BRT REALTY TRUST (NYSE:BRT) Files An 8-K Financial Statements and Exhibits
Item 9.01(a), the audited Statement of Revenues and Certain
Expenses of Kilburn Crossing, a 220 unit multi-family complex
located at 6601 Charmed Way, Fredericksburg, Virginia (“Kilburn
Crossing”), for the year ended December 31, 2015 and the
unaudited statement of revenues and certain expenses of Kilburn
Crossing for the nine months ended September 30, 2016 and (ii)
Item 9.01(b), our unaudited pro forma financials statements
reflecting the acquisition of Kilburn Crossing.
Kilburn Crossing was purchased on November 4, 2016 for $38.5
million, including $27.7 million of mortgage debt obtained in
connection with the acquisition. The mortgage bears interest at a
rate of 3.68%, matures in 2027 and amortizes over a 10-year period.
A supplemental mortgage loan of $2.3 million was also obtained in
connection with the acquisition. This supplemental mortgage loan
bears interest at a rate of 4.84%, matures in 2027 and amortizes
over a 10-year period. We contributed $8.7 million to this venture
for our 80% interest.
million, including $27.7 million of mortgage debt obtained in
connection with the acquisition. The mortgage bears interest at a
rate of 3.68%, matures in 2027 and amortizes over a 10-year period.
A supplemental mortgage loan of $2.3 million was also obtained in
connection with the acquisition. This supplemental mortgage loan
bears interest at a rate of 4.84%, matures in 2027 and amortizes
over a 10-year period. We contributed $8.7 million to this venture
for our 80% interest.
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Item 9.01
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Financial Statements and Exhibits.
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(a)
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Financial Statement of Business Acquired-Kilburn
Crossing |
Page
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(i) Independent Auditors Report
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(ii) Statement of Revenues and Certain Expenses for the
year ended
December 31, 2015
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(iii) Statement of Revenues and Certain Expenses for the
nine months ended
September 30, 2016
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(iv) Notes to Statements of Revenues and Certain Expenses
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(b)
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Unaudited Pro Forma Consolidated Financial Statements
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(i) Pro Forma Consolidated Balance Sheet at September 30,
2016 |
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(ii) Pro Forma Consolidated Statements of Income:
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For the year ended September 30, 2016
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(iii) Notes to Pro Forma Consolidated Financial
Statements |
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(c)
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Exhibits
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Exhibit No.
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Title of Exhibit
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23.1
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Consent of BDO USA, LLP, dated February 6, 2017
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Independent Auditors Report
Shareholders and Board of Trustees
BRT Realty Trust
Great Neck, New York
We have audited the accompanying statement of revenues and certain
expenses of the property located at 6601 Charmed Way,
Fredericksburg, Virginia (“Kilburn Crossing”) for the year ended
December 31, 2015.
expenses of the property located at 6601 Charmed Way,
Fredericksburg, Virginia (“Kilburn Crossing”) for the year ended
December 31, 2015.
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.
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.
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.
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.
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 Kilburn Crossing for
the year ended December 31, 2015, in accordance with accounting
principles generally accepted in the United States of America.
referred to above presents fairly, in all material respects, the
statement of revenues and certain expenses of Kilburn Crossing for
the year ended December 31, 2015, 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 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 Kilburn Crossing revenues
and expenses.
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 Kilburn Crossing revenues
and expenses.
/s/ BDO USA, LLP
New York, New York
February 6, 2017
Kilburn Crossing
Statements of Revenues and Certain Expenses
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Nine Months Ended September 30, 2016
(unaudited)
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Year Ended December 31, 2015
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Revenues:
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Rental income
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$
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2,360,000
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$
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3,034,000
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Other income
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241,000
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303,000
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Rental and other income
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2,601,000
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3,337,000
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Certain Expenses:
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Real estate taxes
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158,000
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187,000
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Management fees
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78,000
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100,000
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Utilities
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150,000
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198,000
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Payroll
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211,000
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267,000
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Insurance
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36,000
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47,000
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Repairs and maintenance
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151,000
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172,000
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Total certain expenses
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784,000
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971,000
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Revenues in excess of certain expenses
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$
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1,817,000
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$
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2,366,000
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See Independent Auditors Report and accompanying notes to the
Statements of Revenues and Certain Expenses
Statements of Revenues and Certain Expenses
Kilburn Crossing
Notes to Statements of Revenues and Certain Expenses
1. Organization
Kilburn Crossing, located at 6601 Charmed Way, Fredericksburg,
Virginia (“Kilburn Crossing” or the “Property”) is a
multi-family complex containing 220 units.
Virginia (“Kilburn Crossing” or the “Property”) is a
multi-family complex containing 220 units.
BRT Realty Trust (BRT or the Trust) is a business trust organized
in Massachusetts. 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.
in Massachusetts. 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 November 4, 2016, a consolidated joint venture comprised of an
indirect wholly-owned subsidiary of the Trust and an unaffiliated
joint venture partner acquired the Property for $38.5 million,
including $27.7 million of assumed mortgage debt and an additional
$2.7 million of supplemental debt in connection with the
acquisition.
indirect wholly-owned subsidiary of the Trust and an unaffiliated
joint venture partner acquired the Property for $38.5 million,
including $27.7 million of assumed mortgage debt and an additional
$2.7 million of supplemental debt in connection with the
acquisition.
