BRT Apartments Corp (NYSE:BRT) Q4 2020 Earnings Conference Call March 12, 2021 8:30 AM ET Company Participants Evelyn Infurna - ICR Jeffrey Gould - President and Chief Executive Officer Ryan Baltimore - Senior Vice President Conference Call Participants Gaurav Mehta - National Securities Jim Sullivan - BTIG Operator Good day, and welcome to the BRT Apartments Corp Conference Call for the Fourth Quarter of 2020. Today's conference is being recorded. At this time, I would like to turn the floor over to Evelyn ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2020 OR ☐ \Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-07172 | --- | --- | --- | |----------------------------|--------------------------------------------------------------|--------------------------------- ...

BRT Apartments Corporation (NYSE:BRT) Q3 2020 Earnings Conference Call November 6, 2020 8:30 AM ET Company Participants Evelyn Infurna – ICR Jeffrey Gould – President and Chief Executive Officer Conference Call Participants Operator Good day and welcome to the BRT Apartments Corporation Conference Call for the Third Quarter of 2020. Today’s conference is being recorded. At this time, I would like to turn the conference over to Evelyn Infurna of ICR. You may begin. Evelyn Infurna Thank you. Good day, everyon ...

BRT Apartments Corp (NYSE:BRT) Q2 2020 Earnings Conference Call August 11, 2020 8:30 AM ET Company Participants Evelyn Infurna - ICR Jeffrey Gould - President and Chief Executive Officer George Zweier - Chief Financial Officer Conference Call Participants Rob Stevenson - Janney Gaurav Mehta - National Securities Barry Oxford - D.A. Davidson Craig Kucera - Wunderlich Securities Operator Good day and welcome to BRT Apartments Corp Conference Call for the Second Quarter of 2020. Today's conference is being rec ...

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) Details the filing of BRT Apartments Corp.'s Form 10-Q for Q2 2020, including its filer status and outstanding common stock - BRT Apartments Corp. filed a Quarterly Report on Form 10-Q for the period ended June 30, 2020[2](index=2&type=chunk) - The registrant is classified as an Accelerated Filer and a Smaller Reporting Company[3](index=3&type=chunk) - | Metric | Value | | :----- | :---- | | Common Stock Outstanding (as of Aug 1, 2020) | 17,176,401 Shares | [Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) Presents the company's unaudited consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of BRT Apartments Corp. and its subsidiaries for the quarter and six months ended June 30, 2020, and 2019, along with the audited balance sheet as of December 31, 2019, detailing various financial statements and extensive notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Summarizes the company's financial position, including assets, liabilities, and equity, at June 30, 2020, and December 31, 2019 - | Metric (in thousands) | June 30, 2020 (unaudited) | December 31, 2019 (audited) | Change | | :-------------------- | :------------------------ | :-------------------------- | :----- | | Total Assets | $385,602 | $390,610 | $(5,008) | | Total Liabilities | $190,451 | $191,050 | $(599) | | Total Equity | $195,151 | $199,560 | $(4,409) | - Real estate properties, net, decreased from **$169,689 thousand** to **$166,760 thousand**[13](index=13&type=chunk) - Investments in unconsolidated joint ventures increased from **$177,071 thousand** to **$180,768 thousand**[13](index=13&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2020, and 2019 - | Metric (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $6,816 | $7,287 | $13,740 | $14,417 | | Total Expenses | $9,579 | $9,283 | $19,425 | $18,496 | | Net Loss Attributable to Common Stockholders | $(4,246) | $(4,317) | $(9,077) | $(8,564) | | Basic and Diluted Loss Per Share | $(0.25) | $(0.27) | $(0.53) | $(0.54) | - Rental revenue decreased by **6.2%** for the three months ended June 30, 2020, and by **4.0%** for the six months ended June 30, 2020, compared to the prior year[18](index=18&type=chunk) - General and administrative expenses increased significantly by **19.2%** for the three months and **25.9%** for the six months ended June 30, 2020, primarily due to professional fees related to a restatement and increased compensation costs[18](index=18&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Presents the net loss and other comprehensive income components for the three and six months ended June 30, 2020, and 2019 - | Metric (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Loss | $(4,215) | $(4,273) | $(9,014) | $(8,486) | | Unrealized gain (loss) on derivative instruments | $1 | $(15) | $(22) | $(24) | | Comprehensive Loss Attributable to Common Stockholders | $(4,244) | $(4,330) | $(9,095) | $(8,584) | [Consolidated Statements of Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Equity) Outlines changes in total equity, common stock, additional paid-in capital, and accumulated deficit for the periods presented - | Metric (in thousands) | December 31, 2019 | March 31, 2020 | June 30, 2020 | | :------------------------------------ | :---------------- | :------------- | :------------ | | Total Equity | $199,560 | $202,726 | $195,151 | | Common Stock | $156 | $164 | $164 | | Additional Paid-In Capital | $232,331 | $244,222 | $244,683 | | Accumulated Deficit | $(32,824) | $(41,477) | $(49,545) | - The company issued **694,298 shares** for **$12,293,000** through an at-the-market equity offering program during the six months ended June 30, 2020[26](index=26&type=chunk)[50](index=50&type=chunk) - Common stock distributions of **$0.22 per share** were made, totaling **$3,822,000** for each of the quarters ended March 31, 2020, and June 30, 2020[26](index=26&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Reports cash flows from operating, investing, and financing activities, and the net change in cash and cash equivalents for the six months ended June 30, 2020, and 2019 - | Metric (in thousands) | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Net Cash (Used in) Provided by Operating Activities | $(1,203) | $2,038 | | Net Cash Used in Investing Activities | $(7,190) | $(16,386) | | Net Cash Provided by Financing Activities | $2,311 | $896 | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(6,082) | $(13,452) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $26,336 | $18,267 | - Contributions to unconsolidated joint ventures were **$13,700,000** for the six months ended June 30, 2020, a decrease from **$24,348,000** in the prior year[36](index=36&type=chunk) - Proceeds from the sale of common stock significantly increased cash from financing activities to **$12,077,000** in 2020, compared to none in 2019[36](index=36&type=chunk) [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of the accounting policies, significant transactions, and financial instrument disclosures supporting the consolidated financial statements [Note 1 – Organization and Background](index=13&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Background) Describes BRT Apartments Corp. as a Maryland REIT focused on multi-family properties, primarily located in the Southeast United States and Texas - BRT Apartments Corp. is a Maryland corporation that owns and operates multi-family properties and conducts operations to qualify as a REIT[42](index=42&type=chunk) - | Property Type | Number of Properties | Number of Units | Carrying Value (in thousands) | | :---------------------------- | :------------------- | :-------------- | :---------------------------- | | Wholly Owned Multi-family | 8 | 1,880 | $156,560 | | Unconsolidated Joint Ventures | 31 | 9,162 | $180,678 | - Most of the Company's properties are located in the Southeast United States and Texas[43](index=43&type=chunk) [Note 2 – Basis of Preparation](index=13&type=section&id=Note%202%20%E2%80%93%20Basis%20of%20Preparation) Explains the basis for preparing interim unaudited