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 and 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.

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.

We may have to spinoff our taxable REIT subsidiaries.

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

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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.

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.

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 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 thus 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 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;

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·        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.

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 these sites.

Discovery of previously undetected environmentally hazardous conditions at our real properties may decrease 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

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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.

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.

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.

Our outdoor maintenance businesses and paratransit business depend on large direct or indirect municipal contracts and require substantial capital.

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.

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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.

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 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.

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,

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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 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

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

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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 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 through the 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.

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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.

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 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.

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 several years, will increase the amount of our debt payments and 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

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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 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.

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;

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·        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.

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 1000 th  of a share of our Series A preferred stock for $50.00 which is convertible into 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.

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 statue (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 “Important Provisions of Maryland Law and Our Charter and Bylaws.”

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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.

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.

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.

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 were 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 addition, upon the conclusion of certain litigations, New York City may 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 Bus Company, Inc. in the amount of $68,100. It is highly probable that the actual payments will aggregate substantially less than $500,000. 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. 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.

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

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City agreed to offer employment to the employees of the Bus Companies, most of whom accepted such offer.

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 24 th  Avenue, East Elmhurst, NY for an initial term of 21 years, with a first year rent of $2,585,000 escalating to a 21 st  year rent of $3,785,000.

·        A Green subsidiary leased New York City its premises at 165-25 147 th  Avenue, Jamaica, NY for an initial term of 21 years with a first year rent of $2,795,000 escalating to a 21 st  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 21 st  year rent of $886,000.

·        A Jamaica subisdiary 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 21 st  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.

The Bus Companies have classified their assets related to their former bus businesses as “discontinued” on their balance sheets. At June 30, 2006, these were as follows. Green - $16,634,728, Triboro - $11,049,145, Jamaica - $4,419,447 and Command - $ 3,179,665. Details on these amounts may be found at Note 3 to their respective financial statements, entitled “Discontinued Operations” in the financial statements beginning on page F-1.

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

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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 66 2 ¤ 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.

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·        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 13,769,122 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.

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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):

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 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

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would designate Shelter Express as a TRS (“Opco Holdco”) before the mergers and transfer to it all of its non-real estate subisidiares (“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 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.

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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.

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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

 

 

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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

 

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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

 

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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.

 

Real Estate

 

 

 

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GTJ Co., Inc.

Valuation Summary

Business Value(1)		$	5,800,000
Real Estate(2)
23-85 87 th  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 49 th  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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PRO FORMA 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. 

There are a group of shareholders who commonly own more than 52.7% of Green, 54.4% of Triboro, and 62.5% of Jamaica. The Reorganization will be accounted for as combination of entities under the common control and are recorded at the historical basis of the entities as of the date acquired by the Company, The  unaudited condensed historical combined balance sheet at June 30, 2006 included herein includes the combination of Bus Companies, Command Bus Company, Inc, (“Command”), and GTJ Co., Inc. (“GTJ”) which the Company anticipates  will be materially consistent with the Company’s presentation of its actual consolidated balance sheet after the consummation of the Reorganization.

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

The unaudited pro forma condensed historical combined statements of operations for each of the years ended December 31, 2005, 2004 and 2003, combine the historical consolidated statements of operations of the Bus Companies and GTJ and the financial statements of Command for each such year, which financial statements are included elsewhere in this prospectus, and (2) reflects the combination of such companies during a period of common control, which we anticipate will be materially consistent with our presentation of consolidated statements of earnings after the consummation of the Reorganization.

The unaudited pro forma consolidated financial statement information is based on, and should be read together with the financial statements as of June 30, 2006 (unaudited) and for the six months ended June 30, 2006 and 2005 (unaudited) and for the years ended December 31, 2005, 2004 and 2003, which are found elsewhere in this prospectus.