2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying statement of revenues and certain expenses of the
Property 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 Trusts Current Report on Form 8-K. Accordingly,
the statements 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.
Property 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 Trusts Current Report on Form 8-K. Accordingly,
the statements 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.
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.
due from tenants. Leases are generally for a one-year term and have
no renewal options.
Income Taxes
The entity that owns Kilburn Crossing was organized as a limited
liability company and is not directly subject to federal or state
income taxes.
liability company and is not directly subject to federal or state
income taxes.
3. Subsequent Events
Subsequent events were evaluated from December 31, 2015 through
February 6, 2017, the date on which the statements of revenues and
certain expenses were available to be issued.
February 6, 2017, the date on which the statements of revenues and
certain expenses were available to be issued.
BRT REALTY TRUST AND SUBSIDIARIES
Pro Forma Consolidated Financial Statements
(Unaudited)
Acquisitions
On November 4, 2016, TRB Kilburn Crossing, LLC, an indirect wholly
owned subsidiary of BRT Realty Trust (“BRT” or the Trust) and an
unaffiliated joint venture partner, acquired a 220 unit
multi-family property located at 6601 Charmed Way, Fredericksburg,
Virginia (Kilburn Crossing or the “Property) for $38.5 million,
including $29.9 million of mortgage debt obtained in connection
with the acquisition.
owned subsidiary of BRT Realty Trust (“BRT” or the Trust) and an
unaffiliated joint venture partner, acquired a 220 unit
multi-family property located at 6601 Charmed Way, Fredericksburg,
Virginia (Kilburn Crossing or the “Property) for $38.5 million,
including $29.9 million of mortgage debt obtained in connection
with the acquisition.
Presentation
The unaudited pro forma consolidated balance sheet is presented as
if the Kilburn Crossing acquisition had been completed on September
30, 2016. The unaudited pro forma consolidated statement of income
for the year ended September 30, 2016 is presented as if the
Kilburn Crossing acquisition had been completed on October 1, 2015.
if the Kilburn Crossing acquisition had been completed on September
30, 2016. The unaudited pro forma consolidated statement of income
for the year ended September 30, 2016 is presented as if the
Kilburn Crossing acquisition had been completed on October 1, 2015.
These unaudited pro forma consolidated financial statements are
presented for informational purposes only and should be read in
conjunction with the Trusts Annual Report on Form 10-K for the year
ended September 30, 2016.
presented for informational purposes only and should be read in
conjunction with the Trusts 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 Trusts
management; however, such statements do not purport to represent
what the Trusts financial position and results of operations would
have been assuming the completion of the acquisition on October 1,
2015, nor do they purport to project the Trusts financial position
and results of operations at any future date or for any future
period.
on assumptions and estimates considered appropriate by the Trusts
management; however, such statements do not purport to represent
what the Trusts financial position and results of operations would
have been assuming the completion of the acquisition on October 1,
2015, nor do they purport to project the Trusts financial position
and results of operations at any future date or for any future
period.
In the opinion of the Trusts management, all adjustments necessary
to reflect the effects of the transactions described above have
been included in the pro forma consolidated financial statements.
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 – UNAUDITED CONSOLIDATED BALANCE SHEET
At September 30, 2016
(Amounts in thousands, except per share data)
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The Trust Historical
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Purchase of Kilburn Crossing
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The Trust
Pro Forma
as Adjusted
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ASSETS
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Real estate properties, net of accumulated depreciation
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$
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759,576
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$
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39,133
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$
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798,709
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Real estate loan
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19,500
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19,500
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Cash and cash equivalents
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27,399
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(8,708
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)
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18,691
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Restricted cash
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7,383
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7,383
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Deposits and escrows
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18,972
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1,264
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20,236
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Other assets
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8,073
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8,154
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Real estate asset held-for-sale
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33,996
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33,996
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Total Assets
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$
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874,899
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$
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31,770
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$
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906,669
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LIABILITIES AND EQUITY
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Liabilities:
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Mortgages payable, net of deferred costs
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$
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588,457
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$
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29,591
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$
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618,048
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Junior subordinated notes, net of deferred costs
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36,998
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36,998
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Accounts payable and accrued liabilities
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20,716
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20,844
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Mortgage payable held-for-sale
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27,052
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27,052
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Total Liabilities
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673,223
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29,719
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702,942
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Commitments and contingencies
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Equity:
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BRT Realty Trust shareholders’ equity:
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Preferred shares, $1 par value:
