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 June 30, 2005
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
(Exact name of Registrant as specified in its charter)
Massachusetts 13-2755856
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 Cutter Mill Road, Great Neck, NY 11021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 466-3100
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 an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
7,789,897 Shares of Beneficial Interest,
$3 par value, outstanding on July 26, 2005
Part 1 - Financial Information
Item 1. Financial Statements
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
June 30, September 30,
2005 2004
---- ----
(Unaudited) (Audited)
ASSETS
Real estate loans:
Earning interest, including $6,213 and
$7,305 from related parties $157,739 $132,229
Not earning interest - 3,096
-------- --------
157,739 135,325
Allowance for possible losses (669) (881)
-------- --------
157,070 134,444
-------- --------
Real estate assets:
Real estate properties net of accumulated
depreciation of $1,912 and $1,699 9,914 5,887
Investment in unconsolidated real
estate ventures 8,867 7,793
-------- --------
18,781 13,680
Cash and cash equivalents 5,297 5,746
Securities available-for-sale at fair value 50,672 41,491
Other assets 3,604 2,644
-------- --------
Total Assets $235,424 $198,005
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowed funds $ 82,163 $ 53,862
Mortgage payable 2,559 2,609
Accounts payable and accrued liabilities,
including deposits of $2,280 and $3,164 5,301 5,798
Dividends payable 3,895 3,673
-------- --------
Total Liabilities 93,918 65,942
-------- --------
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 - 8,924 and 8,883 shares, respectively 26,772 26,650
Additional paid-in capital 83,440 81,769
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 34,717 26,162
Unearned compensation (1,528) (900)
Retained earnings 8,692 9,482
-------- --------
152,093 143,163
Cost of 1,229 and 1,288 treasury shares of
beneficial interest at each date (10,587) (11,100)
-------- --------
Total Shareholders' Equity 141,506 132,063
-------- --------
Total Liabilities and Shareholders' Equity $235,424 $198,005
======== ========
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATE STATEMENTS of INCOME
(Amounts in Thousands)
(Dollar amounts in thousands except per share amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
June 30, June 30,
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Revenues:
Interest and fees on real estate loans, including
$166 and $197 for the three month periods,
respectively, and $523 and $548 for the nine month
periods, respectively, from related parties $ 5,027 $ 3,679 $14,634 $ 9,637
Operating revenue from real estate properties 680 617 1,898 1,742
Other, primarily investment income 657 590 1,908 1,775
------- ------- ------- -------
Total Revenues 6,364 4,886 18,440 13,154
------- ------- ------- -------
Expenses:
Interest - borrowed funds 1,005 372 2,492 817
Advisor's fees, related party 488 393 1,289 1,032
General and administrative - including $179
and $197 for the three month periods,
respectively, and $553 and $555 for the nine month
period, respectively, to related parties 1,138 1,014 3,170 2,828
Other taxes 80 209 321 365
Operating expenses relating to real estate properties
including interest on mortgages payable
of $41 and $63 for the three month periods,
respectively, and $133 and $191 for the nine month
period, respectively 451 1,106 1,123 1,887
Amortization and depreciation 84 68 234 204
------- ------- ------- -------
Total Expenses 3,246 3,162 8,629 7,133
------- ------- ------- -------
Income before equity in earnings of unconsolidated real
estate ventures, gain on sale of available-for-sale securities,
minority interest and discontinued operations 3,118 1,724 9,811 6,021
Equity in earnings of unconsolidated real estate ventures 82 33 83 74
Income before gain on sale of available-for-sale securities, ------- ------- ------- -------
minority interest and discontinued operations 3,200 1,757 9,894 6,095
Gain on sale of available-for-sale securities - 4 680 1,641
Minority interest (13) (11) (37) (32)
------- ------- ------- -------
Income before discontinued operations 3,187 1,750 10,537 7,704
Discontinued Operations
Gain on sale of real estate assets - 559 - 1,150
Net income $ 3,187 $ 2,309 $10,537 $ 8,854
======= ======= ======= =======
Income per share of beneficial interest:
Income from continuing operations $ .41 $ .23 $ 1.36 $ 1.01
Discontinued operations - 07 - .15
------- ------- ------- -------
Basic earnings per share $ .41 $ .30 $ 1.36 $ 1.16
======= ======= ======= =======
Income from continuing operations $ .41 $ .23 $ 1.35 $ .99
