AS FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION ON
September 10, 2004
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BRT REALTY TRUST
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 13-2755856
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 Cutter Mill Road
Great Neck, New York 11021
(516) 466-3100
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Mark H. Lundy, Esq.
Vice President
BRT Realty Trust
60 Cutter Mill Road
Great Neck, New York 11021
(516) 466-3100
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(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
Jeffrey A. Baumel, Esq.
McCarter & English, LLP
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102
(973) 622-4444
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Approximate date of commencement of proposed
sale to the public: From time to time after the
effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
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Proposed maximum Proposed maximum Amount of
Title of each class of securities Amount to be offering price per aggregate offering registration
to be registered registered share (1) price (1) fee
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Shares of Beneficial Interest, par value $3.00 750,000 $21.02 $15,765,000 $1,997.43
per share
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the
average high and low reported sales prices of Registrant's Shares of
Beneficial Interest on the New York Stock Exchange on September 7,
2004.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
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BRT REALTY TRUST
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
750,000 SHARES
OF
BENEFICIAL INTEREST
We are BRT Realty Trust, a real estate investment trust organized as a
business trust in 1972 under the laws of the Commonwealth of Massachusetts. Our
principal business activity is to generate income by originating and holding for
investment for our own account senior and junior real estate mortgage loans
secured by income producing property. With this prospectus, we are offering
participation in our Dividend Reinvestment and Stock Purchase Plan to holders of
our outstanding shares of beneficial interest, par value $3.00 per share
("Common Shares"). The Dividend Reinvestment and Stock Purchase Plan is a
simple, convenient and low-cost means of investing in our Common Shares.
PLAN HIGHLIGHTS
o You may participate in the plan only if you own our Common Shares.
o Once you are enrolled in the plan, you may purchase additional Common
Shares by automatically reinvesting all or a portion of any cash dividends
paid on your Common Shares.
o Once you are enrolled in the plan, you may buy additional Common Shares by
making optional cash investments from $100 to $2,500 per month on a regular
or occasional basis.
o Under the plan, the purchase price for our Common Shares that the
Administrator purchases directly from us for dividend reinvestments or
optional purchases from $100 to $2,500 per month is at a discount which
ranges from 0% to 5% (currently at 2%, subject to change).
o Your participation in the plan is entirely voluntary, and you may terminate
your participation at any time. If you do not elect to participate in the
plan, you will continue to receive any cash dividends paid on your Common
Shares.
Our Common Shares are traded on the New York Stock Exchange, under the
ticker symbol "BRT". The closing price of our Common Shares on September 9, 2004
was $21.48 per share.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or has determined if this prospectus is adequate or accurate. Any
representation to the contrary is a criminal offense.
Investing in our Common Shares involves risks. Potential investors
should consider the information presented under our discussion of
"Risk Factors" beginning on page 5 as well as the risk factors
disclosed in our filings with the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934.
The date of this Prospectus is September 10, 2004.
i
Table of Contents
Page
SUMMARY OF THE PLAN 1
WHERE YOU CAN FIND MORE INFORMATION 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 4
RISK FACTORS 5
TERMS AND CONDITIONS OF THE PLAN 10
INFORMATION ABOUT BRT REALTY TRUST 26
USE OF PROCEEDS 26
PLAN OF DISTRIBUTION 26
LEGAL MATTERS 27
EXPERTS 27
INDEMNIFICATION 27
EXHIBIT A - PLAN SERVICE FEES SCHEDULE 28
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You should rely only on the information contained or
incorporated by reference in this prospectus. We have not authorized
any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not
rely on it.
You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this
prospectus only. Our business, financial condition, results of
operations and prospects may have changed since that date.
4
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SUMMARY OF THE PLAN
The following summary of our Dividend Reinvestment and Stock Purchase
Plan may omit certain information that may be important to you. You should
carefully read the entire text of the plan contained in this prospectus before
you decide to participate in the plan.
Enrollment: You can participate in the plan if you currently own
our Common Shares by completing and submitting the
enclosed authorization form. You may also obtain an
authorization form from the plan's administrator,
American Stock Transfer & Trust Company. Please see
Question 6 under the caption "Terms and Conditions of
the Plan" for more detailed information.
Reinvestment of
Dividends: You can reinvest any cash dividends paid on all
or a portion of your Common Shares. You will be
able to purchase additional Common Shares from us
by reinvesting your dividends without paying
any brokerage commissions. If you participate in
the plan you will be responsible for the fees due
to the Administrator of the plan as outlined in
Exhibit A.To participate in the dividend reinvestment
feature of the plan, you must hold Common Shares and
elect to reinvest the dividends on all or any of
your Common Shares. Except or the restrictions
contained in our declaration of trust, as amended,
on transfer and ownership of Common Shares described
in Question 20, the reinvestment of any cash
dividends paid on your Common Shares is not subject
to a maximum limit. Please see Question 6 for more
detailed information.
Optional Cash
Investments: After you are enrolled in the plan, you can also buy
additional Common Shares from us without paying any
brokerage commissions. However, if you elect to buy
additional Common Shares, you will be responsible for
fees payable to the Administrator of the plan as
outlined in Exhibit A. You can invest from $100 to
$2,500 per month on a regular or occasional basis.
Investments of less than $100 and exceeding $2,500
will be returned to the participant without interest.
Please see Question 6 for more detailed information.
Administration: American Stock Transfer & Trust Company, transfer
agent for our Common Shares, initially will serve as
the administrator of the plan. You should send all
correspondence with the Administrator to: American
Stock Transfer & Trust Company, P.O. Box 922, Wall
Street Station, New York, NY 10269-0560. You may call
the Administrator at 888-888-0144. If you are
inquiring about enrollments, optional cash payments,
termination, sale of shares or if you desire to view
your account balance, you may log onto the
Administrator's website at www.amstock.com. Please
see Question 4 for more detailed information.
Source of Common
Shares: Initially, Common Shares purchased by the
Administrator under the plan will come from our
legally authorized but unissued Common Shares.
However, we may, in our sole discretion, direct the
Administrator to purchase Common Shares in the open
market or in privately negotiated transactions with
third parties. If Common Shares are purchased for you
in the open market or in privately negotiated
transactions, you will not receive any discount.
Please see Question 8 for more detailed information.
Purchase Price: The purchase price for Common Shares that the
Administrator purchases directly from us for
dividend reinvestments or optional purchases under
the plan will be at a discount from the Market Price
(as defined below), which discount is currently 2%
for reinvested dividends and 2% for optional
purchases. Each of the discounts are subject to
change from time to time (but will not vary from
the range of 0% to 5%). We will advise participants
through a press release of any change in the
applicable discount at least thirty days prior to
the effective date of the change. Please see Question
8 for more detailed information.
The purchase price for Common Shares purchased in the
open market or in privately negotiated transactions
with third parties will equal the weighted average of
the purchase prices paid by the Administrator for the
shares. Please see Question 8 for more detailed
information.
However, regardless of the source of shares, in no
event will the purchase price for our Common Shares
for dividend reinvestments or optional purchases be
less than 95% of the Market Price (as defined below)
Market Price: The Market Price in the case of Common Shares
purchased directly from us will be the average of
the daily high and low sales prices, computed to
three decimal places, of the Common Shares on the
NYSE Composite Transactions, as reported in the Wall
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Street Journal during the 5 days on which the NYSE
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is open and for which trades in our Common Shares
are reported immediately preceding the relevant
Purchase Date, or if no trading occurs in the Common
Shares on one or more of such days, for the 5 days
immediately preceding the Purchase Date for which
trades are reported. In the case of Common Shares
purchased on the open market, the Market Price will
be the weighted average of the actual prices paid,
computed to three decimal places, for all Common
Shares purchased by the Administrator with all
participants' dividends and optional cash payments
for the related month.
Tracking Your
Investment: You will receive periodic statements of the
transactions made in your plan account. These
statements will provide you with details of the
transactions and will indicate the share balance in
your plan account. Please see Question 13 for more
detailed information.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. The SEC maintains an Internet
site that contains reports, proxy and information statements, and other
information that we file electronically with the SEC and which are available at
the SEC's web site at: http://www.sec.gov . You can also inspect reports and
other information we file at the offices of the New York Stock Exchange, 20
Broad Street, 17th Floor, New York, New York 10005.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding us and our Common Shares, including certain exhibits. You
can obtain a copy of the registration statement from the SEC at the address
listed above or from the SEC's web site listed above.
The SEC allows us to "incorporate by reference" some of the documents
we file with it into this prospectus, which means:
o we can disclose important information to you by referring you to those
documents;
o the information incorporated by reference is considered to be part of
this prospectus; and
o later information that we file with the SEC will automatically update
and supersede this information.
We incorporate by reference the documents listed below:
o our Annual Report on Form 10-K, for the year ended September 30, 2003;
o our Quarterly Report on Form 10-Q for the quarter ended December 31,
2003;
o our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004;
o our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004;
and
o the description of our capital stock contained in our Current Report on
Form 8-K filed on September 10, 2004.
Current Reports on Form 8-K furnished under Item 9 and under Item 12 of
Form 8-K are not incorporated by reference in this prospectus.
All documents and reports filed by us with the SEC (other than Current
Reports on Form 8-K furnished pursuant to Item 9 or Item 12 of Form 8-K, unless
otherwise indicated therein) pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, after the date of this
prospectus and prior to the termination of this offering, shall be deemed
incorporated by reference in this prospectus and shall be deemed to be a part of
this prospectus from the date of filing of such documents and reports. Any
statement contained in a document incorporated or deemed to be incorporated by
reference in this prospectus shall be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in this
prospectus or in any subsequently filed document or report that also is or is
deemed to be incorporated by reference in this prospectus modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
We will provide without charge to each person, including any
shareholder, to whom a prospectus is delivered, upon written or oral request of
that person, a copy of any and all of the information that has been incorporated
by reference in this prospectus (excluding exhibits unless specifically
incorporated by reference into those documents). Please direct requests to us at
the following address:
BRT Realty Trust
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
Attention: Investor Relations
516-466-3100
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus (including the information incorporated by reference)
contains certain forward-looking statements within the meaning of federal
securities law. Words such as "may", "will", "expect", "anticipate", "intend",
"could", "estimate", or "continue" or other similar terms identify
forward-looking statements. These forward-looking statements discuss our
expectations or beliefs concerning, among other things, our operations,
performance, financial condition, plans, and strategies. Although we believe
that the expectations reflected in these forward-looking statements are based on
reasonable assumptions, forward-looking statements are not guarantees of future
performance and involve substantial risks and uncertainties. Actual results may
differ materially from those predicted in the forward-looking statements as a
result of various factors, including those described in Risk Factors.
