5, 8 and 9 - -
Shareholders' equity - Note 7: Preferred shares, $1 par value:
Authorized 10,000 shares, none issued - -
Shares of beneficial interest, $3 par value:
Authorized number of shares, unlimited, issued
- 8,888 shares 26,665 26,665
Additional paid-in capital, net of distributions
of $5,171 81,521 81,521
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities - 769
Accumulated deficit (12,682) (24,328)
---------- ----------
95,504 84,627
Cost of 1,723 treasury shares
of beneficial interest (14,880) (14,880)
---------- ----------
Total shareholders' equity 80,624 69,747
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 84,609 $ 85,821
========= ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRT REALTY TRUST AND SUBSIDIARIES
Consolidated Statements of Income
(Amounts in thousands except per share amounts)
Year Ended September 30,
------------------------
1999 1998 1997
------- ---- ----
<S> <C> <C> <C>
Revenues:
Interest and fees on real estate loans - Note 2 $ 7,283 $ 5,267 $ 4,877
Operating income relating to real estate owned 3,425 4,104 8,590
Previously provided allowances and write offs 660 - 3,405
Other, primarily investment income 805 826 283
--------- --------- ----------
Total Revenues 12,173 10,197 17,155
------- ------- --------
Expenses:
Interest - note payable and loans payable - Note 5 420 177 150
Advisor's fees - Note 8 571 519 559
General and administrative - Note 8 3,234 2,529 2,256
Other taxes - Note 6 386 - -
Operating expenses relating to real estate owned
including interest on mortgages payable
of $599, $933 and $2,214 2,137 2,374 6,732
Amortization and depreciation 367 357 812
--------- --------- ----------
Total Expenses 7,115 5,956 10,509
-------- -------- -------
Income before gain on sale of real estate loans and
foreclosed properties and available-for-sale securities 5,058 4,241 6,646
Net gain on sale of real estate loans and
foreclosed properties 5,719 8,090 687
Net realized gain on available-for-sale securities 869 1,257 -
---------- --------- ------------
Net Income $ 11,646 $ 13,588 $ 7,333
======== ======== ========
Income per share of Beneficial Interest:
Basic earnings per share $ 1.63 $ 1.72 $ .86
========= ========= =========
Diluted earnings per share $ 1.61 $ 1.71 $ .86
========= ========= ========
Weighted average number of common shares outstanding:
Basic 7,165,263 7,902,161 8,527,057
========= ========= =========
Diluted 7,220,505 7,941,293 8,557,968
========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRT REALTY TRUST AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years Ended September 30, 1999, 1998, and 1997
(Amounts in thousands)
Accumulated
Shares of Additional Other Accum-
Beneficial Paid-In Comprehensive ulated
Interest Capital Income Deficit Total
-------- ------- ------ ------- -----
<S> <C> <C> <C> <C> <C>
Balances, September 30, 1996 $ 26,906 $ 81,857 $ 17 $(45,249) $63,531
Cancellation of 83 shares of
beneficial interest (249) (340) - - (589)
Net income - - - 7,333 7,333
Other comprehensive income -
unrealized gain on available-
for-sale securities - - 709 - 709
--------
Comprehensive income - - - - 8,042
-----------------------------------------------------------------------
Balances, September 30, 1997 26,657 81,517 726 (37,916) 70,984
Exercise of Stock Options 8 4 - - 12
Net income 13,588 13,588
Other comprehensive income -
unrealized gain on available-for-
sale securities (net of reclassification
adjustment for gains included in net
income of $1,257) - - 43 - 43
--------
Comprehensive income - - - - 13,631
-------------------------------------------------------------------------
Balances, September 30, 1998 26,665 81,521 769 (24,328) 84,627
Net income 11,646 11,646
Other comprehensive income -
realized gain on sale of available-for
sale securities (net of reclassification
adjustment for gains included in net
income of $869) - - (769) - (769)
-------
Comprehensive income - - - - 10,877
----------------------------------------------------------------------
Balances, September 30, 1999 $26,665 $81,521 $ - $(12,682) $ 95,504
=====================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
BRT REALTY TRUST AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in thousands)
Year Ended September 30,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 11,646 $ 13,588 $ 7,333
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization and depreciation 367 357 812
Previously provided allowances (660) - (1,300)
Net gain on sale of real estate and foreclosed property (5,719) (8,090) (687)
Net gain on sale of available-for-sale securities (869) (1,257) -
Equity in earnings of unconsolidated entities 58 - -
Decrease (increase) in interest receivable 123 (218) (61)
Decrease in prepaid expenses 102 17 287
Increase (decrease) in accounts payable and
accrued liabilities 433 (644) 89
Increase in deferred revenues 18 108 301
Decrease in rent receivable - - 219
Increase in escrow deposits 353 96 552
Increase in deferred costs (572) (107) (275)
Other 624 (29) 99
----------- ----------- -----------
Net cash provided by operating activities 5,904 3,821 7,369
----------- ----------- -----------
Cash flows from investing activities:
Collections from real estate loans 25,561 24,233 11,278
Additions to real estate loans (25,182) (31,716) (15,353)
Sale of senior participating interest in loans 7,860 - -
Repayments to participating lenders - - (1,000)
Net costs capitalized to real estate owned (329) (631) (854)
Proceeds from sale of real estate owned 3,907 11,385 22,961
(Decrease) increase in deposits payable (311) 308 (439)
Decrease in investments
in U.S. Government obligations - - 986
Purchase of available-for-sale securities - (347) (3,682)
Sale of available-for-sale securities 3,463 3,667 -
Proceeds from sale of partnership interest - 1,679 -
Purchase of partnership interest - (613) -
Other - - (33)
----------- ----------- -----------
Net cash provided by investing activities 14,969 7,965 13,864
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from note payable - 5,500 -
