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| BRT > SEC Filings for BRT > Form 8-K/A on 30-Aug-2012 | All Recent SEC Filings |
30-Aug-2012
Financial Statements and Exhibits
(i) Independent Auditors' Report 1
(ii) Statements of Revenues and Certain Expenses for the year ended
December 31, 2011 and the three months ended March 31, 2012
(Unaudited) 2
(iii) Notes to Statements of Revenues and Certain Expenses 3
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(b) Unaudited Pro Forma Consolidated Financial Statements.
(i) Pro Forma Consolidated Balance Sheet as of March 31, 2012 5
(ii) Pro Forma consolidated Income Statements:
(c) Exhibits Exhibit No. Title of Exhibit 23.1 Consent of BDO USA, LLP dated August 30, 2012 |
To the Board of Trustees and Stockholders of
BRT Realty Trust and Subsidiaries
We have audited the accompanying statement of revenues and certain expenses of 160 Madison Farms Lane ("Madison at Schilling Farms") for the year ended December 31, 2011. The statement of revenues and certain expenses is the responsibility of BRT Realty Trust's management. Our responsibility is to express an opinion on the statement of revenues and certain expenses based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Madison at Schilling Farms' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Form 8-K/A of BRT Realty Trust. As described in Note 2, material amounts that would not be comparable to those resulting from the proposed future operations of Union Square are excluded from the statement of revenues and certain expenses and the statement of revenues and certain expenses is not intended to be a complete presentation of Madison at Schilling Farms' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of Madison at Schilling Farms for the year ended December 31, 2011, on the basis of accounting described in Note 2.
New York, New York
August 30, 2012
Three Months
Ended Year Ended
March 31, 2012 December 31, 2011
(unaudited)
Revenues:
Rental and other income $ 889,000 $ 3,520,000
Certain Expenses:
Real estate taxes 140,000 543,000
Management fees 27,000 105,000
Utilities 41,000 159,000
Other real estate operating expenses 181,000 703,000
Total certain expenses 389,000 1,510,000
Revenues in excess of certain expenses $ 500,000 $ 2,010,000
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See Independent Auditors' Report and accompanying notes.
1. Organization
160 Madison Farms Lane ("Madison at Schilling Farms") is a 325 unit multi-family garden apartment complex located in Collierville, Tennessee.
BRT Realty Trust and subsidiaries (collectively, the "Trust") is a real estate investment trust. The Trust originates and holds for investment senior mortgage loans secured by commercial and multi-family real estate properties and participates as an equity investor in joint ventures which acquire multi-family residential or other real estate assets.
On June 20, 2012, a consolidated joint venture comprised of TRB Schilling LLC, a wholly owned subsidiary of the Trust, and an unaffiliated joint venture partner, acquired Madison at Schilling Farms for a net purchase price of $32.1 million, including $25.7 million of mortgage debt.
2. Basis of Presentation and Significant Accounting Policies
The accompanying statements of revenues and certain expenses of Madison at Schilling Farms have been prepared in accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for inclusion in the Trust's Current Report on Form 8-K/A. Accordingly, the statements of revenues and certain expenses exclude certain expenses that may not be comparable to those expected to be incurred in the future operations of the aforementioned property. Items excluded consist of interest expense, depreciation, amortization, corporate expenses, and other costs not directly related to future operations.
In assessing Madison at Schilling Farms, the Trust considered the sources of revenue including, but not limited to, competitive factors present in the local market for residential rentals, the demographics of the area, and the local economic conditions and outlook. We also considered Madison at Schilling Farms' expenses including, but not limited to, utility costs, real estate tax rates and maintenance expenses.
After reasonable inquiry, the Trust is not aware of any other material factors other than those discussed above that would cause the reported financial information not to be necessarily indicative of future operating results.
Use of Estimates
The preparation of the statements of revenues and certain expenses in conformity with Regulation S-X Rule 3-14 requires management to make estimates and assumptions that affect the amounts reported in the statements of revenues and certain expenses and accompanying notes. Actual results could differ from those estimates.
Revenue Recognition
Rental revenue is recognized on an accrual basis. Generally leases are for a one-year term and have no renewal options.
Income Taxes
Madison at Schilling Farms was organized as a limited liability company and is not directly subject to federal income taxes. The limited liability company is subject to Tennessee franchise tax.
On June 20, 2012, a consolidated joint venture comprised of TRB Schilling LLC, a wholly owned subsidiary of the Trust, and an unaffiliated joint venture partner acquired Madison at Schilling Farms, a 325-unit- multi-family garden apartment complex located in Collierville, Tennessee. The net purchase price was $32.1 million and included $25.7 million of mortgage debt.