financial statements, consolidation policies, and the company's single reportable segment - Interim unaudited consolidated financial statements reflect normal recurring adjustments and are not necessarily indicative of full-year results[45](index=45&type=chunk) - The company consolidates wholly-owned subsidiaries and a specific joint venture in Yonkers, NY, where it has controlling rights, while accounting for other unconsolidated joint ventures using the equity method[46](index=46&type=chunk)[47](index=47&type=chunk) - The company operates in one reportable segment, aggregating multi-family real estate assets[48](index=48&type=chunk) [Note 3 - Equity](index=14&type=section&id=Note%203%20-%20Equity) Details equity transactions, including share offerings, distributions, stock-based compensation, and share repurchases - The company sold **694,298 shares** for **$12,293,000** through an at-the-market offering during the six months ended June 30, 2020[50](index=50&type=chunk) - Quarterly cash distributions of **$0.22 per share** were declared[50](index=50&type=chunk) - | Stock-Based Compensation Expense (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Restricted Stock Units | $35 | $36 | $70 | $71 | | Restricted Stock | $426 | $337 | $829 | $667 | - The company repurchased **39,093 shares** of common stock for **$616,000** during the six months ended June 30, 2020, under a **$5,000,000** repurchase plan[57](index=57&type=chunk) - Basic and diluted loss per share were **$(0.25)** for the three months and **$(0.53)** for the six months ended June 30, 2020[59](index=59&type=chunk) [Note 4 - Leases](index=15&type=section&id=Note%204%20-%20Leases) Discusses rent concessions due to COVID-19 and the company's operating lease obligations for ground and corporate office leases - The company granted **$75,000** in rent concessions to two commercial tenants due to the COVID-19 pandemic during the three months ended June 30, 2020[61](index=61&type=chunk)[63](index=63&type=chunk) - The company is a lessee under operating leases for a ground lease in Yonkers, NY (expires September 2024) and a corporate office lease in Great Neck, NY (expires December 2031)[64](index=64&type=chunk)[65](index=65&type=chunk) - | Metric (in millions) | June 30, 2020 | December 31, 2019 | | :------------------- | :------------ | :---------------- | | Right of Use (ROU) Assets | $2.75 | $2.82 | | Lease Liabilities | $2.77 | $2.83 | [Note 5 ‑ Real Estate Properties](index=16&type=section&id=Note%205%20%E2%80%91%20Real%20Estate%20Properties) Provides a breakdown of real estate properties, including land, buildings, and accumulated depreciation, and details additions and depreciation for the period - | Real Estate Properties (in thousands) | June 30, 2020 | December 31, 2019 | | :------------------------------------ | :------------ | :---------------- | | Land | $29,227 | $29,227 | | Building | $154,854 | $154,854 | | Building improvements | $10,143 | $9,702 | | Real estate properties (gross) | $194,224 | $193,783 | | Accumulated depreciation | $(27,464) | $(24,094) | | Total real estate properties, net | $166,760 | $169,689 | - Additions to multi-family properties totaled **$441,000** during the six months ended June 30, 2020, while depreciation was **$3,370,000**[68](index=68&type=chunk) [Note 6 - Acquisitions and Dispositions](index=17&type=section&id=Note%206%20-%20Acquisitions%20and%20Dispositions) Details a multi-family property acquisition in Wilmington, NC, and confirms no dispositions or impairment charges during the reporting periods - | Acquisition Details (6 months ended June 30, 2020) | Value (in thousands) | | :--------------------------------- | :------------------- | | Location | Wilmington, North Carolina | | Purchase Date | 2/20/2020 | | Number of Units | 264 | | Purchase Price | $38,000 | | Initial BRT Equity | $13,700 | | Ownership Percentage | 80% | - No real estate properties were disposed of, and no impairment charges were recorded during the three and six months ended June 30, 2020 and 2019[71](index=71&type=chunk)[74](index=74&type=chunk) [Note 7 - Real Estate Loan](index=17&type=section&id=Note%207%20-%20Real%20Estate%20Loan) Discusses a matured $4 million loan receivable secured by properties in Newark, NJ, and management's assessment of its collectibility - The company has a **$4,000,000** loan receivable secured by properties in Newark, NJ[75](index=75&type=chunk) - The loan matured on June 30, 2020, and the borrower did not pay the balance[75](index=75&type=chunk) - Management believes the loan is collectible and no impairment allowance is needed[75](index=75&type=chunk) [Note 8 - Restricted Cash](index=17&type=section&id=Note%208%20-%20Restricted%20Cash) Explains the nature and purpose of restricted cash held for capital improvements at unconsolidated joint venture properties - Restricted cash of **$9,462,000** at June 30, 2020, is held for capital improvements at unconsolidated joint venture properties[76](index=76&type=chunk)[13](index=13&type=chunk) - These funds are not available for general corporate purposes[76](index=76&type=chunk) [Note 9 – Investment in Unconsolidated Ventures](index=18&type=section&id=Note%209%20%E2%80%93%20Investment%20in%20Unconsolidated%20Ventures) Provides financial details of unconsolidated joint ventures, including assets, liabilities, BRT's equity interest, and their contribution to rental revenue and net income - | Metric (in thousands) | June 30, 2020 | December 31, 2019 | | :------------------------------------ | :------------ | :---------------- | | Total Assets of Unconsolidated Ventures | $1,135,255 | $1,111,793 | | Total Liabilities of Unconsolidated Ventures | $846,155 | $823,020 | | BRT Interest in Joint Venture Equity | $180,768 | $177,071 | - | Metric (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Rental and Other Revenue | $31,542 | $28,976 | $62,385 | $55,803 | | Net Income (Loss) from Joint Ventures | $(1,977) | $(3,761) | $(4,779) | $(7,125) | | BRT Equity in Loss from Joint Ventures | $(1,387) | $(2,218) | $(3,202) | $(4,286) | - The weighted average interest rate on mortgages payable for unconsolidated joint ventures was **3.96%** at June 30, 2020[78](index=78&type=chunk) [Note 10 – Debt Obligations](index=19&type=section&id=Note%2010%20%E2%80%93%20Debt%20Obligations) Details the company's debt structure, including mortgages payable, junior subordinated notes, and credit facilities, along with their interest rates and maturities - | Debt Obligation (in thousands) | June 30, 2020 | December 31, 2019 | | :----------------------------- | :------------ | :---------------- | | Mortgages payable | $132,533 | $134,038 | | Junior subordinated notes | $37,400 | $37,400 | | Deferred financing costs | $(1,020) | $(1,160) | | Total debt obligations, net | $168,913 | $170,278 | - Weighted average interest rate on mortgages payable was **4.15%** at June 30, 2020[82](index=82&type=chunk) - Junior subordinated notes have an outstanding principal of **$37.4 million**, mature in April 2036, and bear interest at three-month LIBOR + **2.00%** (**2.76%** at June 30, 2020)[86](index=86&type=chunk) - A **$10 million** credit facility with Valley National Bank, maturing April 2021, had no outstanding balance at June 30, 2020[83](index=83&type=chunk)[85](index=85&type=chunk) [Note 11 – Related Party Transactions](index=20&type=section&id=Note%2011%20%E2%80%93%20Related%20Party%20Transactions) Outlines fees paid for investment/consulting services, property management, and shared general and administrative expenses with related parties - | Related Party Fees (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Investment/Consulting Services | $349 | $333 | $699 | $666 | | Property Management (Majestic Property) | $8 | $8 | $16 | $15 | | Shared G&A Expenses (Gould Investors) | $238 | $155 | $464 | $297 | [Note 12 – Fair Value of Financial