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 ...

Part I - Financial Information This section details the company's financial performance, position, and cash flows, along with management's analysis and market risk disclosures [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining the accounting policies, significant transactions, and financial instrument disclosures [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2019 (unaudited) | Dec 31, 2018 (unaudited) | Change (in thousands) | % Change | | :---------------------- | :----------------------- | :----------------------- | :-------------------- | :------- | | Total Assets | $1,192,597 | $1,123,707 | $68,890 | 6.13% | | Real estate properties, net | $1,112,896 | $1,029,239 | $83,657 | 8.13% | | Cash and cash equivalents | $18,466 | $32,428 | $(13,962) | (43.05)% | | Total Liabilities | $917,470 | $833,347 | $84,123 | 10.10% | | Mortgages payable, net | $844,597 | $771,817 | $72,780 | 9.43% | | Total Equity | $275,127 | $290,360 | $(15,233) | (5.25)% | - The Company's consolidated balance sheets include **$677,189 thousand** of real estate properties and **$521,494 thousand** of mortgages payable related to consolidated variable interest entities (VIEs) as of September 30, 2019[8](index=8&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net income or loss over specific periods Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues | $34,036 | $31,481 | $98,102 | $91,286 | | Total Expenses | $38,506 | $37,044 | $112,917 | $107,489 | | Gain on sale of real estate | $9,938 | $424 | $9,938 | $52,405 | | Loss on extinguishment of debt | $(1,766) | — | $(1,766) | $(593) | | Net income (loss) attributable to common stockholders | $3,272 | $(3,111) | $(5,292) | $17,422 | | Basic EPS | $0.21 | $(0.20) | $(0.33) | $1.18 | | Diluted EPS | $0.20 | $(0.20) | $(0.33) | $1.16 | - For the three months ended September 30, 2019, the company reported a **net income of $3,272 thousand**, a significant improvement from a **net loss of $3,111 thousand** in the prior year, primarily due to a substantial **gain on the sale of real estate**[12](index=12&type=chunk) - For the nine months ended September 30, 2019, the company reported a **net loss of $5,292 thousand**, a decrease from a **net income of $17,422 thousand** in the prior year, mainly due to a much **lower gain on real estate sales in 2019**[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's net income and other comprehensive income components, reflecting total non-owner changes in equity Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $3,345 | $(4,138) | $(6,988) | $39,799 | | Unrealized (loss) gain on derivative instruments | $(322) | $316 | $(2,544) | $1,846 | | Comprehensive income (loss) attributable to common stockholders | $3,054 | $(2,888) | $(7,055) | $18,707 | - The company experienced a significant shift in comprehensive income attributable to common stockholders for the nine months ended September 30, 2019, reporting a **loss of $7,055 thousand** compared to an **income of $18,707 thousand** in the prior year, largely influenced by **unrealized losses on derivative instruments**[14](index=14&type=chunk) [Consolidated Statement of Equity](index=7&type=section&id=Consolidated%20Statement%20of%20Equity) This section tracks changes in the company's equity, including common stock, accumulated deficit, and comprehensive income - Total equity decreased from **$290,360 thousand** at December 31, 2018, to **$275,127 thousand** at September 30, 2019[17](index=17&type=chunk) - Common stock distributions totaled **$3,221 thousand**, **$3,220 thousand**, and **$3,554 thousand** for the quarters ending March 31, June 30, and September 30, 2019, respectively[17](index=17&type=chunk) - The accumulated deficit increased from **$(20,044) thousand** at December 31, 2018, to **$(35,331) thousand** at September 30, 2019, reflecting **net losses over the period**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section categorizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (in thousands) | % Change | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Net cash provided by operating activities | $22,523 | $30,223 | $(7,700) | (25.48)% | | Net cash used in investing activities | $(60,929) | $(34,004) | $(26,925) | 79.18% | | Net cash provided by financing activities | $27,053 | $16,066 | $10,987 | 68.39% | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(11,353) | $12,285 | $(23,638) | (192.41)%| | Cash, cash equivalents and restricted cash at end of period | $29,255 | $34,046 | $(4,791) | (14.07)% | - Net cash used in investing activities significantly increased by **79.18%** to **$60,929 thousand** for the nine months ended September 30, 2019, primarily due to **higher additions to real estate properties**[24](index=24&type=chunk) - Net cash provided by financing activities increased by **68.39%** to **$27,053 thousand**, driven by **higher proceeds from mortgages payable and the credit facility**[24](index=24&type=chunk) [Notes to Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant transactions, and financial instrument disclosures [Note 1 – Organization and Background](index=15&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Background) This note describes the company's business as a REIT, its property portfolio, and its operational structure - BRT Apartments Corp. operates as a **Real Estate Investment Trust (REIT)**, focusing on owning, operating, and developing multi-family properties[30](index=30&type=chunk) - As of September 30, 2019, the Company owned **36 multi-family properties with 10,152 units** (including 402 units in lease-up) across 12 states, with a carrying value of **$1,102,619 thousand**[31](index=31&type=chunk) - The Company also holds interests in **three unconsolidated multi-family joint ventures with 1,026 units** (including 339 units in lease-up) in two states, with a carrying value of **$17,964 thousand**[31](index=31&type=chunk) [Note 2 – Basis of Preparation](index=15&type=section&id=Note%202%20%E2%80%93%20Basis%20of%20Preparation) This note outlines the accounting principles, fiscal year change, and consolidation policies used in preparing the financial statements - The interim financial statements are **unaudited** and reflect normal recurring adjustments, not necessarily indicative of full-year results[32](index=32&type=chunk) - The Company changed its fiscal year end from September 30 to December 31, effective January 1, 2019, to better align with other **multi-family REITs**[40](index=40&type=chunk) - Consolidated financial statements include wholly-owned subsidiaries, majority-owned/controlled real estate entities, and **Variable Interest Entities (VIEs)** where the Company is the primary beneficiary[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 3 - Equity](index=16&type=section&id=Note%203%20-%20Equity) This note details changes in equity, including stock sales, distributions, repurchase plans, and stock-based compensation - Through September 30, 2019, the Company sold **1,645,997 shares of common stock** for an aggregate sales price of **$21,704 thousand** under its at-the-market equity distribution program[41](index=41&type=chunk) - A quarterly cash distribution of **$0.22 per share** was declared, payable on October 10, 2019[42](index=42&type=chunk) - A new stock repurchase plan was approved on September 12, 2019, authorizing the repurchase of up to **$5,000 thousand of common stock** through September 30, 2021, effective October 1, 2019[50](index=50&type=chunk) - For the nine months ended September 30, 2019, the Company recorded **$106 thousand of compensation expense** for restricted stock units and **$1,004 thousand for restricted stock awards**[45](index=45&type=chunk)[47](index=47&type=chunk) [Note 4 ‑ Real Estate Properties](index=18&type=section&id=Note%204%20%E2%80%91%20Real%20Estate%20Properties) This note provides a breakdown of the company's real estate assets, including land, buildings, and improvements Real Estate Properties (in thousands) | Metric | Sep 30, 2019 | Dec 31, 2018 | Change (in thousands) | | :------------------------ | :----------- | :----------- | :------- | | Land | $157,252 | $155,573 | $1,679 | | Building | $1,025,689 | $924,378 | $101,311 | | Building improvements | $47,489 | $41,003 | $6,486 | | Total real estate properties, net | $1,112,896 | $1,029,239 | $83,657 | - Additions to real estate properties for the nine months ended September 30, 2019, totaled **$110,710 thousand**[54](index=54&type=chunk) [Note 5 ‑ Acquisitions and Dispositions](index=18&type=section&id=Note%205%20%E2%80%91%20Acquisitions%20and%20Dispositions) This note details the company's property acquisitions and dispositions, including purchase prices and gains on sales Property Acquisitions (9 months ended Sep 30, 2019, in thousands) | Location | No. of Units | Purchase Price (in thousands) | | :---------------- | :----------- | :------------- | | Kannapolis, NC | 312 | $48,065 | | Birmingham, AL | 328 | $43,000 | | Auburn, AL | 200 | $18,400 | | **Total** | **840** | **$109,465** | Property Dispositions (9 months ended