Repayment of note payable (5,169) - -
Payoff/paydown of loan and mortgages payable (896) (3,068) (14,859)
Exercise of stock options - 12 -
Repurchase of shares of beneficial interest,
a portion of which were cancelled - (10,433) (2,397)
Other - - (34)
----------- ------------ -----------
Net cash used in financing activities (6,065) (7,989) (17,290)
----------- ------------ -----------
Net increase in cash and cash equivalents 14,808 3,797 3,943
Cash and cash equivalents at beginning of year 13,949 10,152 6,209
----------- ----------- -----------
Cash and cash equivalents at end of year $ 28,757 $ 13,949 $ 10,152
========== ============= =============
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
BRT REALTY TRUST AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in thousands)
(Continued)
Year Ended September 30,
------------------------
1999 1998 1997
--------- ---------- ---------
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for interest expense $ 1,069 $ 1,141 $ 1,521
========= ========= =========
Cash paid during the year for income taxes $ 211 $ - $ -
========= ========= =========
Supplemental schedule of noncash investing and financing activities:
Transfer of nonearning real estate loans
to foreclosed properties at fair value $ - $ - $ 13
Recognition of valuation allowance upon sale
of real estate owned - 3,915 1,779
Recognition of allowance for previously
provided losses 660 - 516
Purchase money mortgages from sale of real
estate owned - - 425
Transfer of foreclosed property to
real estate joint venture 11,886 - 1,553
Transfer of mortgage to real estate joint venture 6,757 - -
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BRT REALTY TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended September 30, 1999, 1998 and 1997
(Amounts in Thousands Except Share Data)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation; Basis of Preparation
The consolidated financial statements include the accounts of BRT
Realty Trust and its wholly-owned subsidiaries. Investments in less
than majority-owned entities have been accounted for using the equity
method. 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".
Income Tax Status
The Trust qualifies as a real estate investment trust under Sections
856-860 of the Internal Revenue Code.
The Trustees may, at their option, elect to operate the Trust as a
business trust not qualifying as a real estate investment trust.
Income Recognition
Income and expenses are recorded on the accrual basis of accounting
for both financial reporting and income tax purposes. The Trust does
not accrue interest or rental income on impaired loans or real estate
owned where, in the judgment of management and the Trustees,
collection of interest or rent according to the contractual terms is
considered doubtful. Among the factors the Trust considers in making
an evaluation of the amount of interest or rent that are collectable
are the status of the loan or property, the financial condition of
the borrower or tenant and anticipated future events. Loan discounts
are amortized over the life of the real estate loan using the
constant interest method.
Loan commitment and extension fee income is deferred and recorded as
income over the life of the commitment and loan. If a loan
subsequently becomes nonearning, the unamortized portion of the fee
is offset against the loan balance.
The basis on which costs was determined in computing the realized
gain or loss on securities available-for-sale is historical cost.
<PAGE>
Allowance for Possible Losses
The Trust measures the impairment of its real estate loans based upon
the fair value of the underlying collateral which is determined on an
individual loan basis. In arriving at the fair value of the
collateral, numerous factors are considered, including, market
evaluations of the underlying collateral, operating cash flow from
the property during the projected holding period, and estimated sales
value computed by applying an expected capitalization rate to the
stabilized net operating income of the specific property, less
selling costs, discounted at market discount rates. If upon
completion of the valuations, the fair value of the underlying
collateral securing the impaired real estate loan is less than the
recorded investment in the loan, an allowance is created with a
corresponding charge to expense. Adjustments may be necessary in the
event that effective interest rates, rent-up periods, future economic
conditions including the terms and availability of long term
permanent financing for the property, or other relevant factors vary
significantly from those assumed in estimating the allowance for
possible losses. The existing allowances will be either increased or
decreased based upon future valuations, with a corresponding increase
or reduction in the provision for loan losses.
Real Estate Assets
Foreclosed properties (real estate acquired by foreclosure or by a
deed in lieu of foreclosure) are recorded at estimated fair value,
net of foreclosure costs, at the time of foreclosure. In subsequent
periods, individual foreclosed assets held for sale are valued at the
lower of the recorded cost or estimated fair value, as described
below, and if required, a valuation allowance is recognized. Assets
acquired through foreclosure and held for sale, are not depreciated,
while assets held long-term for the production of income are
depreciated over their estimated useful lives. Costs incurred in
connection with the foreclosure of the properties collateralizing the
real estate loans and costs incurred to extend the life or improve
the assets subsequent to foreclosure are capitalized. With respect to
the operating properties, operating income and expenses are reflected
in the statements of income. For residential apartment units acquired
through foreclosure which are subject to an offering for the sale of
units or cooperative shares, the net effect of income and expenses is
applied to the basis of the asset to the extent that fair value is
not exceeded.
