424B2 1 a2176046z424b2.htm 424B2
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Filed Pursuant to Rule 424(b)(2)
Registration Number 333-136110

        Green Bus Lines, Inc.

Triboro Coach Corporation

Jamaica Central Railways, Inc.

444 Merrick Road
Lynbrook, NY 11563

February 9, 2007

Dear Shareholder:

        You are cordially invited to attend a special joint meeting of the shareholders of Green Bus Lines, Inc., a New York corporation ("Green"), Triboro Coach Corp., a New York corporation ("Triboro") and Jamaica Central Railways, Inc., a New York corporation ("Jamaica") (Green, Triboro and Jamaica, being sometimes referred to as a "Bus Company" and collectively as the "Bus Companies"), to be held on March 26, 2007, at 1:00 pm, Eastern Time (the "special meeting"). The special meeting will be held at Ramada Plaza Hotel, John F. Kennedy Airport/Van Wyck Expressway, New York, NY 11430.

        As described in the enclosed proxy statement/prospectus, at the special meeting, you will be asked to consider and vote upon a proposal to approve and adopt an Agreement and Plan of Merger ("merger agreement") that the Bus Companies have entered into as of July 24, 2006 with GTJ REIT, Inc. ("GTJ REIT") and its wholly owned subsidiaries, Triboro Acquisition, Inc., Green Acquisition, Inc. and Jamaica Acquisition, Inc., New York corporations, and to approve the mergers contemplated by the merger agreement.

        If holders of record of two-thirds of the common stock, including voting trust certificates, of each of the Bus Companies, as of the record date, February 7, 2007, voting separately, vote to adopt and approve the merger agreement and to approve the mergers, and the other conditions in the merger agreement are satisfied or waived, Green Bus Lines, Inc. would be merged with and into Green Acquisition, Inc., with the latter as the surviving corporation, Triboro Coach Corp. would be merged with and into Triboro Acquisition, Inc., with the latter as the surviving corporation, Jamaica Central Railways, Inc. would be merged with and into Jamaica Acquisition, Inc., with the latter as the surviving corporation, and the Bus Companies would become wholly owned subsidiaries of GTJ REIT.

        As described in this proxy statement/prospectus, upon the approval of the mergers and the satisfaction of the other conditions in the merger agreement and a closing:

    (a)
    Each share of Green common stock will be converted into 1,117.429975 shares of GTJ REIT common stock;

    (b)
    Each share of Triboro common stock will be converted into 2,997.964137 shares of GTJ REIT common stock; and

    (c)
    Each share of Jamaica common stock will be converted into 195.001987 shares of GTJ REIT common stock.

        The Bus Companies' Board of Directors investigated, considered and evaluated the terms and conditions of the merger agreement. Based on its review, the Bus Companies' Board of Directors has unanimously determined that the mergers are fair to, and in the best interests of the shareholders of the Bus Companies and recommends that you vote FOR approving the merger agreement and approving the mergers.

        Your vote is very important, regardless of the number of shares you own of record or as a voting trust beneficiary. No Bus Company can complete its merger unless the merger agreement is adopted and approved and the mergers are approved, respectively by the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding common stock of each Bus Company entitled to vote at the special meeting. Whether or not you plan to attend the special meeting in connection with the proposed mergers, please promptly complete, sign and return the enclosed proxy card in the envelope provided. Your proxy card may also include instructions about how to vote by telephone or by using the Internet. Your shares then will be represented at the special meeting. If you attend the special meeting, you may, by following the procedures discussed in the accompanying documents, withdraw your proxy and vote in person.

        The accompanying Notice of Special Meeting, the proxy statement/prospectus and the proxy card explain the proposed mergers and provide specific information concerning the special meeting. Please read these materials carefully. IN PARTICULAR, PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 15 OF THIS PROXY STATEMENT/PROSPECTUS.

        On behalf of the Board of Directors of the Bus Companies, I would like to express our appreciation for your continued interest in the affairs of the Bus Companies. We look forward to seeing you at the special meeting.

    Sincerely,

 

 

Jerome Cooper
Chairman of the Board of Directors and President

Lynbrook, New York

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger described in this proxy statement/prospectus, passed upon the fairness or merits of this transaction, or passed upon the accuracy or adequacy of the disclosure in this document. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated February 9, 2007, and is first being mailed to the shareholders of the
Bus Companies beginning on or about February 14, 2007.


GREEN BUS LINES, INC.
TRIBORO COACH CORPORATION
JAMAICA CENTRAL RAILWAYS, INC.
444 Merrick Road
Lynbrook, NY 11563
(516) 881-3535


NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS
To Be Held on March 26, 2007
Commencing at 1:00 p.m., Eastern Time


February 9, 2007

Dear Shareholder:

        You are cordially invited to attend a special joint meeting of shareholders of Green Bus Lines, Inc., a New York corporation ("Green"), Triboro Coach Corporation ("Triboro") and Jamaica Central Railways, Inc. ("Jamaica") (sometimes referred to as a "Bus Company" or collectively as the "Bus Companies") (the "special meeting") commencing at 1:00 p.m. Eastern Time on March 26, 2007 at Ramada Plaza Hotel, John F. Kennedy Airport/Van Wyck Expressway, New York, NY 11430.

        We are holding this special meeting so that, and you will be asked:

    (a)
    as a Green shareholder, to vote on the merger of Green with and into Green Acquisition, Inc., a wholly owned subsidiary of GTJ REIT, with the latter as the surviving corporation;

    (b)
    as a Triboro shareholder, to vote on the merger of Triboro with and into Triboro Acquisition, Inc., a wholly owned subsidiary of GTJ REIT, with the latter as the surviving corporation;

    (c)
    as a Jamaica shareholder, to vote on the merger of Jamaica with and into Jamaica Acquisition, Inc., a wholly owned subsidiary of GTJ REIT, with the latter as the surviving corporation; and

    (d)
    to grant discretionary authority to vote upon any matters not known by our Board of Directors a reasonable period of time before the Bus Companies mailed this proxy statement/prospectus as may properly come before the special meeting, including authority to vote in favor of any postponements or adjournments of the special meeting, if necessary, to solicit additional proxies.

        The mergers, and a related reorganization of the Bus Companies, are more fully described in the accompanying proxy statement/prospectus, which you should read carefully in its entirety before voting.

        Shareholders of record or beneficiaries of voting trusts of each Bus Company as of the close of business on February 7, 2007 (referred to as the "record date") are entitled to notice of and to vote at the special meeting and any adjournment or postponement of the special meeting. A list of shareholders eligible to vote at the special meeting will be available for review during the Bus Companies' regular business hours at its headquarters, located at 444 Merrick Road, Lynbrook, New York, for ten days prior to the special meeting. At least two-thirds (2/3) of the common stock outstanding on the record date of each Bus Company must be voted, voting separately to approve the mergers in order for the mergers to be completed. Therefore, your vote is very important. Your failure to vote your shares will have the same effect as voting against the mergers.

        It is important for your shares to be represented at the special meeting. We hope that you will promptly mark, sign, date and return the enclosed proxy even if you plan to attend the special meeting. Your proxy card may also include instructions about how to vote by telephone or by using the Internet. If you attend the special meeting, you may vote in person even if you have already returned a proxy card. You should not send any certificates representing Bus Company common stock or voting trust certificates with your proxy.

        We look forward to seeing you at the meeting.

                              For the Board of Directors,

                              Secretary

Lynbrook, New York



ADDITIONAL INFORMATION

        You may obtain copies of information relating to the Bus Companies, without charge, by contacting the Bus Companies at:

Green Bus Lines, Inc.
Triboro Coach Corporation
Jamaica Central Railways, Inc.
Suite 370
444 Merrick Road
Lynbrook, NY 11563
Telephone: (516) 881-3535

        We are not incorporating the contents of the websites of the SEC, the Bus Companies or any other person into this document. We are only providing the information about how you can obtain certain documents that are specifically incorporated by reference into this proxy statement/prospectus at these websites for your convenience.

        In order for you to receive timely delivery of the documents in advance of the special meeting, the Bus Companies should receive your request no later than March 9, 2007.



TABLE OF CONTENTS

 
  Page
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE REORGANIZATION   1
SUMMARY   5
RISK FACTORS   15
THE REORGANIZATION   27
DESCRIPTION OF FAIRNESS OPINION   34
BUSINESS OF THE BUS COMPANIES   52
OUR REAL PROPERTY MANAGEMENT POLICIES   72
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA   79
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   84
MANAGEMENT OF OUR COMPANY   122
OUR PRINCIPAL STOCKHOLDERS   131
POTENTIAL CONFLICTS OF INTEREST   132
RELATED PARTY TRANSACTIONS   133
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION AND OUR PROPOSED STATUS AS A REIT   135
DESCRIPTION OF OUR CAPITAL STOCK   149
SHARE REPURCHASES   154
CERTAIN PROVISIONS OF MARYLAND CORPORATE LAW AND OUR CHARTER AND BYLAWS   155
SHARES AVAILABLE FOR FUTURE SALE   164
THE MERGER   164
RIGHTS OF DISSENTING SHAREHOLDERS   171
LEGAL PROCEEDINGS   174
REPORTS TO STOCKHOLDERS   174
LEGAL MATTERS   174
EXPERTS   174
ADDITIONAL INFORMATION   175
FINANCIAL STATEMENTS   F-1

ATTACHMENTS

 

 
  A—MERGER AGREEMENT AND PLAN OF MERGER   A-1
  B—SECTIONS 623 AND 910 OF THE NEW YORK BUSINESS CORPORATION
   LAW
  B-1
  C—OPINION OF RYAN BECK & CO.   C-1


QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE REORGANIZATION

        The following are some questions that you, as a shareholder of one or more of the Bus Companies, may have regarding the mergers and the Reorganization being considered at the special meeting of the Bus Companies' shareholders and brief answers to those questions. The Bus Companies urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section may not provide all the information that might be important to you with respect to the merger and the Reorganization being considered at the special meeting. Additional important information is also contained in the attachments to, and the documents incorporated by reference in, this proxy statement/prospectus.

Q:
Why am I, as a Bus Company shareholder, receiving this proxy statement/prospectus?

A:
The Bus Companies have determined to effect a reorganization (the "Reorganization") whereby each of the Bus Companies will become a wholly-owned subsidiary of GTJ REIT, Inc., a Maryland corporation ("GTJ REIT"). The Reorganization would be effected by a merger of each of the Bus Companies with a wholly-owned subsidiary of GTJ REIT, which are the mergers referred to in this proxy statement/prospectus on which you are being requested to vote. Please see "The Merger" beginning on page 159 of this proxy statement/prospectus. A copy of the merger agreement is attached to this proxy statement/prospectus as Attachment A. In order to complete the mergers, the shareholders of each Bus Company must approve the merger agreement and approve the mergers. The Bus Companies are holding a special joint meeting of their shareholders to obtain these approvals. This proxy statement/prospectus contains important information about the mergers, the merger agreement, the special meeting and the Reorganization, which you should read carefully. The enclosed voting materials allow you to vote your shares without attending the special meeting. Your vote is very important. We encourage you to vote as soon as possible.

Q:
Why is the Reorganization being proposed?

A:
As a result of the sales of the Bus Companies' bus assets to New York City and the execution of leases with New York City and others, the Bus Companies now receive a substantial amount of income and cash flow. Because the Bus Companies were organized more than half-century ago, their real property is still owned by "C" corporations. For tax purposes, these are corporations which are taxed on their income and do not "pass through" their tax liabilities to the shareholders, as would occur in, for example, a limited partnership or a limited liability company. Accordingly, the substantial income being generated under the leases described above is being taxed at the corporate level at a tax rate of approximately 45% and then, if distributed to the shareholder as dividends, would be taxed again at, for example, rates ranging from approximately 15% to 25% which would result, if such income were fully distributed, in a combined tax rate on the income ranging from approximately 53% to 59%. Accordingly, the Bus Companies' Board of Directors determined that the only tax efficient solution to the above situation is the creation of a real estate investment trust, or "REIT". All of the real property of the Bus Companies can be acquired by a REIT in a tax free reorganization. Furthermore, the income earned by the REIT's real properties will not be taxed to the REIT provided there is compliance with the REIT rules. Among other requirements, the REIT rules provide, with certain exceptions, that at least 90% of REIT net income for each year must be distributed to REIT shareholders. Income from the Bus Companies' outdoor maintenance, paratransit and other activities will continue to be subject to corporate taxation.


Q:
What will happen in the mergers?

A:
Pursuant to the merger agreement, Green would be merged with and into Green Acquisition, Inc., a wholly owned subsidiary of GTJ REIT and the surviving corporation, Triboro would be merged with and into Triboro Acquisition, Inc., a wholly owned subsidiary of GTJ REIT and the surviving

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    corporation, and Jamaica would be merged with and into Jamaica Acquisition, Inc., a wholly owned subsidiary of GTJ REIT and the surviving corporation.

Q:
What are Bus Company shareholders voting on?

A:
Bus Company shareholders are voting on a proposal to approve and adopt the merger agreement and approve the mergers. Bus Company shareholders are also voting on a proposal to approve any adjournment of the special meeting.


Q:
What vote of Bus Company shareholders is required to approve and adopt the merger agreement and to approve the mergers?

A:
Approval of the proposal to adopt the merger agreement and to approve the mergers requires the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding common stock of each Bus Company entitled to vote at the special meeting, voting separately.


Q:
When do GTJ REIT and the Bus Companies expect the mergers to be completed?

A:
GTJ REIT and the Bus Companies are working to complete the mergers as quickly as practicable and currently expect that the mergers could be completed promptly after the special meeting. However, we cannot predict the exact timing of the completion of the mergers because they are subject to other conditions.


Q:
When and where will the special meeting be held?

A:
The special meeting will take place on March 26, 2007 at 1:00 p.m. Eastern Time at Ramada Plaza Hotel, John F. Kennedy Airport/Van Wyck Expressway, New York, NY 11430.


Q:
Who can attend and vote at the special meeting?

A:
All holders of record of the common stock, that is, persons holding Common Stock in their name, or beneficiaries of voting trusts, that is, persons holding voting trust certificates in their names, of one or more Bus Companies at the close of business on February 7, 2007, the record date, are entitled to notice of and to vote at the special meeting. As of the record date, there were 3,766.50 shares of Green common stock, 1,277.10 shares of Triboro common stock and 10,064.00 shares of Jamaica common stock outstanding and entitled to vote at the special meeting.


Q:
How do the Bus Companies' Boards of Directors recommend that Bus Company shareholders vote?

A:
The Bus Companies' Boards of Directors unanimously recommends that the Bus Company shareholders vote "FOR" the proposal to approve and adopt the merger agreement and to approve the mergers and any adjournment of the special meeting. The Bus Companies and their Boards of Directors have determined that the merger agreement and the transactions contemplated by the merger agreement, including the mergers, are fair to and in the best interests of Bus Companies and their shareholders. Accordingly, the Bus Companies' Boards of Directors has approved the merger agreement and the transactions contemplated by the merger agreement, including the mergers.


Q:
Are there any shareholders who have already agreed to vote in favor of the mergers?

A:
No. Although management of the Bus Companies are in favor of the mergers and the Reorganization, there are no voting agreements with any person.

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Q:
Am I entitled to appraisal or dissenters' rights?

A:
Yes. Under New York law, Bus Company shareholders are entitled to appraisal rights. See "Rights of Dissenting Shareholders" beginning on page 166 of this proxy statement/prospectus.


Q:
What should I do now in order to vote on the proposals being considered at the special meeting?

A:
Shareholders of record of one or more of the Bus Companies or shareholders holding voting trust certificates as of the record date of the special meeting may vote by proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope or by submitting a proxy over the Internet or by telephone by following the instructions on the enclosed proxy card. Additionally, you may also vote in person by attending the special meeting. If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Whether or not Bus Company shareholders, including holders of voting trust certificates plan to attend the special meeting, they should give their proxy as described in this proxy statement/prospectus.

    To vote by telephone, call 1-866-853-9739
To vote via the Internet, go to www.proxyvotenow.com/bus and enter the control
number(s) on your proxy card.
   
Q:
Should I send in my Bus Company share or voting trust certificates now?

A:
No. You should not send in your Bus Company stock or voting trust certificates until you receive a separate transmittal letter. Following the mergers, a transmittal letter will be sent to Bus Company shareholders informing them of where to deliver their Bus Company stock or voting trust certificates in order to receive shares of GTJ REIT common stock. You should not send in your Bus Company stock or voting trust certificates prior to receiving this letter of transmittal.


Q:
What will happen if I abstain from voting or fail to vote?

A:
An abstention occurs when a shareholder attends a meeting, either in person or by proxy, but abstains from voting. If you abstain, it will have the same effect as voting NO on the proposal to approve and adopt the merger agreement and to approve the mergers. The approval of the holders of at least two-thirds (2/3) of the outstanding common stock of each of the Bus Companies is required to approve the merger agreement and mergers, and it is important that shareholders vote on the mergers.


Q:
Can I change my vote after I have delivered my proxy?

A:
Yes. You can change your vote at any time before your proxy is voted at the special meeting by:

delivering a signed written notice of revocation to the Secretary of the Bus Company at:

      Green Bus Lines, Inc.
      Triboro Coach Corporation
      Jamaica Central Railways, Inc.
      444 Merrick Road
      Lynbrook, NY
      (516) 881-3535

    signing and delivering a new, valid proxy card bearing a later date; and delivered to the attention of the Bus Companies' Secretary;

    submitting another proxy by telephone or on the Internet; or

    attending the special meeting and voting in person, although your attendance alone will not revoke your proxy.

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Q:
What should I do if I receive more than one set of voting materials for the special meeting?

A:
You may receive more than one set of voting materials for the special meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. Please complete, sign, date and return EACH proxy card and voting instruction card that you receive. Please note that if you sign a proxy but do not complete the voting portion as to an item, your vote will be treated as FOR such item.

Q:
Who can help answer my questions?

A:
If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement/prospectus, the enclosed proxy card, voting instructions or the election form, you should contact:

Innisfree M&A, Inc.
501 Madison Avenue
New York, NY 10072
Call Collect (212) 750-5833
Call Toll-Free (877) 800-5187
E-mail: info@innisfreema.com

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SUMMARY

        The following is a summary that highlights certain material information contained in this proxy statement/prospectus. This summary may not contain all of the information that may be important to you. For a more complete description of the merger agreement and the transactions contemplated by the merger agreement, including the merger, we encourage you to read carefully this entire proxy statement/prospectus, including the attached annexes.

Introduction

        The mergers are part of a proposed reorganization (the "Reorganization") of Green, Triboro and Jamaica, three affiliated New York corporations with long historical roots in the operation of private bus routes in New York City, as subsidiaries of GTJ REIT. The bus businesses of the Bus Companies were acquired by New York City in late 2005 and early 2006, leaving the Bus Companies with a portfolio of real property and a group of outdoor maintenance businesses and a paratransit business.

Participants in the mergers and the Reorganization

        In addition to Green, Triboro and Jamaica, the participants in the mergers are the following wholly owned subsidiaries of GTJ REIT (sometimes referred to in this proxy statement/prospectus as the "Company" "we", "us", or "our", except to the extent it is used in a discussion of federal tax matters, in which case such term refers only to GTJ REIT unless the context indicates otherwise), namely, Green Acquisition, Inc., Triboro Acquisition, Inc. and Jamaica Acquisition, Inc.

Goal of the Mergers

        The goal of the Mergers is to make the Bus Companies wholly-owned subsidiaries of GTJ REIT, which then proposes to take actions necessary to become a REIT.

Merger Consideration

        Upon consummation of the mergers, the Bus Companies will become wholly-owned subsidiaries of GTJ REIT and their presently outstanding common stock will be converted as follows:

      (a)
      Each share of Green common stock will be converted into 1,117.429975 shares of GTJ REIT common stock;

      (b)
      Each share of Triboro common stock will be converted into 2,997.964137 shares of GTJ REIT common stock; and

      (c)
      Each share of Jamaica common stock will be converted into 195.001987 shares of GTJ REIT common stock.

Common management of the Bus Companies

        The businesses of the Bus Companies have been managed under the direction of a common Board of Directors. The Board of Directors meets approximately once a month to discuss matters relating to the Bus Companies. All corporate actions by the Board of Directors with respect to the Bus Companies are decided by the directors, including the election of officers for each of the Bus Companies. The common Boards of Directors is maintained in place under voting trust agreements in which approximately 88% of the Green common stock, 89% of the Triboro common stock and 91% of the Jamaica common stock is voted by a single voting trustee, Jerome Cooper, who is also the Chief Executive Officer of the Bus Companies and of the Company. Mr. Cooper will not vote any of the common stock of which he is the voting trustee, at the special meeting and voting shall instead be done by the holders of voting trust certificates.

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Present operations

        The Bus Companies, including their subsidiaries, own a total of six rentable real properties, four of which are leased to New York City and one of which is leased to a commercial tenant (all five on a triple net basis), and one of which is used by our operations and the remainder of which is leased to a commercial tenant but not on a triple net basis. The annual gross rental income of all of the real properties from third party tenants is approximately $9,500,000. There is an additional real property of negligible size which is not rentable. In addition, the Bus Companies and their subsidiaries collectively operate a group of outdoor maintenance businesses, and a paratransit business, with aggregate sales of approximately $27,527,000 and an operating loss of approximately $821,000, exclusive of their present real estate operations, in 2005.

Reasons for the proposed mergers and Reorganization

        As a result of the sales of the Bus Companies' bus assets to New York City and the execution of the leases described above with New York City and others, the Bus Companies now receive a substantial amount of income and cash flow. Because the Bus Companies were organized more than a half-century ago, their real property is still owned by "C" corporations. For tax purposes, these are corporations which are taxed on their income and do not "pass through" their tax liabilities to the shareholders, as would occur in, for example, a limited partnership or a limited liability company. Accordingly, the substantial income being generated under the leases described above is being taxed at the corporate level at a tax rate of approximately 45% and then, if distributed to the shareholders as dividends, would be taxed again at, for example, rates ranging from approximately 15% to 25%, which would result, if such income were fully distributed, in a combined tax rate on the income rates ranging from approximately 53% to 59%.

        One solution to this situation is the transfer of all of the real properties to entities which could "pass through" the tax liability. Such transfers would be treated as a sale of the real properties and would generate very substantial tax liabilities. Another solution, sale of the properties to third parties, would entail similar very substantial tax liabilities.

        The Board of Directors determined that the only tax efficient solution to the above situation is the creation of a REIT. Because of special tax rules applicable to REITs, all of the real property of the Bus Companies can be acquired by a REIT in tax free reorganizations. Furthermore, the income earned by the REIT's real properties will not be taxed to the REIT provided there is compliance with the REIT rules. Among other requirements, the REIT rules provide, with certain exceptions, that at least 90% of net income for each year must be distributed to REIT shareholders. Income from the Bus Companies' outdoor maintenance, paratransit and other activities will continue to be subject to corporate taxation.

Ryan Beck Fairness Opinion

        The Bus Companies' Board of Directors engaged Ryan Beck & Co. to advise as to the relative valuations of each of the Bus Companies as part of the mergers. Ryan Beck & Co. reviewed information concerning the Bus Companies including third party valuations of their real properties and outdoor businesses. Ryan Beck & Co. derived the relative valuations of the Bus Companies from that information and so advised the Bus Companies' Board of Directors. A description of the opinion of Ryan Beck & Co. is included in "Description of Fairness Opinion", beginning on page 34, of this proxy statement/prospectus, and a copy of the opinion of Ryan Beck & Co. is included as Attachment C to this proxy statement/prospectus.

        Based on the valuations of the real properties and outdoor maintenance businesses, and the paratransit business, and considering the ownership of the same in whole or part by each of the Bus Companies, we have been advised by Ryan Beck & Co. that the relative valuation of each the Bus Companies (as part of GTJ REIT) is Green—42.088%, Triboro—38.287% and Jamaica—19.625%. Accordingly, under the Reorganization, 10,000,000 shares of our common stock will be distributed as

6



follows: 4,208,800 shares to the shareholders of Green, 3,828,700 shares to the shareholders of Triboro and 1,962,500 shares to the shareholders of Jamaica, in such case in proportion to the outstanding shares held by such shareholders of each Bus Company, respectively, constituting the merger consideration.

Distribution of earnings and profits

        As part of becoming a REIT, we intend, after the mergers, to make a distribution of the Bus Companies' undistributed historical earnings and profits, estimated to be not more than $62,000,000 to GTJ REIT stockholders as of the record date of such distribution. We intend to distribute, in 2007, $20,000,000 in cash, and the remainder in shares of GTJ REIT common stock valued by its Board of Directors. There is no assurance that our shareholders, after the Reorganization, will be able to realize that value (or any other particular value) for a share of our Common Stock. We expect that each shareholder may elect a combination of cash and stock, or exclusively cash or stock. If more than $20,000,000 of cash is elected in the aggregate, we expect that, for some or all of the Bus Company shareholders, the cash paid would be less than the cash elected, and the cash will be distributed pro rata to each stockholder electing to receive some or all of his or her distribution in cash, in an amount totaling $20,000,000, and the balance of the distribution to each such stockholder will be made in shares of our Common Stock.

Annual Dividends

        In order to remain a REIT, GTJ REIT will be required to pay dividends to our stockholders each year equal to at least 90% of our net income, and exclusive of real property capital gains if any.

Recommendation of Bus Companies' Board of Directors

        The Board of Directors of the Bus Companies recommends that you vote FOR approval and adoption of the merger agreement and approval of the mergers.

Risk Factors

        In evaluating the merger agreement, the merger and the Reorganization, you should be aware that there are a number of risks related to the same. See "Risk Factors" beginning on page 15 of this proxy statement/prospectus.

Share ownership of Bus Company directors and executive officers

        The directors and officers of the Bus Companies own, collectively, 121.50 shares of Green (approximately 3.2% of the Green common stock outstanding on the record date), 70.7 shares of Triboro (approximately 5.5% of the Triboro common stock outstanding on the record date/and 459.0 shares of Jamaica (approximately 4.5% of the Jamaica common stock outstanding on the record date), The foregoing does not include common stock held by voting trusts, since the voting trustee will not be voting such common stock in connection with the merger agreement or the mergers.

Interests of Bus Company directors and executive officers in the mergers and the Reorganization

        No director or executive officer of the Bus Companies has any interest in the mergers and the Reorganization other than as a shareholder of the Bus Companies. None of such persons hold options on common stock of the Bus Companies nor will receive any payment in connection with the mergers and the Reorganization.

        It should be noted that Jerome Cooper will act as President and Chief Executive Officer and Chairman of the Board of Directors of GTJ REIT, Paul Cooper will act as a Vice President and a director of GTJ REIT, Douglas Cooper, a former director, will act as a Vice President and Director of GTJ REIT and Michael Kessman will act as Chief Accounting Officer of GTJ REIT. See "Management of Our

7



Company" beginning on page 120 of this proxy statement/prospectus for information on the proposed compensation and stock options of such persons.

Right of Appraisal

        Shareholders of the Bus Companies who do not vote FOR the mergers and who strictly adhere to procedures specified by applicable law will be entitled to seek appraisal for their shares of common stock. However, the merger agreement provides that if appraisal is sought for Bus Company common stock otherwise entitled to an aggregate of 3% or more of the 10,000,000 shares of GTJ REIT common stock to be issued in the mergers, GTJ REIT can terminate the merger agreement. See "Rights of Dissenting Shareholders" beginning on page 166 of this proxy statement/prospectus.

No listing of GTJ REIT common stock

        It is not presently anticipated that GTJ REIT will list its common stock on a securities exchange or electronic trading system. Accordingly, it is not anticipated that a trading market will develop for the GTJ REIT common stock. The board of directors of GTJ REIT may, however, determine to effect such listing or otherwise assist in the creation of a trading market in the future, but there can be no assurance of the same.

Conditions to the completion of the mergers

        A number of conditions must be satisfied or waived before the mergers can be completed. These include, among others:

    Conditions to GTJ REIT's obligations to complete the mergers

        GTJ REIT's obligation to complete the mergers is conditioned upon the satisfaction or waiver in writing by us, on or before the effectiveness of the mergers, of the following conditions:

    The Bus Companies' representations and warranties contained in the merger agreement must be accurate in all material respects as of the effective time of the mergers as if made at the effective time of the mergers.

    Each covenant or obligation that each of the Bus Companies is required to comply with or to perform at or prior to the closing of the mergers shall have been complied with and performed in all material respects.

    The Registration Statement of which this proxy statement/prospectus is a part shall have been declared effective by the Securities and Exchange Commission and shall remain effective through closing of the mergers.

    All consents, approvals and other authorizations of any governmental body (including from all applicable state securities regulatory agencies) required to consummate the mergers and the other transactions contemplated by this Agreement (other than the delivery of the certificates of merger with the Department of State of the State of New York) shall have been obtained, free of any condition that would reasonably be expected to have a material adverse effect on us or our subsidiaries.

    No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the mergers shall have been issued by any court of competent jurisdiction and remain in effect, and there shall not be any legal requirement enacted or deemed applicable to the mergers that makes consummation of the mergers illegal.