Sep 30, 2019, in thousands) | Location | No. of Units | Sales Price (in thousands) | Gain on Sale (in thousands) | | :---------------- | :----------- | :---------- | :----------- | | Houston, TX (two properties) | 384 | $33,200 | $9,938 | - No impairment charges were recorded during the three and nine months ended September 30, 2019 and 2018[60](index=60&type=chunk) [Note 6 - Variable Interest Entities](index=20&type=section&id=Note%206%20-%20Variable%20Interest%20Entities) This note explains the company's involvement with VIEs, detailing their assets and liabilities - Many of the Company's consolidated joint ventures are determined to be **Variable Interest Entities (VIEs)** because the Company is the primary beneficiary, having controlling financial interest and the power to direct activities that significantly impact economic performance[61](index=61&type=chunk) Summary of VIE Assets and Liabilities (in thousands) | Metric (VIEs) | Sep 30, 2019 | Dec 31, 2018 | | :---------------------- | :----------- | :----------- | | Total Assets | $699,021 | $607,288 | | Real estate properties, net | $677,189 | $584,074 | | Total Liabilities | $536,274 | $458,595 | | Mortgages payable, net | $521,494 | $446,779 | [Note 7 - Restricted Cash](index=22&type=section&id=Note%207%20-%20Restricted%20Cash) This note clarifies the nature and balance of restricted cash, held for specific purposes like capital improvements - Restricted cash represents funds held for specific purposes, primarily **capital improvements** at certain multi-family properties, and is not available for general corporate use[64](index=64&type=chunk) - The balance of restricted cash was **$10,789 thousand** at September 30, 2019[8](index=8&type=chunk) [Note 8 – Investment in Unconsolidated Ventures](index=22&type=section&id=Note%208%20%E2%80%93%20Investment%20in%20Unconsolidated%20Ventures) This note details the company's equity investments in unconsolidated joint ventures and their financial impact - The Company has interests in **three unconsolidated joint ventures** that own multi-family properties, with a total of **1,026 units**[65](index=65&type=chunk) - The carrying value of the investment in these unconsolidated joint ventures was **$18,020 thousand** at September 30, 2019[65](index=65&type=chunk) - The net loss from these unconsolidated ventures increased to **$643 thousand** for the nine months ended September 30, 2019, from **$364 thousand** in the prior year[65](index=65&type=chunk) [Note 9 – Debt Obligations](index=23&type=section&id=Note%209%20%E2%80%93%20Debt%20Obligations) This note outlines the company's various debt instruments, including mortgages, notes, and credit facilities Debt Obligations (in thousands) | Debt Obligation | Sep 30, 2019 | Dec 31, 2018 | Change (in thousands) | | :------------------------ | :----------- | :----------- | :------- | | Mortgages payable | $851,147 | $778,106 | $73,041 | | Junior subordinated notes | $37,400 | $37,400 | $0 | | Credit facility | $3,600 | — | $3,600 | | Total debt obligations, net of deferred costs | $885,185 | $808,860 | $76,325 | - During the nine months ended September 30, 2019, the Company obtained **$80,097 thousand in new mortgage debt** for property acquisitions[68](index=68&type=chunk) - A **$10,000 thousand credit facility** was entered into in April 2019, with an outstanding balance of **$3,600 thousand** at September 30, 2019, bearing an adjustable interest rate of **50 basis points over prime (5% at Sep 30, 2019)**[71](index=71&type=chunk)[72](index=72&type=chunk) - The Company refinanced a **$27,000 thousand adjustable rate loan** on its San Antonio, TX property with a fixed rate loan of the same amount at **3.64%** in September 2019[70](index=70&type=chunk) [Note 10 – Related Party Transactions](index=25&type=section&id=Note%2010%20%E2%80%93%20Related%20Party%20Transactions) This note discloses transactions with related parties, including fees paid to officers and management services - Fees incurred and paid to executive officers and a director for services totaled **$998 thousand** for the nine months ended September 30, 2019[76](index=76&type=chunk) - Property management services provided by Majestic Property Management Corp. (a company wholly owned by a director) amounted to **$25 thousand** for the nine months ended September 30, 2019[77](index=77&type=chunk) - Net allocated general and administrative expenses reimbursed to Gould Investors L.P. for shared services aggregated **$402 thousand** for the nine months ended September 30, 2019[78](index=78&type=chunk) - Management