Instruments](index=20&type=section&id=Note%2012%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) Compares the carrying and fair values of junior subordinated notes and mortgages payable, and details the fair value measurement of derivative instruments - Fair value of junior subordinated notes was approximately **$10,794,000** lower than carrying value at June 30, 2020[93](index=93&type=chunk) - Fair value of mortgages payable was approximately **$6,586,000** greater than carrying value at June 30, 2020[95](index=95&type=chunk) - | Financial Liabilities (in thousands) | Carrying and Fair Value (June 30, 2020) | Fair Value Measurements Level 2 | | :--------------------------------- | :-------------------------------------- | :------------------------------ | | Interest rate swap | $34 | $34 | - Derivative financial instruments (interest rate swaps) are valued using Level 2 inputs in the fair value hierarchy[99](index=99&type=chunk) [Note 13 – Derivative Financial Instruments](index=22&type=section&id=Note%2013%20%E2%80%93%20Derivative%20Financial%20Instruments) Explains the company's use of interest rate swaps as cash flow hedges to manage interest rate exposure and their fair value - The company uses interest rate swaps as cash flow hedges to stabilize interest expense and manage interest rate exposure[101](index=101&type=chunk) - | Interest Rate Derivative | Notional Amount (in thousands) | Fixed Rate | Maturity | | :----------------------- | :----------------------------- | :--------- | :--------------- | | Interest rate swap | $1,104 | 5.25% | April 1, 2022 | - The fair value of derivatives in a net liability position was **$36,000** at June 30, 2020[106](index=106&type=chunk) - An estimated **$20,000** will be reclassified from other comprehensive loss as an increase to interest expense over the next twelve months[102](index=102&type=chunk) [Note 14 – New Accounting Pronouncements](index=24&type=section&id=Note%2014%20%E2%80%93%20New%20Accounting%20Pronouncements) Discusses the adoption of recent accounting standards and the evaluation of future pronouncements, noting no material effects on financial statements - The company adopted ASU 2020-04 (Reference Rate Reform), ASU 2018-16 (SOFR as Benchmark), ASU 2018-13 (Fair Value Measurement Disclosures), and ASU 2018-07 (Nonemployee Share-Based Payment Accounting), with no material effect on financial statements[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - The company is evaluating the impact of ASU 2016-13 (Credit Losses on Financial Instruments), effective for fiscal years beginning after December 15, 2022[111](index=111&type=chunk) [Note 15 – Subsequent Events](index=24&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Events) Highlights the significant risks and uncertainties posed by the COVID-19 pandemic on the company's business and financial performance - The COVID-19 pandemic presents significant risks and uncertainties, with its ultimate impact on the company's business, financial condition, liquidity, results of operations, and prospects being highly uncertain[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, the challenges posed by COVID-19, the status of a significant real estate loan, and a detailed comparison of operating results for the three and six months ended June 30, 2020, versus 2019, also discussing liquidity, capital resources, off-balance sheet arrangements, cash distribution policy, and non-GAAP financial measures like FFO, AFFO, and NOI [Cautionary Statement Regarding Forward-Looking Statements](index=25&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) Warns that forward-looking statements are subject to various risks and uncertainties, including economic conditions, market risks, and the impact of COVID-19 - Forward-looking statements are subject to change due to various events and factors not all within the company's control[116](index=116&type=chunk) - Key risk factors include general economic conditions, capital and liquidity availability, real estate market conditions, regulatory changes, acquisition strategy, competitive environment, geographic concentration in the Southeast U.S. and Texas, and the impact of the COVID-19 pandemic[116](index=116&type=chunk)[118](index=118&type=chunk) [Overview](index=27&type=section&id=Overview) Provides an overview of BRT Apartments Corp. as an internally managed REIT focused on multi-family properties, primarily through unconsolidated joint ventures in the Southeast U.S. and Texas - BRT Apartments Corp. is an internally managed REIT focused on multi-family properties, primarily through unconsolidated joint ventures[122](index=122&type=chunk) - | Property Type | Number of Properties | Number of Units | Carrying Value (in millions) | | :---------------------------- | :------------------- | :-------------- | :--------------------------- | | Wholly Owned Multi-family | 8 | 1,880 | $156.6 | | Unconsolidated Joint Ventures | 31 | 9,162 | $180.7 | - Most properties are located in the Southeast United States and Texas[122](index=122&type=chunk) - Seven properties were designated as "same store properties" for the periods ended June 30, 2020 and 2019[123](index=123&type=chunk) [Challenges and Uncertainties Presented by COVID-19](index=27&type=section&id=Challenges%20and%20Uncertainties%20Presented%20by%20COVID-19) Discusses the potential adverse effects of COVID-19 on rent collection, operating expenses, revenues, and property operations, especially in key geographic regions - COVID-19 may adversely affect residents' ability to pay rent, impacting the company's dividends and debt service[123](index=123&type=chunk) - The pandemic's resurgence in the Southeast U.S. and Texas, where many properties are located, increases risk[123](index=123&type=chunk) - Potential impacts include increased operating expenses, reduced revenues from rent accommodations, limited rent increases, and delays in property marketing, value-add programs, acquisitions, and dispositions[123](index=123&type=chunk) [Status of $4 million real estate loan](index=27&type=section&id=Status%20of%20%244%20million%20real%20estate%20loan) Addresses the non-payment of a matured $4 million real estate loan, its collateral, and the potential for future impairment - A **$4.0 million** real estate loan matured on June 30, 2020, and has not been paid[124](index=124&type=chunk) - The loan is secured by properties in Newark, New Jersey, and the company believes the value of these properties exceeds the loan balance[124](index=124&type=chunk) - The company may be required to recognize an impairment on this loan in the future and does not anticipate further interest income[124](index=124&type=chunk) [Results of Operations – Three months ended June 30, 2020 compared to three months ended June 30, 2019.](index=28&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20months%20ended%20June%2030%2C%202020%20compared%20to%20three%20months%20ended%20June%2030%2C%202019.) Compares the company's financial performance for the three months ended June 30, 2020, against the same period in 2019, analyzing key revenue and expense drivers [Revenues (Three Months)](index=28&type=section&id=Revenues%20(Three%20Months)) Analyzes the changes in rental and other income, highlighting impacts from property sales, rent abatements, and acquisitions - | Revenue (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | Increase (Decrease) | % Change | | :--------------------- | :--------------------------- | :--------------------------- | :------------------ | :------- | | Rental revenue | $6,657 | $7,097 | $(440) | (6.2)% | | Other income | $159 | $190 | $(31) | (16.3)% | | Total revenues | $6,816 | $7,287 | $(471) | (6.5)% | - Rental revenue decreased due to **$1.1 million** from sold properties and **$75,000** from COVID-19 rent abatements[130](index=130&type=chunk) - Offsetting increases included **$602,000** from a partner buyout property and **$118,000** from same-store properties (higher rental