    There shall not be pending or threatened any legal proceeding: (i) challenging or seeking to restrain or prohibit the consummation of the mergers or any of the other transactions contemplated by the

8


      merger agreement; (ii) relating to the mergers and seeking to obtain from each of the Bus Companies or us or any of their or our respective subsidiaries any damages that may be material to each of the Bus Companies or us or any of their or our subsidiaries; (iii) seeking to prohibit or limit in any material respect each of the Bus Companies stockholders' ability to vote, receive dividends with respect to or otherwise exercise ownership rights with respect to our common stock; (iv) which would materially and adversely affect our rights to own the assets or operate the business of the Bus Companies; or (v) seeking to compel any of the Bus Companies or us or to dispose of or hold separate any material assets, as a result of the mergers or any of the other transactions contemplated by the merger agreement.

    Appraisal rights shall not have been perfected pursuant to Section 623 of the New York Business Corporation Law by shareholders or beneficial owners thereof of the Bus Companies with respect to more than 3% of the number of shares of our common stock issuable in connection with the mergers.

    Each Bus Company shall have received written resignation letters from each of the directors and officers of the Bus Companies requested by us effective as of the effective time of the Reorganization.

    Conditions to Bus Companies' obligations to complete the merger

        The Bus Companies' obligation to complete the mergers is conditioned upon the satisfaction or waiver in writing by them, at or before the effective time of the mergers, of the following conditions:

    Each covenant and obligation that GTJ REIT is required to comply with or to perform at or prior to the closing of the mergers shall have been complied with and performed in all material respects.

    The Registration Statement shall have been declared effective by the Securities and Exchange Commission and shall remain effective through closing of the mergers.

    The merger agreement shall have been duly adopted by affirmative vote of the holders of two-thirds of the outstanding stock of each of the Bus Companies, voting separately.

    All consents, approvals and other authorizations of any governmental body (including from all applicable state securities regulatory authorities) required to consummate the mergers and the other transactions contemplated by the merger agreement (other than the delivery of the certificate of merger with the Department of State of the State of New York) shall have been obtained, free of any condition that would reasonably be expected to have a material adverse effect on the Bus Companies.

    No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the mergers by each of the Bus Companies shall have been issued by any court of competent jurisdiction and remain in effect, and there shall not be any legal requirement enacted or deemed applicable to the mergers that makes consummation of the mergers by each of the Bus Companies illegal.

Termination of the merger agreement

        Either GTJ REIT or the Bus Companies can terminate the merger agreement as follows:

      (a)
      A non-breaching party can terminate on account of a breach by the other party

      (b)
      Either GTJ REIT or the Bus Companies can terminate upon an adverse action by a governmental entity

      (c)
      Either GTJ REIT or the Bus Companies can terminate if the mergers have not occurred by January 31, 2007, subject to extension by agreement of the parties.

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United States federal income tax consequences

        We expect the mergers to qualify as reorganizations within the meaning of Section 368(a) of the Internal Revenue Code. If the mergers qualify as reorganizations under Section 368(a), Bus Company shareholders generally will not recognize any gain or loss upon the receipt of GTJ REIT common stock in exchange for Bus Company common stock in connection with the mergers. As part of attaining REIT status, GTJ REIT intends to make a distribution, in 2007 of undistributed historical earnings and profits of the Bus Companies of a sum expected to be not more than $62,000,000, $20,000,000 in cash and $42,000,000 in GTJ REIT common stock, as elected by each GTJ REIT stockholder as of the record date of such distribution. It is anticipated that if shareholders elect to receive at least 32% in cash, such funds will be sufficient to satisfy tax liabilities arising from this distribution. Tax matters are complicated, and the tax consequences of the mergers to each Bus Company shareholder will depend on the facts of each shareholder's situation. You are urged to read carefully the discussion in the section entitled "Federal Income Tax Consequences of the Reorganization and Our Proposed Status as a REIT" beginning on page 130 of this proxy statement/prospectus and to consult with your tax advisor for a full understanding of the tax consequences of your participation in this transaction.

Material Difference in rights of Bus Company shareholders and GTJ REIT shareholders

        As part of the proposed Reorganization, the Bus Company shareholders are being requested to approve mergers of the Bus Companies with and into subsidiaries of GTJ REIT, and in exchange for their common stock of the Bus Companies, which are New York corporations, they would receive common stock of GTJ REIT, which is a Maryland corporation.

        There are differences between the rights of New York shareholders in view of New York law and the Bus Companies' articles of incorporation and by-laws, as compared with and rights of Maryland stockholders in view of Maryland law and GTJ REIT's certificate of incorporation and by-laws. The following is only a summary and is qualified by the terms of the laws and documents referred to above.

        The following table summarizes the material differences:

 
  Bus Company Shareholders
  GTJ REIT Stockholders

Notice of Meetings

 

No less than 10 and no more than 40 days notice.

 

No less than 10 and no more than 90 days notice.

Quorum

 

At least one third for Green and Triboro, at least 50% for Jamaica.

 

At least 50%

Voting

 

Majority present unless otherwise required by law.

 

Majority present unless otherwise required by law.

Dividends

 

Within discretion of the Board of Directors.

 

Within discretion of the Board of Directors except that for so long as the Board deems it in the best interest of GTJ REIT to qualify as a REIT, at least 90% of net income to be paid in dividends.

Written Consent

 

Shareholders may act by unanimous written consent.

 

Stockholders may act by unanimous written consent.
         

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Dissenting
Shareholders

 

A shareholder has the right to receive payment of the fair value
of his shares if he does not assent
to:

 

A stockholder has a right to demand and receive payment of the fair market value of the stockholder's stock if:
    A. a merger or consolidation except when:
        The shareholder is a
        member of the parent in
        a merger;
        The shareholder is a
        member of the surviving
        corporation unless the
        merger changes the
        rights of the
        shareholder;
        The shares are listed.
B. a sale, lease, exchange or other disposition of all or substantially all of the assets of a corporation which requires shareholder approval.
C. a share exchange. (Section 910 of the New York Business Corporation Law).
  A. the corporation consolidates or merges.
B. The stockholder's stock is to be acquired in a share exchange.
C. The corporation transfers its assets in a manner requiring shareholder consent.
D. The corporation amends its charter in a way that alters the contract rights of any outstanding stock and substantially adversely affects the stockholder's rights, unless the right to do so is reserved in the charter.
E. Business combination with an interested stockholder or affiliate. (Section 3-202 of the Maryland General Corporation Law).

Voting

 

Shareholders' voting is required for mergers, consolidation, dissolution and election of directors.

 

Stockholders' voting is required for mergers, consolidation, dissolution and election of directors.

Shareholding

 

No restriction on amount.

 

No person may hold more than 9.9% of the outstanding common stock.

        Other differences in the rights of the Bus Company shareholders and GTJ REIT shares should be noted, although they are based on agreements and not corporate law:

            (a)   The holders of up to 90% of the common stock of the Bus Companies are now parties to voting trust agreements, under which the voting trustee exercises substantially all of the voting rights of such shareholders. By contrast, there will be no voting trusts related to GTJ REIT.

            (b)   GTJ REIT expects to enter into a Stockholders' Rights Agreement before the mergers (the Bus Companies do not have this). The Stockholders' Rights Agreement provides for the issuance of rights to purchase Series A preferred stock which are convertible into common stock, or common stock, at below market values to all stockholders of GTJ REIT other than one or more persons owning, or seeking to own, collectively, 15% or more of the GTJ REIT common stock without approval by the Board of Directors. The effect of the Stockholders Rights Agreement is to discourage tender offers for or purchases of common stock of GTJ REIT, by an individual or a group, of 15% or more, without Board of Directors approval, thereby providing a barrier to a takeover not approved by the Board of Directors.

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Expected Organizational chart after the Reorganization

        The following chart represents our organization after the Reorganization ("QRS" means qualified REIT subsidiary, and "TRS" means taxable REIT subsidiary):

GRAPHIC

        The above chart reflects the following. First Green, Triboro and Jamaica are merged into subsidiaries of GTJ REIT. Each of them has a subsidiary or subsidiaries ("Subsidiaries") holding their respective real

12



property. Green's Subsidiary would form two LLCs and transfer a real property to each of the same. Triboro and Jamaica's Subsidiaries each have one real property, and they would each form an LLC and transfer a real property to it. GTJ would form three LLCs and transfer its real properties to them. GTJ would designate Shelter Express as a TRS ("Opco Holdco") before the mergers and transfer to it all of its non-real estate subsidiaries ("OpCos"). From a REIT perspective, each of Green, Triboro and Jamaica and their respective Subsidiaries, GTJ, and all of the LLCs holding GTJ's real properties, are expected to be treated as qualified REIT subsidiaries or disregarded for federal tax purposes. Opco Holdco and the OpCos are expected to be treated as taxable REIT subsidiaries.

Summary of pro forma consolidated financial data

        Assuming approval by the Bus Companies' shareholders and consummation of the Reorganization, our pro forma operations for the year ended December 31, 2005, the nine months ended September 30, 2006, and our pro forma financial position at September 30, 2006 are as follows:

Summary unaudited pro forma combined condensed financial consolidated information

        The following summary unaudited pro forma combined condensed consolidated financial data of GTJ REIT, Inc. The unaudited pro forma consolidated financial statement information is based on, and should be read together with the consolidated financial statements as of September 30, 2006 (unaudited) and for the nine months ended September 30, 2006 (unaudited) and for the year ended December 31, 2005 which are found elsewhere in this prospectus.

    Pro forma combined condensed consolidated statement of operations data:

 
  GTJ REIT, INC.
 
 
  Nine months
ended

  Year ended
December 31,

 
 
  September 30, 2006
  2005
 
 
  (in thousands)
(unaudited)

  (in thousands)

 
Operating revenue   $ 23,773   $ 27,527  
Rental income     7,541     9,648  
   
 
 
  Total     31,314     37,175  
Operating expenses—other     25,648     28,348  
Operating expenses—rental operations     3,790     1,938  
   
 
 
Income (loss) from operations     1,876     6,889  
Other income (expense)     (732 )   (1,673 )
   
 
 
Income (loss) from continuing operations before income taxes     1,144     5,216  
Provision for income tax expense     517     1,891  
   
 
 
Income (loss) from continuing operations before income (loss) of unconsolidated affiliates     627     3,325  
   
 
 
Income (loss) from continuing operations   $ 627   $ 3,325  
   
 
 

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        Pro forma combined condensed consolidated balance sheet data:

 
  September 30, 2006
 
 
  (in thousands)
(unaudited)

 
Cash and cash equivalents and restricted cash   $ 1,405  
   
 
Working capital deficiency   $ (145 )
   
 
Total assets   $ 130,671  
   
 
Total liabilities   $ 29,895  
   
 
Total shareholders' equity   $ 100,776  
   
 

Changes in Control

        Under the provisions of our charter, no individual may own more than 9.9% of our outstanding common stock, in order to insure that REIT ownership rules are not violated. In addition, our board of directors has approved a Stockholder Rights Agreement to be entered into before the mergers, which is designed to discourage any group from acquiring, or seeking to acquire, in the aggregate, more than 15% of our outstanding common stock, without our board of directors' approval. In addition, Maryland law has a number of provisions that would discourage or prohibit takeovers of our company without the approval of our board of directors.

Risk Factors

        Our company, following the Reorganization, will be subject to a number of risks, among which are the following:

    We are not raising any financing in this offering, so that we will have to obtain other sources of funding for our growth.

    We may incur debt up to 75% of our gross assets to expand our business, which could lead to an inability to pay distributions to our stockholders; additionally, distributions payable to our stockholders may include a return of capital.

    If we do not qualify as a REIT for federal income tax purposes, we will be taxed as a corporation.

    We may be required to borrow money, sell assets or issue new securities for cash to pay distributions required of us as a REIT.

    As with the common stock of the Bus Companies, there is no public market for our common stock and none may develop in the foreseeable future. Thus, although your shares are freely transferable, there may not be a market for the same.

        For further information, see "Risk Factors" commencing on page 15.

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RISK FACTORS

        Before you vote on the mergers described in this proxy statement/prospectus, you should be aware that we are subject to various risks, including those described below. You should carefully consider these risks together with all of the other information included in this prospectus before you decide to approve the Reorganization. The following include the material risks known to us at this time, other than those which are generic and applicable to a variety of businesses.

Transaction risks

    Our company is newly formed and has not yet commenced business operations, which makes our future performance and the performance of your investment difficult to predict.

        Our company was incorporated on June 26, 2006. We have no prior operating history as a REIT. Therefore, our future performance and the performance of your investment can not be predicted at this time.

    Our failure to qualify as a REIT would subject us to corporate income tax, which would materially impact funds available for distribution.

        We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes beginning with the tax year ending December 31, 2007. Qualifying as a REIT will require us to meet several tests regarding the nature of our assets and income on an ongoing basis. A number of the tests established to qualify as a REIT for tax purposes are factually dependent. Therefore, you should be aware that while we intend to qualify as a REIT, it is not possible at this early stage to assess our ability to satisfy these various tests on a continuing basis. Therefore, we cannot assure you that our company will in fact qualify as a REIT or remain qualified as a REIT.

        If we fail to qualify as a REIT in any year, we would pay federal income tax on our net income. We might need to borrow money or sell assets to pay that tax. Our payment of income tax would substantially decrease the amount of cash available to be distributed to our stockholders. In addition, we no longer would be required to distribute substantially all of our taxable income to our stockholders. Unless our failure to qualify as a REIT is excused under relief provisions of the federal income tax laws, we could not re-elect REIT status until the fifth calendar year following the year in which we failed to qualify.

        In addition, even if we qualify as a REIT in any year, we would still be subject to federal taxation on certain types of income. For example, we would be subject to federal income taxation on the net income earned by our "taxable REIT subsidiaries", that is, our corporate subsidiaries with respect to which elections are made to treat the same as separate, taxable subsidiaries, presently including our outdoor maintenance and para transit businesses.

    The proposed distribution of undistributed historical earnings and profits to the Bus Company shareholders, consisting of cash and/or common stock, will be taxable to them as a dividend, resulting in tax liability to such shareholders.

        The proposed earnings and profits distribution would be taxable to the Bus Company shareholders as a dividend. The federal tax rate will be 15%, based on present tax law, and the state taxes will vary from state to state. Any shareholder electing cash of less than the tax on the distribution to such shareholder will be required to pay taxes on some or all of such distribution from a source other than the distribution.

15


    We may have to spinoff our taxable REIT subsidiaries, which would reduce our value.

        On a going forward basis, at least 75% of our assets must be those which may be held by REITs. Our outdoor maintenance and para transit business assets, and any other assets we may add to that group, are not qualified to be held directly by a REIT. Accordingly, we may be required, in the future, to spinoff these businesses in order to protect our status as a REIT. If we do so, we may be distributing a significant portion of our assets, which could materially and adversely affect the value of our common stock. It should be noted, however, that such distribution would be made to the then holders of our common stock.

Real property business risks

    Our real property portfolio is derived from the Bus Companies and we may not grow or diversify our real estate portfolio in the foreseeable future, leaving us vulnerable to New York area problems.

        We will own six income producing real properties which are presently owned, collectively, by the Bus Companies. We are raising no funds in this offering and so, without a sale of an existing real property, which is not contemplated for at least 10 years, the raising of funds by the sale of debt or equity securities or significant mortgage financing, our real property portfolio will not grow or be diversified.

    We have not determined what other kinds of real property may be the subject of a future investment, which may create uncertainty.

        The formation of the Company and the Reorganization are based on the Bus Companies' real property and outdoor maintenance businesses and a paratransit business. We have formulated no plans with respect to future real property investments. Therefore, we can not predict the future business direction of the Company.

    Adverse financial conditions in New York City will adversely affect all of our initial portfolio of real properties.

        All of our real property is commercial and is located in Queens and Brooklyn, New York and New York City is the sole tenant of four of the properties. The lack of diversity in the properties which we will own, and their principal tenant, New York City, should we not diversify after the Reorganization, could increase your risk of owning our shares. We are not raising any funds in this offering for diversification. Adverse conditions at that limited number of properties or in the location in which the properties exist would have a direct negative impact on your return as a stockholder.

Negative characteristics of real property investments

    Financing of our real property could lead to loss of the same if there is a default.

        The growth and diversification of our real property business is expected to be financed, in substantial part, by mortgage financing. We may borrow sums up to 75% of the value of our real property portfolio. Such loans may result in substantial interest charges which can materially reduce distributions to our stockholders. The documentation related to such loans is expected to contain covenants regulating the manner in which we may conduct our businesses and may restrict us from pursuing opportunities which could be beneficial to our stockholders. In addition, if we are unable to meet our payment or other obligations to our lenders, we risk loss of some or all of our real property portfolio.

    We depend upon our tenants to pay rent, and their inability or refusal to pay rent will substantially reduce our collections and payment of our indebtedness, leading to possible defaults, and reduce cash available for distribution to our stockholders.

        Our real property, particularly those we may purchase after the Reorganization, will be subject to varying degrees of risk that generally arise from such ownership. The underlying value of our properties and the ability to make distributions to you depend upon the ability of the tenants of our properties to

16


generate enough income to pay their rents in a timely manner. Their inability or unwillingness to do so may be impacted by employment and other constraints on their finances, including debts, purchases and other factors. Additionally, the ability of commercial tenants of commercial properties would depend upon their ability to generate income in excess of their operating expenses to make their lease payments to us. Changes beyond our control may adversely affect our tenants' ability to make lease payments and consequently would substantially reduce both our income from operations and our ability to make distributions to you. These changes include, among others, the following:

    changes in national, regional or local economic conditions;

    changes in local market conditions; and

    changes in federal, state or local regulations and controls affecting rents, prices of goods, interest rates, fuel and energy consumption.

        Due to these changes or others, tenants may be unable to make their lease payments. A default by a tenant, the failure of a tenant's guarantor to fulfill its obligations or other premature termination of a lease could, depending upon the size of the leased premises and our ability to successfully find a substitute tenant, have a materially adverse effect on our revenues and the value of our common stock or our cash available for distribution to our stockholders.

        If we are unable to find tenants for our properties, particularly those we may purchase after the Reorganization, or find replacement tenants when leases expire and are not renewed by the tenants, our revenues and cash available for distribution to our stockholders will be substantially reduced.

    Lack of diversification and liquidity of real estate will make it difficult for us to sell underperforming properties or recover our investment in one or more properties.

        Our business will be subject to risks associated with investment primarily in real property. Real property investments are relatively illiquid. Our ability to vary our portfolio in response to changes in economic and other conditions will be limited. We cannot assure you that we will be able to dispose of a property when we want or need to. Consequently, the sale price for any property we may purchase of the Reorganization may not recoup or exceed the amount of our investment.

    Lack of geographic diversity may expose us to regional economic downturns that could adversely impact our real property operations or our ability to recover our investment in one or more properties.

        All of the properties we will initially own are located in the counties of Queens and Brooklyn, New York City. Geographic concentration of properties will expose us to economic downturns in New York City. A recession in this area could adversely affect our ability to generate or increase operating revenues, attract new tenants or dispose of unproductive properties.

    Each of the Bus Company real properties has been, and continues to be, used as a bus depot or automobile facility and has certain environmental conditions resulting in continuing exposure to environmental liabilities.

        Generally all the Bus Companies' real property have had activity regarding removal and replacement of underground storage tanks and soil removal. Upon removal of the old tanks, any soil found to be unacceptable was heated off site to burn off contaminants. Fresh soil was brought in to replace earth which had been removed. There are still some levels of contamination at the sites, and groundwater monitoring programs have been put into place. Closures of existing New York State Department of Environmental Control spill numbers may be warranted if it can be shown that the remaining degree of impact is non threatening and within acceptable levels. Each of the properties is in a commercial zone and is still used as a transit depot including maintenance of vehicles. We can not assess what further liability may arise from

17


these sites. For further information on existing conditions, remediation and related costs, see "Environmental Issues" commencing on page 66 of this proxy statement/prospectus.

    Discovery of previously undetected environmentally hazardous conditions at our real properties would result in additional expenses, resulting in a decrease in our revenues and the return on your shares of common stock.

        Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost to remove or remediate hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances, including asbestos-containing materials into the air. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could reduce the amounts available for distribution to you.

    A number of risks to which our real properties may be exposed may not be covered by insurance, which could result in losses which are uninsured.

        We could suffer a loss due to the cost to repair any damage to properties that are not insured or are underinsured. There are types of losses, generally of a catastrophic nature, such as losses due to terrorism, wars, earthquakes or acts of God, that are either uninsurable or not economically insurable. We may acquire properties that are located in areas where there exists a risk of hurricanes, earthquakes, floods or other acts of God. Generally, we will not obtain insurance for hurricanes, earthquakes, floods or other acts of God unless required by a lender or we determine that such insurance is necessary and may be obtained on a cost-effective basis. If such a catastrophic event were to occur, or cause the destruction of one or more of our properties, we could lose both our invested capital and anticipated profits from such property.

    You may not receive any distributions from the sale of one of our properties, or receive such distributions in a timely manner, because we may have to provide financing to the purchaser of such property, resulting in an inability or delay of distributions to stockholders.

        If we sell a property or our company, you may experience a delay before receiving your share of the proceeds of such liquidation. In a forced or voluntary liquidation, we may sell our properties either subject to or upon the assumption of any then outstanding mortgage debt or, alternatively, may provide financing to purchasers. We may take a purchase money obligation secured by a mortgage as partial payment. To the extent we receive promissory notes or other property instead of cash from sales, such proceeds, other than any interest payable on those proceeds, will not be included in net sale proceeds until and to the extent the promissory notes or other property are actually paid, sold, refinanced or otherwise disposed of. In many cases, we will receive initial down payments in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of years. Therefore, you may experience a delay in the distribution of the proceeds of a sale until such time.

18


Our outdoor maintenance businesses and paratransit business depend on large direct or indirect municipal contracts, which are subject to the conduct of customers and municipalities and require substantial capital, which may be difficult to obtain.

        We will operate several outdoor maintenance businesses including bus shelters, bill boards advertising displays and outdoor construction and maintenance support. Much of this business is related to large customer contracts with municipalities. The loss by customers of one or more of those contracts could have a material adverse effect on our business. In addition, these businesses have required significant capital and may require significant additional capital in the future. In addition to the risk related to additional investment, the capital may have to be funded by borrowing or asset sales in order to have funds available for REIT mandated distributions to our stockholders, increasing the cost of such capital. In addition, our paratransit business depends on the continuance of one major agreement with the Metropolitan Transit Authority.

Risks related to possible conflicts of interest

    Our officers and directors may have other interests which may conflict with their duties to us and our stockholders, and which may have adverse effects on the interests of us and our stockholders

        Our officers and directors may have other interests which could conflict with their duties to us and our stockholders, and which may have adverse effects on the interests of us and our stockholders. For example, certain of such persons may have interests in other real estate related ventures and may have to determine how to allocate an opportunity between us and such other ventures. Also, such persons may have to decide on whether we should purchase or dispose of real property from or to an entity with which they are related, or conduct other transactions, and if so, the terms thereof. Such determinations may either benefit us or be detrimental to us. Our officers and directors are expected to behave in a fair manner toward us, and we require that potential conflicts be brought to the attention of our board of directors and that determinations will be made by a majority of directors who have no interest in the transaction. As of this time, only one officer and director, Paul Cooper, conducts a real property business apart from his activities with us.

Risks related to our common stock

    The absence of a public market for our common stock will make it difficult for you to sell your shares, which may have to be held for an indefinite period.

        Prospective stockholders should understand that our common stock, like that of the Bus Companies, is illiquid, and they must be prepared to hold their shares of common stock for an indefinite length of time. Before this offering, there has been no public market for our common stock, and initially we do not expect a market to develop. We have no current plans to cause our common stock to be listed on any securities exchange or quoted on any market system or in any established market either immediately or at any definite time in the future. While our board of directors may attempt to cause our common stock to be listed or quoted in the future, there can be no assurance that this event will occur. Accordingly, stockholders will find it difficult to resell their shares of common stock. Thus, our common stock should be considered a long-term investment. In addition, there are restrictions on the transfer of our common stock. In order to qualify as a REIT, our shares must be beneficially owned by 100 or more persons at all times and no more than 50% of the value of our issued and outstanding shares may be owned directly or indirectly by five or fewer individuals and certain entities at all times. Our charter provides that no person may own more than 9.9% of the issued and outstanding shares of our common stock. Any attempted ownership of our shares that would result in a violation of one or more of these limits will result in such shares being transferred to an "excess share trust" so that such shares will be disposed of in a manner consistent with the REIT ownership requirements. In addition, any attempted transfer of our shares that

19


would cause us to be beneficially owned by less than 100 persons will be void ab initio (i.e., the attempted transfer will be considered to never have occurred).

    The allocation of our common stock among the Bus Companies' shareholders has been established by appraisals and a fairness opinion, rather than market values, and could be deemed arbitrary.

        We have allocated 10,000,000 shares, the initial amount of our outstanding common stock, among the stockholders of the Bus Companies, as follows: 4,208,800 shares for the Green shareholders, 3,828,700 shares for the Triboro shareholders and 1,962,500 shares for the Jamaica shareholders. These allocations are based on appraisals of the Bus Companies' real property and outdoor maintenance businesses' and a paratransit business's assets and liabilities, and a fairness opinion provided by Ryan Beck & Co., Inc. There is no external reference for the value of the Bus Companies and their holdings based on either a market capitalization basis or a recent sale basis. While we do not consider the allocation arbitrary, it is not referenced to actual trading or sale transactions.

    Our stockholders' interests may be diluted by the proposed earnings and profits distribution, issuances under our Stock Option Plan, and other common stock issuances, which could result in lower returns to our stockholders.

        Our board of directors is authorized, without stockholder approval, to cause us to issue additional shares of our common stock, or shares of preferred stock on which it can set the terms, and to raise capital through the issuance of options, warrants and other rights, on terms and for consideration as the board of directors in its sole discretion may determine, subject to certain restrictions in our charter in the instance of options and warrants. Any such issuance could result in dilution of the equity of the stockholders. The board of directors may, in its sole discretion, authorize us to issue common stock or other interests or our securities to persons from whom we purchase real property or other assets, as part or all of the purchase price. The board of directors, in its sole discretion, may determine the value of any common stock or other equity or debt securities issued in consideration of property or services provided, or to be provided, to us.

        We have adopted the 2006 Incentive Stock Option Plan, under which 1,000,000 of common stock is reserved for issuance, and under which we may grant stock options, restricted stock and other performance awards to our officers, employees, consultants and independent directors. The effect of these grants, including the subsequent exercise of stock options, could be to dilute the value of the stockholders' investments.

        In addition, we intend to make available 5,564,454 shares of our common stock as part of the distribution of a sum expected to be not more than $62,000,000 of earnings and profits which is a condition for our obtaining REIT status, but assuming all of the $20,000,000 of cash is elected, only 3,769,122 of such shares will be issued. This issuance will be dilutive.

Federal income tax requirements

    The requirement to distribute at least 90% of our net income may require us to incur debt, sell assets or issue additional securities for cash, which would increase the risks associated with your investment.

        In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our net income, other than any net capital gains. To the extent that we distribute at least 90% but less than 100% of our net income in a calendar year, we will incur no federal corporate income tax on our distributed net income, but will incur a federal corporate income tax on any undistributed amounts. In addition, we will incur a 4% nondeductible excise tax if the actual amount we distribute to our stockholders in a calendar year is less than a minimum amount specified under federal income tax law. We intend to distribute at least 90% of our net income to our stockholders each year so that we will satisfy the distribution requirement and avoid the 4% excise tax. However, we could be required to include earnings in our taxable income before we actually receive the related cash. That timing difference could require us to borrow funds or

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raise additional capital to meet the distribution requirement and avoid corporate income tax and the 4% excise tax in a particular year. In case we don't distribute 100% of our net income, we will be subject to taxation at the REIT level on the amount of undistributed net income and to the extent we distribute such amount, you will be subject to taxation on it at the stockholder level.

        The minimum distribution requirements for REIT's may require us to borrow, sell assets or issue additional securities for cash to make required distributions, which would increase the risks associated with your investment in our company.

        Under existing tax law, we would be taxed at the corporate level if, within 10 years of our election to be taxed as a REIT, we sell any real property acquired in the Reorganization in a taxable transaction. For that reason, we presently intend to hold such real property for at least 10 years of our election to be taxed as a REIT. This policy would eliminate a sale as a way to obtain liquidity and would prevent a sale which would otherwise be made to take advantage of favorable market conditions.

    Distributions may include a return of capital, or an amount which would be taxable as a capital gain to the Bus Companies' shareholders.

        C corporation earnings and profits distributions payable to stockholders may include a return of capital, as distinct from a return on capital. To the extent that our distributions exceed our undistributed historical earnings and profits, such amounts will constitute a return of capital for federal income tax purposes, to the extent of a stockholder's basis in his stock, and thereafter will constitute capital gain. GTJ REIT expects to borrow monies to make a portion of the $20 million cash payment which is part of the distribution of earnings and profits. In addition, GTJ REIT may be required, in the future to borrow to make all or a portion of the distribution of real property related income required to retain its proposed status as a REIT, or in the alternative, to sell equity securities to obtain funds for such purpose.

Acquisition risks

    Our inability to identify or find funding for acquisitions could prevent us from diversification or growth and could adversely impact the value of your investment in our company.

        We may not be able to identify or obtain financing to acquire additional real properties. If we qualify as a REIT, we will be required to distribute at least 90% of our net income, excluding net capital gains, to our stockholders in each taxable year, and thus our ability to retain internally generated cash is very limited. Also, acquisition capital may be required by our outdoor maintenance and paratransit businesses. Accordingly, our ability to acquire properties or to make capital improvements to or remodel properties will depend on our ability to obtain debt or equity financing from third parties or the sellers of properties.