The Trust accounts for the sale of real estate when title passes to
the buyer, sufficient equity payments have been received and when
there is reasonable assurance that the remaining receivable will be
collected.
Investments in joint ventures that the Trust does not own a greater
than 50% interest or in which it does not have the ability to
exercise operational or financial control, are accounted for using
the equity method. Accordingly, the Trust reports its pro rata share
of net profits and losses from its investments in unconsolidated
entities in the accompanying consolidated financial statements.
<PAGE>
Valuation Allowance on Real Estate Assets
The Trust reviews each real estate asset owned for which indicators
of impairment are present to determine whether the carrying amount of
the asset will be recovered. Recognition of impairment is required if
the undiscounted cash flows estimated to be generated by the assets
are less than the assets' carrying amount. Measurement is based upon
the fair value of the asset.
Real estate assets held for sale are valued at the lower of cost or
fair value, less costs to sell, on an individual asset basis. Upon
evaluating the property, many indicators of value are considered,
including current and expected operating cash flow from the property
during the projected holding period, costs necessary to extend the
life or improve the asset, expected capitalization rates, projected
stabilized net operating income, selling costs, and the ability to
hold and dispose of such real estate owned in the ordinary course of
business. Valuation adjustments may be necessary in the event that
effective interest rates, rent-up periods, future economic
conditions, and other relevant factors vary significantly from those
assumed in valuing the property at the time of foreclosure. If future
evaluations result in a diminution in the value of the property, the
reduction will be recognized as a valuation allowance. If the value
of the property subsequently increases, the valuation allowance will
be reduced.
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
Cash and cash equivalents: The carrying amounts reported in the
balance sheet for these instruments approximate their fair values.
Securities available-for-sale: Investment in securities are considered
"available-for-sale", and are reported on the balance sheet based upon
quoted market prices.
Real estate loans: The earning mortgage loans of the Trust have either
variable interest rate provisions, which are based upon a margin over
the prime rate, or are currently fixed at effective interest rates
which approximate market. At September 30, 1999 and 1998 these
interest rates are reflective of current market conditions for these
loans. Accordingly, the carrying amounts of the earning, non-impaired
mortgage loans approximate their fair values. For earning loans which
are impaired, the Trust has valued such loans based upon the fair
value of the underlying collateral. Accordingly, their carrying
amounts are recorded at fair value.
Notes and mortgages payable: The Trust determined the estimated fair
value of its debt by discounting future cash payments at their
effective rates of interest, which approximate current market rates of
interest for similar loans. Accordingly, there is no material
difference between their carrying amounts and fair value.
Per Share Data
The Financial Accounting Standards Board issued Statement No. 128,
Earnings Per Share in 1997 which replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings
per share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per
share amounts for all periods have been presented, and where
appropriate, restated to conform to the Statement No. 128
requirements.
The 1997 earnings per share amounts have been restated to conform to
the Statement No. 128 requirements.
Cash Equivalents
Cash equivalents consist of highly liquid investments, primarily money
market type U.S. Government obligations, with maturities of three
months or less when purchased.
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Comprehensive Income
As of April 1, 1998, the Trust adopted Statement No. 130, Reporting
Comprehensive Income. Statement No. 130 establishes standards for the
reporting and display of comprehensive income and its components.
Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities, which prior to adoption were reported
separately in shareholders' equity, to be included in other
comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of Statement 130.
Segment Reporting
Effective October 1, 1998, the Trust adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 131,
Disclosure About Segments of an Enterprise and Related Information.
Statement 131 superceded FASB Statement No. 14 Financial Reporting for
Segments of a Business Enterprise. Statement No. 131 establishes
standards for the way that public business enterprises report
information about operating segments in annual financial statements
and requires that those enterprises report selected information about
operating segments in interim financial reports. Statement No. 131
also establishes standards for related disclosures about products and
services, geographical areas, and major customers. The adoption of
Statement No. 131 did not affect results of operations or financial
position. As the Trust operates predominantly in one industry segment,
has determined it has one reportable segment and operates primarily in
one geographic location, management believes it is in compliance with
the standards established by Statement No. 131.