rates, lower occupancy)[131](index=131&type=chunk) [Expenses (Three Months)](index=28&type=section&id=Expenses%20(Three%20Months)) Examines changes in real estate operating expenses, interest expense, general and administrative costs, and depreciation for the three-month period - | Expense (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | Increase (Decrease) | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :------------------ | :------- | | Real estate operating expenses | $3,004 | $3,325 | $(321) | (9.7)% | | Interest expense | $1,809 | $2,049 | $(240) | (11.7)% | | General and administrative | $2,957 | $2,481 | $476 | 19.2% | | Depreciation | $1,809 | $1,428 | $381 | 26.7% | | Total expenses | $9,579 | $9,283 | $296 | 3.2% | - General and administrative expenses increased by **$476,000**, primarily due to a **$224,000** increase in professional fees (including **$165,000** for restatement) and a **$120,000** increase in compensation costs[140](index=140&type=chunk) - Depreciation increased by **$381,000** due to additional depreciation from increased asset values on properties where partner interests were bought out[141](index=141&type=chunk) [Equity in (loss) of unconsolidated joint ventures (Three Months)](index=30&type=section&id=Equity%20in%20(loss)%20of%20unconsolidated%20joint%20ventures%20(Three%20Months)) Reviews the company's share of income or loss from unconsolidated joint ventures, detailing changes in rental revenues and expenses - | Metric (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | Increase (Decrease) | % Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :------------------ | :------- | | Rental revenues from unconsolidated joint ventures | $31,542 | $28,976 | $2,566 | 8.9% | | Total expenses from unconsolidated joint ventures | $33,857 | $33,254 | $603 | 1.8% | | Net income (loss) from joint ventures | $(1,977) | $(3,761) | $1,784 | (47.4)% | | Equity in (loss) of unconsolidated joint ventures | $(1,387) | $(2,218) | $831 | (37.5)% | - Rental revenue increase was primarily due to **$1.7 million** from two properties in lease-up, **$1.3 million** from two acquired properties, and **$660,000** from unconsolidated same-store properties[143](index=143&type=chunk) - Interest expense decreased by **$153,000**, mainly due to **$394,000** from unconsolidated same-store properties (refinancing) and decreases from sold/partner buyout properties, partially offset by acquired properties[148](index=148&type=chunk)[149](index=149&type=chunk) [Results of Operations – Six months ended June 30, 2020 compared to six months ended June 30, 2019.](index=32&type=section&id=Results%20of%20Operations%20%E2%80%93%20Six%20months%20ended%20June%2030%2C%202020%20compared%20to%20six%20months%20ended%20June%2030%2C%202019.) Compares the company's financial performance for the six months ended June 30, 2020, against the same period in 2019, analyzing key revenue and expense drivers [Revenues (Six Months)](index=32&type=section&id=Revenues%20(Six%20Months)) Analyzes the changes in rental and other income for the six-month period, highlighting impacts from property sales, acquisitions, and same-store performance - | Revenue (in thousands) | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | Increase (Decrease) | % Change | | :--------------------- | :--------------------------- | :--------------------------- | :------------------ | :------- | | Rental revenue | $13,402 | $13,983 | $(581) | (4)% | | Other income | $338 | $434 | $(96) | (22)% | | Total revenues | $13,740 | $14,417 | $(677) | (5)% | - Rental revenue decreased primarily due to **$2.1 million** from sold properties in the prior year[155](index=155&type=chunk) - Offsetting increases included **$1.2 million** from a partner buyout property and **$366,000** from same-store properties (higher average rent, lower occupancy)[156](index=156&type=chunk) [Expenses (Six Months)](index=32&type=section&id=Expenses%20(Six%20Months)) Examines changes in real estate operating expenses, interest expense, general and administrative costs, and depreciation for the six-month period - | Expense (in thousands) | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | Increase (Decrease) | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :------------------ | :------- | | Real estate operating expenses | $6,062 | $6,501 | $(439) | (6.8)% | | Interest expense | $3,669 | $3,995 | $(326) | (8.2)% | | General and administrative | $6,324 | $5,025 | $1,299 | 25.9% | | Depreciation | $3,370 | $2,975 | $395 | 13.3% | | Total expenses | $19,425 | $18,496 | $929 | 5.0% | - General and administrative expenses increased by **$1,299,000**, primarily due to an **$820,000** increase in professional fees (**$688,000** for restatement), **$199,000** in compensation costs, and **$161,000** from shared services[163](index=163&type=chunk) - Interest expense decreased by **$326,000**, mainly due to **$411,000** from sold properties and a **$224,000** decrease in subordinated debt interest rates, partially offset by a **$392,000** increase from the partner buyout property[160](index=160&type=chunk)[162](index=162&type=chunk) [Equity in (loss) of unconsolidated joint ventures (Six Months)](index=33&type=section&id=Equity%20in%20(loss)%20of%20unconsolidated%20joint%20ventures%20(Six%20Months)) Reviews the company's share of income or loss from unconsolidated joint ventures for the six-month period, detailing changes in rental revenues and expenses - | Metric (in thousands) | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | Increase (Decrease) | % Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :------------------ | :------- | | Rental revenues from unconsolidated joint ventures | $62,385 | $55,803 | $6,582 | 11.8% | | Total expenses from unconsolidated joint ventures | $67,502 | $63,445 | $4,057 | 6.4% | | Net loss from joint ventures | $(4,779) | $(7,125) | $2,346 | (32.9)% | | Equity in (loss) of unconsolidated joint ventures | $(3,202) | $(4,286) | $1,084 | (25.3)% | - Rental revenue increase was primarily due to **$3.5 million** from two properties in lease-up, **$2.6 million** from two properties owned for the entire period, **$2.2 million** from two acquired properties, and **$1.4 million** from unconsolidated same-store properties[166](index=166&type=chunk) - Interest expense increased by **$698,000**, mainly due to **$706,000** from properties owned for the entire period, **$678,000** from acquired properties, and **$579,000** from lease-up properties, partially offset by **$526,000** from unconsolidated same-store properties (refinancing) and decreases from sold/partner buyout properties[171](index=171&type=chunk)[172](index=172&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's liquidity position, including cash, restricted cash, and credit facility availability, and discusses future debt obligations and funding needs - | Liquidity (as of August 1, 2020, in millions) | Amount | | :------------------------------------------ | :----- | | Cash and cash equivalents | $10.6 | | Restricted cash | $9.6 | | Credit facility availability | $10.0 | | Total Available Liquidity | $30.2 | - The company anticipates **$115.3 million** in mortgage amortization and interest expense and **$182.9 million** in balloon payments (including **$97.3 million** from unconsolidated joint ventures) maturing from 2020 to 2022[177](index=177&type=chunk) - Operating cash flow and available cash are insufficient to fully fund the **$182.9 million** balloon payments, potentially requiring additional equity or property dispositions[177](index=177&type=chunk) - Junior subordinated notes outstanding principal is **$37.4 million**, maturing April 2036, with an interest rate of three-month LIBOR + **200 basis points**[180](index=180&type=chunk) [Off Balance Sheet Arrangements](index=37&type=section&id=Off%20Balance%20Sheet%20Arrangements) Clarifies the company's lack of off-balance sheet arrangements, highlighting