UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended December 31, 2006
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission File Number 001-07172
BRT REALTY TRUST
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(Exact name of Registrant as specified in its charter)
Massachusetts 13-2755856
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 Cutter Mill Road, Great Neck, NY 11021
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(Address of principal executive offices) (Zip Code)
516-466-3100
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large Accelerated Filer Accelerated Filer X Non-Accelerated Filer
--- --- ---
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X
---
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
11,019,376 Shares of Beneficial Interest,
$3 par value, outstanding on February 5, 2007
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
ASSETS
December 31, September 30,
2006 2006
---- ----
(Unaudited) (Audited)
Real estate loans
Earning interest, including $-0- and $550
from related parties $280,792 $283,282
Not earning interest 11,596 1,346
-------- --------
292,388 284,628
Allowance for possible losses (669) (669)
-------- --------
291,719 283,959
Real estate properties net of accumulated
depreciation of $753 and $725 3,314 3,342
Investment in unconsolidated ventures at equity 4,425 9,608
Cash and cash equivalents 7,587 8,393
Available-for-sale securities at market 62,478 53,252
Real estate property held for sale - 2,833
Other assets 10,648 9,655
-------- --------
Total Assets $380,171 $371,042
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowed funds $ 60,000 $141,464
Junior subordinated notes 56,702 56,702
Mortgage payable 2,452 2,471
Accounts payable and accrued liabilities including
deposits payable of $4,395 and $5,061 10,625 11,479
Dividends payable 4,674 4,491
-------- --------
Total liabilities 134,453 216,607
-------- --------
Commitments and contingencies - -
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, issued
12,037 and 9,065 shares 36,111 27,194
Additional paid-in capital 155,021 85,498
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 47,547 38,319
Retained earnings 17,125 13,510
-------- --------
255,804 164,521
Cost of 1,171 treasury shares
of beneficial interest in both periods (10,086) (10,086)
-------- --------
Total shareholders' equity 245,718 154,435
-------- --------
Total Liabilities and Shareholders' Equity $380,171 $371,042
======== ========
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands except per share amounts)
Three Months Ended
------------------
December 31,
------------
2006 2005
---- ----
Revenues:
Interest and fees on real estate loans, including
$15 and $59 from related parties $11,587 $ 6,424
Operating income from real estate properties 365 293
Other, primarily investment income 793 683
------- -------
Total Revenues 12,745 7,400
Expenses:
Interest - borrowed funds 3,855 1,770
Advisor's fees, related party 824 536
General and administrative - including $258
and $232 to related parties 1,560 1,605
Other taxes 228 114
Operating expenses relating to real estate properties
including interest on mortgage payable of $39 and $40 201 207
Amortization and depreciation 33 37
-------- -------
Total Expenses 6,701 4,269
-------- -------
Income before equity in earnings (loss) of unconsolidated
joint ventures, minority interest and discontinued operations 6,044 3,131
Equity in earnings (loss) of unconsolidated joint ventures 82 (877)
Gain on disposition of real estate related to unconsolidated
venture 1,819 2,531
-------- -------
Income before minority interest and discontinued operations 7,945 4,785
Minority interest (14) (8)
-------- -------
Income before discontinued operations 7,931 4,777
Discontinued Operations
Income (loss) from operations 6 (62)
Gain on sale of real estate assets 352 -
------- -------
Income (loss) from discontinued operations 358 (62)
------- -------
Net income $ 8,289 $ 4,715
======= =======
Income per share of beneficial interest:
Income from continuing operations $ .91 $ .61
Income (loss) from discontinued operations .04 (.01)
------- -------
Basic earnings per share $ .95 $ .60
======= =======
Income from continuing operations $ .91 $ .61
Income (loss) from discontinued operations .04 (.01)
------- -------
Diluted earnings per share $ .95 $ .60
======= =======
Cash distributions per common share $ .58 $ .52
======= =======
Weighted average number of common shares outstanding:
Basic 8,680,671 7,829,991
========= =========
Diluted 8,698,915 7,877,349
========= =========
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Amounts in Thousands except for Per Share Data)
Accumulated
Shares of Additional Other Com-
Beneficial Paid-In prehensive Retained Treasury
Interest Capital Income Earnings Shares Total
-------- ------- ------ -------- ------ -----
Balances, September 30, 2006 $27,194 $85,498 $38,319 $ 13,510 $(10,086) $154,435
Shares issued - purchase plan (39,698 shares) 119 1,016 - - - 1,135
Shares issued - underwritten
public offering (2,932,500 shares) 8,798 68,367 - - - 77,165
Distributions - common share
($.58 per share) - - - (4,674) - (4,674)
Compensation expense -
restricted stock - 140 - - - 140
Net income - - - 8,289 - 8,289
Other comprehensive
Income - net unrealized gain
on available-for-sale securities - - 9,228 - - 9,228
-----
Comprehensive income - - - - - 17,517
-----------------------------------------------------------------------
Balances, December 31, 2006 $36,111 $155,021 $47,547 $17,125 $(10,086) $245,718
=======================================================================
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Thousands)
Three Months Ended
December 31,
2006 2005
---- ----