<PAGE>
NOTE 2 - REAL ESTATE LOANS
At September 30, 1999 and September 30, 1998, information as to real
estate loans, all of which are earning interest, is summarized as
follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
First mortgage loans:
Long-term:
Residential $ 2,337 $ 11,117
Shopping centers/retail 4,835 3,487
Hotel - 750
Office building 1,068 -
Short-term (five years or less):
Shopping centers/retail 3,554 8,856
Industrial buildings 5,728 7,593
Office buildings 8,419 7,351
Residential (multiple family units) 13,770 8,756
Hotel 2,724 1,008
Miscellaneous 212 242
Second mortgage loans
and wraparound mortgages 2,035 2,015
----------- ----------
$ 44,682 $ 51,175
========= =========
</TABLE>
During 1999 the Trust sold senior participating interests in several
real estate loans, which were held for sale, to a financial
institution. These senior participating interests were sold at cost
which approximated estimated fair value. Under the terms of the
Agreement the financial institution has the priority rights to any
optional prepayments and in the event of a default, after payment of
accrued but unpaid servicing fees to the Trust, to payment of
accrued, but unpaid interest and principal due to the financial
institution.
At September 30, 1999 and 1998 the Trust had no non-earning assets. Of
the real estate loans earning interest at September 30, 1999 and 1998,
$4,296 and $5,489, respectively, were deemed impaired and all are
subject to allowances for possible losses. For the years ended
September 30, 1999, 1998 and 1997, respectively, an average $4,893,
$7,786 and $15,470 of real estate loans were deemed impaired, on which
$520, $613 and $1,827 of interest income was recognized.
Included in the Trust's portfolio was a real estate loan
collateralized by a 50% interest in a partnership in which the
Chairman of the Board of Trustees of the Trust holds one-half of the
other 50% partnership interest. The loan was paid in full during the
year ended September 30, 1999. The balance at September 30, 1998 was
$2,075.
Loans originated by the Trust generally provide for interest rates,
which are related to the prime or Treasury rates. The weighted average
interest rate on earning loans was 11.71% and 11.60% at September 30,
1999 and 1998, respectively.
<PAGE>
Annual maturities of real estate loans receivable during the next five
years reflect revised maturities and are summarized as follows:
Years Ending September 30 Amount
------------------------- --------
2000 $ 28,559
2001 1,778
2002 3,223
2003 2,248
2004 1,526
2005 and thereafter 7,348
--------
Total $ 44,682
========
The Trust's portfolio consists primarily of senior mortgage loans,
secured by residential and commercial property, 83% of which are
located principally in the New York metropolitan area.
If a loan is not repaid at maturity, in addition to foreclosing on the
property, the Trust may either extend the loan or consider the loan
past due. The Trust analyzes each loan separately to determine the
appropriateness of an extension. In analyzing each situation,
management examines many aspects of the loan receivable, including the
value of the collateral, the financial strength of the borrower, past
payment history and plans of the owner of the property. Of the $28,559
of real estate loans receivable which mature in Fiscal 2000, $12,536
were extended during the fiscal year ended September 30, 1999.
If all loans classified as non-earning were earning interest at their
contractual rates for the years ended September 30, 1997, interest
income would have increased by $501.
The Trust's interests in wraparound mortgages are subject to underlying
mortgages aggregating $313 and $334 at September 30, 1999 and 1998
respectively.
At September 30, 1999 the two largest real estate loans had principal
balances outstanding of approximately $2,990 and $2,600, respectively.
Of the total interest and fees earned on real estate loans during the
fiscal year ended September 30, 1999, 1.3% and 4.5% related to these
loans, respectively.
NOTE 3 - REAL ESTATE ASSETS
A summary of foreclosed properties held for sale, for the year ended
September 30, 1999 is as follows:
<TABLE>
<CAPTION>
Costs Sales
September 30, 1998 Capitalized/ Collections/ Gain on September 30, 1999
# Properties Amount Amortization Other Sale # Properties Amount
------------ ------ ------------ ----- ---- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Residential units-shares of
cooperative corporations 3 $1,793 $ 114 ($3,180) $1,313 3 $ 40
Shopping centers/retail 1 3,569 53 - - 1 3,622
Office 1 11,724 162 (13,820) 1,934 0 -
Unimproved land 1 - - (727) 727 1 -
---------------------------------------------------------------------------
6 17,086 329 (17,727) 3,974 5 3,662
Less:Valuation Allowance 349 349
Amortization 464 141 - - - 605
---------------------------------------------------------------------------
6 $16,273 $188 $(17,727) $3,974 5 $2,708
===========================================================================
</TABLE>
During the year ended September 30, 1999 the Trust continued to dispose of its
shares of cooperative apartment units. Sales of these units had a net book value
totaling $1,867. Gains of $1,313 were recognized on these sales.
On October 15, 1999, effective September 1, 1999 the Trust (through a
subsidiary) entered into a limited liability company venture agreement to own,
operate and develop its remaining office property. The subsidiary sold the
property at fair value of $16,000 (with a book value of $11,886 and subject to a
net outstanding mortgage of $6,757) to the venture and retained a 50% membership
interest. A $4,620 distribution was received from the venture in October 1999
with a gain of $1,934 recognized on the transaction since the Trust is not
obligated to reinvest funds received on the sale into the venture
Future minimum rentals to be received by the Trust, pursuant to noncancellable
operating leases in excess of one year, from properties on which the Trust has
title at September 30, 1999 are as follows:
Years Ending September 30, Amount
-------------------------- ------
2000 .................................... $ 550
2001 .................................... 368
2002 .................................... 189
2003 .................................... 55
2004 .................................... 25
NOTE 4 - ALLOWANCE FOR POSSIBLE LOSSES AND VALUATION ALLOWANCE
ON REAL ESTATE OWNED
The Trust was not required to record provisions for possible loan
losses nor valuation adjustments on owned real estate during the
years ended September 30, 1999 and 1998.