its material investments in unconsolidated joint ventures and their associated debt - The company is not a party to any off-balance sheet arrangements as defined by Regulation S-K[184](index=184&type=chunk) - The company is a joint venture partner in approximately **31** unconsolidated joint ventures, which are a material source of liquidity[184](index=184&type=chunk) - These joint ventures have **$830.9 million** in mortgage debt not reflected on the company's consolidated balance sheet[184](index=184&type=chunk) - Distributions from these joint venture properties were **$3.8 million** for the quarter ended June 30, 2020[184](index=184&type=chunk) [Cash Distribution Policy](index=37&type=section&id=Cash%20Distribution%20Policy) Explains the company's REIT distribution requirements, current dividend policy, and factors influencing future dividend decisions - To qualify as a REIT, the company must distribute at least **90%** of its ordinary taxable income[185](index=185&type=chunk) - The company had a net operating loss of approximately **$16.8 million** at December 31, 2019, meaning it is not currently required to pay cash dividends to maintain REIT status[186](index=186&type=chunk) - Quarterly cash dividends of **$0.22 per share** were paid on April 7, 2020, and July 9, 2020[186](index=186&type=chunk) - The board evaluates dividend policy quarterly, considering cash/liquidity requirements, debt maturities, REIT taxable income, and the impact of the COVID-19 pandemic[187](index=187&type=chunk) [Funds from Operations; Adjusted Funds from Operations; Net Operating Income](index=38&type=section&id=Funds%20from%20Operations%3B%20Adjusted%20Funds%20from%20Operations%3B%20Net%20Operating%20Income) Defines and presents non-GAAP financial measures (FFO, AFFO, NOI) used to evaluate the company's operating and property-specific performance - FFO and AFFO are non-GAAP measures used to evaluate REIT operating performance, excluding real estate depreciation and certain non-cash items[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - NOI is a non-GAAP measure used to evaluate property-specific performance, excluding corporate-level expenses[197](index=197&type=chunk)[198](index=198&type=chunk) - | Metric (in thousands) | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | NAREIT Funds from operations (FFO) | $4,186 | $3,479 | $7,484 | $6,541 | | Adjusted funds from operations (AFFO) | $4,712 | $3,871 | $8,680 | $7,589 | | Net Operating Income (NOI) | $3,653 | $3,772 | $7,340 | $7,482 | - | Per Share Metric | 3 Months Ended June 30, 2020 | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2020 | 6 Months Ended June 30, 2019 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | NAREIT Funds from operations per diluted common share | $0.24 | $0.22 | $0.44 | $0.41 | | Adjusted funds from operations per diluted common share | $0.27 | $0.24 | $0.51 | $0.48 | - For the three months ended June 30, 2020, NOI decreased by **$119,000**, primarily due to sold properties (down **$394,000**), offset by partner buyout (up **$254,000**) and same-store NOI (up **$40,000**)[199](index=199&type=chunk) - For the six months ended June 30, 2020, NOI decreased by **$142,000**, primarily due to sold properties (down **$776,000**), offset by partner buyout (up **$570,000**) and same-store NOI (up **$93,000**)[200](index=200&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risks](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risks) The company's market risks primarily relate to interest rate fluctuations, with most debt fixed-rate or hedged, while junior subordinated notes bear a variable interest rate, impacting annual interest expense by approximately $374,000 for a 100 basis point change - All mortgage debt is fixed rate or effectively fixed by an interest rate swap[202](index=202&type=chunk) - Junior subordinated notes bear interest at three-month LIBOR + **200 basis points** (**3.77%** at June 30, 2020)[204](index=204&type=chunk) - A **100 basis point** increase/decrease in interest rates would change annual interest expense on junior subordinated notes by approximately **$374,000**[204](index=204&type=chunk) - A **100 basis point** change in forward interest rates would impact the fair market value of the interest rate swap by approximately **$16,000**, with no impact on net income or cash[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of June 30, 2020, due to a material weakness in internal controls over financial reporting related to property consolidation, though financial statements are deemed fairly presented - Disclosure controls and procedures were not effective as of June 30, 2020, due to a material weakness in internal controls over financial reporting[207](index=207&type=chunk) - The material weakness relates to the consolidation of properties that should have been accounted for using the equity method[206](index=206&type=chunk) - A remediation plan has been implemented, including enhanced procedures for evaluating property venture accounting, multi-level reviews, and additional training[208](index=208&type=chunk) - Management concluded that, despite the material weakness, the financial statements fairly present the company's financial position, results of operations, and cash flows in conformity with GAAP[209](index=209&type=chunk) [Part II – Other Information](index=42&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) Contains additional information, including a list of exhibits and required certifications [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits accompanying the Form 10-Q, including various certifications required by the Sarbanes-Oxley Act (Sections 302 and 906) from the President, CEO, SVP-Finance, and CFO, also specifying the inclusion of financial information formatted in Inline XBRL - Exhibits include certifications from the President, CEO, SVP-Finance, and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[212](index=212&type=chunk) - Financial information from the Quarterly Report is provided in Inline XBRL format[212](index=212&type=chunk) [SIGNATURES](index=43&type=section&id=SIGNATURES) Confirms the official signing of the report by the President, CEO, Vice President, and CFO on August 10, 2020 - The report was signed by Jeffrey A. Gould, President and Chief Executive Officer, and George Zweier, Vice President and Chief Financial Officer, on August 10, 2020[219](index=219&type=chunk)[220](index=220&type=chunk)

Part I - Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q1 2020, reporting a net loss of **$4.8 million** and total assets of **$395.0 million** [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheet shows total assets increased to **$395.0 million** and total equity to **$202.7 million** as of March 31, 2020 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 (unaudited) | December 31, 2019 (audited) | | :--- | :--- | :--- | | **Total Assets** | **$394,960** | **$390,610** | | Investments in unconsolidated joint ventures | $185,946 | $177,071 | | Cash and cash equivalents | $18,707 | $22,699 | | **Total Liabilities** | **$192,234** | **$191,050** | | Mortgages payable, net | $132,524 | $133,215 | | **Total Equity** | **$202,726** | **$199,560** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a net loss of **$4.8 million** for Q1 2020, or **($0.29)** per share, due to decreased revenues and increased expenses Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Total revenues | $6,924 | $7,130 | | Total expenses | $9,846 | $9,213 | | Equity in loss of unconsolidated joint ventures | ($1,815) | ($2,068) | | **Net loss attributable to common stockholders** | **($4,831)** | **($4,247)** | | **Diluted loss per share** | **($0.29)** | **($0.27)** | [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company recorded a comprehensive loss of **$4.9 million** for Q1 2020, including net loss and unrealized losses on derivatives Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net