30
RISK FACTORS
An investment in our Common Shares involves significant risks. You
should carefully consider the risks described below and the other information in
this prospectus before you decide to buy our Common Shares. The trading price of
our Common Shares could decline due to any of these risks, and you could lose
all or part of your investment.
Risks Related to Our Business
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Defaults on loans by borrowers would result in decrease in income. -
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Loan defaults will result in a decrease in interest income and an increase in
loan loss reserves. The decrease in interest income resulting from loan defaults
may be for a prolonged period of time as we seek to recover the principal
balance and accrued interest due to us plus default interest and our legal costs
in legal proceedings, including foreclosure actions and bankruptcy and
reorganization proceedings. These legal proceedings are expensive and time
consuming. The decrease in interest income and the costs involved in seeking to
recover the amount due to us will reduce the amount of cash available to meet
our expenses. The decrease in interest income combined with increases in loan
loss reserves will have an adverse impact on our net income, taxable income and
shareholders' equity. The decrease in interest income and the costs involved in
seeking to recover the amounts due to us could also have an adverse impact on
the cash dividends paid by us to our shareholders and our ability to continue to
pay cash dividends.
Our primary source of recovery in the event a loan default is the real
property underlying a defaulted loan and therefore the value of our loan depends
upon the value of the underlying real property. The value of the underlying
property is dependent on numerous factors outside of our control, including
national, regional and local business and economic conditions, government
economic policies, the level of interest rates, and non performance of lease
obligations by tenants occupying space at the underlying real property.
If a significant number of our mortgage loans are in default or we
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otherwise must write down our loans, a breach of the covenants of our bank line
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of credit could occur. - If a significant number of our mortgage loans are in
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default and/or a recessionary environment exists which, under generally accepted
accounting principles, requires us to take provisions against our loans or
against our real estate assets, our shareholders' equity could be materially
adversely affected. Under our credit agreement with North Fork Bank, the ratio
of bank debt to shareholders' equity cannot exceed 50%, the minimum ratio of
shareholders' equity (including available for sale securities) to debt shall not
be less than 1.75:1 (increasing to 2.01:1 on September 30, 2004) and our annual
debt service coverage ratio (based on the full amount of the debt, whether or
not advanced) shall not be less than 1.65:1.
A breach by us of any of these covenants would place us in default
under our loan agreement with North Fork Bank. A decline in our shareholders'
equity could place us in breach of one or more of these covenants. If as a
result of a breach of one or more of these covenants the Bank called a default
and required us to repay the full amount outstanding under the loan agreement,
we could be required to dispose of assets in a rapid fashion, which could have
an adverse impact on the amounts we would receive on such disposition. If we
could not dispose of assets in a timely fashion to the satisfaction of the Bank,
the Bank could foreclose on all or any portion of our loan portfolio pledged to
the Bank as collateral, which could result in loans being disposed of at below
market values. Disposition of loans at below our carrying value would adversely
affect net income, reduce our shareholders' equity and adversely affect our
ability to pay cash dividends to shareholders.
Inability of our borrowers to refinance or sell the underlying real
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property would lead to defaults on our loans. - A majority of our mortgage
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portfolio is short term and the preponderance of our portfolio is due within
five years. In addition, our borrowers are required to pay all or substantially
all of the principal balance of our loans at maturity, in most cases with little
or no amortization of principal over the term of the loan. Accordingly, in order
to satisfy this obligation, at the maturity of a loan a borrower will be
required to refinance or sell the property or otherwise raise a substantial
amount of cash. The ability to refinance or sell or otherwise raise a
substantial amount of cash is dependent upon factors which neither we nor our
borrowers control, such as national, local and regional business and economic
conditions, government economic policies, and the level of interest rates. If a
borrower is not able to pay the balance due at maturity, and we are not willing
to extend or restructure the loan, we will in most cases be required to
foreclose on the property, which can be expensive and time consuming and could
adversely affect our net income, shareholders' equity and cash dividends to
shareholders.
A significant portion of our loans are subordinate loans. - At June 30,
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2004 nine of our loans, constituting $23,179,000 in principal amount, or 18% of
the carrying value of our loan portfolio, were junior mortgage loans or junior
participations in mortgage loans. Because of their subordinate position, junior
liens carry a greater credit risk than senior lien financing, including a
substantially greater risk of non-payment of interest or principal. A decline in
real estate values in the region in which the underlying property is located
could adversely affect the value of our collateral, so that the outstanding
balance of senior liens may exceed the value of the underlying property.
In the event of a default of a junior lien, we may elect to make
payments to the senior mortgage holder, if we have the right to do so, in order
to prevent foreclosure of the senior position. In certain situations we may not
have the right to elect to make payments to the senior position, and the senior
lien holder may refuse to allow us to make any such payments. In such a
situation, or if we elect not to make payments even if we have the right to do
so, the senior lien holder may foreclose; in which event we will be entitled to
share in the proceeds of the foreclosure sale only after amounts due to senior
lien holders have been paid in full. This can result in the loss of all or part
of our investment, adversely affecting our net income, shareholders' equity and
cash dividends to shareholders.
Our loans may have high loan to value ratios. - The loan to value ratio
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of certain of our loans exceeds 80%. Loan to value ratio is defined as the ratio
of the amount of our loan, plus any senior indebtedness, to the value of the
real property underlying the loan as determined by our own in-house procedures.
The higher the loan to value ratio, the greater the risk that upon default the
amount obtainable from a foreclosure or bankruptcy sale may be insufficient to
repay the loan in full. In addition we may find it necessary to acquire the
property at a foreclosure sale or bankruptcy auction, in which event we assume
the risks and realize any benefits that may be derived from ownership.
Our portfolio lacks geographical diversification. - As of June 30,
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2004, 34% of the principal amount of our outstanding loans were secured by
properties located in the New York metropolitan area, including New Jersey and
Connecticut, and 20% by properties located in the State of Florida, although we
will originate and hold for investment loans secured by real property located
anywhere in the United States and Puerto Rico. A lack of geographical
diversification may make our mortgage portfolio more sensitive to local or
regional economic conditions, which may result in higher default rates than
might be incurred if our portfolio was more geographically diverse.
We face stiff competition for loans. - We encounter significant
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competition from other REITs, banks, conduits, pension funds, public and private
lending companies and mortgage bankers. At times we have to compete based on
yield, which could reduce our returns. We seek to compete by offering rapid
response time in terms of approval and closing. In addition, the real estate
expertise of our executive group provides us with the ability to understand and
structure complex loan transactions. However, many of our competitors have
substantially greater assets than we do and therefore have the ability to make
larger loans. An increase in funds available to lenders, or a decrease in
borrowing activity, may increase competition for making loans and may result in
loans available to us having a greater risk.
We face risks relating to fluctuations in the real property markets. -
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We are subject to the general risks of the real estate market. These include
adverse changes in general and local economic conditions, demographics,
retailing trends and traffic patterns, competitive overbuilding, casualty losses
and other factors beyond our control. The value of the collateral underlying our
loans, as well as the real estate owned by us and by joint ventures in which we
participate, may also be negatively affected by factors such as the cost of
complying with regulations and liability under applicable environmental laws,
interest rate changes and the availability of financing. Income from a
commercial or multifamily residential property will also be adversely affected
if a significant number of tenants are unable to pay rent, if tenants terminate
or cancel leases, or if available space cannot be rented on favorable terms.
Operating and other expenses of properties, particularly significant expenses
such as real estate taxes, maintenance costs and casualty and liability
insurance costs, generally do not decrease when income decreases and even if
revenues increase, operating and other expenses may increase faster than
revenues.
Casualty risk. - All of our borrowers obtain, for our benefit,
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comprehensive insurance covering the property collateralizing our loan in an
amount intended to be sufficient to provide for the replacement of the
improvement at the property in the event of casualty. In addition, joint
ventures in which we are a participant carry comprehensive insurance covering
the property owned by the venture for the replacement cost of the improvements
at such property in the event of a casualty and we carry insurance for such
purpose on properties owned by us. However, the amount of insurance coverage
maintained for any property may not be sufficient to pay the full replacement
cost of the improvement following a casualty event. In addition, the rent loss
coverage under a policy may not extend for the full period of time that a tenant
may be entitled to a rent abatement that is a result of, or that may be required
to complete restoration, following a casualty event. In addition, there are
certain types of losses, such as those arising from earthquakes, floods,
hurricanes and terrorist attacks that may be uninsurable or that may not be
economically insurable. Changes in zoning, building codes and ordinances,
environmental considerations and other factors may make it impossible for our
borrower, a joint venture or us, as the case may be, to use insurance proceeds
to replace damaged or destroyed improvements at a property. If any of these or
similar events occur, the amount of coverage may not be sufficient to replace a
damaged or destroyed property and/or to repay in full the amount due on all
loans collateralized by such property and, therefore, may reduce our returns and
the value of our investment.
Other Risk Factors
Senior management and key personnel are critical to our business and
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our future success may depend on our ability to retain them. - We depend on the
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services of Fredric H. Gould, Chairman of our Board of Trustees, Jeffrey A.
Gould our President and Chief Executive Officer, and other members of our senior
management to carry out business and investment strategies. Only three officers,
Jeffrey A. Gould, George Zweier, Vice President and Chief Financial Officer and
David Heiden and Mitchell Gould, Vice Presidents, devote substantially all of
their business time to our company. The remainder of our management personnel
share their services on a part-time basis with entities affiliated with us and
located in the same executive offices under a Shared Services Agreement. In
addition, Jeffrey A. Gould devotes a limited amount of his business time to
entities affiliated with us. As we grow our business, we will need to attract
and retain qualified senior management and other key personnel, both on a
full-time and part-time basis. The loss of the services of any of our senior
management or other key personnel or our inability to recruit and retain
qualified personnel in the future, could impair our ability to carry out our
business and our investment strategies.
Relationships and transactions with affiliates involve conflicts of
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interest. - Entities affiliated with us and with certain of our officers provide
---------
services to us and on our behalf and we intend to continue the relationships
with such entities in the future. For a description of our current relationships
and transactions with affiliates, please see the information under the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Certain Transactions" in our Annual Report on Form 10-K for the
year ended September 30, 2003. Although such services are provided by affiliates
at competitive market rates, there is the potential that we may not receive
terms in these transactions as favorable as those we would receive if the
services were provided by unaffiliated entities pursuant to competitive bid.