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authorized 10,000 shares, none issued
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Shares of beneficial interest, $3 par value:
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authorized number of shares, unlimited, 13,306 issued
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39,696
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39,696
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Additional paid-in capital
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161,321
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161,321
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Accumulated other comprehensive loss
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(1,602
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)
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(1,602
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)
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Accumulated deficit
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(48,125
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)
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(48,125
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)
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Total BRT Realty Trust shareholders’ equity
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151,290
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151,290
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Non-controlling interests
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50,386
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2,051
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52,437
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Total Equity
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201,676
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|
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2,051
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203,727
|
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Total Liabilities and Equity
|
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$
|
874,899
|
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$
|
31,770
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$
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906,669
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See accompanying notes to the unaudited pro forma consolidated
financial statements
financial statements
BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA – UNAUDITED CONSOLIDATED STATEMENT OF INCOME
For The Year Ended September 30, 2016
(Dollars in thousands, except share data)
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The Trust Historical
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Purchase of Kilburn Crossing
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The Trust
Pro Forma
as Adjusted
|
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Revenues:
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Rental and other revenues from real estate
properties
|
$
|
90,945
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$
|
3,466
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$
|
94,411
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Other income
|
3,319
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|
|
3,319
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|
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Total revenues
|
94,264
|
|
3,466
|
|
97,730
|
||||||
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Expenses:
|
|
|
|
|
|
||||||
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Real estate operating expenses – including
$1,950 to related parties
|
43,262
|
|
1,151
|
|
44,413
|
||||||
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Interest expense
|
23,878
|
|
|
1,159
|
|
(a)
|
25,037
|
|
|||
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Advisor’s fees, related party
|
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|
|||||||||
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Property acquisition costs – including $2,221 to related
parties |
3,852
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|
|
|
|
3,852
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|
||||
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Provision for Federal Tax
|
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|
|||||||||
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General and administrative-including $1,020 to related
party |
8,536
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|
|
|
|
8,536
|
|
||||
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Depreciation
|
23,180
|
|
(b)
|
24,142
|
|||||||
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Total expenses
|
104,101
|
|
3,272
|
|
107,373
|
||||||
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Total revenues less total expenses
|
(9,837
|
)
|
|
|
|
(9,643
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)
|
||||
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Gain on sale of real estate assets
|
46,477
|
|
|
|
|
46,477
|
|
||||
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Gain on sale of Partnership interest
|
|
|
|||||||||
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Loss on extinguishment of debt
|
(4,547
|
)
|
|
|
(4,547
|
)
|
|||||
|
Income (loss) from continuing operations
|
32,479
|
|
|
32,673
|
|||||||
|
Discontinued Operations:
|
|
|
|
|
|
||||||
|
Loss from discontinued operationsincluding $214 to
related party in 2014 |
(2,788
|
)
|
|
|
(2,788
|
)
|
|||||
|
Gain on sale of partnership interest
|
15,467
|
|
|
|
|
15,467
|
|
||||
|
Income (loss) from discontinued operations
|
12,679
|
|
|
12,679
|
|||||||
|
Net income
|
45,158
|
|
|
|
|
45,352
|
|||||
|
Net (income) attributable to non-controlling interests
|
(13,869
|
)
|
|
(39
|
)
|
|
(13,908
|
)
|
|||
|
Net income attributable to common shareholders
|
$
|
31,289
|
|
$
|
|
|
$
|
31,444
|
|||
|
|
|
|
|
|
|
||||||
|
Basic and diluted per share amounts attributable to
common shareholders: |
|
|
|
|
|
||||||
|
Basic and diluted earnings per share
|
$
|
2.23
|
|
$
|
0.01
|
|
$
|
2.24
|
|||
|
|
|
|
|
|
|
||||||
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
||||||
|
Basic and diluted
|
14,017,279
|
|
14,017,279
|
|
14,017,279
|
See accompanying notes to the pro forma unaudited consolidated
financial statements
financial statements
BRT REALTY TRUST AND SUBSIDIARIES
Notes to Pro Forma Unaudited Consolidated Financial Statements
(Unaudited)
Basis of Pro Forma Presentation
|
1.
|
The historical consolidated financial statements of the Trust
include the accounts of the Trust and consolidated subsidiaries 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 Trusts 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 Trust 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 Kilburn for the year ended September 30, 2016. |
|
a)
|
To reflect the interest expense resulting from the mortgages
securing Kilburn Crossing which expense is calculated at an interest rate of 3.68% and 4.84%, respectively, and includes amortization of deferred financing costs. |
|
b)
|
To reflect depreciation expense on the estimated useful life
of the properties of 30 years. |
About BRT REALTY TRUST (NYSE:BRT)
BRT Realty Trust (the Trust) is a real estate investment trust (REIT). The Trust owns, operates and develops multi-family properties, and commercial and mixed use real estate assets. The Trust operates through two segments: multi-family real estate and other real estate. The multi-family real estate segment includes the ownership, operation and development of the Trust’s multi-family properties. The other real estate segment includes all activities related to the ownership, development, operation and disposition of the Trust’s other real estate assets. Its multi-family property activities involve the ownership, operation and development, primarily through joint ventures. It owns approximately 30 multi-family properties located in approximately 10 states. Its multifamily properties are garden apartment, mid rise or town home style properties that provide residents with amenities, such as a clubhouse, swimming pool, laundry facilities and cable television access. BRT REALTY TRUST (NYSE:BRT) Recent Trading Information
BRT REALTY TRUST (NYSE:BRT) closed its last trading session up +0.01 at 8.57 with 542 shares trading hands.