Great Neck, New York, December 14, 2009 -- BRT Realty Trust (NYSE:BRT) today announced its results of operations for the year and the three months ended September 30, 2009. For the year ended September 30, 2009, BRT reported total revenues of $14,602,000 and a net loss of $47,755,000, or a loss per share of $4.10. For the year ended September 30, 2008, BRT reported total revenues of $22,386,000 and a net loss of $260,000, or a loss per share of $.02. The weighted average number of common shares outstanding for the years ended September 30, 2009 and 2008 was 11,643,972 and 11,648,885, respectively.
BRT also reported that for the three months ended September 30, 2009, it had total revenues of $3,540,000 and net income of $3,467,000, or $.30 per share. For the three months ended September 30, 2008, BRT reported revenues of $4,673,000 and net income of $2,206,000, or $.19 per share. The weighted average number of common shares outstanding for the three months ended September 30, 2009 and 2008 was 11,575,475 and 11,728,412, respectively.
Commenting on the results of operations, Jeffrey A. Gould, President and Chief Executive Officer of BRT, noted that the economic recession and the unprecedented disruptions in the real estate and credit markets over the past two fiscal years caused significant declines in the values of commercial real estate properties, which materially and adversely affected BRT’s business and its operating results. Specifically, Mr. Gould noted:
Fiscal 2009 compared to Fiscal 2008
• Revenues declined by 35% year-over-year due primarily to significant declines in interest and fees on real estate loans as a result of decreases in loan originations. The decrease in loan originations is due to reduced demand for BRT’s short-term bridge loans and its conservatism in originating loans due to concerns about the ability of potential borrowers to repay loans in the current economic environment. The decrease in new originations was offset to a limited extent by the origination in 2009 of senior purchase money mortgage loans to facilitate the sale of real estate assets acquired in foreclosure proceedings. Also contributing to the decline in revenues was a decrease in investment income of $1,040,000.
• Loan loss provisions of $17,110,000 were taken in the 2009 Fiscal Year compared to loan loss provisions of $15,260,000 in the 2008 Fiscal Year.
• Impairment charges of $12,762,000 were taken against the real estate portfolio in the 2009 Fiscal Year (excluding impairment charges taken against real estate assets held for sale). For the prior fiscal year impairment charges totaled $2,680,000.
• Operating expenses related to real estate properties (including real estate assets held for sale) exceeded rental revenues by $3,018,000 in the 2009 Fiscal Year compared to $1,030,000 in the 2008 Fiscal Year, resulting primarily from operating deficits at properties acquired in foreclosure proceedings.
• Equity in earnings of unconsolidated ventures decreased by $4,149,000 year-over-year to a loss of $2,791,000. This decrease is primarily the result of a loss incurred in our joint venture with CIT Capital USA, Inc. due to loan loss provisions. This venture has been terminated and is in the process of winding up its affairs.
• Discontinued operations represents the income from operations, impairment charges and gains from the sale of properties sold during the fiscal year and interest and fee income on loans classified as held for sale. Loss from discontinued operations was $16,400,000 in the 2009 Fiscal Year primarily due to impairment charges of $18,284,000 taken with respect to real estate held for sale. In Fiscal Year 2008 the loss from discontinued operations was $5,078,000, principally due to impairment charges of $6,535,000.
• Offsetting the losses incurred in Fiscal 2009 is (i) a $6,443,000 gain on early extinguishment of debt as a result of BRT’s purchase at a discount of a portion of its outstanding junior subordinated notes, (ii) a $1,016,000 gain on a sale of available-for-sale securities, and (iii) a decrease of $2,209,000 in interest expense due to paydowns during the year and the cancellation of our credit line and the restructuring of our trust preferred securities. In the 2008 Fiscal Year, BRT benefitted substantially from a $19,940,000 gain on the sale of available-for-sale securities.
Quarter Ended September 30, 2009 compared to the quarter ended September 30, 2008
• Revenues declined quarter-over-quarter by 24% for the reasons expressed with respect to the decline in our revenues for the entire fiscal year.
• Although no additional provisions for loan losses were taken in the quarter ended September 30, 2009, impairment charges of $3,700,000 were taken in the quarter against real estate assets (excluding real estate assets held for sale). In the comparable quarter of Fiscal 2008 provisions of $3,560,000 and impairment charges of $1,630,000 were recorded.
