Great Neck, New York, June 8, 2009 -- BRT Realty Trust (NYSE:BRT) announced that its wholly-owned subsidiaries have entered into a joint venture arrangement with respect to a grouping of properties in the downtown area of Newark, New Jersey (which includes existing office, retail, parking and vacant land which are primarily being held for future renovation or redevelopment). This joint venture is with a group of investors controlled by RBH Capital LLC (“RBH Capital”). BRT formerly held loans secured by the bulk of these properties in the aggregate of approximately $38 million. The prior loans have been refinanced with a new loan of $27 million held by BRT. Subsidiaries of BRT hold a 50.1% membership interest in the joint venture (with a common capital account of approximately $3.9 million) as well as hold an approximately $6.8 million preferred capital account interest. RBH Capital is affiliated with the former owners of the properties. RBH Capital also caused additional properties (unencumbered by the former BRT loans) and contract rights in additional properties to be contributed to the Joint Venture. RBH Capital’s affiliate has a 49.9% membership interest in the joint venture (with a common capital account of approximately $3.9 million).
In the March 31, 2009 quarter, BRT had reported that the former loans totaling approximately $38 million were non-earning and that it had taken a reserve against these loans of $11 million, which is substantially now represented by an equity interest and a preferred equity interest in the joint venture.
The new $27,000,000 mortgage will mature in five years, with a two-year extension option and will provide for an interest rate of 11% per annum, of which 6% will be paid currently and 5% will accrue. The extension option cannot be exercised unless all accrued interest is brought current at the time of exercise.
Jeffrey A. Gould, President and Chief Executive Officer of BRT, commented that the venture will seek to both generate rental revenues from the existing properties as well as seek the redevelopment of these inner-city locations. Mr. Gould further noted that the controlling principal of the RBH Group has significant knowledge of the Newark, New Jersey market and that an affiliate of his will be the manager and have operating responsibility for the activities of the joint venture. However, BRT’s consent is required for major joint venture decisions.
BRT is a New York-based Real Estate Investment Trust that specializes in the origination and holding for investment of senior and junior commercial mortgage loans secured by real property in the United States. For more information on BRT, please visit our Home Page.
Caution Concerning Forward-Looking Statements: Materials included in this filing may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Statements that include the words "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plans," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words or other comparable words should be considered uncertain and forward-looking.
Contact: Simeon Brinberg, Senior Vice President - (516) 466-3100
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