An analysis of the allowance for possible losses is as follows:
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 2,041 $ 5,956 $ 7,773
Previously provided allowances (660) - (1,300)
Write-off of allowances - (3,915) (517)
---------- --------- ---------
Balance at end of year $ 1,381 $ 2,041 $ 5,956
========= ========= =========
</TABLE>
The allowance for possible losses applies to assets aggregating
$4,296 at September 30, 1999, $5,489 at September 30, 1998 and
$10,083 at September 30, 1997.
During the year ended September 30, 1999 the Trust reversed
previously provided allowances of $660.
During the year ended September 30, 1997, $2,105 was realized
from previously written off provisions.
<PAGE>
The allowance for possible losses consists of the following components:
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Excess of carrying value plus estimated
cost to complete, including marketing
costs over estimated fair value $ 736 $ 1,404 $ 2,979
Valuation adjustment 417 434 2,505
Estimated holding period costs 228 203 472
-------- --------- --------
$ 1,381 $ 2,041 $ 5,956
</TABLE>
<TABLE>
<CAPTION>
NOTE 5 - DEBT OBLIGATIONS
Debt obligations consist of the following:
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>
Note payable - credit facility $ 331 $ 5,500
====== =======
Mortgages payable $ 841 $ 8,494
====== =======
</TABLE>
On May 18, 1999 BRT entered into a $45,000,000 revolving credit
facility with TransAmerica Business Credit Corporation
("TransAmerica"). It replaced a $25,000,000 facility with Credit
Suisse First Boston Mortgage Capital LLC. The agreement with
TransAmerica is a revolving facility, which may be used for specific
purposes, the primary of which is lending. Borrowings under this
facility are secured by specific receivables of BRT and its subsidiary
BRT Funding Corp. The agreement provides that the amount borrowed will
not exceed 80% of the value of the collateral. BRT paid a non
refundable fee of $337,500 at closing which is being amortized over
the term of the facility. Interest is charged on the outstanding
balance at prime plus 1/2% or under certain circumstances at LIBOR
plus 3 1/4% which was 8.75% at September 30, 1999. The facility
matures on May 18, 2002. Unused line fees are calculated at 1/8% on
the difference between $45,000,000 (the maximum principal debt) and
the average amount outstanding. BRT is required to maintain a minimum
tangible net worth (as defined) of $70,000,000 and meet certain other
covenants, all of which have been met.
At September 30, 1999 the outstanding balance on the facility was
$331. At September 30, 1998 the outstanding balance on the prior
facility was $5,500.
At September 30, 1999 there was one outstanding non-recourse mortgage
payable, secured by real estate owned property with an aggregate
carrying value of $3,017 net of amortization. The mortgage bears
interest at a rate of 8.44% and matures in the fiscal year ending
September 30, 2001. The mortgage which had a balance of $841 at
September 30, 1999 was paid in full in November 1999.
NOTE 6 - FEDERAL INCOME TAXES
Cumulative taxable loss since inception is less than the cumulative
loss reported for financial statement purposes principally because a
portion of the allowance for possible losses has not yet been deducted
for tax purposes.
During the year ended September 30, 1999 the Trust recorded $386,000
of expense relating to the payment of alternative minimum tax.
The taxable income is expected to be $600 greater than the financial
statement income during calendar 1999.
At December 31, 1998, the Trust had available tax operating loss
carryforwards of $20,835 of which, $4,315 will expire in 2007, $14,288
will expire in 2008, $1,634 will expire in 2009, $527 will expire in
2010 and $71 will expire in 2011.
NOTE 7 - SHAREHOLDERS' EQUITY
Distributions
There were no distributions on the Trust's shares of beneficial
interest declared during the years ended September 30, 1999, 1998 and
1997.
Stock Options
On December 8, 1995, the Board of Trustees granted, under the 1988
Stock Option Plan (Incentive/Nonstatutory Stock Option Plan), options
to purchase the remaining 53,000 shares of beneficial interest
available under this plan at $4.375 per share to various officers and
employees of the Trust. The options are cumulatively exercisable at a
rate of 25% per annum, for a period of five years commencing six months
after the date of grant. At September 30, 1999 options to purchase
48,000 shares are exercisable, none of which have been exercised.
On December 6, 1996, the Board of Trustees adopted the BRT 1996 Stock
Option Plan (Incentive/Nonstatutory Stock Option Plan), whereby a
maximum of 450,000 shares of beneficial interest are reserved for
issuance to the Trust's officers, employees, trustees and consultants
or advisors to the Trust. Incentive stock options are granted at per
share amounts at least equal to the fair value at the date of grant,
whereas for nonstatutory stock options, the exercise price may be any
amount determined by the Board, but not less than the par value of a
share.
