BRT APARTMENTS CORP. (NYSE:BRT) Files An 8-K Financial Statements and Exhibits

BRT APARTMENTS CORP. (NYSE:BRT) Files An 8-K Financial Statements and Exhibits

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Item 9.01(a), the audited statement of revenues and certain
expenses of Vanguard Heights, a 174 unit multi-family property
located at 10362 Old Olive Street Road, Creve Coeur, Missouri
(“Vanguard Heights”), for the period from April 1,2016
(commencement of operations) through December 31, 2016, and (ii)
Item 9.01(b) our unaudited pro forma financials statements
reflecting the acquisition of the Vanguard Heights property.

Vanguard Heights was purchased on April 4, 2017 for $39.6 million,
including $29.0 million of mortgage debt obtained in connection
with the acquisition. The mortgage loan bears interest at a
floating rate of one month LIBOR 2.50% (3.48% at closing), matures
in July 2018, has a nine month extension option and is interest
only for the initial loan term. We contributed $9.4 million to this
venture for our 78.4% interest.
Item 9.01
Financial Statements and Exhibits.
(a)
Financial Statement of property acquired-Vanguard
Heights
Page
(i) Independent Auditors Report
(ii) Statement of Revenues and Certain Expenses for the
period from April 1, 2016 (commencement of operations)
through December 31, 2016
(iii) Notes to Statement of Revenues and Certain Expenses
(b)
Unaudited Pro Forma Consolidated Financial Statements
(i) Pro Forma Consolidated Balance Sheet at December 31,
2016
(ii) Pro Forma Consolidated Statements of Income:
For the year ended September 30, 2016
For the three months ended December 31, 2016
(ii) Notes to Pro Forma Consolidated Financial Statements
(d)
Exhibits
Exhibit No.
Title of Exhibit
23.1
Consent of BDO USA, LLP, dated May 5, 2017
Independent Auditors Report
Stockholders and Board of Directors
BRT Apartments Corp.
Great Neck, New York
We have audited the accompanying statement of revenues and certain
expenses of the property located at 10362 Old Olive Street Road,
Creve Coeur, Missouri (“Vanguard Heights”) for the period from
April 1, 2016 (commencement of operations) through December 31,
2016.
Managements Responsibility for the Financial Statements
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.
Auditors Responsibility
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 auditors
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 the entity’s
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 entitys 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
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.
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 Vanguard Heights for
the period from April 1, 2016 (commencement of operations) through
ended December 31, 2016, in accordance with accounting principles
generally accepted in the United States of America.
Emphasis of Matter
The accompanying statements 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 Apartments Corp. as described in
Note 2 to the statement of revenues and certain expenses and is not
intended to be a complete presentation of Vanguard Heights’
revenues and expenses.
/s/ BDO USA, LLP
New York, New York
May 5, 2017
/div>
Vanguard Heights
Statement of Revenues and Certain Expenses
From April 1, 2016 (commencement of operations)
through December 31, 2016
Revenues:
Rental income
$
671,000
Other income
73,000
Rental and other income
744,000
Certain Expenses:
Real estate taxes
39,000
Management fees
77,000
Utilities
112,000
Payroll
355,000
Insurance
52,000
Repairs and maintenance
82,000
Total certain expenses
717,000
Revenues in excess of certain expenses
$
27,000
See Independent Auditors Report and accompanying notes to the
Statement of Revenues and Certain Expenses
/div>
Vanguard Heights
Notes to Statement of Revenues and Certain Expenses
1. Organization
Vanguard Heights, located at 10362 Old Olive Street Road, Creve
Coeur, Missouri (“Vanguard Heights” or the “Property”) is a
174 unit multi-family property. Construction of the property
was completed in March 2016 and operations commenced on April
1, 2016.
BRT Apartments Corp. (BRT or the Company) is a corporation
organized in Maryland. BRT is a real estate investment trust,
also known as a REIT, that is primarily focused on the