We may have less control of our investment when we invest in joint
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ventures. - We have made loans to and acquired equity interests in joint
---------
ventures that own income producing real property. Our co-venturers may have
different interests or goals than we do or our co-venturers may not be able or
willing to take an action that is desired by us. If we or our co-venturers have
a disagreement with respect to the activities of the joint venture, it could
result in a substantial diversion of time and effort by our management and could
result in one of the co-venturers (including us) exercising the buy/sell
provision typically contained in our joint venture organizational documents. In
addition, there is no limitation under our charter documents as to the amount of
funds that may be invested in joint ventures. Accordingly, we may invest a
substantial amount of our funds in joint ventures which ultimately may not be
profitable as a result of disagreement with or among co-venturers.
We cannot assure our ability to pay dividends in the future. - We
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intend to pay quarterly cash dividends and to make cash dividends to our
shareholders in amounts such that all or substantially all of our taxable income
in each year, subject to adjustments, is distributed. This along with other
factors should enable us to qualify for the tax benefits afforded a REIT under
the Internal Revenue Code. We have not established a minimum cash dividend
payment level and our ability to pay cash dividends may be adversely affected by
the risk factors described above. All cash dividends will be made at the
discretion of our Board of Trustees and will depend on our taxable earnings, our
financial condition, maintenance of our REIT status and such other factors as
our Board of Trustees may deem relevant from time-to-time. We cannot give any
assurance that we will be able to pay cash dividends in the future.
Effect of decrease in market value of, or cash dividends paid on, EPR
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stock. - The value of the shares of Entertainment Properties Trust owned by us
------
at June 30, 2004 was $36,937,000, while our cost basis was $13,575,000. At June
30, 2004 our balance sheet reflects as an asset $39,363,000 of
available-for-sale securities, of which $36,937,000 represents the market value
of the shares of EPR owned by us on June 30, 2004 and $24,033,000, or 18% of our
shareholders' equity, represents the difference between our cost basis for such
shares and the market value for such shares. We have no business relationship,
affiliation with or influence over, the business or operations of EPR. Any
substantial decrease in the market value of EPR shares, whether resulting from
activities of EPR, its management, market forces or otherwise could result in a
material decrease in our total assets and in our shareholders' equity.
Our ownership of shares of EPR resulted in the receipt by us for the
fiscal year ended 2003 of cash dividends of $2,464,000. In the fiscal year
ending September 30, 2003 we sold 260,800 EPR shares for a gain of $4,187,000.
The shares sold provided us with cash dividends of $303,000 in calendar 2003. If
there is a decrease in the EPR dividend, for any reason, it could reduce the
amount of cash distributions available for our shareholders. In addition, if the
stock price of EPR were to decline, our profit from the sale of these shares
will decline or could be eliminated.
We have established a margin line of credit collateralized by the EPR
shares owned by us. At June 30, 2004 approximately $14,775,000 was available
under this line of credit of which $10,263,000 was outstanding. When we have
amounts outstanding under the margin line of credit, a significant decrease in
the value of the EPR shares could result in a margin call and, if cash is not
available from other sources, a sale of EPR shares may be required at a time
when we are not desirous of selling EPR shares, resulting in the possibility
that such shares could be sold at a per share loss.
Risks Related to the REIT Industry
----------------------------------
Failure to qualify as a REIT would result in material adverse tax
-----------------------------------------------------------------
consequences and would significantly reduce cash available for distributions. We
-----------------------------------------------------------------------------
believe that we have operated so as to qualify as a REIT under the Internal
Revenue Code. Qualification as a REIT involves the application of technical and
complex legal provisions for which there are limited judicial and administrative
interpretations. The determination of various factual matters and circumstances
not entirely in our control may affect our ability to qualify as a REIT. In
addition, no assurance can be given that legislation, new regulations,
administrative interpretations or court decisions will not significantly change
the tax laws with respect to qualification as a REIT or the federal income tax
consequences of such qualification.
If we fail to qualify as a REIT, we will be subject to federal, state
and local income tax, including any applicable alternative minimum tax, on our
taxable income at regular corporate rates and would not be allowed a deduction
in computing our taxable income for amounts distributed to shareholders. In
addition, unless entitled to relief under certain statutory provisions, we would
be disqualified from treatment as a REIT for the three taxable years following
the year during which the qualification is lost. The additional tax would reduce
significantly our net income and the cash available for dividends to
shareholders.
We are Subject to Certain Distribution Requirements that May Result in
----------------------------------------------------------------------
our Having to Borrow Funds at Unfavorable Rates. - To obtain favorable tax
------------------------------------------------
treatment associated with being a REIT, we generally will be required, among
other things, to distribute to our shareholders at least 90% of our ordinary
taxable income (excluding capital gains) each year. In addition, we are subject
to a 4% non-deductible excise tax, on the amount, if any, by which certain
distributions paid by us with respect to any calendar year are less than the sum
of 85% of our ordinary income, 95% of our capital gain income and 100% of our
undistributed income from prior years. As a result of differences in timing
between the receipt of income and the payment of expenses, and the inclusion of
such income and the deduction of such expenses in arriving at taxable income,
and the affect of non-deductible capital expenditures, the creation of reserves
and the timing of required debt service (including amortization payments) we may
need to borrow funds on a short-term basis in order to pay the dividends
necessary to retain the tax benefits associated with qualifying as a REIT, even
if the prevailing market conditions are not generally favorable for such
borrowings. Such borrowings could reduce our net income and the cash available
for dividends to the holders of our beneficial shares.
Compliance with REIT Requirements May Hinder Our Ability to Maximize
--------------------------------------------------------------------
Profits. - In order to qualify as a REIT for federal income tax purposes, we
--------
must continually satisfy tests concerning, among other things, our sources of
income, the amounts we distribute to our shareholders and the ownership of our
stock. We may also be required to make cash dividends to shareholders at
disadvantageous times or when we do not have funds readily available for
distribution. Accordingly, compliance with REIT requirements may hinder our
ability to operate solely on the basis of maximizing profits.
In order to qualify as a REIT, we must also insure that at the
end of each calendar quarter, at least 75% of the value of our assets consists
of cash, cash items, government securities, and qualified REIT real estate
assets. The remainder of our investment in securities cannot include more than
10% of the outstanding voting securities of any one issuer or more than 10% of
the total value of the outstanding securities of any one issuer. In addition, no
more than 5% of the value of our assets can consist of the securities of any one
issuer, other than a qualified REIT security. If we fail to comply with these
requirements, we must dispose of a portion of our assets within 30 days after
the end of the calendar quarter in order to avoid losing our REIT status and
suffering adverse tax consequences. This requirement could cause us to dispose
of assets for consideration which is less than the true value and could lead to
a material adverse impact on our results of operations and financial condition.
TERMS AND CONDITIONS OF THE PLAN
The following constitutes our Dividend Reinvestment and Stock Purchase
Plan, in effect beginning September 10, 2004. All references in this prospectus
to "Common Shares" refers to our shares of Beneficial Interest, par value $3.00.
Purpose
1. What is the purpose of the plan?
The primary purpose of the plan is to provide our shareholders with a
convenient and economical way to purchase our Common Shares and to reinvest all
or a portion of their cash dividends in additional Common Shares. A secondary
purpose of the plan is to provide us with an economical way to raise additional
capital for general corporate purposes through sales of Common Shares to our
existing shareholders.
Participation Options
2. What are my investment options under the plan?
Once enrolled in the plan, you may buy Common Shares through any of the
following investment options:
o Full Dividend Reinvestment. You may have cash dividends paid
on all of your Common Shares automatically reinvested in
additional Common Shares. This option also permits you to make
optional cash investments to buy additional Common Shares as
described below.
o Partial Dividend Reinvestment. You may have cash dividends
paid on a specified number of your Common Shares automatically
reinvested in additional Common Shares. In addition, dividends
on all Common Shares held in your plan account will be
reinvested. We will continue to pay you cash dividends on the
remaining Common Shares. This option also permits you to make
optional cash investments to buy additional Common Shares as
described below.
o Optional Cash Investments. You may make optional cash
investments from $100 to $2,500 per month to buy additional
Common Shares on a regular or occasional basis. You may elect
to make optional cash investments even if you do not elect to
reinvest any cash dividends paid on you Common Shares. We will
continue to pay you any cash dividends on the Common Shares
owned by you then or in the future, unless you designate such
shares for reinvestment pursuant to the plan, as noted above.
Benefits and Disadvantages
3. What are the benefits and disadvantages of the plan?
Benefits
Before deciding whether to participate in the plan, you should consider
the following benefits of participation in the plan:
o The price of the Common Shares purchased by the Administrator under the
plan directly from us for dividend reinvestments and optional purchases
from $100 to $2,500 per month will be at a discount from the Market Price
(as defined), currently 2% for reinvested dividends and 2% for optional
purchases. Each of the discounts is subject to change from time to time,
but will not vary from the range of 0% to 5%. We will advise participants
through a press release of any change in the applicable discount at least
thirty days prior to the effective date of the change.
o If we direct that the Administrator purchase Common Shares in the open
market or in privately negotiated transactions with third parties (as we
may do in our sole discretion) you will not receive any discount. At the
present time we do not contemplate the purchase of Common Shares in the
open market or in privately negotiated transactions for dividend
reinvestments or optional purchases.
o You will not pay brokerage commissions to purchase Common Shares directly
from us through the plan. Please see the "Plan Service Fee Schedule"
attached as Exhibit A for a description of the fees for which you will be
responsible. We will be responsible for all other costs of administering
the plan.
o You will realize the convenience of having all or a portion of any of your
cash dividends automatically reinvested in additional Common Shares. Since
the Administrator will credit fractional shares of Common Shares to your
plan account, you will receive full investment of your dividends and
optional cash investments.
o You will have the option of having your stock certificates held for
safekeeping by the Administrator, protecting against loss, theft or
destruction of the certificates representing your Common Shares.
o You will simplify your record keeping by receiving periodic statements
which will reflect all current activity in your plan account, including
purchases, sales and latest balances.
o You will have the flexibility of making optional cash investments from $100
to $2,500 in any one month to buy additional Common Shares. You may make
these optional cash investments on a regular or occasional basis.
o At any time, you may direct the Administrator to sell or transfer all or a
portion of the Common Shares held in your plan account. You will be
responsible for any brokerage fees and other expenses associated with the
sale.