Also on December 6, 1996, the Board of Trustees granted, under the 1996
Stock Option Plan options to purchase a total of 82,500 shares of
beneficial interest at $6.00 per share to a number of officers,
employees and consultants to the Trust. The options are cumulatively
exercisable at a rate of 25% per annum, commencing after six months,
and expire five years after the date of grant. At September 30, 1999
options to purchase 58,125 shares are exercisable, none of which have
been exercised.
In March and April 1998 the Board of Trustees granted, under the 1996
Stock Option Plan options to purchase 50,000 shares of beneficial
interest at prices ranging from $7.3125 to $7.9375 per share to a
number of directors, officers and employees of the Trust. The options
are cumulatively exercisable at a rate of 25% per annum, commencing
after two years, and expire ten years after the grant date. At
September 30, 1999 none of these options were exercisable.
In December 1998 the Board of Directors granted, under the 1996 Stock
Option Plan options to purchase 180,000 shares of beneficial interest
at $5.9375 per share to a number of officers, employees, consultants
and trustees of the Trust. The options are cumulatively exercisable at
a rate of 25% per annum, commencing after one year (50,000) and two
years (130,000), and expire five years (50,000) and ten years (130,000)
after the date of the grant. At September 30, 1999 none of these
options were exercisable. Between December 1, 1998 and December 1999,
8,000 of these options were cancelled.
The Trust elected Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB 25"), and related
Interpretations in accounting for its employee stock options. Under APB
25, no compensation expense is recognized because the exercise price of
the Trust's employee stock options equals the market price of the
underlying stock on the date of grant.
Pro forma information regarding net income and earnings per share is
required by FAS No. 123, and has been determined as if the Trust had
accounted for its employee stock options under the fair value method.
The fair value for these options was estimated at the date of the grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions:
<TABLE>
<CAPTION>
December 1998 December 1998 March/April 1998 December 1996
50,000 Shares 130,000 Shares 50,000 Shares 82,500 Shares
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Risk Free Interest Rate 4.38% 4.62% 5.64% 6.02%
Dividend Yield 0% 0% 0% 0%
Volatility Factor .208 .208 .188 .270
Expected Life (Years) 5 10 5 5
</TABLE>
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including
expected stock price volatility. Because the Trust's employee stock
options have characteristics significantly different from those of
traded options, and changes in the subjective input assumptions can
materially affect the fair value estimate, management believes the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
Pro forma net income and earnings per share calculated using the
Black-Scholes option valuation model is as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1999
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Pro forma net income $11,225 $13,470 $7,156
Pro forma earnings per share:
Basic 1.571.70 .84
Diluted 1.55 1.70 .84
</TABLE>
<PAGE>
Changes in the number of shares under all option arrangements are
summarized as follows:
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Outstanding at beginning of period 165,500 135,500 53,000
Granted 180,000 50,000 82,500
Option price per share granted 5.9375 7.3125-7.9375 $6.00
Cancelled 8,000 17,500 -
Exercisable at end of period 106,125 74,750 47,125
Exercised - 2,500
Expired - - -
Outstanding at end of period 337,500 165,500 135,500
Option prices per share outstanding $4.375-$7.9375 $4.375-$7.9375 $4.375-$6.00
</TABLE>
As of September 30, 1999 the outstanding options had a weighted average
remaining contractual life of approximately 5.8 years and a weighted
average exercise price of $5.93.
Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Numerator for basic and diluted
earnings per share:
Net income $11,646 $13,588 $7,333
Denominator:
Denominator for basic earnings
per share - weighted average shares 7,165,263 7,902,161 8,527,057
Effect of dilutive securites:
Employee stock options 55,242 39,132 30,911
Denominator for diluted earnings
per share - adjusted weighted average
shares and assumed conversions 7,220,505 7,941,293 8,557,968
Basic earnings per share $ 1.63 $ 1.72 $ .86
Diluted earnings per share $ 1.61 $ 1.71 $ .86
</TABLE>
<PAGE>
Treasury Shares
The Trust's Board of Trustees authorized the purchase from time to time
of up to 1,614,000 shares of beneficial interest of the Trust. During
1998 1,205,000 shares were purchased at an approximate cost of $10,433.
During the fiscal year ended September 30, 1999 no shares were
purchased by the Trust. As of September 30, 1999 the Trust owns
1,723,000 shares of beneficial interest of the Trust at an aggregate
cost of $14,880.
NOTE 8 - ADVISOR'S COMPENSATION AND CERTAIN TRANSACTIONS
Certain of the Trust's officers and trustees are also officers,
directors and the shareholder of REIT Management Corp. ("REIT"), to
which the Trust pays advisory fees for administrative services and
investment advice. The agreement, which expires on December 31, 2003,
provides that directors and officers of REIT may serve as trustees,
officers and employees of the Trust, but shall not be compensated for
services rendered in such latter capacities. Advisory fees are charged
to operations at a rate of 1% on real estate loans and 1/2 of 1% on
other invested assets. Advisory fees amounted to $571, $519 and $559
for the years ended September 30, 1999, 1998, and 1997, respectively.
