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 March 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). (Check one):
Yes No X
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Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
7,965,335 Shares of Beneficial Interest,
$3 par value, outstanding on May 6, 2006
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
March 31, September 30,
2006 2005
---- ----
(Unaudited) (Audited)
ASSETS
Real estate loans:
Earning interest, including $550 and
$3,500 from related parties $214,237 $192,012
Not earning interest 1,617 1,617
-------- --------
215,854 193,629
Allowance for possible losses (669) (669)
-------- --------
215,185 192,960
-------- --------
Real estate assets:
Real estate properties net of accumulated
depreciation of $614 and $613 3,398 3,475
Investment in unconsolidated real
estate ventures 9,557 8,713
-------- --------
12,955 12,188
Cash and cash equivalents 7,885 5,709
Securities available-for-sale at fair value 45,651 48,453
Real estate property held for sale 2,810 2,642
Other assets, including $71and $14 related to
real estate property held for sale and $345
and $-0- due from related party 7,653 4,246
-------- --------
Total Assets $292,139 $266,198
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowed funds $110,074 $110,932
Junior subordinated notes 25,774 -
Mortgage payable 2,506 2,542
Accounts payable and accrued liabilities,
including deposits of $3,219 and $2,606 7,341 6,166
Dividends payable 4,135 3,903
-------- --------
Total Liabilities 149,830 123,543
-------- --------
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 - 8,997 and 8,947 shares respectively 26,990 26,841
Additional paid-in capital 83,645 83,723
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 30,721 33,503
Unearned compensation - (1,311)
Retained earnings 11,071 10,465
-------- --------
152,427 153,221
Cost of 1,174 and 1,226 treasury shares of
beneficial interest, respectively (10,118) (10,566)
-------- --------
Total Shareholders' Equity 142,309 142,655
-------- --------
Total Liabilities and Shareholders' Equity $292,139 $266,198
======== ========
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
Consolidated Statements of Income
(Dollar amounts in thousands except per share amounts)
Three Months Ended Six Months Ended
March 31, March 31,
2006 2005 2006 2005
---- ---- ---- ----
Revenues:
Interest and fees on real estate loans, including
$17 and $172 for the three month periods,
respectively, and $76 and $357 for the six month
periods, respectively, from related parties $ 7,119 $ 4,744 $13,543 $ 9,607
Operating income from real estate properties 251 333 544 683
Other, primarily investment income 751 658 1,434 1,251
------- ------- ------- -------
Total Revenues 8,121 5,735 15,521 11,541
------- ------- ------- -------
Expenses:
Interest - borrowed funds 2,006 820 3,776 1,487
Advisor's fees, related party 629 416 1,165 801
General and administrative - including $216
and $187 for the three month periods,
respectively, and $448 and $374 for the six month
periods, respectively, to related parties 1,468 1,064 3,073 2,032
Other taxes 134 131 248 241
Operating expenses relating to real estate properties
including interest on mortgages payable of $39 and $47
for the three month periods, respectively, and $80 and
$93 for the six month periods, respectively 197 195 404 406
Amortization and depreciation 34 35 71 71
------- ------- ------- -------
Total Expenses 4,468 2,661 8,737 5,038
Income before equity in earnings of unconsolidated real
estate ventures, gain on sale of available-for-sale securities,
minority interest and discontinued operations 3,653 3,074 6,784 6,503
Equity in earnings (loss) of unconsolidated real estate ventures 127 (54) (750) 1
Gain on disposition of real estate related to unconsolidated
real estate venture - - 2,531 -
------- ------- ------- -------
Income before gain on sale of available-for-sale securities,
minority interest and discontinued operations 3,780 3,020 8,565 6,504
(Loss) Gain on sale of available-for-sale securities - (49) - 680
Minority interest (6) (13) (14) (24)
------- ------- ------- -------
Income before discontinued operations 3,774 2,958 8,551 7,160
Discontinued Operations
Income (loss) from operations 30 81 (32) 190
Gain on sale of real estate assets 315 - 315 -
------- ------- ------- -------
Income from discontinued operations 345 81 283 190
------- ------- ------- -------
Net income $4,119 $3,039 $8,834 $7,350
====== ====== ====== ======
Income per share of beneficial interest:
Income from continuing operations $ .48 $ .38 $ 1.09 $ .93
Income from discontinued operations .04 .01 .03 .02
