BRT Realty Trust Reports Second Quarter 2015 Results
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GREAT NECK, NY -- (Marketwired) -- 05/08/15 -- BRT Realty Trust (NYSE: BRT) today announced operating results for the three months ended March 31, 2015.
Jeffrey A. Gould, President and Chief Executive Officer, stated: "We are pleased with the progress of our multi-family operations as reflected in the increase in funds from operations to $0.12 per diluted share in the current quarter from $0.00 per share in the three months ended March 31, 2014. We also benefited from our $1.7 million share of the $2.7 million gain from the February 2015 sale of the Lawrenceville, Georgia multi-family property acquired three years ago. The operations and sale of this property generated a 27% internal rate of return on our investment and reflects favorably on our multi-family underwriting activities."
Operating Results:
Total revenues for the three months ended March 31, 2015 were approximately $20.5 million, an increase of $5.3 million, or 34.9%, from $15.2 million in the corresponding quarter in the prior year. The increase is due primarily to $4.4 million from the inclusion of six multi-family properties acquired since April 2014 and $790,000 primarily due to improved rental rates from many of the multi-family properties acquired before April 2014.
Total expenses for the three months ended March 31, 2015 were $23.6 million, an increase of $4.6 million, or 24.2%, from $19.0 million in the quarter ended March 31, 2014. Contributing to the change were increases of $1.9 million in real estate operating expenses, $1.7 million in depreciation and amortization and $916,000 of interest expense, due primarily to the multi-family properties acquired since April 2014.
Net loss attributable to common shareholders for the three months ended March 31, 2015 was $748,000, or $0.05 per share, compared to net loss of $2.6 million, or $0.18 per share, for the three months ended March 31, 2014. The decrease is due primarily to our $1.7 million share, net of non-controlling interests, of the gain recognized from the February 2015 sale of the Lawrenceville, Georgia multi-family property. Excluding depreciation, amortization, and the Trust's share of the gain on the sale of this property, net income attributable to common shareholders was $2.7 million, or $0.19 per share, in the current period, compared to $792,000, or $0.05 per share, in the corresponding period of the prior year.
Funds from Operations; Adjusted Funds from Operations:
Funds from Operations, or FFO, was $1.6 million, or $0.12 per fully diluted share, in the current quarter, compared to $(75,000), or $0.00 per diluted share, in the second quarter of 2014. Adjusted Funds from Operations, or AFFO, was $2.1 million, or $0.16 per diluted share, in the current quarter, compared to $353,000, or $0.04 per diluted share, in the second quarter of 2014. The increase in FFO and AFFO is attributable primarily to multi-family properties acquired after March 31, 2014 and improved operations at multi-family properties acquired before April 1, 2014.
A reconciliation of net income to FFO and AFFO, presented in accordance with GAAP, is provided with the financial information included later in this release.
Balance Sheet:
At March 31, 2015, the Trust had $18.0 million of cash and cash equivalents, assets of $760.1 million, debt of $553.9 million and total BRT shareholders' equity of $121.8 million.
At April 30, 2015, the Trust has approximately $15.7 million of cash and cash equivalents. As further described in our Quarterly Report on Form 10-Q for the period ended March 31, 2015, the Newark Joint Venture may require additional funds to complete the Teachers Village project.
Disposition
In February 2015, the Trust sold a 170 unit multi-family property located in Lawrenceville, Georgia for $9.7 million, realizing a net gain of $2.7 million. The Trust's share of this gain, net of non-controlling interests, is $1.7 million.
Subsequent Event:
On April 9, 2015, the Trust entered into a contract to sell a 798 unit multi-family property in Houston, TX for $39.9 million, including the assumption of $24.1 million mortgage debt. The transaction is anticipated to close in the quarter ending September 30, 2015, subject to the satisfaction of customary closing conditions, including the lender's consent to the buyer's assumption of the mortgage. The Trust anticipates it will record a gain of approximately $5.3 million on the sale, and that its share of the gain, net of non-controlling interests, will be approximately $4.2 million.