The borrower may pay fees to REIT for services rendered in arranging
and restructuring loans by the Trust. These fees, which are allowed by
the advisory agreement, on loans arranged on behalf of the Trust and
which are paid directly by the borrower to REIT amounted to $151, $229
and $155 for the year ended September 30, 1999, 1998 and 1997
respectively.
REIT arranges for the management of certain foreclosed properties for
the Trust under renewable year-to-year agreements. Management fees,
legal fees and leasing, selling and financing commissions incurred and
reimbursed or owed to REIT or an other affiliated company for the years
ended September 30, 1999, 1998 and 1997 aggregated $746, $595 and $655,
respectively.
The Chairman of the Board of Trustees of the Trust holds a similar
position in One Liberty Properties, Inc. a related party, is an
executive officer of the managing general partner and is a general
partner of Gould Investors L.P. a related party. During the years ended
September 30, 1999, 1998 and 1997, allocated general and administrative
expenses charged to the Trust by Gould Investors L.P. aggregated $422,
$622 and $979, respectively.
NOTE 9 - COMMITMENT
In August 1984, the Board of Trustees approved a non-contributory
pension plan covering eligible employees and officers. Contributions by
the Trust are made through a money purchase plan, based upon a percent
of qualified employees' total salaries. Pension expense approximated
$190, $105 and $81 during the years ended September 30, 1999, 1998 and
1997, respectively.
<PAGE>
<TABLE>
<CAPTION>
NOTE 10 - QUARTERLY FINANCIAL DATA (Unaudited)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Oct.-Dec. Jan.-March April-June July-Sept. For Year
--------- ---------- ---------- ---------- --------
1999
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 3,193 $ 3,002 $ 2,924 $ 3,054 $12,173
Income before
gain on sale of fore-
closed properties
held for sale 1,507 1,185 1,218 1,148 5,058
Net income 2,926 2,183 1,773 4,764 11,646
Per share $ .41 $ .30 $ .25 $ .66 $ 1.63 (a)
1998
---------------------------------------------------------------------
Revenues $ 2,446 $ 2,504 $ 2,539 $ 2,708 $10,197
Income before
gain on sale of fore-
closed properties
held for sale 999 1,051 1,020 1,171 4,241
Net income 3,153 3,608 2,295 4,532 13,588
Per share $ .38 $ .45 $ .28 $ .62 $ 1.72 (a)
Per share earnings represent basic earnings per beneficial share.
(a) Calculated on weighted average shares outstanding for the fiscal year.
Balances do not crossfoot due to rounding.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRT REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1999
(Amounts in Thousands)
Initial Cost To Company
-----------------------
Buildings Costs Capitalized
Encum- And Subsequent to Acquisition
-------------------------
Description brances Land Improvements Improvements Carrying Costs Land
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Residential
Islip, New York - - $ 40 - - -
Shopping Center/Retail
Rock Springs, WY $841 $600 $2,483 $511 $28 $600
TOTAL $841 $600 $2,523 $511 $28 $600
==============================================================================
(g) (a)
Gross Amount At Which Carried At
September 30, 1999 Depreciation
------------------
Buildings Life For
And Accum. Date Of Date Latest Income
Description Land Improvements Total Deprec. Construction Acquired Statement
- -----------------------------------------------------------------------------------------------------------------------------------
Residential
Islip, New York - $ 40 $ 40 - - - -
Shopping Center/Retail
Rock Springs, WY $600 3,022 3,622 $605 - Jan-92 21-35 Years
----------------------------------------------
Total $600 $3,062 $3,662 $605
==============================================
(b) (c) (d)
</TABLE>
BRT REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1999
(Amounts in Thousands)
Notes to the schedule:
(a) With respect to residential apartment units acquired through
foreclosure which are subject to an offering for sale of units or
cooperative shares, the net effect of income and expenses is applied
to the basis of the asset to the extent that the realizable value is
not exceeded. With respect to other operating properties, all
operating income and expenses are reflected in the statements of
income.
(b) Total foreclosed properties held for sale $ 3,662
Less: Accumulated amortization 605
Valuation allowance 349
--------
Net foreclosed properties held for sale $ 2,708
========
(c) Amortization of the Trust's leasehold interest is over the terms
of the respective land leases.
(d) Information not readily obtainable.
(e) A reconciliation of real estate owned is as follows:
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $16,273 $22,811 $46,310
Additions:
Foreclosures - - 13
Capitalization of expenses 329 755 854
Recognition of valuation allowance upon
sale of property - - 1,779
------- -------- --------
16,602 23,566 48,956
------- -------- --------
Deductions:
Sales/conveyances 13,753 7,169 26,031
Depreciation/amortization 141 124 114
------- -------- --------
13,894 7,293 26,145
------- -------- --------
Balance at end of year $ 2,708 $ 16,273 $22,811
======= ======== =======
(f) The aggregate cost of investments in real estate assets for
federal income tax purposes approximates book value.