        If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of additional properties. If we place mortgage debt on properties we acquire in the Reorganization, which we plan to do, we will run the risk of being unable to refinance the additional properties when the loans become due, or of being unable to refinance on favorable terms. If interest rates are higher when we refinance the properties, our income would be reduced. We may be unable to refinance properties. If any of these events occurs, our cash flow would be reduced. This, in turn, would reduce cash available for distribution to our stockholders and may hinder our ability to raise more capital.

    We plan to incur mortgage and other indebtedness, which could result in material damage to our business if there is a default.

        Significant borrowings by us will increase the risks of owning shares of our company. If there is a shortfall between the cash flow generated by our properties and the cash flow needed to service our indebtedness, then the amount available for distributions to our stockholders will be reduced or eliminated. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness

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secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, thus reducing the value of your investment. If any mortgages or other indebtedness contain cross-collateralization or cross-default provisions, a default on a single loan could affect multiple properties.

        Additionally, when providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Loan documents we enter into may contain covenants that limit our ability to further mortgage the property, merge with another company, or discontinue insurance coverage. These or other limitations may limit our flexibility and our ability to achieve our operating plans. In particular, we are currently negotiating and anticipate entering into a revolving line of credit with a bank to use for our future acquisitions, which we anticipate will have significant restrictions and covenants. Our failure to meet such restrictions and covenants could result in an event of default under our line of credit and result in the foreclosure of some or all of our properties.

    Investing in properties through joint ventures creates a risk of loss to us as a result of the possible inaction or misconduct of a joint venture partner.

        Joint venture investments may involve risks not present in an acquisition, including, for example:

    the risk that our co-venturer or partner in an investment might become bankrupt;

    the risk that such co-venturer or partner may at any time have economic or business interests or goals which are inconsistent with our business interests or goals; or

    the risk that such co-venturer or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives, such as selling a property at a time when it would have adverse consequences for our stockholders.

        Actions by such a co-venturer or partner might have the result of subjecting the applicable property to liabilities in excess of those otherwise contemplated and may have the effect of reducing our cash available for distribution. It also may be difficult for us to sell our interest in any such joint venture or partnership in such property.

Borrowings may increase our business risks

    The $20 million cash distribution, and continuing income distributions will cause us to borrow to meet our working capital requirements, resulting in borrowing costs and risk of defaults.

        We may not be able to fund our working capital needs. If we qualify as a REIT, we will be required to distribute at least 90% of our net income, excluding net capital gains to our stockholders in each taxable year. However, depending on the size of our operations, we will require a minimum amount of capital to fund our daily operations. In addition, we may require working capital for our outdoor maintenance businesses and paratransit business. We may have to obtain financing from either affiliated or unaffiliated sources to meet such cash needs. This financing may not be available to us on acceptable terms or at all, which could adversely affect our operations and decrease the value of your investment in our company.

        We are presently considering a working capital loan of up to $80,000,000. There is no assurance the same will be obtained, or, if obtained will be on terms we would want or could afford.

    As we incur indebtedness which will be needed for operations, we increase the expenses of our operations, which could result in a decrease in cash available for distribution to our stockholders.

        The risk associated with your ownership of our common stock depends upon, among other factors, the amount of debt we incur. We intend to incur indebtedness in connection with our acquisition of properties. We may also borrow for the purpose of maintaining our operations or funding our working capital needs. Lenders may require restrictions on future borrowings, distributions and operating policies. We also may

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incur indebtedness if necessary to satisfy the federal income tax requirement that we distribute at least 90% of our net income, excluding net capital gains, to our stockholders in each taxable year. Borrowing increases our business risks.

        Debt service increases the expense of operations since we will be responsible for retiring the debt and paying the attendant interest, which may result in decreased cash available for distribution to you as a stockholder. In the event the fair market value of our properties were to increase, we could incur more debt without a commensurate increase in cash flow to service the debt. In addition, our directors can change our policy relating to the incurrence of debt at any time without stockholder approval.

    We will incur indebtedness secured by our properties, which may subject our properties to foreclosure in the event of a default.

        Incurring mortgage indebtedness increases the risk of possible loss. Most of our borrowings to acquire properties would be secured by mortgages on our properties. If we default on our secured indebtedness, the lender may foreclose and we could lose our entire investment in the properties securing such loan which would adversely affect distributions to stockholders. For federal tax purposes, any such foreclosure would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage and, if the outstanding balance of the debt secured by the mortgage exceeds the basis of the property to our company, there could be taxable income upon a foreclosure. Such taxes would be payable by us if the sale was of Bus Company properties and took place within 10 years after our REIT election. To the extent lenders require our company to cross-collateralize our properties, or our loan agreements contain cross-default provisions, a default under a single loan agreement could subject multiple properties to foreclosure.

    Increases in interest rates, which have been occuring for the past two years, will increase the amount of our debt payments and increased interest payments will adversely affect our ability to make cash distributions to our stockholders.

        A change in economic conditions could result in higher interest rates which could increase debt service requirements on variable rate debt and could reduce the amounts available for distribution to you as a stockholder. A change in economic conditions could cause the terms on which borrowings become available to be unfavorable. In such circumstances, if we are in need of capital to repay indebtedness in accordance with its terms or otherwise, we could be required to liquidate one or more of our investments in properties at times which may not permit realization of the maximum return on such investments.

Our ability to change policies without a stockholder vote

    Our policies described in this proxy statement/prospectus, including the limits on debt, may be changed or eliminated by our board of directors at any time without a vote of our stockholders.

        Our policies, including policies intended to protect you as a stockholder and the policies described in this prospectus with respect to acquisitions, financing, limitations on debt and investment limitations, have been determined by our board of directors and can be changed at any time without a vote of our stockholders or notice to you as a stockholder if our board of directors so determines in the exercise of its duties. Therefore, these policies and limitations may not be meaningful to protect your interests as a stockholder.

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Possible adverse consequences of limits on ownership and transfer of our shares

    The limitation on ownership of our stock in our charter will prevent you from acquiring more than 9.9% of our common stock and may force you to sell common stock back to us.

        Our charter limits the beneficial and constructive ownership of our capital stock by any single stockholder to 9.9% of the number of outstanding shares of each class or series of our stock including our common stock. We refer to these limitations as the ownership limits. Our charter also prohibits the beneficial or constructive ownership of our capital stock by any stockholder that would result in (1) our capital stock being beneficially owned by fewer than 100 persons, (2) five or fewer individuals, including natural persons, private foundations, specified employee benefit plans and trusts, and charitable trusts, owning more than 50% of our capital stock, applying broad attribution rules imposed by the federal tax laws, (3) our company otherwise failing to qualify as a REIT for federal tax purposes. In addition, any attempted transfer of our capital stock that would result in GTJ REIT being beneficially owned by less than 100 persons will be void ab initio (i.e., such transfer will be considered to never have happened). If you acquire shares in excess of the ownership limits or in violation of the ownership limitations, we:

    will consider the transfer (in whole or part) to be null and void;

    will not reflect the transaction on our books;

    may institute legal action to enjoin the transaction;

    will not pay dividends or other distributions to you with respect to those excess shares;

    will not recognize your voting rights for those excess shares; and

    will consider the excess shares held in trust for the benefit of a charitable beneficiary.

        If such shares are transferred to a trust for the benefit of a charitable beneficiary, you will be paid for such excess shares a price per share equal to the lesser of the price you paid or the "market price" of our stock. Unless shares of our common stock are then traded on a national securities exchange or quoted on a national market system, the market price of such shares will be a price determined by our board of directors in good faith. If shares of our common stock are traded on a national securities exchange or quoted on a national market system, the market price will be the average of the last sales prices or the average of the last bid and ask prices for the the date of determination.

        If you acquire our common stock in violation of the ownership limits or the restrictions on transfer described above:

    you may lose your power to dispose of the stock;

    you may not recognize profit from the sale of such stock if the "market price" of the stock increases; and

    you may incur a loss from the sale of such stock if the "market price" decreases.

Anti-takeover provisions related to us

    Our proposed Stockholder Rights Agreement is designed to discourage takeover attempts without approval of our Board of Directors, which could discourage a potential takeover bid and the related payment to our stockholders.

        The Stockholder Rights Agreement we intend to enter into provides that a right is deemed to be issued and outstanding in conjunction with each outstanding share of our common stock. If any person or group, as defined in the agreement, acquires more than 15% of our outstanding common stock without the approval of our board of directors, each holder of a right, other than such 15% or more holders, will be entitled to purchase 1000th of a share of our Series A preferred stock for $50.00 which is convertible into

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our common stock at one-half of the market value of our common stock, or to purchase, for each right, $50.00 of our common stock at one-half of the market value. The effect of this provision is to materially dilute the holdings of such 15% or more holders and substantially increase the cost of acquiring a controlling interest in us. These types of provisions generally inhibit tender offers or other purchases of a controlling interest in a company such as ours.

    Limitations on share ownership and transfer may deter a sale of our company in which you could profit.

        The limits on ownership and transfer of our equity securities in our charter may have the effect of delaying, deferring or preventing a transaction or a change in control of our company that might involve a premium price for your common stock. The ownership limits and restrictions on transferability will continue to apply until our board of directors determines that it is no longer in our best interest to continue to qualify as a REIT.

    Our ability to issue preferred stock may include a preference in distributions superior to our common stock and also may deter or prevent a sale of our company in which you could otherwise profit.

        Our ability to issue preferred stock and other securities without your approval also could deter or prevent someone from acquiring our company. Our charter authorizes our board of directors to issue up to 10 million shares of preferred stock. Our board of directors may establish the preferences and rights, including a preference in distributions superior to our common stockholders, of any issued preferred stock designed to prevent, or with the effect of preventing, someone from acquiring control of our company.

    Maryland anti-takeover statute restrictions may deter others from seeking to acquire our company in a transaction in which you could profit.

        Maryland law contains many provisions, such as the business combination statute and the control share acquisition statute, that are designed to prevent, or have the effect of preventing, someone from acquiring control of our company without approval of our board of directors. Our bylaws exempt our company from the control share acquisition statute (which eliminates voting rights for certain levels of shares that could exercise control over us) and our board of directors has adopted a resolution opting out of the business combination statute (which prohibits a merger or consolidation of us and a 10% stockholder for a period of time) with respect to affiliates of our company. However, if the bylaw provisions exempting our company from the control share acquisition statute or the board resolution opting out of the business combination statute were repealed by the board of directors, in its sole discretion, these provisions of Maryland Law could delay or prevent offers to acquire our company and increase the difficulty of consummating any such offers. See "Certain Provisions of Maryland Corporate Law and Our Charter and Bylaws" commencing on page 150 of this proxy statement/prospectus.

    Because of our staggered board of directors, opposition candidates would have to be elected in two separate years to constitute a majority of the Board of Directors, which may deter a change of control from which stockholders could profit.

        We presently have a seven person board of directors. Each director has or will have a three year term, and only approximately one-third of the directors will stand for election each year. Accordingly, in order to change a majority of our board of directors, a third party would have to wage a successful proxy contest in two successive years, which may deter proxy contests.

    Certain provisions of our charter make stockholder action more difficult, which could deter changes beneficial to our stockholders.

        We have certain provisions in our charter and bylaws that require super-majority voting and regulate the opportunity to nominate directors and to bring proposals to a vote by the stockholders.

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Forward-looking statements

        We make forward-looking statements in this prospectus which may prove to be inaccurate.

        This prospectus contains forward-looking statements within the meaning of the federal securities laws which are intended to be covered by the safe harbor created by those laws. Historical results and trends should not be taken as indicative of future operations. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "prospects," or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions generally and the real estate market specifically; legislative or regulatory changes, including changes to laws governing the taxation of REITs; availability of capital; interest rates; our ability to service our debt; competition; supply and demand for operating properties in our current and proposed market areas; generally accepted accounting principles; and policies and guidelines applicable to REITs; and litigation. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved.

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THE REORGANIZATION

Introduction

        The issuance of 10,000,000 shares of common stock by our company relates to a proposed reorganization (the "Reorganization") of three affiliated New York corporations with long historical roots in the operation of private bus routes in New York City, namely Green Bus Lines, Inc. ("Green"), Triboro Coach Corporation ("Triboro") and Jamaica Central Railways, Inc., ("Jamaica") (collectively referred to as the "Bus Companies"). The bus businesses of the Bus Companies were acquired by New York City in late 2005 and early 2006, leaving the Bus Companies with a portfolio of real property, outdoor maintenance businesses and a paratransit business (see "Purchase of Bus Companies' bus assets by New York City" below). The issuance of up to an additional 5,564,454 shares is part of a distribution of earnings and profits of the Bus Companies relating to an election of GTJ REIT, Inc. to be treated as a real estate investment trust ("REIT") beginning with its taxable year ending December 31, 2007.

Historical background of the Bus Companies

    Green

        In the early part of the twentieth century, entrepreneurs secured permits from New York City to operate surface transit in Manhattan, Brooklyn, and Queens and established transit systems in areas where there had not previously been public transportation. In 1925, approximately one hundred sixty of these bus operators determined to organize themselves into one company, and formed Green.

        By the 1920s, New York City's surface transit policy began to change and it sought to modernize its transit system by replacing its street railways with buses and replacing the street railway franchises and permits with bus franchises.

        During the following years, Green grew, and acquired several bus companies with operations in Queens County. The last, and largest, acquisition occurred in 1943, when Green purchased the Manhattan & Queens Transit Company, thereby providing Green with the routes that connected Jamaica with Manhattan. The 1950's saw the initiation of express bus service connecting Queens with Manhattan.

        By the 1970's, operating costs had increased dramatically while revenues remained flat or even declined. New York City, in order to keep surface transit available in the outer boroughs, agreed to subsidize the fares paid by passengers so that the fares would remain at a reasonable level, and to supply Green and other companies with sufficient funding to continue operations. Green's bus assets were acquired by New York City in January 2006.

    Triboro

        Triboro was formed in 1931 and began operating a bus line from Corona to Flushing, Queens. Over the succeeding years, Triboro expanded its operations throughout northwestern Queens County. In 1936, Triboro received a 10-year franchise incorporating nine routes in northwestern Queens from New York City. Thereafter, Triboro began to experience financial problems. In 1946, New York City offered the Triboro franchise to Green provided it could act quickly to rescue Triboro from financial failure. Triboro's outstanding shares were purchased by the controlling shareholders of Green, who then offered the shares to the shareholders of Green. Certain of the Green shareholders declined the purchase of the Triboro shares, but the majority of shares were purchased by such persons, resulting in a substantial commonality of ownership of Green and Triboro. Triboro's bus assets were acquired by New York City in February 2006.

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    Jamaica

        Jamaica evolved from the Long Island Electric Railway ("LIER"), which was incorporated in 1894. LIER, which operated routes in Nassau and Queens, went bankrupt in 1926, and its routes in Nassau County were abandoned. The Queens routes continued to operate under Jamaica-Central Railway, the company that emerged from the reorganization of LIER. In 1931, New York City announced a plan to widen Jamaica Avenue. In order to do so, Jamaica-Central would have been required to remove its track and have it re-laid, and so instead, it motorized its Jamaica Avenue route. A subsidiary, Jamaica Buses, Inc. ("Jamaica Bus"), was formed that year to operate the buses on the motorized route. In 1933, New York City granted a franchise to Jamaica Bus in exchange for the surrender of all of Jamaica-Central's trolley franchises. Jamaica Bus then motorized all of its other routes.

        Similarly to Triboro, Jamaica-Central and Jamaica Bus thereafter experienced financial difficulties and were taken over by Green, which offered the shares to the Green shareholders, the majority of whom purchased such shares providing a substantial commonality of ownership with Green and Triboro. Jamaica's bus assets were acquired by New York City in January 2006.

    Command

        Command Bus Company, Inc. ("Command") is the successor to the Pioneer Bus Corporation, which was formed from an amalgamation of three small school bus and charter service operators in 1954. Pioneer operated only school bus, charter, and racetrack service until 1960, when it secured a franchise for the local route between Mill Basin and the Kings Highway station of the Brighton Line in Brooklyn. Command was acquired by the Bus Companies using funds provided by each of them and is owned as follows: Green 40%; Triboro 40% and Jamaica Central 20%. Its bus assets were acquired by New York City in December 2005.

    GTJ

        In the mid 1990s, the Bus Companies experienced increasing operating costs and declining revenues. In order to preserve bus service but maintain fares at reasonable levels, New York City made a decision to subsidize the fares paid by passengers, and to supply the Bus Companies with sufficient funding to continue their operations. The management of the Bus Companies determined that it would be in the best interest of the Bus Companies and their shareholders to develop other businesses, which were placed under GTJ Co., Inc. ("GTJ"), a joint venture company previously formed by the Bus Companies. Based on funds which have previously been provided by the respective Bus Companies at the time of its formation, GTJ was and is owned as follows: Green 40%; Triboro 40%; and Jamaica 20%.

    Shareholders of the Bus Companies

        Since their formation, the Green, Triboro and Jamaica shareholders transferred their shares to family members or, on occasion, sold their shares to the Bus Companies. As a result, Green as of July 17, 2006, has 214 shareholders, Triboro has 209 shareholders and Jamaica has 178 shareholders, many of whom own shares in two, or all three, of the Bus Companies. The holders of a majority of the shares of each Bus Company, have, for decades, entered and reentered into voting trust agreements to effect a stable, common management of the Bus Companies. The sole voting trustee is presently Jerome Cooper, Chief Executive Officer of the Bus Companies and Chief Executive Officer of our company.

    Common management of the Bus Companies

        From the acquisition of Triboro, and then Jamaica by the shareholder of Green, the businesses of the Bus Companies have been managed under the direction of a common Board of Directors. The Board of Directors meets approximately once a month to discuss matters relating to all of the Bus Companies. All corporate actions with respect to the Bus Companies are decided by the Board of Directors, including the election of officers for each of the Bus Companies. The Board of Directors is maintained in place under

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voting trust agreements. The present trustee under these voting trust agreements is Jerome Cooper, the Chief Executive Officer of the Bus Companies and Chief Executive Officer of our company.

Operations in the recent past

        Since the mid 1990's, New York City made public statements related to its intention to terminate the franchises held by the Bus Companies and its incorporation of the bus routes into the Metropolitan Transit Authority operations. These statements became more frequent and more pointed. In 1999, the franchise agreements, which had been renewed regularly over the past half-century, expired and were not renewed by New York City. New York City continued to work with the Bus Companies on an ad hoc basis. New York City then began in earnest to negotiate for the purchase of the Bus Companies' bus assets. At that time, the Bus Companies, in addition to owning the bus routes, owned depots which were stocked with various spare parts and also employed the drivers, mechanics and executive employees necessary to run the bus lines. The buses themselves were owned by New York City and provided under lease to the Bus Companies. Under their arrangement with New York City, the Bus Companies were reimbursed for expenses approved by New York City and in addition received a payment for the services rendered in managing the bus operations and rent for the use of the depots.

Purchase of Bus Companies' bus assets by New York City

        On November 29, 2005 an agreement (the "Sale Agreement") was entered into between New York City and the Bus Companies and several of their subsidiaries.

        In accordance with the Sale Agreement, the Bus Companies agreed to sell to New York City all of their bus assets including routes, tangible personal property related to bus operations and goodwill. The total purchase price for the bus assets was $25,000,000 allocated as follows: Green—$10,822,000, Triboro—$9,487,000 and Jamaica—$4,691,000. These amounts include a reallocation of the $3,405,000 paid for the Command Bus bus assets. Command Bus is jointly owned by the Bus Companies. These sums were received upon the respective closing of the purchase of the assets of the Bus Companies, which occurred between December 2005 and February 2006. The Bus Companies will also be paid for spare parts and supplies and the book value of tangible assets in an aggregate amount of approximately $5,000,000.

        In 1975, New York City signed a labor protection agreement pursuant to the labor protection provisions of the Federal Transit Act in order to satisfy a condition for receiving federal transit funds. At the time of the sale of bus assets to New York City, the Bus Companies' non-union employees made a claim against New York City that it must require the MTA to offer jobs to the non-union employees and to otherwise preserve all of the non-union employees' pre-existing rights, privileges and benefits as a condition of the transfer of bus assets. The Bus Companies were not the subject of this claim and are not parties to the resulting litigation. In negotiations for the sale of the Bus Companies' bus assets to New York City, New York City agreed to pay the Bus Companies up to an additional $500,000 if 100% of the claimants agreed to the proposed settlement of their claims as follows: Green—$216,440, Triboro—$189,740 and Jamaica—$93,820. These amounts include reallocation of the maximum sum to be paid to Command Bus Company, Inc. in the amount of $68,100. If less than 100% of the claimants agree to the settlement, which is the most likely case, New York City will pay the Bus Companies a lesser amount. The Bus Companies have no obligation to make any payments to any of the claimants.

        New York City assumed many of the liabilities of the Bus Companies including claims for personal injury and property damage, claims related to certain outstanding litigations, obligations under union agreements, pension obligations, severance payments, claims under collective bargaining agreements, workers compensation back-charges, holiday pay and certain operating expenses. In addition, New York City agreed to offer employment to the employees of the Bus Companies, most of whom accepted such offer.

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        New York City leased certain real property of the Bus Companies for use as bus depots, as follows:

    A Triboro subsidiary leased New York City its premises at 85-01 24th Avenue, East Elmhurst, NY for an initial term of 21 years, with a first year rent of $2,585,000 escalating to a 21st year rent of $3,785,000.

    A Green subsidiary leased New York City its premises at 165-25 147th Avenue, Jamaica, NY for an initial term of 21 years with a first year rent of $2,795,000 escalating to a 21st year rent of $4,092,000.

    A Green subsidiary leased New York City its premises at 49 -19 Rockaway Beach Blvd., NY for an initial term of 21 years with a first year rent of $605,000 escalating to a 21st year rent of $886,000.

    A Jamaica subsidiary leased New York City its premises at 114-15 Guy R. Brewer Boulevard, Jamaica, New York for an initial term of 21 years with a first year rent of $1,515,000 escalating to a 21st year rent of $2,218,000.

        These leases are "triple net" leases. This means that New York City has agreed to pay all expenses of the properties, including maintenance, insurance and taxes. Each lease has two renewal terms of 14 years each, so that the total term is a maximum of 49 years. The term of each lease commenced on the date that the Bus Company in question closed the sale of its bus company assets to New York City.

        The Bus Companies will be required to pay income taxes on the sums received from New York City pursuant to the Sale Agreement, the amount of which is estimated at approximately $9,586,000. In addition, the Bus Companies incurred approximately $3,100,000 of expenses related to the sale, including lease negotiation commissions, legal and accounting fees. As a result, only $12,314,000 of the $25,000,000 purchase price is available for distribution.

Present operations

        At the present time, the Bus Companies, including their subsidiaries, own a total of seven parcels of real property (one of which is of negligible size), four of which are leased to New York City and two of which are leased to commercial interests, all but one of which are on a triple net basis. The annual gross rental income from third party tenants is approximately $9,500,000. In addition, the Bus Companies and their subsidiaries, collectively, operate a group of outdoor maintenance businesses and a paratransit business with aggregate sales of approximately $27,000,000 in 2005. A more complete description of the ongoing businesses of the Bus Companies is set forth below.

Reasons for the Reorganization

        Following the transactions with New York City, the Bus Companies started receiving a substantial amount of income and cash flow primarily as a result of the real property leases. Since the Bus Companies were organized more than a half-century ago, their real property is owned by "C" corporations. For tax purposes, C corporations are taxed on their income and do not "pass through" tax liability to their shareholders, as would occur in, for example, a limited partnership or a limited liability company. Accordingly, the substantial income being generated under the leases described above will, if the Reorganization does not take place, be taxed at the corporate level at a tax rate of approximately 45% and

30


then, if distributed to the shareholders, would be taxed again as dividends at rates ranging from approximately 15% to 25%, which would result, if such income were fully distributed, in a combined tax rate on the income ranging from approximately 53% to 59%. One solution to this situation is the transfer of all of the real properties to entities which could "pass through" the tax liability to their shareholders. However, such transfers would be viewed as a sale of the real properties and would generate estimated tax liabilities at the corporate level in excess of $73,000,000.

        Accordingly, retaining the existing structure or a transfer of the real properties has very substantial tax costs, and neither were deemed by the Board of Directors of the Bus Companies to be in the best interests of their shareholders. Management determined that the only tax efficient solution to the above situation is the creation of a real estate investment trust or REIT.

        All of the real property of the Bus Companies can be transferred to a REIT without incurring tax recognition. Furthermore, all of the income earned by the properties owned by the REIT will not be taxed to the REIT, provided that REIT rules are complied with. Among other matters, REIT rules require that 90% of the REIT's net income, other than net capital gains, must be distributed to the REIT shareholders on account of each year. See "REIT Tax Rules" below.

        In order to adopt an efficient REIT structure, it is necessary in the first instance to combine the Bus Companies and their subsidiaries under a single holding company, which is referred to as the Reorganization. We are a Maryland corporation and will act as a holding company to own the assets of the Bus Companies. We have formed three New York corporations as wholly-owned subsidiaries, and propose that each of the Bus Companies merge with one of the subsidiaries, thereby collectively becoming our wholly-owned subsidiaries. We would also own GTJ, Inc. (presently a jointly owned subsidiary of the Bus Companies) which in turn owns certain of the real property described above and all of the outdoor maintenance businesses and a paratransit business. The mergers require the approval of the holders of at least 662/3% of the outstanding shares of common stock of each of Green, Triboro and Jamaica, voting separately and not as one class.

Ownership of our common stock by Bus Company shareholders

        A key issue in the Reorganization is how many of our shares of common stock will be owned by each shareholder of each of the Bus Companies. We will issue a total of 10,000,000 shares of our authorized but unissued common stock to the shareholders of the Bus Companies in connection with the Reorganization. We have had appraisals of the real estate and outdoor maintenance and paratransit businesses of the Bus Companies performed. Certain of these assets are owned directly by each bus company, respectively. Other assets, such as the stock of GTJ, Inc. and its outdoor maintenance subsidiaries, paratransit subsidiary and real property, are owned jointly by the Bus Companies, 40% by Green, 40% by Triboro and 20% by Jamaica. A valuation model has been developed for each of Green, Triboro and Jamaica. Based upon that model, used in the fairness opinion described elsewhere in this prospectus, the relative value of the three companies have been determined to be as follows: Green—42.088%, Triboro—38.287% and Jamaica—19.625%.

        Accordingly, to effect the Reorganization, a total of 4,208,800 shares have been allocated to the shareholders of Green, a total of 3,828,700 shares have been allocated to the shareholders of Triboro and a total of 1,962,500 shares have been allocated to the shareholders of Jamaica, a grand total of ten million shares.

        The shares allocated to a Bus Company have then been reallocated among its shareholders in proportion to their shareholdings of that Bus Company as follows.

    There are presently 3,766.50 shares of Green outstanding, so that the 4,208,800 shares allocated to the Green shareholders will be issued at a rate of 1,117.429975 shares for each outstanding share of Green.

31


    There are presently 1,277.10 shares of Triboro outstanding, so that the 3,828,700 shares allocated to the Triboro shareholders will be issued at a rate of 2,997.964137 shares for each outstanding share of Triboro.

    There are presently 10,064.00 shares of Jamaica outstanding, so that the 1,962,500 shares allocated to the Jamaica shareholders will be issued at a rate of 195.001987 shares for each outstanding share of Jamaica.

        No fractional shares will be issued to any person, and fractions will be rounded up or down to the nearest whole share.

Distribution of earnings and profits

        Among other matters that must occur in order for us to become a REIT, we must distribute to our shareholders all of the historical earnings and profits accumulated by the Bus Companies but not previously distributed as a condition to our conversion to a REIT. We have been advised that the total of the earnings and profits of the Bus Companies not previously distributed, including the gain on the transactions with New York City, is a sum expected to be not more than $62,000,000.

        We expect to make a distribution of $62,000,000 in the following manner. We will make a total of $20,000,000 of cash available for the distribution. The substantial portion of this cash amount is expected to come from a revolving credit loan to be implemented at the time of the Bus Companies' mergers, with the balance from working capital. We expect to make 5,564,454 shares of our common stock available for the distribution at a price, based in part on the fairness opinion set forth elsewhere in this prospectus, at a price of $11.14 per share since we expect all of the $20,000,000 of cash to be elected, we do not expect to issue more than 3,769,122 shares of common stock. The $11.14 price per share is based solely on appraisals of the Bus Companies' assets and liabilities and is not based on market or trading values, and was derived by dividing such appraised value by the 3,769,122 shares of common stock we expect to be outstanding. Therefore, there is no assurance that our shareholders, after the Reorganization, will be able to realize that value (or any other particular value) for a share of our Common Stock. Each GTJ REIT stockholder on the record date of the distribution will be advised of the amount of the distribution to that stockholder, based on his or her share ownership, and will be entitled to elect the manner in which the distribution is to be made; for example, all cash, all stock, or a combination of cash and stock.

        To the extent that the aggregate elections for cash exceed $20,000,000, we expect that the cash portion of the distribution will be reduced among some or all of the electing stockholders and the balance of the distribution will be made in shares of common stock valued at $11.14 per share. These shares of common stock are also being registered pursuant to the registration statement of which this prospectus is a part. The earnings and profits distribution will be taxable to the GTJ REIT stockholders as a dividend. The federal tax rate will be 15%, based on present tax law, and the state taxes will vary from state to state. Any shareholder electing cash of less than the tax on the distribution to such shareholder will be required to pay taxes on some or all of such distribution from a source other than the distribution.