------ ------ ------ ------
Basic earnings per share $ .52 $ .39 $ 1.12 $ .95
====== ====== ====== ======
Income from continuing operations $ .48 $ .38 $ 1.09 $ .92
Income from discontinued operations .04 .01 .03 .02
------ ------ ------ ------
Diluted earnings per share $ .52 $ .39 $ 1.12 $ .94
====== ====== ====== ======
Cash distributions per common share $ .52 $ .48 $ 1.04 $ .96
====== ====== ====== ======
Weighted average number of common shares outstanding:
Basic 7,920,760 7,748,340 7,874,877 7,704,884
Diluted 7,945,242 7,806,385 7,910,922 7,777,400
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, 2005 $26,841 $83,723 $33,503 $ (1,311) $ 10,465 $(10,566) $142,655
Reclassification upon the adoption
FASB No. 123(R) - (1,311) - 1,311 - - -
Shares issued - purchase plan 149 994 - - - - 1,143
Distributions - common share
($1.04 per share) - - - - (8,228) - (8,228)
Exercise of stock options - 5 - - - 448 453
Compensation expense -
stock option and restricted stock - 234 - - - - 234
Net income - - - - 8,834 - 8,834
Other comprehensive
(loss) - net unrealized
loss on available-for-sale
securities - - (2,782) - - - (2,782)
------
Comprehensive income - - - - - - 6,052
-----------------------------------------------------------------------------------
Balances, March 31, 2006 $26,990 $83,645 $30,721 $ - $11,071 $(10,118) $142,309
===================================================================================
See Accompanying Notes to Consolidated Financial Statements.
BRT REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Thousands)
Six Months Ended
March 31,
2006 2005
---- ----
Cash flows from operating activities:
Net income $ 8,834 $ 7,350
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation 239 211
Amortization of restricted stock and stock options 234 140
Net gain on sale of available-for-sale securities - (680)
Gain on sale of real estate and foreclosed property (315) -
Equity in loss (earnings) of unconsolidated real estate ventures 750 (1)
Gain on disposition of real estate related to unconsolidated
real estate venture (2,531) -
Distribution of earnings of unconsolidated joint ventures 91 120
Increase in straight line rent (33) (76)
Increases and decreases from changes in other assets and liabilities
(Increase) in interest and dividends receivable (377) (518)
Decrease in prepaid expenses 32 28
Increase (Decrease) in accounts payable and accrued liabilities 1,218 (264)
Increase in deferred costs (1,572) (121)
Increase (Decrease) in deferred revenues 466 (84)
(Decrease) in escrow deposits (513) (229)
Due from participants (745) -
Other (75) 30
------- -------
Net cash provided by operating activities 5,703 5,906
------- -------
Cash flows from investing activities:
Collections from real estate loans 82,534 84,880
Sale of participation interests 37,800 37,075
Additions to real estate loans (142,559) (121,819)
Net costs capitalized to real estate assets (191) (209)
Proceeds from sale of real estate owned 337 -
Investment in real estate ventures - (459)
Sales of available-for-sale securities - 1,055
Contributions to real estate ventures (30) -
Distributions of capital of unconsolidated joint ventures 876 40
-------- --------
Net cash (used in) provided by investing activities (21,233) 563
-------- --------
Cash flows from financing activities:
Proceeds from borrowed funds 83,000 110,500
Repayment of borrowed funds (83,858) (106,345)
Proceeds from sale of junior subordinated notes 25,000 -
Pay down of mortgage payable (36) (34)
Cash distribution - common shares (7,996) (7,376)
Exercise of stock options 453 492
Issuance of shares - stock purchase plan 1,143 525
Net cash
-------- --------
provided by financing activities 17,706 2,238
-------- --------
Net increase in cash and cash equivalents 2,176 4,231
Cash and cash equivalents at beginning of period 5,709 5,746
-------- --------
Cash and cash equivalents at end of period $ 7,885 $ 9,977
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 3,598 $ 1,453
======== ========
Non cash investing and financing activity:
Purchase of common shares of statutory trust $ 774 $ -
======== ========
Reclassification of loan to real estate upon foreclosure - 2,446
======== ========
Reclassification of real asset to real estate property held for sale 2,787 -
======== ========
Accrued distributions 4,135 3,729
======== ========
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 March
31, 2006 and for the three and six months ended March 31, 2006 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 and six months ended March 31, 2006 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 to conform with the current consolidated financial
statements.