ownership, operation and development of multifamily properties.
On April 4, 2017, a consolidated joint venture comprised of an
indirect 78.4% owned subsidiary of the Company and unaffiliated
joint venture partners acquired the Property for $39.6 million,
including $29.0 million of floating rate mortgage debt.
2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying statement of revenues and certain expenses of
Vanguard Heights has been prepared in accordance with Rule 3-14
of Regulation S-X of the U.S. Securities and Exchange
Commission for inclusion in the Companys Current Report on Form
8-K. Accordingly, the statement of revenues and certain
expenses excludes 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.
Significant Accounting Policies
Use of Estimates
The preparation of the statements of revenues and certain
expenses in conformity with accounting principles generally
accepted in the United States 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.
Revenue Recognition
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.
Repairs and Maintenance
Major replacement and betterments that improve or extend the
life of Vanguard Heights are capitalized. Expenditures for
ordinary repairs and maintenance are charged to operations as
incurred.
3. Subsequent Events
Subsequent events were evaluated through May 5, 2017, the date
on which the statements of revenues and certain expenses were
available to be issued.
/div>
BRT APARTMENTS CORP. AND SUBSIDIARIES
Pro Forma Consolidated Financial Statements
(Unaudited)
Conversion
BRT Apartments Corp., a Maryland corporation, is the
successor to BRT Realty Trust, a Massachusetts business
trust, to the conversion of BRT Realty Trust into BRT
Apartments Corp. on March 18, 2017.
Acquisitions
On April 4, 2017, TRB Vanguard LLC, an indirect wholly owned
subsidiary of BRT Apartments Corp. (“BRT or the
“Company”), and an unaffiliated joint venture partner,
acquired a 174 unit multi-family property located at 10362
Old Olive Street Road, Creve Coeur, Missouri for $39.6
million including $29.0 million of mortgage debt obtained in
connection with the acquisition. The Company owns a 78.4%
interest in this venture.
On February 28, 2017, TRB OPOP LLC, an indirect wholly owned
subsidiary of the Company and an unaffiliated joint venture
partner, acquired a 128 unit multi-family high rise building
located at 411 North 8th Street, St. Louis, Missouri (“OPOP
Tower”) and a 53 unit multi-family loft building located at
901 Locust Street, St. Louis, Missouri (“OPOP Lofts”; and
together with OPOP Tower, the “OPOP Properties”) for $27.0
million and $8.0 million, respectively, including $20.0
million and $6.2 million, respectively, of mortgage debt
obtained in connection with the acquisitions. The Company
owns a 75.5% interest in this venture.
On November 10, 2016, TRB Canalside Lofts, LLC, an indirect
wholly owned subsidiary of the Company and unaffiliated joint
venture partners, acquired a 374 unit multi-family property
located at 383 Taylor Street, Columbia, South Carolina
(Canalside Lofts”) for $58.3 million, including $41.0
million of mortgage debt assumed in connection with the
acquisitions. The Company owns a 32.12% interest in this
unconsolidated venture.
On November 4, 2016, Kilburn Crossing, LLC, an indirect
wholly owned subsidiary of the Company and an unaffiliated
joint venture partner, acquired a 220 unit multi-family
property located at 6601 Charmed Way, Fredericksburg,
Virginia (Kilburn Crossing) for $38.5 million, including
$29.9 million of mortgage debt obtained in connection with
the acquisition. The Company owns an 80% interest in this
venture.
The acquisitions of the OPOP Properties, Canalside Lofts and
Kilburn Crossing are referred to collectively as the
“Previously Reported Acquisitions.”
Presentation
The unaudited pro forma consolidated balance sheet is
presented as if the acquisitions of the Vanguard Heights and
the Previously Reported Acquisitions had been completed on
December 31, 2016. The unaudited pro forma consolidated
statement of income for the year ended September 30, 2016 is
presented as if the Vanguard Heights and the Previously
Reported Acquisitions had been completed on October 1, 2015.
The unaudited pro forma consolidated statement of income for
the three months ended December 31, 2016, is presented as if