32


Expected Organizational chart after the Reorganization

        The following chart represents our organization after the Reorganization ("QRS" means qualified REIT subsidiary, and "TRS" means taxable REIT subsidiary):

GRAPHIC

        The above chart reflects the following. First Green, Triboro and Jamaica are merged into subsidiaries of GTJ REIT. Each of them has a subsidiary or subsidiaries ("Subsidiaries") holding their respective real

33




property. Green's Subsidiary would form two LLCs and transfer a real property to each of the same. Triboro and Jamaica's Subsidiaries each have one real property, and they would each form an LLC and transfer a real property to it. GTJ would form three LLCs and transfer its real properties to them. GTJ would designate Shelter Express as a TRS ("Opco Holdco") before the mergers and transfer to it all of its non-real estate subsidiaries ("OpCos"). From a REIT perspective, each of Green, Triboro and Jamaica and their respective Subsidiaries, GTJ, and all of the LLCs holding GTJ's real properties, are expected to be treated as qualified REIT subsidiaries or disregarded for federal tax purposes. Opco Holdco and the OpCos are expected to be treated as taxable REIT subsidiaries.


DESCRIPTION OF FAIRNESS OPINION

Opinion of Ryan Beck & Co.

        The Board of Directors of the Bus Companies retained Ryan, Beck & Co. ("Ryan Beck") to advise them with respect to the fairness, from a financial point of view, to the holders of shares of common stock or voting trust certificates in Green, Triboro and Jamaica. Ryan Beck has been asked to advise the Bus Companies' shareholders as to the fairness in valuation in the combination of Green, Triboro and Jamaica, and their respective subsidiaries, into a single holding company (the "Reorganization"). This would be determined by the allocation of our shares among the Green, Jamaica and Triboro shareholders.

        The full text of Ryan Beck's opinion, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the opinion and the review undertaken in connection with the opinion, is included as Attachment C to this proxy statement/prospectus. You should carefully read the opinion. This summary is qualified in its entirety by reference to the full text of the opinion.

        The Ryan Beck opinion did not address the merits of the underlying business decision to enter into the Reorganization and does not constitute a recommendation to any holder of shares as to how to vote in connection with the merger agreements.

        In arriving at its opinion, Ryan Beck has, among other things:

    reviewed annual reports for the Bus Companies for the years ending December 31, 2003–2005;

    reviewed certain interim reports and quarterly reports for the Bus Companies;

    reviewed certain business, financial and other information regarding the Bus Companies;

    reviewed seven appraisals, dated February 2, 2006, prepared by Cushman & Wakefield, Inc., relating to real estate owned by the Bus Companies;

    reviewed a valuation, prepared by Empire Valuation Consultants, relating to the fair market value of a minority common stock interest in GTJ;

    participated in discussions among representatives of the Bus Companies and their financial and legal advisors;

    reviewed historical documentation regarding the formation and incorporation of the Bus Companies.

        In connection with its review, Ryan Beck has relied upon the accuracy and completeness of the foregoing financial and other information, including all accounting, legal and tax information and did not assume any responsibility for any independent verification of such information and assumed such accuracy and completeness for purposes of the opinion. In arriving at its opinion, Ryan Beck did not prepare any independent evaluations or appraisals. This summary does not purport to be a complete description of the analyses performed by Ryan Beck, but describes, in summary form, the material analyses of Ryan Beck in connection with it fairness opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial or summary description.

34


Methodology

        In developing a methodology to determine the allocation of shares of the reorganized company among the Green, Triboro and Jamaica shareholders, Ryan Beck looked at the present operations of the Bus Companies. Currently, the Bus Companies, including their subsidiaries, own a total of six rentable real properties, four of which are leased to New York City and two of which are leased to commercial interests. In addition, the Bus Companies, collectively, own GTJ. Given that the Bus Companies sold their bus businesses to New York City, the bus businesses, as such, have no value, and the sale consideration, and financial assets, have been substituted therefor. The value of the Bus Companies exists in their real property net financial assets, and GTJ and its subsidiaries.

        In determining a value for the real property, Cushman & Wakefield, Inc. was engaged to appraise the seven parcels of real property. Empire Valuation Consultants was engaged to determine the value of GTJ.

        In determining a net value for each of the Bus Companies, Ryan Beck first determined which Bus Company held title to each specific real property. Based upon the appraisals provided by Cushman & Wakefield, Inc., it was determined that Green held real property worth $51,800,000; Triboro held real property worth $39,400,000; and Jamaica held real estate worth $23,100,000. Ryan Beck then examined the value of GTJ, which, in its entirety, is comprised of two real properties and operating businesses. Cushman & Wakefield appraised the real property at $39,095,000, and Empire Valuation Consultants, Inc., valued the operating businesses at $5,800,000. Accordingly, the combination of these valuations yields a total value for GTJ of $44,895,000. The ownership of GTJ is Green—40%, Triboro—40% and Jamaica—20%.

        The next step was to review the current balance sheets of the Bus Companies. This information, which was provided by the Bus Companies, is an accounting of assets and liabilities other than their real property. Based upon data provided by the Bus Companies, Green's total non-real property assets are $10,760,888 and total liabilities are $7,524,189. Triboro's total non-real property assets are $14,821,195 and total liabilities are $5,777,060. Jamaica's total non-real property assets are $4,905,965 and total liabilities are $2,950,002.

        Ryan Beck combined the net value of each of the Bus Companies, (Green—$72,994,699; Triboro—$66,402,135 and Jamaica—$34,034,963), to produce a total net asset value of the Bus Companies of $173,431,797. To then determine share allocation in the reorganized company, Ryan Beck divided each Bus Company's net value by the combined value of the Bus Companies to reach a fractional share allocation ratio. Accordingly, based upon the data provided by Cushman & Wakefield, Empire Valuation Consultants and the Bus Companies. Based thereon, Green shareholders should receive shares equal to 42.088% of the reorganized company, Triboro shareholders should receive share equal to 38.287% of the reorganized company and Jamaica shareholders should receive shares equal to 19.624% of the Reorganized company.

        Ryan Beck, was retained by the Board of Directors of the Bus Companies as an independent contractor to determine that the consideration offered the shareholders of the Bus Companies in the Reorganization is fair, from a financial point of view. Ryan Beck received a fee of $100,000 for its opinion.

        Prior to this engagement, Ryan Beck did not have an investment banking relationship with the Bus Companies other than as the successor custodian of certain bonds of the Bus Companies approximately $125,000 face amount. Ryan Beck may solicit investment banking business from us in the future.

35



Green Bus Lines, Inc. and Subsidiary

Final Balance Sheet (not including Real Estate and GTJ)

Cash   $ 5,706,873
Investments     798,345
Accounts Receivable     4,255,670
   
  Total Assets     10,760,888

Liabilities

 

 

7,524,189
   
 
Total Shareholders' Equity

 

$

3,236,699
   
Real Estate  

Green Bus Lines, Inc. and Subsidiary leased to the City of New York the depot and facilities located at 165-25 147thAvenue, Jamaica, New York.

 


        Building and Land Value—$42,600,000
 


As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

Green Bus Lines, Inc. and Subsidiary leased to the City of New York the depot located at 49-19 Rockaway Beach Blvd., Arverna, New York.

 


        Building and Land Value—$9,200,000
 


As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

36



Triboro Coach Corporation and Subsidiaries

Final Balance Sheet (not including Real Estate and GTJ)

Cash   $ 5,575,184
Investments     2,674,051
Accounts Receivable     6,571,960
   
  Total Assets     14,821,195

Liabilities

 

 

5,777,060
   
 
Total Shareholders' Equity

 

$

9,044,135
   
Real Estate  

Triboro leased to the City of New York a bus depot located in East Elmhurst, New York.

 


        Value—$39,400,000
 


As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

37



Jamaica Central Railways, Inc.

Final Balance Sheet (not including Real Estate and GTJ)

Cash   $ 1,711,130
Investments     297,647
Accounts Receivable     2,897,188
   
  Total Assets     4,905,965

Liabilities

 

 

2,950,002
   
 
Total Shareholders' Equity

 

$

1,955,963
   
Real Estate  

Jamaica Bus Holding Corp. leased to the City of New York a bus depot located at 114-15 Guy Brewer Boulevard, Jamaica, New York.

 


        Value—$23,100,000
 


As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

38



GTJ Co, Inc.

Valuation Summary

        Based on the opinion of Empire Valuation Consultants, LLC, which was engaged to evaluate GTJ Co., Inc., not including real estate, the fair market value of a minority interest in the common stock of GTJ Co., Inc. and Subsidiaries as of March 31, 2006, is reasonably stated at $29,000 per share, on a post-real estate divested basis.

          Common Shares Outstanding          
      Share Price        
      Value
200   x   $29,000         =   $5,800,000
Real Estate  

G.T.J. Co., Inc. has leased to Avis Rent-A-Car System an industrial building located at 23-85 87thStreet East Elmhurst, New York.

 

        Value - $24,000,000
 

As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

G.T.J. Co., Inc. owns an industrial building located on 1.39 acres of land located at 612 Wortman Avenue, Brooklyn, New York.

 

        Value – $3,200,000
 

As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

G.T.J. Co., Inc. owns 9.0 acres of excess land located at 612 Wortman Avenue, Brooklyn, New York.

 

        Value – $11,800,000
 

As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

G.T.J. Co., Inc. owns a vacant site containing 0.072 acres of land at the North West corner of Rockaway Beach Blvd. and Beach 49th Street Arverne, New York.

 

        Value – $95,000
 

As per the Cushman & Wakefield, Inc. report dated February 2, 2006.
 

39



GTJ Co., Inc.

Valuation Summary

Business Value(1)   $ 5,800,000
Real Estate(2)      
  23-85 87th Street
East Elmhurst, NY
    24,000,000
  Building at 612 Wortman Avenue
Brooklyn, NY
    3,200,000
  Vacant land at 612 Wortman Avenue
Brooklyn, NY
    11,800,000
  Vacant land at Rockaway Beach Blvd. and Beach 49th Street
Arverne, NY
    95,000
   
TOTAL   $ 44,895,000
   
Ownership

   
Triboro Coach Corp. and Subsidiaries (40.0%)   $ 17,958,000
Jamaica Central Railways, Inc. and Subsidiaries (20.0%)     8,979,000
Green Bus Lines, Inc. and Subsidiaries (40.0%)     17,958,000
   
  TOTAL   $ 44,895,000
   

(1)
Based on the opinion of Empire Valuation Consultants, LLC, dated March 31, 2006.

(2)
As per the Cushman & Wakefield, Inc. appraisals, dated February 2, 2006.


Relative Valuation of Bus Companies

 
  Interest in
G.T.J. Co., Inc.

  Real Estate
  Other Assets
  Liabilities
  Net Asset Value
  Relative %
 
Green Bus and Subsidiaries   $ 17,958,000   $ 51,800,000   $ 10,760,888   $ 7,524,189   $ 72,994,699   42.088 %
Triboro and Subsidiaries     17,958,000     39,400,000     14,821,195     5,777,060     66,402,135   38.288 %
Jamaica and Subsidiaries     8,979,000     23,100,000     4,905,965     2,950,002     34,034,963   19.624 %
   
 
 
 
 
 
 
 
Total

 

$

44,895,000

 

$

114,300,000

 

$

30,488,048

 

$

16,251,251

 

$

173,431,797

 

100.0

%
   
 
 
 
 
 
 

        A copy of the fairness opinion is included as Attachment C to this prospectus.

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

        The unaudited pro forma condensed consolidated financial statement information set forth below is presented to reflect the pro forma effects of the following transaction as if they occurred on the dates indicated as discussed below:

        GTJ REIT, Inc. ("the Company") plans to issue a total of approximately 13,769,122 shares of which 10,000,000 shares of common stock are for a planned reorganization ("the Reorganization") of three affiliated New York Corporations Green Bus Lines, Inc., ("Green") Triboro Coach Corporation, ("Triboro") Jamaica Central Railways, Inc., ("Jamaica"), collectively referred to the "Bus Companies". The additional 3,769,122 represent dividend shares to be issued to the shareholders of the Bus Companies for undistributed earnings and profits through the date of the REIT election.

        The combined value of the Bus Companies has been computed based on the value of each of the Bus Companies, (Green—$72,994,699; Triboro—$66,402,135 and Jamaica—$34,034,963), to produce a total net asset value of the Bus Companies of $173,431,797.

        The Reorganization will be accounted for under the purchase method of accounting as required by Statement of Financial Accounting Standards No. 141 "Business Combinations", ("SFAS No. 141") issued by the Financial Accounting Standards Board. Since the Company has been formed to issue equity interests to effect a business combination, as required by SFAS No. 141, one of the existing combining entities shall be determined to be the acquiring entity. Under SFAS No. 141, the acquiring entity is the combining entity whose owners as a group retained or received the larger portion of the voting rights in the combined entity. As a result of the Reorganization, Green will have a 42.088% voting interest, Triboro will have a 38.28% voting interest, and Jamaica will have a 19.624% voting interest. Additionally, under SFAS No. 141, in determining the acquiring entity, consideration shall be given to which combining entity initiated the combination and whether the assets, revenues, and earnings of one of the combining entities significantly exceed those of the others.

        Green's assets at September 30, 2006 total $20.8 million as compared to Triboro's assets of $18.5 million, and Jamaica's assets of $9.7 million, and Green's revenues on a going forward basis will exceed that of Triboro and Jamaica. As a result of these facts, Green is deemed to be the accounting acquirer for this transaction.

        Under the purchase method of accounting, Triboro's and Jamaica's assets and liabilities were acquired and will be recorded at their fair value.

        The unaudited pro forma condensed consolidated balance sheet has been prepared as if the Reorganization had occurred on September 30, 2006. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2006 gives effect to the unaudited pro forma adjustments necessary to account for the Reorganization.

        The unaudited pro forma condensed historical consolidated statements of operations for the nine-months ended September 30, 2006 and year ended December 31, 2005 is based on the historical financial statements of the Bus Companies and give effect to the merger as if it had occurred on January 1, 2006 and January 1, 2005, respectively. The unaudited pro forma condensed consolidated financial information is presented for informational purposes only and is not necessarily indicative of what the Company's actual consolidated financial position or results of operations would have been had the merger and the reorganization been consummated on the dates indicated above, nor is it necessarily indicative of the future consolidated financial position or results of operations of the Company. The unaudited pro forma adjustments are based on estimates and assumptions, which are preliminary and have been made solely for the purpose of developing such pro forma information. The purchase accounting allocations made by management in connection with the unaudited pro forma condensed consolidated financial information are based on the assumptions, estimates of management, and appraisals performed on Triboro's and

41



Jamaica's fixed assets and are subject to reallocation when the final purchase accounting takes place after consummation of the merger.

        The unaudited pro forma condensed consolidated financial statement information is based on, and should be read together with the Bus Companies financial statements as of September 30, 2006 (unaudited) and for the nine months ended September 30, 2006 and 2005 (unaudited) and for the year ended December 31, 2005 which are found elsewhere in this prospectus and the Company's financial statements as of September 30, 2006 and for the period from June 23, 2006 (date of inception) through September 30, 2006.

        The newly combined entity with Green as the acquiring entity will be merged into the Company.

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GTJ REIT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2006
(in thousands)

 
  Green
Historical

  Triboro
Historical

  Jamaica
Historical

  Total
  Proforma
Adjustments

  Adjusted
Green

  GTJ REIT
INC.
Historical

  Proforma
Adjustments

  GTJ REIT
Inc.

 
ASSETS                                                        
CURRENT ASSETS:                                                        
  Cash and cash equivalents   $ 6,893   $ 1,698   $ 891   $ 9,482   $ 2,410   (c) $ 12,539   $     10,000   (f) $ 1,405  
                              647   (d)               (20,000 )(e)      
                                                (1,134 )(g) $  
  Accounts receivable                     6,253   (c)   6,253             6,253  
  Operating subsidies receivable and other amounts due from the City of New York     2,275     4,367     1,927     8,569     833   (d)   9,402             9,402  
  Due from bus companies     358     358         716     (716 )(b)                
  Due from affiliated companies     4,688     4,566     2,964     12,218     1,033   (c)                
                              432   (d)                        
                              (13,683 )(b)                        
  Assets from discontinued operations                     692   (c)   692             692  
                              562   (d)                        
  Prepaid expenses and other assets     783     763     480     2,026     3,589   (c)   6,177             6,177  
   
 
 
 
 
 
 
 
 
 
    Total current assets     14,997     11,752     6,262     33,011     2,052     35,063         (11,134 )   23,929  
      Property and equipment, net     1,601     1,791     1,614     5,006     (3,405 )(a)   91,458             91,458  
                              85,957   (a)                        
                              7,229   (c)                  
                              (3,329 )(c-1)                        
                              23,457   (c-1)                        
                              (23,457 )(b)                        
      Restricted cash                     3,492   (c)   3,492             3,492  
      Assets from discontinued operations                     294   (c)   294             294  
      Investments in affiliated companies     951     951     394     2,296     (2,296 )(a)                
      Deferred leasing commissions     1,236     815     595     2,646         2,646             2,646  
      Marketable Securities     1,523     2,932     476     4,931     1,081   (c)   6,012             6,012  
      Goodwill                     894   (a)   894             894  
                              4,190   (c)                    
                              (4,190 )(c-1)                        
      Other assets     491     299     366     1,156     790   (c)   1,946             1,946  
   
 
 
 
 
 
 
 
 
 
Total   $ 20,799   $ 18,540   $ 9,707   $ 49,046   $ 92,759   $ 141,805   $   $ (11,134 ) $ 130,671  
   
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY                                                        
CURRENT LIABILITIES                                                        
  Accounts payable   $ 14   $   $   $ 14   $ 1,142   (c) $ 1,156   $   $   $ 1,156  
  Income tax payable     4,045     149     1,786     5,980         5,980         (1,958 )(j)   4,022  
  Line of credit                     495   (c)   495             495  
  Note payable                     1,666   (c)   1,666         10,000   (f)   11,666  
  Liabilites from discontinued operations                     858   (c)   858             858  
  Due to affialated companies             250     250     11,726   (c)                
                              (13,700 )(b)                      
                              1,724   (d)                        
  Due to bus companies             716     716     (716 )(b)                
                              611   (d)                      
  Accrued expenses and other     736     1,328     474     2,538     2,708   (c)   5,857     20         5,877  
   
 
 
 
 
 
 
 
 
 
    Total current liabilities     4,795     1,477     3,226     9,498     6,514     16,012     20     8,042     24,074  
  Other liabilities             1     1     875   (c)   876             876  
  Unpaid losses and loss adjustment expenses                     4,323   (c)   4,323             4,323  
  Liabilities from discontinued operations                     622   (c)   622             622  
   
 
 
 
 
 
 
 
 
 
Total liabilities     4,795     1,477     3,227     9,499     12,334     21,833     20     8,042     29,895  
   
 
 
 
 
 
 
 
 
 
Common stock     377     127     17     521     (144 )(a)   377         (377 )(e)   138  
                              1,000   (c)               138   (e)      
                              500   (d)                      
                              (1,500 )(a)                        
Additional-paid-in-capital                     998   (c)             377   (e)   377  
                              83,303   (a)   100,451         296   (g)   100,747  
                              21,129   (a)                        
                              144   (a)                        
                              15,938   (c-1)                        
                              (21,061 )(b)                        
                              (344 )(d)               41,862   (e)      
                              4,642   (c)             (1,430 )(g)      
Retained earnings (deficit)     15,649     16,914     6,468     39,031     (23,382 )(a)   19,151     (20 )   (62,000 )(e)   (479 )
                              (796 )(a)               1,958   (j)      
Accumulated comprehensive (loss) income     (22 )   22     (5 )   (5 )   (2 )(c)   (7 )           (7 )
   
 
 
 
 
 
 
 
 
 
      16,004     17,063     6,480     39,547     80,425     119,972     (20 )   (19,176 )   100,776  
   
 
 
 
 
 
 
 
 
 
Total liabilities and equity   $ 20,799   $ 18,540   $ 9,707   $ 49,046   $ 92,759   $ 141,805   $   $ (11,134 ) $ 130,671  
   
 
 
 
 
 
 
 
 
 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

43



GTJ REIT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(in thousands, except per share data)

 
  Green
Historical

  Triboro
Historical

  Jamaica
Historical

  Total
  Pro Forma
Adjustments

  Adjusted
Green

  GTJ REIT,
INC.
Historical

  Proforma
Adjustments

  GTJ REIT,
Inc.

 
Operating revenue   $   $   $   $   $ 23,773   (i) $ 23,773   $   $   $ 23,773  
Rental income     2,910     1,853     1,196     5,959     1,582   (i)   7,541             7,541  
   
 
 
 
 
 
 
 
 
 
  Total     2,910     1,853     1,196     5,959     25,355     31,314             31,314  
Operating expenses—other                     25,628   (i)   25,628     20         25,648  
Operating expenses—rental operations     822     471     453     1,746     589   (i)   2,335         1,455   (j)   3,790  
                                                     
   
 
 
 
 
 
 
 
 
 
Income (loss) from operations     2,088     1,382     743     4,213     (862 )   3,351     (20 )   (1,455 )   1,876  
                              1,545   (i)                        
Other income (expense)                     (1,710 )(h)   (165 )       (567 )(j)   (732 )
   
 
 
 
 
 
 
 
 
 
Income (loss) gain from continuing operartions before income taxes     2,088     1,382     743     4,213     (1,027 )   3,186     (20 )   (2,022 )   1,144  
Provision for income tax expense (benefit)     854     709     454     2,017     458   (i)   2,475         (1,958 )(j)   517  
   
 
 
 
 
 
 
 
 
 
Net loss from continuing operations before income loss of unconsolidated affiliates     1,234     673     289     2,196     (1,485 )   711     (20 )   (64 )   627  
Income (loss) from affiliates     155     156     77     388     (388 )(h)                
   
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations   $ 1,389   $ 829   $ 366   $ 2,584   $ (1,873 ) $ 711   $ (20 ) $ (64 ) $ 627  
   
 
 
 
 
 
 
 
 
 
Income (loss) per common share                                                        
  Basic                                   $ 0.05  
                                                   
 
  Diluted                                   $ .04  
                                                   
 
Weighted average common shares outstanding                                                        
  Basic                                     13,769  
                                                   
 
  Diluted                                     13,969  
                                                   
 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

44



GTJ REIT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
(in thousands, except per share data)

 
  Green
Historical

  Triboro
Historical

  Jamaica
Historical

  Total
  Pro Forma
Adjustments

  Adjusted Green
  Proforma
Adjustments

  GTJ REIT, Inc.
 
Operating revenue   $   $   $   $   $ 27,527   (l) $ 27,527   $   $ 27,527  
Rental income                     1,969   (l)   1,969     7,679   (m)   9,648  
   
 
 
 
 
 
 
 
 
  Total                     29,496     29,496     7,679     37,175  
Operating expenses-other     317     130     167     614     27,734   (l)   28,348         28,348  
Operating expenses-rental operations                             1,938   (m)   1,938  
   
 
 
 
 
 
 
 
 
Income (loss) from operations     (317 )   (130 )   (167 )   (614 )   1,762     1,148     5,741     6,889  
                              (2,209 )                  
Other income (expense)                     1,154   (l)   (1,055 )   (618 )(h)   (1,673 )
   
 
 
 
 
 
 
 
 
Income (loss) gain from continuing operations before income taxes     (317 )   (130 )   (167 )   (614 )   707     93     5,123     5,216  
Provision for income tax expense (benefit)     684     437     282     1,403     488   (l)   1,891         1,891  
   
 
 
 
 
 
 
 
 
Net loss from continuing operations before income loss of unconsolidated affiliates     (1,001 )   (567 )   (449 )   (2,017 )   219     (1,798 )   5,123     3,325  
Income (loss) from affiliates     1,390     1,390     695     3,475     (3,475 )(k)            
   
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations   $ 389   $ 823   $ 246   $ 1,458   $ (3,256 ) $ (1,798 ) $ 5,123   $ 3,325  
   
 
 
 
 
 
 
 
 
Income (loss) per common share                                                  
  Basic                               $ 0.24  
                                             
 
  Diluted                               $ 0.24  
                                             
 
Weighted average common shares outstanding                                                  
  Basic                                 13,769  
                                             
 
  Diluted                                 13,969  
                                             
 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

45


NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL INFORMATION

Basis of Presentation

(1)
Gives effect to the proposed issuance of 13,769,122 shares of common stock held by the GTJ REIT relating to the Reorganization of the Bus Companies. The mergers will be accounted for under the purchase method of accounting as required by SFAS No. 141. Since the Company has been formed to issue equity interests to effect a business combination, as required by SFAS No. 141, one of the existing combining entities shall be determined to be the acquiring entity. Under SFAS No. 141, the acquiring entity is the combining entity whose owners as a group retained or received the larger portion of the voting rights in the combined entity. As a result of the Reorganization, Green will have a 42.088% voting interest, Triboro will have a 38.28% voting interest, and Jamaica will have a 19.624% voting interest. Additionally, under SFAS No. 141, in determining the acquiring entity, consideration shall be given to which combining entity initiated the combination and whether the assets, revenues, and earnings of one of the combining entities significantly exceed those of the others.

    Green's assets at September 30, 2006 total $20.8 million as compared to Triboro's assets of $18.5 million, and Jamaica's assets of $9.7 million, and Green's revenues on a going forward basis will exceed that of Triboro and Jamaica. As a result of these facts, Green is deemed to be the accounting acquirer for this transaction.

    Under the purchase method of accounting, Triboro's and Jamaica's assets and liabilities were acquired and will be recorded at their fair value.

    The unaudited pro forma condensed consolidated balance sheet has been prepared as if the Reorganization had occurred on September 30, 2006. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2006 gives effect to the unaudited pro forma adjustments necessary to account for the Reorganization.

    The unaudited pro forma condensed historical consolidated statements of operations for the nine-months ended September 30, 2006 and year ended December 31, 2005 is based on the historical financial statements of the Bus Companies and give effect to the merger as if it had occurred on January 1, 2006 and January 1, 2005, respectively. The unaudited pro forma condensed consolidated financial information is presented for informational purposes only and is not necessarily indicative of what the Company's actual consolidated financial position or results of operations would have been had the merger and the reorganization been consummated on the dates indicated above, nor is it necessarily indicative of the future consolidated financial position or results of operations of the Company. The unaudited pro forma adjustments are based on estimates and assumptions, which are preliminary and have been made solely for the purpose of developing such pro forma information. The purchase accounting allocations made by management in connection with the unaudited pro forma condensed consolidated financial information are based on the assumptions, estimates of management, and appraisals performed on Triboro's and Jamaica's fixed assets and are subject to reallocation when the final purchase accounting takes place after consummation of the merger.

    The unaudited pro forma condensed consolidated financial statement information is based on, and should be read together with the Bus Companies financial statements as of September 30, 2006 (unaudited) and for the nine months ended September 30, 2006 and 2005 (unaudited) and for the year ended December 31, 2005 which are found elsewhere in this prospectus and the Company's financial statements as of September 30, 2006 and for the period from June 23, 2006 (date of inception) through September 30, 2006.

    The newly combined entity with Green as the acquiring entity will be merged into the Company.

46



    The combined the net value of each of the Bus Companies, (Green—$72,994,699; Triboro—$66,402,135 and Jamaica—$34,034,963), to produce a total net asset value of the Bus Companies of $173,431,797. Based on the valuations of the real properties and outdoor maintenance businesses, and the paratransit business, and considering the ownership of the same in whole or in part by each of the Bus Companies, the relative valuation of each of the Bus Companies (as part of the Reorganization) is Green—42.088%, Triboro—38.287% and Jamaica—19.625%.

    Accordingly, under the Reorganization, 10,000,000 shares of our common stock will be distributed 4,208,800 shares to the shareholders of Green, 3,828,700 shares to the shareholders of Triboro and 1,962,500 shares to the shareholders of Jamaica, in such case in proportion to the outstanding shares held by such shareholders of each Bus Company, respectively.

    As part of becoming a REIT, the Company proposes, after the Reorganization, to make a distribution of the Bus Companies' historical undistributed earnings and profits, calculated to be an estimated $62,000,000. The Company would distribute up to $20,000,000 in cash, and also make available for distribution 5,564,454 shares of the Company's common stock, valued at $11.14 per share calculated as follows:

Total Value of the Company   $ 173,431,797
Assumed E&P—Cash distribution     20,000,000
   
Total value after cash distribution     153,431,797
Assumed E&P—Stock distribution     42,000,000
   
Total value after stock distribution   $ 111,431,797
   
Reorganization shares     10,000,000
Share Value Post Earnings and Profits   $ 11.14
   

    Each shareholder may elect a combination of cash and stock, or exclusively cash or stock. If more than $20,000,000 of cash is elected in the aggregate, cash distributed to each stockholder electing to receive some or all of his or her distribution in cash will be reduced such that the aggregate cash distribution will total $20,000,000, and the balance of the distribution to each such stockholder will be made in our common stock. For the purposes of the pro forma, the Company assumed that $20,000,000 would be distributed in cash and 3,769,122 shares (with an approximate value of $42,000,000) would be distributed.

    The dilutive income (loss) per common share reflects grants of stock options to purchase an aggregate of 200,000 shares of common stock pursuant to the 2006 Incentive Award Plan for all periods presented.