Cash flows from operating activities:
Net income $ 8,289 $ 4,715
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation 253 95
Amortization of restricted stock and stock options 140 111
Net gain on sale of real estate assets from discontinued operations (352) -
Equity in (earnings) loss of unconsolidated joint ventures (82) 877
Gain on disposition of real estate related to unconsolidated
real estate venture (1,819) (2,531)
Distribution of earnings of unconsolidated joint ventures 4,482 47
Increase in straight line rent (60) (19)
Increases and decreases from changes in other assets and liabilities
(Increase) Decrease in interest and dividends receivable (494) 126
Increase in prepaid expenses (124) (4)
Decrease in accounts payable and accrued liabilities (869) (75)
Increase in deferred costs (301) (5)
Other (152) 12
-------- --------
Net cash provided by operating activities 8,911 3,349
-------- --------
Cash flows from investing activities:
Collections from real estate loans 18,301 57,933
Sale or additions of participation interests 36 7,825
Additions to real estate loans (23,537) (52,272)
Net costs capitalized to real estate assets - (167)
Proceeds from sale of real estate owned 625 -
Contributions to unconsolidated joint ventures (2,080) (20)
Distributions of capital of unconsolidated joint ventures 4,612 863
--------- --------
Net cash (used in) provided by investing activities (2,043) 14,162
--------- --------
Cash flows from financing activities:
Proceeds from borrowed funds 22,000 20,500
Repayment of borrowed funds (103,464) (34,545)
Mortgage amortization (19) (18)
Cash distribution - common shares (4,491) (3,903)
Exercise of stock options - 355
Issuance of shares - stock purchase plan 1,135 528
Net proceeds from secondary offering 77,165 -
-------- --------
Net cash (used in) financing activities (7,674) (17,083)
--------- --------
Net (decrease) increase in cash and cash equivalents (806) 428
Cash and cash equivalents at beginning of period 8,393 5,709
-------- --------
Cash and cash equivalents at end of period $ 7,587 $ 6,137
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 3,959 $ 1,780
======== ========
Non cash investing and financing activity:
Seller financing provided for sale of real estate $ 2,560 $ -
======== ========
Reclassification of real asset to real estate property held for sale - 2,787
======== ========
Accrued distributions 4,674 4,093
======== ========
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Organization and Background
BRT Realty Trust is a real estate investment trust organized as a business trust
in 1972 under the laws of the Commonwealth of Massachusetts. Our principal
business activity is to generate income by originating and holding for
investment, for our own account, senior and junior real estate mortgage loans
secured by real property. The Trust may also participate as both an equity
investor in, and as a mortgage lender to, joint ventures which acquire income
producing properties.
Note 2 - Basis of Preparation
The accompanying interim unaudited consolidated financial statements as of
December 31, 2006 and for the three months ended December 31, 2006 and December
31, 2005 reflect all normal recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the results for such interim
periods. The results of operations for the three months ended December 31, 2006
are not necessarily indicative of the results for the full year.
Certain items on the consolidated financial statements for the preceding period
have been reclassified to conform with the current consolidated financial
statements.
The consolidated financial statements include the accounts and operations of BRT
Realty Trust, its wholly owned subsidiaries and its majority-owned or controlled
real estate entities. With respect to its unconsolidated joint ventures, as the
Company (i) is primarily the managing member but does not exercise substantial
operating control over these entities pursuant to EITF 04-05, and (ii) such
entities are not variable-interest entities pursuant to FASB Interpretation No.
46, "Consolidation of Variable Interest Entities", it has determined that such
joint ventures should be accounted for under the equity method of accounting for
financial statement purposes. Material intercompany items and transactions have
been eliminated. BRT Realty Trust and its subsidiaries are hereinafter referred
to as "BRT" or the "Trust."
These statements should be read in conjunction with the consolidated financial
statements and related notes which are included in BRT's Annual Report on Form
10-K for the year ended September 30, 2006.
The preparation of the financial statements 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 financial
statements. Actual results could differ from those estimates.
Note 3 - Shareholders' Equity
Underwritten Public Offering
On December 5, 2006, the Trust entered into an Underwriting Agreement with
Friedman, Billings, Ramsey & Co., Inc. (the "Agreement"), as representative of
the several underwriters named in the Agreement, in connection with the public
offering of 2,800,000 of its shares of beneficial interest, par value $3.00 per
share. The Agreement granted the underwriters an option until December 14, 2006
to purchase up to an additional 420,000 shares from the Trust to cover
over-allotments, if any. The offering closed on December 11, 2006. On December
13, 2006, the underwriters exercised their over allotment option to the extent
of 132,500 shares. The net proceeds to the Trust, after deducting the
underwriting discount and offering expenses payable by the Trust, were $77.2
million which were used to pay down our revolving credit facility by $58 million
and to pay off our outstanding balance of $19 million on the margin line.