Disadvantages
Before deciding whether to participate in the plan, you should consider
the following disadvantages of participation in the plan:
o Without giving you prior notice, we may direct the Administrator to buy
Common Shares under the plan either in the open market or in privately
negotiated transactions with third parties. The purchase price for Common
Shares purchased in the open market or in privately negotiated transactions
with third parties will equal the weighted average of the purchase prices
paid by the Administrator for the shares and you will not receive the
benefit of any discount. Please see the "Plan Service Fee Schedule"
attached as Exhibit A for a description of the fees for which you will be
responsible.
o Your reinvestment of cash dividends will be treated, for federal income tax
purposes, as your receipt on the dividend payment date of a dividend equal
to the fair market value of our Common Shares that you received to the
extent of our earnings and profits attributable to that distribution. The
dividend may give rise to a liability for the payment of income tax without
providing you with immediate cash to pay the tax when it becomes due.
o You will not know the actual number of Common Shares that the Administrator
of the plan buys for your account until on or after the applicable Purchase
Date (as defined in Question 8).
o Because the Administrator of the plan may buy Common Shares directly from
us for your account at an average price per share, the price paid for such
shares on any date may be greater than the price at which Common Shares are
then trading.
o Because the Administrator of the plan may sell shares only once per week,
sales of Common Shares held in your plan account may be delayed.
o We will not pay interest on funds that we hold pending reinvestment or
investment.
o You may not pledge Common Shares deposited in your plan account unless you
withdraw those shares from the plan.
Administration
4. Who will administer the plan?
Administrator. American Stock Transfer & Trust Company or another
entity we may designate will serve as the Administrator of the plan. The
Administrator
o acts as your agent;
o keeps records of all plan accounts;
o sends your account statements to you;
o buys and sells, on your behalf, all Common Shares under the plan; and
o performs other duties relating to the plan.
You should send all correspondence with the Administrator to:
American Stock Transfer & Trust Company
59 Madison Avenue
New York, NY 10038
Telephone: 888-888-0144
All transactions or requests for enrollment, termination, sale of shares,
etc. should be sent to the Administrator:
American Stock Transfer & Trust Company
P.O. Box 922
Wall Street Station
New York, New York 10269-0560
For terminations, optional cash payments, sale of shares or to view
account balances you may visit the Administrator's website at www.amstock.com.
----------------
In order to use the website, you must be enrolled in the plan and have available
your social security number and ten digit account number. Once you have gained
access, you should follow the instructions on the menu.
Successor Administrator: We may replace the Administrator with a
successor Administrator at any time. The Administrator may resign as
Administrator of the plan at any time. In either such case, we will appoint a
successor Administrator and we will notify you of such change.
Participation
For purposes of this section, we have based our responses upon the
method by which you hold your Common Shares. Generally, you are either a record
owner or a beneficial owner. You are a record owner if you own Common Shares in
your own name. You are a beneficial owner if you own Common Shares that are
registered in a name other than your own; for example, if the shares are held in
the name of a broker, bank or other nominee. If you are a record owner, you may
participate directly in the dividend reinvestment portion of the plan. If you
are a beneficial owner, you will have to either coordinate your participation in
the plan through the broker, bank or other nominee in whose name your Common
Shares are held or become a record owner by instructing your broker, bank or
other nominee, in whose name your shares are held, to transfer at least one
Common Share into your name following which you may enroll in the plan directly.
5. Who is eligible to participate in the plan?
You may participate in the plan if you meet the following requirements:
Ownership Interest. You may directly join the plan if you are a
registered holder of any number of Common Shares. If you are a beneficial owner
of Common Shares and wish to participate in the plan, you should either (1)
direct your broker, bank or other nominee in whose name your shares are held to
transfer at least one Common Share to your name, or (2) arrange with your
broker, bank or other nominee in whose name your shares are held to participate
in the plan on your behalf.
There is no minimum requirement as to the number of Common Shares that
you must hold in order to participate in the dividend reinvestment portion or
the optional cash investment portion of the plan.
Non-transferability of Right to Participate. You may not transfer your
right to participate in the plan to another person.
Foreign Law Restrictions. You may not participate in the plan if it
would be unlawful for you to do so in the jurisdiction where you are a citizen
or resident. If you are a citizen or resident of a country other than the United
States, your should confirm that by participating in the plan you will not
violate local laws governing, among other things, taxes, currency and exchange
controls, stock registration and foreign investments.
Exclusion from Plan at Our Election. Notwithstanding any other
provision in the plan, we reserve the right to prevent you from participating in
the plan for any reason. It is our sole discretion to exclude you from
participation in the plan.
6. Enrollment
How do I enroll in the plan?
If you are eligible to participate in the plan, you may join the plan
at any time. Once you enroll in the plan, you will remain enrolled until you
withdraw from the plan or we terminate the plan or your participation in the
plan.
The Authorization Form. To enroll and participate in the plan, you must
complete the enclosed Authorization Form and mail it to the Administrator at the
address set forth in Question 4. If your Common Shares are registered in more
than one name (such as joint tenants or trustees), all such registered holders
must sign the Authorization Form. If you are eligible to participate in the
plan, you may sign and return the Authorization Form to participate in the plan
at any time.
If you are a beneficial owner of Common Shares and wish to enroll and
participate in the plan, you may do so in one of the following ways:
a) Request your broker, bank or other nominee in whose name your
shares are held to complete and sign a Broker and Nominee Form
(please see the "Broker and Nominee Form" below for more
information), or
b) Instruct your broker, bank or other nominee in whose name your
shares are held to transfer at least one Common Share to your
name, following which you may enroll in the plan directly. If
you elect to instruct your broker, bank or other nominee to
transfer one or more, but less than all, shares to your name
and you then enroll in the plan, cash dividends will only be
reinvested on the Common Shares registered in your name and
not on the Common Shares held by your broker, bank or other
nominee, unless you request your broker, bank or other nominee
to complete and sign a Broker and Nominee Form.
Choosing Your Investment Option. When completing the Authorization
Form, you should choose one or more of the following three investment options:
o Full Dividend Reinvestment. This option directs the Administrator to
----------------------------
reinvest any cash dividends paid on all of the Common Shares owned by you
then or in the future in additional Common Shares. This option also permits
you to make optional cash investments to buy additional Common Shares.
o Partial Dividend Reinvestment. This option directs the Administrator to
-------------------------------
reinvest cash dividends paid on a specified number of Common Shares then
owned by you in stock certificate form plus all dividends on Common Shares
held in your plan account. We will continue to pay to you any cash
dividends on the remaining Common Shares owned by you in stock certificate
form. This option also permits you to make optional cash investments to buy
additional Common Shares.
o Optional Cash Investments. This option permits you to make optional cash
---------------------------
investments from $100 to $2,500 per month to buy additional Common Shares
on a regular or occasional basis. You may elect to make optional cash
investments even if you do not elect to reinvest any cash dividends paid on
your Common Shares. We will continue to pay to you any cash dividends on
the Common Shares owned by you then or in the future, unless you designate
such shares for dividend reinvestment pursuant to the plan.
You should choose your investment option by checking the appropriate
option(s) on the Authorization Form. If you sign and return an Authorization
Form without checking an option, the Administrator will choose the "Full
Dividend Reinvestment" option and will reinvest all cash dividends on all Common
Shares registered in your name. If you select both Full and Partial Dividend
Reinvestment, the Administrator will choose the "Full Dividend Reinvestment."
The Administrator automatically will reinvest any cash dividends paid
on all Common Shares that you have designated for participation in the plan
until you indicate otherwise or withdraw from the plan, or until we terminate
the plan. If you have elected to have your dividends reinvested, we will pay to
the Administrator dividends on all shares of Common Shares held in your plan
account. The Administrator will credit the Common Shares purchased with your
reinvested dividends to your plan account.
Changing Your Investment Option. You may change your investment option
by completing and signing a new Authorization Form and returning it to the
Administrator of the plan. You may also change your investment option by
accessing the website of the Administrator at www.amstock.com. The Administrator
----------------
must receive any such change at least three business days before the record date
for a dividend payment in order for the change to become effective for that
dividend payment. The Administrator also must receive any change in the number
of shares of Common Shares that you have designated for partial dividend
reinvestment at least three business days before the record date for a dividend
payment in order to reinvest for the new number of shares on the next Purchase
Date.
The Broker and Nominee Form. If you are a beneficial owner of Common
Shares and wish for your broker, bank or other nominee in whose name your shares
are held to participate in the plan on your behalf, such broker, bank or other
nominee in whose name your shares are held must complete and submit the Broker
and Nominee Form. The Broker and Nominee Form provides the only means by which a
broker, bank or other nominee in whose name your Common Shares are held, may
make optional cash investments on your behalf. Your broker, bank or other
nominee in whose name your Common Shares are held must submit a Broker and
Nominee Form to the Administrator each time such broker, bank or other nominee
in whose name your Common Shares are held transmits optional cash investments on
your behalf. You, your broker, bank or other nominee in whose name your Common
Shares are held may request a Broker and Nominee Form at any time by contacting
the Administrator at the address set forth in Question 4. Prior to submitting a
Broker and Nominee Form, your broker, bank or other nominee in whose name your
Common Shares are held must have submitted a completed Authorization Form on
your behalf. The Administrator must receive the Broker and Nominee Form and
appropriate instructions at least three business days before the applicable
Purchase Date or the optional cash investment will not be invested until the
following Purchase Date.
7. When will my participation in the plan begin?
The date on which the Administrator receives your properly completed
Authorization Form will determine the date on which the Administrator will buy
Common Shares for your account. If you choose either the full or partial
dividend reinvestment option, the Administrator will begin to reinvest dividends
on the Purchase Date after receipt of your Authorization Form, provided it
receives such Authorization Form at least three business days before the record
date set for the related dividend payment.
If you choose the "Optional Cash Investment" option and wish to invest
from $100 to $2,500 in any one month, the Administrator will purchase Common
Shares for you on the Purchase Date after receipt of both your Authorization
Form and the funds to be invested, provided it receives such Authorization Form
and funds on or before the close of business on the business day immediately
preceding such Purchase Date. If the Administrator receives your Authorization
Form and funds for optional cash investment after the business day indicated
above but before the Purchase Date, then the Administrator will hold your funds,
without interest, for investment on the next Purchase Date.
Once you enroll in the plan, you will remain enrolled in the plan until
you withdraw from the plan or we terminate the plan or your participation in the
plan.
Purchases
8. How are shares purchased under the plan?
Source of the Common Shares. Initially, shares purchased by the
Administrator under the plan will come from our legally authorized but unissued
Common Shares. However, we may, in our sole discretion, direct the Administrator
to purchase Common Shares in the open market or in privately negotiated
transactions with third parties.
