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 1, 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))









Explanatory Note

We are filing this current report on Form 8-K (the “Current Report”) to include under (i) Item 9.01(a), the Audited Statement of Revenues and certain expenses of Madison at River Place, a 240 unit multi-family complex located at 4501 Sheraton Drive, Macon, Georgia (“River Place”), for the year ended December 31, 2014 and (ii) Item 9.01(b), our Unaudited Pro forma Financial Statements reflecting the acquisition of River Place. The property was purchased on February 1, 2016 for a purchase price of $14.5 million, including $11.2 million of mortgage debt obtained in connection with the acquisition.

The mortgage bears interest at a rate of 4.39%, matures in 2026, is interest only for the first 24 months and thereafter amortizes over a 30-year period. We contributed $3.3 million to this venture for our 80% interest.

Item 9.01
Financial Statements and Exhibits.

    
(a)
Financial Statement of Business Acquired-River Place
Page
 
(i) Independent Auditor’s Report
1
 
(ii) Statement of Revenues and Certain Expenses for the year ended
       December 31, 2014
(iii) Statement of Revenues and Certain Expenses for the nine months ended
       September 30, 2015 (Unaudited)
2
 
(iv) Notes to Statements of Revenues and Certain Expenses
3
(b)
Unaudited Pro Forma Consolidated Financial Statements
4
 
(i) Pro Forma Consolidated Balance Sheet at September 30, 2015
5
 
(ii) Pro Forma Consolidated Statements of Income:
 
 
       For the year ended September 30, 2015
6
 
       For the three months ended December 31, 2015
7
 
(iii) Notes to Pro Forma Consolidated Financial Statements
8
(c)
Exhibits
 
 
 
 
 
 
Exhibit No.
Title of Exhibit
 
 
23.1
Consent of BDO USA, LLP dated February 19, 2016
 


1



Independent Auditor’s 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 Madison at River Place located at 4501 Sheraton Drive, Macon, GA for the year ended December 31, 2014.

Management’s 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.

Auditor’s 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 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 Madison at River Place'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 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 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 Madison at River Place for the year ended December 31, 2014, 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 Madison at River Place's revenues and expenses.



/s/ BDO USA, LLP
New York, New York
February 19, 2016


2



River Place
Statements of Revenues and Certain Expenses
 
Nine Months Ended September 30, 2015
 
Year Ended December 31, 2014
 
(unaudited)
 
 
Revenues:
 
 
 
 
 
 
 
  Rental and other income
$
1,419,000

 
$
1,820,000

 
 
 
 
Certain Expenses:
 
 
 
  Real estate taxes
97,000

 
125,000

  Management fees
50,000

 
64,000

  Utilities
81,000

 
109,000

  Payroll
260,000

 
333,000

  Insurance
47,000

 
60,000

  Repairs and maintenance
127,000

 
165,000

Total certain expenses
662,000

 
856,000

 
 
 
 
Revenues in excess of certain expenses
$
757,000

 
$
964,000



See Independent Auditor’s report and accompanying notes to the Statements of Revenues and Certain Expenses.


3



River Place
Notes to Statements of Revenues and Certain Expenses

1. Organization

The property, located at 4501 Sheraton Drive, Macon, GA (“River Place” or the "Property"), is a multi-family complex containing 240 units.

BRT Realty Trust (“BRT” or the “Trust”) is a business trust organized in Massachusetts. BRT owns, operates and develops multi‑family properties, commercial and mixed use real estate assets.
On February 1, 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 a purchase price of $14.5 million, including $11.2 million of mortgage debt obtained in connection with the acquisition.

2. Basis of Presentation and Significant Accounting Policies

The accompanying statements 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 Trust’s 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.

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.

Income Taxes

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

3. Subsequent Events

Subsequent events were evaluated from December 31, 2014 through February 19, 2016, the date on which the statements of revenues and certain expenses were issued.


4



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

On February 1, 2016, TRB River Place LLC, an indirect wholly owned subsidiary of BRT Realty Trust ("BRT" or the “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 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 acquisitions had been completed on October 1, 2014.The pro forma unaudited consolidated statement of income for the three months ended ended December 31, 2015, is presented as if the 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 acquisition 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.


5



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 Acquisition
 
Purchase of River Place
 
The Trust
Pro Forma
as Adjusted
ASSETS
 
 
 
 
 
 
 
 
Real estate properties, net of accumulated depreciation of $46,301
 
$
769,320

 
$
40,250

 
14,525

 
$
824,095

 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
21,379

 
(7,942
)
 
(2,845
)
 
10,592

Restricted cash - Newark
 
15,229

 

 

 
15,229

Restricted cash - multi-family
 
5,919

 

 

 
5,919

Deferred costs, net
 
15,581

 
305

 
177

 
16,063

Deposits and escrows
 
14,484

 
568

 
51

 
15,103

Other assets
 
14,701

 
61

 
91

 
14,853

Real estate property held-for-sale
 
23,869

 