Distributions
During the quarter ended December 31, 2006, BRT declared a cash distribution to
shareholders of $.58 per share. This distribution totaled $4,674,000 and was
paid January 3, 2007 to shareholders of record on December 1, 2006.
Note 3 - Shareholders' Equity (Continued)
Stock Options
As of December 31, 2006, there were 26,250 stock options outstanding. All of
these options are exercisable. During the quarter ended December 31, 2006 no
options were exercised.
Restricted Shares
As of December 31, 2006, 130,510 restricted shares were issued under the Trust's
2003 incentive plan, of which 5,500 are fully vested. The total number of shares
allocated to this plan is 350,000. The shares issued vest five years from the
date of issuance and under certain circumstances may vest earlier. For
accounting purposes, the restricted stock is not included in the outstanding
shares shown on the balance sheet until they vest, but is included in the
earnings per share computation. In 2006, the Trust adopted the provisions of
Financial Accounting Standards Board ("FASB") No. 123 (R), "Share-Based Payment
(revised 2004)". These provisions require that the estimated fair value of
restricted stock at the date of grant be amortized ratably into expense over the
appropriate vesting period. For the three months ended December 31, 2006 and
December 31, 2005, the Trust recorded $140,000 and $94,000 of compensation
expense, respectively, as a result of the outstanding restricted shares. At
December 31, 2006, $1,682,000 has been deferred as unearned compensation and
will be charged to expense over the remaining weighted average vesting period of
approximately 2.9 years.
Per Share Data
Basic earnings per share were determined by dividing net income for the period
by the weighted average number of common shares outstanding during each period.
Diluted earnings per share reflect the potential dilution that could occur if
securities or other contracts to issue common shares were exercised or converted
into common shares or resulted in the issuance of common shares that then shared
in the earnings of the Trust.
The following table sets forth the computation of basic and diluted shares:
Three Months Ended
December 31,
2006 2005
---- ----
Basic 8,680,671 7,829,991
Effect of dilutive securities 18,244 47,358
--------- ---------
Diluted 8,698,915 7,877,349
========= =========
Note 4 - Real Estate Loans
Management evaluates the adequacy of the allowance for possible losses
periodically and believes that the allowance for losses is adequate to absorb
any probable losses on the existing loan portfolio.
At December 31, 2006, there were two loans outstanding to two separate unrelated
borrowers which were non- earning with an aggregate outstanding principal
balance of $11,596,000 at December 31, 2006 and represented 3.98% of total net
loans and 3.05% of total assets.
Note 4 - Real Estate Loans (Continued)
The first loan with an outstanding balance of $1,346,000 is deemed impaired as
it is probable that the Trust will not be able to collect all amounts due
according to the contractual terms. Accordingly, an allowance has been
established for it. The second loan, which was reclassified at December 31,
2006, to non-earning has an outstanding balance of $10,250,000 and is not deemed
impaired. Of the real estate loans earning interest at December 31, 2006, one
loan with a balance of $25,464,000 is deemed impaired and an allowance has been
established for it.
If all loans classified as non-earning were earning interest at their
contractual rates for the three months ended December 31, 2006 and 2005,
interest income would have increased by approximately $216,000 and $66,000,
respectively.
At December 31, 2006, four separate unaffiliated borrowers had loans outstanding
in excess of 7% of the total portfolio. Information regarding these loans is set
forth in the table below:
# OF % OF GROSS % OF
BALANCE LOANS LOANS ASSETS TYPE / NUMBER STATE / NUMBER
------- ----- ----- ------ ------------- --------------
$27,184,000 6 9.30 7.15 Multi family (5) / residential AK (2) TN (3) NY (1)
25,464,000 1 8.71 6.70 Multi family, condo redevelopment FL
24,440,000 1 8.36 6.43 Multi family, condo redevelopment NY
20,833,000 3 7.13 5.48 Multi family, condo redevelopment(2)
and land (1) FL (2) IL (1)
Note 5 - Real Estate Properties
On November 1, 2006, BRT sold a property that was previously acquired in
foreclosure. This property which was classified as held for sale was sold for
$3,200,000. BRT recorded a gain on the sale of $352,000. In connection with the
sale BRT provided a purchase money mortgage in the amount of $2,560,000.
Note 6 - Investment in Unconsolidated Joint Ventures at Equity
BRT Funding LLC
On November 2, 2006, BRT Joint Venture I LLC, a wholly owned subsidiary of the
Trust (which is referred to as the BRT member), entered into a joint venture
agreement with and among (1) CIT Capital USA, Inc., which is referred to herein
as the CIT member and which is a wholly owned subsidiary of CIT Group, Inc. and
(2) BRT Funding LLC, a limited liability company formed under the laws of the
State of Delaware, which is referred to as the joint venture. The joint venture
engages in the business of investing in short-term commercial real estate loans
for terms of six months to three years, commonly referred to as bridge loans.