loss | ($4,799) | ($4,213) | | Other comprehensive loss | ($23) | ($9) | | **Comprehensive loss attributable to common stockholders** | **($4,851)** | **($4,254)** | [Consolidated Statement of Equity](index=8&type=section&id=Consolidated%20Statement%20of%20Equity) Total equity increased to **$202.7 million** driven by **$12.1 million** from an equity offering, offset by dividends and share repurchases - Issued shares through an equity offering program, raising net proceeds of **$12,077,000**[23](index=23&type=chunk) - Paid common stock distributions of **$0.22** per share, totaling **$3,822,000**[23](index=23&type=chunk) - Repurchased common stock for a total cost of **$616,000**[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$0.6 million**, while investing activities used **$10.9 million**, resulting in a **$3.5 million** net decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $557 | $316 | | Net cash used in investing activities | ($10,863) | ($8,426) | | Net cash provided by (used in) financing activities | $6,838 | ($4,002) | | **Net (decrease) increase in cash** | **($3,468)** | **($12,112)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, business structure as a REIT, equity activities, a new property acquisition, and COVID-19 risks - The company operates as a REIT, primarily owning and operating multi-family properties through wholly-owned subsidiaries and unconsolidated joint ventures, with a focus on the Southeast United States and Texas[31](index=31&type=chunk)[32](index=32&type=chunk) - During Q1 2020, the company sold **694,298** shares for **$12.3 million** through its at-the-market (ATM) offering and repurchased **39,093** shares for **$616,000**[40](index=40&type=chunk)[48](index=48&type=chunk) - In February 2020, an unconsolidated joint venture acquired a **264-unit** multi-family property in Wilmington, NC, for **$38.0 million**, with BRT contributing **$13.7 million** for an **80%** equity interest[54](index=54&type=chunk) - Subsequent to the quarter-end, the company noted risks from the COVID-19 pandemic but stated it had not materially impacted operations through mid-June 2020, granting two commercial tenants rent abatements totaling **$75,000** for Q2 2020[96](index=96&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, liquidity, and capital resources, highlighting strong rent collections despite COVID-19 and the need to refinance **$182.9 million** in mortgage balloon payments [Overview](index=25&type=section&id=Overview) The company, a REIT, acquired a new property, raised **$12.3 million** via ATM, and maintained **98%** rent collections despite COVID-19 - In Q1 2020, the company collected **98%** of billed amounts for April and May, and **95%** through June 15, indicating minimal initial impact from the COVID-19 pandemic on rent payments[108](index=108&type=chunk) - Acquired an **80%** interest in a **264-unit** property in Wilmington, NC, for **$38.0 million**, contributing **$13.7 million** in equity[105](index=105&type=chunk) - Sold **694,298** shares of common stock for **$12.3 million** via its ATM program and repurchased **39,093** shares for **$616,000**[106](index=106&type=chunk)[107](index=107&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Total revenues decreased **2.9%** to **$6.9 million** due to property sales, while total expenses increased **6.9%** to **$9.8 million** due to higher professional fees Revenue and Expense Changes (Q1 2020 vs Q1 2019, in thousands) | Item | Q1 2020 | Q1 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,924 | $7,130 | ($206) | (2.9)% | | Real estate operating expenses | $3,058 | $3,176 | ($118) | (3.7)% | | General and administrative | $3,367 | $2,544 | $823 | 32.4% | | Total Expenses | $9,846 | $9,213 | $633 | 6.9% | - The decrease in rental revenue was primarily due to the sale of two properties in July 2019, which contributed **$1.0 million** in revenue in the prior-year period[112](index=112&type=chunk) - General and administrative expenses increased mainly due to a **$596,000** rise in professional fees, of which **$523,000** was related to the financial restatement[119](index=119&type=chunk) - Equity in loss from unconsolidated joint ventures decreased by **$253,000**, driven by a **$2.5 million** increase in rental revenues from these ventures, primarily from property acquisitions and lease-ups[121](index=121&type=chunk)[122](index=122&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Available liquidity was **$33.4 million** as of June 1, 2020, but **$182.9 million** in mortgage balloon payments through 2022 will require refinancing - Available liquidity at June 1, 2020, was **$33.4 million**, consisting of **$18.5 million** in cash, **$9.9 million** in restricted cash, and **$5.0 million** available under its credit facility[134](index=134&type=chunk) - The company faces **$182.9 million** in mortgage balloon payments from 2020 to 2022 (including amounts from unconsolidated JVs), which will require refinancing or other capital actions as operating cash flow is insufficient to cover them[135](index=135&type=chunk) - The company has a **$10 million** credit facility, of which **$5 million** was available as of June 1, 2020, maturing in April 2021[134](index=134&type=chunk)[139](index=139&type=chunk) [Funds from Operations; Adjusted Funds from Operations](index=33&type=section&id=Funds%20from%20Operations%3B%20Adjusted%20Funds%20from%20Operations) NAREIT FFO was **$3.3 million** and AFFO was **$4.0 million** for Q1 2020, with AFFO per share remaining flat at **$0.23** FFO and AFFO Reconciliation (in thousands, except per share data) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | GAAP Net loss attributable to common stockholders | ($4,831) | ($4,247) | | NAREIT Funds from operations | $3,298 | $3,062 | | **Adjusted funds from operations (AFFO)** | **$3,968** | **$3,718** | | NAREIT FFO per diluted common share | $0.19 | $0.19 | | **AFFO per diluted common share** | **$0.23** | **$0.23** | [Net Operating Income](index=35&type=section&id=Net%20Operating%20Income) Consolidated NOI was **$3.7 million** in Q1 2020, while same-store NOI increased by **$55,000** due to higher rental rates NOI Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | GAAP Net loss attributable to common stockholders | ($4,831) | ($4,247) | | **Net Operating Income (NOI)** | **$3,687** | **$3,710** | | Non-same store NOI | ($560) | ($638) | | **Same store NOI** | **$3,127** | **$3,072** | - Same-store NOI increased by **$55,000**, primarily due to a **$248,000** increase in revenues from higher rental rates, partially offset by a **$193,000** increase in operating expenses[157](index=157&type=chunk) [Quantitative and Qualitative Disclosures About Market Risks](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risks) The primary market risk is interest rate risk on variable-rate junior subordinated notes, where a **100 basis point** change impacts annual interest expense by **$374,000** - The company's junior subordinated notes bear interest at three-month LIBOR plus **2.00%**, where a **100 basis point (1%)** change would alter annual interest expense by approximately **$374,000**[161](index=161&type=chunk) - All mortgage debt is fixed rate, except for one mortgage effectively fixed through an interest rate swap[159](index=159&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of March 31, 2020, due to a material weakness in accounting for joint ventures, with a remediation plan underway - A material weakness was identified in internal controls over financial reporting related to the consolidation of properties that should have been accounted for using the equity method[163](index=163&type=chunk) - As a result of the material weakness, the CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2020[164](index=164&type=chunk) - Management has implemented a remediation plan, including enhanced