 

 
23,869

     Total Assets
 
$
880,482

 
$
33,242

 
$
11,999

 
$
925,723

 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
  Mortgages payable
 
$
596,204

 
$
30,750

 
$
11,200

 
$
638,154

  Junior subordinated notes
 
37,400

 

 

 
37,400

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

 

 

 
14,001

  Accounts payable and accrued liabilities
 
21,019

 
46

 
19

 
21,084

  Deferred income
 
33,736

 

 

 
33,736

  Mortgage payable held-for-sale
 
19,248

 

 

 
19,248

    Total Liabilities
 
721,608

 
30,796

 
11,219

 
763,623

 
 
 
 
 
 
 
 
 
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
)
 

 

 
(81,448
)
     Total BRT Realty Trust shareholders' equity
 
120,871

 

 

 
120,871

Non-controlling interests
 
38,003

 
2,446

 
780

 
41,229

     Total Equity
 
158,874

 
2,446

 
780

 
162,100

Total Liabilities and Equity
 
$
880,482

 
$
33,242

 
$
11,999

 
$
925,723


See accompanying notes to the unaudited pro forma consolidated financial statements

6




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 Acquisition
 
Purchase of River Place
 
The Trust
Pro Forma
as Adjusted
Revenues:
 
 
 
 
 
 
 
 
   Rental and other revenue from real estate properties
 
$
81,358

 
$
4,059

 
$
1,794

 
$
87,211

   Other income
 
1,139

 

 

 
1,139

   Total revenues
 
82,497

 
4,059

 
1,794

 
88,350

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

 
1,937

 
839

 
45,995

   Interest expense
 
24,177

 
1,434

(a)
523

(a)
26,134

   Advisor's fees, related party
 
2,448

 

 

 
2,448

   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

 
1,208

(b)
436

(b)
22,339

   Total expenses
 
99,107

 
4,579

 
1,798

 
105,484

Total revenues less total expenses
 
(16,610
)
 
(520
)
 
(4
)
 
(17,134
)
Gain on sale of real estate assets
 
15,005

 

 

 
15,005

Net loss
 
(1,605
)
 
(520
)
 
(4
)
 
(2,129
)
Plus: net loss (income) attributable to non-controlling interests
 
(783
)
 
104

 
1

 
(678
)
Net loss attributable to common shareholders
 
$
(2,388
)
 
$
(416
)
 
$
(3
)
 
$
(2,807
)
 
 
 
 
 
 
 
 
 
Basic and diluted per share amounts attributable to
 
 
 
 
 
 
 
 
   common shareholders:
 
 
 
 
 
 
 
 
   Basic and diluted loss per share
 
$
(0.17
)
 
$
(0.03
)
 
$

 
$
(0.20
)
 
 
 
 
 
 
 
 
 
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.











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 Acquisition
 
Purchase of River Place
 
The Trust
Pro Forma
as Adjusted
Revenues:
 
 
 
 
 
 
 
 
   Rental and other revenue from real estate properties
 
$
22,935

 
$
1,015

 
$
449

 
$
24,399

   Other income
 
277

 

 
 
 
277

   Total revenues
 
23,212

 
1,015

 
449

 
24,676

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

 
484

 
210

 
12,200

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

 
359

(a)
129

(a)
7,416

   Advisor's fees, related party
 
693

 

 

 
693

   Property acquisition costs
 
57

 

 

 
57

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

 

 

 
1,749

   Depreciation
 
5,661

 
302

(b)
109

(b)
6,072

   Total expenses
 
26,594

 
1,145

 
448

 
28,187

Total revenues less total expenses
 
(3,382
)
 
(130
)
 
1

 
(3,511
)
Gain on sale of real estate assets
 
609

 

 

 
609

Net loss
 
(2,773
)
 
(130
)
 
1

 
(2,902
)
Plus: net loss attributable to non-controlling interests
 
739

 
26

 

 
765

Net loss attributable to common shareholders
 
$
(2,034
)
 
$
(104
)
 
$
1

 
$
(2,137
)
 
 
 
 
 
 
 
 
 
Basic and diluted per share amounts attributable to
 
 
 
 
 
 
 
 
   common shareholders:
 
 
 
 
 
 
 
 
   Basic and diluted loss per share
 
$
(0.14
)
 
$
(0.01
)
 

 
$
(0.15
)
 
 
 
 
 
 
 
 
 
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 and statements of income for River Place and other previously reported acquisitions for the year ended September 30, 2015.

a)
To reflect the interest expense resulting from the mortgages securing Cinco Ranch and River Place which expense is calculated an interest rate of 4.44% and 4.39%, respectively, and includes amortization of loan related fees.

b)
To reflect depreciation expense on the estimated useful life of the properties of 30 years.




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
 
 
 
 
 
By: /s/ George Zweier
 
 
George Zweier
February 19, 2016
 
Vice President and
Great Neck, NY
 
Chief Financial Officer    
 
 
 

    

10