BRT Apartments (BRT) - 2019 Q1 - Quarterly Report

Part I - Financial Information Item 1. Financial Statements The unaudited statements show increased assets and liabilities from acquisitions and a net loss for the quarter Consolidated Balance Sheets 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 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 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 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] Consolidated Statements of Cash Flows 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 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] - 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] - The company acquired one 312-unit multi-family property in Kannapolis, NC, for $48.1 million during the quarter ended March 31, 2019[49] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, highlighting revenue growth from acquisitions and sufficient liquidity for near-term obligations 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] - Subsequent to the quarter end, on May 7, 2019, the company acquired a 328-unit property in Trussville, AL, for $43.0 million through a joint venture[106] - Leasing commenced in Q1 2019 for the first 120 completed units at the 402-unit Bells Bluff project in West Nashville, TN[103] Results of Operations Q1 2019 revenues increased 4.4% and expenses rose 3.5%, driven by property acquisitions and same-store performance Revenue and Expense Comparison (in thousands) | Category | Q1 2019 | Q1 2018 | Change ($) | 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] - 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] Liquidity and Capital Resources 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] - 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] - 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] Funds from Operations (FFO) and Adjusted Funds from Operations (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 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][146] - 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] Item 4. Controls and Procedures 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] - 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] Part II - Other Information Item 6. Exhibits 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]