8-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT


Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): February 23, 2016

BRT REALTY TRUST
(Exact name of Registrant as specified in charter)

Massachusetts
 
001-07172
 
13-2755856
(State or other jurisdiction of incorporation)
 
(Commission file No.)
 
(IRS Employer I.D. No.)


60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code 516-466-3100

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))










Item 1.01
Entry into a Material Definitive Agreement.

    
On February 23, 2016, we sold, through subsidiaries which owned such interests, our equity interests in RBH - TRB Newark Holdings, LLC, which we refer to as the Newark Joint Venture, to RBH Partners III, LLC, for $16.9 million. The buyer is an affiliate of our former partners in the Newark Joint Venture. We anticipate recognizing a gain of approximately $15 million in the quarter ending March 31, 2016 in connection with this sale. (This gain will be recognized for tax and financial statement reporting purposes).
In addition, we (i) may be paid up to an additional $900,000 by the newly formed parent of the Newark Joint Venture (“Holdco”) upon the achievement of specified investment returns, development of certain properties, realization of specified cost savings and any one or more of the foregoing and (ii) have been granted a nominal profit participation interest in Holdco. We do not anticipate generating significant income, if any, from these interests.
Other than our subsidiary’s agreement to provide indemnity with respect to (i) certain carve-out guaranty and other indemnity obligations with respect to a bond in principal amount of $5.3 million and (ii) up to $2.8 million of other obligations related to the venture (collectively, the “Indemnity Obligations”), neither we nor our subsidiaries have any guaranty, indemnity or similar obligations with respect to the Newark Joint Venture. Holdco and the Newark Joint Venture have agreed to indemnify us for certain losses we may sustain as a result of the Indemnity Obligations.
As a result of the sale of our equity interest in the Newark Joint Venture, the mortgage debt in principal amount of $19.5 million owed to us by this venture (the “NJV Debt”), which had been eliminated in consolidation in our consolidated balance sheet at December 31, 2015, will be reflected as a mortgage receivable in our consolidated balance sheet at March 31, 2016. The NJV Debt matures in June 2017 and bears an annual interest rate of 11%, of which 6% is paid on a monthly basis and 5% accrues and is to be paid in June 2016 (i.e., $2.2 million) and at maturity. There are ongoing discussions with an institutional lender with respect to the possible repayment of approximately $5.9 million of the NJV Debt by April 2016 and the related release of certain properties from the mortgages securing such debt.We have agreed to release certain properties upon the satisfaction of specified conditions, including the payment of $5.9 million. We can provide no assurance that such transaction will be completed.

BRT intends to use $8 million of the proceeds from the sale of our equity interest to pay off an equivalent amount of debt owed to Gould Investors L.P., a related party.


Item 1.02.
Termination of a Material Definitive Agreement.


The information set forth under Item 1.01 is incorporated herein by reference to the extent responsive to this Item 1.02.

    
Item 2.01
Completion of Acquisition or Disposition of Assets.

The information set forth under Item 1.01 is incorporated herein by reference to the extent responsive to this Item 2.01.


1

Item 9.01
Financial Statements and Exhibits.

    
 
 
Page
(a)
Unaudited Pro Forma Consolidated Financial Statements
3
 
(i) Pro Forma Consolidated Balance Sheet at December 31, 2015
4
 
(ii) Pro Forma Consolidated Statements of Income:
 
 
       For the year ended September 30, 2015
5
 
       For the year ended September 30, 2014
6
 
       For the year ended September 30, 2013
7
 
       For the three months ended December 31, 2015
8
 
(iii) Notes to Pro Forma Consolidated Financial Statements
9
 
 
 
(c)
Exhibit
 
 
 
 
 
 
Exhibit No.
Description
 
 
99.1
Press release dated February 24, 2016.
 


2


BRT REALTY TRUST AND SUBSIDIARIES
Pro Forma Consolidated Financial Statements
(Unaudited)

On February 23, 2016, TRB Newark Assemblage, LLC and TRB Newark TRS, LLC, wholly owned subsidiaries of the Trust ("BRT or the "Trust") sold its equity interest in the Newark Joint Venture for a sale price of $16.9 million.