The BRT member is the managing member of the joint venture. The initial
capitalization of the joint venture will be up to $100 million of which 25% will
be funded by the BRT member and 75% will be funded by the CIT member.
The Trust manages the joint venture and will receive a management allocation
calculated as 1% of the loan portfolio amount, annualized, and payable
quarterly. Origination fees up to 2% of the principal amount of a loan are
distributed 37.5% to the CIT member and 62.5% to the BRT member. Any amount of
origination fees in excess of 2% of the principal amount of a loan but not
exceeding 3% of the principal amount of the loan are paid to REIT Management
Corp., BRT's advisor and a related party. Any amounts of the joint venture's
origination fees which exceed 3% of the principal amount of a loan are paid
37.5% to the CIT member and 62.5% to the BRT member. The joint venture will
distribute net available cash to its two members on a pro-rata basis until the
CIT member receives a return of 9% (inclusive of origination fees), annualized
on its outstanding advances. If the joint venture is able to provide the CIT
member with an annualized 9% return, thereafter, additional available net cash
will be distributed, 37.5% to the CIT member and 62.5% to the BRT member.
Note 6 - Investment in Unconsolidated Joint Ventures at Equity (Continued)
We have agreed to present all loan proposals received by us to the joint venture
for its consideration on a first refusal basis, under procedures set forth in
the joint venture agreement, until the joint venture originates loans with an
aggregate principal amount of $100 million (or, in the event that a line of
credit at the maximum level is obtained, $150 million).
Unaudited condensed financial information regarding the joint venture is shown
below.
(Dollar Amounts in Thousands)
Three Months Ended
December 31, 2006
Condensed Balance Sheet
Cash $ 386
Real estate loan 8,038
---------
Total assets $ 8,424
=========
Deferred fees $ 372
Equity 8,052
---------
Total liabilities and equity $ 8,424
=========
Three Months Ended
December 31, 2006
Condensed Statement of Operations
Interest and fees on loan $ 14
---------
Total revenues 14
Operating expenses -
---------
Net income attributable to members $ 14
=========
Real Estate Ventures
The Trust is also a partner in eight unconsolidated joint ventures which own and
operate six properties.
During the quarter ended December 31, 2006, one of the joint ventures sold a
corporate office center, with a retail component, located in Dover, Delaware,
for $17,400,000. The Trust recognized a gain on the sale of the property of
$1,747,000. During the quarter the Trust received a cash distribution of
$9,000,000 from this joint venture.
The real estate ventures contributed $73,000 and ($877,000) in equity earnings
(losses) for the three months ended December 31, 2006 and 2005, respectively.
The loss in the three month period ended December 31, 2005 includes the Trust's
50% share of interest expense of $882,000 from the prepayment of the first
mortgage upon the sale of a 248 unit garden apartment complex in the Atlanta,
Georgia area that was sold in December 2005.
Note 7 - Available-For-Sale Securities
Included in available-for-sale securities are 1,009,600 shares of Entertainment
Properties Trust (NYSE:EPR), which have a cost basis of $13,262,000 and a fair
market value at December 31, 2006 of $59,001,000.
Note 8 -Borrowed Funds
The Trust has a $185 million revolving credit facility with North Fork Bank, VNB
New York Corp., Signature Bank and Manufacturers and Traders Trust Company. The
credit facility was increased from $155 million to $185 million effective
October 31, 2006. The credit facility matures on February 1, 2008 and may be
extended for two one-year periods for a fee of $462,500 for each extension.
Under the credit facility, the Trust is required to maintain cash or marketable
securities at all times of not less than $15 million. Borrowings under the
credit facility are secured by specific receivables and the facility provides
that the amount borrowed will not exceed 65% of first mortgages, plus 50% of
second mortgages and certain owned real estate pledged to the participating
banks which may not exceed 15% of the borrowing base. At December 31, 2006, $168
million was available to be drawn by us based on the lending formula under the
credit facility and $60 million was outstanding.
The average outstanding balances on our credit facilities for the three months
ended December 31, 2006 and December 31, 2005 were $111,054,000 and $71,049,000,
respectively, and the average interest rate paid was 8.12% and 7.66%,
respectively. Interest expense for the quarters ended December 31, 2006 and
December 31, 2005 was $2,304,000 and $1,390,000, respectively.
In addition to its credit facility, the Trust has the ability to borrow funds
through two margin accounts. In order to maintain one of the accounts, the Trust
pays an annual fee equal to .3% of the market value of the pledged securities;
this fee is included in interest expense. At December 31, 2006, there was no
outstanding balance on either of the margin accounts. Marketable securities,
with a fair market value at December 31, 2006 of $62,478,000, are available to
be pledged as collateral. The average outstanding balance on the margin
facilities for the quarters ended December 31, 2006 and December 31, 2005 was
$14,643,000 and $20,736,000, respectively, and the average interest rate paid
was 8.54% and 7.17%, respectively. Interest expense on the margin accounts for
the quarters ended December 31, 2006 and 2005 was $319,000 and $380,000,
respectively.