Purchase Dates. When the Administrator purchases Common Shares from us,
such purchases shall be made on either (1) the dividend payment date during any
calendar month in which we pay a cash dividend or (2) the last trading day of
any calendar month in which we do not pay a cash dividend. This date of purchase
is referred to in the plan as the Purchase Date. A trading day is a day on which
trades in our Common Shares are reported on the NYSE.
If the Administrator is buying Common Shares for the plan through open
market or privately negotiated transactions, then the Administrator will
reinvest dividends or make optional purchases as soon as is practical on or
after the applicable Purchase Date.
Dividend Payment Dates. We historically have paid dividends on or about
the first business day of each of January, April, July and October. In the past,
record dates for dividends have preceded the dividend payment dates by ten to
twenty days. We cannot assure you that we will continue to pay dividends
according to this schedule, and nothing contained in the plan obligates us to do
so. Neither we nor the Administrator will be liable when conditions, including
compliance with the provisions of our charter and rules and regulations of the
SEC or the NYSE, prevent the Administrator from buying Common Shares or
interfere with the timing of such purchases.
We pay dividends as and when authorized and declared by our Board of
Trustees. We cannot assure you that we will declare or pay a dividend in the
future, and nothing contained in the plan obligates us to do so. The plan does
not represent a guarantee of future dividends.
Price of Common Shares. If the Administrator purchases Common Shares
directly from us for dividend reinvestments or optional purchases in amounts
from $100 to $2,500 per month, then the purchase price will be at a discount
from the Market Price established by us from time to time, currently 2% for
reinvested dividends and 2% for optional purchases. Each of the discounts is
subject to change from time to time, but will not vary from 0% to 5%. The Market
Price in the case of Common Shares purchased directly from us, will be the
average of the daily high and low sales prices, computed to three decimal
places, on the NYSE Composite Transactions, as reported in the Wall Street
Journal, for the five days on which the NYSE is open and for which trades in our
Common Shares are reported immediately preceding the relevant Purchase Date, or
if no trading occurs in the Common Shares on one or more of such days, for the
five days immediately preceding the Purchase Date for which trades are reported.
In the case of shares purchased on the open market, the Market Price shall be
the weighted average of the actual prices paid, computed to three decimal
places, for all the Common Shares purchased by the Administrator with all
Participants' reinvested dividends and optional cash payments for the related
month.
Number of Shares to be Purchased. If you elect to participate in the
plan by reinvesting your dividends, the Administrator will invest for you the
total dollar amount equal to the sum of (1) the dividend on all Common Shares,
including fractional shares, held in your plan account for which you have
requested dividend reinvestment, and (2) any optional cash investments to be
made as of that Purchase Date less any fees payable by you in connection with
any such transaction (see Exhibit A to this Prospectus). Subject to restrictions
contained in our charter on transfer and ownership of Common Shares described in
Question 20, there is no limit on the number of Common Shares you may purchase
through dividend reinvestment. If you elect to make only optional cash
investments, the Administrator will invest for you the total dollar amount equal
to any optional cash investments to be made as of that Purchase Date less any
fees payable by you in connection with any such transaction (see Exhibit A to
this Prospectus). As of any Purchase Date, the Administrator will purchase for
your account the number of Common Shares equal to the total dollar amount to be
invested for you, as described above, divided by the applicable purchase price,
computed to the third decimal place. The Administrator will deduct from the
amount to be invested for you any amount that we are required to deduct for
withholding tax purposes.
Administrator's Control of Purchase Terms. With respect to purchases of
Common Shares that the Administrator makes under the plan on the open market,
the Administrator, or a broker that the Administrator selects, will determine
the following:
o the exact timing of open market purchases;
o the number of Common Shares, if any, that the Administrator purchases
on any one day or at any time of that day;
o the prices for the Common Shares that the Administrator pays;
o the markets on which the Administrator makes the purchases; and
o the persons, including brokers and dealers, from or through which the
Administrator makes such purchases.
Commingling of Funds. When making purchases for an account under the
plan, the Administrator may commingle your funds with those of other
stockholders participating in the plan.
9. How do I make optional cash investments?
You make optional cash investments at any time you have submitted a
signed Authorization Form or your broker, bank or other nominee has submitted a
Broker and Nominee Form, and if you are (1) a registered holder of Common
Shares, or (2) a beneficial owner of Common Shares and either have directed your
broker, bank or other nominee in whose name your shares are held to transfer at
least one Common Share to your name or you have arranged with your broker, bank
or other nominee in whose name your shares are held to participate in the plan
on your behalf.
Subsequent Optional Cash Investments. Once you enroll in the plan and
make an initial investment, whether by dividend reinvestment or optional cash
investment, the Administrator will attach an Optional Cash Investment Form to
each statement of account it sends to you. To make an optional cash investment
once enrolled in the plan, you should send a properly completed Optional Cash
Investment Form and a check or money order (payable to American Stock Transfer &
Trust Company) in an amount from$100 to $2,500 to the Administrator at the
address set forth in Question 4 by the close of business on the business day
preceding a Purchase Date, or once enrolled in the Plan, you may make an
optional cash investment by logging onto the Administrator's website at
www.amstock.com and following the applicable instructions.
---------------
If you are a beneficial owner of Common Shares, you, through your
broker, bank or other nominee, must make all optional cash investments through
the use of the Broker and Nominee Form, as set forth in Question 6 or by logging
onto the Administrator's website at www.amstock.com and following the applicable
instructions. ---------------
The Administrator will hold, without interest, all optional cash
investments that it receives after the close of business on the business day
before a Purchase Date and before the next Purchase Date. The Administrator will
invest such held-over funds on the next Purchase Date. If the next Purchase Date
will occur in more than 45 days, then the Administrator will return such funds
to you, without interest.
Minimum and Maximum Limits. For any Purchase Date on which you choose
to make an optional cash investment, you must invest at least $100 but not more
than $2,500 per month. You may not invest an amount greater than $2,500 in any
month.
Items to Remember when Making Optional Cash Investments. When making
your optional cash investment, you should consider the following:
o All optional cash investments must equal at least $100 but not more
that $2,500 per month;
o You do not have to make an optional cash payment in any month;
o You do not have to send the same amount of cash payment each month;
o You must make all optional cash investments in United States dollars;
and
o You must send optional cash investments in the form of a check or
money order payable to American Stock Transfer & Trust Company, or
make payments pursuant to the instructions on the Administrator's
website, www.amstock.com. Do not send cash.
Refunds of Uninvested Optional Cash Investments. To obtain a refund of
optional cash investment funds which the Administrator has not yet invested, you
must send a written request to the Administrator at the address set forth in
Question 4. The Administrator must receive your request no later than three
business days prior to the Purchase Date in order to refund your money for such
Purchase Date.
Interest on Optional Cash Investments. You will not earn interest on
optional cash investments held pending investment. We therefore suggest that you
send any optional cash investment that you wish to make so as to reach the
Administrator as close as possible to the business day preceding the next
Purchase Date. You should contact the Administrator if you have any questions
regarding these dates.
10. What if I have more than one account?
For purposes of the plan we may aggregate all plan accounts that we
believe, in our sole discretion, to be under common control or management or to
have common ultimate beneficial ownership. Unless we have determined that
reinvestment of dividends and optional cash investments for each such account
would be consistent with the purposes of the plan, we will have the right to
aggregate all such accounts and to return, without interest, within 30 (for
dividend reinvestment) or 45 (for optional cash investment) days of receipt, any
amounts in excess of the investment limitations applicable to a single account
received in respect of all such accounts.
Certificates
11. Will I receive certificates for shares purchased?
Safekeeping of Certificates. Unless your shares are held by a broker,
bank or other nominee, we will register Common Shares that the Administrator
purchases for your account under the plan in your name. The Administrator will
credit such shares to your plan account in "book-entry" form. This service
protects against the loss, theft or destruction of certificates representing
Common Shares.
You also may send to the Administrator for safekeeping all certificates
for Common Shares which you hold. The Administrator will credit the Common
Shares represented by such certificates to your account in "book-entry" form and
will combine such shares with any whole and fractional shares then held in your
plan account. In addition to protecting against the loss, theft or destruction
of your certificates, this service also is convenient if and when you sell
Common Shares through the plan. The Administrator charges a $7.50 per
transaction fee for certificates deposited with it, which fee is waived if the
shares deposited are to be sold at or about the same time as the shares are
deposited. See Question 12 to learn how to sell your Common Shares under the
plan.
You may deposit certificates for Common Shares into your account
regardless of whether you have previously authorized reinvestment of dividends.
The Administrator automatically will reinvest all dividends on any such shares
deposited in accordance with the plan, unless you have instructed the
Administrator otherwise.
To deposit certificates for safekeeping under the plan, you should send
your share certificates, in non-negotiable form, to the Administrator by insured
mail at the address specified in Question 4. You may withdraw any shares
deposited for safekeeping by mailing a written request to the Administrator.
Issuance of Certificates. Upon your written request to the
Administrator or upon our termination of the plan or your participation in the
plan, the Administrator will issue and deliver to you certificates for all whole
Common Shares credited to your plan account. The Administrator will not issue
certificates for fractional shares. The Administrator will handle such requests
at no cost to you. The Administrator will continue to credit any remaining whole
or fractional shares to your account.
Effect of Requesting Certificates in Your Name. If you request a
certificate for whole Common Shares held in your account, either of the
following may occur.
o If you maintain an account for reinvestment of dividends, then the
Administrator will continue to reinvest all dividends on the Common Shares
for which you requested a certificate so long as such shares remain
registered in your name; or
o If you maintain an account only for optional cash investments, then the
Administrator will not reinvest dividends on Common Shares for which your
requested a certificate unless and until you submit an Authorization Form
to authorize reinvestment of dividends on the shares registered in your
name.
Transfer Restrictions. You may not pledge, sell or otherwise transfer
Common Shares credited to your plan account. If you wish to pledge, sell or
transfer the shares, you must first request that we issue a certificate for the
shares in your name. Please also see Question 20 which describes certain
provisions of our charter which restrict transfer and ownership of shares.
Sale of Shares
12. How do I sell shares?
Sale of Shares Held in Your Account. You may request by telephone,
letter to the Administrator or by logging onto the Administrator's website at
www.amstock.com that the Administrator sell all or any part of the Common Shares
---------------
held in your plan account. After receipt of your written request, which may be
made at any time, the Administrator will sell such shares through a designated
broker or dealer. The Administrator will mail to you a check for the proceeds of
such sale, less applicable brokerage commissions, service charges and any taxes.
The Administrator must receive your written instructions at least 48 hours prior
to the sale. The Administrator will sell shares at least once per week (or more
as determined by the Administrator) at then current market prices through one or
more brokerage firms.