On February 1, 2016, TRB River Place LLC, an indirect wholly owned subsidiary of BRT Realty Trust and an unaffiliated joint venture partner, acquired a 240 unit multi-family garden apartment complex located at 4501 Sheraton Drive, Macon, GA (“River Place”) for a purchase price of $14.5 million, including $11.2 million of mortgage debt obtained in connection with the acquisition.

On January 22, 2016, TRB Cinco Ranch LLC, an indirect wholly owned subsidiary of the Trust and an unaffiliated joint venture partner acquired a multi-family garden apartment complex located at 3306 S. Fry Road, Katy, TX ("Retreat at Cinco Ranch") containing 268 units for a purchase price of $40.3 million, including $30.8 million of mortgage debt.

The pro forma unaudited consolidated balance sheet is presented as if the disposition and acquisitions had been completed on December 31, 2015. The pro forma unaudited consolidated statement of income for the year ended September 30, 2015 is presented as if the disposition and acquisitions had been completed on October 1, 2014.The pro forma unaudited consolidated statement of income for the three months ended December 31, 2015, is presented as if the disposition and acquisitions had been completed on October 1, 2015.

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, 2015.

The pro forma unaudited 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 disposition and acquisitions on October 1, 2014 and October 1, 2015, 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.


3


BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA - UNAUDITED CONSOLIDATED BALANCE SHEET
At December 31, 2015
(Amounts in thousands, except per share data)

 
 
The Trust Historical
 
Previously Reported Acquisitions
 
Disposition of Newark Joint Venture
 
The Trust
Pro Forma
as Adjusted
ASSETS
 
 
 
 
 
 
 
 
Real estate properties, net of accumulated depreciation of $46,301
 
$
769,320

 
$
54,775

 
$
(147,688
)
 
$
676,407

 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
21,379

 
(10,787
)
 
14,036

 
24,628

Restricted cash - Newark
 
15,229

 
—

 
(15,229
)
 
—

Restricted cash - multi-family
 
5,919

 
—

 
—

 
5,919

Real estate loans
 
—

 
—

 
19,500

(a)
19,500

Deferred costs, net
 
15,581

 
482

 
(9,808
)
 
6,255

Deposits and escrows
 
14,484

 
619

 
(63
)
 
15,040

Other assets
 
14,701

 
152

 
(8,756
)
 
6,097

Real estate property held-for-sale
 
23,869

 
—

 
—

 
23,869

     Total Assets
 
$
880,482

 
$
45,241

 
$
(148,008
)
 
$
777,715

 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
  Mortgages payable
 
$
596,204

 
$
41,950

 
$
(113,585
)
 
$
524,569

  Junior subordinated notes
 
37,400

 
—

 
—

 
37,400

  Other borrowings - including $8,000 to related party
 
14,001

 
—

 
(6,001
)
 
8,000

  Accounts payable and accrued liabilities
 
21,019

 
65

 
(7,196
)
 
13,888

  Deferred income
 
33,736

 
—

 
(33,736
)
 
—

  Mortgage payable held-for-sale
 
19,248

 
—

 
—

 
19,248

    Total Liabilities
 
721,608

 
42,015

 
(160,518
)
 
603,105

 
 
 
 
 
 
 
 
 
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, 13,428 issued
 
40,285

 
—

 
—

 
40,285

   Additional paid-in capital
 
162,072

 
—

 
—

 
162,072

   Accumulated other comprehensive loss
 
(38
)
 
—

 
—

 
(38
)
   Accumulated deficit
 
(81,448
)
 
—

 
15,000

 
(66,448
)
     Total BRT Realty Trust shareholders' equity
 
120,871

 
—

 
15,000

 
135,871

Non-controlling interests
 
38,003

 
3,226

 
(2,490
)
 