fees paid to joint venture partners or their affiliates for multi-family properties totaled **$3,187 thousand** for the nine months ended September 30, 2019[79](index=79&type=chunk) [Note 11 – Fair Value of Financial Instruments](index=25&type=section&id=Note%2011%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) This note provides estimated fair values for financial instruments, including debt and derivatives - The estimated fair value of junior subordinated notes was approximately **$9,520 thousand greater** than their carrying value at September 30, 2019[82](index=82&type=chunk) - The estimated fair value of mortgages payable was approximately **$29,153 thousand greater** than their carrying value at September 30, 2019[84](index=84&type=chunk) - Derivative financial instruments (interest rate swap) had a fair value of **$112 thousand**, classified as a **Level 2 liability**, at September 30, 2019[87](index=87&type=chunk) [Note 12 – Derivative Financial Instruments](index=28&type=section&id=Note%2012%20%E2%80%93%20Derivative%20Financial%20Instruments) This note details the company's use of interest rate swaps for hedging and managing interest rate risk - The Company uses **interest rate swaps** as cash flow hedges to add stability to interest expense and manage interest rate risk[91](index=91&type=chunk) - As of September 30, 2019, the Company had **two outstanding interest rate swap agreements** with current notional amounts of **$1,201 thousand** and **$25,662 thousand**[93](index=93&type=chunk) - A **loss of $391 thousand** was accelerated from Accumulated Other Comprehensive Income to earnings during the three months ended September 30, 2019, due to a hedged forecasted transaction becoming probable not to occur[92](index=92&type=chunk) - A non-designated interest rate cap with a notional value of **$9,200 thousand** had no value at September 30, 2019[94](index=94&type=chunk) [Note 13 – New Accounting Pronouncements](index=29&type=section&id=Note%2013%20%E2%80%93%20New%20Accounting%20Pronouncements) This note discusses the adoption and impact of recent accounting standards on the company's financial reporting - The Company adopted **ASU 2014-09 (Revenue from Contracts with Customers)** effective October 1, 2018, which did not have a material impact on its consolidated financial statements[99](index=99&type=chunk) - **ASU 2016-02 (Leases)** was adopted effective January 1, 2019, leading to the recognition of right-of-use assets and lease liabilities as a lessee, but without a material effect on overall financial statements[100](index=100&type=chunk) - **ASU 2016-18 (Restricted Cash)** was adopted effective October 1, 2018, using the retrospective approach, with no material effect on the consolidated financial statements[104](index=104&type=chunk) - The Company adopted **ASU 2017-12 (Derivatives and Hedging)** effective January 1, 2019, which did not have a material effect on its consolidated financial statements[106](index=106&type=chunk) [Note 14 – Subsequent Events](index=30&type=section&id=Note%2014%20%E2%80%93%20Subsequent%20Events) This note discloses significant events occurring after the reporting period that warrant financial statement disclosure - Subsequent events have been evaluated and any significant events warranting additional disclosure have been included in the notes to the consolidated financial statements[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&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, highlighting key performance drivers, recent acquisitions and dispositions, liquidity, capital resources, and non-GAAP financial measures like FFO and AFFO [Overview](index=31&type=section&id=Overview) This section provides a high-level summary of the company's business, property portfolio, and recent operational highlights - The Company, a **REIT focused on multi-family properties**, changed its fiscal year end from September 30 to December 31, effective January 1, 2019[114](index=114&type=chunk) - As of September 30, 2019, the Company owned **36 multi-family properties (10,152 units)** and had interests in **three unconsolidated joint ventures (1,026 units)**[113](index=113&type=chunk) - The **402-unit Bells Bluff project** in West Nashville, TN, commenced leasing in Q1 2019 and achieved an **occupancy rate of 49.5%** as of September 30, 2019[115](index=115&type=chunk) - A quarterly dividend of **$0.22 per share** was paid on October 10, 2019, representing a **10% increase** over the prior quarter's dividend[116](index=116&type=chunk) - On August 8, 