BRT Realty: Financial Statements And Exhibits


The following excerpt is from the company's SEC filing.

  (ii)  Statements of Revenues and Certain Expenses for the year ended December 31, 2012 and the nine months ended September 30, 2013 (Unaudited) 2

We have audited the accompanying statement of revenues and certain expenses of the property located at 4551 Durrow Drive, Columbus, Ohio (“Newbridge Commons”) for the year ended December 31, 2012.

Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues and certain expenses that is free from material misstatement, whether due to fraud or error.

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 of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and certain expenses is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement of revenues and certain expenses. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the statement of revenues and certain expenses, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to Newbridge Commons’ preparation and fair presentation of the statement of revenues and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statement of revenues and certain expenses.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the statement of revenues and certain expenses referred to above presents fairly, in all material respects, the statement of revenues and certain expenses of Newbridge Commons for the year ended December 31, 2012, in accordance with accounting principles generally accepted in the United States of America.

The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with rules and regulations of the U.S. Securities and Exchange Commission and for inclusion in a Current Report on Form 8-K of BRT Realty Trust as described in Note 2 to the statement of revenues and certain expenses and is not intended to be a complete presentation of Newbridge Commons’ revenues and expenses.

    Nine Months Ended September 30, 2013 (unaudited)     Year Ended December 31, 2012   Revenues:             Rental and other income   $ 1,516,000     $ 2,087,000                     Certain Expenses:                 Real estate taxes     219,000       273,000   Management fees     74,000       94,000   Utilities     121,000       192,000   Payroll     189,000       273,000   Insurance     41,000       49,000   Repairs and maintenance     148,000       285,000   Other real estate operating expenses     70,000       114,000   Total certain expenses     862,000       1,280,000                     Revenues in excess of certain expenses   $ 654,000     $ 807,000  

BRT Realty Trust (“BRT” or the “Trust”) is a business trust organized in Massachusetts.  BRT  owns and operates multi-family properties, originates and holds for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States and owns and operates commercial and mixed use real estate assets.

On November 22, 2013, a wholly-owned subsidiary of the Trust acquired Newbridge Commons for a contract purchase price of $14.1 million, including $10.7 million of assumed mortgage debt.

The accompanying statements of revenues and certain expenses of Newbridge Commons 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.  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.

The preparation of the statements of revenues and certain expenses in conformity with accounting principles generally accepted in the United States or requires management to make estimates and assumptions that affect the amounts reported in the statements of revenues and certain expenses.  Actual results could differ from those estimates.

Rental revenue is recognized on an accrual basis when earned and due from tenants.  Leases are generally for a one-year term and have no renewal options.

The entity that owns Newbridge Commons was organized as a limited liability company and is not directly subject to federal or state taxes.

Subsequent events were evaluated from December 31, 2012 through January 6, 2014, the date on which the statements of revenues and certain expenses were issued.

On November 22, 2013, TRB Columbus LLC, a wholly-owned subsidiary of BRT Realty Trust (“the Trust”), acquired a 264 unit multi-family garden apartment complex located at 4551 Durrow Drive, Columbus, Ohio (“Newbridge Commons”), for a contract purchase price of $14.1 million, including $10.7 million of assumed mortgage debt.

The pro forma unaudited consolidated balance sheet is presented as if the acquisition had been completed on September 30, 2013.  The pro forma unaudited consolidated statement of income for the year ended September 30, 2013 is presented as if the acquisition had been completed on October 1, 2012.

These pro forma unaudited consolidated financial statements are presented for informational purposes only and should be read in conjunction with the Trust’s Annual Report on Form 10-K for the year ended September 30, 2013.

The pro forma unaudited consolidated statements of income 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, 2012, 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.