38,739

     Total Equity
 
158,874

 
3,226

 
12,510

 
174,610

Total Liabilities and Equity
 
$
880,482

 
$
45,241

 
$
(148,008
)
 
$
777,715


See accompanying notes to the unaudited pro forma consolidated financial statements

4



BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA - UNAUDITED CONSOLIDATED STATEMENT OF INCOME
For The Year Ended September 30, 2015
(Dollars in thousands, except share data)
 
 
The Trust Historical
 
Previously Reported Acquisitions
 
Disposition of Newark Joint Venture
 
The Trust
Pro Forma
as Adjusted
Revenues:
 
 
 
 
 
 
 
 
   Rental and other revenue from real estate properties
 
$
81,358

 
$
5,853

 
$
(4,335
)
 
$
82,876

   Other income
 
1,139

 
—

 
635

(a)
1,774

   Total revenues
 
82,497

 
5,853

 
(3,700
)
 
84,650

Expenses:
 
 
 
 
 
 
 
 
   Real estate operating expenses - including $1,233 to related parties
 
43,219

 
2,776

 
(4,610
)
 
41,385

   Interest expense
 
24,177

 
1,957

 
(4,880
)
 
21,254

   Advisor's fees, related party
 
2,448

 
—

 
(296
)
 
2,152

   Property acquisition costs - including $1,293 to related parties
 
1,885

 
—

 
—

 
1,885

   General and administrative - including $171 to related party
 
6,683

 
—

 
—

 
6,683

   Depreciation
 
20,695

 
1,644

 
(2,241
)
 
20,098

   Total expenses
 
99,107

 
6,377

 
(12,027
)
 
93,457

Total revenues less total expenses
 
(16,610
)
 
(524
)
 
8,327

 
(8,807
)
Gain on sale of real estate
 
15,005

 
—

 
—

 
15,005

Net (loss) income
 
(1,605
)
 
(524
)
 
8,327

 
6,198

Plus: net loss (income) attributable to non-controlling interests
 
(783
)
 
105

 
(4,186
)
 
(4,864
)
Net (loss) income attributable to common shareholders
 
$
(2,388
)
 
$
(419
)
 
$
4,141

 
$
1,334

 
 
 
 
 
 
 
 
 
Basic and diluted per share amounts attributable to
 
 
 
 
 
 
 
 
   common shareholders:
 
 
 
 
 
 
 
 
   Basic and diluted (loss) income per share
 
$
(0.17
)
 
$
(0.03
)
 
$
0.29

 
$
0.09

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic and diluted
 
14,133,352

 
14,133,352

 
14,133,352

 
14,133,352


See accompanying notes to the pro forma unaudited consolidated financial statements.











5


BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA - UNAUDITED CONSOLIDATED STATEMENT OF INCOME
For The Year Ended September 30, 2014
(Dollars in thousands, except share data)

 
 
The Trust Historical
 
Disposition of Newark Joint Venture
 
The Trust
Pro Forma
as Adjusted
Revenues:
 
 
 
 
 
 
   Rental and other revenue from real estate properties
 
$
65,254

 
$
(3,529
)
 
$
61,725

   Other income
 
1,160

 
5,695

(a)
6,855

   Total revenues
 
66,414

 
2,166

 
68,580

Expenses:
 
 
 
 
 
 
   Real estate operating expenses - including $1,120 to related parties
 
37,067

 
(4,083
)
 
32,984

   Interest expense
 
20,670

 
(4,235
)
 
16,435

   Advisor's fees, related party
 
1,801

 
(234
)
 
1,567

   Property acquisition costs - including $1,677 to related parties
 
2,542

 
—

 
2,542

   General and administrative - including $286 to related party
 
6,324

 
—

 
6,324

   Depreciation
 
15,576

 
(1,631
)
 
13,945

   Total expenses
 
83,980

 
(10,183
)
 
73,797

   (Loss) income from continuing operations
 
(17,566
)
 
