BRT Realty Trust (BRT) filed Quarterly Report for the period ended 2009-06-30.
BRT is a real estate investment trust. BRT\'s primary business activity is to originate and hold for investment for its own account senior real estate mortgage loans secured by income producing real property and to a lesser extent junior real estate mortgage loans secured by income producing real property and senior mortgage loans secured by undeveloped real property. BRT Realty Trust has a market cap of $52.4 million; its shares were traded at around $4.5 with and P/S ratio of 2.2. BRT Realty Trust had an annual average earning growth of 20.1% over the past 5 years.
Highlight of Business Operations:
During the nine months ended June 30, 2009, we generated cash of $9,039,000 from real estate loan collections, and $18,371,000 from the sales of real estate properties. The cash, along with our cash on hand of $35,765,000 at September 30, 2008, was used primarily to fund real estate loan originations of $12,650,000, pay shareholder dividends in October 2008 of $15,564,000 (relating to taxable income for the 2007 calendar year) and fund an operating loss of $8,179,000.
Interest expense on borrowed funds decreased to $923,000 for the three months ended June 30, 2009, from $1,734,000 for the three months ended June 30, 2008, a decline of $811,000, or 47%. For the three month period ended June 30, 2009, the average outstanding balance of borrowed funds declined by $24 million, as a result of our paydown of the credit facility with funds from loan repayments and the sale of properties. This decline accounted for a decrease in interest expense of $205,000. A decline of 225 basis points in the interest rate paid on the credit facility caused a decrease in interest expense of $116,000. Additionally, $150,000 of the decrease was the result of the decline in the amortization of deferred fees on our credit facility. The Trust also realized a reduction in interest and amortization of fees of $340,000, as a result of the restructuring of its trust preferred securities.
Interest expense on borrowed funds decreased to $3,725,000 for the nine months ended June 30, 2009, from $5,179,000 for the nine months ended June 30, 2008, a decline of $1,454,000, or 28%. For the nine month period ended June 30, 2009, the average outstanding balance of borrowed funds declined by $18 million, as a result of our paydown of the credit facility with funds from loan repayments and the sale of properties. This decline accounted for a decrease in interest expense of $541,000. A decline of 225 basis points in the interest rate paid on the credit facility caused a further decrease in interest expense of $323,000. Additionally, $250,000 was the result of a decline in the amortization of deferred fees on our credit facility. The Trust also realized a reduction in interest and amortization of fees of $340,000, as a result of the restructuring of its trust preferred securities.
Management, in its regular review process, analyzes the loan portfolio and the underlying value of the collateral securing its loans to determine the necessity of recording provisions for loan losses to reflect a decrease in the value of the collateral underlying loans. Due to the continuation of the credit crisis and national recession for the nine months ended June 30, 2009, the Trust recorded $17,530,000 in provisions for loan losses. The provision was taken against 22 loans with an aggregate outstanding balance of $65,771,000 and includes $2,265,000, taken against a loan due to a fraud committed by our borrower which has been reported to the appropriate authorities. For the three months ended June 30, 2009 no additional loan loss provision was required. For the three and nine month period ended June 30, 2008, the Trust recorded provision for loan losses of $6,400,000 and $11,700,000, respectively. The prior period s provisions were taken against six loans with an aggregate outstanding balance of $67,357,000 and seven loans with an aggregate outstanding balance of $51,357,000, respectively.
Loss from discontinued operations was $2,283,000 in the three month period ended June 30, 2009 as compared to a loss of $5,280,000 in the three month period ended June 30, 2008. The losses in both the current and prior three month periods are primarily due to impairment charges taken on real estate that the Trust has classified as held for sale or sold in these periods. In the quarter ended June 30, 2009, the Trust took impairment charges of $2,211,000 against seven properties five of which were sold in the current period. These impairment charges include $1,145,000 taken against condominium units located in Miami, Florida and $755,000 against condominium units located in Apopka, Florida. In the quarter ended June 30, 2008 the Trust took impairment charges of $5,402,000 against five properties. These impairments include $3,740,000 taken against units owned at two separate condominium complexes located in Miami and Apopka, Florida, $630,000 taken against a shopping center owned in Stuart, Florida and $985,000 taken against a multi family property located in Chattanooga, Tennessee.
Loss from discontinued operations was $18,178,000 in the nine month period ended June 30, 2009 as compared to a loss of $4,175,000 in the nine month period ended June 30, 2008. The losses in both the current and prior three month periods are primarily due to impairment charges taken on real estate that the Trust has classified as held for sale or sold in these periods. In the nine months ended June 30, 2009 the Trust took impairment charges of $17,522,000 against 11 properties. These impairments include $1,130,000 taken against condominium units located in Miami, Florida, $7,185,000 against condominium units located in Apopka, Florida and $7,818,000 taken against five multi family properties located in Nashville, Tennessee. In the nine months ended June 30, 2008 the Trust took impairment charges of $ 5,305,000 against four properties. These impairments include $3,690,000 taken against units at two separate condominium complexes located in Miami and Apopka, Florida, $630,000 taken against a shopping center in Stuart, Florida and $985,000 taken against a multi family property located in Chattanooga, Tennessee.
BRT is in the portfolios of Michael Price of MFP Investors LLC.
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