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

		GTJ REIT Historical				Green Historical				Triboro Historical				Jamaica Historical				GTJ Companies and Subsidiaries				Command Bus Lines, Inc.				Intercompany Adjustment				Total		Proforma Adjustments				GTJ REIT, Inc.
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$—				$   1,273				$    737				$    650				$ 4,310				$    —				$        —			$   6,970			10,000	(c)			$   4,527
																																	(20,000	)(b)
																																	8,313	(d)
																																	(756	)(d)
Accounts receivable			—				—				—				—				4,601				—				—			4,601							4,601
Due from bus companies			—				461				461				54				—				—				(976	)(a)		—			—				—
Due from affiliated companies			—				4,584				4,476				2,853				1,460				764				(14,137	)(a)		—			—				—
Assets from discontinued operations			—				14,674				7,258				2,831				791				2,416				—			27,970			(8,313	)			19,657
Prepaid expenses and other assets			—				684				—				177				3,593				—				—			4,454			—				4,454
Total current assets			—				21,676				12,932				6,565				14,755				3,180				(15,113	)		43,995			(10,756	)(c)			33,239
PROPERTY AND EQUIPMENT:
Property and equipment, net			—				1,409				976				514				6,738				—				—			9,637			—				9,637
Restricted cash			—				—				—				—				3,690				—				—			3,690							3,690
Assets from discontinued operations			—				1,961				3,791				1,589				319				—				—			7,660			—				7,660
Investments in affiliated companies			—				1,247				1,247				623				—				—				(3,117	)(a)		—			—				—
Prepaid real estate commission			—				1,251				825				608				—				—				—			2,684							2,684
Securities available for sale			—				—				—				130				1,048				—				—			1,178			—				1,178
Goodwill			—				—				—				—				4,190				—				—			4,190			—				4,190
Other assets			—				285				162				111				975				—				—			1,533			—				1,533
Total			$—				$ 27,829				$19,933				$10,140				$31,715				$3,180				$(18,230	)		$ 74,567			$(10,756	)			$ 63,811
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable			$—				$        —				$      —				$      —				$    803				$    —				$        —			$      803			$        —				$      803
Line of credit			—				—				—				—				495											495			10,000	(c)			10,495
Note payable			—				—				—				—				1,666				—				—			1,666			—				1,666
Liabilites from discontinued operations			—				7,611				2,518				1,756				858				860				—			13,603			—				13,603
Due to affialated companies			—				31				—				206				12,183				2,154				(14,574	)(a)		—			—				—
Due to bus companies			—				—				—				716				—				—				(716	)(a)		—			—				—
Accrued expenses and other			—				1,609				255				592				2,526				—				—			4,982			—				4,982
Total current liabilities			—				9,251				2,773				3,270				18,531				3,014				(15,290	)		21,549			10,000	(b)			31,549
Other liabilities			—				—				53				—				804				—				—			857			—				857
Unpaid losses and loss adjustment expenses			—				—				—				—				4,413				—				—			4,413							4,413
Liabilities from discontinued operations			—				9,158				—				—				622				—				—			9,780			—				9,780
Total liabilities			—				18,409				2,826				3,270				24,370				3,014				(15,290	)		36,599			10,000	(b)			46,599
Common stock			—				377				127				17				1,000				500				—			2,021			(2,021	)(b)			138
																																	138	(b)
																																	296	(d)
Additional-paid-in-capital			—				—				—				—				998				—				—			998			2,021	(b)			3,315
																																	41,862	(b)			41,862
																																	(1,052	)(d)
Retained earnings (deficit)			—				21,309				18,681				7,692				5,373				(334	)			(2,940	)(a)		49,781			(62,000	)(b)			(13,271	)
Accumulated comprehensive (loss) income			—				(12,266	)			(1,701	)			(839	)			(26	)			—				—			(14,832	)		—				(14,832	)
			—				9,420				17,107				6,870				7,345				166				(2,940	)		37,968			(20,756	)			17,212
Total liabilities and equity			$—				$ 27,829				$19,933				$10,140				$31,715				$3,180				$(18,230	)		$ 74,567			$(10,756	)			$ 63,811

 

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

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