12,349

 
(5,217
)
Discontinued operations:
 
 
 
 
 

  Income from discontinued operations - including $214 to related party
 
1,400

 
—

 
1,400

Net (loss) income
 
(16,166
)
 
12,349

 
(3,817
)
Plus: net loss (income) attributable to non-controlling interests
 
6,712

 
(6,045
)
 
667

Net loss (income) attributable to common shareholders
 
$
(9,454
)
 
$
6,304

 
$
(3,150
)
 
 
 
 
 
 
 
Basic and diluted per share amounts attributable to
 
 
 
 
 
 
   common shareholders:
 
 
 
 
 
 
(Loss) income from continuing operations
 
$
(0.76
)
 
$
0.44

 
$
(0.32
)
Income from discontinued operations
 
0.10

 
—

 
0.10

   Basic and diluted loss earnings per share
 
$
(0.66
)
 
$
0.44

 
$
(0.22
)
 
 
 
 
 
 
 
Amounts attributable to BRT Realty Trust:
 
 
 
 
 
 
(Loss) income from continuing operations
 
$
(10,854
)
 
$
6,304

 
$
(4,550
)
Income from discontinued operations
 
1,400

 
—

 
1,400

Net (loss) income attributable to common shareholders
 
$
(9,454
)
 
$
6,304

 
$
(3,150
)
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
Basic and diluted
 
14,265,589

 
14,265,589

 
14,265,589


See accompanying notes to the pro forma unaudited consolidated financial statements.


6


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
 
Disposition of Newark Joint Venture
 
The Trust
Pro Forma
as Adjusted
Revenues:
 
 
 
 
 
 
   Rental and other revenue from real estate properties
 
$
30,592

 
$
(1,947
)
 
$
28,645

   Other income
 
1,411

 
409

(a)
1,820

   Total revenues
 
32,003

 
(1,538
)
 
30,465

Expenses:
 
 
 
 
 
 
   Real estate operating expenses - including $426 to related parties
 
16,409

 
(2,180
)
 
14,229

   Interest expense
 
11,978

 
(3,591
)
 
8,387

   Advisor's fees, related party
 
971

 
(180
)
 
791

   Property acquisition costs - including $1,382 to related parties
 
2,637

 
—

 
2,637

   General and administrative - including $442 to related party
 
5,862

 
—

 
5,862

   Depreciation
 
7,094

 
(850
)
 
6,244

   Total expenses
 
44,951

 
(6,801
)
 
38,150

Total revenue less total expense
 
(12,948
)
 
5,263

 
(7,685
)
  Gain on sale of available-for-sale securities
 
530

 
—

 
530

  Gain on sale of partnership interest
 
5,481

 
—

 
5,481

(Loss) income from continuing operations
 
(6,937
)
 
5,263

 
(1,674
)
Discontinued operations:
 
 
 
 
 
 
   Discontinued operations - including $831 to related party
 
8,257

 
—

 
8,257

  Gain on sale of real estate assets
 
769

 
—

 
769

   Income from discontinued operations
 
9,026

 
—

 
9,026

Net income
 
2,089

 
5,263

 
7,352

Plus: net loss (income) attributable to non-controlling interests
 
2,924

 
(2,894
)
 
30

Net income attributable to common shareholders
 
$
5,013

 
$
2,369

 
$
7,382

 
 
 
 
 
 
 
Basic and diluted per share amounts attributable to
 
 
 
 
 
 
   common shareholders:
 
 
 
 
 
 
   (Loss) income from continuing operations
 
$
(0.28
)
 
$
0.17

 
$
(0.11
)
   Income from discontinued operations
 
0.63

 
—

 
0.63

   Basic and diluted earnings (loss) earnings per share
 
$
0.35

 
$
0.17

 
$
0.52

 
 
 
 
 
 
 
Amounts attributable to BRT Realty Trust:
 
 
 
 
 
 
   (Loss) income from continuing operations
 
$
(3,244
)
 
$
2,369

 
$
(875
)
   Income from discontinued operations
 
8,257

 
—

 
8,257

Net income attributable to common shareholders
 
$
5,013

 
$
2,369

 
$
7,382

 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
Basic and diluted
 
14,137,091

 
14,137,091

 
14,137,091

See accompanying notes to the pro forma unaudited consolidated financial statements.


