Foiled in an earlier attempt to buy a banking company, a suburban New York real estate investment trust is trying again.
BRT Realty Trust in Great Neck said last week that it has signed a letter of intent to acquire a controlling interest in Reliance Bank in White Plains, N.Y. The deal calls for BRT to invest $20.8 million in exchange for 86% of the stock of Reliance, which has $25 million of assets and two branches.
The REIT intends to form a holding company for Reliance and then spin that new company off to shareholders. That way BRT would be able to keep its special tax status instead of becoming a bank holding company itself.
Last year BRT tried to buy $199 million-asset Peekskill (N.Y.) Financial Corp., a thrift holding company. Rebuffed, it filed this June with the Office to Thrift Supervision to start a thrift, but withdrew the application last week when the Reliance deal was announced.
Simeon Brinberg, a senior vice president at BRT, said it is interested in banking because the market has treated bank stocks more favorably than real estate investment trusts of late. Most bank stocks trade above book value, but BRT's shares are trading at about $8, $2.50 below book value.
"We hope to see Reliance trading at a premium to book," Mr. Brinberg said. "We believe that with two separate entities, we can create a market value higher than the sum of the parts."
The group that runs BRT invested in another New York thrift, Bankers Federal Savings, in the late 1980s and bought a controlling interest in 1992. Dime Savings Bank of New York bought Bankers Federal in April 1997.