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, 2005.
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 2 - Shareholders' Equity
Distributions
During the quarter ended March 31, 2006, BRT declared a cash distribution to
shareholders of $.52 per share. This distribution totaled $4,135,000 and was
paid April 3, 2006 to shareholders of record on March 22, 2006.
Stock Options
The Trust accounts 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 2005 and 2004: 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.
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 stock 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 stock options.
The Trust recorded $17,000 of compensation expense during the six months ended
March 31, 2006 related to unvested options which vested subsequent to December
13, 2005. During the six months ended March 31, 2006, 51,936 previously issued
options were exercised. Proceeds from these options totaled $453,000.
Note 2 - Shareholders' Equity (Continued)
Restricted Shares
As of March 31, 2006, 138,430 restricted shares were issued under the Trust's
2003 incentive plan of which 130,510 were outstanding. 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. 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 and stock options at
the date of grant be amortized ratably into expense over the appropriate vesting
period. For the three months ended March 31, 2006 and March 31, 2005, the Trust
recorded $123,000 and $84,000 of compensation expense, respectively. For the six
months ended March 31, 2006 and March 31, 2005 the Trust recorded $217,000 and
$140,000 of compensation expense, respectively.
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 Six Months Ended
March 31, March 31,
--------- ---------
2006 2005 2006 2005
---- ---- ---- ----
Basic 7,920,760 7,748,340 7,874,877 7,704,884
Effect of dilutive securities 24,482 58,045 36,045 72,516
--------- --------- --------- ---------
Diluted 7,945,242 7,806,385 7,910,922 7,777,400
========= ========= ========= =========
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 loan portfolio.
If all loans classified as non-earning were earning interest at their
contractual rates for the three months ended March 31, 2006 and 2005, interest
income would have increased by approximately $66,000 and $21,000, respectively.
For the six month period ended March 31, 2006 and 2005, the increase would have
been $132,000 and $124,000, respectively.
Included in real estate loans is one second mortgage to a venture in which the
Trust (through a wholly owned subsidiary) holds a 50% interest. At March 31,
2006, the aggregate balance of this mortgage loan was $550,000. Interest earned
on loans to ventures totaled $17,000 and $174,000 for the three months ended
March 31, 2006 and 2005, respectively. For the six month period ended March 31,
2006 and 2005 interest earned on these loans totaled $76,000 and $357,000.
At March 31, 2006 two separate borrowers had loans outstanding in excess of 15%
of the total portfolio. One borrower had 3 loans outstanding totaling
$43,500,000 at March 31, 2006, which is approximately 20% of the portfolio and
15% of the Trust's total assets. Each loan is collateralized by a separate
multi-family apartment complex located in Florida being converted to condominium
ownership. The other borrower has 5 loans outstanding totaling $37,394,000 at
March 31, 2006. These loans totaled 17% of the Trust's loan portfolio and 13% of
the Trust's total assets. Each of these five loans is collateralized by a
separate multi-family garden apartment complex. Three of the loans, with a
balance at March 31, 2006 of $22,075,000, are collateralized by properties
located in Tennessee. The remaining two loans, with a balance at March 31, 2006
of $15,319,000, are collateralized by properties located in Alabama and
Arkansas.
During the quarter ended March 31, 2006 the Trust sold at par, pari passu
participations in seven mortgage loans totaling $30 million.
Note 4 - Investment in Unconsolidated Joint Ventures at Equity
The Trust is a partner in eight unconsolidated joint ventures which own and
operate seven properties. The Trust holds a second mortgage on one property
owned by one of the ventures.
Unaudited condensed financial information for the most significant joint venture
is shown below.