On March 22, 2012, a consolidated joint venture comprised of TRB Union Palm LLC, a wholly owned subsidiary of the Trust, and an unaffiliated joint venture partner acquired Union Square, a 542-unit, multi-family garden apartment complex located in Palm Beach Gardens, Florida. The net purchase price was $59.4 million and included $45.2 million of mortgage debt.
The following unaudited pro forma consolidated balance sheet of the Trust as of March 31, 2012, has been prepared as if the acquisition of Madison at Schilling Farms had been completed on March 31, 2012. The unaudited pro forma consolidated statement of income for the year ended September 30, 2011 is presented as if both acquisitions had been completed on October 1, 2010. The unaudited pro forma consolidated income statement for the six months ended March 31, 2012 is presented as if both acquisitions had been completed on October 1, 2011.
The pro forma income statement for the six months ended March 31, 2012 has been adjusted to reflect the income and expense items of Union Square from March 22, 2012 (the date of the acquisition) and March 31, 2012.
These pro forma consolidated financial statements are presented for informational purposes only and should be read in conjunction with (a) the Trust's 2011 Annual Report on Form 10-K and (b) the Trust's Quarterly Report on Form 10-Q for the six months ended March 31, 2012.
The unaudited pro forma consolidated financial statements are based on assumptions and estimates considered appropriate by the Trust's management; however, such statements do not purport to represent what the Trust's financial position and results of operations would have been assuming the completion of the acquisition on October 1, 2010, nor do they purport to project the Trust's financial position and results of operations at any future date or for any future period.
In the opinion of the Trust's management, all adjustments necessary to reflect the effects of the transactions described above have been included in the pro forma consolidated financial statements.
BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA - CONSOLIDATED BALANCE SHEET
As of March 31, 2012
(Unaudited)
(Amounts in thousands, except share data)
Purchase of
Madison
at The Trust
The Trust Schilling Pro Forma
Historical Farms As Adjusted
ASSETS
Real estate loans, all earning interest $ 73,503 - $ 73,503
Deferred fee income (1,302 ) - (1,302 )
72,201 - 72,201
Real estate properties, net of accumulated
depreciation of $2,867 131,997 $ 32,100 164,097
Investment in unconsolidated ventures 5,503 - 5,503
Cash and cash equivalents 37,094 (5,277 ) 31,817
Restricted cash - construction holdbacks 33,064 - 33,064
Available-for-sale securities at market 2,509 - 2,509
Deferred Costs 8,501 243 8,744
Other assets 8,475 457 8,932
Total Assets $ 299,344 $ 27,523 $ 326,867
LIABILITIES AND EQUITY
Liabilities:
Junior subordinated notes $ 37,400 - $ 37,400
Mortgages payable 100,306 $ 25,680 125,986
Accounts payable and accrued liabilities 1,045 253 1,298
Deposits payable 2,614 40 2,654
Deferred Income 13,730 - 13,730
Total Liabilities 155,095 25,973 181,068
Commitments and contingencies - - -
Equity:
BRT Realty Trust shareholders' equity:
Preferred shares, $1 par value:
Authorized 10,000 shares, none issued - - -
Shares of beneficial interest, $3 par value:
Authorized number of shares, unlimited,
13,924 issued 41,772 - 41,772
Additional paid-in capital 167,044 - 167,044
Accumulated other comprehensive income-net
unrealized gain on available-for-sale
securities 548 - 548
Accumulated deficit (74,169 ) - (74,169 )
Cost of 451 treasury shares of beneficial
interest (3,505 ) - (3,505 )
Total BRT Realty Trust shareholders' equity 131,690 131,690
Non-controlling interests 12,559 1,550 14,109
Total Equity 144,249 1,550 145,799
Total Liabilities and Equity $ 299,344 $ 27,523 $ 326,867
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See accompanying notes to the unaudited pro forma consolidated financial statements
BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA - CONSOLIDATED STATEMENT OF INCOME
For the Six Months Ended March 31, 2012
(Unaudited)
(Amounts in thousands, except share data)
Purchase of
Madison At The Trust
The Trust Purchase of Schilling Pro Forma
Historical Union Square Farms As Adjusted