If you sell or transfer only a portion of the Common Shares in your
plan account, you will remain a participant in the plan and may continue to make
optional cash investments and reinvest dividends. The Administrator will
continue to reinvest the dividends on the Common Shares credited to your account
unless you notify the Administrator that you wish to withdraw from the plan.
Cost of Selling Shares. The plan requires you to pay all costs
associated with the sale of your Common Shares under the plan. Please see the
"Plan Service Fees Schedule" attached as Exhibit A hereto for a detailed
description of such costs.
Sale of Fractional Shares Held in Your Plan Account. The Administrator
will not sell a fractional share unless you request that the Administrator sell
(or withdraw via a certificate issuance) all Common Shares held in your plan
account. You should note that a service fee of $15.00 per transaction will be
charged by the Administrator in connection with the sale of shares, and with
respect to the sale of only fractional shares, may use up the entire proceeds
derived for the sale of fractional shares (but the fee can not exceed the
proceeds).
Termination of Your Account upon Sale of All Shares. If the
Administrator sells all Common Shares held in your plan account, the
Administrator will automatically terminate your account. In such case, you will
have to complete and file a new Authorization Form to again participate in the
plan.
Reports
13. How will I keep track of my investments?
Each time the Administrator makes an investment for your account,
whether by reinvestment of dividends or by optional cash investment, the
Administrator will send you a detailed statement that will provide the following
information with respect to your plan account:
o total cash dividends received;
o total optional cash investment received;
o total number of Common Shares purchased (including fractional shares);
o price paid per Common Share;
o date of share purchases; and
o total number of Common Shares in your plan account.
You should retain these statements to determine the tax cost basis of
the shares purchased for your account under the plan.
Withdrawal
14. How would I withdraw from participation in the plan?
Withdrawal from the Plan. You may withdraw from the plan at any time.
In order to withdraw from the plan, you must provide notice instructing the
Administrator to terminate your account. Notice may be provided by mail,
telephone or by logging onto the Administrator's website at www.amstock.com. The
---------------
Administrator must receive notice at least three business days before the
Purchase Date for any dividend payment in order to terminate your plan account
prior to the dividend payment date. If notice of withdrawal from the plan is
received less than three days prior to the Purchase Date, the dividend will be
applied to the purchase of Common Shares in accordance with the plan, but
subsequent dividends will be paid in cash.
Issuance of Stock Certificates upon Withdrawal from the Plan. Upon
termination of your plan account, the Administrator will issue to you stock
certificates for any whole Common Shares in your account. The Administrator will
convert to cash any fractional share held in your account at the time of
termination at the then current market price of the Common Shares less service
fees. After the Administrator terminates your account, we will pay to you all
cash dividends on Common Shares owned by you unless you rejoin the plan.
Selling Shares upon Withdrawal from the Plan. As an alternative to
receiving stock certificates, upon termination of your plan account you may
request by mail, telephone or by logging onto the Administrator's website at
www.amstock.com that the Administrator sell all or a portion of the Common
---------------
Shares (both whole and fractional) in you account. If you instruct the
Administrator only to sell a portion of your Common Shares, then the
Administrator will issue a certificate to you for the remaining shares. The
Administrator will mail a check to you for the proceeds of the sale, less
applicable brokerage commissions, service charges and applicable taxes.
Rejoining the Plan after Withdrawal. After you withdraw from the plan,
you may again participate in the plan at any time by filing a new Authorization
Form with the Administrator. However, the Administrator has the right to reject
such Authorization Form if you repeatedly join and withdraw from the plan, or
for any other reason. The Administrator's exercise of such right is intended to
minimize unnecessary administrative expenses and to encourage use of the plan as
a long-term stockholder investment service.
Tax Considerations
15. What are the income tax consequences for participants in the plan?
You are encouraged to consult your personal tax advisers with specific
reference to your own tax situation and potential changes in the applicable law
as to all federal, state, local, foreign and other tax matters in connection
with the reinvestment of cash dividends and optional purchases of Common Shares
under the plan, your tax basis and holding period for Common Shares acquired
under the plan and the character, amount and tax treatment of any gain or loss
realized on the disposition of Common Shares. The following is a brief summary
of the material federal income tax considerations applicable to the plan, is for
general information only, and is not tax advice. In particular, this summary
generally does not address tax consequences to persons who are not United States
persons. In general, a United States person is a citizen or individual resident
of the United States, a corporation or other entity taxable as a corporation for
U.S. federal income tax purposes that is created or organized in the United
States or under the laws of the United States or of any state or the District of
Columbia, an estate whose income is includible in gross income for U.S. federal
income tax purposes regardless of its source, or a trust if (1) a court within
the United States is able to exercise primary supervision over the
administration of the trust, and one or more United States persons have the
authority to control all substantial decisions of the trust or (2) the trust was
in existence on August 20, 1996 and properly elected to continue to be treated
as a United States person. Partners in partnerships that hold Common Shares and
participate in the plan should consult their own tax advisers regarding their
tax consequences.
In the case of Common Shares purchased by the Administrator from us,
you will be treated for federal income tax purposes as having received a
distribution equal to the fair market value, as of the Purchase Date, of the
Common Shares purchased with reinvested distributions. The discount will be
treated as being part of the distribution received. With respect to Common
Shares purchased by the Administrator in open market transactions or in
negotiated transactions with third parties, the Internal Revenue Service has
indicated in somewhat similar situations that the amount of distribution you
receive would include the fair market value of the Common Shares purchased with
reinvested distributions and a pro rata share of any brokerage commission or
other related charges paid in connection with the Administrator's purchase of
the Common Shares on your behalf. As in the case of nonreinvested cash
distributions, the distributions described above will constitute taxable
dividends to you to the extent of our current and accumulated earnings and
profits allocable to the distributions, and any excess distributions will
constitute a return of capital that reduces the basis of your Common Shares and
gain to the extent the excess distribution exceeds your tax basis in your Common
Shares. In addition, if we designate part or all of our distributions as capital
gain distributions, you would treat those designated amounts as long-term
capital gains. Dividends that we pay are not eligible for the dividends received
deduction otherwise generally available to a stockholder that is a corporation.
Your tax basis in your Common Shares acquired under the plan will
generally equal the total amount of distributions you are treated as receiving,
as described above. Your holding period in your Common Shares generally begins
on the day following the date on which the Common Shares are credited to your
plan account.
16. What are the tax consequences of optional cash payments?
The Internal Revenue Service has indicated in somewhat similar
situations that if you make an optional cash purchase of Common Shares under the
plan you will be treated as having received a distribution equal to the excess,
if any, of the fair market value on the Purchase Date of the Common Shares over
the amount of the optional cash payment you made. Also, if the Common Shares are
acquired by the Administrator in an open market transaction or in a negotiated
transaction with third parties, then the Internal Revenue Service may assert
that you will be treated as receiving a distribution equal to a pro rata share
of any brokerage commission or other related charges paid on your behalf. Any
distributions that you are treated as receiving, including any discount, would
be taxable income or gain or reduce basis in your Common Shares, or some
combination thereof, under the rules described above.
In several private letter rulings, the Internal Revenue Service has
held that a stockholder who participated in both the dividend reinvestment and
stock purchase aspects of a dividend reinvestment and cash option purchase plan
offered by a REIT under which stock could be acquired at a discount, would be
treated in the case of a cash option purchase as having received at the time of
the purchase a distribution from the REIT, taxable to the stockholder in the
manner described above, in an amount equal to the amount of the discount; but
that a stockholder who participated solely in the cash purchase part of the plan
would not be treated as having received a distribution of the discount amount
and, therefore, would realize no income attributable to the discount.
Your tax basis in Common Shares acquired through an optional cash
purchase under the plan generally will equal the amount of distributions, if
any, you are treated as receiving, as described above, plus the amount of the
optional cash payment. Your holding period for Common Shares purchased under the
plan generally will begin on the day following the date on which Common Shares
are credited to your plan account.
17. How are administrative expenses treated?
Although the matter is not free from doubt, based on certain private
letter rulings obtained by other taxpayers, we intend to take the position that
administrative expenses of the plan that we pay do not give rise to constructive
distributions to you.
18. What are the tax consequences of dispositions?
When you withdraw shares from the plan and receive whole shares, you
will not realize any taxable income. You may recognize a gain or loss upon
receipt of a cash payment for a fractional share credited to your plan account
or when the Common Shares held in your account are sold at your request. You may
also recognize a gain or loss upon your disposition of Common Shares you receive
from the plan. The amount of any gain or loss you recognize will be the
difference between your amount realized, generally the amount of cash you
receive, for the Common Shares and your tax basis in the Common Shares.
Generally, gain or loss recognized on the disposition of Common Shares acquired
under the plan will be treated for federal income tax purposes as capital gain
or loss if you do not hold the Common Shares as a dealer. The capital gain or
loss will be taxed as long-term capital gain or loss if your holding period for
the Common Shares exceeds one year.
19. How are backup withholding and information reporting provisions applied to
you?
In general, any distribution reinvested under the plan is not subject
to federal income tax withholding. The Administrator or we may be required,
however, to deduct as "back-up withholding" at rates described below a portion
of all distributions paid to you, regardless of whether those distributions are
reinvested pursuant to the plan. Similarly, the Administrator may be required to
deduct backup withholding from all proceeds of sales of Common Shares held in
your plan account. The backup withholding rate is currently 28% for payments
made in 2004 and 2005, and is currently set at 28% for payments made in 2006 and
thereafter. You are subject to backup withholding if (1) you fail to properly
furnish the Administrator and us with your correct taxpayer identification
number ("TIN"), (2) the Internal Revenue Service notifies the Administrator that
the TIN you furnished is incorrect, (3) the Internal Revenue Service notifies
the Administrator or us that backup withholding should be commenced because you
failed to report on your tax return certain amounts paid to you, or (4) when
required to do so, you fail to certify, under penalties of perjury, that you are
not subject to backup withholding. Backup withholding amounts will be withheld
from distributions before those distributions are reinvested under the plan.
Therefore, if you are subject to backup withholding, your distributions to be
reinvested under the plan will be reduced by the backup withholding amount. The
withheld amounts constitute a credit on your federal income tax return or may be
refundable. Backup withholding will not apply, however, if you (1) furnish a
correct TIN and certify that you are not subject to backup withholding on
Internal Revenue Service Form W-9 or an appropriate substitute form, (2) provide
a certificate of foreign status on Internal Revenue Service Form W-8BEN or an
appropriate substitute form or (3) are otherwise exempt from backup withholding.
