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BRT Realty Trust Reports Fourth Quarter and Full Year 2012 Results


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© Marketwire 2012
2012-12-12 22:20:15 -

GREAT NECK, NY -- (Marketwire) -- 12/12/12 -- BRT REALTY TRUST (NYSE: BRT), a real estate investment trust that originates and holds senior mortgage loans secured by commercial and multi-family properties and participates as an equity investor in joint ventures which acquire multi-family properties, today announced its results of operations for the quarter and fiscal year ended September 30, 2012.



Jeffrey A. Gould, President and Chief Executive Officer of BRT, commented that: "During 2012, we expanded on our traditional lending activities by providing equity capital to purchasers of multi-family properties. As a result, through September 30, 2012, we invested $28.6 million in joint ventures that acquired five multi-family properties with an aggregate of 1,451 units. We continued these activities in the first fiscal quarter of 2013 and through December 12, 2012, invested an additional $14 million in joint ventures that acquired three additional multi-family properties with an aggregate of 884 units. In fiscal 2012, our net income was adversely impacted, and may be adversely impacted in the near future, due to the expenses associated with our multi-family acquisitions; particularly, property acquisition costs. In addition, interest expense and the non-cash depreciation and amortization expenses associated with ownership of such properties impacts our overall net income. However, we believe that these acquisitions and our continuing participation in ownership of multi-family properties will, over time, be accretive to our cash flow and net income. The immediate benefits of our multi-family activities are reflected in the quarter-over-quarter and year-over-year improvement in funds from operations."





Mr. Gould further commented: "During 2012, the Newark Joint Venture obtained financing of $68.5 million, which, together with $25.8 million of New Markets Tax Credit net proceeds, is being used to construct five buildings at the Teachers Village site, in Newark, NJ.



"Our total assets and total liabilities increased year-over-year by approximately $195 million and $184 million, respectively, due to the activities of the Newark Joint Venture and our multi-family property additions.



"We are reporting positive results for two consecutive years, after reporting losses in each of the two prior years."



Results for the Three Months Ended September 30, 2012:



Total revenues for the three months ended September 30, 2012 increased 63.6% to $7.2 million from $4.4 million for the three months ended September 30, 2011. Total revenues increased primarily due to additional rental revenue from multi-family properties acquired in fiscal 2012.



Total expenses for the current three months increased 135% to $7.3 million from $3.1 million for the three months ended September 30, 2011. Total expenses increased primarily due to increases in interest expense, operating expenses, property acquisition costs, and depreciation and amortization. Interest expense increased due to the Newark Joint Venture's financing activities and mortgage debt associated with the multi-family properties -- the other items of expense increased due to the multi-family properties acquired.



Net income attributable to common shareholders decreased to $1.7 million or $.12 per share from net income attributable to common shareholders of $1.9 million or $.13 per share in the fourth quarter of 2011. The decrease is due primarily to the loss sustained in BRT's multi-family activities. Contributing to the loss sustained with respect to these activities were $143,000 in property acquisition costs, which will not recur with respect to the acquired properties, and a $380,000 increase in non-cash depreciation and amortization expense.



Funds from Operations ("FFO") was $2.3 million in the fourth quarter of 2012 compared to $2.1 million in the fourth quarter of 2011. FFO per diluted share was $.16 in the fourth quarter of 2012 compared to $.14 in the same period in 2011. A description and reconciliation of non-GAAP financial measures to GAAP financial measures is presented later in this release.



Results for the Year Ended September 30, 2012:



Total revenues rose 9.5% to $19.6 million from $17.9 million in 2011. The increase was primarily due to the revenues generated by the multi-family properties acquired in 2012. Revenues in 2012 included $156,000 of recovery of previously provided allowances while revenues in 2011 included $3.6 million of such recoveries.



Total expenses increased to $23.4 million from $13.8 million in 2011. Total expenses increased primarily due to increases in interest expense, operating expenses, property acquisition costs, and depreciation and amortization. Interest expense increased due to the Newark Joint Venture's financing activities and mortgage debt associated with the multi-family properties -- the other items of expense increased due to the multi-family properties acquired.