procedures, multi-level reviews, and additional training, to address the control deficiency[165](index=165&type=chunk) Part II - Other Information [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) A subsidiary faces a wrongful death lawsuit seeking over **$1 million** in compensatory damages, which the company believes is covered by insurance - A subsidiary is a defendant in a wrongful death lawsuit seeking over **$1 million** in compensatory damages and unspecified exemplary damages[171](index=171&type=chunk) - The company believes its primary and umbrella insurance is sufficient to cover the claim for compensatory damages, but not for exemplary damages[171](index=171&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **39,093** shares for **$616,000** in Q1 2020, with **$4.4 million** remaining for future repurchases Common Stock Repurchases (Q1 2020) | Period | Total Shares Purchased | Average Price Paid per Share | Total Cost (Approx.) | | :--- | :--- | :--- | :--- | | Jan 2020 | 0 | N/A | $0 | | Feb 2020 | 14,000 | $15.60 | $218,400 | | Mar 2020 | 25,093 | $15.85 | $397,724 | | **Total** | **39,093** | **$15.76** | **$616,124** | - As of March 31, 2020, approximately **$4.4 million** remained available for future repurchases under the company's stock buyback program, which runs through September 30, 2021[172](index=172&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and financial statements in Inline XBRL format - The filing includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[173](index=173&type=chunk) - Financial data is provided in Inline XBRL format as required by the SEC[173](index=173&type=chunk)

Explanatory Note and Forward-Looking Statements [Explanatory Note](index=4&type=section&id=Explanatory%20Note) Financial statements were restated due to a shift in joint venture accounting to the equity method, significantly impacting reported revenues, expenses, assets, and liabilities but not net income or FFO - The company restated its financial statements to account for most joint ventures using the equity method instead of consolidation, as required by ASC 810, significantly reducing reported revenues, expenses, assets, and liabilities[8](index=8&type=chunk) - Despite presentation changes, the restatement correctly stated or understated total stockholders' equity and had no impact on previously reported absolute and per-share figures for net income, funds from operations (FFO), and adjusted funds from operations (AFFO)[8](index=8&type=chunk) - In February 2019, the company changed its fiscal year end from September 30 to December 31 to better align with other multi-family REITs[8](index=8&type=chunk) - The filing of this Annual Report was delayed due to the impacts of the COVID-19 pandemic, which affected the ability of personnel to complete the report on a timely basis[9](index=9&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) Key risks affecting forward-looking statements include economic conditions, real estate market fluctuations, geographic concentration, joint venture disagreements, and COVID-19 impact - The company's multi-family properties are concentrated in the Southeastern United States and Texas, making it susceptible to adverse developments in those specific markets[13](index=13&type=chunk) - Risks associated with joint venture partnerships include potential disagreements, misconduct by partners, and economic interests that may become inconsistent with the company's goals[13](index=13&type=chunk) - The impact of the COVID-19 pandemic is highlighted as a significant risk factor affecting the business[15](index=15&type=chunk) - The company notes risks related to the ongoing review and restatement of its financial statements, including the discovery of any additional adjustments[15](index=15&type=chunk) PART I [Business](index=7&type=section&id=Item%201.%20Business) BRT Apartments Corp. is a REIT focused on owning and developing multi-family properties, primarily via joint ventures in the Southeast U.S. and Texas Portfolio Overview (as of December 31, 2019) | Ownership Type | Number of Properties | Number of Units | States | Carrying Value (Net Equity, in millions) | | :--- | :--- | :--- | :--- | :--- | | Wholly-Owned | 8 | 1,880 | 6 | $159.4 | | Unconsolidated JVs | 30 | 8,898 | 9 | $177.0 | - In 2019, the company, through joint ventures, acquired three multi-family properties for **$109.5 million** and sold two multi-family properties for **$34.0 million**, realizing a gain of **$10.6 million**; it also raised **$7.5 million** in equity and increased its dividend by **10%**[23](index=23&type=chunk) - The company's acquisition strategy targets Class B or better properties with cap rates of **4.5% to 5.75%**, aiming for an initial **6.5% to 8%** annual return on cash and an IRR of **10% to 16%**[36](index=36&type=chunk) - The weighted average annual interest rate on mortgage debt across all multi-family properties is **4.17%**, with a weighted average remaining term to maturity of approximately **7.8 years** as of year-end 2019[48](index=48&type=chunk) - The COVID-19 pandemic is expected to adversely affect operations by impacting tenants' ability to pay rent, increasing operating expenses, and potentially delaying value-add programs and transactions[25](index=25&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) Key risks include significant mortgage debt refinancing, geographic concentration, joint venture conflicts, COVID-19 impact, and a material weakness in internal financial controls - The company has significant mortgage debt with balloon payments of **$182.6 million** (including **$108.0 million** at JVs) maturing through 2022, which will require successful refinancing[66](index=66&type=chunk)[67](index=67&type=chunk) - A high concentration of properties in the Southeastern U.S. and Texas exposes the company to greater risks from adverse regional economic conditions, pandemics, or natural disasters[68](index=68&type=chunk) - The COVID-19 pandemic is adversely affecting tenants' ability to pay rent and may increase operating expenses, limit property marketing, and delay value-add programs[82](index=82&type=chunk) - A material weakness in internal control over financial reporting was identified due to the company's improper consolidation of joint ventures, which was inconsistent with the Consolidation Standard (ASC 810); this led to a significant restatement of financial statements[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - The phasing out of LIBOR after 2021 presents a risk for the company's **$37.4 million** in junior subordinated notes and **$114.2 million** of variable rate mortgage debt tied to LIBOR[84](index=84&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - Not applicable[120](index=120&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) The company's executive office is in Great Neck, New York, with property details in Item 1 - The company's executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, New York[122](index=122&type=chunk) - Additional property information is cross-referenced to "Item 1—Business"[122](index=122&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) A subsidiary faces a wrongful death lawsuit seeking over $1 million in damages related to a Houston property incident, with insurance expected to cover compensatory damages - A subsidiary is involved in a wrongful death lawsuit seeking over **$1 million** in compensatory damages related to an incident at a Houston, TX property[122](index=122&type=chunk) - The company's primary insurance carrier is defending the claim, and management believes insurance coverage is sufficient for compensatory damages, though it generally does not cover exemplary damages[122](index=122&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company has no mine safety disclosures - Not applicable[123](index=123&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock is NYSE-listed, with