Note 9 - Junior Subordinated Notes
On April 27, 2006, BRT issued $30,928,000 principal amount 30-year subordinated
notes to BRT Realty Trust Statutory Trust II, an unconsolidated affiliate of
BRT. Statutory Trust II was formed to issue $928,000 worth of common securities
(all of Statutory Trust II's common securities) to BRT and to sell $30 million
of preferred securities to third party investors. The notes pay interest
quarterly at a fixed rate of 8.49% per annum for ten years at which time they
convert to a floating rate of LIBOR plus 290 basis points. Statutory Trust II
remits dividends to the common and preferred security holders under the same
terms as the subordinated notes. The notes and preferred securities mature in
April 2036 and may be redeemed in whole or in part anytime after five years,
without penalty, at BRT's option. To the extent BRT redeems notes, Statutory
Trust II is required to redeem a corresponding amount of preferred securities.
Issuance costs of $944,500 were incurred in connection with this transaction and
are included in other assets. These costs are being amortized over the intended
10-year holding period of the notes. Interest expense for the three months ended
December 31, 2006 was $680,000.
On March 21, 2006, BRT issued $25,774,000 principal amount 30-year subordinated
notes to BRT Realty Trust Statutory Trust I, an unconsolidated affiliate of BRT.
Statutory Trust I was formed to issue $774,000 worth of common securities (all
of Statutory Trust I's common securities) to BRT and to sell $25 million of
preferred securities to third party investors. The notes pay interest quarterly
at a fixed rate of 8.23% per annum for ten years at which time they convert to a
floating rate of LIBOR plus 300 basis points. Statutory Trust I remits dividends
to the common and preferred security holders under the same terms as the
subordinated notes. The notes and preferred securities mature in April 2036 and
may be redeemed in whole or in part anytime after five years, without penalty,
at BRT's option. To the extent BRT redeems notes, Statutory Trust I is required
to redeem a corresponding amount of preferred securities. Issuance costs of
$822,000 were incurred in connection with this transaction and are included in
other assets. These costs are being amortized over the intended 10- year holding
period of the notes. Interest expense for the three months ended December 31,
2006 was $551,000.
Note 9 - Junior Subordinated Notes (Continued)
BRT Realty Trust Statutory Trusts I and II are variable interest entities under
FIN 46R. Under the provisions of FIN 46R, BRT has determined that the holders of
the preferred securities are the primary beneficiaries of the two Statutory
Trusts. Accordingly, BRT does not consolidate the Statutory Trusts and has
reflected the obligations of the Statutory Trusts under the caption "Junior
Subordinated Notes." The investment in the common securities of the Statutory
Trusts is reflected in other assets and is accounted under the equity method of
accounting.
Note 10 - Comprehensive Income
Comprehensive income for the three month periods was as follows:
(Dollar Amounts in Thousands)
Three Months Ended
December 31,
2006 2005
---- ----
Net income $ 8,289 $ 4,715
Other comprehensive income -
Unrealized gain (loss) on available -
for-sale securities 9,228 (4,210)
------- -------
Comprehensive income $17,517 $ 505
======= =======
Note 11 - Related Party Transactions
On November 16, 2006, the Trust repaid in full the outstanding balance of a loan
participation that was previously sold to Gould Investors L.P. ("Gould"), a
related party, in the prior fiscal year. The balance at the time of the
repayment was $9.5 million. In addition, Gould repaid the Trust $159,000,
representing the unamortized portion of the commitment fee of $220,000 received
by Gould.
Note 12 - New Accounting Pronouncements
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes" ("FIN 48"). This interpretation, among other things, creates a
two step approach for evaluating uncertain tax positions. Recognition (step one)
occurs when an enterprise concludes that a tax position, based solely on its
technical merits, is more-likely-than-not to be sustained upon examination.
Measurement (step two) determines the amount of benefit that
more-likely-than-not will be realized upon settlement. Derecognition of a tax
position that was previously recognized would occur when a company subsequently
determines that a tax position no longer meets the more-likely-than-not
threshold of being sustained. FIN 48 specifically prohibits the use of a
valuation allowance as a substitute for derecognition of tax positions, and it
has expanded disclosure requirements. FIN 48 is effective for fiscal years
beginning after December 15, 2006, in which the impact of adoption should be
accounted for as a cumulative-effect adjustment to the beginning balance of
retained earnings. The Company believes that the adoption of this standard on
October 1, 2007 will not have a material effect on the consolidated financial
statements.
In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 provides guidance for using fair value to measure
assets and liabilities. This statement clarifies the principle that fair value
should be based on the assumptions that market participants would use when
pricing the asset or liability. SFAS No.157 establishes a fair value hierarchy,
giving the highest priority to quoted prices in active markets and the lowest
priority to unobservable data. SFAS No. 157 applies whenever other standards
require assets or liabilities to be measured at fair value. This statement is
effective in fiscal years beginning after November 15, 2007. The Company
believes that the adoption of this standard on October 1, 2008 will not have a
material effect on the Company's consolidated financial statements.