Net income attributable to common shareholders decreased to $4.4 million or $0.32 per diluted share from net income attributable to common shareholders of $6.4 million or $0.45 per diluted share in fiscal 2011. The decrease is primarily due to the loss sustained in BRT's multi-family property activities. Contributing to the loss on multi-family activities were property acquisition costs of $2.4 million, which will not recur with respect to the acquired properties, and an increase in non-cash depreciation and amortization expense of approximately $1.3 million.



FFO was $6.0 million in 2012 compared to $5.8 million in 2011. FFO per diluted share was $.42 in 2012 compared to $.40 in 2011. A description and reconciliation of non-GAAP financial measures to GAAP financial measures is presented later in this release.



Balance Sheet:



At September 30, 2012, the Trust had $78.2 million of cash and cash equivalents, total assets of $386 million, total debt of $206.7 million and total equity of $147 million. At December 5, 2012, after giving effect to, among other things, net loan origination activities of approximately $20 million and investments of approximately $14 million in three multi-family properties acquired in the first quarter of fiscal 2013, the Trust had approximately $44 million of cash and cash equivalents.



Non-GAAP Financial Measures:



In view of the equity investments that BRT made in joint ventures which have acquired multi-family properties, BRT is disclosing funds from operations ("FFO") because it believes that FFO is a widely recognized and appropriate measure of the performance of an equity REIT. BRT believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of equity REITs, many of which present FFO when reporting their results. FFO is intended to exclude historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income. Though BRT is not solely an equity REIT, it is presenting FFO because a significant portion of its revenues and expenses in fiscal 2012 were derived from its ownership of multi-family properties.



BRT has determined FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). FFO is defined by NAREIT as net income (or loss) computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from sales of property, plus depreciation and amortization, plus impairment write-downs of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.



Forward Looking Information:



Certain information contained herein is forward looking within the meaning of Section 27A of the Securities Act of 1933, as amended. BRT intends such forward looking statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward looking statements, which are based on certain assumptions and describe the Trust's future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions or variations thereof. Forward looking statements, including statements with respect to BRT's loan origination activities, the development activities being undertaken by the Newark Joint Venture, and multi-family residential property acquisition and ownership activities, involve known and unknown risks, uncertainties and other factors, which, in some cases, are beyond BRT's control and could materially affect actual results, performance or achievements. Investors are cautioned not to place undue reliance on forward looking statements. Information regarding certain important facts that could cause actual outcomes or other events to differ materially from any such forward looking statements appear in BRT's Annual Report on Form 10-K for the year ended September 30, 2012 and in particular "Item 1A. Risk Factors" included therein.



Additional Information About BRT Realty Trust:



For additional financial and descriptive information on BRT, its operations and its portfolio, please refer to its website at: www.BRTRealty.com : www.brtrealty.com/ . Interested parties are encouraged to review the Form 10-K to be filed with the Securities and Exchange Commission for the year ended September 30, 2012 for further details. The Form 10-K can also be linked through the "Investor Relations" section of BRT's website.




                     BRT REALTY TRUST AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollars in thousands, except per share data)

                            Three months ended        Twelve months ended
                               September 30,             September 30,
                             2012         2011         2012         2011
                         -----------  -----------  -----------  -----------

Revenues:
  Interest and fees on
   loans                 $     2,514  $     3,390  $     9,530  $    10,328
  Rental and other
   revenue from real
   estate properties           4,220          880        8,675        3,456
  Recovery of previously
   provided allowance            137           27          156        3,595
  Other income                   312           91        1,218          502
                         -----------  -----------  -----------  -----------
    Total revenues             7,183        4,388       19,579       17,881

Expenses:
  Interest on borrowed
   funds                       1,971          461        4,729        2,112
  Property acquisition
   costs                         143            -        2,407            -
  General and
   administrative
   expenses                    1,747        1,504        7,161        6,149
  Operating expenses
   relating to real
   estate properties           2,564          685        6,042        3,340
  Other expenses                 327          277        1,104        1,495
Depreciation and
 amortization                    563          183        2,004          738
                         -----------  -----------  -----------  -----------
    Total expenses             7,315        3,110       23,447       13,834