Revenues:
Interest on real estate loans $ 3,614 - - $ 3,614
Loan fee income 840 - - 840
Rental revenue from real estate
properties 1,787 $ 3,302 $ 1,794 6,883
Recovery of previously provided
allowances 10 - - 10
Other, primarily investment
income 590 - - 590
Total revenues 6,841 3,302 1,794 11,937
Expenses:
Interest on borrowed funds 1,342 813 (a) 514 (e) 2,669
Advisor's fees, related party 444 151 (b) 58 (b) 653
Property acquisition costs 1,793 - - 1,793
General and
administrative-including $481 to
related party 3,680 - - 3,680
Operating expenses relating to
real estate properties 1,745 1,489 768 4,002
Amortization and depreciation 364 864 (c) 518 (c) 1,746
Total expenses 9,368 3,317 1,858 14,543
Total revenues less total
expenses (2,527 ) (15 ) (64 ) (2,606 )
Equity in loss of unconsolidated
ventures (115 ) - - (115 )
Loss on sale of
available-for-sale securities 324 - - 324
Gain on sale of loan 3,192 - - 3,192
Income (loss) from continuing
operations 874 (15 ) (64 ) 795
Discontinued operations:
Gain on sale of real estate
assets 490 - - 490
Net income(loss) 1,364 (15 ) (64 ) 1,285
Plus: net loss (income)
attributable to non-controlling
interests 1482 (27 )(d) 1 (d) ,456
Net income (loss) attributable
to common shareholders $ 2,846 $ (42 ) $ (63 ) $ 2,741
Basic and diluted per share
amounts attributable to common
shareholders:
Income from continuing
operations $ .17 $ - $ - $ .17
Discontinued operations .03 - - .03
Basic and diluted income per
share $ .20 $ - $ - $ .20
Amounts attributable to BRT
Realty Trust:
Income (loss) from continuing
operations $ 2,356 $ (42 ) $ (63 ) $ 2,251
Discontinued operations 490 - - 490
Net income (loss) $ 2,846 $ (42 ) $ (63 ) $ 2,741
Weighted average number of
common shares outstanding:
Basic and diluted 14,015,940 14,015,940 14,015,940 14,015,940
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See accompanying notes to the unaudited pro forma consolidated financial statements
BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA - CONSOLIDATED STATEMENT OF INCOME
For The Year Ended September 30, 2011
(Unaudited)
(Dollars in thousands, except share data)
Purchase of The Trust Pro
The Trust Purchase of Madison at Forma As
Historical Union Square Schilling Farms Adjusted
(Audited) (Unaudited) (Unaudited)
Revenues:
Interest on real estate loans an
purchase money mortgage $ 8,500 - - $ 8,500
Loan fee income 1,828 - - 1,828
Rental revenue from real estate
properties 3,456 $ 6,787 $ 3,520 13,763
Recovery of previously provided
allowances 3,595 - - 3,595
Other, primarily investment income 502 - - 502
Total revenues 17,881 6,787 3,520 28,188
Expenses:
Interest on borrowed funds 2,112 1,721 (a) 1,004 (e) 4,837
Advisor's fees, related party 916 356 (b) 193 (b) 1,465
Foreclosure related professional
fees 579 - - 579
General and
administrative-including $847 to
related party 6,149 - - 6,149
Operating expenses relating to real
estate properties 3,340 3,116 1,510 7,966
Amortization and depreciation 738 1,728 (c) 1,036 (c) 3,502
Total expenses 13,834 6,921 3,743 24,498
Total revenues less total expenses 4,047 (134 ) (223 ) 3,690
Equity in earnings of
unconsolidated ventures 350 - - 350
Gain on sale of available-for-sale
securities 1,319 - - 1,319
Loss on extinguishment of debt (2,138 ) - - (2,138 )
Income (loss) from continuing
operations 3,578 (134 ) (223 ) 3,221
Discontinued operations:
Gain on sale of real estate assets 1,346 - - 1,346
Net income (loss) 4,924 (134 ) (223 ) 4,567
Plus:net loss (income) attributable
to non controlling interests 1,450 (44 )(d) 6 (d) 1,412
Net income (loss) attributable to
common shareholders $ 6,374 $ (178 ) $ (217 ) $ 5,979
Basic and diluted per share amounts
attributable to common
shareholders:
Income (loss) from continuing
operations $ .35 $ (.01 ) $ (.02 ) $ . 32
Discontinued operations .10 - - .10
Basic and diluted income (loss) per
share $ .45 $ (.01 ) $ (.02 ) $ .42
Amounts attributable to BRT Realty
Trust:
Income (loss) from continuing
operations $ 5,028 $ (178 ) $ (217 ) $ 4,633
Discontinued operations 1,346 - - 1,346
Net income (loss) $ 6,374 $ (178 ) $ (217 ) $ 5,979
Weighted average number of common
shares outstanding:
Basic and diluted 14,041,509 14,041,509 14,041,509 14,041,509
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