the acquisition had been completed on October 1, 2016.
These unaudited pro forma consolidated financial statements
are presented for informational purposes only and should be
read in conjunction with the Companys Annual Report on Form
10-K for the year ended September 30, 2016.
The unaudited pro forma consolidated financial statements are
based on assumptions and estimates considered appropriate by
the Companys management; however, such statements do not
purport to represent what the Companys financial position and
results of operations would have been assuming the completion
of the acquisition
/div>
on October 1, 2015, nor do they purport to project the
Companys financial position and results of operations at
any future date or for any future period.
In the opinion of the Companys management, all adjustments
necessary to reflect the effects of the transactions
described above have been included in the pro forma
consolidated financial statements.
/div>
>>BRT APARTMENTS CORP. AND SUBSIDIARIES
PRO FORMA – UNAUDITED CONSOLIDATED BALANCE SHEET
At December 31, 2016
(Amounts in thousands, except per share data)
The Company Historical
Previously Reported Acquisitions
Purchase of Vanguard Heights
The Company
Pro Forma
as Adjusted
ASSETS
Real estate properties, net of accumulated
depreciation
$
746,183
$
35,557
$
40,166
$
821,906
Real estate loan
5,900
5,900
Cash and cash equivalents
51,231
(8,172
)
(9,237
)
33,822
Restricted cash
6,683
6,683
Deposits and escrows
18,283
19,055
Investment in unconsolidated joint ventures
14,672
14,672
Other assets
6,122
6,354
Total Assets
$
849,074
$
28,071
$
31,247
$
908,392
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net of deferred costs
$
573,577
$
25,855
$
28,432
$
627,864
Junior subordinated notes, net of deferred
costs
37,003
37,003
Accounts payable and accrued liabilities
18,873
19,184
Total Liabilities
629,453
25,951
28,647
684,051
Commitments and contingencies
Equity:
BRT Apartments Corp. stockholders’ equity:
Preferred shares, $.01 and $1 par value:
authorized 2,000 and 10,000 shares, none issued
Common stock $.01 par value, 300,000 shares
authorized;
Shares of beneficial interest, $3 par value:
authorized number of shares, unlimited, 13,306
issued
39,693
39,693
Additional paid-in capital
161,639
161,639
Accumulated other comprehensive loss
1,666
1,666
Accumulated deficit
(32,355
)
(32,355
)
Total BRT Apartments Corp. shareholders’
equity
170,643
170,643
Non-controlling interests
48,978
2,120
2,600
53,698
Total Equity
219,621
2,120
2,600
224,341
Total Liabilities and Equity
$
849,074
$
28,071
$
31,247
$
908,392
See accompanying notes to the unaudited pro forma
consolidated financial statements
/div>
BRT APARTMENTS CORP. AND SUBSIDIARIES
PRO FORMA – UNAUDITED CONSOLIDATED STATEMENT OF INCOME
For The Year Ended September 30, 2016
(Dollars in thousands, except share data)
The Company Historical
Previously Reported Acquisitions
Purchase of Vanguard Heights
The Company
Pro Forma
as Adjusted
Revenues:
Rental and other revenues from real estate
properties
$
90,945
$
7,193
$
3,094
$
101,232
Other income
3,319
3,319
Total revenues
94,264
7,193
3,094
104,551
Expenses:
Real estate operating expenses – including
$1,950 to related parties
43,262
2,778
1,221
47,261
Interest expense
23,878
2,413
1,753
(a)
28,044
Advisor’s fees, related party
Property acquisition costs – including $2,221
to related parties
3,852
3,852
General and administrative-including $1,020
to related party
8,536
8,536
Provision for Federal Tax
Depreciation
23,180
2,777
1,594
(b)
27,551
Total expenses
104,101
7,968
4,568
116,637
Total revenues less total expenses
(9,837
)
(775
)
(1,474
)
(12,086
)
Gain on sale of real estate assets
46,477
46,477
Gain on sale of partnership interest
Loss on extinguishment of debt
(4,547
)
(4,547
)
Equity in earnings of unconsolidated joint
ventures
Income (loss) from continuing operations
32,479
(575
)
(1,474
)
30,430
Discontinued Operations:
Loss from discontinued operations
(2,788
)
(2,788
)
Gain on sale of partnership interest
15,467
15,467
Income from discontinued operations
12,679
12,679
Net income (loss)
45,158
(575
)
(1,474
)
43,109
Net (income) loss attributable to
non-controlling interests
(13,869
)
(13,352
)
Net income (loss) attributable to common
stockholders
$