Discontinued operations - .07 - .15
------- ------- ------- -------
Diluted earnings per share $ .41 $ .30 $ 1.35 $ 1 .14
======= ======= ======= =======
Cash distributions per common share $ .50 $ .48 $ 1.46 $ 1.31
======= ======= ======= =======
Weighted average number of common
shares outstanding:
Basic 7,779,184 7,650,471 7,729,650 7,605,366
Diluted 7,834,539 7,738,076 7,796,446 7,733,032
========= ========= ========= =========
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- Unearned
Beneficial Paid-In prehensive Compen- Retained Treasury
Interest Capital Income sation Earnings Shares Total
-------- ------- ------ ------ -------- ------ -----
Balances, September 30, 2004 $26,650 $81,769 $26,162 $ (900) $ 9,482 $(11,100) $132,063
Shares issued - purchase plan 122 799 - - - - 921
Distributions - common share
($1.46 per share) - - - - (11,327) - (11,327)
Issuance of restricted stock - 870 - (870) - - -
Exercise of stock options - 6 - - - 513 519
Forfeiture of restricted stock - (4) - 4 - - -
Compensation expense -
restricted stock - - - 238 - - 238
Net income - - - - 10,537 - 10,537
Other comprehensive
income - net unrealized
gain on available-for-sale
securities (net of reclassi-
fication adjustment for
gains included in net
income of $680) - - 8,555 - - - 8,555
Comprehensive income - - - - - - 19,092
-----------------------------------------------------------------------------------
Balances, June 30, 2005 $26,772 $83,440 $34,717 $ (1,528) $8,692 $(10,587) $141,506
===================================================================================
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Thousands)
Nine Months Ended
June 30,
2005 2004
---- ----
Cash flows from operating activities:
Net income $10,537 $ 8,854
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation 325 240
Amortization of restricted stock 238 159
Net gain on sale of real estate assets - (1,150)
Net gain on sale of available-for-sale securities (680) (1,641)
Equity in earnings of unconsolidated real estate ventures (83) (74)
Increase in straight line rent (115) (115)
Increases and decreases from changes in other
assets and liabilities
(Increase) in interest and dividends receivable (805) (619)
(Increase) in prepaid expenses (44) (73)
(Decrease) Increase in accounts payable and accrued liabilities (872) 1,268
(Increase) in deferred expenses (121) (75)
Increase in deferred revenues 96 490
Increase in escrow deposits 355 416
Other 29 53
------- -------
Net cash provided by operating activities 8,860 7,733
------- -------
Cash flows from investing activities:
Collections from real estate loans 113,729 64,699
Sale of participation interests 38,475 -
Additions to real estate loans (177,275) (125,061)
Net costs capitalized to real estate assets (228) (86)
Additions to real estate (1,565) -
Proceeds from the sale of real estate - 1,247
Investment in real estate ventures (1,229) (856)
Purchase of available-for-sale securities (1,000) -
Sales of available-for-sale securities 1,055 3,384
(Increase) Decrease in deposits payable (93) 188
Partnership distributions 238 170
------- -------
Net cash (used in) investing activities (27,893) (56,315)
------- -------
Cash flows from financing activities:
Proceeds from borrowed funds 168,500 75,300
Repayment of borrowed funds (140,199) (41,250)
Payoff/paydown of loan and mortgages payable (50) (52)
Cash distribution - common shares (11,107) (9,041)
Exercise of stock options 519 710
Issuance of shares - stock purchase plan 921 -
------- -------
Net cash provided by financing activities 18,584 32,175
------- -------
Net (decrease) in cash and cash equivalents (449) (16,407)
Cash and cash equivalents at beginning of period 5,746 21,694
------- -------
Cash and cash equivalents at end of period $ 5,297 $ 5,287
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 2,327 $ 851
======= =======
Non cash investing and financing activity:
Reclass of loan to real estate upon foreclosure $ 2,446 $ -
======= ======
Accrued distributions $ 3,895 $ 3,673
======= =======
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Basis of Preparation
The accompanying interim unaudited consolidated financial statements as of June
30, 2005 and for the three and nine months ended June 30, 2005 reflect all
normal recurring adjustments which, in the opinion of management, are necessary
for a fair statement of the results for such interim periods. The results of
operations for the three and nine months ended June 30, 2005 are not necessarily
indicative of the results for the full year.
Certain items on the consolidated financial statements for the preceding periods
have been reclassified in the accompanying consolidated financial statements to
conform with the current presentation.
