BRT

Business Context and Reporting Period

This Form 8-K was filed by BRT Realty Trust (referred to in the request as BRT Apartments Corp.) on October 4, 2012. The report details a material definitive agreement and the completion of an asset acquisition involving a joint venture.

Key Financial Metrics and Transaction Details

• Asset Acquired: Silvana Oaks Apartments, a 208-unit multi-family property in North Charleston, SC.
• Total Purchase Price: Approximately $22.6 million (including $21.5 million purchase price and $1.1 million in closing costs and escrows).
• Financing: $17.7 million non-recourse loan at 3.79% interest per annum.
• Equity Contribution: $4.4 million contributed by the registrant for a 90% equity interest in the joint venture.
• Loan Terms: Interest-only until November 1, 2014; 30-year amortization thereafter; matures November 1, 2022.

Material Changes and Cash Flow Structure

The filing reports the entry into a joint venture with KBS Silvana LLC. Cash flow distributions from the joint venture follow a specific priority structure:

1. Payment of a 10% preferred return (compounded quarterly) to members pari passu.
2. Return of unreturned capital contributions to members pari passu.
3. 25% to KBS and 75% to the registrant until the registrant achieves a 15% internal rate of return.
4. Thereafter, 35% to KBS and 65% to the registrant.

Guidance, Outlook, and Unusual Items

The filing does not provide forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the standard terms of the loan agreement. The transaction is a standard acquisition via joint venture structure.

Investor Verification Checklist

• Verify the filing of financial statements for the acquired business and pro forma financial information, which are due by December 18, 2012.
• Confirm the 90% equity ownership structure and the specific cash flow waterfall mechanics with the joint venture partner, KBS Silvana LLC.
• Review the non-recourse nature of the $17.7 million debt and the specific events of default outlined in the loan agreement.
• Assess the impact of the 3.79% interest rate and interest-only period on the company's overall debt service coverage ratio.