                         -----------  -----------  -----------  -----------
    Total revenues less
     total expenses             (132)       1,278       (3,868)       4,047

Equity in earnings of
 unconsolidated ventures         924          155          829          350
Gain on sale of
 available-for-sale
 securities                      185          129          605        1,319
Gain on sale of loan               -            -        3,192           -
Loss on extinguishment
 of debt                           -            -            -       (2,138)
                         -----------  -----------  -----------  -----------
  Income from continuing
   operations                    977        1,562          758        3,578

Discontinued operations:
  Gain on sale of real
   estate assets                   -            4          792        1,346
                         -----------  -----------  -----------  -----------
    Discontinued
     operations                    -            4          792        1,346

                         -----------  -----------  -----------  -----------
Net income                       977        1,566        1,550        4,924

Plus: net loss
 attributable to non-
 controlling interests           749          297        2,880        1,450

                         -----------  -----------  -----------  -----------
Net income attributable
 to common shareholders  $     1,726  $     1,863  $     4,430  $     6,374
                         ===========  ===========  ===========  ===========


Basic and diltued per
 share amounts
 attributable to common
 shareholders:

Income from continuing
 operations              $      0.12  $      0.13  $      0.26  $      0.35
Discontinued operations            -            -         0.06         0.10
                         -----------  -----------  -----------  -----------
  Basic and diluted
   income per share      $      0.12  $      0.13  $      0.32  $      0.45
                         ===========  ===========  ===========  ===========

Amounts attributable to
 BRT Realty Trust:
    Income from
     continuing
     operations          $     1,726  $     1,859  $     3,638  $     5,028
    Discontinued
     operations                    -            4          792        1,346
                         -----------  -----------  -----------  -----------
      Net income         $     1,726  $     1,863  $     4,430  $     6,374
                         ===========  ===========  ===========  ===========

                         -----------  -----------  -----------  -----------
Funds from operations -
 Note 1                  $     2,331  $     2,060  $     5,957  $     5,820
                         ===========  ===========  ===========  ===========

                         -----------  -----------  -----------  -----------
Funds from operations
 per share - basic and
 diluted - Note 2        $      0.16  $      0.14  $      0.42  $      0.40
                         ===========  ===========  ===========  ===========

Weighted average number
 of common shares
 outstanding:
    Basic and diluted     14,055,654   14,070,377   14,035,972   14,041,569
                         ===========  ===========  ===========  ===========

Note 1:
Funds from operations is
 summarized in the
 following table:
Net income attributable
 to common shareholders  $     1,726  $     1,863  $     4,430  $     6,374
Add: depreciation of
 properties                      561          177        1,990          705
Add: our share of
 depreciation in
 unconsolidated joint
 ventures                         33           10          270           39
Add: amortization of
 capitalized leasing
 expenses                         11           14           59           48
Deduct: net gain on
 sales of real estate              0           (4)        (792)      (1,346)
                         -----------  -----------  -----------  -----------
Funds from operations    $     2,331  $     2,060  $     5,957  $     5,820
                         ===========  ===========  ===========  ===========

Note 2:
Funds from operations is
 summarized in the
 following table:
Net income attributable
 to common shareholders  $      0.12  $      0.13  $      0.32  $      0.45
Add: depreciation of
 properties                     0.04         0.01         0.14         0.05
Add: our share of
 depreciation in
 unconsolidated joint
 ventures                          -            -         0.02            -
Add: amortization of
 capitalized leasing
 expenses                          -            -            -            -
Deduct: net gain on
 sales of real estate              -            -        (0.06)       (0.10)
                         -----------  -----------  -----------  -----------
Funds from operations
 per common share basic
 and diluted             $      0.16  $      0.14  $      0.42  $      0.40
                         ===========  ===========  ===========  ===========







Contact:
David Kalish
(516) 466-3100
BRT REALTY TRUST
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
Telephone (516) 466-3100
Telecopier (516) 466-3132
www.BRTRealty.com : www.brtrealty.com/



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