The consolidated financial statements include the accounts of BRT Realty Trust,
its wholly owned subsidiaries, and its majority-owned or controlled real estate
entities. Investments in less than majority-owned entities have been accounted
for using the equity method. 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, 2004.
The preparation of the financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements.
Actual results could differ from those estimates.
Note 2 - Shareholders' Equity
Distributions
During the quarter ended June 30, 2005, BRT declared a cash distribution to
shareholders of $.50 per share. This distribution totaled $3,895,000 and was
payable on July 5, 2005 to shareholders of record on June 27, 2005.
Stock Options
Pro forma information regarding net income and earnings per share is required by
FAS No. 123, and has been determined as if the Trust had accounted for its
employee stock options under the fair value method. The fair value for these
options was estimated at the date of the grant using the Black-Scholes option
pricing model with the following weighted-average assumptions for both 2004 and
2003: risk free interest rate of 4.43%, volatility factor of the expected market
price of the Trust's shares of beneficial interest based on historical results
of .207, dividend yield of 5.5% and an expected option life of six years.
Note 2 - Shareholders' Equity (Continued)
Pro forma net income and earnings per share calculated using the Black-Scholes
option valuation model is as follows:
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Net income to common
shareholders as reported $ 3,187 $ 2,309 $10,537 $ 8,854
Less: Total share-based employee
compensation expense
determined under fair value
method for all awards 16 30 48 90
------- ------- ------- -------
Pro forma net income $ 3,171 $ 2,279 $10,489 $ 8,764
======= ======= ======= =======
Pro forma earnings per share
of beneficial interest
Basic $ .41 $ .30 $ 1.36 $ 1.15
======= ======= ======= =======
Diluted $ .41 $ .29 $ 1.35 $ 1.13
======= ======= ======= =======
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including expected stock price volatility. Because the
Trust's employee share options have characteristics significantly different from
those of traded options, and changes in the subjective input assumptions can
materially affect the fair value estimated, management believes the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee share options.
Restricted Shares
As of June 30, 2005, 95,530 restricted shares were issued under the Trust's 2003
incentive plan. 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. The Trust records compensation expense under
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, over the vesting period, measuring the compensation cost based on the
market value of the shares on the date of the award of the restricted shares.
For the three and nine months ended June 30, 2005, the Trust recorded $98,000
and $238,000 of compensation expense, respectively.
Note 2 - Shareholders' Equity (Continued)
Per Share Data
Basic earnings per share was determined by dividing net income for the period by
the weighted average number of shares of common stock outstanding during each
period.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of BRT.
The following table sets forth the computation of basic and diluted shares:
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Basic 7,779,184 7,650,471 7,729,650 7,605,366
Effect of dilutive securities 55,355 87,605 66,796 127,666
--------- --------- --------- ---------
Diluted 7,834,539 7,738,076 7,796,446 7,733,032
========= ========= ========= =========
Note 3 - 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 portfolio.
During the quarter ended June 30, 2005, the Trust accepted a discounted payoff
on a loan that had been previously classified as non-earning. The Trust charged
the allowance for possible losses in the amount of $211,250 relating to the
repayment of this loan.
At June 30, 2005 there were no non-earning assets.
If all loans classified as non-earning were earning interest at their
contractual rates for the three months ended June 30, 2005 and 2004, interest
income would have increased by approximately $11,000 and $102,000, respectively.
For the nine month period ended June 30, 2005 and 2004, the increase would have
been $134,000 and $390,000, respectively.
Included in real estate loans are three second mortgages and one first mortgage
to ventures in which the Trust (through wholly owned subsidiaries) holds a 50%
interest. At June 30, 2005, the aggregate balance of these mortgage loans was
$6,213,000. Interest earned on these loans totaled $166,000 and $198,000 for the
three months ended June 30, 2005 and 2004, respectively. For the nine months
ended June 30, 2005 and 2004, interest earned on these loans totaled $523,000
and $548,000, respectively.
As of June 30, 2005, there were four first mortgage loans outstanding to one
borrower. These loans totaled $36,493,000, which is approximately 23% of the
Trust's loan portfolio and 16% of the Trust's total assets. All four loans are
collateralized by multi-family apartment developments. Two of the loans, with a
balance at June 30, 2005 of $17,800,000, are collateralized by properties
located in Tennessee, the third with a balance of $6,095,000, is a
collateralized by a property located in Alabama and the remaining loan, with a
balance of $12,598,000, is collateralized by a property located in Florida. All
four loans have adjustable interest rates.