Non-GAAP Financial Measures:
In view of BRT's equity investments in joint ventures which have acquired multi-family properties, it discloses FFO and AFFO because management believes that such metrics are a widely recognized and appropriate measure of the performance of an equity REIT.
BRT computes FFO in accordance with the "White Paper on Funds From Operations" issued by the National Association of Real Estate Investment Trusts ("NAREIT") and NAREIT's related guidance. FFO is defined in the White Paper as net income (computed in accordance with generally accepting accounting principles), excluding gains (or losses) from sales of property, plus depreciation and amortization, plus impairment write-downs of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. In computing FFO, BRT does not add back to net income the amortization of costs in connection with its financing activities or depreciation of non-real estate assets. Since the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one REIT to another. BRT computes AFFO by deducting from FFO, straight line rent accruals and deferrals, adding back amortization of restricted stock compensation and amortization of costs in connection with financing activities, and adjusting for non-controlling interests.
Management believes that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assumes that the value of real estate assets diminish predictability over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, management believes that FFO and AFFO provide a performance measure that when compared year over year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. Management also considers FFO and AFFO to be useful in evaluating potential property acquisitions.
FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.
FFO and AFFO do not measure whether cash flow is sufficient to fund all of BRT's cash needs, including principal amortization and capital improvements. FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP.
Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating BRT's performance, management examines GAAP measures such as net income and cash flows from operating, investing and financing activities. Management also reviews the reconciliation of net income to FFO and AFFO.
Forward Looking Statements:
Certain information contained herein is forward looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding lending activities and other positive business activities. BRT intends such forward looking statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes 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, including our loan origination and property acquisition activities, involve known and unknown risks, uncertainties and other factors, which, in some cases, are beyond BRT's control and could materially affect actual results, performance or achievements. Investors are cautioned not to place undue reliance on any forward-looking statements and to carefully review the section entitled "Item 1A. Risk Factors" in BRT's Annual Report on Form 10-K for the year ended September 30, 2014.
About BRT Realty Trust:
BRT is a real estate investment trust that participates as an equity investor in joint ventures which own and operate multi-family properties, owns and operates and develops commercial, mixed use and other real estate assets. Additional financial and descriptive information on BRT, its operations and its portfolio, is available at BRT's website at: www.BRTRealty.com. Interested parties are encouraged to review the Form 10-Q for the quarter ended March 31, 2015 to be filed with the Securities and Exchange Commission for additional information.
BRT REALTY TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three months ended Six months ended
March 31, March 31,
2015 2014 2015 2014
----------- ----------- ----------- -----------
Revenues:
Rental and other
revenues from real
estate $ 20,186 $ 14,877 $ 39,667 $ 28,684
Other income 286 280 582 551
----------- ----------- ----------- -----------
Total revenues 20,472 15,157 40,249 29,235
Expenses:
Real estate operating
expenses 10,314 8,395 20,723 16,029
Interest expense 5,865 4,949 12,066 9,633
Advisor's fee, related
party 605 414 1,189 776
Property acquisition
costs - 292 295 1,528
General and
administrative
expenses 1,736 1,596 3,393 3,170
Depreciation and
amortization 5,115 3,384 9,273 6,574
----------- ----------- ----------- -----------
Total expenses 23,635 19,030 46,939 37,710
----------- ----------- ----------- -----------
Total revenues less