    The Trust Historical     Purchase of Newbridge Commons     The Trust Pro Forma as Adjusted   ASSETS                   Real estate properties, net of accumulated depreciation of $11,862   $ 402,896     $ 14,050     $ 416,946                             Real estate loans, net, all earning interest     30,300       -       30,300   Cash and cash equivalents     60,265       (3,526 )     56,739   Restricted cash – construction holdbacks     29,279       -       29,279   Deferred costs     12,833       10       12,843   Prepaid expenses     3,955       -       3,955   Other assets     9,963       466       10,429                             Total Assets   $ 549,491     $ 11,000     $ 560,491                             LIABILITIES AND EQUITY                         Liabilities:                         Mortgages payable   $ 313,216     $ 10,664     $ 323,880   Junior subordinated notes     37,400       -       37,400   Accounts payable and accrued liabilities     6,511       278       6,789   Deposits payable     1,258       58       1,316       Deferred income     25,848       -       25,848           Total Liabilities     384,233       11,000       395,233                                 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, 13,535 issued     40,606       -       40,606           Additional paid-in capital     165,763       -       165,763           Accumulated other comprehensive income     (6 )     -       (6 )         Accumulated deficit     (67,572 )     -       (67,572 )                 Total BRT Realty Trust shareholders’ equity     138,791       -       138,791   Non-controlling interests     26,467       -       26,467           Total Equity     165,258       -       165,258   Total Liabilities and Equity   $ 549,491     $ 11,000     $ 560,491  

BRT REALTY TRUST AND SUBSIDIARIES PRO FORMA – UNAUDITED CONSOLIDATED STATEMENT OF INCOME For The Year Ended September 30, 2013 (Dollars in thousands, except share data)

    The Trust Historical     Purchase of Newbridge Commons     The Trust Pro Forma as Adjusted   Revenues:                   Rental and other revenue from real estate properties   $ 30,592     $ 2,087     $ 32,679   Interest and fees on real estate loans     9,946       -       9,946   Recovery of previously provided allowances     1,066       -       1,066   Other income     1,213       -       1,213   Total revenues     42,817       2,087       44,904   Expenses:                         Interest expense     12,487       461 (a)     12,948   Advisor’s fees, related party     1,802       63 (b)     1,865   Property acquisition costs     2,466       -       2,466   General and administrative—including $779 to related party     7,448       -       7,448   Operating expenses relating to real estate properties     16,409       1,161       17,570   Depreciation and  amortization     7,094       375 (c)     7,469   Total expenses     47,706       2,060       49,766   Total revenues less total expenses     (4,889 )     27       (4,862 ) Equity in earnings of unconsolidated ventures     198       -       198   Gain on sale of available-for-sale securities     530       -       530   Gain on sale of partnership interest     5,481       -       5,481   Income from continuing operations     1,320       27       1,347                             Discontinued operations:                         Gain on sale of real estate assets     769       -       769   Net income     2,089       27       2,116   Plus: net loss attributable to non-controlling interests     2,924       -       2,924   Net income attributable to common shareholders   $ 5,013     $ 27     $ 5,040                             Basic and diluted per share amounts attributable to common shareholders:                         Income from continuing operations   $ .30     $ -     $ . 30   Discontinued operations      .05        -        .05   Basic and diluted income per share   $ .35     $ -     $ .35                             Amounts attributable to BRT Realty Trust:                         Income from continuing operations   $ 4,244     $ 27     $ 4,271   Discontinued operations     769       -       769   Net income   $ 5,013     $ 27     $ 5,040   Weighted average number of common shares outstanding:                         Basic and diluted     14,137,091       14,137,091       14,137,091  

1.   The consolidated financial statements include the consolidated accounts of the Trust and its investments in limited liability companies in which the Trust is presumed to have control in accordance with the consolidation guidance of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”).  Investments in entities for which the Trust has the ability to exercise significant influence but does not have financial or operating control, are accounted for under the equity method of accounting.  Accordingly, the Trust’s share of the net earnings (or losses) of entities accounted for under the equity method are included in consolidated net income under the caption “Equity in earnings of unconsolidated ventures”.  Investments in entities for which the Trust does not have the ability to exercise any influence are accounted for under the cost method of accounting.

     a) To reflect the interest expense resulting from the mortgages securing Newbridge Commons which expense is calculated using an interest rate of 4.35% and includes amortization of loan related fees.

     b)   To reflect the advisory fees to be paid by the Trust pursuant to the Amended and Restated Advisory Agreement, as amended.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

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