Note 4 - Investment in Unconsolidated Joint Ventures at Equity
Through subsidiaries, the Trust is a partner in eight unconsolidated joint
ventures which own and operate eight properties. In addition to making an equity
contribution, the Trust may hold a first or second mortgage on the property
owned by the venture.
Unaudited condensed financial information for the two most significant joint
ventures is shown below.
Blue Hen Venture
----------------
Amounts in Thousands
June 30, September 30,
2005 2004
---- ----
Condensed Balance Sheet
Cash and cash equivalents $ 1,294 $ 327
Real estate investments, net 15,443 15,298
Other assets 346 436
------- -------
Total assets $17,083 $16,061
Mortgages payable (1) $ 1,413 $ 2,080
Other liabilities 214 190
Equity 15,456 13,791
Total liabilities and equity $17,083 $16,061
Trust's equity investment (3) $ 7,038 $ 5,855
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Condensed Statement of Operations
Revenues, primarily rental income $ 767 $ 825 $ 2,345 $ 2,327
-------- -------- -------- -------
Operating expenses (2) 405 434 1,291 1,207
Depreciation 158 136 484 385
Interest expense (1) 31 51 105 170
-------- -------- -------- -------
Total expenses 594 621 1,880 1,762
-------- -------- -------- -------
Net income attributable to members $ 173 $ 204 $ 465 $ 565
======== ======== ======== =======
Trust's share of net income
recorded in income statement $ 87 $ 102 $ 233 $ 253
======== ======== ======== =======
(1) First mortgages held by the Trust.
(2) Includes $32,000 and $33,000 for the three months ended June 30, 2005 and
2004, respectively, and $122,000 and $112,000 for the nine months ended
June 30, 2005 and 2004, respectively, to related parties for management
fees.
(3) The unamortized excess of the Trust's share of the net equity over its
investment in the Blue Hen joint venture that is attributable to building
and improvements is being amortized over the life of the related property
The portion that is attributable to land will be recognized upon the
disposition of the land.
Note 4 - Investment in Unconsolidated Joint Ventures at Equity (Continued)
Rutherford Glen
---------------
Amounts in Thousands
June 30, September 30,
-------- -------------
2005 2004
Condensed Balance Sheet
Cash and cash equivalents $ 276 $ 214
Real estate investments, net 17,433 17,984
Other assets 313 240
-------- --------
Total assets $ 18,022 $ 18,438
======== ========
Mortgages payable (1) $ 18,610 $ 18,765
Other liabilities 511 414
Equity (1,099) (741)
-------- --------
Total liabilities and equity $ 18,022 $ 18,438
======== ========
Trust's equity investment $ (550) $ (340)
======== ========
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Condensed Statement of Operations
Revenues, primarily rental income $ 570 $ 603 $ 1,744 $ 1,768
-------- --------- -------- ---------
Operating expenses (2) 270 264 797 830
Depreciation 182 182 545 546
Interest expense (3) 357 361 1,074 1,080
-------- --------- -------- ---------
Total expenses 809 807 2,416 2,456
-------- --------- -------- ---------
Net loss attributable to members $ (239) $ (204) $ (672) $ (688)
======== ======== ========= =========
Trust's share of net loss
recorded in income statement $ (119) $ (102) $ (336) $ (344)
======== ======== ========= =========
(1) Includes a $2,950,000 second mortgage held by the Trust.
(2) Includes $4,000 for both for the three months ended June 30, 2005 and
2004, respectively, and $8,000 and $11,000 for the nine months ended
June 30, 2005 and 2004, respectively, to related party.
(3) Includes $82,000 and $83,000 for the three months ended June 30, 2005 and
2004, respectively, and $246,000 and $248,000 for the nine months ended
June 30, 2005 and 2004, respectively, of interest expense on the second
mortgage which is held by the Trust.
The remaining six ventures contributed $114,000 and $33,000 for the three months
ended June 30, 2005 and 2004, respectively, and $186,000 and $165,000 for the
nine months ended June 30, 2005 and 2004, respectively of equity in earnings of
unconsolidated joint ventures.
Note 5 - 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 market
value at June 30, 2005 of $46,441,600. The shares held by the Trust represent
approximately 3.90% of the outstanding common shares of Entertainment Properties
Trust as of July 29, 2005.