Note 12 - New Accounting Pronouncements (Continued)
In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108 ("SAB 108"), which becomes effective beginning on
January 1, 2007. SAB 108 provides guidance on the consideration of the effects
of prior period misstatements in quantifying current year misstatements for the
purpose of a materiality assessment. SAB108 provides for the quantification of
the impact of correcting all misstatements, including both the carryover and
reversing effects of prior year misstatements, on the current year financial
statements. If a misstatement is material to the current year financial
statements, the prior year financial statements should also be corrected, even
though such revision was, and continues to be, immaterial to the prior year
financial statements. Correcting prior year financial statements for immaterial
errors would not require previously filed reports to be amended. Such correction
should be made in the current period filings. The Company is currently
evaluating the impact of adopting SAB 108. The Company believes that the
adoption of this standard will not have a material effect on the Company's
consolidated financial statements.
Note 13 - Subsequent Event
As of February 5, 2007, BRT sold 165,300 shares of Entertainment Properties
Trust for $10,541,000, for an average price of $63.77 per share. The book basis
of these shares is $2,174,000 or $13.15 per share. Accordingly we will recognize
a gain from the sale of these shares of approximately $8,367,000 in the quarter
ended March 31, 2007.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Statements
With the exception of historical information, this report on Form 10-Q contains
certain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended. We intend such forward-looking statements to
be covered by the safe harbor provision for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995 and include this
statement for purposes of complying with these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
our 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 involve known and unknown risks, uncertainties and
other factors which are, in some cases, beyond our control and which could
materially affect actual results, performance or achievements. Investors are
cautioned not to place undue reliance on any forward-looking statements.
Overview
We are a real estate investment trust, also known as a REIT, organized as a
business trust in 1972 under the laws of the Commonwealth of Massachusetts. We
are primarily engaged in originating and holding for investment senior and
junior commercial mortgage loans secured by real property in the United States.
From time to time, we also participate as both an equity investor in, and as a
mortgage lender to, joint ventures which acquire income-producing real property.
We have originated in the past, and will consider in the future, loans to
entities which own real property collateralized by pledges of some or all of the
ownership interests that directly or indirectly control such real property
(commonly referred to as mezzanine financing).
Liquidity and Capital Resources
Our focus is to originate loans secured by real property, which generally have
high yields and are short term or bridge loans, with an average duration ranging
from six months to three years. Repayments of real estate loans in the amount of
$289,808,000 (representing 99% of our mortgage portfolio at December 31, 2006)
are due during the twelve months ending December 31, 2007, including $11,596,000
not earning interest and due on demand. The availability of mortgage financing
secured by real property and the market for buying and selling real estate is
cyclical. Since these are the principal sources for the generation of funds by
our borrowers to repay our outstanding real estate loans, we cannot project the
portion of loans maturing during the next twelve months which will be paid or
the portion of loans which will be extended for a fixed term or on a month to
month basis.
We have a $185 million revolving credit facility with a group of banks
consisting of North Fork Bank, VNB New York Corp., Signature Bank and
Manufacturers and Traders Trust Company. This facility matures on February 1,
2008 and may be extended for two one-year terms. The maximum amount which can be
outstanding under the facility is the lesser of 65% of the first mortgages plus
50% of the second mortgages and certain owned real estate pledged which may not
exceed 15% of the borrowing base or $185 million. At December 31, 2006, $168
million was available to be drawn based on the lending formula, of which $60
million was outstanding.
We also have the ability to borrow under margin lines of credit maintained with
national brokerage firms, secured by the common shares we own in EPR and other
investment securities. Under the terms of the margin lines of credit, we may
borrow up to 50% of the market value of the shares we own. At December 31, 2006,
$31.2 million was available under the margin lines of credit, of which there was
no outstanding balance. Following the sale by us of 165,300 EPR shares in the
open market from January 1, 2007 through February 5, 2007, approximately $29.3
million remains available under the margin lines of credit as of February 5,
2007. If the value of the EPR shares (our principal securities investment) were
to decline, the available funds under the margin lines of credit might decline
and we could be required to repay a portion or all of the margin loans.
During the three months ended December 31, 2006, we generated cash of $8,911,000
from operations, $18,301,000 from real estate loan collections, and $77,165,000
from the issuance of 2.9 million shares of beneficial interest in connection
with an underwritten public offering. The proceeds we received from the
underwritten public offering were used to pay down our revolving credit facility
by $58,000,000 and to pay off our outstanding balance of $19,000,000 on the
margin line. The cash generated from our operations and from real estate loan
collections were used primarily to fund real estate loan originations of
$23,537,000, pay shareholder dividends of $4,491,000 and to further reduce our
indebtedness under our credit line. Our cash and cash equivalents were
$7,587,000 at December 31, 2006.