7


BRT REALTY TRUST AND SUBSIDIARIES
PRO FORMA - UNAUDITED CONSOLIDATED STATEMENT OF INCOME
For The Three Months Ended December 31, 2015
(Dollars in thousands, except share data)

 
 
The Trust Historical
 
Previously Reported Acquisitions
 
Disposition of Newark Joint Venture
 
The Trust
Pro Forma
as Adjusted
Revenues:
 
 
 
 
 
 
 
 
   Rental and other revenue from real estate properties
 
$
22,935

 
$
1,464

 
$
(1,537
)
 
$
22,862

   Other income
 
277

 
—

 
52

(a)
329

   Total revenues
 
23,212

 
1,464

 
(1,485
)
 
23,191

Expenses:
 
 
 
 
 
 
 
 
   Real estate operating expenses - including $433 to related
    parties
 
11,506

 
694

 
(1,333
)
 
10,867

   Interest expense - including $24 to related party
 
6,928

 
488

 
(1,397
)
 
6,019

   Advisor's fees, related party
 
693

 
—

 
(85
)
 
608

   Property acquisition costs
 
57

 
—

 
—

 
57

   General and administrative-including $26 to related party
 
1,749

 
—

 
—

 
1,749

   Depreciation
 
5,661

 
411

 
(677
)
 
5,395

   Total expenses
 
26,594

 
1,593

 
(3,492
)
 
24,695

Total revenues less total expenses
 
(3,382
)
 
(129
)
 
2,007

 
(1,504
)
Gain on sale of real estate assets
 
609

 
—

 
—

 
609

Net (loss) income
 
(2,773
)
 
(129
)
 
2,007

 
(895
)
Plus: net loss (income) attributable to non-controlling interests
 
739

 
26

 
(959
)
 
(194
)
Net (loss) income attributable to common shareholders
 
$
(2,034
)
 
$
(103
)
 
$
1,048

 
$
(1,089
)
 
 
 
 
 
 
 
 
 
Basic and diluted per share amounts attributable to
 
 
 
 
 
 
 
 
   common shareholders:
 
 
 
 
 
 
 
 
   Basic and diluted (loss) earnings per share
 
$
(0.14
)
 
$
(0.01
)
 
$
0.07

 
$
(0.08
)
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic and diluted
 
14,101,056

 
14,101,056

 
14,101,056

 
14,101,056



8


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 Trust’s 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 as of December 31, 2015 and statements of income for Newark JV, and where applicable, other previously reported acquisitions for the year ended September 30, 2015, 2014, 2013 and for the three month period ended December 31, 2015.

a)
The adjustment reflects the addition of $322,000, $1.7 million, $6.8 million and $1.5 million of interest income on the NJV Debt (as defined) for the three months ended December 31, 2015, and the years ended September 30, 2015, 2014 and 2013, respectively, and the deduction of other income of $270,000 for the quarter ended December 31, 2015, and $1.1 million for each of the three years ended September 30, 2015, 2014 and 2015. The NJV Debt refers to the mortgage debt in principal amount of $19.5 million owed to us by the Newark Joint Venture which had been eliminated in our consolidated financial statements and the related interest income. The loan matures in June 2017 and bears an annual interest rate of 11%, of which 6% is paid on a monthly basis and 5% accrues and is to be paid in June 2016.



9


SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
BRT REALTY TRUST
 
 
 
February 24, 2016
 
By: /s/ David W. Kalish
Great Neck, NY
 
David W. Kalish
 
 
Senior Vice President - Finance
 
 
 
 
 
 

    

10