47


Pro Forma Condensed Consolidated Balance Sheet at September 30, 2006

Pro Forma Adjustments

        The total pro forma consideration as shown in the table below is allocated to the assets of Triboro and Jamaica as if the transaction had occurred on September 30, 2006.

        The unaudited pro forma condensed consolidated financial information is presented for informational purposes only and is not necessarily indicative of what the Company's actual financial position or results of operations would have been had the merger and the reorganization been consummated on the dates indicated above, nor is it necessarily indicative of the future financial position or results of operations of the Company. The unaudited pro forma adjustments are based on estimates and assumptions, which are preliminary and have been made solely for the purpose of developing such pro forma information. The purchase accounting allocations made by management in connection with the unaudited pro forma condensed consolidated financial information are based on the assumptions, estimates of management, and appraisals performed on Triboro's and Jamaica's fixed assets and are subject to reallocation when the final purchase accounting takes place after consummation of the merger.

 
  Triboro
  Jamaica
  Total
 
Issuance of Stock   $ 66,402   $ 34,035   $ 100,437  
Preliminary allocation of purchase price:                    
Fair value of property and equipment     39,400     23,100     62,500  
Goodwill     894         894  
Fair value of real property thru its ownership interest in GTJ     15,638     7,819     23,457  
Historical value of cash and cash equivalents acquired     4,630     1,369     5,999  
Historical value of other assets acquired     7,317     4,007     11,324  
Historical value of liabilities assumed     (1,477 )   (2,260 )   (3,737 )
   
 
 
 
    $ 66,402   $ 34,035   $ 100,437  

    (a)
    Reflects the elimination of Triboro's and Jamaica's historical account balances and the fair value of the assets acquired and liabilities assumed.
    (b)
    The intercompany adjustments reflect the elimination of intercompany accounts necessary to prepare consolidated financial statements. These adjustments are summarized as follows:

    The elimination of $358,000 receivable/payable between Green Bus and Jamaica, since the companies will be consolidated.

    The elimination of $4.5 million receivable/payable between Green and GTJ, Inc. ("GTJ") since the companies will be consolidated.

    The elimination of $1.3 million, unconsolidated losses from affiliates, and investments in affiliates between Green and GTJ and Command since the companies will be consolidated.

    The elimination of $358,000 receivable/payable between Triboro and Jamaica, since the companies will be consolidated.

    The elimination of $103,000 receivable/payable between Triboro and Command, Bus Company Inc. ("Command"), since the companies will be consolidated.

    The elimination of $4.4 million receivable/payable between Triboro and GTJ, since the companies will be consolidated.

48


      The elimination of $1.3 million, unconsolidated losses from affiliates, and investments in affiliates between Triboro and GTJ and Command, since the companies will be consolidated.

      The elimination of $2.6 million receivable/payable between Jamaica and GTJ, since the companies will be consolidated.

      The elimination of $625,000, unconsolidated losses from affiliates, and advances in affiliates between Jamaica and GTJ and Command, since the companies will be consolidated.

      The elimination of $1.1 million receivable/payable between Command and GTJ, since the companies will be consolidated.

      The elimination of $21 million related to the fair value of real property thru its ownership in GTJ.

    c)
    .    Prior to the merger, Green and Triboro each held a forty percent ownership interest in GTJ and Jamaica held the remaining twenty percent ownership in GTJ. Upon completion of this transaction, Green will own a hundred percent ownership interest in GTJ. In order to properly reflect this transaction, the pro forma balance sheet will reflect the assets and liabilities of GTJ at historical cost, plus a pro rata fair value adjustment which has been allocated to those assets whose fair values are in excess of historical cost. The following reflects the historical balances of GTJ prior to the merger with Green. The balances are as follows:

Cash   $ 2,410  
Accounts receivable     6,253  
Due from affiliated companies     1,033  
Assets from discontinued operations-current     692  
Prepaid expenses and other current assets     3,589  
Property and equipment, net     7,229  
Restricted cash     3,492  
Assets from discontinued operations-long-term     294  
Marketable Securities     1,081  
Goodwill     4,190  
Other assets     790  
   
 
  Total assets   $ 31,053  
   
 
Accounts payable   $ 1,142  
Line of credit     495  
Note payable     1,666  
Liabilities from discontinued operation-current     858  
Due to affiliated companies     11,726  
Accrued expenses and other     2,708  
Other liabilities-long-term     875  
Unpaid losses and loss adjustment expenses     4,323  
Liabilities from discontinued operation-long term     622  
   
 
  Total liabilities     24,415  
Common stock     1,000  
Additional-paid-in-capital     998  
Retained earnings     4,642  
Accumulated comprehensive loss     (2 )
   
 
  Total liabilities and equity   $ 31,053  
   
 

49


    c-1)
    . In accordance with SFAS 141, to record the adjustments to reflect Green's acquisition of the remaining sixty percent ownership of GTJ's assets and liabilities that it did not already own.

 

 

 

 

 
Eliminate the historical basis of the real estate assets acquired   $ (3,329 )
Pro rata fair value adjustment to real estate assets acquired ($39,095 x 60%)     23,457  
Eliminate the existing goodwill recorded on the books of GTJ     (4,190 )
   
 
    $ 15,938  
   
 
    (d)
    To record the historical balances of Command.

    (e)
    To record shares issued in the reorganization and the payment of the dividend distribution in the amount of $20.0 million in cash 3,769,122 shares of stock valued at $11.14 per share to the shareholders.

    (f)
    To record the borrowing of $10.0 million of GTJ REIT, Inc.'s proposed credit line facility to be used to pay the cash part of the dividend distribution.

    (g)
    To record the cash used for the payment of salaries and interest expense, and record cash used for the 2005 dividend distribution.

Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2006 (Unaudited)

(h)    Intercompany Adjustments

The intercompany adjustments reflect the elimination of intercompany accounts necessary to prepare consolidated financial statements. These adjustments are summarized as follows:

      The elimination of Green's $156,000 equity income of the GTJ and Command since both will be consolidated.

      The elimination of Triboro's $156,000 equity income of the GTJ and Command, since both will be consolidated.

      The elimination of Jamaica's $277,000 equity income of the GTJ and Command, since both will be consolidated.

      The elimination of $1.7 million service fees charged to the Bus Companies by Varsity Transit, Inc, which is part of the GTJ and will be consolidated.

    (i)
    To record the historical statement of operations for GTJ.

    (j)
    Pro Forma Adjustments

    Effect of new management compensation of $1,455,000 as a result of the proposed new compensation structure as a result of the reorganization and compensation charges related to the issuance of stock options under Financial Accounting Standards Board (FASB) SFAS No. 123 (Revised 2004), "Share-Based Payment," (SFAS No. 123R) which requires the Company to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.

50


      Effect of interest expense on the borrowing of $10.0 million of GTJ REIT, Inc.'s proposed credit facility to be used to pay the cash part of the dividend distribution to the shareholders.

      Effect of federal and state income taxes as a result of REIT status, election in accordance with the plan of reorganization.

Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2005 (Unaudited)

Intercompany Adjustments

    (k)
    The intercompany adjustments reflect the elimination of intercompany accounts necessary to prepare consolidated financial statements. These adjustments are summarized as follows:

    The elimination of Green's $1.4 million equity income of the GTJ and Command since both will be consolidated.

    The elimination of Triboro's $1.4 million equity income of the GTJ and Command since both will be consolidated.

    The elimination of Jamaica's $700,000 equity income of the GTJ and Command since both will be consolidated.

    The elimination of $2.2 million service fees charged to the Bus Companies by Varsity Transit, Inc which is part of the GTJ and will be consolidated.

    (l)
    To record the historical statement of operations for GTJ.

    (m)
    Pro Forma Adjustments

    Effect of new management compensation of $1.9 million as a result of the proposed reorganization and compensation charges related to the issuance of stock options under SFAS No. 123R which requires the Company to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.

    Effect of $7.7 million of rental income related to the leases with New York City.

    Effect of interest expense on the borrowing of $10.0 million of GTJ REIT, Inc.'s proposed credit facility to be used to pay the cash part of the dividend distribution to the shareholders.

51



BUSINESS OF THE BUS COMPANIES

Introduction

        Our business immediately after the Reorganization will consist of: (a) the ownership of six rentable real properties, five of which have triple net leases and (b) the ownership and operation of a group of outdoor maintenance businesses and a paratransit business.

Real Property Business

    Green real property

        Green presently owns two real properties that are leased to New York City.

        Green owns real property located at 165-25 147th Avenue, Jamaica, New York (the "147th Avenue Property") in fee simple. The 147th Avenue Property consists of a 151,068 square foot industrial building located on 6.567 acres. The 147th Avenue Property is comprised of three parcels. The main parcel contains an entire block which is bordered by Rockaway Boulevard to the South, 167th Avenue to the North, 146th Avenue to the West and 147th Avenue to the East. A second parcel is located on the SE corner of 147th Avenue and 167th Street and a third parcel is located on the NE corner of 147th Avenue and 167th Street. The real property is leased to New York City as a bus depot for an initial term of twenty-one years with a first year rent of $2,795,000 which rent escalates to a 21st year rent of $4,092,000. Rent continues to escalate during the following two fourteen year extension terms. Cushman and Wakefield has appraised the 147thAvenue Property at $42,600,000.

        Green also owns real property at 49-19 Rockaway Beach Boulevard, Queens, New York (the "Rockaway Beach Property") in fee simple. The Rockaway Beach Property consists of a 28,790 square foot industrial building on 3.026 acres. The Rockaway Beach Property is located on both the north and south side of Rockaway Beach Boulevard. One parcel is located on the South side of Rockaway Beach Boulevard between Beach 47th and Beach 49th Street. This parcel is developed with a 28,790 square foot industrial building. The second parcel which is comprised of six contiguous tax lots is located on the North side of Rockaway Beach Boulevard between Beach 49th Street and Beach 50th Street. The Rockaway Beach property has been leased to New York City as a bus depot for an initial term of 21 years with a first year rent of $605,000 escalating over the term to a 21st year rent of $886,000. The rent escalates during the following two fourteen year extension terms. Cushman and Wakefield has appraised the Rockaway Beach Property at $9,200,000.

    Triboro real property

        Triboro owns real property located at 8501 24th Avenue, East Elmhurst, New York (the "24th Avenue Property") in fee simple. The 24th Avenue Property consists of a 118,430 square foot industrial building on 6.432 acres. The 24thAvenue Property is located on the block front bordered by 23rd Avenue to the North, 24th Avenue to the South, 85th Street to the West and 87th Street to the East in East Elmhurst, New York. The 24th Avenue Property has been leased to New York City as a bus depot for an initial term of 21 years, with a first year rent of $2,585,000 escalating during the term to a 21st year rent of $3,785,000. The rent escalates during the two fourteen year extension terms. Cushman and Wakefield has appraised the 24th Avenue Property at $39,400,000.

    Jamaica real property

        Jamaica owns real property at 114-15 Guy Brewer Boulevard, Jamaica, New York (the "Guy Brewer Property") in fee simple. The Guy Brewer Property consists of a 75,800 square foot industrial building on 4.616 acres. The Guy Brewer Property is located on the NE corner of 115th Avenue and Guy Brewer Boulevard in Jamaica, New York. The Guy Brewer Property has been leased to New York City as a bus depot for an initial term of twenty one years with a first year rent of $1,515,000 escalating to a 21st year rent of $2,218,000.

52


Escalations continue during the following two fourteen year renewal terms. Cushman and Wakefield has appraised the Guy Brewer Property at $23,100,000.

    Summarized New York City Financial Information

        The following summarized New York City financial information is derived from the audited financial statements of the City of New York's audited financial statements which are prepared in accordance with generally accepted accounting principles for governments in the United States of America as prescribed by Governmental Accounting Standards Board (GASB).

        The information presented below is provided for the shareholders of the Bus Companies in assisting them to determine the creditworthiness of the City of New York as the Bus Companies significant tenant for their rental properties.

        We have included both summarized financial information as well as information related to the City of New York's Capital Assets, Debt Obligations, and Commitments.

        In the government-wide financial statements, all of the activities of the City, aside from its discretely presented component units, are considered governmental activities. Governmental activities decreased the City's net assets by $53.7 billion during fiscal year 2006, and decreased net assets by $671 million during fiscal year 2005 and increased net assets by $83 million during fiscal year 2004.

        As mentioned previously, the basic financial statements include a reconciliation between the fiscal year 2006 governmental funds statement of revenues, expenditures, and changes in fund balances which reports a decrease of $736 million in fund balances and the reported decrease in the excess of liabilities over assets reported in the government-wide statement of activities $53.7 billion, a difference of $53.0 billion. A similar reconciliation is provided for fiscal year 2005 amounts.

        Key elements of the reconciliation of these two statements are that the government-wide statement of activities report the issuance of debt as a liability, the purchases of capital assets as assets which are then charged to expense over their useful lives (depreciated) and changes in long-term liabilities as adjustments of expenses. Conversely, the governmental funds statements report the issuance of debt as an other financing source of funds, the repayment of debt as an expenditure, the purchase of capital assets as an expenditure and do not reflect changes in long-term liabilities.

53



        Key elements of these changes are follows:

 
  Governmental Activities
for the fiscal years ended June 30,

 
 
  2006
  2005
  2004
 
 
  (in thousands)

 
Revenues                    
  Program revenues:                    
    Charges for services   $ 3,345,160   $ 4,143,436   $ 3,286,407  
    Operating grants and contributions     15,126,979     15,936,907     14,507,980  
    Capital grants and contributions     475,674     366,432     477,280  
  General revenues:                    
    Taxes     35,381,695     31,708,689     28,493,546  
    Investment Income     465,685     232,109     49,677  
    Unrestricted Federal and State aid     973,766     1,258,399     1,254,101  
    Other     311,847     581,497     348,915  
   
 
 
 
      Total revenues     56,080,806     54,227,469     48,417,906  
   
 
 
 
Expenses:                    
  General government     3,854,068     3,374,268     2,602,630  
  Public safety and judicial     38,107,802     12,696,849     9,566,889  
  Education     34,564,249     15,613,925     14,539,644  
  City University     907,472     646,397     668,841  
  Social services     13,025,782     10,882,448     10,283,512  
  Environmental protection     6,906,033     2,375,604     2,453,205  
  Transportation services     2,155,180     1,827,871     1,702,394  
  Parks, recreation and cultural activities     974,610     628,807     560,670  
  Housing     1,711,951     1,007,341     745,544  
  Health (including payments to HHC)     4,699,686     3,186,166     2,853,898  
  Libraries     301,342     389,739     263,976  
  Debt service interest     2,573,905     2,269,181     2,093,597  
   
 
 
 
      Total expenses     109,782,080     54,898,596     48,334,800  
   
 
 
 
Change in net assets     (53,701,274 )   (671,127 )   83,106  
Net Deficit—Beginning     (27,192,541 )   (26,521,414 )   (26,604,520 )
   
 
 
 
Net Deficit—Ending   $ (80,893,815 ) $ (27,192,541 ) $ (26,521,414 )
   
 
 
 

        The following are the statements of revenues, expenditures, and changes in fund balances for the years ended June 30, 2006 and 2005.

54


THE CITY OF NEW YORK

GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
(in thousands)

 
  General
  New York City
Capital
Projects

  General
Debt
Service

  Nonmajor Governmental Funds
  Adjustments/
Eliminations

  Total Governmental Funds
 
REVENUES:                                      
  Real estate taxes   $ 12,636,355   $   $   $   $   $ 12,636,355  
  Sales and use taxes     5,986,655                     5,986,655  
  Personal income tax     7,675,813             350,000         8,025,813  
  Income taxes, other     5,531,620                     5,531,620  
  Other taxes     2,380,744                     2,380,744  
  Federal, State and other categorical aid     15,436,591     438,021         170,000         16,044,612  
  Unrestricted Federal and State aid     494,154                     494,154  
  Charges for services     1,836,959                     1,836,959  
  Tobacco settlement     5,410             193,688         199,098  
  Investment income     362,197         27,350     67,018     (1,829 )   454,736  
  Interest on mortgages, net                 4,809         4,809  
  Other revenues     1,554,280     1,717,501         1,765,008     (1,715,637 )   3,321,152  
   
 
 
 
 
 
 
    Total revenues     53,900,778     2,155,522     27,350     2,550,523     (1,717,466 )   56,916,707  
   
 
 
 
 
 
 
EXPENDITURES                                      
  General government     1,530,074     665,096         3,235         2,198,405  
  Public safety and judicial     6,693,911     212,111                 6,906,022  
  Education     14,794,254     1,781,904         1,715,593     (1,715,637 )   16,576,114  
  City University     550,366     13,780                 564,146  
  Social services     10,147,669     39,308                 10,186,977  
  Environmental protection     1,836,396     1,935,273                 3,771,669  
  Transportation services     954,155     782,904                 1,737,059  
  Parks, recreation and cultural activities     376,808     382,845                 759,653  
  Housing     721,483     459,376                 1,180,859  
  Health (including payments to HHC)     2,757,802     269,673                 3,027,475  
  Libraries     261,140     52,317                 313,457  
  Pensions     3,878,950                     3,878,950  
  Judgments and claims     516,801                     516,801  
  Fringe benefits and other benefit payments     4,154,015                     4,154,015  
  Administrative and other     105,394         145,324     50,934         301,652  
  Debt Service:                                      
    Interest             1,559,898     818,904         2,378,802  
    Redemptions             1,455,252     1,095,880         2,551,132  
    Lease payments     228,846                     228,846  
   
 
 
 
 
 
 
      Total expenditures     49,508,064     6,594,587     3,160,474     3,684,546     (1,715,637 )   61,232,034  
   
 
 
 
 
 
 
        Excess (deficiency) of revenues over expenditures     4,392,714     (4,439,065 )   (3,133,124 )   (1,134,023 )   (1,829 )   (4,315,327 )
   
 
 
 
 
 
 
                                       

55


OTHER FINANCING SOURCES (USES):                                      
  Transfers from (to) General Fund         200,000     4,281,010     (92,938 )       4,388,072  
  Transfers to Nonmajor Capital Projects Funds                 (1,500 )       (1,500 )
  Principal amount of bonds issued         3,405,000                 3,405,000  
  Bond premium         76,818     64,182             141,000  
  Capitalized leases         14,191                 14,191  
  Refunding bond proceeds             1,421,810     1,942,974         3,364,784  
  Transfers to New York City Capital Projects Fund     (200,000 )                   (200,000 )
  Transfers from (to) General Debt Service Fund     (4,281,010 )           198         (4,280,812 )
  Transfers from (to) Nonmajor Debt Service Funds, net     92,938         (198 )   1,500         94,240  
  Payments to refunded bond escrow holder             (1,478,288 )   (1,860,299 )       (3,338,587 )
  Cost of termination of rate cap obligation                 (7,275 )       (7,275 )
   
 
 
 
 
 
 
      Total other financing sources (uses)     (4,388,072 )   3,696,009     4,288,516     (17,340 )       3,579,113  
   
 
 
 
 
 
 
  Net change in fund balances     4,642     (743,056 )   1,155,392     (1,151,363 )   (1,829 )   (736,214 )
FUND BALANCES (DEFICIT) AT BEGINNING OF YEAR     417,841     (1,460,885 )   2,088,280     2,973,638     1,829     4,020,703  
   
 
 
 
 
 
 
FUND BALANCES (DEFICIT) AT END OF YEAR   $ 422,483   $ (2,203,941 ) $ 3,243,672   $ 1,822,275   $   $ 3,284,489  
   
 
 
 
 
 
 

56


THE CITY OF NEW YORK

GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2005
(in thousands)

 
  General
  New York City
Capital
Projects

  General
Debt
Service

  Nonmajor
Governmental
Funds

  Adjustments/
Eliminations

  Total
Governmental
Funds

 
REVENUES:                                      
  Real estate taxes   $ 11,615,939   $   $   $   $   $ 11,615,939  
  Sales and use taxes     5,822,751                     5,822,751  
  Personal income tax     6,656,334             497,094     46,632     7,200,060  
  Income taxes, other     4,640,541                     4,640,541  
  Other taxes     2,130,072                     2,130,072  
  Federal, State and other categorical aid     16,251,806     344,217         340,000         16,936,023  
  Unrestricted Federal and State aid     603,500                     603,500  
  Charges for services     2,479,372                     2,479,372  
  Tobacco settlement     67,579             149,341         216,920  
  Investment income     148,824         8,938     62,488     (369 )   219,881  
  Interest on mortgages, net                 3,743         3,743  
  Unrealized loss on investment                 (1,182 )       (1,182 )
  Other revenues     1,746,867     1,556,919     70,070     1,148,921     (1,065,524 )   3,457,253  
   
 
 
 
 
 
 
    Total revenues     52,163,585     1,901,136     79,008     2,200,405     (1,019,261 )   55,324,873  
   
 
 
 
 
 
 
EXPENDITURES:                                      
  General government     2,385,327     719,829                 3,105,156  
  Public safety and judicial     6,506,707     996,069                 7,502,776  
  Education     13,776,018     975,368         1,061,342     (1,065,524 )   14,747,204  
  City University     566,613     15,042                 581,655  
  Social services     10,329,111     57,221                 10,386,332  
  Environmental protection     1,706,594     1,838,220                 3,544,814  
  Transportation services     956,527     946,161                 1,902,688  
  Parks, recreation and cultural activities     342,999     317,256                 660,255  
  Housing     511,638     343,274                 854,912  
  Health (including payments to HHC)     2,424,183     384,586                 2,808,769  
  Libraries     362,310     61,680                 423,990  
  Pensions     3,233,826                     3,233,826  
  Judgments and claims     590,294                     590,294  
  Fringe benefits and other benefit payments     2,947,681                     2,947,681  
  Grant to The State of New York                 170,000         170,000  
  Administrative and other     869,351         125,396     60,297         1,055,044  
  Debt Service:                                      
    Interest             1,380,854     697,052     5,557     2,083,463  
    Redemptions             1,502,716     526,265     (12,664 )   2,016,317  
    Lease payments     204,654                     204,654  
   
 
 
 
 
 
 
      Total expenditures     47,713,833     6,654,706     3,008,966     2,514,956     (1,072,631 )   58,819,830  
   
 
 
 
 
 
 
        Excess (deficiency) of revenues over expenditures     4,449,752     (4,753,570 )   (2,929,958 )   (314,551 )   53,370     (3,494,957 )
   
 
 
 
 
 
 
                                       

57


OTHER FINANCING SOURCES (USES):                                      
  Transfers from General Fund             3,816,394     628,253         4,444,647  
  Transfers from Nonmajor Capital Projects Funds         44,140         11,703     (44,140 )   11,703  
  Principal amount of bonds issued         3,920,000         3,097,685         7,017,685  
  Bond premium         145,453     123,026     112,985         381,464  
  Capitalized leases         835,900                 835,900  
  Refunding bond proceeds             2,855,250     1,079,379         3,934,629  
  Transfer to New York City Capital Projects Fund                 (44,140 )   44,140      
  Transfers (to) from General Debt Service Fund     (3,816,394 )       (6,270 )   6,270         (3,816,394 )
  Transfer to Nonmajor Debt Service Funds, net     (628,253 )           (11,703 )       (639,956 )
  Payments to refunded bond escrow holder             (2,964,211 )   (2,868,032 )       (5,832,243 )
   
 
 
 
 
 
 
      Total other financial sources (uses)     (4,444,647 )   4,945,493     3,824,189     2,012,400         6,337,435  
   
 
 
 
 
 
 
  Net change in fund balances     5,105     191,923     894,231     1,697,849     53,370     2,842,478  
FUND BALANCES (DEFICIT) AT BEGINNING OF YEAR     412,736     (1,652,808 )   1,194,049     1,275,789     (51,541 )   1,178,225  
   
 
 
 
 
 
 
FUND BALANCES (DEFICIT) AT END OF YEAR   $ 417,841   $ (1,460,885 ) $ 2,088,280   $ 2,973,638   $ 1,829   $ 4,020,703  
   
 
 
 
 
 
 

58


THE CITY OF NEW YORK

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006
(in thousands)

Amounts reported for governmental activities in the Statement of Activities are different because:              

Net change in fund balances—governmental funds

 

 

 

 

$

(736,214

)

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the currrent period.

 

 

 

 

 

 

 
  Purchases of capital assets   $ 3,522,523        
  Depreciation expense     (2,018,812 )   1,503,711  
The net effect of various miscellaneous transactions involving capital assets and other (i.e. sales, trade-ins, and donations) is to decrease net assets           106,750  
The issuance of long-term debt (i.e., bonds, capital leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.              
  Proceeds from sales of bonds     (6,769,784 )      
  Principal payments of bonds     5,748,719        
  Other     (154,437 )   (1,175,502 )
   
       
Some expenses reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds           (764,653 )
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds           872,085  
OPEB obligation           (53,507,451 )
         
 
Change in net assets—governmental activities         $ (53,701,274 )
         
 

59


THE CITY OF NEW YORK

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2005
(in thousands)

Amounts reported for governmental activities in the Statement of Activities are different because:              

Net change in fund balances—governmental funds

 

 

 

 

$

2,842,478

 

Governmental funds report capital outlays as expenditures. However in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the currrent period.

 

 

 

 

 

 

 
  Purchases of capital assets   $ 3,110,766        
  Depreciation expense     (2,366,576 )   744,190  
The net effect of various miscellaneous transactions involving capital assets and other (i.e. sales, trade-ins, and donations) is to decrease net assets           (706,473 )
The issuance of long-term debt (i.e., bonds, capital leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.              
  Proceeds from sales of bonds     (10,952,314 )      
  Principal payments of bonds     7,467,096        
  Other     (121,785 )   (3,607,003 )
   
       
Some expenses reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds           (386,990 )
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds           442,761  
         
 
Change in net assets—governmental activities         $ (671,127 )
         
 

60


        The following charts compare the amounts of program and general revenues for fiscal years 2006 and 2005:


Revenues by Source—Governmental Activities
for the Year Ended June 30, 2006

GRAPHIC


Revenues by Source—Governmental Activities
for the Year Ended June 30, 2005

GRAPHIC

        As noted earlier, increases and decreases of net assets may over time serve as a useful indicator of changes in a government's financial position. In the case of the City, liabilities exceed assets by $80.9 billion

61



at the close of the most recent fiscal year, an increase of $53.7 billion from June 30, 2005, compared with an increase in the excess of liabilities over net assets of $671 million in the prior fiscal year.

 
  Governmental Activities

 
 
  2006
  2005
  2004
 
 
  (in thousands)

 
Current and other assets   $ 27,878,882   $ 27,783,430   $ 19,691,909  
Capital assets (net of depreciation)     32,170,950     30,682,882     29,958,556  
   
 
 
 
  Total assets     60,049,832     58,466,312     49,650,465  
   
 
 
 
Long-term liabilities     121,963,394     66,590,911     61,288,787  
Other liabilities     18,980,253     19,067,942     14,883,092  
   
 
 
 
  Total liabilities     140,943,647     85,658,853     76,171,879  
   
 
 
 
Net assets:                    
Invested in capital assets, net of related debt     (5,373,813 )   (6,611,918 )   (6,157,298 )
Restricted     5,246,663     4,640,370     2,239,532  
Unrestricted     (80,766,665 )   (25,220,993 )   (22,603,648 )
   
 
 
 
  Total net deficit   $ (80,893,815 ) $ (27,192,541 ) $ (26,521,414 )
   
 
 
 

    Capital Assets

        The City's investment in capital assets includes land and buildings, equipment, highways, bridges, traffic signals, street reconstruction, and parks (net of accumulated depreciation), which are detailed as follows:

 
  Governmental Activities
 
  2006
  2005
  2004
 
  (in millions)

Land   $ 968   $ 948   $ 761
Buildings     19,319     19,006     17,652
Equipment     1,393     1,574     2,289
Infrastructure     7,537     7,101     6,569
Construction work-in progress     2,954     2,054     2,688
   
 
 
Total   $ 32,171   $ 30,683   $ 29,959
   
 
 

        The net increase in the City's capital assets during fiscal year 2006 was $1.488 billion, a 4.9% increase. Capital assets additions in fiscal year 2006 were $4.982 billion, a decrease of $470 million from fiscal year 2005. Capital assets additions in the Education program totaling $988 million and total new construction work-in-progress (the majority of which are in the Education program) totaling $2.359 billion accounted for 67% of the capital assets additions in fiscal year 2006.

        The net increase in the City's capital assets during fiscal year 2005 was $724 million, a 2.4% increase. Capital assets additions in fiscal year 2005 were $5.451 billion, an increase of $393 million from fiscal year 2004. Capital assets additions in the Education program totaling $999 million and total new construction work-in-progress (the majority of which are in the Education program) totaling $1.707 billion accounted for 50% of the capital assets additions in fiscal year 2005.

    Debt Administration

        The City through the Controller's Office of Public Finance, in conjunction with the Mayor's Office of Management and Budget, is charged with issuing debt to finance the implementation of the City's capital

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program. The following table summarizes the debt outstanding for New York City and City-related issuing entities at the end of fiscal years 2006, 2005 and 2004.

 
  New York City and
City-Related Debt

 
  2006
  2005
  2004
 
  (in millions)

General Obligation Bonds(a)   $ 35,844   $ 33,903   $ 31,378
1991 General Resolution Bonds (MAC)             1,758
Future Tax Secured Bonds (TFA)     10,392     11,022     11,337
TSASC, Inc.     1,334     1,283     1,256
IDA Bonds     104     106     108
STAR Bonds     2,470     2,552    
FSC Bonds     387     460    
Revenue Bonds (ECF)     84     135     107
Recovery Bonds (TFA)     1,841     1,955     2,027
   
 
 
  Total bonds and notes payable     52,456     51,416     47,971
Less treasury obligations         39     51
   
 
 
  Outstanding debt   $ 52,456   $ 51,377   $ 47,920
   
 
 

(a)
Does not include capital contract liabilities.