• Operating expenses of real estate properties (including real estate assets held for sale), primarily real estate properties acquired in foreclosure proceedings, exceeded rental revenues by $840,000 and $172,000, in the current quarter versus the prior year’s quarter, respectively.
• A loss of $808,000 in equity of unconsolidated ventures was recognized in the current quarter compared to modest income in the last quarter of 2008.
• Discontinued operations in the Fiscal 2009 fourth quarter reflects income of $1,307,000 primarily as a result of a $1,986,000 gain from sale of real estate assets. In the fourth quarter of Fiscal 2008, BRT reported a loss from discontinued operations of $319,000 primarily because of $785,000 of impairment charges taken against real estate held for sale.
• The gain on early extinguishment of debt of $6,443,000 and the gain on sale of available-for-sale securities of $924,000 were the principal reasons that BRT reported net income of $3,467,000 for the current quarter. In the prior year’s quarter an $8,237,000 gain on sale of available-for-sale securities was the primary reason for net income of $2,206,000.
Mr. Gould noted that significant increases in loan defaults in the years ended September 30, 2008 and September 30, 2009 caused BRT to modify its business focus from origination activities to servicing its loan portfolio. During Fiscal 2009, BRT focused its energy and resources on workout activities, pursuing foreclosure actions, acquiring title to real estate properties securing loans and, subsequent to acquiring title, operating and selling such properties. Mr. Gould stated that “by focusing on our liquidity position, specifically acquiring properties securing defaulted loans and selling such properties, BRT has generated cash and cash equivalents, including securities available-for-sale, aggregating approximately $55,000,000 as of December 8, 2009.” Mr. Gould commented that “our current cash position allows us to be in a position to actively reengage in our principal business of originating and holding for investment senior, short-term mortgage loans. We intend to be active in the lending area in the new year.”
BRT REALTY TRUST CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share data)(Unaudited) (Audited)
Three Months Ended Twelve Months Ended
September 30, September 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues $ 3,540 $ 4,673 $ 14,602 $ 22,386
Expenses (1) 8,413 10,377 51,501 38,727
---------- ---------- ---------- ----------
Total revenues less totalexpenses (4,873) (5,704) (36,899) (16,341)
Equity in (loss) earnings
of unconsolidated joint
ventures (808) 36 (2,791) 1,358
Gain on sale of joint
venture interest - - 271 -
Gain on sale of
available-for-sale
securities 924 8,237 1,016 19,940
Gain on early
extinguishment of debt 6,443 - 6,443 -
Minority Interest 474 (44) 605 (139)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations 2,160 2,525 (31,355) 4,818
Discontinued operations:
Income from operations (91) 372 (315) (60)
Impairment charges (514) (785) (18,284) (6,535)
Gain on sale of real
estate assets 1,912 94 2,199 1,517
---------- ---------- ---------- ----------
Income from discontinued
operations 1,307 (319) (16,400) (5,078)
---------- ---------- ---------- ----------
Net income (loss) income $ 3,467 $ 2,206 $ (47,755) $ (260)
========== ========== ========== ==========
Basic and diluted income
(loss) per share of
beneficial interest:
Income (loss) from
continuing operations $ 0.19 $ 0.22 $ (2.69) $ 0.41
Income from discontinued
operations 0.11 (0.03) (1.41) (0.43)
---------- ---------- ---------- ----------
Basic and diluted
Earnings (loss) earningsper share $ 0.30 $ 0.19 $ (4.10) $ (0.02)
========== ========== ========== ==========
Cash distribution per share $ 0.12 $ 1.33 $ 0.12 $ 3.19
Stock distribution per
share 1.03 - 1.03 -
---------- ---------- ---------- ----------
Total distribution percommon share $ 1.15 $ 1.33 $ 1.15 $ 3.19
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 11,575,475 11,725,236 11,643,972 11,648,885
========== ========== ========== ==========
Diluted 11,575,475 11,728,412 11,643,972 11,648,885
========== ========== ========== ==========
(1) Includes impairment charges of $3,700,000 and $1,630,000 for the three
months ended and $12,762,000 and $2,680,000 for the twelve months ended September 30, 2009 and 2008 respectively. Also includes provision for loan loss of $(420,000) and $3,560,000 for the three months ended and $17,110,000 and $15,260,000 for the twelve months ended September 30, 2009 and 2008 respectively.
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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