Blue Hen Venture
----------------
(Dollar Amounts in Thousands)
March 31, September 30,
2006 2005
---- ----
Condensed Balance Sheet
-----------------------
Cash and cash equivalents $ 1,344 $ 573
Real estate investments, net 15,094 15,395
Other assets 414 596
-------- --------
Total assets $ 16,852 $ 16,564
======== ========
Other liabilities $ 178 $ 268
Equity 16,674 16,296
-------- --------
Total liabilities and equity $ 16,852 $ 16,564
======== ========
Trust's equity investment $ 7,316 $ 7,126
======== ========
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2006 2005 2006 2005
---- ---- ---- ----
Condensed Statement of Operations
---------------------------------
Revenues, primarily rental income $ 777 $ 763 $ 1,555 $ 1,578
------- ------- ------- -------
Operating expenses (1) 448 477 845 886
Depreciation 159 168 333 326
Interest expense (2) - 34 - 74
------- ------- ------- -------
Total expenses 607 679 1,178 1,286
------- ------- ------- -------
Net income attributable to members $ 170 $ 84 $ 377 $ 292
======= ======= ======= =======
Trust's share of net income
recorded in income statement $ 85 $ 42 $ 188 $ 146
======= ======= ======= =======
(1)Includes $59,000 and $43,000 for the three months ended March 31, 2006 and
2005, respectively, and $109,000 and $90,000 for the six months ended
March 31, 2006 and 2005, respectively, to related parties.
(2)Interest expense on first mortgage held by the Trust.
Note 4 - Investment in Unconsolidated Joint Ventures at Equity (Continued)
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.
The remaining seven ventures contributed $42,000 and ($96,000) in equity
earnings (losses) for the three months ended March 31, 2006 and 2005,
respectively, and $(938,000) and $(145,000) in equity losses for the six months
ended March 31, 2006 and 2005, respectively. The loss in the six month period
ended March 31, 2006 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 area that was sold in December 2005.
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 fair
market value at March 31, 2006 of $42,383,000.
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 fair market value at March, 2006 of $1,772,000.
Note 6 -Borrowed Funds
On January 9, 2006, the Trust entered into a $150 million credit facility with
North Fork Bank, Valley National Bank, Merchants Bank Division, Signature Bank
and Manufacturers and Traders Trust Company. This credit facility replaced two
previous facilities of $85 million and $17 million. The current facility matures
on February 1, 2008 and may be extended for two one-year periods for a fee of
$375,000 for each extension. On March 13, 2006, the credit facility was amended
to increase the facility to $155 million. The Trust paid a commitment fee of
$700,000 to the banks, which is being amortized over the term of the facility.
Borrowings under the 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.
Borrowings under the facility bear interest at 30 day LIBOR plus 225 basis
points (7.00% at March 31, 2006). At March 31, 2006, the Trust pledged
collateral that would permit it to borrow $114 million, of which $90 million was
outstanding.
The average outstanding balances on our credit facilities for the three months
ended March 31, 2006 and March 31, 2005 were $86,889,000 and $39,100,000,
respectively, and the average interest rate paid was 7.38% and 6.17%,
respectively. Interest expense for the quarters ended March 31, 2006 and March
31, 2005 was $1,604,000 and $603,000, respectively. For the six months ended
March 31, 2006 and 2005, the average outstanding balances on our credit
facilities were $78,882,000 and $37,325,000, respectively, and the average
interest rate paid was 7.51% and 5.97%, respectively. Interest expense for the
six months ended March 31, 2006 and 2005 was $2,994,000 and $1,126,000,
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 March 31, 2006 there was an
outstanding balance of $20,074,000 on one of the margin accounts and zero
outstanding on the other margin account. Marketable securities, with a fair
market value at March 31, 2006 of $43,844,000 were pledged as collateral. The
average outstanding balance on the margin facilities for the quarter ended March
31, 2006 was $19,994,000 and the average interest rate paid was 6.93%. For the
quarter ended March 31, 2005, there was an average outstanding balance of
$15,453,000 at an average interest rate of 5.63%. Interest expense on the margin
accounts for the quarter ended March 31, 2006 and 2005 was $346,000 and
$217,000, respectively. The average outstanding balances on the margin
facilities for the six months ended March 31, 2006 and 2005 were $20,369,000 and
$12,819,000, respectively, and the interest rate paid was 7.05% and 5.58%,
respectively. Interest expense on the margin accounts for the six months ended
March 31, 2006 and 2005 was $726,000 and $362,000, respectively.