    General Obligation

        On June 30, 2006, the City's outstanding General Obligations (GO) debt, including capital contract liabilities, totaled $39.7 billion (compared with $37.9 and $33.8 billion as of June 30, 2005 and 2004, respectively). The State Constitution provides that, with certain exceptions, the City may not contract indebtedness in an amount greater than 10% of the average full value of taxable real estate in the City for the most recent five years. As of June 30, 2006, the City's 10% general limitation was $53 billion (compared with $47 and $43 billion as of June 30, 2005 and 2004 respectively). The combined City and TSASC remaining GO debt incurring power as of June 30, 2006, after providing for capital contract liabilities, totaled $13.6 billion.

        As of June 30, 2006, the City's outstanding GO variable and fixed rate debt totaled $6.79 billion and $29.05 billion, respectively. During fiscal year 2006, the City's GO tax exempt daily and weekly variable rate debt averaged 2.974% and 3.031%, respectively. Of the $4.83 billion was issued to refund certain outstanding bonds and a total of $3.41 billion was issued for new money capital purposes. The proceeds of the refunding issues were placed in irrevocable escrow accounts in amounts sufficient to pay when due all principal, interest, and applicable redemption premium, if any, on the refunded bonds. The refunding produced debt service savings of $1.56 million, $92.20 million and $1.07 million in fiscal years 2006, 2007, and 2008, respectively. The refundings will generate approximately $91.16 million in net present value savings throughout the life of the bonds.

        In fiscal year 2006, a total of $585 billion of the bonds refunded were second advance refunding bonds, additional advance refunding capacity of $727 million was provided by the Governor of New York State, charged against the States limit for bonds designated as advance refunding bonds.

        A total of $180 billion of the $4.83 billion GO bonds issued during fiscal year 2006 were issued as taxable debt. The taxable debt issued in fiscal year 2006 was sold on a competitive bases.

        On May 22, 2006, Standard & Poor's (S&P) improved its rating on New York City General Obligation bonds from A+ to AA-. Moody's Investors Service (Moody's) maintained its rating on New York City General Obligation Bonds at A1. Fitch Ratings (Fitch) maintained its rating on New York City General Obligation debt at A+.

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    Short-term Financing

        In fiscal year 2006, the City had no short-term borrowings.

    TFA

        The New York City Transitional Finance Authority (TFA) is a separate legal entity, created by the New York State Legislature in 1997 in order to ease the constraints imposed by the City's debt limit. TFA was originally authorized to issue up to $7.5 billion of debt. In fiscal year 2000, this authorization was increased by $4 billion, allowing TFA a total debt incurring capacity of $11.5 billion. As of June 30, 2004, TFA had reached its debt limit and did not have the authority to issue new money bonds pursuant to this authorization. On July 26, 2006, the debt incurring authorization was increased by $2 billion to a total of $13.5 billion.

        TFA issued $597.24 million of refunding during fiscal year 2006. This refunding included $140.53 million of subordinate bonds. The refinancing produced debt service savings totaling $31.51 million. This refinancing will generate approximately $20.62 million in net present value savings throughout the life of the bonds.

        In September 2001, the New York State Legislature approved a special TFA authorization of $2.5 billion to fund capital and operating costs related to or arising from the events of September 11, 2001. The Legislature also authorized TFA to issue debt without limit as to principal amount, secured solely by state or federal aid received as a result of the disaster. To date, TFA issued $2 billion in Recovery Bonds pursuant to this authorization.

        In fiscal year 2006, the New York State Legislature authorized TFA to issue bonds and notes or other obligations in an amount outstanding of up to $9.4 billion to finance a portion of the City's educational facilities capital plan and authorized the City to assign to TFA all or any portion of the state aid payable to the City or its school district pursuant to section 3602.6 of the New York State Education Law. The City is expected to assign the building aid portion of the state aid to TFA for this purpose.

        TFA's fixed rate debt outstanding, including $74.3 million of recovery bonds, was $9.41 billion as of June 30, 2006. This amount includes $261 million of bonds economically defeased through previous refundings, but that remain legally as outstanding debt. TFA's variable rate debt outstanding, including recovery bonds, was $2.82 billion. During fiscal year 2006, TFA's tax exempt daily and weekly variable rate debt averaged 2.89% and 2.96%, respectively.

        In March 2005, S&P upgraded TFA's bonds from AA+ to AAA. Moody's upgraded its rating on TFA's senior lien bonds from Aa2 to Aa1. Fitch maintained its rating on TFA Bonds at AA+.

    TSASC

        TSASC is a special purpose, bankruptcy-remote local development corporation created pursuant to the Not-for-Profit Corporation Law of the State of New York. TSASC is authorized to issue bonds to purchase from the City its future right, title and interest under a Master Settlement Agreement (the MSA) between participating cigarette manufacturers and 46 states, including the State of New York.

        In February 2006, TSASC issued $1.35 billion of refunding bonds. The proceeds of the refunding issue were placed in irrevocable escrow accounts in amounts sufficient to pay when due all principal, interest, and applicable redemption premium, if any, on the refunded bonds. In connection with the refunding, certain Tobacco Settlement Revenues which had accumulated in a trapping account were released to TSASC free and clear of the lien of TSASC's original indenture. A portion of the refunding proceeds, $158.94 million, was used to pay off the outstanding balance on a Transportation Infrastructure Finance and Innovation Act of 1998 loan. As of June 30, 2006, TSASC had approximately $1.33 billion of bonds outstanding.

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        As of June 30, 2006, TSASC's bonds are rated BBB by both S&P and Fitch.

    Sales Tax Asset Receivable Corporation

        In May 2003, New York State statutorily committed $170 million of New York State Sales Tax receipts to the City in each fiscal year from 2004 through 2034. The Sales Tax Asset Receivable Corporation (STAR) was formed to securitize the payments and to use the proceeds to retire existing MAC debt, thereby expecting to save the City approximately $500 million per year for fiscal years 2004 through 2008.

        As of June 30, 2006, STAR has $2.47 billion bonds outstanding.

    Fiscal Year 2005 Securitization Corporation

        In fiscal year 2005, $498.85 million of taxable bonds were issued by the Fiscal Year 2005 Securitization Corporation, a bankruptcy-remote local development corporation, established to restructure an escrow fund that was previously funded with general obligation bonds proceeds. This restructuring resulted in a net present value of $49.84 million saving to the City.

        As of June 30, 2006, Fiscal Year 2005 Securitization Corporation has $386.6 million bonds outstanding.

    Interest Rate Exchange Agreements

        In an effort to lower its borrowing costs over the life of its bonds and to diversify its existing portfolio, the City has entered into several interest rate exchange agreements (swaps). The City received specific authorization to enter into these agreements, or swaps, under Section 54.90 of the New York State Local Finance Law. No new agreements were initiated in fiscal year 2006. As of June 30, 2006, the City's outstanding notional amount on various swap agreements was $3.05 billion.

    Subsequent Events

        Subsequent to June 30, 2006, the City and TFA completed the following long-term financing:

        On August 17, 2006, the City sold its Series A and B bonds of $850 million for refunding purposes.

        On October 16, 2006, TFA sold its Series A Federal Tax Secured bonds of $800 million for capital purposes.

    Commitments

        At June 30, 2006, the outstanding commitments relating to projects of the New York City Capital Projects Fund amounted to approximately $11.3 billion.

        To address the need for significant infrastructure and public facility capital investments, the City has prepared a ten-year capital spending program which contemplates New York City Capital Projects Fund expenditures of $55.8 billion over the remaining fiscal years 2007 through 2015. To help meet its capital spending program, the City borrowed $3.4 billion in the public credit market in fiscal year 2006.

    New York City Credit Ratings

        New York City's general credit rating by three prominent rating companies is as follows as of September 25, 2006:

            (i)    Standard & Poor's AA-. This rating means an obligor rated "AA" has very strong capacity to meet its financial commitments. It differs from the highest rated obligators only in small degree. The "-" sign indicates a lower ranking within this category.

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            (ii)   Moody's A1. This rating means issuers or issues rated "A" have present above-average creditworthiness relative to other US municipal or tax-exempt issuers or issues. The number "1" sign indicates a higher ranking within this category.

            (iii)  Fitch Ratings A+. "A" ratings means a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. The "+" sign indicates a higher ranking within this category.

These ratings are not a guarantee of solvency of New York City or a prediction as to future credit worthiness, which is particularly relevant in the case of leases that may continue, at the option of New York City, for a period of up to 49 years. These ratings may change at any time in the future.

    GTJ real property

        GTJ, a jointly-owned subsidiary of the Bus Companies, owns real property at 612 Wortman Avenue, Brooklyn, New York (the "Wortman Property") in fee simple. The Wortman Property consists of an industrial building of 27,250 square feet located on 10.389 acres. The Wortman Property is located along the entire block front surrounded by Wortman Avenue to the North, Cozine Avenue to the Sourth, Fountain Avenue to the East and Montauk Avenue to the West. An additional parcel made up of three tax lots is located along the entire block front bordered by Cozine Avenue, Milford Avenue, Flatlands Avenue and Logan Street. The Wortman Property is primarily leased to Varsity Bus Co., Inc. ("Varsity Bus") as a bus depot, which purchased certain bus routes and buses from the Bus Companies in 2003 (see "Related Party Transactions". Varsity has occupied a portion of the Wortman Property since 2003 based on an oral agreement, and has now entered into a written lease related to its tenancy. Under the lease, Varsity is leasing 195,813 square feet of outdoor parking and approximately 11,852 square feet of indoor maintenance and office space for $231,800 per year from September 2005 to January 2006 and for $311,800 per year from February 2006 to August 2006, increasing by the cost of living index from September 2006 to August 2010 through when the term ends. Varsity also pays a 60% share of utility and building maintenance costs. Varsity has the right to terminate the term on six months' notice at an earlier date. Varsity also has the right to lease the space for up to four–five year consecutive extension terms after 2010 at a rental rate equal to 90% of then fair market value at the beginning of the first extension term, with rent for following years at a compounding of annual CPI index increases. The balance of the Wortman Property is occupied by Transit Facility Management, Inc., a subsidiary of GTJ, as a bus depot. Transit Facility Management, Inc. operates a fleet of buses. Rent is accrued at the rate of approximately $150,000 per year at the present time for its use of the Wortman Property. Cushman and Wakefield has appraised the Wortman Property at $11,800,000.

        GTJ also owns real property at 23-85 87th Street, East Elmhurst, New York (the "87th Street Property") in fee simple. The 87th Street Property consists of a 52,020 square foot industrial building on 7.016 acres. The 87th Street Property is located on the block front bordered by 23rd Avenue to the North, 24th Avenue to the South, 87th Street to the West and 89th Street to the East in East Elmhurst, New York. The 87th Street Property is leased to Avis Rent-A-Car Systems, Inc. as an automobile leasing and maintenance depot under a lease dated October 31, 2003 with a term ending October 31, 2023, with a base rent of $1,800,000 per year. For the sixth, eleventh and sixteenth years, the base rent will be increased by the greater of 105% of the immediately preceding base rent or the cumulative cost of living index increase for the preceding five years but not in excess of 115% of the immediately preceding base rent. The initial base rent has been reduced to $1,530,000 per year until rezoning takes place at which time the initial base rent will be increased to $1,800,000 per year. Cushman and Wakefield has valued the 87th Street Property at $24,000,000.

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    No plans for renovation or improvement

        Our real properties were, and except for the 87th Street Property, currently are, used as bus depots. We have no plans or obligations to renovate or develop any of our present real properties.

    Financing

        At September 30, 2006, there was a mortgage on the GTJ real property for $2,500,000, under which $1,666,201 is outstanding with interest at the prime lending rate of the mortgagee which was 8.5% as of the last billing in October 2006. The Bus Companies also have a $4,000,000 revolving credit under which $495,000 was outstanding at September 30, 2006.

    Competitive Position

        We believe the Bus Companies' real properties are in a favorable competitive position, as we believe that there are not numerous sites in Queens and Brooklyn, New York that are suitable as bus depots or for the mass parking of automobiles.

    Insurance Coverage

        The Bus Companies' real properties are covered under an umbrella liability insurance policy providing for $10,000,000 of coverage. The Bus Companies also insure their real and personal property. We believe that the Bus Companies' insurance coverage is adequate in amount and coverage.

    Occupancy

        The Bus Companies' real properties are fully occupied. New York City is the sole tenant of four of the real properties, Avis Rent A Car is the sole tenant of the fifth real property, and Varsity Bus is the majority tenant of the sixth real property, the balance of which is occupied by GTJ's paratransit operations.

    Expiration of leases

        The New York City leases expire in 2026 and 2027 and the Avis Rent A Car lease expires in 2023. The only lease that expires in the next 10 years is the Varsity Bus lease which expires in 2010. Such lease represents approximately 11.79% of the Bus Companies' real property and approximately 3.18% of the Bus Companies' gross rental income.

    Depreciation

        The following table provides information on depreciation of the Bus Companies' real property:

Property

  Tax Basis
  Depreciation Method
  Remaining Life
147th Street and Rockaway Beach   $ 3,448,262   MACRS   20 years
24th Avenue   $ 1,993,628   MACRS   20 years
Guy Brewer   $ 2,520,674   MACRS   20 years
Wortman and 87th Street   $ 3,589,790   MACRS   20 years

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    Real property taxes

        The following table provides information on real property taxes of the Bus Companies' real property. We are not planning any improvements to any of the real property.

Property

  Tax Rate
  Annual Amount
147th Street   11.3060 % $ 390,115
Rockaway Beach   11.3060 % $   61,236
24th Avenue   11.3060 % $ 372,593
Guy Brewer   11.3060 % $ 154,895
Wortman   11.3060 % $ 117,350
87th Street   11.3060 % $ 362,560

    Certain Rental Data

        The following table sets forth certain rental data of the Bus Companies' real property. It should be noted that rentals include outdoor parking and indoor maintenance and office space. For purposes of the following, aggregate rent is divided by aggregate square footage used, since the leases do not differentiate between outdoor parking and indoor maintenance and office space. No data prior to 2006 is provided for the real properties leased to New York City since, for the previous five years, the same were used by the Bus Companies for their bus operations. No data prior to 2003 is provided for the 87th Street and Wortman properties, since prior to 2003, the same were used by the Bus Companies for their operations.

Property

  Rental Per Square Foot

   
147th Avenue (New York City)   2006—$9.7          5
Rockaway Beach (New York City)   2006—$4.5          8
24th Avenue (New York City)   2006—$9.2          1
Guy Brewer (New York City)   006—$7.52          2
Wortman (Varsity Bus lease only)   9/2003—8/2004—$1       .10
    9/2004—8/2005—$1       .10
    9/2005—1/2006—$1       .17
    2/2006—8/2006—$1       .50
87th Street (Avis Rent A Car)   2003—2006 average—$5.88

    Environmental Issues

        The Bus Companies' real property have had removal and replacement of underground tanks. Upon removal of the old tanks, any soil found to be unacceptable was heated off site to burn off contaminants. Fresh soil was brought in to replace the soil that was removed. There are still some levels of contamination at the sites, and some groundwater monitoring programs have been put into place. Closures of existing New York State Department of Environmental Control spill numbers may be warranted if it can be shown that the remaining degree of impact is non threatening and within acceptable levels. Each of the real properties is in a commercial zone and is still used as transit depots including maintenance of vehicles.

        The following apply to each of the Bus Companies' real properties:

    147th Avenue Property—twenty underground storage tanks ("USTs") were removed and two USTs were abandoned. Approximately 3,135 tons of soil were removed and some soil and groundwater contamination remains.

    Rockaway Beach Property—sixteen USTs were abandoned and there appears to be little soil contamination.

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    24th Avenue Property—11 USTs were removed and four USTs were abandoned. Approximately 1,461 tons of soil were removed. Some petroleum products remain in the soil and groundwater.

    Guy Brewer Property—10 USTs were removed and one UST was abandoned. Approximately 3,062 tons of soil were removed. Some petroleum products remain in the soil and groundwater.

    Wortman Property—thirty USTs were removed. Approximately 2,966 tons of soil were removed. Soil and groundwater contamination remains.

    87th Street Property—twenty-two USTs were removed and two USTs were abandoned. Approximately 5,635 tons of soil were removed. Soil and groundwater contamination remains.

        Each of these properties is being monitored by the New York State Department of Environmental Conservation ("DEC"). Sampling and reports are being periodically provided by the Bus Companies to DEC. The Bus Companies have reached the following understandings with DEC. At the request of DEC, the Bus Companies requested their environmental survey firm to formulate a Comprehensive Work Plan designed at one level, to monitor the Bus Companies' real properties for environmental conditions, and at another level to provide for remediation. The estimated cost for the first level of service is approximately $1.3 million and the estimated cost for the other level is an additional $1.3 million, a total of $2.6 million. The Bus Companies presented the Comprehensive Work Plan to DEC, and DEC and the Bus Companies are in the process of entering into stipulations binding the Bus Companies to follow the Comprehensive Work Plan with respect to the Bus Companies' real properties.

        While the Bus Companies do not anticipate liabilities beyond continuing tests and some additional soil removal, it is possible that material liabilities may result from past contamination. The Bus Companies are responsible for environmental cleanup issues other than those due to the conduct of their respective tenants. Based on conditions existing prior to the present tenancies, the Bus Companies believe that the aggregate clean up costs are approximately $1,300,000 to $2,600,000. A liability for remedial investigation and feasibility study has been recorded in the aggregate amount of $1,300,000.

        The tenants of the Bus Companies' real properties are responsible for environmental conditions which occur during their tenancies, based on the terms of their respective leases.

Outdoor maintenance and paratransit businesses

        The Bus Companies, through their commonly owned subsidiary, GTJ, operate a group of outdoor maintenance businesses and a paratransit business. The majority of these operations are based in the New York metropolitan area, with additional operations based in the Los Angeles, California and Phoenix, Arizona metropolitan areas. This group also includes a number of other subsidiaries which are inactive and have little or no assets. The active subsidiaries are described below.

    New York metropolitan area operations

        These operations include MetroClean Express Corp., Shelter Express Corp. Shelter Electric Maintenance Corp. and Transit Facility Management Corp.

    MetroClean Express Corp.

        MetroClean Express Corp. was founded in 1998 and has two major divisions, the outdoor advertising service division and the traffic control services division.

        The outdoor advertising service division provides services to outdoor advertising agencies for which we install and maintain bus shelters, urban panels, banners, murals, kiosks, automated pay toilets, video screens and information centers. The work provided under these contracts is for the installation and maintenance of these structures, as well as the posting of advertisements in their illuminated and nonilluminated display boxes.

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        The traffic control services division provides operation support to engineering and construction companies for which it protects road crews working on highways and roadways. With the use of safety barriers and vehicles equipped with protectors and attenuators, our crews secure work areas to allow contractors to conduct their services. Other aspects of this division are the installation of concrete barriers which provide protection and security on highways and buildings. In addition, this division owns and offers for lease bucket trucks, light towers, cargo vans, back-up trucks, display boards, arrow boards, concrete barriers, wooden barriers, man-lifts and under bridge inspection units.

    Shelter Express Corp.

        Shelter Express provided service to CBS Outdoor, which completed its contract with New York City for installation, maintenance and posting of all the bus shelters in the five boroughs of New York. A new contract was awarded to Cemusa USA ("Cemusa"), a Spanish corporation currently doing business in Miami, Boston and San Antonio. Cemusa is expected to replace the existing 3,200 New York City bus shelters, install over 330 newsstands and construct 20 automated pay toilets. On June 26, 2006, Shelter Express entered into an agreement with Cemusa to provide labor, equipment and supervision to service existing bus shelters throughout New York City. During the five year term, Shelter Express will maintain all shelters existing at the beginning of the term which are not subsequently removed. Removals are expected to begin in year 3 of the term and will be carried out for Cemusa by Shelter Express. Shelter Express is negotiating with Cemusa for the installation and maintenance of replacement shelters. There can be no assurance this latter agreement will be entered into, and Shelter Express does not believe a failure to enter into the same will be materially adverse to its present business.

    Shelter Electric Maintenance Corp.

        Shelter Electric Maintenance Corp. is a licensed electrical contractor which provides support services for the activities of MetroClean Express and Shelter Express and services other customers. Based on the growth and development of outdoor furniture advertising, Shelter Electric clients now also include Clear Channel Outdoor for electrification of bus shelters in Worchester County and wall hangings in malls and Titan Outdoor for outdoor kiosks, CBS Outdoor for urban panels.

    Los Angeles metropolitan area operations

        Shelter Clean, Inc. is based in Los Angeles, California. Shelter Clean was established in 2000 and provides support services for outdoor furniture advertisements to advertising agencies. Shelter Clean also engages in the installation, maintenance, posting repair and cleaning of bus shelters, kiosks and other related structures where additional displays are located. Shelter Clean's major contracts at the present time are with CBS Outdoor, JC DeCaux Outdoor, Van Wagner Outdoor, Orange County Transit Authority and the City of Los Angeles Department of Transportation. As part of its services Shelter Clean provides its customers with site selection and marking, permit acquisition and execution, sub-contractor liaison, assembly and installation, record keeping, cost analysis and inventory control. Its services include cleaning, trash containment, damage repair, graffiti removal, glass replacement, lighting repair and repainting.

    Phoenix area operations

        On May 1, 2006 Shelter Clean of Arizona, Inc. commenced outdoor maintenance operations in Phoenix, Arizona with a three year contract and the possibility of a two year extension option. This operation requires capital expenditures for leased premises and trucks and other equipment.

    Transit Facility Management Corp.

        Transit Facility Management Corp. ("TFM") is one of several private paratransit bus companies in New York City under contract to the Metropolitan Transit Authority as part of the joint plan between the

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Metropolitan Transit Authority and the New York City Department of Transportation to provide paratransit service. This service is provided by the Metropolitan Transportation Authority to comply with the Americans with Disabilities Act of 1990. TFM began operating paratransit service in October 2001, providing door-to-door public transportation service to people with disabilities unable to use conventional public transit services. The routes held by TFM include transit services in each of the five boroughs of New York City.

        Starting with a fleet of 50 vans in 2001 TFM has expanded and is now operating 95 vans and 5 sedans with approximately 208,000 service vehicle hours and carrying 303,000 passengers annually. The vans are purchased by the New York City Transit Authority and provided without charge to TFM. These vehicles provide seating capacity for 7 passengers and availability of up to three wheelchair passengers.

        The paratransit service is regulated by the New York City Transit Authority. Based on the need for this particular service for the disabled community, there is growth potential over the next several years. TFM's contract with the Metropolitan Transit Authority, as extended, expires on September 30, 2008.

    Employees

        Shelter Express, MetroClean and Shelter Electric had a total of 146 employees as of April 1, 2006, 122 of whom are union members. Transit Facility Management had 176 employees as of April 1 2006, 145 of whom are union members. Shelter Clean had 80 employees as of April 1, 2006, none of whom are union members. The union agreements expire between May 2006 for Shelter Electric while Shelter Express and Metro Clean expire in June 2007. TFM's labor contract expires in August 2007. The Company considers its relations with its employees to be good.

    Facilities

        Shelter Express, MetroClean and Shelter Electric share leased facilities of approximately 60,000 square feet in Long Island City, New York under a month to month lease providing for current rent of $225,000 per year. TFM occupies approximately one-third of the Wortman Property and pays approximately $150,000 in annual rent.

    Litigation

        The outdoor maintenance and paratransit businesses are presently not parties to any litigation except litigation in the ordinary course of their business, carrying no material liabilities for such businesses.

    Competition

        Each of the outdoor maintenance businesses faces substantial competition in its respective market. Competition is based on price and level of service. These companies compete with companies with greater financial and physical resources, including greater numbers of vehicles and other equipment. The Company believes that its outdoor services operations are significant in each market in which it operates as a percentage of all such services in the market.

    Appraisal

        The outdoor maintenance and paratransit operations have been appraised by Empire Valuation Consultants, LLC collectively at $5,800,000.

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REAL PROPERTY MANAGEMENT POLICIES

Introduction

        Following the Reorganization, we will have a portfolio of six rentable real properties, four of which are leased to New York City and one of which is leased to Avis Rent A Car, each under long-term triple net leases and one of which is leased to the purchasers of Varsity Bus, with the balance of such real property occupied by the GTJ's paratransit operations. We do not plan to sell any of these properties for at least 10 years, for tax reasons, and view them as (a) a source of current earnings and (b) a source of financing, which, together with financing we may desire to obtain through possible sales of our debt or equity securities, may be used to expand and diversify our real property operations.

        The following discussion assumes that we will develop a real property portfolio beyond the six real properties we will own upon the Reorganization and relates to such future real properties, although there can be no assurance that any of the same will be acquired.

Our real property investment objectives

        Our objective is to acquire quality real properties so we can provide our stockholders with:

    stable cash flow available for distribution;

    preservation and protection of capital; and

    growth of income and principal without taking undue risk.

        Additionally, we intend to:

    invest in income producing real property generally through equity investments in a manner which permits us to qualify as a REIT for federal income tax purposes; and

    Seek to realize capital appreciation upon the ultimate sale of the properties.

        We believe the following are key factors for our success in meeting our objectives.

Investing in real estate

        We will seek to acquire quality real properties at favorable prices rather than lesser real properties at low prices. We believe that quality tenants seek well-managed properties that offer superior and dependable services, particularly in competitive markets.

        We believe that a critical success factor in property acquisition lies in possessing the flexibility to move quickly when an opportunity presents itself to buy or sell a property. We believe that employing highly qualified industry professionals will allow us to better achieve this objective.

        We intend to acquire fee ownership of real properties, but may also enter into joint venture arrangements. We seek to maximize current and long-term net income and the value of our assets. Our policy is to acquire assets where we believe opportunities exist for reasonable investment returns.

        Decisions relating to the purchase or sale of properties will be made by our board of directors. Our board of directors is responsible for monitoring the administrative procedures, investment operations and performance of our company to ensure our policies are carried out. Our board of directors will review our investment policies to determine that our policies are in the best interests of our stockholders and will set forth their determinations in the minutes of the board meetings. You will have no voting rights with respect to implementing our investment objectives and policies, all of which are the responsibility of our board of directors and may be changed at any time.

72


Types of investments

        We intend to invest primarily in quality real properties. To the extent it is in the best interests of our stockholders, we will strive to invest in a geographically diversified portfolio of real properties that will satisfy our primary investment objectives of providing our stockholders with stable cash flow, preservation of capital and growth of income and principal without taking undue risk. Because a significant factor in the valuation of income-producing real property is the potential for future income, we anticipate that the majority of properties we acquire will have both the potential for growth in value and providing cash distributions to stockholders.

        We intend to acquire properties with cash and mortgage or other debt, we may also acquire properties for cash or shares of our common stock. On properties purchased on an all-cash basis, we may later incur mortgage indebtedness by obtaining loans secured by selected properties, if favorable financing terms are available. The proceeds from such loans would be used to acquire additional properties and increase our cash flow.

        We do not intend to incur aggregate indebtedness in excess of 75% of the gross fair market value of our real properties. Fair market value will be determined by an internal or independent certified appraiser and in a similar manner as the fair market determination at the time of purchase satisfactory to our board of directors.

Revolving Credit

        GTJ REIT is negotiating for a revolving credit loan to take effect upon the merger of the Bus Companies with subsidiaries of GTJ REIT. It is not anticipated that an agreement will be entered into prior to that point in time. The revolving credit loan may be secured by GTJ REIT's real properties, or the loan may be unsecured with a negative covenant on mortgaging to others. The amount being sought by GTJ REIT is approximately $72,500,000 with a term of three or more years, with payments to be of interest only prior to maturity. The loan proceeds may be used for the substantial portion of the cash payment to be made as part of the proposed distribution of earnings and profits by GTJ REIT, for working capital purposes and to bridge the acquisition of additional real properties until permanent financing can be obtained to replace the same.

Considerations related to possible acquisitions

        The following considerations will be evaluated by us in relation to potential purchases of real property:

    geographic location and type;

    construction quality and condition;

    potential for capital appreciation;

    the general credit quality of current and potential tenants;

    the potential for rent increases;

    the interest rate environment;

    potential for economic growth in the tax and regulatory environment of the community in which the property is located;

    potential for expanding the physical layout of the property;

73


    occupancy and demand by tenants for properties of a similar type in the same geographic vicinity;

    prospects for liquidity through sale, financing or refinancing of the property;

    competition from existing properties and the potential for the construction of new properties in the area; and

    treatment under applicable federal, state and local tax and other laws and regulations.

        We will not close the purchase of any property unless and until we obtain an environmental assessment, a Phase I review, for each real property purchased and are generally satisfied with the environmental status of the real property.

        We may also enter into arrangements with the seller or developer of a real property whereby the seller or developer agrees that if, during a stated period, the property does not generate a specified cash flow, the seller or developer will pay in cash to our company a sum necessary to reach the specified cash flow level, subject in some cases to negotiated dollar limitations.

        In determining whether to purchase a particular real property, we may obtain an option on such property. The amount paid for an option, if any, is normally surrendered if the real property is not purchased, and is normally credited against the purchase price if the real property is purchased.