The Administrator will send a Form 1099-DIV to you and to the Internal
Revenue Service after the end of each year, reporting all dividend income you
received during the year on your Common Shares. If you sell any Common Shares
through the plan, the Administrator will send a Form 1099-B to you and to the
Internal Revenue Service at the end of each year, showing the total proceeds of
the transactions.
20. Is there any limit on the amount of Common Shares I can purchase to the
plan?
For us to qualify as a real estate investment trust for federal income
tax purposes, no more than 50% in value of our outstanding stock may be actually
and/or constructively owned by five or fewer individuals (as defined in the
Internal Revenue Code to include certain entities) during the last half of a
taxable year or during a proportionate part of a short taxable year (the
"Closely-Held Requirement") and our Common Shares must be beneficially owned by
100 or more persons during at least 335 days of a taxable year or during a
proportionate part of a short taxable year (the "100 Stockholder Requirement").
Any acquisition of our Common Shares under the plan, whether a
reinvestment of dividends or an optional cash investment, is subject to being
voided, ab initio, in the event that acquisition would result in a violation of
the Closely-Held Requirement or 100 Stockholder Requirement. If your acquisition
is voided, you will receive in cash any dividends that were to be reinvested and
a refund of any optional cash payment, in either case without interest.
Other Provisions
21. How can I vote my shares?
We will send you proxy materials for any meeting of stockholders in
order to vote all Common Shares credited to your account. You may vote Common
Shares either by designating the vote of such Shares by proxy or by voting such
Shares in person at the meeting of stockholders.
22. What are the costs of the plan?
You will not pay any brokerage commissions in connection with the
purchase directly from us of Common Shares under the plan. You will pay certain
fees to the Administrator in connection with the purchase of Common Shares under
the Plan. You will be responsible for any fees payable in connection with your
sale of Common Shares. Please see the "Plan Service Fees Schedule" attached as
Exhibit A hereto for a detailed description of such fees.
All costs of administration of the plan will be paid by us.
23. What are your and the Administrator's responsibilities?
We, the Administrator and any of our agents, in administering the plan,
are not liable for any act done in good faith or for any good faith failure to
act, including, without limitation, any claim of liability (1) arising from the
failure to terminate your account upon your death or judgment of incompetence
prior to the Administrator's receipt of notice in writing of such death; (2)
relating to the prices and times at which the Administrator buys or sells Common
Shares for your account; or (3) relating to any fluctuation in the market value
of the Shares.
We, the Administrator and any of our agents will not have any duties,
responsibilities or liabilities other than those expressly set forth in the plan
or as imposed by applicable law, including federal securities laws. Since we
have delegated all responsibility for administering the plan to the
Administrator, we specifically disclaim any responsibility for any of the
Administrator's actions or inactions in connection with the administration of
the plan. None of our trustees, officers or stockholders will have any personal
liability under the plan.
24. How will a stock split or a rights offering affect my plan account?
Effect of a Stock Split. We will adjust your account to reflect any
stock split or dividend payable in Common Shares. In such event, the
Administrator will receive and credit to your plan account the applicable number
of whole and/or fractional Common Shares.
Effect of a Rights Offering. If we have a rights offering in which we
issue separately tradable and exercisable rights to registered holders of Common
Shares, we will transfer the rights attributable to whole Common Shares held in
your plan account to you as soon as practicable after we issue such rights. The
Administrator will sell rights attributable to fractional shares and will treat
the proceeds as optional cash payments on the next Purchase Date.
The Administrator, at its sole discretion, may curtail or suspend
transactions pending under the plan until completion of any stock split or
dividend, rights offering or other corporate action.
25. Can I pledge my shares under the plan?
You may not pledge any Common Shares credited to your plan account. Any
attempted pledge will be void. If you wish to pledge your Common Shares, you
first must withdraw the Common Shares from the plan. See Question 12 to learn
how to sell your shares under the plan.
26. How can I transfer my shares?
You may transfer ownership of all or part of the Common Shares held in
your plan account through gift, private sale or otherwise by mailing to the
Administrator, at the address in Question 4, a properly executed stock
assignment, along with a letter with specific instructions regarding the
transfer. You also must mail to the Administrator an Authorization Form and a
Form W-9 (Certification of Taxpayer Identification Number) completed by the
person to whom you are transferring your Common Shares. Absent any instructions
by you to the contrary, if you have enrolled in the plan, any transferee will be
automatically enrolled in the plan.
You also may transfer ownership of all or part of the Common Shares
held in your plan account into the account of another person within the plan. To
complete such a transfer, you must mail to the Administrator a letter with
specific instructions regarding the transfer and an Authorization Form completed
by the person to whom you are transferring your Common Shares.
27. Can the plan be amended, modified, suspended or terminated?
Although we expect to continue the plan indefinitely, we reserve the
right to amend, modify, suspend or terminate the plan in any manner at any time.
We will provide advanced public notification in writing of any modifications
made to the plan.
28. What happens if you terminate the plan?
If we terminate the plan, you will receive a certificate for all whole
Common Shares held in your plan account and a check representing the value of
any fractional share valued at the then current market price and any uninvested
dividends or optional cash investments held in your account.
29. Are there any risks associated with the plan?
Your investment in Common Shares purchased under the plan is no
different from any investment in Common Shares that you hold directly. Neither
we nor the Administrator can assure you a profit or protect you against a loss
on Common Shares that you purchase. You bear the risk of loss and enjoy the
benefits of any gain from changes in the market price with respect to Common
Shares purchased under the plan. We encourage you to carefully consider the
various risks associated with an investment in our Common Shares set forth in
"Risk Factors" contained elsewhere in this prospectus.
30. How will you interpret and regulate the plan?
We may interpret, regulate and take any other action in connection with
the plan that we deem reasonably necessary to carry out the plan. As a
participant in the plan, you will be bound by any actions taken by us or the
Administrator.
31. What laws governs the plan?
The laws of the Commonwealth of Massachusetts will govern the terms,
conditions and operation of the plan.
32. Where will notices be sent?
The Administrator will address all of its notices to you at your last
known address. You should notify the Administrator promptly in writing of any
change of address.
INFORMATION ABOUT BRT REALTY TRUST
We are a real estate investment trust organized as a business trust in
1972 under the laws of the Commonwealth of Massachusetts. Our principal business
activity is to generate income by originating and holding for investment, for
our own account, senior and junior real estate mortgage loans secured by income
producing real property. In addition, we purchase and hold for investment senior
or junior participations in existing mortgage loans originated by others secured
by income producing real property. On occasion, we participate as both lender to
and an equity participant in joint ventures which acquire income producing real
property and we will originate and hold for investment a loan secured by an
improved commercial or multi-family residential property that is vacant, pending
renovation and sale or leasing. We have originated in the past, and will
consider in the future, loans to entities which own income producing real
property or real property under construction, secured by the individuals'
partnership or limited liability company interest in the owning entity. We also
originate and hold for investment participating mortgage loans secured by income
producing property. Except for loans to our joint ventures and participating
mortgage loans, we seek and prefer to invest in loans with terms ranging from
six months to three years. A participating mortgage loan is usually for a term
of one to five years. We do not generally finance new construction, but will
finance renovation activities in property being upgraded or rehabilitated. From
time-to-time we have provided mortgage financing secured by undeveloped real
property. Finally, we have invested in equity securities of other REITs, the
increase in market value and subsequent sale of which may account for income to
us, although we do not consider this to be a part of our usual business
activities.
USE OF PROCEEDS
We will receive proceeds from the sale of Common Shares that the
Administrator purchases directly from us. We will not receive proceeds from the
sale of Common Shares that the Administrator purchases in the open market or in
privately negotiated transactions. We will use the proceeds from the sale of the
Common Shares that the Administrator purchases directly from us for general
corporate purposes. We cannot estimate either the number of Common Shares or the
prices of the Common Shares that we will sell in connection with the plan.
PLAN OF DISTRIBUTION
Except to the extent the Administrator purchases Common Shares in the
open market or in privately negotiated transactions with third parties, we will
sell directly to the Administrator the Common Shares acquired under the plan.
The Common Shares may be resold in market transactions on any national
securities exchange on which Common Shares trade or in privately negotiated
transactions. Our Common Shares are currently listed on the New York Stock
Exchange.
We may sell Common Shares through the plan to persons who, in
connection with the resale of the Common Shares, may be considered underwriters.
In connection with these types of transactions, compliance with Regulation M
under the Securities Exchange Act of 1934, as amended, would be required. We
will not give any person any rights or privileges other than those that the
person would be entitled to as a participant under the plan. We will not enter
into any agreement with any person regarding the person's purchase, resale or
distribution of Common Shares.
Subject to the availability of Common Shares registered for issuance
under the plan and to the limitation described in Question 20, there is no total
maximum number of shares that can be issued pursuant to the reinvestment of
dividends and optional cash investments. You will have to pay fees and service
charges as set forth on Exhibit A.
LEGAL MATTERS
Brinberg & Lundy has issued an opinion to us regarding certain legal
matters in connection with this offering, including the validity of the issuance
of Common Shares pursuant to the plan. Simeon Brinberg and Mark H. Lundy,
members of the firm of Brinberg & Lundy, are officers and shareholders of the
Trust.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, have
audited our consolidated financial statements and schedules included in our
Annual Report on Form 10-K for the year ended September 30, 2003, as set forth
in their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements and schedules
are incorporated by reference in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.
INDEMNIFICATION
The Declaration of Trust provides that the Trust shall indemnify each
trustee, officer, employee and agent against all liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by him in connection with
the defense or disposition of any action, suit or other proceeding by the Trust
or any other person, whether civil or criminal, in which he may be involved or
with which he may be threatened, while in office or thereafter, by reason of his
being or having been a trustee, officer, employee or agent; provided however,
there shall be no indemnification with respect to any matter as to which the
person seeking indemnification shall have been adjudicated to have acted in bad
faith or with willful misconduct or reckless disregard to his duties or gross
negligence or not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust and further provided, that as to
any matter disposed of by a compromise payment by the person seeking
indemnification, pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expense shall be provided unless such a
compromise shall be approved as in the best interests of the Trust by a majority
of the disinterested trustees or unless the Trust shall have received a written
opinion from independent legal counsel to the effect that such person appears to
have acted in good faith in the reasonable belief that his action was in the
best interests of the Trust. Subject to the proviso clauses, and except for
expenses not reasonably incurred, the Declaration of Trust is intended to
provide for indemnification of trustees, officers, employees and agents to the
full extent provided by law. The Trust may make advance payments in connection
with indemnification; provided that the indemnified trustee, officer, employee
or agent shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that he is not entitled to such
indemnification.