Also included in available-for-sale securities are 75,400 shares of Atlantic
Liberty Financial Corp. (NASDAQ:ALFC), which have a cost basis of $1,145,000 and
a market value at June 30, 2005 of $1,907,000. The shares held by the Trust
represent approximately 4.48% of the outstanding common shares of Atlantic
Liberty Financial Corp. as of June 10, 2005.
Note 6 - Borrowed Funds
On February 16, 2005, the Trust consummated an $85 million credit line with
North Fork Bank, Valley Bank and Signature Bank. This facility replaced a $60
million credit line that the Trust had with North Fork Bank. The new facility
has a maturity date of February 16, 2007. The Trust may extend the term of the
facility for two one year periods for a fee of $212,500 for each extension.
Borrowings under this facility are secured by specific mortgage receivables and
the facility provides that the amount borrowed will not exceed 65% of the
collateral pledged. At June 30, 2005, the Trust had pledged collateral that
would permit it to borrow the entire $85 million under the facility, of which
$63,550,000 was outstanding under the facility. Interest is charged on the
outstanding balance at prime plus 1/2% (which interest rate was 6.75% at June
30, 2005). For the three and nine months ended June 30, 2005 and 2004, the
average outstanding balance on the credit line was $42,698,000 and $19,804,000,
respectively, and $39,116,000 and $12,059,000, respectively. As of July 29,
2005, $77,550,000 was outstanding.
In addition to its credit line, BRT has the ability to borrow funds through a
margin account. In order to maintain the account BRT pays an annual fee equal to
..3% of the market value of the pledged securities, which is included in interest
expense. At June 30, 2005, there was an outstanding balance under the margin
account of $18,613,000. The average outstanding balance for the three and nine
months ended June 30, 2005 and 2004 was $18,563,000 and $10,317,000,
respectively, and $14,733,000 and $10,049,000, respectively, and the average
interest rate paid was 5.90% and 4.88%, respectively, and 5.71% and 4.81%,
respectively. At June 30, 2005, marketable securities with a market value of
$46,441,600 were pledged as collateral.
Note 7 - Comprehensive Income
Comprehensive income for the three month period ended was as follows:
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Net income $ 3,187 $ 2,309 $10,537 $ 8,854
Other comprehensive (loss) income -
Unrealized (loss) gain on available -
for-sale securities 4,929 (5,452) 8,555 4,751
--------- ------- ------- ------
Comprehensive (loss) income $ 8,116 $ 3,143 $19,092 $13,605
========= ======= ======= =======
Accumulated other comprehensive income, which is comprised solely of the net
unrealized gain on available-for-sale securities, was $34,717,000 and
$24,033,000 at June 30, 2005 and 2004, respectively.
Note 8 - New Accounting Pronouncement
On December 16, 2004, the Financial Accounting Standards Board issued Statement
No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB
Statement No. 123, Accounting for Stock-Based Compensation. Statement 123 (R)
supersedes APB Opinion No. 25, Accounting for Stock Issue to Employees, and
amends FASB Statement No. 95, Statement of Cash Flows. Statement 123 (R)
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the financial statements based on their fair
value. The pro forma disclosure is no longer an alternative. The statement is
effective for public companies at the beginning of the next fiscal year that
begins after June 15, 2005.
Emerging Issues Task Force ("EITF") Issue 04-5, "Investor's Accounting for an
Investment in a Limited Partnership when the Investor is the Sole General
Partner and the Limited Partners Have Certain Rights" was ratified by the FASB
in June 2005. This EITF provides guidance in determining whether a general
partner controls a limited partnership and what rights held by the limited
partners(s) preclude consolidation in which the sole general partner would
consolidate the limited partnership in accordance with the U.S. generally
accepted accounting principles. This issue is effective no later than for fiscal
years beginning after December 15, 2005 and as of June 29, 2005 for new or
modified arrangements. The Trust is currently evaluating the impact of the issue
and does not anticipate that the adoption of the new issue will have a
significant effect on earnings or the financial position of the Trust.
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 should not be relied on since they 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 primarily engaged in the business of originating and holding for
investment senior and junior real estate mortgages secured by income producing
property. We also originate and hold for investment real estate mortgages
secured by development and non income producing properties, purchase and hold
for investment senior and junior participations in existing mortgage loans
originated by others and sell senior, junior and pari passu participations in
real estate mortgage loans originated by us. We may also participate as both
lender to, and an equity participant in, joint ventures which acquire real
property. Our investment policy emphasizes short-term mortgage loans.