On March 21, 2006 BRT issued thirty year subordinated notes to BRT Realty Trust
Statutory Trust I, an unconsolidated affiliate of BRT. The Statutory Trust was
formed to issue $774,000 worth of common securities (all of the Statutory
Trust'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. The Statutory Trust remits dividends to the
common and preferred security holders on the same term as the subordinated
notes. The notes and trust 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, the Statutory Trust is required to
redeem a corresponding amount of trust 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 holding period
of the notes. Interest expense for the quarter ended March 31, 2006 was $55,000.
BRT Realty Trust Statutory Trust I is a variable interest entity under FIN 46.
Under the provisions of FIN 46 BRT has determined that the holders of the
preferred securities are the primary beneficiaries of the Statutory Trust.
Accordingly, BRT does not consolidate the Statutory Trust and has reflected the
obligations of the Statutory Trust under the caption "Junior Subordinated
Notes". The investment in the common securities of the Statutory Trust is
reflected in Other Assets in the Consolidated Balance Sheets and is accounted
under the equity method of accounting.
Note 7 - Comprehensive Income
Comprehensive income for the three and six month periods ended was as follows:
(Dollar Amounts in Thousands)
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2006 2005 2006 2005
---- ---- ---- ----
Net income $ 4,119 $ 3,039 $ 8,834 $ 7,350
Other comprehensive income (loss) -
Unrealized gain (loss) on available -
for-sale securities 1,428 (3,099) (2,782) 3,626
-------- ------- ------- -------
Comprehensive income (loss) $ 5,547 $ (60) $ 6,052 $10,976
======== ======= ======= =======
Note 8 - Related Party Transactions
During the quarter ended March 31, 2006, BRT sold to Gould Investors L.P., a
related party, at its cost, on the same date that the loan was originated, a 50%
pari passu participation in a $46 million mortgage loan for $23 million. Gould
Investors also received $333,438, its 50% share of the total commitment fee paid
by the borrower.
Note 9 - Subsequent Events
On April 27, 2006 BRT Realty Trust completed the sale of $30 million of trust
preferred securities through a newly created Statutory Trust, BRT Realty Trust
Statutory Trust II, an unconsolidated affiliate of BRT Realty Trust. The
securities have a 30 year term and bear interest at a fixed rate of 8.49% per
annum for 10 years at which time they convert to a floating rate of LIBOR plus
290 basis points. The securities mature in April 2036 and may be redeemed in
whole or in part anytime after five years without penalty at BRT's option.
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 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
("mezzanine financing"). 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. Our loans to
joint ventures in which we participate as an equity owner may provide for a
longer term.
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
$209,998,000 are due during the twelve months ending March 31, 2007, including
$1,617,000 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 in place a $155 million credit facility with a group of banks consisting
of North Fork Bank, Valley National Bank, Merchants Bank Division, 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
or $155 million. At March 31, 2006, $114.5 million was available to be drawn
based on the lending formula, of which $90 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 March 31, 2006,
$22.8 million was available under the margin lines of credit, of which $20.1
million was outstanding. 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 six months ended March 31, 2006, we generated cash of $5,703,000 from
operations, $82,534,000 from real estate loan collections, $37,800,000 from the
sale of participation interests in loans and $25,000,000 from the issuance of
junior subordinated notes in connection with a private placement of Trust
preferred securities. These funds, in addition to cash on hand, were used
primarily to fund real estate loan originations of $142,559,000 and pay
shareholder dividends of $7,996,000. Our cash and cash equivalents were
$7,885,000 at March 31, 2006.
We will satisfy our liquidity needs from cash and liquid investments on hand,
the credit facility with our bank group, the availability in our margin account
collateralized by our available-for-sale 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 $2,375,000, or 50%, to $7,119,000 for the
three months ended March 31, 2006 from $4,744,000 for the three months ended
March 31, 2005. During the current quarter the average balance of loans
outstanding increased by approximately $61.3 million, resulting in an increase
in interest income of $2,014,000. Recent increases in the prime rate have caused
the average interest rate earned on the loan portfolio to increase to 13.18% for
the three month period ended March 31, 2006 from 12.64% for the three months
ended March 31, 2005, which caused interest income to increase by $186,000. We
also realized an increase in fee income of $175,000, primarily as the result of
amortization on a larger loan portfolio.
