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)