Liquidity and Capital Resources
We are engaged in the business of originating and holding for investment senior
and junior real estate mortgages. Our investment policy emphasizes short-term
mortgage loans. We also purchase senior and junior participations in short term
mortgage loans and originate participating mortgage loans and loans to joint
ventures in which we are an equity participant. Repayments of real estate loans
in the amount of $146,107,000 are due and payable to us during the twelve months
ending June 30, 2006. The availability of mortgage financing secured by real
property and the market for 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 predict 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 maintain an $85 million revolving credit facility with our lenders. The
maturity date of the facility is February 16, 2007 and may be extended at our
option for two one year terms. Borrowings under the facility are secured by
specific first mortgages receivable and the facility provides that the amount
borrowed will not exceed 65% of these specific receivables pledged to lenders.
Interest is charged on the outstanding balance at prime plus 1/2% (which
interest rate was 6.75% at June 30, 2005). At June 30, 2005, we pledged
collateral that would permit us to borrow the entire $85 million under the
facility, of which $63,550,000 was outstanding. As of July 29, 2005, $77,550,000
was outstanding under the facility.
We also have the ability to borrow on margin using the shares we own in
Entertainment Properties Trust as collateral. At June 30, 2005, there was
approximately $23,221,000 available under this facility, of which $18,613,000
was outstanding. The amount available under the margin account will be reduced
if the market value of the stock of Entertainment Properties Trust declines.
During the nine months ended June 30, 2005, we generated cash of $8,860,000 from
operations, $113,729,000 from real estate loan collections, $38,475,000 from the
sale of participation interests, $28,301,000 from net borrowings and $1,055,000
from the sale of securities. These funds, in addition to cash on hand, were used
primarily to fund real estate loan originations of $177,275,000 and pay
shareholder dividends of $11,107,000. Our cash and cash equivalents was
$5,297,000 at June 30, 2005.
We will satisfy our liquidity needs from cash and liquid investments on hand,
the credit facility with our lenders, the availability in our margin account
collateralized by shares of Entertainment Properties Trust, interest and
principal payments received on outstanding real estate loans and net cash flow
generated from the operation and sale of real estate assets.
As of June 30, 2005, there were 4 loans outstanding to one borrower. These loans
totaled $36,493,000, which is approximately 23% of our total loan portfolio and
16% of our total assets.
Results of Operations
Interest and fees on loans increased $1,348,000, or 37%, to $5,027,000 for the
three months ended June 30, 2005 from $3,679,000 for the three months ended June
30, 2004. During the current quarter, the average balance of loans outstanding
increased by approximately $28.7 million, resulting in an increase in interest
income of $845,000. Recent increases in the prime rate have caused the average
interest rate earned on the loan portfolio to increase to 12.49% for the three
month period ended June 30, 2005 from 10.70% for the three months ended June 30,
2004, resulting in a $554,000 increase in interest income. We also realized an
increase in fee income of $219,000 primarily the result of fee amortization on a
larger loan portfolio. Offsetting these increases was a $270,000 decline in
interest income that resulted from the collection of interest of three loans
that were returned to performing status in the prior years quarter.
For the nine months ended June 30, 2005, interest and fees on loans increased
$4,997,000, or 52%, from $9,637,000 to $14,634,000. During the nine months ended
June 30, 2005, the average balance of loans outstanding increased by
approximately $34.2 million resulting in an increase in interest income of
$3,067,000. We also realized an increase in interest income of $420,000
resulting from the collection of interest in excess of the stated rate on a loan
that went into default the previous fiscal year but was paid in full in the
current fiscal year. Recent increases in the prime rate have caused the average
interest rate earned on the portfolio to increase to 12.35% for the nine month
period ended June 30, 2005 from 10.94% for the nine month period ended June 30,
2004, resulting in an increase in interest income of $1,146,000. We also
realized an increase in fee income of $636,000. This was the result of fee
amortization on the larger loan portfolio and an acceleration of amortization
from the prepayment of loans. Offsetting these increases was a $272,000 decline
in interest income that resulted from the collection of interest of three loans
that were returned to performing status in the prior years quarter.
Operating income on real estate owned increased $63,000, or 10%, for the three
months ended June 30, 2005 to $680,000 from $617,000 for the three months ended
June 30, 2004. The increase was primarily caused by rents received from a
residential property located in Charlotte, North Carolina, that the Trust
acquired in foreclosure in January, 2005.