We will satisfy our liquidity needs from cash and liquid investments on hand,
our credit facility, the availability in our margin account collateralized by
our available-for-sale securities and where appropriate the sale of these
securities, interest and principal payments received on outstanding real estate
loans and net cash flow generated from the operation and sale of real estate
assets.
Results of Operations
Interest and fees on loans increased by $5,163,000, or 80%, to $11,587,000 for
the three months ended December 31, 2006 from $6,424,000 for the three months
ended December 31, 2005. During the current quarter, the average balance of
loans outstanding increased by approximately $128.3 million, accounting for an
increase in interest income of $4,282,000. Recent increases in the prime rate
have caused the average interest rate earned on the loan portfolio to increase
to 13.35% in the three months ended December 31, 2006 from 13.09% in the three
months ended December 31, 2005, which caused interest income to increase by
$116,000. Fee income increased $765,000 quarter vs. quarter. This was primarily
due to increased amortization of commitment fee and extension fee income which
resulted from a larger loan portfolio.
Operating income on real estate increased $72,000, or 24%, for the three month
period ended December 31, 2006 to $365,000 from $293,000 in the three month
period ended December 31, 2005. This was the result of an increase in rent
received at our Yonkers, New York property due to the releasing of vacant space
at the property.
Other, primarily investment income increased by $110,000, or 16%, to $793,000 in
the three months ended December 31, 2006 from $683,000 in the three months ended
December 31, 2005. Approximately $63,000 of the increase was the result of a 10%
increase in the dividend paid on the EPR shares we own from $.625 per share to
$.6875 per share and the remaining $47,000 was the result of an increase in
income from our other invested assets.
Interest expense on borrowed funds increased to $3,855,000 in the three months
ended December 31, 2006 from $1,770,000 in the three months ended December 31,
2005, an increase of $2,085,000, or 118%. In the current quarter we increased
our level of borrowings to fund our increased loan portfolio, causing the
average balance of borrowed funds to increase from $91.7 million to $182.4
million, an increase of $90.7 million. This resulted in an increase of
$1,934,000 in interest expense. The remaining increase of $151,000 was the
result of higher interest rates paid on our line of credit and margin accounts.
Our combined borrowing rate increased from 7.55% for the quarter ended December
31, 2005 to 8.41% for the quarter ended December 31, 2006.
The Advisor's fee that we pay to REIT Management Corp., a related party, and
which is calculated based on invested assets, increased $288,000, or 54%, in the
three months ended December 31, 2006 to $824,000 from $536,000 in the three
months ended December 31, 2005. In the three month period ended December 31,
2006, when compared to the three month period ended December 31, 2005, we
experienced a large increase in the outstanding balance of invested assets,
primarily loans, the basis upon which the Advisor's fee is calculated.
General and administrative fees decreased $45,000, or 3%, from $1,605,000 in the
three months ended December 31, 2005 to $1,560,000 in the three months ended
December 31, 2006. The decrease was the result of several factors. During the
quarter ended December 31, 2006, the Trust incurred increased payroll related
expenses of $165,000 related to the payment of year end staff bonuses. Legal
expenses increased by approximately $75,000 due to expenses associated with the
renegotiation of our advisory agreement. Allocated expenses charged to us
pursuant to the Shared Services Agreement among our related entities for legal
and accounting services increased by $26,000 primarily due to our common share
offering. Offsetting these increased expenses in full was the payment in the
prior year's quarter of $322,000 of legal, professional and printing expenses
related to a contemplated public offering of preferred securities which was
cancelled due to adverse market conditions.
Other taxes increased by $114,000, or 100%, to $228,000 in the three months
ended December 31, 2006 from $114,000 in the three ended December 31, 2005. This
was the result of an increase in the amount of federal excise tax recorded. The
federal excise tax is based on taxable income generated during the current
fiscal year but not distributed.
Equity in earnings (loss) of unconsolidated ventures increased $959,000 in the
three months ended December 31, 2006 to $82,000 from ($877,000) in the three
months ended December 31, 2005. During the 2005 quarter, we experienced a loss
of $995,000 from the operations of the joint venture which owns the Rutherford
Glen property in the Atlanta, Georgia area (which was sold in the quarter ended
December 31, 2005). This loss was the result of an increase in interest expense
of $882,000 from the prepayment of the first mortgage upon the sale of the
property.
Gain on disposition of real estate related to unconsolidated real estate
ventures decreased $712,000 in the three months ended December 31, 2006 to
$1,819,000, from $2,531,000 in the three months ended December 31, 2005. During
the 2006 quarter our Blue Hen joint venture sold a corporate center and retail
mall in Dover, Delaware. The Trust recognized a gain on the sale of $ 1,819,000,
representing its share of the gain. In the 2005 quarter, we realized a gain on
disposition of real estate related to unconsolidated real estate ventures, the
result of the sale of the property by our Rutherford Glen joint venture. The
venture owned and operated a multi-family apartment complex in the Atlanta,
Georgia area.