For the six months ended March 31, 2006, interest and fees on loans increased
$3,936,000, or 41%, from $9,607,000 to $13,543,000. During the six months ended
March 31, 2006, the average balance of loans outstanding increased by
approximately $53.7 million resulting in an increase in interest income of
$3,498,000. Recent increases in the prime rate have caused the average interest
rate earned on the portfolio to increase to 13.14% for the six month period
ended March 31, 2006 from 12.28% for the six month period ended March 31, 2005,
which caused interest income to increase by $588,000. We also realized an
increase in fee income of $271,000, primarily as the result of amortization on
the larger loan portfolio. We also realized a decline in interest income of
$420,000 six month vs. six month resulting from the collection of interest in
excess of the stated rate on a loan that went into default and was paid off in
full in the prior year.
Operating income on real estate owned decreased $82,000, or 25%, for the three
months ended March 31, 2006 to $251,000 from $333,000 for the three month period
ended March 31, 2005. For the six month period ended March 31, 2006, operating
income from real estate owned decreased $139,000, or 20%, to $544,000 from
$683,000 for the six month period ended March 31, 2005. For both the three and
six month periods, the decline was the result of reduced rental income at our
Yonkers property due to the Chapter 11 filing of one of our tenants and its
subsequent rejection of the lease.
Other revenues, primarily investment income, increased to $751,000 for the three
months ended March 31, 2006, from $658,000 for the three months ended March 31,
2005, an increase of $93,000, or 14%. For the six months ended March 31, 2006,
other revenues, primarily investment income, increased by $183,000, or 15%, for
the six months ended March 31, 2005, from $1,251,000 to $1,434,000. For both the
three and six month periods ended March 31, 2006, we received increased dividend
income from our investment in Entertainment Properties Trust shares and
increased investment income due to higher invested balances.
Interest expense on borrowed funds increased to $2,006,000 for the three months
ended March 31, 2006, from $820,000 for the three months ended March 31, 2005,
an increase of $1,186,000, or 144%. Interest expense on borrowed funds increased
to $3,776,000 for the six month period ended March 31, 2006 from $1,487,000 for
the six month period ended March 31, 2005, an increase of $2,289,000, or 154%.
The increase for both the three and six 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 March 31, 2006, the average outstanding balance on borrowed funds
increased from $54.5 million for the three months ended March 31, 2005 to $109.4
million on all borrowings, accounting for an increase in interest expense of
$933,000 and the overall interest rate paid increased from 6.02% in the three
months ended March 31, 2005, to 7.34% for the three months ended March 31, 2006
causing an increase in interest expense of $252,000. For the six month period
ended March 31, 2006, the average outstanding balance increased from $50.1
million for the six months ended March 31, 2005 to $100.5 million, accounting
for an increase in interest expense of $1,822,000 and the overall interest rate
on all borrowings paid increased from 5.87% for the six months ended March 31,
2005 to 7.43% for the six months ended March 31, 2006 causing an increase in
interest expense of $467,000.
The Advisor's fee, which is calculated based on invested assets, increased
$213,000, or 51%, for the three months ended March 31, 2006, to $629,000 from
$416,000 for the three months ended March 31, 2005. For the six month period
ended March 31, 2006, the fee increased $364,000, or 45%, to $1,165,000 from
$801,000 in the six month period ended March 31, 2005. For both the three and
six month periods, when compared to the prior three and six month periods, we
experienced a large increase in the outstanding balance of invested assets,
primarily loans, which is the basis upon which the fee is calculated.
General and administrative expense increased $404,000, or 38%, to $1,468,000 for
the three months ended March 31, 2006 from $1,064,000 for the three months ended
March 31, 2005. As our business expands and the size of our portfolio increases,
we incurred increases in several areas, particularly payroll and payroll related
expenses which increased $263,000. This was the result of increased staffing
levels, increased bonuses, an increase in commissions paid to loan originators
and increased restricted stock amortization. There was also an increase of
$29,000 in expenses allocated to us pursuant to a Shared Services Agreement
among us and related entities for overhead expenses. Additionally, advertising
increased $31,000 and there were additional accounting and audit fees of
$50,000, primarily as the result of Sarbanes-Oxley compliance activities.