2019, the Company acquired Village at Lakeside, a **200-unit multi-family property** in Auburn, AL, for **$18.4 million**[118](index=118&type=chunk) - On July 11, 2019, the Company sold two properties in Houston, TX (**384 units**) for **$33.2 million**, recognizing a **gain of $9.9 million**[119](index=119&type=chunk) [Results of Operations – Three months ended September 30, 2019 compared to three months ended September 30, 2018.](index=32&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20months%20ended%20September%2030%2C%202019%20compared%20to%20three%20months%20ended%20September%2030%2C%202018.) This section analyzes the company's financial performance for the three-month period, comparing revenues and expenses year-over-year Revenue Comparison (Three Months Ended September 30, in thousands) | Metric | 2019 (in thousands) | 2018 (in thousands) | Increase (Decrease) (in thousands) | % Change | | :------------- | :------------------ | :------------------ | :--------------------------------- | :------- | | Rental revenue | $33,875 | $31,283 | $2,592 | 8.3% | | Other income | $161 | $198 | $(37) | (18.7)% | | Total revenues | $34,036 | $31,481 | $2,555 | 8.1% | - Rental revenue increased by **$3.4 million** from four properties acquired during the twelve months ended September 30, 2019, and by **$1.7 million** from same-store properties due to increased rental rates and variable lease payments[122](index=122&type=chunk) Expense Comparison (Three Months Ended September 30, in thousands) | Metric | 2019 (in thousands) | 2018 (in thousands) | Increase (Decrease) (in thousands) | % Change | | :--------------------------- | :------------------ | :------------------ | :--------------------------------- | :------- | | Real estate operating expenses | $16,281 | $15,661 | $620 | 4.0% | | Interest expense | $9,845 | $8,965 | $880 | 9.8% | | General and administrative | $2,430 | $2,002 | $428 | 21.4% | | Depreciation | $9,950 | $10,416 | $(466) | (4.5)% | | Total expenses | $38,506 | $37,044 | $1,462 | 3.9% | - Real estate operating expenses increased due to acquired properties (**$1.5 million**) and the Bells Bluff property (**$445 thousand**), partially offset by expenses from properties sold in the prior year[126](index=126&type=chunk)[127](index=127&type=chunk) - A **gain on sale of real estate of $9,938 thousand** was recognized in Q3 2019, significantly higher than **$424 thousand** in Q3 2018, while a **loss on extinguishment of debt of $1,766 thousand** was incurred in Q3 2019[137](index=137&type=chunk)[138](index=138&type=chunk) [Results of Operations – nine months ended September 30, 2019 compared to nine months ended September 30, 2018.](index=35&type=section&id=Results%20of%20Operations%20%E2%80%93%20nine%20months%20ended%20September%2030%2C%202019%20compared%20to%20nine%20months%20ended%20September%2030%2C%202018.) This section analyzes the company's financial performance for the nine-month period, comparing revenues and expenses year-over-year Revenue Comparison (Nine Months Ended September 30, in thousands) | Metric | 2019 (in thousands) | 2018 (in thousands) | Increase (Decrease) (in thousands) | % Change | | :------------- | :------------------ | :------------------ | :--------------------------------- | :------- | | Rental revenue | $97,507 | $90,710 | $6,797 | 7.5% | | Other income | $595 | $576 | $19 | 3.3% | | Total revenues | $98,102 | $91,286 | $6,816 | 7.5% | - Rental revenue increased by **$7.1 million** from acquired properties and **$4.2 million** from properties owned for the entire nine months in 2019 that were only partially owned in 2018[141](index=141&type=chunk) Expense Comparison (Nine Months Ended September 30, in thousands) | Metric | 2019 (in thousands) | 2018 (in thousands) | Increase (Decrease) (in thousands) | % Change | | :--------------------------- | :------------------ | :------------------ | :--------------------------------- | :------- | | Real estate operating expenses | $47,195 | $44,318 | $2,877 | 6.5% | | Interest expense | $28,353 | $26,408 | $1,945 | 7.4% | | General and administrative | $7,455 | $6,907 | $548 | 7.9% | | Depreciation | $29,914 | $29,856 | $58 | 0.2% | | Total expenses | $112,917 | $107,489 | $5,428 | 5.0% | - Gain on sale of real estate significantly decreased to **$9,938 thousand** in 2019 from **$52,405 thousand** in 2018, while loss on extinguishment of debt increased to **$1,766 thousand** from **$593 thousand**[152](index=152&type=chunk)[153](index=153&type=chunk)[155](index=155&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's