Income (loss) from discontinued operations increased $420,000 in the three month
period ended December 31, 2006 to $358,000 from ($62,000) in the three month
period ended December 31, 2005. The discontinued operations in the quarter ended
December 31, 2006 reflects the sale and operations of a property located in
Charlotte, North Carolina, which we acquired in foreclosure in January 2005. The
discontinued operations in the quarter ended December 31, 2005 also reflects
earnings from this property.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Our primary component of market risk is interest rate sensitivity. Our interest
income and our interest expense is subject to changes in interest rates. We seek
to minimize these risks by originating loans that are indexed to the prime rate,
with a stated minimum interest rate, and borrowing, when necessary, from our
available credit line which is adjustable and is indexed to LIBOR. At December
31, 2006, approximately 95% of our loan portfolio was variable rate based
primarily on the prime rate. Accordingly, changes in the prime interest rate
would have an effect on our net interest income. When determining interest rate
sensitivity, we assume that any change in interest rates is immediate and that
the interest rate sensitive assets and liabilities existing at the beginning of
the period remain constant over the period being measured. We assessed the
market risk for our variable rate mortgage receivables and variable rate debt
and believe that a one percent increase in interest rates would have a positive
effect of approximately $2,181,000 on income before taxes and a one percent
decline in interest rates would have a negative effect of approximately $819,000
on income before taxes. In addition, we originate loans with short maturities
and maintain a strong capital position. At December 31, 2006, our loan portfolio
was primarily secured by properties located in the New York metropolitan area,
New Jersey, Florida and Tennessee, and it is subject to risks associated with
the economies of these localities.
Item 4. Controls and Procedures
As required under Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange
Act of 1934, as amended, we carried out an evaluation under the supervision and
with the participation of our management, including our Chief Executive Officer,
Senior Vice President-Finance and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures as of
December 31, 2006. Based upon that evaluation, the Chief Executive Officer,
Senior Vice President-Finance and Chief Financial Officer concluded that our
disclosure controls and procedures as of December 31, 2006 are effective.
There have been no changes in our internal control over financial reporting
during the quarter ended December 31, 2006 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 6. Exhibits
Exhibit 31.1 Certification of President and Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2 Certification of Senior Vice President-Finance pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.3 Certification of Vice President and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1 Certification of President and Chief Executive Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2 Certification of Senior Vice President-Finance pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.3 Certification of Vice President and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRT REALTY TRUST
(Registrant)
February 7, 2007 /s/ Jeffrey A. Gould
---------------- -------------------------------------
Date Jeffrey A. Gould, President and
Chief Executive Officer
February 7, 2007 /s/ George Zweier
---------------- -------------------------------------
Date George Zweier, Vice President
and Chief Financial Officer
(principal financial officer)
EXHIBIT 31.1
CERTIFICATION
I, Jeffrey A. Gould, President and Chief Executive Officer of BRT Realty
Trust, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter
ended December 31, 2006 of BRT Realty Trust;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: February 7, 2007
/s/ Jeffrey A. Gould
--------------------
Jeffrey A. Gould
President and
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION
I, David W. Kalish, Senior Vice President-Finance of BRT Realty Trust,
certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter
ended December 31, 2006 of BRT Realty Trust;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: February 7, 2007 /s/ David W. Kalish
-------------------
David W. Kalish
Senior Vice President-Finance
EXHIBIT 31.3
CERTIFICATION
I, George Zweier, Vice President and Chief Financial Officer of BRT Realty
Trust, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter
ended December 31, 2006 of BRT Realty Trust;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: February 7, 2007
/s/ George Zweier
-----------------
George Zweier
Vice President and Chief
Financial Officer
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
The undersigned, Jeffrey A. Gould, the Chief Executive Officer of BRT Realty
Trust, (the "Registrant"), does hereby certify, pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that,
to the best of my knowledge, based upon a review of the Quarterly Report on Form
10-Q for the quarter ended December 31, 2006 of the Registrant, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"):
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
Date: February 7, 2007 /s/ Jeffrey A. Gould
--------------------
Jeffrey A. Gould, President and
Chief Executive Officer
EXHIBIT 32.2
CERTIFICATION OF SENIOR VICE PRESIDENT-FINANCE
PURSUANT TO 18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
The undersigned, David W. Kalish, Senior Vice President-Finance of BRT Realty
Trust, (the "Registrant"), does hereby certify, pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that,
to the best of my knowledge, based upon a review of the Quarterly Report on Form
10-Q for the quarter ended December 31, 2006 of the Registrant, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"):
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
Date: February 7, 2007 /s/ David W. Kalish
---------------------------------
David W. Kalish
Senior Vice President-Finance
EXHIBIT 32.3
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
The undersigned, George Zweier, the Chief Financial Officer of BRT Realty Trust,
(the "Registrant"), does hereby certify, pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the
best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q
for the quarter ended December 31, 2006 of the Registrant, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"):
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
Date: February 7, 2007 /s/ George Zweier
-----------------------------------
George Zweier, Vice President
and Chief Financial Officer