(g) Paid in full during November 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRT REALTY TRUST
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1999
(Amounts in Thousands)
FINAL
# OF INTEREST MATURITY
DESCRIPTION LOANS RATE DATE PERIODIC PAYMENT TERMS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First mortgage loans:
Long term:
Retail/Apartments, Brooklyn, NY 1 Prime + 2.45% Aug-08 Interest and principal monthly
$0-$299 7
$300-499 2
$500-998 3
$1,000-1,299 2
Short term:
Office Building - Brooklyn, NY 1 Prime + 3.75% Interest monthly, principal at maturity
Industrial Building - Bernardsville, NJ 1 Prime + 4.0% Interest monthly, principal at maturity
Industrial Building - Brooklyn, NY 1 Prime + 5.0% Interest monthly, principal at maturity
Condominium Apartments, NY, NY 1 Prime + 5.0% Interest monthly, principal at maturity
Underlying Mortgage - Bronx, NY 1 TBill +2.25% Interest monthly, principal at maturity
Cooperative Apartments - Islip, NY 1 9.0% Interest monthly, principal at maturity
Industrial/Retail - Great Neck, NY 1 Prime + 5.0% Interest monthly, principal at maturity
Hotel - Brooklyn, NY 1 Prime + 5.0% Interest and princial monthly
Retail - Medford, NJ 1 Prime + 5.0% Interest monthly, principal at maturity
Commercial Condominium - NY, NY 1 Prime + 5.0% Interest monthly, principal at maturity
Miscellaneous
$0-$299 5
$300-$499 6
$500-$999 6
$1,000-$1,299 3
Junior mortgage loans:
Residential:
Wraparound mortgages:
Retail Building - New York, NY 1 Prime + 5.0% Mar-99 Interest monthly, principal at maturity
---
46
===
BRT REALTY TRUST
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1999
(Amounts in Thousands)
PRINCIPAL AMOUNT
CARRYING OF LOANS SUBJECT
FACE AMOUNT AMOUNT TO DELINQUENT
PRIOR LEINS OF MORTGAGES OF MORTGAGES PRINCIPAL OR INTEREST
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First mortgage loans:
Long term:
Retail/Apartments, Brooklyn, NY - $ 2,129 $ 2,129 -
Miscellaneous
$0-$299 - 895 884 -
$300-499 - 833 833 -
$500-998 - 2,223 2,223 -
$1,000-1,299 - 2,160 2,160 -
Short term:
Office Building - Brooklyn, NY - 2,990 2,990 -
Industrial Building - Bernardsville, NJ - 2,600 2,600 -
Industrial Building - Brooklyn, NY - 2,246 2,246 -
Condominium Apartments, NY, NY - 2,200 2,200 -
Underlying Mortgage - Bronx, NY - 2,835 2,200 -
Cooperative Apartments - Islip, NY - 2,006 2,006 -
Industrial/Retail - Great Neck, NY - 2,000 2,000 -
Hotel - Brooklyn, NY - 1,974 1,974 -
Retail - Medford, NJ - 1,900 1,900 -
Commercial Condominium - NY, NY - 1,890 1,890 -
Miscellaneous
$0-$299 - 529 254 -
$300-$499 - 2,556 2,555 -
$500-$999 - 5,231 4,772 -
$1,000-$1,299 - 3,450 3,450 -
Junior mortgage loans:
Residential:
Wraparound mortgages:
Retail Building - New York, NY $ 313 2,035 2,035 -
------------------------------------------------------
$ 313 $44,682 $43,301 $ -
======================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRT REALTY TRUST
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1999
(Amounts in Thousands)
Notes to the schedule:
(a) The following summary reconciles mortgages receivable at their carrying
values:
Year Ended September 30,
------------------------
1999 1998 1997
--------- ----------- ----------
<S> <C> <C> <C>
Balance at beginning of year $ 49,134 $ 37,909 $ 30,945
Additions:
Advances under real estate loans 25,182 31,716 15,353
Repayments to participating lenders - - 1,000
Capitalization of earned interest
income to loan balance in accordance
with agreements - - 177
Previously provided allowances 660 - 1,300
Purchase money mortgages from sale of
real estate owned - - 425
--------- --------- --------
74,976 69,625 49,200
--------- --------- --------
Deductions:
Collections of principal 23,815 20,491 11,278
Sale of senior participating interests in loans 7,860 - -
Investments transferred to foreclosed
properties, net - - 13
--------- --------- --------
31,675 20,491 11,291
--------- --------- --------
Balance at end of year $ 43,301 $ 49,134 $ 37,909
======== ======== ========
(b) The aggregate cost of investments in mortgage loans is the same for
financial reporting purposes and Federal income tax purposes.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000014846
<NAME> BRT REALTY TRUST
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 28,757
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 84,609
<CURRENT-LIABILITIES> 0
<BONDS> 1,172
0
0
<COMMON> 26,665
<OTHER-SE> 57,959
<TOTAL-LIABILITY-AND-EQUITY> 84,609
<SALES> 0
<TOTAL-REVENUES> 12,173
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,115
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,646
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,646
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,646
<EPS-BASIC> 1.63
<EPS-DILUTED> 1.61
</TABLE>