available cash, funding sources, and strategies for managing operational and investment needs - Available liquidity as of November 1, 2019, was **$32.4 million**, comprising **$14.4 million** in cash and cash equivalents, **$10.8 million** in restricted cash, and **$7.2 million** available under the credit facility[157](index=157&type=chunk) - Operating expenses, dividend payments, and **$85.2 million** in interest and mortgage amortization payments over the next two years are expected to be funded by property operations, with supplemental funding from mortgage refinancing, property sales, or common stock sales[158](index=158&type=chunk) - Capital improvements at **19 multi-family properties** will be funded by **$10.8 million of restricted cash** and cash flow from operations[160](index=160&type=chunk) - The Company maintains its **REIT status** by distributing at least **90% of its ordinary taxable income** to stockholders[165](index=165&type=chunk) - A **$10 million credit facility**, maturing April 2021, is available for acquisitions and investments, secured by cash accounts at Valley National Bank[163](index=163&type=chunk) [Funds from Operations; Adjusted Funds from Operations](index=41&type=section&id=Funds%20from%20Operations%3B%20Adjusted%20Funds%20from%20Operations) This section presents non-GAAP financial measures, FFO and AFFO, to assess the company's operating performance as a REIT - The Company uses **Funds from Operations (FFO)** and **Adjusted Funds from Operations (AFFO)** as supplemental non-GAAP measures to evaluate the operating performance of its equity REIT, excluding GAAP depreciation and real estate gains/losses[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) FFO and AFFO Attributable to Common Stockholders (in thousands) | Metric | 3 Months Ended Sep 30, 2019 (in thousands) | 3 Months Ended Sep 30, 2018 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | 9 Months Ended Sep 30, 2018 (in thousands) | | :---------------------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | NAREIT Funds from operations attributable to common stockholders | $1,962 | $4,080 | $8,503 | $12,150 | | Adjusted funds from operations attributable to common stockholders | $4,177 | $3,380 | $11,767 | $10,558 | FFO and AFFO Per Common Stock (Basic and Diluted) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | NAREIT Funds from operations per common stock basic and diluted | $0.12 | $0.26 | $0.54 | $0.80 | | Adjusted funds from operations per common stock basic and diluted | $0.26 | $0.21 | $0.74 | $0.69 | [Item 3. Quantitative and Qualitative Disclosures About Market Risks](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risks) This section outlines the company's exposure to market risks, primarily interest rate fluctuations and geographic concentration of properties, detailing the potential impact of interest rate changes on debt obligations and derivative instruments - A **100 basis point increase** in interest rates on the unhedged mortgage debt would reduce annual net income by **$448 thousand**[177](index=177&type=chunk) - A **100 basis point increase** in the three-month LIBOR rate would increase annual interest expense on junior subordinated notes by approximately **$374 thousand**[179](index=179&type=chunk) - As of September 30, 2019, **27% of the Company's properties are located in Texas**, **15% in Georgia**, **12% in Florida**, and **9% in Alabama**, indicating **geographic concentration risk**[180](index=180&type=chunk) - A **100 basis point increase** in forward interest rates would increase the fair market value of derivative instruments by approximately **$866 thousand**[178](index=178&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2019[181](index=181&type=chunk) - There have been no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2019[182](index=182&type=chunk) Part II – Other Information This section covers legal proceedings, exhibits, and official signatures related to the financial report [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) A wholly-owned subsidiary of the company is a defendant in a wrongful death lawsuit alleging a homicide at a Houston, TX property, seeking over $1 million in compensatory damages and unspecified exemplary damages. The company believes it has sufficient insurance for compensatory damages but not for exemplary damages - A wholly-owned subsidiary is named as a defendant in a **wrongful death lawsuit** (Takakura et al. v. Houston Pizza Venture, LP, et.al.) alleging a homicide at a Houston, TX property[187](index=187&type=chunk) - The