For the nine month period ended June 30, 2005, operating income from real estate
owned increased $156,000, or 9%, to $ 1,898,000 from $1,742,000 for the nine
month period ended June 30, 2004. In addition to the acquisition of the property
in Charlotte, North Carolina, which accounted for $135,000, or 85%, of the
increase, the Trust recognized increases in rental income and percentage rent at
its property located in Rock Springs, Wyoming.
Other revenues, primarily investment income, increased to $657,000 for the three
months ended June 30, 2005, from $590,000 for the three months ended June 30,
2004, an increase of $67,000, or 12%. For the nine months ended June 30, 2005,
other revenues, primarily investment income, increased by $133,000, or 8%, from
the nine months ended June 30, 2004, from $1,775,000 to $1,908,000. For both the
three and nine month periods ended June 30, 2005, the increase was primarily due
to increased dividend income from our investment in the common shares of
Entertainment Properties Trust.
Interest expense on borrowed funds increased to $1,005,000 for the three months
ended June 30, 2005, from $372,000 for the three months ended June 30, 2004, an
increase of $633,000, or 170%. Interest expense on borrowed funds increased to
$2,492,000 for the nine month period ended June 30, 2005 from $817,000 for the
nine month period ended June 30, 2004, an increase of $1,675,000, or 205%. The
increase for both the three and nine month periods is due to an increase in the
level of our borrowings to fund our increased loan portfolio and an increase in
the rates paid on our credit facility and margin account. For the three month
period ended June 30, 2005, the average outstanding balance increased from $30.1
million for the three months ended June 30, 2004 to $61.3 million, accounting
for an increase in interest expense of $482,000 and the combined interest rate
paid increased from 4.88% in the three months ended June 30, 2004, to 6.49% for
the three months ended June 30, 2005 causing an increase in interest expense of
$151,000. For the nine month period ended June 30, 2005, the average outstanding
balance increased from $22.1 million for the nine months ended June 30, 2004 to
$53.8 million, accounting for an increase in interest expense of $1,443,000 and
the combined interest rate paid increased from 4.86% for the nine months ended
June 30, 2004 to 6.10% for the nine months ended June 30, 2005 causing an
increase in interest expense of $232,000.
The Advisor's fee, which is calculated based on invested assets, increased
$95,000, or 24%, for the three months ended June 30, 2005, to $488,000 from
$393,000 for the three months ended June 30, 2004. For the nine month period
ended June 30, 2005, the fee increased $257,000, or 25%, to $1,289,000 from
$1,032,000 for the nine month period ended June 30, 2004. For both the three and
nine month periods, when compared to the prior three and nine month periods, we
experienced a large increase in the outstanding balance of invested assets,
primarily loans, the basis upon which the fee is calculated.
General and administrative expense increased $124,000, or 12%, to $1,138,000 for
the three months ended June 30, 2005 from $1,014,000 for the three months ended
June 30, 2004. We incurred increased accounting and audit fees of $114,000, the
result of Sarbanes-Oxley compliance activities, an increase in payroll and
payroll related expenses of $124,000, the result of increased staffing levels,
commissions paid to loan originators and increased restricted stock
amortization. These increases were offset by a $88,000 decline in legal expenses
that resulted from a decline in foreclosure related activities and the expensing
in the prior period of legal costs associated with the organization of a "de
novo" bank that the Trust decided not to pursue. The remaining decrease of
$26,000 was among several categories, none of which were significant.
General and administrative expense increased $342,000, or 12%, to $3,170,000 for
the nine months ended June 30, 2005 from $2,828,000 for the nine months ended
June 30, 2004. We incurred increased accounting and audit fees of $122,000, the
result of Sarbanes-Oxley compliance activities, an increase in payroll and
payroll related expenses of $225,000, the result of increased commissions paid
to loan originators and increased restricted stock amortization, and a $45,000
increase in insurance costs related to directors' and officers' liability
insurance. These increases were offset by a $65,000 decline in legal expenses
that resulted from a decline in foreclosure related activities and the expensing
in the prior period of legal costs associated with the organization of a "de
novo" bank that the Trust decided not to pursue.
Other taxes decreased $129,000, or 62%, for the three months ended June 30, 2005
from $209,000 for the three months ended June 30, 2004, to $80,000. The prior
years expense includes the payment of $122,000 income tax on earnings not
distributed to shareholders. For the nine months ended June 30, 2005, other
taxes decreased $44,000, or 12%, from $365,000 for the nine months ended June
30, 2004, to $321,000. The decline is the result of a $122,000 payment for
income tax on earnings that was not distributed to shareholders, offset by an
increase of $78,000 which is primarily an increase in the amount of excise tax
recorded. This tax is based on taxable income that has been generated but not
yet distributed.