For the six months ended March 31, 2006 general and administrative expense
increased $1,041,000 or 51% to $3,073,000 from $2,032,000 in the six month
period ended March 31, 2005. During the six months ended March 31, 2006 the
Trust incurred $316,000 in legal, professional and printing expenses related to
a contemplated public offering which was cancelled due to adverse market
conditions. Professional expenses increased $189,000, of which $104,000 was due
to Sarbanes-Oxley compliance costs, $41,000 was due to the reimbursement from a
borrower in the quarter ended December 31, 2004 of legal fees and $43,000 was
due to current foreclosure actions. There was also an increase of $74,000 in
expenses allocated to us pursuant to a Shared Services Agreement among us and
related entities for legal and accounting services. These increased allocations
resulted from the negotiation of the Trust's new credit facility which closed in
January 2006 and for professional services related to the cancelled offering.
Payroll and payroll related expenses have increased $382,000 in the current
period as the Trust has added staff, paid increased bonuses and commissions and
recognized increased expenses related to restricted stock and stock option
amortization.
Equity in earnings (loss) of unconsolidated joint ventures increased $181,000
for the three months ended March 31, 2006 to $127,000 from a loss of $54,000 for
the three month period ended March 31, 2005. For the six months ended March 31,
2006 equity in earnings (loss) of unconsolidated joint ventures declined
$751,000 from $1,000 for the six months ended March 31, 2005 to a loss of
$750,000 in the six month period ended March 31, 2006. For the three month
period, the increase was caused by a reduction in operating expenses related to
a property in Dover, Delaware and the sale of a property in Atlanta, Georgia in
December 2005 which experienced a loss in the prior three month period. For the
six month period we experienced a loss of $995,000 from the operations of the
joint venture which owns the Atlanta property that was sold in December 2005.
This loss was the result of an increase in interest expense of $882,000
resulting from the prepayment of the first mortgage upon the sale of the
property.
During the current six month period we realized a gain on disposition of real
estate related to unconsolidated real estate ventures, the result of the sale of
a multi-family apartment property located in Atlanta, Georgia. The venture
recognized a gain of approximately $5.1 million of which the Trust recorded
$2,531,000 as its share.
There were no sales of securities during the three or six month periods ended
March 31, 2006. In the three month period ended March 31, 2005, the Trust
recognized a loss of $49,000 on the exchange of shares of Malan Realty Trust, in
connection with Malan Realty's liquidation. Additionally, in the six month
period ended March 31, 2005 the Trust also recognized a gain of $729,000 on the
sale of 23,900 shares of Entertainment Properties Trust which was offset by the
loss of $49,000.
Income from discontinued operations increased $264,000 in the three month period
ended March 31, 2006 to $345,000 from $81,000 in the three month period ended
March 31, 2005. For the six month period ended March 31, 2006 income from
discontinued operations increased $93,000 to $283,000 from $190,000 in the six
months ended March 31, 2005. The discontinued operations in the current three
month period reflect the operations of a property acquired in foreclosure in
January 2005 and the gain on sale of $315,000 is from the sale of a cooperative
unit in New York. The discontinued operations for the prior three and six month
periods also include the operations from a property in Rock Springs, Wyoming
which was sold in July 2005.
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 March 31,
2006, approximately 88% 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 $802,000 on income before taxes and a one percent decline in
interest rates would have a negative effect of approximately $418,000 on income
before taxes. In addition, we originate loans with short maturities and maintain
a strong capital position. At March 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
March 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 March 31, 2006 are effective.
There has been no changes in our internal control over financial reporting
during the quarter ended March 31, 2006 that has materially affected, or is
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
BRT REALTY TRUST
Registrant
May 9, 2006 /s/ Jeffrey A. Gould
- ----------- ------------------------------
Date Jeffrey A. Gould, President and
Chief Executive Officer
May 9, 2006 /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
March 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: May 9, 2006 /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 March 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: May 9, 2006 /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
March 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: May 9, 2006
/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 March 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: May 9, 2006 /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 March 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: May 9, 2006 /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 March 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: May 9, 2006 /s/ George Zweier
-----------------------------------
George Zweier, Vice President
and Chief Financial Officer