complaint seeks compensatory damages in excess of **$1 million** and unspecified exemplary damages[187](index=187&type=chunk) - The Company believes it has sufficient primary and umbrella insurance to cover compensatory damages, but insurance generally does not cover claims for **exemplary damages**[187](index=187&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and financial information formatted in Inline XBRL - The exhibits include certifications from the President and Chief Executive Officer and Senior Vice President—Finance pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[185](index=185&type=chunk) - Financial information from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, is provided in **Inline XBRL format (Exhibit 101)**[185](index=185&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) The report is duly signed on behalf of BRT Apartments Corp. by Jeffrey A. Gould, President and Chief Executive Officer, and George Zweier, Vice President and Chief Financial Officer, on November 7, 2019 - The report was signed by **Jeffrey A. Gould, President and Chief Executive Officer**, and **George Zweier, Vice President and Chief Financial Officer**[193](index=193&type=chunk) - The signing date for the report was **November 7, 2019**[193](index=193&type=chunk)

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 ...

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 June 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 Identi ...

BRT Apartments Corp. (NYSE:BRT) Q1 2019 Results Earnings Conference Call May 9, 2019 8:30 AM ET Company Participants Evelyn Infurna - 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 Rob Stevenson - Janney Jim Lykins - D.A. Davidson Craig Kucera - B. Riley FBR Operator Thank you for standing by. This is the conference operator. Welcome to BR ...

Part I - Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited statements show increased assets and liabilities from acquisitions and a net loss for the quarter [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $1.15 billion and liabilities to $868.4 million, driven by property acquisitions Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$1,153,915** | **$1,123,707** | | Real estate properties, net | $1,077,326 | $1,029,239 | | Cash and cash equivalents | $21,062 | $32,428 | | **Total Liabilities** | **$868,397** | **$833,347** | | Mortgages payable, net | $808,729 | $771,817 | | **Total Equity** | **$285,518** | **$290,360** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a Q1 2019 net loss of $4.2 million, a significant shift from a $25.2 million net income in Q1 2018 Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Total Revenues | $30,946 | $29,651 | | Total Expenses | $35,744 | $34,548 | | Gain on sale of real estate | $0 | $51,981 | | Net (loss) income attributable to common stockholders | $(4,247) | $25,222 | | Diluted (loss) earnings per share | $(0.27) | $1.75 | [Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) A comprehensive loss of $4.9 million was reported for Q1 2019, compared to a $26.0 million comprehensive income in Q1 2018 Comprehensive (Loss) Income Summary (in thousands) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net (loss) income | $(5,083) | $49,908 | | Other comprehensive (loss) income | $(869) | $1,132 | | Comprehensive (loss) income attributable to common stockholders | $(4,852) | $26,008 | [Consolidated Statement of Equity](index=7&type=section&id=Consolidated%20Statement%20of%20Equity) Total equity decreased to $285.5 million due to a net loss and common stock distributions - Key changes in equity for Q1 2019 included a **net loss of $5.1 million**, common stock distributions of **$3.2 million ($0.20 per share)**, and distributions to non-controlling interests of **$2.3 million**[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $11.7 million, driven by investing activities in real estate properties Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,492 | $11,609 | | Net cash (used in) provided by investing activities | $(18,219) | $43,289 | | Net cash used in financing activities | $(2,006) | $(37,983) | | **Net (decrease) increase in cash** | **$(11,733)** | **$16,915** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, portfolio composition, debt obligations, and recent property acquisitions - As of March 31, 2019, the company owned **36 multi-family properties with 10,008 units** and interests in three unconsolidated joint ventures with 1,026 units[24](index=24&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[32](index=32&type=chunk) - The