EXHIBIT A
PLAN SERVICE FEES SCHEDULE
Enrollment Fee for New Investors No Charge
Reinvestment of Dividends 2% up to a maximum of $2.50
for each investment
Optional Cash Purchases $2.50 per transaction
Gift or Transfer of Shares No Charge
Safekeeping of Stock Certificates $7.50 per transaction
without sale
Certificate Issuance No Charge
Open Market Purchase of Shares
Transaction Fee $15.00 per purchase transaction
Brokerage Commission $0.10 per share
Sale of Shares (partial or full) (1)
Transaction Fee $15.00 per sale transaction
Brokerage Commission $0.10 per share
Returned Checks for Insufficient Funds $25.00 per item
Duplicate Statements
Current Year No Charge
Prior Year(s) $20.00 per year requested
----------------------------------------------------------------------
(1) The Administrator will deduct the applicable fees from the proceeds
of a sale.
We reserve the right to amend or modify this Plan Service Fees Schedule
at any time.
AUTHORIZATION FORM
BRT REALTY TRUST
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
To: American Stock Transfer & Trust Company
P. O. Box 922
Wall Street Station
New York, New York 10269-0560
Telephone: (877) 253-6850
Fax Number: (718) 234-1440
INSTRUCTIONS
This form is to be used only by BRT Realty Trust shareholders to indicate their
interest in participating in the BRT Realty Trust Dividend Reinvestment and
Stock Purchase Plan. This form will not be accepted by the Administrator unless
it is completed in its entirety and is accompanied by the full amount of the
optional cash investment, if any.
The Participant submitting this form hereby certifies that (i) the information
contained herein is true and correct as of the date of this form; and (ii) the
Participant has received a copy of the Prospectus, dated September 10, 2004,
relating to the Plan and agrees to abide by its provisions. If you are electing
to make an optional cash investment, it must be at least $100 and not in excess
of $2,500 per month. If your shares are held in your name by a securities
depository and you are making an optional cash investment, you must submit a
Broker and Nominee Form with this form.
I wish to participate in the BRT Realty Trust Dividend Reinvestment and Stock
Purchase Plan as follows (mark an "X" on the appropriate line(s)):
_____ FULL DIVIDEND REINVESTMENT. I want to reinvest the cash dividends on
all shares now or hereafter registered in my name and on all shares
held for me by the Administrator. I may also elect to make an optional
cash investment, as noted below.
_____ PARTIAL DIVIDEND REINVESTMENT. I want to reinvest the cash dividends on
____ shares registered in my name and want to receive cash dividends on
the rest of my shares. I understand that cash dividends on all shares
held for me by the Administrator will be reinvested in shares. I may
also elect to make an optional cash investment, as noted below.
_____ OPTIONAL CASH INVESTMENT. I want to make an optional cash investment. I
understand that you will continue to pay me cash dividends on the
shares owned by me now or in the future, unless I have designated such
shares for dividend reinvestment, as noted above.
------------------------------------------------- ----------------------
NAME OF PARTICIPANT (MUST MATCH PRINTED NAME BELOW) SOCIAL SECURITY NUMBER
------------------------------------------------------------------------------
ADDRESS OF PARTICIPANT
--------------------------- CHECK--- MONEY ORDER ------ --------------------
OPTIONAL CASH INVESTMENT MANNER OF PAYMENT TODAY'S DATE
AMOUNT, IF ANY (MARK ONE)
------------------------------------- ---------------------------------
PARTICIPANT (SIGNATURE) PARTICIPANT (PRINT NAME)
BROKER AND NOMINEE FORM
BRT REALTY TRUST
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
To: American Stock Transfer & Trust Company
P. O. Box 922
Wall Street Station
New York, New York 10269-0560
Telephone: (877) 253-6850
Fax Number: (718) 234-1440
INSTRUCTIONS
This form is to be used only by a broker, bank or other nominee submitting an
optional cash investment on behalf of a Participant whose shares are held in the
name of a securities depository, as provided for in the Prospectus, dated
September 10, 2004 for the BRT Realty Trust Dividend Reinvestment and Stock
Purchase Plan. A new form must be completed for each month an optional cash
investment is submitted. This form will not be accepted by the Administrator
unless it is completed in its entirety and is accompanied by the full amount of
the optional cash investment, if any.
The broker, bank or other nominee submitting this form hereby certifies that (i)
the information contained herein is true and correct as of the date of this
form; (ii) a current copy of the Prospectus has been delivered to the
Participant; and (iii) the optional cash investment amount specified below is
not less than $100 nor greater than $2,500 for each month. Shares issued upon
request will be registered in the nominee name of the respective depository.
------------------------------------------------- -------------------------
NAME OF PARTICIPANT(MUST MATCH PRINTED NAME BELOW) SOCIAL SECURITY NUMBER
-------------------------------------------------------------------------------
ADDRESS OF PARTICIPANT
-------------------------------------- ------------------------------------
NAME OF SECURITIES DEPOSITORY PARTICIPANT ACCOUNT NUMBER AT
DEPOSITORY
-------------------------------------- ------------------------------------
BROKER/NOMINEE CONTACT BROKER/NOMINEE TELEPHONE NUMBER
--------------------------------------------- ---------------------------
SHARES HELD WITH DEPOSITORY AS OF RECORD DATE TODAY'S DATE
--------------------------------------- ---- CHECK ---- MONEY ORDER
OPTIONAL CASH INVESTMENT AMOUNT, IF ANY MANNER OF PAYMENT (MARK ONE)
----------------------------------------- ----------------------------------
PARTICIPANT (SIGNATURE) PARTICIPANT (PRINT NAME)
II-7
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses payable by the
registrant in connection with the sale and distribution of the common shares
registered hereby. All amounts other than the SEC registration fee are
estimated.
SEC Registration Fee $ 1,998
New York Stock Exchange Additional Listing Fee $ 6,000
Accounting Fees $10,000
Legal Fees and Disbursements $ 5,000
Printing Fees $12,000
Miscellaneous $ 1,002
Total: $36,000
Item 15. Indemnification of Trustees and Directors.
Reference is made to the caption "Indemnification" in the prospectus
which is a part of this registration statement, which is incorporated herein by
reference.
We have purchased and maintain insurance on behalf of our trustees and
officers against liability asserted against such trustees and officers in their
capacities as such.
Item 16. Exhibits.
See the index to exhibits, which is incorporated herein by reference.
Item 17. Undertakings.
(A) The undersigned registrant hereby undertakes:
(1) To file, during the period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Great Neck Plaza, State of New York on September
10, 2004.
BRT REALTY TRUST
Registrant
By: /s/ Jeffrey A. Gould
-------------------------------
Jeffrey A. Gould
President, Chief Executive Officer
and Trustee
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, each of the undersigned constitutes and
appoints Jeffrey A. Gould and Mark H. Lundy, and each of them, as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in the name, place and stead of the undersigned, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement or any registration statement for
this offering that is to be effective upon the filing pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, and all post-effective amendments
thereto, and to file the same, with all exhibits thereto and all other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that each of
said attorney-in-fact or substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on September 10, 2004.
(Signature) (Title)
/s/ Fredric H. Gould
--------------------
Fredric H. Gould Chairman of the Board of Directors
/s/ Jeffrey A. Gould
--------------------
Jeffrey A. Gould President, Chief Executive Officer
and Trustee (principal executive
officer)
/s/ Patrick J. Callan
---------------------
Patrick J. Callan Trustee
--------------------- Trustee
Louis C. Grassi
/s/ Gary Hurand Trustee
-----------------------
Gary Hurand
/s/ David Herold Trustee
-----------------------
David Herold
/s/ Jeffrey Rubin Trustee
------------------------
Jeffrey Rubin
/s/ Kenneth F. Bernstein Trustee
-------------------------
Kenneth F. Bernstein
/s/ Matthew J. Gould Trustee
-------------------------
Matthew J. Gould
/s/ George E. Zweier
--------------------
George E. Zweier Vice President and Chief Financial
Officer (principal executive
officer)
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
4.1 Form of Certificate for Shares of Beneficial Interest.
Filed as Exhibit 4.1 to Registration Statement on Form
S-8 (Registration No. 333-104461) filed with the
Securities and Exchange Commission on April 11, 2003
and incorporated herein by reference.
5.1 Opinion of Brinberg & Lundy
23.1 Consent of Brinberg & Lundy (included in its opinion
filed as Exhibit 5.1 hereto)
23.2 Consent of Ernst & Young LLP, independent auditors
24.1 Powers of Attorney (included on the signature page
of this Registration Statement)
Exhibit 5.1
BRINBERG & LUNDY
60 CUTTER MILL ROAD
SUITE 303
GREAT NECK, NY 11021
Telephone (516) 466-3100
Facsimile: (516) 466-3132
September 10, 2004
BRT REALTY TRUST
60 Cutter Mill Road
Suite 303
Great Neck, NY 11021
Gentlemen:
In our capacity as counsel to BRT Realty Trust, a Massachusetts
business trust ("BRT"), we have been requested to render this opinion in
connection with a Registration Statement on Form S-3 (the "Registration
Statement") filed by BRT with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, covering an aggregate of 750,000 shares (the
"Shares") of Beneficial Interest, $3.00 par value, issuable under the BRT Realty
Trust Dividend Reinvestment and Stock Purchase Plan (the "Plan").
In furnishing our opinion, we have examined the Declaration of Trust of
BRT, as amended, the By-Laws of BRT, and such other instruments and documents as
we have deemed relevant and necessary as the basis for the opinion expressed
herein. We have examined originals or certified, conformed, or photostatic
copies of all documents, the authenticity of which has been established to our
satisfaction. In all such examinations, we have assumed the genuineness of all
signatures on original and certified documents, and the conformity to executed
documents of all executed copies submitted to us as conformed or photostatic
copies.
Based upon and subject to the foregoing, we are of the opinion that the
Shares issuable under the Plan have been duly authorized and, when issued in
accordance with the terms of the Plan, will be legally issued, fully paid and
non-assessable.
Simeon Brinberg and Mark H. Lundy, members of this firm, are officers
and shareholders of BRT.
We hereby consent to use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Brinberg & Lundy
--------------------
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of BRT Realty Trust
(the "Company") for the registration of 750,000 shares of its common stock
and to the incorporation by reference therein of our report dated December 8,
2003 with respect to the consolidated financial statements and schedule of
the Company included in its Annual Report (Form 10-K) for the year ended
September 30, 2003, filed with the Securities and Exchange Commission.
New York, New York
September 10, 2004