a $5.0 million share repurchase program authorized and shares repurchased post-year-end - The company's common stock trades on the New York Stock Exchange under the symbol "BRT"[125](index=125&type=chunk) - A share repurchase program authorizing up to **$5.0 million** in buybacks is in place through September 30, 2021; no shares were repurchased in Q4 2019[125](index=125&type=chunk) - From January 1, 2020, through April 30, 2020, the company repurchased **39,093 shares** for an aggregate price of **$616,000**[128](index=128&type=chunk) [Selected Financial Data](index=29&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, BRT omitted selected financial data prior to December 31, 2018 - The company qualifies as a smaller reporting company and has omitted financial data for periods prior to December 31, 2018[130](index=130&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, highlighting the restatement, 2019 revenue growth, sharp net income decline due to lower JV property sale gains, increased AFFO, and COVID-19 liquidity challenges Comparison of Operations (Years Ended December 31) | (in thousands) | 2019 (in thousands) | 2018 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $27,761 | $23,429 | 18.5% | | Total Expenses | $36,135 | $31,444 | 14.9% | | Net Income (to common) | $856 | $25,495 | -96.6% | FFO and AFFO Reconciliation Summary (in thousands) | Metric | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | | Funds from Operations (FFO) | $12,010 | $16,358 | | Adjusted Funds from Operations (AFFO) | $16,627 | $14,123 | - The **19.4%** increase in rental and other property revenue was driven by **$5.5 million** from properties where JV partner interests were bought out and **$845,000** from same-store properties, partially offset by a **$1.9 million** revenue loss from sold properties[137](index=137&type=chunk) - The significant decrease in net income was primarily due to recognizing **$9.9 million** in gains from the sale of unconsolidated JV properties in 2019, compared to **$37.9 million** in 2018[143](index=143&type=chunk) - Primary sources of liquidity in 2019 were property operations (including **$28.1 million** in distributions from JVs), **$7.5 million** from stock sales, and borrowings from a **$10 million** credit facility; cash and equivalents stood at **$22.7 million** at year-end[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from variable-rate junior subordinated notes; a 100 basis point LIBOR change impacts annual interest expense by approximately $374,000 - The company's junior subordinated notes bear a variable interest rate of three-month LIBOR plus **200 basis points**[178](index=178&type=chunk) - A **100 basis point (1%)** increase or decrease in the interest rate on these notes would result in a corresponding **$374,000** change in annual interest expense[178](index=178&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited, restated financial statements for 2019 and 2018, with the auditor providing an unqualified opinion on financials but an adverse opinion on internal controls due to a material weakness in consolidation accounting - The independent auditor, BDO USA, LLP, issued an adverse opinion on the company's internal control over financial reporting as of December 31, 2019[219](index=219&type=chunk)[225](index=225&type=chunk) - The auditor's adverse opinion on internal controls was due to a material weakness related to management's failure to design and maintain effective controls over the accounting for real estate ventures in accordance with ASC Topic 810, "Consolidation"[229](index=229&type=chunk) Restatement Impact on 2018 Balance Sheet (in thousands) | Account | As Previously Reported (in thousands) | As Restated (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,123,707 | $394,990 | | Total Liabilities | $833,347 | $191,171 | | Total Equity | $290,360 | $203,819 | Restatement Impact on 2018 Statement of Operations (in thousands) | Account | As Previously Reported (in thousands) | As Restated (in thousands) | | :--- | :--- | :--- | | Total Revenues | $122,725 | $23,429 | | Total Expenses | $144,329 | $31,444 | | Net Income (to common) | $25,495 | $25,495 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=39&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - Not applicable[182](index=182&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of December 31, 2019, due to a material weakness in internal control over financial reporting related to improper joint venture consolidation, leading to restated financials - Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of December 31, 2019[183](index=183&type=chunk) - A material weakness was identified in the internal controls surrounding the supervision and review of accounting for the Previously Consolidated Ventures, which were improperly consolidated instead of being presented under the equity method[186](index=186&type=chunk) - The material weakness impacts the consolidated balance sheets, statements of operations, and cash flows, but does not affect the presentation of net income, FFO, or AFFO in previously reported information[187](index=187&type=chunk) [Other Information](index=40&type=section&id=Item%209B.%20Other%20Information) In Q1 2020, the board adopted the 2020 Incentive Plan and approved fees for related parties for services - In Q1 2020, the board adopted the 2020 Incentive Plan, allowing for the grant of up to **1 million shares** through various awards[188](index=188&type=chunk) - Fees for services to be paid to related parties in 2020 were approved, including payments to Israel Rosenzweig, Fredric H. Gould, Matthew J. Gould, and others[188](index=188&type=chunk) PART III [Directors, Executive Officers, Corporate Governance, Compensation, and Other Matters](index=41&type=section&id=Items%2010-14) Information for Items 10-14, covering directors, executive compensation, security ownership, related transactions, and accountant fees, is incorporated by reference from the proxy statement or a future amendment - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's proxy statement or a future amendment to the 10-K[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=42&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Annual Report, including governing documents, material contracts, and SOX certifications - This item contains a list of all financial statements, schedules, and exhibits included with the 10-K filing[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Form 10-K Summary](index=44&type=section&id=Item%2016.%20Form%2010-K%20Summary) Not applicable - Not applicable[207](index=207&type=chunk)

BRT Apartments Corp (NYSE:BRT) Q3 2019 Earnings Conference Call November 7, 2019 8:30 AM ET Company Participants Morey Marcus - Investor Relations Jeffrey Gould - President and Chief Executive Officer George Zweier - Chief Financial Officer David Kalish - Senior Vice President Ryan Baltimore - Senior Vice President Conference Call Participants Gaurav Mehta - National Securities Craig Kucera - B. Riley FBR Operator Good day and welcome to BRT Apartment Corp. Conference Call for the Third Quarter of 2019. Tod ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2019 OR ☐ \Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-07172 BRT APARTMENTS CORP. (Exact name of Registrant as specified in its charter) Maryland 13-2755856 (State or other jurisdiction of (I.R.S. Employer I ...

BRT Apartments Corp. (NYSE:BRT) Q2 2019 Earnings Conference Call August 8, 2019 8:30 AM ET Company Participants Morey Marcus - IR, ICR Jeffrey Gould - President & CEO George Zweier - CFO Ryan Baltimore - SVP Conference Call Participants Gueva Neta - National Security Barry Oxford - D.A. Davidson Craig Kucera - B. Riley FBR Operator Good day, and welcome to BRT Apartments Corp Conference Call for the Second Quarter of 2019. Today's conference is being recorded. At this time, I would like to turn the conferen ...