company acquired one 312-unit multi-family property in Kannapolis, NC, for **$48.1 million** during the quarter ended March 31, 2019[49](index=49&type=chunk) - Total debt obligations, net of deferred costs, **increased to $845.8 million** as of March 31, 2019, from $808.9 million at December 31, 2018[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial results, highlighting revenue growth from acquisitions and sufficient liquidity for near-term obligations [Overview](index=26&type=section&id=Overview) The company operates as a REIT focused on multi-family properties, primarily in the southeast U.S. and Texas - The company acquired the 312-unit Vive at Kellswater property in Kannapolis, NC, for **$48.1 million** on March 12, 2019[104](index=104&type=chunk) - Subsequent to the quarter end, on May 7, 2019, the company acquired a 328-unit property in Trussville, AL, for **$43.0 million** through a joint venture[106](index=106&type=chunk) - Leasing commenced in Q1 2019 for the first 120 completed units at the **402-unit Bells Bluff project** in West Nashville, TN[103](index=103&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q1 2019 revenues increased 4.4% and expenses rose 3.5%, driven by property acquisitions and same-store performance Revenue and Expense Comparison (in thousands) | Category | Q1 2019 | Q1 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $30,946 | $29,651 | $1,295 | 4.4% | | Total Expenses | $35,744 | $34,548 | $1,196 | 3.5% | - Rental revenue from same-store properties **increased by $980,000**, largely due to higher rental rates and occupancy[109](index=109&type=chunk) - Real estate operating expenses for same-store properties **increased by $621,000**, with approximately 55% of this increase due to higher real estate taxes from increased assessments[115](index=115&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Available liquidity stood at $23.5 million, with management deeming resources sufficient for near-term needs - As of May 6, 2019, the company had **$23.5 million in available liquidity**, comprising $14.7 million in cash, $7.8 million in restricted cash, and $1.0 million available under its credit facility[124](index=124&type=chunk) - The company entered into a **new $10 million credit facility** in April 2019, secured by cash accounts, and subsequently borrowed $9 million in May 2019[129](index=129&type=chunk) - The company paid a quarterly cash dividend of **$0.20 per share** on January 4, 2019, and April 5, 2019, despite having a net operating loss carryforward that does not currently require distributions to maintain REIT status[133](index=133&type=chunk) [Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)](index=32&type=section&id=Funds%20from%20Operations%20(FFO)%20and%20Adjusted%20Funds%20from%20Operations%20(AFFO)) Q1 2019 FFO was $3.1 million ($0.19/share) and AFFO was $3.7 million ($0.23/share) FFO and AFFO Reconciliation (in thousands, except per share data) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | GAAP Net (loss) income | $(4,247) | $25,222 | | **NAREIT FFO** | **$3,062** | **$5,334** | | **AFFO** | **$3,718** | **$3,794** | | **NAREIT FFO per share** | **$0.19** | **$0.37** | | **AFFO per share** | **$0.23** | **$0.26** | [Item 3. Quantitative and Qualitative Disclosures About Market Risks](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risks) The company's primary market risks are interest rate fluctuations and geographic concentration in Texas - A **100 basis point increase in interest rates** would reduce annual net income by **$641,000** from unhedged mortgages and increase interest expense by **$374,000** on junior subordinated notes[144](index=144&type=chunk)[146](index=146&type=chunk) - The company has geographic concentration risk, with **31% of its properties** (by unit count) located in Texas, 15% in Georgia, and 12% in Florida[147](index=147&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the quarter-end - Based on an evaluation as of March 31, 2019, the Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures are effective**[148](index=148&type=chunk) - **No changes in internal control** over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[149](index=149&type=chunk) Part II - Other Information [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including a new loan agreement and required officer certifications - Exhibits filed include the **Loan Agreement with VNB New York, LLC** and certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[153](index=153&type=chunk)