        In purchasing real properties, we will be subject to risks, including:

    changes in general economic or local conditions;

    changes in supply of or demand for similar competing properties in an area;

    changes in interest rates and availability of permanent mortgage funds which may render the sale of a property difficult or unattractive;

    changes in tax, real estate, environmental and zoning laws;

    periods of high interest rates and tight money supply which may make the sale of properties more difficult;

    tenant turnover; and

    general overbuilding or excess supply in the market area.

        We anticipate that the purchase price of properties we acquire will vary depending on a number of factors, including size and location. In addition, our cost will vary based on the amount of debt we incur in connection with financing the acquisition. We may not be able to purchase a diverse portfolio of real properties unless we find sources of financing, since no funds are being raised in this offering. It is difficult to predict the actual number of properties that we will actually acquire because the purchase prices of properties varies widely and our investment in each will vary based on the amount and cost of leverage we use.

Real property acquisition

        We intend to acquire real properties through wholly-owned subsidiaries of our company. In addition to fee simple interests, we may acquire long-term ground leases. Other methods of acquiring a real property may be used when advantageous. For example, we may acquire properties through a joint venture or the acquisition of substantially all of the interests of an entity that in turn owns a parcel of real property.

74



        We are currently negotiating and anticipate entering into a $72.5 million revolving line of credit with a financial institution, which we plan to use to facilitate our acquisition opportunities, with the intention of placing permanent financing on the acquired property at a later date. We believe our line of credit will allow us to secure acquisition contracts faster after we identify a strategic property, and will be an attractive feature of our bids to sellers seeking to complete a sale quickly. We may also use our line of credit to pay required REIT distributions to our stockholders, as necessary. There is no assurance the line of credit can or will be obtained.

        We may commit to purchase real properties subject to completion of construction in accordance with terms and conditions specified by our board of directors. In such cases, we will be obligated to purchase the real property at the completion of construction, provided that (1) the construction conforms to definitive plans, specifications and costs approved by us in advance and embodied in the construction contract and (2) an agreed upon percentage of the real property is leased beforehand. We will receive a certificate of an architect, engineer or other appropriate party, stating that the real property complies with all plans and specifications. Our intent is to leave development risk with the developer.

        If remodeling is required prior to the purchase of a real property, we will anticipate paying a negotiated maximum amount either upon completion or in installments commencing prior to completion. Such amount will be based on the estimated cost of such remodeling. In such instances, we will also have the right to review the seller's books during and following completion of the remodeling to verify actual costs. In the event of substantial disparity between estimated and actual costs, an adjustment in purchase price may be negotiated.

        We are not specifically limited in the number or size of properties we may acquire or on the percentage of net proceeds of this offering which we may invest in a single property. The number and mix of properties we may acquire will depend upon real estate and market conditions and other circumstances existing at the time we are acquiring our real properties.

Joint ventures

        We may invest in general partnership and joint venture arrangements with other real estate investors. You should note that there is a potential risk that our company or its joint venture partner will be unable to agree on a matter material to the joint venture on joint venture decisions and we may not control the decision. Furthermore, we cannot assure you that we will have sufficient financial resources to exercise any right of first refusal that may be part of a partnership or joint venture agreement.

Our policies with respect to borrowing

        When we think it is appropriate, we will borrow funds to acquire or finance properties. We may later refinance or increase mortgage indebtedness by obtaining additional loans secured by selected properties, if favorable financing terms are available. We will use the proceeds from such loans to acquire additional properties for the purpose of increasing our cash flow and providing further diversification. We anticipate that aggregate borrowings, both secured and unsecured, will not exceed 75% of our real property fair market value. Our board of directors will review our aggregate borrowings to ensure that such borrowings are reasonable in relation to our net assets. We may also incur indebtedness to finance improvements to properties and, if necessary, for working capital needs or to meet the distribution requirements applicable to REITs under the federal tax laws.

        When incurring secured debt, we will seek to incur nonrecourse indebtedness, which means that the lenders' rights upon our default generally will be limited to foreclosure on the property that secured the obligation, but we may have to accept recourse financing, where we remain liable for any shortfall between the debt and the proceeds of sale of the mortgaged real property. If we incur mortgage indebtedness, we will endeavor to obtain level payment financing, meaning that the amount of debt service payable would be

75



substantially the same each year, although some mortgages are likely to provide for one large payment and we may incur floating or adjustable rate financing when our board of directors determines it to be in our best interest.

        Our board of directors controls our policies with respect to borrowing and may change such policies at any time without stockholder approval.

Sale or disposition of our real property

        Our board of directors will determine whether a particular real property should be sold or otherwise disposed of after consideration of the relevant factors, including performance or projected performance of the property and market conditions, with a view toward achieving our principal investment objectives.

        When appropriate to minimize our tax liabilities, we may structure the sale of a real property as a "like-kind exchange" under the federal income tax laws so that we may acquire qualifying like-kind replacement property meeting our investment objectives without recognizing taxable gain on the sale. Furthermore, our general policy will be to reinvest in additional real properties proceeds from the sale, financing, refinancing or other disposition of our real properties that represent our initial investment in such real property or, secondarily, to use such proceeds for the maintenance or repair of existing properties or to increase our reserves for such purposes. The objective of reinvesting such portion of the sale, financing and refinancing proceeds is to increase the total value of real estate assets that we own, and the cash flow derived from such assets to pay distributions to our stockholders.

        Despite this policy, our board of directors may determine to distribute to our stockholders all or a portion of the proceeds from the sale, financing, refinancing or other disposition of real properties. In determining whether any of such proceeds should be distributed to our stockholders, our board of directors will consider, among other factors, the desirability of real properties available for purchase, real estate market conditions and compliance with the REIT distribution requirements. Alternatively, our board of directors may determine not to make distributions of capital.

        In connection with a sale of a property, our preference will be to obtain an all-cash sale price. However, we may accept a purchase money obligation secured by a mortgage on the property as partial payment. There are no limitations or restrictions on our taking such purchase money obligations. The terms of payment upon sale will be affected by custom in the area in which the property being sold is located and the then economic conditions. To the extent we receive notes, securities or other property instead of cash from sales, such proceeds, other than any interest payable on such proceeds, will not be included in net sale proceeds available for distribution until and to the extent the notes or other property are actually paid, sold, refinanced or otherwise disposed of. Thus, the distribution of the proceeds of a sale to you as a stockholder, may be delayed until such time. In such cases, we will receive payments in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of years.

        A property may be sold before the end of the planned holding period if:

    in the judgment of our board of directors, the value of a property might decline substantially;

    an opportunity has arisen to improve other properties;

    we can increase cash flow through the disposition of the property; or

    in our judgment, the sale of the property is in our best interest.

        The determination of whether a particular property should be sold or otherwise disposed of will be made after consideration of the relevant factors, including prevailing economic conditions, with a view to

76



achieving maximum capital appreciation. We cannot assure you that this objective will be realized. The selling price of a property will be determined in large part by the amount of rent payable under the lease. If a tenant has a repurchase option at a formula price or if operating expenses increase without a commensurate increase in rent under our gross leases, we may be limited in realizing any appreciation. In connection with our sales of properties, we may lend the purchaser all or a portion of the purchase price. In these instances, our taxable income may exceed the cash received in the sale. The terms of payment will be affected by custom in the area in which the property being sold is located and the then-prevailing economic conditions.

        In addition to the above considerations, GTJ REIT does not intend to sell the real properties it would acquire from the Bus Companies for a period of 10 years after it makes a REIT election. Under current tax law, if a real property thus acquired is sold within such 10 year period, GTJ REIT would be taxed on the gain from the sale of such real property in the hands of the Bus Companies, and a distribution of any of the profits would be taxed to the stockholder as a dividend. This would result in the high and double taxation which the Bus Companies are seeking to reduce by engaging in the Reorganization.

Lease purchases

        To the extent consistent with our proposed REIT status, we may acquire long-term ground leases, or master leases for real property we can then sublet as determined by our board of directors.

Changes in our investment objectives

        Subject to the limitations in our charter, our bylaws and the Maryland General Corporation Law, or MGCL, the business and policies of our company will be controlled by our board of directors. Our board of directors has the right to establish policies concerning investments and the right, power and obligation to monitor our procedures, investment operations and performance of our company.

        Thus, prospective stockholders must be aware that the board of directors, acting consistently with our organizational documents, applicable law and their fiduciary obligations, may elect to modify or expand our objectives and policies from time to time.

Making loans and investments in mortgages

        We do not plan to make loans to other entities or persons unless secured by mortgages, although we may advance funds to GTJ. We will not make or invest in mortgage loans unless we obtain an appraisal concerning the underlying property from a certified independent appraiser. In addition to the appraisal, we will obtain a customary lender's title insurance policy or commitment as to the priority of the mortgage or condition of the title.

        We will not make or invest in mortgage loans on any one property if the aggregate amount of all mortgage loans outstanding on the property, including the loans of our company, would exceed an amount equal to 75% of the fair market value of the property, unless we find substantial justification due to the presence of other underwriting criteria.

Investment in securities

        We will not invest in equity securities of another entity, other than a wholly-owned subsidiary, directly or indirectly, unless our board of directors approves the investment as part of a real property investment. We may purchase our own securities if the board of directors determine such purchase to be in our best interests. We may in the future acquire some, all or substantially all of the securities or assets of other REITs or similar entities where that investment would be consistent with our investment policies and the REIT qualification requirements. There are no limitations on the amount or percentage of our total assets

77



that may be invested in any one issuer, other than those imposed by the gross income and asset tests that we must satisfy to qualify as a REIT. In any event, we do not intend that our investments in securities will require us to register as an "investment company" under the Investment Company Act, and we intend to divest securities before any registration would be required.

Distribution policy

        We cannot assure you that we will make distributions. In order to qualify as a REIT for federal income tax purposes, among other things, we are required to distribute each taxable year at least 90% of our net income, other than net capital gains but may be unable to do so.

        We will have a policy of generally making distributions on a quarterly basis. We will seek to avoid, to the extent possible, the fluctuations in distributions that might result if distribution payments were based solely on actual cash received during the distribution period. To implement this policy, we may use cash received during prior periods or cash received subsequent to the distribution period and prior to the payment date for such distribution payment, to pay annualized distributions consistent with the distribution level established from time to time by our board of directors. Our ability to maintain this policy will depend upon the availability of cash flow and applicable requirements for qualification as a REIT under the federal income tax laws. Therefore, we cannot assure you that there will be cash flow available to pay distributions or that distributions will not fluctuate. If cash available for distribution is insufficient to pay distributions to you as a stockholder, we may obtain the necessary funds by borrowing, issuing new securities or selling assets. These methods of obtaining funds could affect future distributions by increasing operating costs.

        To the extent that distributions to our stockholders are made out of our current or accumulated earnings and profits, such distributions would be taxable as ordinary dividend income. To the extent that our distributions exceed our current and accumulated earnings and profits, such amounts will constitute a return of capital to our stockholders for federal income tax purposes, to the extent of their basis in their stock, and thereafter will constitute capital gain.

78



SELECTED HISTORICAL FINANCIAL DATA
GTJ REIT, Inc.

        GTJ REIT, Inc. was formed on June 23, 2006 and as yet to commence operations. As a result, there is no historical financial data as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, 2003, 2002, and 2001 and as of September 30, 2006 and for the nine months ended September 30, 2006 and 2005.


SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
Green Bus Lines, Inc. and Subsidiary

        The following table summarizes certain historical consolidated financial data of Green Bus Lines, Inc. and Subsidiary, which you should read in conjunction with its financial statements and the related notes contained in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in this prospectus. The selected historical financial data as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003, have been derived from our audited consolidated financial statements at those dates and for those periods, contained elsewhere in this prospectus. The selected historical consolidated financial data as of December 31, 2003 and 2002 and for the years ended December 31, 2002 and 2001 have each been derived from our audited consolidated financial statements at that date and for that period, not contained in this prospectus. The selected historical consolidated financial data as of September 30, 2006 and 2005 are unaudited. For the nine month periods ended September 30, 2006 and 2005, all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of the interim consolidated financial statements, have been included. Results for the nine months ended September 30, 2006 and September 30, 2005 are not necessarily indicative of the results for the full year.

 
  Nine Months Ended
September 30,

  Year Ended December 31,
 
 
  2006
  2005
  2005
  2004
  2003
  2002
  2001
 
 
  (in thousands)
(unaudited)

  (in thousands)

 
Statement of Operations Data:                                            
Total revenues   $ 2,910   $   $   $   $   $   $  
   
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes   $ 2,088   $ (237 ) $ (317 ) $ (332 ) $ (357 ) $ (299 ) $ (294 )
Income tax expense     854     202     684     (239 )   548     38     314  
Equity in earnings (loss) of affiliated companies, net of tax     155     536     1,390     156     (2,499 )   (1,035 )   (483 )
   
 
 
 
 
 
 
 
Income (loss) from continuing operations     1,389     97     389     63     (3,404 )   (1,372 )   (1,091 )
   
 
 
 
 
 
 
 
Discontinued operations:                                            
  Income (loss) from discontinued operations, net of taxes     (9,049 )   786     1,338     398     1,380     1,116     832  
  Gain on sale of discontinued operations, net of taxes     8,269                          
   
 
 
 
 
 
 
 
Total income from discontinued operations     (780 )   786     1,338     398     1,380     1,116     832  
   
 
 
 
 
 
 
 
Net income (loss)   $ 609   $ 883   $ 1,727   $ 461   $ (2,024 ) $ (256 ) $ (259 )
   
 
 
 
 
 
 
 
 
   
  December 31,
 
  September 30,
2006

 
  2005
  2004
  2003
  2002
  2001
 
  (in thousands)
(unaudited)

  (in thousands)

Balance Sheet Data:                                    
Cash and cash equivalents   $ 6,893   $ 1,010   $ 3,189   $ 24   $ 22   $ 41
Assets from discontinued operations         9,955     8,462     15,063     36,892     34,676
Property and equipment, net     1,601     1,836     2,152     2,469     2,002     2,488
Total assets   $ 20,799   $ 28,161   $ 27,397   $ 26,360   $ 39,581   $ 37,843
Liabilities from discontinued operations   $   $ 15,702   $ 9,627   $ 17,033   $ 29,534   $ 21,171
Total liabilities   $ 4,795   $ 24,774   $ 21,135   $ 16,968   $ 29,541   $ 21,177

(1)
On November 29, 2005, the Company entered an agreement (the "Agreement") and subsequently closed on January 9, 2006, with the City of New York to buy, all of the Company's assets used in connection with the Company's bus operations. As a result of the Agreement and sale of bus assets, the operations of the bus operations are presented as discontinued operations in the accompanying consolidated financial statements for all periods presented.

79



SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
Triboro Coach Corporation and Subsidiaries

        The following table summarizes certain historical consolidated financial data of Triboro Coach Corporation and Subsidiaries, which you should read in conjunction with its financial statements and the related notes contained in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in this prospectus. The selected historical financial data as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003, have been derived from our audited consolidated financial statements at those dates and for those periods, contained elsewhere in this prospectus. The selected historical consolidated financial data as of December 31, 2003 and 2002 and for the years ended December 31, 2002 and 2001 have each been derived from our audited consolidated financial statements at that date and for that period, not contained in this prospectus. The selected historical consolidated financial data as of September 30, 2006 and 2005 are unaudited. For the nine month periods ended September 30, 2006 and 2005, all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of the interim consolidated financial statements, have been included. Results for the nine months ended September 30, 2006 and September 30, 2005 are not necessarily indicative of the results for the full year.

 
  Nine
Months Ended
September 30,

  Year Ended December 31,
 
 
  2006
  2005
  2005
  2004
  2003
  2002
  2001
 
 
  (in thousands)
(unaudited)

  (in thousands)

 
Statement of Operations Data:                                            
Total revenues   $ 1,853   $   $   $   $   $   $  
   
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes     1,382     (97 )   (130 )   (166 )   (170 )   (139 )   (137 )
Income tax expense     709     209     437     476     512     368     385  
Equity in earnings (loss) of affiliated companies, net of tax     155     536     1,390     156     (2,499 )   (1,035 )   (483 )
   
 
 
 
 
 
 
 
Income (loss) from continuing operations     829     230     823     (486 )   (3,181 )   (1,542 )   (1,005 )
   
 
 
 
 
 
 
 
Discontinued operations:                                            
Income (loss) from discontinued operations, net of taxes     (3,519 )   790     1,159     1,924     616     548     450  
Gain on sale of discontinued operations     7,207                          
   
 
 
 
 
 
 
 
Total income from discontinued operations     3,688     790     1,159     1,924     616     548     450  
   
 
 
 
 
 
 
 
Net income (loss)   $ 4,517   $ 1,020   $ 1,982   $ 1,438   $ (2,565 ) $ (994 ) $ (555 )
   
 
 
 
 
 
 
 
 
  September 30,
  December 31,
 
  2006
  2005
  2004
  2003
  2002
  2001
 
  (in thousands)
(unaudited)

  (in thousands)

Balance Sheet Data:                                    
Cash and cash equivalents   $ 1,698   $ 2,727   $ 2,887   $ 4   $   $ 7
Assets from discontinued operations         2,657     2,663     20,928     27,433     24,378
Property and equipment, net     1,791     1,882     2,007     2,169     1,242     1,334
Total assets   $ 18,540   $ 24,538   $ 24,319   $ 23,223   $ 28,824   $ 25,894
Liabilities from discontinued operations   $   $ 2,887   $ 2,748   $ 13,536   $ 16,850   $ 11,768
Total liabilities   $ 1,477   $ 13,487   $ 14,329   $ 13,779   $ 17,068   $ 11,987

(1)
On November 29, 2005, the Company entered an agreement (the "Agreement") and subsequently closed on February 20, 2006, with the City of New York to buy, all of the Company's assets used in connection with the Company's bus operations. As a result of the Agreement and sale of bus assets, the operations of the bus operations are presented as discontinued operations in the accompanying consolidated financial statements for all periods presented.

80



SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
Jamaica Central Railways, Inc. and Subsidiaries

        The following table summarizes certain historical consolidated financial data of Jamaica Central Railways, Inc. and Subsidiaries, which you should read in conjunction with its financial statements and the related notes contained in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in this prospectus. The selected historical financial data as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003, have been derived from our audited consolidated financial statements at those dates and for those periods, contained elsewhere in this prospectus. The selected historical consolidated financial data as of December 31, 2003 and 2002 and for the years ended December 31, 2002 and 2001 have each been derived from our audited consolidated financial statements at that date and for that period, not contained in this prospectus. The selected historical consolidated financial data as of September 30, 2006 and 2005 are unaudited. For the nine month periods ended September 30, 2006 and 2005, all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of the interim consolidated financial statements, have been included. Results for the nine months ended September 30, 2006 and September 30, 2005 are not necessarily indicative of the results for the full year.

 
  Nine Months Ended
September 30,

  Year Ended December 31,
 
 
  2006
  2005
  2005
  2004
  2003
  2002
  2001
 
 
  (in thousands)
(unaudited)

  (in thousands)

 
Statement of Operations Data:                                            
Total revenues   $ 1,196   $   $   $   $   $   $  
   
 
 
 
 
 
 
 
Income from continuing operations before income taxes     743     (123 )   (167 )   (170 )   (173 )   (87 )   78  
Income tax expense (benefit)     454     35     282     49     (10 )   124     78  
Equity in earnings (loss) of affiliated companies, net of tax     77     268     695     78     (1,249 )   (518 )   (241 )
   
 
 
 
 
 
 
 
Income (loss) from continuing operations     366     110     246     (141 )   (1,412 )   (729 )   (241 )
   
 
 
 
 
 
 
 
Discontinued operations:                                            
  Income (loss) from discontinued operations, net of taxes     (1,958 )   171     362     138     297     (92 )   136  
  Gain on sale of discontinued operations     3,775                          
   
 
 
 
 
 
 
 
Total income from discontinued operations     (1,817 )   171     362     138     297     (92 )   136  
   
 
 
 
 
 
 
 
Net income (loss)   $ 2,183   $ 281   $ 608   $ (3 ) $ (1,115 ) $ (821 ) $ (105 )
   
 
 
 
 
 
 
 
 
   
  December 31,
 
  September 30,
2006

 
  2005
  2004
  2003
  2002
  2001
 
  (in thousands)
(unaudited)

  (in thousands)

Balance Sheet Data:                                    
Cash and cash equivalents   $ 891   $ 176   $ 1,094   $ 93   $ 62   $ 392
Assets from discontinued operations         1,123     935     11,896     14,936     13,849
Property and equipment, net     1,614     1,733     1,793     514     514     514
Total assets   $ 9,707   $ 11,922   $ 11,831   $ 12,609   $ 15,928   $ 14,834
Liabilities from discontinued operations   $   $ 1,327   $ 1,259   $ 8,732   $ 11,281   $ 8,476
Total liabilities   $ 3,227   $ 8,917   $ 8,491   $ 8,758   $ 11,289   $ 8,543

(1)
On November 29, 2005, the Company entered an agreement (the "Agreement") and subsequently closed on January 30, 2006, with the City of New York to buy, all of the Company's assets used in connection with the Company's bus operations. As a result of the Agreement and sale of Acquired Assets, the operations of the Bus operations are presented as discontinued operations in the accompanying consolidated financial statements for all periods presented.

81



SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
GTJ Co., Inc. and Subsidiaries

        The following table summarizes certain historical consolidated financial data of GTJ Companies, Inc. and Subsidiaries, which you should read in conjunction with its financial statements and the related notes contained in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in this prospectus. The selected historical financial data as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003, have been derived from our audited consolidated financial statements at those dates and for those periods, contained elsewhere in this prospectus. The selected historical consolidated financial data as of December 31, 2003 and 2002 and for the years ended December 31, 2002 and 2001 have each been derived from our audited consolidated financial statements at that date and for that period, not contained in this prospectus. The selected historical consolidated financial data as of September 30, 2006 and 2005 are unaudited. For the nine month periods ended September 30, 2006 and 2005, all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of the interim consolidated financial statements, have been included. Results for the nine months ended September 30, 2006 and September 30, 2005 are not necessarily indicative of the results for the full year.

 
  Nine Months Ended
September 30,

  Year Ended December 31,
 
 
  (in thousands)
  (in thousands)
 
 
  2006
  2005
  2005
  2004
  2003
  2002
  2001
 
 
  (unaudited)

   
   
   
   
   
 
Statement of Operations Data:                                            
Total revenues   $ 25,355   $ 21,730   $ 29,496   $ 27,389   $ 21,998   $ 80,845   $ 77,980  
   
 
 
 
 
 
 
 
Operating income (loss)   $ (862 ) $ 1,606   $ 1,762   $ 2,140   $ 1,614   $ 1,158   $ 2,708  
Other income (expense)     1,545     49     1,155     (819 )   (246 )   (3,807 )   (2,520 )
   
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes     683     1,655     2,917     1,321     1,368     (2,649 )   188  
Income tax expense (benefit)     458     248     489     268     659     (174 )   1,353  
   
 
 
 
 
 
 
 
Income (loss) from continuing operations     225     1,407     2,428     1,053     709     (2,475 )   (1,165 )
   
 
 
 
 
 
 
 
Discontinued operations:                                            
  Income (loss) from discontinued operations     (21 )   (12 )   160     (326 )   (6,670 )        
   
 
 
 
 
 
 
 
Total income from discontinued operations     (21 )   (12 )   160     (326 )   (6,670 )        
   
 
 
 
 
 
 
 
Net income (loss)   $ 204   $ 1,395   $ 2,588   $ 727   $ (5,961 ) $ (2,475 ) $ (1,165 )
   
 
 
 
 
 
 
 
 
   
  December 31,
 
  September 30,
2006

 
  2005
  2004
  2003
  2002
  2001
 
  (in thousands)
(unaudited)

  (in thousands)

Balance Sheet Data:                                    
Cash and cash equivalents   $ 2,410   $ 3,130   $ 3,177   $ 3,114   $ 2,526   $ 2,406
Accounts receivable, net     6,253     4,439     4,594     3,843     3,637     6,758
Property and equipment, net     7,229     5,959     6,224     6,375     14,978     17,839
Total assets   $ 31,053   $ 30,350   $ 31,208   $ 28,585   $ 40,595   $ 45,069
Line of credit   $ 495   $ 200   $ 200   $   $ 3,000   $ 2,120
Notes payable     1,666     1,666     1,735     2,490     12,084     10,334
Total liabilities   $ 24,416   $ 23,921   $ 27,340   $ 24,436   $ 31,509   $ 33,528

82



SELECTED HISTORICAL FINANCIAL DATA
Command Bus Company, Inc.

        The following table summarizes certain historical financial data of Command Bus Company, Inc., which you should read in conjunction with its financial statements and the related notes contained in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in this prospectus. The selected historical financial data as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003, have been derived from our audited financial statements at those dates and for those periods, contained elsewhere in this prospectus. The selected historical financial data as of December 31, 2003 and 2002 and for the years ended December 31, 2002 and 2001 have each been derived from our audited financial statements at that date and for that period, not contained in this prospectus. The selected historical financial data as of September 30, 2006 and 2005 are unaudited. For the nine month periods ended September 30, 2006 and 2005, all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of the interim financial statements, have been included. Results for the nine months ended September 30, 2006 and September 30, 2005 are not necessarily indicative of the results for the full year.

 
  Nine Months Ended
September 30,

  Year Ended December 31,
 
 
  (in thousands)
  (in thousands)
 
 
  2006
  2005
  2005
  2004
  2003
  2002
  2001
 
 
  (unaudited)

   
   
   
   
   
 
Statement of Operations Data:                                            
Discontinued operations:                                            
  Income (loss) from discontinued operations, net of taxes   $ 186   $ (53 ) $ (1,647 ) $ (337 ) $ (287 ) $ (113 ) $ (42 )
  Gain on sale of discontinued operations             2,533                  
   
 
 
 
 
 
 
 
Income (loss) from discontinued operations     186     (53 )   886     (337 )   (287 )   (113 )   (42 )
   
 
 
 
 
 
 
 
Net income (loss)   $ 186   $ (53 ) $ 886   $ (337 ) $ (287 ) $ (113 ) $ (42 )
   
 
 
 
 
 
 
 
 
   
  At December 31,
 
  At September 30,
2006

 
  2005
  2004
  2003
  2002
  2001
 
  (in thousands)
(unaudited)

  (in thousands)

Balance Sheet Data:                                    
Total assets   $ 2,492   $ 5,023   $ 6,591   $ 7,195   $ 10,690   $ 8,826
Total liabilities   $ 2,337   $ 9,247   $ 10,341   $ 9,601   $ 12,681   $ 9,323

(1)
On November 29, 2005, the Company entered an agreement (the "Agreement") and subsequently closed on December 5, 2005, with the City of New York to buy, all of the Company's assets used in connection with the Company's bus operations. As a result of the Agreement and sale of Acquired Assets, the operations of the Bus operations are presented as discontinued operations in the accompanying financial statements for all periods presented.

83



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

GTJ REIT, Inc.

        GTJ REIT, Inc. was formed on June 23, 2006 and as yet to commence operations. As a result, there is no historical financial information as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003 and as of September 30, 2006 and the nine months ended September 30, 2006 and 2005.

Bus Companies

        Management's discussion and analysis of results of operations and financial condition should be read in conjunction with the consolidated financial statements and related notes contained elsewhere in this prospectus. The following discussion below includes Green, Triboro and Jamaica and their collectively owned affiliates Command and GTJ.

Overview

Operations in the recent past

        During the past several years, New York City had made public statements related to its termination of the franchises held by the Bus Companies and the incorporation of the bus routes into the Metropolitan Transit Authority operations. These statements became more frequent and more pointed. The franchise agreements, which had been renewed regularly over the past half-century, expired and were not renewed by New York City; however New York City continued to work with the Bus Companies on an ad hoc basis and under the threat of litigation then began to negotiate for the purchase of the Bus Companies' bus assets. The Bus Companies, in addition to owning the bus routes, owned depots which were stocked with various spare parts and employed both the drivers, mechanics and executive employees necessary to run the bus lines. The buses were owned by New York City and provided to the Bus Companies. Under their arrangement with New York City, the Bus Companies were reimbursed for expenses approved by New York City and in addition received a payment for the services rendered in managing the bus operations and the use of the depots.

Purchase of bus assets by New York City

        On November 29, 2005 an agreement (the "Sale Agreement") was entered into between the City and the Bus Companies and several of their subsidiaries.

        In accordance with the Sale Agreement, the Bus Companies agreed to sell to New York City all of their bus assets including routes, tangible personal property related to bus operations and goodwill. The total purchase price for the bus assets was $25,000,000 allocated as follows: Green—$10,822,000, Triboro—$9,487,000 and Jamaica—$4,691,000. These amounts include a reallocation of the $3,405,000 paid for the Command assets. Command is jointly owned by the Bus Companies. These sums were received upon the respective closing of the purchase of the assets of the Bus Companies, which occurred between December 2005 and February 2006. New York City also purchased spare parts and supplies at their invoiced value and other tangible assets at book value.

        In addition, upon the settlement of certain litigations, New York City will pay up to $500,000 to the Bus Companies in the following maximum amounts: Green—$216,440, Triboro—$189,740 and Jamaica—$93,820. These amounts include reallocation of the maximum sum to be paid to Command in the amount of $68,100.

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        New York City leased certain real property of the Bus Companies for use as bus depots, as follows:

    Triboro leased New York City its premises at 85-10 24th Avenue, East Elmhurst, NY for an initial term of 21 years, with a first year rent of $2,585,000 escalating to a 21st year rent of $3,785,000.