total expenses (3,163) (3,873) (6,690) (8,475)
Gain on sale of real
estate 2,777 - 2,777 -
----------- ----------- ----------- -----------
Loss from continuing
operations (386) (3,873) (3,913) (8,475)
Discontinued operations:
Income from operations - 362 - 1,213
----------- ----------- ----------- -----------
Net loss (386) (3,511) (3,913) (7,262)
Plus: net (income) loss
attributable to non-
controlling interests (362) 919 667 1,937
----------- ----------- ----------- -----------
Net loss attributable to
common shareholders $ (748) $ (2,592) $ (3,246) $ (5,325)
=========== =========== =========== ===========
Basic and diltued per
share amounts
attributable to common
shareholders:
Loss from continuing
operations (0.05) (0.21) (0.23) (0.46)
Discontinued operations - 0.03 - 0.09
----------- ----------- ----------- -----------
Basic and diluted
(loss) income per
share $ (0.05) $ (0.18) $ (0.23) $ (0.37)
=========== =========== =========== ===========
Funds from operations -
Note 1 $ 1,645 $ (75) $ 2,260 $ (447)
=========== =========== =========== ===========
Funds from operations
per common share -
diluted - Note 2 $ 0.12 $ 0.00 $ 0.16 $ (0.03)
=========== =========== =========== ===========
Adjusted funds from
operations - Note 1 $ 2,107 $ 353 $ 3,313 $ 345
=========== =========== =========== ===========
Adjusted funds from
operations per common
share - diluted -Note 2 $ 0.16 $ 0.04 $ 0.24 $ 0.02
=========== =========== =========== ===========
Weighted average number
of common shares
outstanding:
Basic and diluted 14,086,761 14,294,022 14,165,826 14,227,734
=========== =========== =========== ===========
Note 1:
Funds from operations is
summarized in the
following table:
Net (loss) attributable
to common shareholders $ (748) $ (2,592) $ (3,246) $ (5,325)
Add: depreciation of
properties 5,112 3,377 9,266 6,565
Add: our share of
depreciation in
unconsolidated joint
ventures 5 5 10 10
Add: amortization of
deferred leasing costs 28 16 31 31
Deduct: gain on sale of
real estate assets (2,777) - (2,777) -
Adjustments for non-
controlling interests -
depreciation of
properties (1,213) (874) (2,261) (1,715)
Adjustments for non-
controlling interests -
deferred leasing costs (12) (7) (13) (13)
Adjustments for non-
controlling interests -
gain on sale of real
estate 1,250 - 1,250 -
----------- ----------- ----------- -----------
Funds from
operations $ 1,645 $ (75) $ 2,260 $ (447)
Adjust for straight line
rents (101) (133) (201) (268)
Add: amortization of
restricted stock
compensation 239 214 445 394
Add: amortization of
deferred financing
costs 464 457 1,209 869
Adjustments for non-
controlling interests -
straight line rents 60 76 119 152
Adjustments for non-
controlling interests -
deferred financing
costs (200) (186) (519) (355)
----------- ----------- ----------- -----------
Adjusted funds from
operations $ 2,107 $ 353 $ 3,313 $ 345
=========== =========== =========== ===========
Note 2:
Funds from operations
per share is summarized
in the following table:
Net (loss) income
attributable to common
shareholders $ (0.05) $ (0.18) $ (0.23) $ (0.37)
Add: depreciation of
properties 0.37 0.23 0.66 0.46
Add: our share of
depreciation in
unconsolidated joint
ventures - - - -
Add: amortization of
deferred leasing costs - - - -
Deduct: gain on sale of
real estate asset (0.20) - (0.20) -
Adjustments for non-
controlling interests -
depreciation of
properties (0.09) (0.05) (0.16) (0.12)
Adjustments for non-
controlling interests -
deferred leasing costs - - - -
Adjustment for non-
controlling interest -
gain on sale of real
estate 0.09 - 0.09 -
----------- ----------- ----------- -----------
Funds from
operations per
common share basic
and diluted 0.12 0.00 0.16 (0.03)
Adjust for straight line
rents (0.01) (0.01) (0.01) (0.02)
Add: amortization of
restricted stock
compensation 0.02 0.02 0.03 0.03
Add: amortization of
deferred financing
costs 0.04 0.03 0.09 0.06
Adjustments for non-
controlling interests -
straight line rents 0.01 - 0.01 -
Adjustments for non-
controlling interests -
deferred financing
costs (0.02) - (0.04) (0.02)
----------- ----------- ----------- -----------
Adjusted funds from
operations per
common share basic
and diluted $ 0.16 $ 0.04 $ 0.24 $ 0.02
=========== =========== =========== ===========
Contact: Investor Relations (516) 466-3100 BRT REALTY TRUST 60 Cutter Mill Road Suite 303 Great Neck, New York 11021 Telephone (516) 466-3100 Telecopier (516) 466-3132 www.BRTRealty.com
Source: BRT Realty Trust
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