31,289
$
(377
)
$
(1,155
)
$
29,757
Basic and diluted per share amounts
attributable to common stockholders:
Basic and diluted earnings (loss) per share
$
2.23
$
(0.02
)
$
(0.08
)
$
2.13
Weighted average number of shares of common
stock outstanding:
Basic and diluted
14,017,279
14,017,279
14,017,279
14,017,279
See accompanying notes to the pro forma unaudited
consolidated financial statements
/div>
BRT APARTMENTS CORP. AND SUBSIDIARIES
PRO FORMA – UNAUDITED CONSOLIDATED STATEMENT OF
INCOME
For The Three Months Ended December 31, 2016
(Dollars in thousands, except share data)
The Company Historical
Previously Reported Acquisitions
Purchase of Vanguard Heights
The Company
Pro Forma
as Adjusted
Revenues:
Rental and other revenues from real estate
properties
$
25,029
$
1,284
$
$
27,087
Other income
Total revenues
25,640
1,284
27,698
Expenses:
Real estate operating expenses – including
$1,950 to related parties
12,446
13,291
Interest expense
6,687
(a)
7,557
Advisor’s fees, related party
Property acquisition costs – including
$2,221 to related parties
General and administrative-including $1,020
to related party
2,597
2,597
Provision for Federal Tax
Depreciation
6,297
(b)
7,261
Total expenses
28,377
1,531
1,148
31,056
Total revenues less total expenses
(2,737
)
(247
)
(374
)
(3,358
)
Gain on sale of real estate assets
35,838
35,838
Loss on extinguishment of debt
(799
)
(799
)
Equity in earnings of unconsolidated joint
ventures
Net income (loss)
32,302
(197
)
(374
)
31,731
Net (income) loss attributable to
non-controlling interests
(16,532
)
(16,392
)
Net income (loss) attributable to common
stockholders
$
15,770
$
(138
)
$
(293
)
$
15,339
Basic and diluted per share amounts
attributable to common stockholders:
Basic and diluted earnings (loss) per share
$
1.13
$
(0.01
)
$
(0.02
)
$
1.10
Weighted average number of shares of common
stock outstanding:
Basic and diluted
13,898,626
13,898,626
13,898,626
13,898,626
/div>
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Pro Forma Unaudited Consolidated Financial
Statements
(Unaudited)
Basis of Pro Forma Presentation
1.
The historical consolidated financial
statements of the Company include the
accounts of the Company and consolidated
subsidiaries in which the Company 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 Company 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 Companys share
of the net earnings (or losses) of entities
accounted for under the equity method are
included in consolidated net income (loss)
under the caption Other Income. Investments
in entities for which the Company does not
have the ability to exercise any influence
are accounted for under the cost method of
accounting.
2.
Notes to the pro forma unaudited consolidated
balance sheet and statements of income for
Vanguard Heights for the year ended September
30, 2016.
a)
To reflect the interest expense resulting
from the mortgage securing Vanguard Heights
which expense is calculated an interest rate
of 3.48% and includes amortization of
deferred financing costs.
b)
To reflect depreciation expense on the
estimated useful life of the property of 30
years.
/div>


About BRT APARTMENTS CORP. (NYSE:BRT)

BRT Apartments Corp. is a real estate investment trust (REIT). The Trust is focused on the ownership, operation and development of multi-family properties. These activities are primarily conducted through joint ventures in which the Trust has an equity interest in the entity owning the property. The Trust’s segments include Multi-Family Real Estate and Other Assets. The Multi-Family Real Estate segment includes the ownership, operation and development of multi-family properties. The Other Assets segment includes the ownership and operation of the Trust’s other real estate assets and a real estate loan. As of December 31, 2016, the Trust owned 30 multi-family properties with 8,624 units located in 11 states (including 271 units at a property in the lease up stage), and interests in two unconsolidated joint ventures. The Trust also owns and operates various other real estate assets.

BRT APARTMENTS CORP. (NYSE:BRT) Recent Trading Information

BRT APARTMENTS CORP. (NYSE:BRT) closed its last trading session down -0.10 at 8.06 with 1,040 shares trading hands.

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