Operating expenses relating to real estate properties declined to $451,000 for
the three months ended June 30, 2005, from $1,106,000 for the three months ended
June 30, 2004, a decline of $655,000, or 59%. In the prior three month period,
we incurred legal and other professional expenses of $779,000 in connection with
a litigation, commenced against the Trust, related to a property that was sold
by BRT in 1997. This litigation was favorably concluded in June 2004. This
decline was offset by $108,000 of operating expenses relating to a property
located in Charlotte, North Carolina that was acquired by the Trust in
foreclosure in January 2005. For the nine months ended June 30, 2005 operating
expenses relating to real estate properties declined to $1,123,000 from
$1,887,000 for the nine months ended June 30, 2004, a decline of $764,000, or
40%. In the prior nine month period we incurred legal and other professional
expenses of $919,000 in connection with the above referenced litigation. This
decline was offset by $172,000 of operating expenses related to a property
located in Charlotte, North Carolina that was recently acquired by the Trust in
foreclosure.
Amortization and depreciation increased to $84,000 for the three month period
ended June 30, 2005 from $68,000 in the three month period ended June 30, 2004,
an increase of $16,000, or 24%. Depreciation and amortization increased to
$234,000 for the nine month period ended June 30, 2005 from $204,000 for the
nine month period ended June 30, 2004, an increase of $30,000, or 15%. The
increase for both the three and nine month periods relates to the Charlotte,
North Carolina property acquired in foreclosure.
Equity in earnings of unconsolidated real estate ventures increased $49,000 for
the three months ended June 30, 2005 to $82,000 from $33,000 for the three
months ended June 30, 2005. The increase in the current three month period is
due to the sale of a cooperative apartment unit at one of our joint ventures.
For the nine months ended June 30, 2005, equity in earnings of unconsolidated
real estate ventures increased $9,000, or 12%, to $83,000 in the nine months
ended June 30, 2005 from $74,000 in the nine months ended June 30, 2004. In the
current nine month period the Trust realized an increase in income due to the
sale of a cooperative apartment unit at one of our joint ventures. This increase
was offset by a decline in rental income related to a property located in Dover,
Delaware, where, upon a lease renewal, a major tenant reduced the amount of
space it occupies.
For the nine months ended June 30, 2005 gain on available-for-sale securities
declined $961,000, from $1,641,000 to $680,000 for the nine months ended June
30, 2004. For the nine month period ended June 30, 2005, the Trust recognized a
loss of $49,000 on the liquidation of shares of a security the Trust owned and
recognized a $729,000 gain on the sale of 23,900 shares of Entertainment
Properties Trust. For the nine month period ended June 30, 2004, the Trust sold
61,300 shares of Entertainment Properties Trust and 58,500 shares of Atlantic
Liberty Financial for a gain of $1,637,000.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Our primary component of market risk is interest rate sensitivity. Our interest
income and to a lesser extent 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 also indexed to the
prime rate. At June 30, 2005, approximately 92% of our loan portfolio was at a
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 approximately a $595,000 positive effect on income before taxes and a
one percent decline in interest rates would have approximately a $126,000
negative effect on income before taxes. In addition, we originate loans with
short maturities and maintain a strong capital position. At June 30, 2005, our
loan portfolio was primarily secured by properties located in the New York
metropolitan area, New Jersey, Florida and Tennessee and, therefore, 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 of
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 June 30, 2005. 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 June 30, 2005 are effective.
There has been no changes in our internal control over financial reporting
during the quarter ended June 30, 2005 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
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
August 8, 2005 /s/ Jeffrey A. Gould
- -------------- --------------------
Date Jeffrey A. Gould, President
and Chief Executive Officer
(authorized officer)
August 8, 2005 /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
June 30, 2005 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)) 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) 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;
c) 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 fiscal 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: August 8, 2005 /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
June 30, 2005 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)) 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) 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;
c) 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 fiscal 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 registran'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: August 8, 2005 /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
June 30, 2005 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)) 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) 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;
c) 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 fiscal 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 registran'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: August 8, 2005
/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. 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. 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 June 30, 2005 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: August 8, 2005 /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. 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. 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 June 30, 2005 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: August 8, 2005 /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. 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. 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 June 30, 2005 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: August 8, 2005 /s/ George Zweier
---------------------
George Zweier
Chief Financial Officer