    Green leased New York City its premises at 165-25 147th Avenue, Jamaica, NY for an initial term of 21 years with a first year rent of $2,795,000 escalating to a 21st year rent of $4,092,000.

    Jamaica leased New York City its premises at 114-15 Guy Brewer Boulevard, Jamaica, New York for an initial term of 21 years with a first year rent of $1,515,000 escalating to a 21st year rent of $2,218,000.

        These leases are what are known as "triple net" leases. This means that the City has agreed to pay all expenses of the properties, including maintenance, insurance and taxes. Each lease has two renewal terms of 14 years each, so that the total term is a maximum of 49 years. The term of each lease commenced on the date that the Bus Company in question, closed the sale of its bus company assets to the City.

Green

    Results of Operations

        As a result of sale of Green's bus operations, all operations related to the bus operations have been reclassified as discontinued operations. The remaining operations of Green are related to the real properties owned and operated by Green and reflect the depreciation recorded on each of the buildings and leasehold improvements as well as Green's equity ownership in GTJ and Command.

    Nine Months Ended September 30, 2006 vs. Nine Months Ended September 30, 2005 (Unaudited)

        The following table sets forth results of operations of Green for the periods indicated:

 
  Nine Months Ended
September 30,

 
 
  2006
  2005
 
Operating revenue   $ 2,909,845   $  
   
 
 
Operating expenses:              
  General and administrative     606,394      
  Depreciation and amortization     215,643     237,692  
   
 
 
Total operating expenses     822,037     237,692  
   
 
 
Income (loss) from continuing operations before income taxes and equity in earnings (loss) of affiliated companies     2,087,808     (237,692 )
Provision for income taxes     854,361     202,419  
Equity in earnings of affiliated companies, net of taxes     155,820     536,641  
   
 
 
Net earnings (loss) from continuing operations     1,389,267     96,530  
Discontinued Operations:              
  (Loss) income from discontinued operations, net of taxes     (9,048,928 )   786,129  
  Gain on sale of discontinued operations, net of taxes     8,269,428      
   
 
 
Net Income   $ 609,767   $ 882,659  
   
 
 

    Operating Revenue

        Operating revenue for the nine months ended September 30, 2006 represents rental income from New York City for the recently signed leases for Green's real properties. There were none in the 2005 period.

85


    General and Administrative Expenses

        General and administrative expense for the nine months ended September 30, 2006 was $606,394 and was primarily related to $462,000 of environmental clean-up costs and professional fees and other expenses totaling $144,394. There were none in the 2005 period.

    Depreciation

        Depreciation expense for the nine months ended September 30, 2006 was $215,643, a decrease of $22,049 from the nine months ended September 30, 2005 depreciation expense of $237,692. Depreciation expense represents depreciation on Green's real properties.

    Provision for Income Taxes

        The provision for income tax represents federal, state, and local taxes on income before income taxes. Provision for income taxes for the nine months ended September 30, 2006 was $854,361, an increase of $651,942 from the nine months ended September 30, 2005 provision for income taxes of $202,419.

    Equity in Earnings of Affiliated Companies, Net of Taxes

        Equity in earnings of affiliated companies, net of tax was $155,820 for the nine months ended September 30, 2006, a decrease of $380,821 for the nine months ended September 30, 2005 which showed equity in earnings of affiliated companies, net of tax of $536,641. The decrease was related to increased earnings from Green's forty percent interest in Command totaling $95,950 offset by decreased earnings of $476,771 from Green's forty percent interest in GTJ.

    Income (Loss) From Discontinued Operations, Net of Taxes

        Income (loss) from discontinued operations reflect the operating results of Green's bus operations. Discontinued operations reflected a loss of $(9,048,928) for the nine months ended September 30, 2006 versus income of $786,129 for the nine months ended September 30, 2005. The increase in loss of discontinued operations of $9,835,057 is primarily related to increased professional fees and costs related to the Reorganization.

    Gain on Sale of Discontinued Operations, Net of Tax

        Gains on sale of discontinued operations reflect the gain on the sale of Green's bus operations to New York City in the 2006 period.

    Net Income (Loss)

        For the nine months ended September 30, 2006, Green had net income of $609,767 versus net income of $882,659 for the nine months ended September 30, 2005. The decrease in net earnings is primarily attributable to gain on the sale of Green's bus company operations to New York City.

    Year Ended December 31, 2005 vs. December 31, 2004 and December 31, 2004 vs. December 31, 2003

        The following table sets forth results of operations of Green for the periods indicated:

 
  Years Ended December 31,
 
 
  2005
  2004
  2003
 
Operating revenue   $   $   $  
   
 
 
 
Operating expenses:                    
  Depreciation and amortization     316,924     332,061     357,267  
   
 
 
 
    Total operating expenses     316,924     332,061     357,267  
   
 
 
 
Loss from continuing operations before income taxes, equity in (loss) earnings of affiliated companies     (316,924 )   (332,061 )   (357,267 )
Provision (benefit) for income taxes     684,089     (239,015 )   548,221  
Equity in earnings (loss) of affiliated companies, net of tax     1,389,712     156,196     (2,498,879 )
   
 
 
 
Income (loss) from continuing operations     388,699     63,150     (3,404,367 )
Discontinued operations:                    
  Income from discontinued operations, net of tax     1,338,269     398,285     1,380,793  
   
 
 
 
Net income (loss)   $ 1,726,968   $ 461,435   $ (2,023,574 )
   
 
 
 

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    Depreciation

        For 2005, depreciation and amortization expense decreased $15,137 to $316,924 from $332,061 in 2004. For 2004, depreciation and amortization decreased $25,206 to $332,061 from $357,267 income in 2003. Depreciation and amortization expense represents depreciation on the Green's owned real properties.

    Provision for Income Taxes

        The provision for income taxes represents federal, state, and local taxes on income before income taxes. For 2005, the provision for taxes increased $923,104 to $684,089 from $(239,015) in 2004. For 2004, the provision for income taxes decreased $787,236 to $(239,015) from $548,221 for 2003.

    Equity in Earnings (Loss) Of Affiliated Companies, Net of Tax

        For 2005, equity in earnings (loss) of affiliated companies, net of tax was $1,389,712, an increase of $1,233,516 from the 2004 equity in earnings (loss) of affiliated companies, net of tax was earnings of $156,196. The increase was related to increased earnings from Green's forty percent interest in GTJ totaling $744,332 and increased earnings from Green's forty-percent interest in Command totaling $489,184. For 2004, the equity in earnings (loss) increased $2,655,075 from a loss of $2,498,879 in 2003. The increase was related to increased earnings from Green's interest in GTJ totaling $2,675,116 offset by decreased earnings from Command totaling $20,041 in 2003.

    Income From Discontinued Operations

        Income from discontinued operations reflect the operating results of Green's bus operations. For 2005, discontinued operations reflected income of $1,338,269 an increase of $939,984 from $398,285 in 2004. The increase of $939,984 was primarily related to higher income tax expense recorded of $711,754 in 2004 compared to a tax benefit of $182,549 recorded in 2005. For 2004, income from discontinued operations decreased $982,508 from $1,380,793 in 2003. The decrease of $982,508 was primarily related to higher income tax expense recorded in 2004 of $711,754 compared to a tax benefit of $114,325 recorded in 2003.

    Net Income (Loss)

        For 2005, Green had net income of $1,726,968 compared to net income of $461,435 in 2004 and a net loss of $(2,023,574) in 2003. The changes were due to the factors discussed above.

Financial Position

    September 30, 2006 (Unaudited) vs. December 31, 2005

        Current assets decreased by $5,895,073 to $14,997,528 at September 30, 2006 from $20,892,601 at December 31, 2005, primarily due to decreases in assets from discontinued operations of $9,005,104 and decreases in prepaid expenses of $1,189,159, prepaid income taxes of $103,889, and amounts due from the City of New York for operating subsidies and injuries and damages totaling $90,000 which were offset by increases in cash and cash equivalents of $5,882,529.

        Deferred leasing commissions increased by $1,235,808 at September 30, 2006 from $0 at December 31, 2005, and was related to the real estate commission that Green paid for the negotiation of its lease that was entered into with New York City.

        Current liabilities decreased $8,350,898 to $4,795,020 at September 30, 2006 from $13,145,918 at December 31, 2005. The decrease was primarily related to a reduction in liabilities from discontinued operations of $6,543,796 most of which were assumed by the New York City as part of the sale of Green's

87


bus operations. This decrease was partially offset by increases in income tax payable of $3,717,484 and a decrease of deferred tax liability of $1,275,986.

    December 31, 2005 vs. December 31, 2004

        Current assets increased by $629,469 to $20,892,601 at December 31, 2005 from $20,263,132 at December 31, 2004, primarily due to increases in assets from discontinued operations of $2,587,286 and amounts due from the City of New York for operating subsidies and injuries and damages totaling $1,000,251, which were offset by decreases in cash of $2,179,045, which were offset by decreases in prepaid expenses and other current assets of $513,471 and deferred income tax assets of $296,265.

        Investment in affiliates increased to $795,094 at December 31, 2005 from $0 at December 31, 2004 which was primarily related to earnings from unconsolidated subsidiaries.

        Current liabilities decreased $739,458 to $13,145,918 at December 31, 2005 from $13,885,376 at December 31, 2004, primarily due to decreases in the amount due to City of New York of $1,628,824 and deferred tax liabilities of $384,120, which were offset by an increase in accounts payable of $760,056.

Cash Flows

Nine months ended September 30, 2006 vs Nine months ended September 30, 2005 (Unaudited)

        At September 30, 2006, Green had $6,892,780 in cash and cash equivalents, an increase of $3,560,690 as compared to the nine months ended September 30, 2005:

 
  Nine Months Ended
September 30,

 
 
  2006
  2005
 
Cash (used in) provided by operating activities   $ (5,016,648 ) $ 371,427  
Cash provided by (used in) investing activities     11,124,604     (3,205 )
Cash used in financing activities     (225,427 )   (225,427 )
   
 
 
Increase (decrease) in cash and cash equivalents   $ 5,882,529   $ 142,795  
   
 
 

    Operating Activities

        Cash used in operating activities of $5,016,648 for the nine months ended September 30, 2006 increased $5,388,075 versus $371,427 of cash provided by operating activities for the nine months ended September 30, 2005. For the nine months ended September 30, 2006, cash provided by operating activities was primarily related to the (i) net earnings from continuing operations of $1,389,267, (ii) decreases in prepaid expenses of $1,036,664, (iii) prepaid income taxes of $103,889, (iv) decreases in operating subsidies and other amounts due from the City of New York of $1,870,903, (vi) decreases in accounts payable of $3,038,468, decreases in other current liabilities of $10,316,998 These decreases were primarily offset by (i) a deferred income tax benefit of $188,284, (ii) provisions for injuries and damages claims of $2,470,155, (iii) equity earnings of affiliated companies of $155,820, (iv) an increase in prepaid real estate commission of $1,235,808, (v) an increase in income taxes payable of $4,045,152 (vi) cash flows provided by discontinued operations of $2,635,010.

        For the nine months ended September 30, 2005, cash provided by operating activities of $371,427 was primarily related to (i) net income from continuing operations of $96,530, (ii) increases in due from affiliates of $92,836, (iii) increase in prepaid expenses of $488,919, (iv) increase in prepaid income taxes of $165,550, and (v) increase in other current assets of $338,517. These changes were partially (i) equity earnings of affiliated companies of $536,641, (ii) decreases in operating subsidies and other amounts due from the City of New York of $793,198, and (iii) cash flows provided by discontinued operations of $1,348,785.

88



    Investing Activities

        Cash provided by investing activities of $11,124,604 for the nine months ended September 30, 2006 increased $11,127,809 versus $3,205 used in investing activities for the nine months ended September 30, 2005. The increase was primarily related to cash proceeds received from the sale of discontinued operation totaling $11,142,885.

    Financing Activities

        Cash used in financing activities was $225,427 for the nine months ended September 30, 2006 and 2005, and represents dividend payments made to shareholders.

Year Ended December 31, 2005 vs. December 31, 2004 and Year Ended December 31, 2004 vs. December 31, 2003

        At December 31, 2005, Green had $1,010,251, in cash and cash equivalents, a decrease of $2,179,045 from the year ended December 31, 2004. At December 31, 2004, Green had $3,189,296, in cash and cash equivalents, an increase of $1,153,839 from the year ended December 31, 2003. The change in cash and cash equivalents was as follows:

 
  For The Year Ended
December 31,

 
 
  2005
  2004
  2003
 
Cash (used in) provided by operating activities   $ (1,845,950 ) $ 1,267,334   $ 2,427,487  
Cash provided by (used in) investing activities     (32,525 )   (71,495 )   (844,049 )
Cash used in financing activities     (300,570 )   (42,000 )   (606,000 )
   
 
 
 
(Decrease) increase in cash and cash equivalents   $ (2,179,045 ) $ 1,153,839   $ 977,438  
   
 
 
 

    Operating Activities

        Cash used in operating activities for 2005 was $1,845,950 as compared with cash provided by operating activities in 2004 of $1,267,334, a difference of $3,113,284. For 2005, cash provided by operating activities of $2,911,154 was primarily related to (i) equity earnings of affiliated companies of $1,389,712, (ii) provisions for injuries and damages claims of $1,481,525, (iii) decreases in other assets of $956,959, (iv) decreases in operating subsidies and other amounts due from the City of New York of $463,379 and (v) cash used in discontinued operations of $4,757,104. These decreases in cash flow were partially offset by (i) the net earnings from continuing operations of $388,699, (ii) depreciation expense of $316,924, (iii) increases in prepaid income taxes of $57,115, (iv) increases in accounts payable of $310,522, (v) increases in income taxes payable of $316,344, and (vi) other current liabilities of $3,217,707 and (vii) cash used in discontinued operations of $4,757,104.

        For 2004, cash provided by operating activities of $1,267,334 was primarily related to (i) equity earnings of affiliated companies of $156,196, (ii) tax benefit of $460,847, (iii), provisions for injuries and damages claims of $2,540,414, (iv), decreases in operating subsidies and other amounts due from the City of New York of $4,140,920, (v) decrease in other assets of $8,617,933, and (iv) cash used in discontinued operations of $3,204,486. These changes were partially offset by (i) depreciation expense of $332,061, (ii) net amounts due to/from affiliates of $344,885, (iii) decrease in other current liabilities of $5,369,027 and (iv) cash used in discontinued operations of $3,204,486.

        For 2003, cash provided by operating activities of $2,427,487 was primarily related to (i) the net loss from continuing operations of $3,404,367, (ii) increases in prepaid income taxes of $164,972, (iii) net amounts due from affiliates of $362,976, and (iv) increases in operating subsidies and other amounts due from the City of New York of $2,067,580. These increases were partially offset by (i) equity loss of affiliated companies of $2,498,879, (ii) depreciation expense of $357,267, (iii) decrease in deferred operating

89


assistance, of $3,025,824, (iv) decrease in accounts payable of $988,434, and (v) cash provided by discontinued operations of $3,938,881.

    Investing Activities

        Cash used in investing activities of $(32,525) for 2005 decreased $38,970 versus cash used in investing activities at $(71,495) for 2004. For 2004, cash used in operating activities decreased $772,554 from $844,049 in 2003. For 2004, cash used in investing activities was primarily related to capital expenditures of $63,808. For 2003, cash used in investing activities was primarily related to amounts due from affiliates of $961,518 offset by increase in restricted cash of 623,400 partially offset by net sales of investments of $793,405.

    Financing Activities

        Cash used in financing activities of $300,570 for 2005 increased $258,570 versus $42,000 for 2004. For 2004, cash used in financing activities decreased $564,000 from $606,000 in 2003. Cash used in financing activities in 2005 related to the payment of dividends. The 2004 amount related to the repurchase of Green stock and in 2003, amount related to the repurchase of Green stock and the change in notes payable of $300,570.

        The Company is restating its previously issued consolidated balance sheets, consolidated statements of operations, and cash flows for the years ended December 31, 2005, 2004, and 2003. The restatement relates to the reclassification of certain assets and liabilities from discontinued operations to continuing operations. The restatement results in the following charges to the Company's balance sheet, statement of

90



operations and cash flows for the years ended December 31, 2005, 2004, and 2003. The restatement did not change net income (loss) for any of the periods presented.

 
  2005
Consolidated Balance Sheet

  As Reported
  As Restated
Current Assets:            
  Cash and cash equivalents   $ 4,347   $ 1,010,251
  Operating subsidies receivable         1,864,419
  Current portion of operating subsidies receivable injuries and damages withholding         601,970
  Due from the City of New York         694,760
  Prepaid expenses and other current assets     220,645     1,198,969
  Assets from discontinued operations-current portion     15,014,460     9,005,104
  Deferred income taxes     593,680     1,457,659

Non-current assets:

 

 

 

 

 

 
Property and equipment, net   $ 1,517,413   $ 1,835,515
Assets of discontinued operation     4,956,210     950,262
Available for sale securities         756,347
Restricted cash         741,488
Operating subsidies receivable injuries and damages withholding         2,122,649
Other assets         67,362

Current Liabilities:

 

 

 

 

 

 
  Accounts payable   $ 25,539   $ 3,052,367
  Due to City of New York         1,397,000
  Current liabilities from discontinued operation     12,585,822     6,543,796
  Deferred tax liability     75,019     1,423,194
  Other current liabilities     6,000     276,023

Other Liabilities:

 

 

 

 

 

 
  Personal injury and property damage claim         2,470,157
  Liabilities from discontinued operation     11,628,193     9,158,036

91


 
  2005
Consolidated Statement of Operations

  As Reported
  As Restated
Income (loss) from continuing operations   $ 773,469   $ 388,699
Discontinued operations:            
  Income from operations of discontinued operation,net of taxes     953,499     1,338,269
   
 
Net Income   $ 1,726,968   $ 1,726,968
   
 
Consolidated Statement of Cash Flows

  As Reported
  As Restated
 
Net cash (used in) provided by operating activities   $ (2,237,712 ) $ 2,911,154  
Net cash provided by (used in) investing activities     359,237     (32,525 )
Net cash (used in) financing activities     (300,570 )   (300,570 )
Cash flows from discontinued operations         (4,757,104 )
 
  2004
Consolidated Balance Sheet

  As Reported
  As Restated
Current Assets:            
  Cash and cash equivalents   $ 11,490   $ 3,189,296
  Operating subsidies receivable         197,934
  Current portion of operating subsidies receivable injuries and damages withholding         1,268,204
  Due from the City of New York         574,971
  Prepaid expenses and other current assets     213,494     1,712,440
  Assets from discontinued operations-current portion     14,489,533     6,417,818
  Deferred income taxes     400,070     1,753,924
Non-current assets:            
Property and equipment, net   $ 1,753,619   $ 2,152,439
Assets of discontinued operation     5,379,844     1,426,427
Available for sale securities         764,331
Restricted cash         712,069
Operating subsidies receivable injuries and damages withholding         2,044,031
Other assets         34,166
Current Liabilities:            
  Accounts payable   $ 4,500   $ 2,292,311
  Due to City of New York         3,025,824
  Current liabilities from discontinued operation     13,611,688     6,311,164
  Deferred tax liability     72,588     1,807,314
  Other current liabilities     8,054     260,217
Other Liabilities:            
Personal injury and property damage claim         3,933,786
Liabilities from discontinued operation     7,250,112     3,316,326
Consolidated Statement of Operations

  As Reported
  As Restated
Income (loss) from continuing operations   $ (256,090 ) $ 63,150
Discontinued operations:            
  Income from operations of discontinued operation,net of taxes     717,525     398,285
   
 
Net Income   $ 461,435   $ 461,435
   
 
Consolidated Statement of Cash Flows

  As Reported
  As Restated
 
Net cash provided by operating activities   1,266,636   4,558,225  
Net cash (used in) investing activities   (70,797 ) (71,495 )
Net cash(used in) financing activities   (42,000 ) (42,000 )
Cash flows from discontinued operations     (3,290,891 )

92


 
  2003
 
Consolidated Statement of Operations

 
  As Reported
  As Restated
 
Income (loss) from continuing operations   $ (3,345,994 ) $ (3,404,367 )
Discontinued operations:              
  Income from operations of discontinued operation,net of taxes     1,322,420     1,380,793  
   
 
 
Net (loss)   $ (2,023,574 ) $ (2,023,574 )
   
 
 
Consolidated Statement of Cash Flows

  As Reported
  As Restated
 
Net cash provided by (used in) operating activities   $ 2,427,487   $ (1,511,394 )
Net cash (used in) investing activities     (844,049 )   (844,049 )
Net cash (used in) financing activities     (606,000 )   (606,000 )
Cash flows from discontinued operations         3,938,881  

Triboro

        As discussed above, as a result of the sale of Triboro's bus routes, all operations related to the bus operations has been reclassified to discontinued operations. The remaining operations of Triboro are related to the real property owned and operated by Triboro and reflect the depreciation recorded on the building and leasehold improvements, as well as Triboro's equity ownership in GTJ and Command.

Results of Operations

    Nine Months ended September 30, 2006 vs. Nine Months ended September 30, 2005 (Unaudited)

        The following table sets forth results of operations of Triboro for the periods indicated:

 
  Nine Months Ended
September 30,

 
 
  2006
  2005
 
Operating revenue   $ 1,852,717   $  
   
 
 
Operating expenses:              
  General and administrative     354,045      
  Depreciation and amortization     116,391     96,922  
   
 
 
    Total operating expenses     470,436     96,922  
   
 
 
Income (loss) from continuing operations before income taxes and equity in earnings (loss) of affiliated companies     1,382,281     (96,922 )
Provision for income taxes     709,005     209,440  
Equity in earnings of affiliated companies, net of taxes     155,820     536,641  
   
 
 
Income from continuing operations     829,096     230,279  
Discontinued operations:              
  Income (loss) from discontinued operations, net of taxes     (3,519,457 )   790,332  
  Gain on sale of discontinued operations, net of taxes     7,207,363      
   
 
 
Net income   $ 4,517,002   $ 1,020,611  
   
 
 

    Operating Revenue

        Operating revenue for the nine months ended September 30, 2006 represents rental income under the leases from New York City for Triboro's real property. There were none in the 2005 period.

93


    General and Administrative Expenses

        General and administrative expenses for the nine months ended September 30, 2006 were $354,045 and was primarily related to $231,000 of environmental clean-up costs and professional fees and other expenses totaling $123,045. There were none in the 2005 period.

    Depreciation

        Depreciation expense for the nine months ended September 30, 2006 was $116,391, an increase of $19,469 from the nine months ended September 30, 2005 depreciation expense of $96,922. Depreciation expense represents depreciation on the Triboro's real property.

    Provision for Income Taxes

        The provision for income tax represents federal, state, and local taxes on earnings before income taxes. Provision for income taxes for the nine months ended September 30, 2006 was $709,005, an increase of $431,331 from the nine months ended September 30, 2005 provision for income taxes of $209,440.

    Equity in Earnings of Affiliated Companies, Net of Taxes

        Equity in earnings of affiliated companies, net of tax was $155,820 a decrease of $380,821 from the nine months ended September 30, 2005 which showed equity in earnings of affiliated companies, net of tax of $536,641. The increase was related to increased earnings from Triboro's forty percent interest in Command totaling $95,950 offset by decreased earnings of $380,821 from Green's forty percent interest in GTJ.

    Income (Loss) From Discontinued Operations, Net of Taxes

        Income (loss) from discontinued operations reflect the operating results of Triboro's bus operations. Discontinued operations reflected a loss of $3,519,457 for the nine months ended September 30, 2006 versus a gain of $790,332 for the nine months ended September 30, 2005. The increase of $4,309,789 is primarily related to increased professional fees and costs related to the Reorganization.

    Gain on Sale of Discontinued Operations, Net of Taxes

        Gains on sale of discontinued operations of $7,207,363 reflects the gain on the sale of Triboro's bus operations to New York City.

    Net Income

        For the nine months ended September 30, 2006, Triboro had net income of $4,517,002 versus net income of $1,020,611 for the nine months ended September 30, 2005. The increase in net income is primarily attributable to the gain on the sale of Triboro's bus operations to New York City.

94


Results of Operations

Year Ended December 31, 2005 vs. December 31, 2004 and December 31, 2004 vs. December 31, 2003

        The following table sets forth results of operations of Triboro for the periods indicated:

 
  Years Ended December 31,
 
 
  2005
  2004
  2003
 
Operating revenue and subsidies   $   $   $  
   
 
 
 
Operating expenses:                    
  Depreciation and amortization     129,864     165,792     170,242  
   
 
 
 
    Total operating expenses     129,864     165,792     170,242  
   
 
 
 
Loss from continuing operations before income taxes and equity in earnings (loss) of affiliated companies     (129,864 )   (165,792 )   (170,242 )
Provision for income taxes     436,307     476,124     512,510  
Equity in earnings (loss) of affiliated companies, net of tax     1,389,712     156,196     (2,498,879 )
   
 
 
 
Income (loss) from continuing operations     823,541     (485,720 )   (3,181,631 )
Discontinued Operations:                    
  Income from discontinued operations, net of tax     1,159,012     1,923,690     616,199  
  Gain on sale of discontinued operations, net of tax              
   
 
 
 
Net income (loss)   $ 1,982,553   $ 1,437,970   $ (2,565,432 )
   
 
 
 

    Depreciation

        For 2005, depreciation and amortization expense decreased $35,928 to $129,864 from $165,792 in 2004. For 2004, depreciation and amortization decreased $4,450 from $170,242 in 2003. Depreciation and amortization expense represents depreciation on Triboro's real property.

    Provision for Income Taxes

        The provision for income taxes represents federal, state, and local taxes on earnings before income taxes. For 2005, the provision for taxes decreased $39,817 to $436,307 from $476,126 in 2004. For 2004, the provision for income taxes decreased $36,336 from $512,510 in 2003.

    Equity in Earnings (Loss) Of Affiliated Companies, Net of Tax

        Equity in earnings of affiliated companies in 2005, net of tax was $1,389,712, an increase of $1,233,516 from the 2004 equity earnings of affiliated companies, net of tax of $156,196. The increase was related to increased earnings from Triboro's forty percent interest in GTJ totaling $639,578 offset by decreased earnings of $204,868 from Triboro's forty percent interest in Command. For 2004, equity in earnings (loss) increased $2,655,075 from a loss of $2,498,879 in 2003. The increase was related to increased earnings from Triboro's interest in GTJ totaling $2,675,116 offset by decreased earnings from Command totaling $20,041.

    Income (Loss) From Discontinued Operations

        Income (loss) from discontinued operations reflect the operating results of Triboro's bus operations. For 2005, discontinued operations reflected a gain of $1,159,012, a decrease of $764,678 from income of $1,923,690 in 2004. The decrease of $764,678 was primarily related to an increase in the operating subsidy. For 2004, income from discontinued operations increased $1,307,491 from $616,199 in 2003. The increase of $1,307,491 was primarily related to an increase in the operating subsidy.

    Net Income (Loss)

        For 2005, Triboro had net income of $1,982,553 compared to $1,437,970 in 2004 and a net loss of $2,565,432 in 2003. The changes were due to the factors discussed above.

95


Financial Position

    September 30, 2006 (Unaudited) vs. December 31, 2005

        Current assets decreased by $4,668,420 to $11,752,188 September 30, 2006 from $16,420,608 at December 31, 2005, primarily due to (i) decreases in assets from discontinued operations of $2,403,276, decreases in other receivables of $32,446, (ii) decreases in prepaid expenses of $1,648,821, (iii) decreases in prepaid income taxes of $481,007, and a decrease in cash of $1,029,029. These decreases were partially offset by (i) increases in operating subsidies and other amounts due from the City of New York of $482,537 and (ii) increases in amounts due from affiliates of $964,893.

        Deferred leasing commissions increased by $815,524 at September 30, 2006 from $0 at December 31, 2005, which was related to the real estate commission that Triboro paid for the negotiation of its lease that was entered into with New York City.

        Current liabilities decreased $7,808,214 to $1,476,709 at September 30, 2006 from $9,284,923 at December 31, 2005. The decrease was primarily related to (i) decrease in liabilities from discontinued operations of $2,880,754, (ii) decrease in accounts payable of $2,629,950, and (iii) decrease in deferred operating assistance of $2,310,150.

    December 31, 2005 vs. December 31, 2004

        Current assets increased by $1,791,596 to $16,420,608 at December 31, 2005 from $14,629,012 at December 31, 2004 primarily due to (i) increases in assets from discontinued operations of $105,586 and (ii) increases in prepaid income taxes of $471,236, (iii) increase in operating subsidies and other amounts due from the City of New York of $2,200,154, and (iv) increases in prepaid expenses and other assets of $323,061 partially offset by a decrease in the net amounts due from affiliates of $851,828 and deferred income taxes of $330,904.

        Investment in affiliates increased by $795,094 at December 31, 2005 from $— at December 31, 2004, primarily related to earnings from unconsolidated subsidiaries.

        Current liabilities increased $1,330,565 to $9,284,923 at December 31, 2005 from $7,954,358 at December 31, 2004. This increase was primarily related to (i) the liabilities from discontinued operations of $133,185, (ii) income taxes payable of $95,523, and (iii) accounts payable of $1,541,204, partially offset by a decrease in (i) deferred operating assistance of $247,516, and (ii) other current liabilities of $194,452.

Cash Flows

    Nine Months Ended September 30, 2006 vs Nine Months Ended September 30, 2005 (unaudited)

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