BRT Apartments (BRT) - 2025 Q2 - Quarterly Report

Part I - Financial Information This section encompasses the company's financial statements, management's discussion, market risks, and internal controls Item 1. Financial Statements This section presents the unaudited consolidated financial statements for BRT Apartments Corp. for the quarter and six months ended June 30, 2025, including balance sheets, statements of operations, equity, cash flows, and comprehensive notes detailing the company's financial position, performance, and significant accounting policies Consolidated Balance Sheets Presents the company's financial position, assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------- | | Total Assets | $699,559 | $713,463 | $(13,904) | | Real estate properties, net | $607,066 | $615,915 | $(8,849) | | Investments in unconsolidated joint ventures | $30,023 | $31,344 | $(1,321) | | Cash and cash equivalents | $23,645 | $27,856 | $(4,211) | | Total Liabilities | $507,510 | $508,549 | $(1,039) | | Mortgages payable, net | $444,983 | $446,471 | $(1,488) | | Total Equity | $192,049 | $204,914 | $(12,865) | Consolidated Statements of Operations Details the company's revenues, expenses, and net loss for the reported periods Consolidated Statements of Operations Highlights (Amounts in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | % Change | | :----------------------------------- | :------------------------------- | :------------------------------- | :----- | :------- | | Total Revenues | $24,197 | $23,862 | $335 | 1.4% | | Total Expenses | $27,148 | $26,625 | $523 | 2.0% | | Net loss attributable to common stockholders | $(2,566) | $(2,345) | $(221) | 9.4% | | Basic and diluted EPS | $(0.14) | $(0.13) | $(0.01) | 7.7% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | % Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :----- | :------- | | Total Revenues | $48,303 | $47,265 | $1,038 | 2.2% | | Total Expenses | $53,985 | $53,314 | $671 | 1.3% | | Net loss attributable to common stockholders | $(4,918) | $(5,516) | $598 | (10.8)% | | Basic and diluted EPS | $(0.26) | $(0.30) | $0.04 | (13.3)% | Consolidated Statements of Equity Outlines changes in stockholders' equity, including net loss, distributions, and stock transactions - Total Equity decreased from $204,914k at December 31, 2024, to $192,049k at June 30, 2025[16] - Common stock distributions for the six months ended June 30, 2025, totaled $(9,457)k (two quarterly payments of $0.25 per share)[16] - Compensation expense for restricted stock and restricted stock units for the six months ended June 30, 2025, was $2,277k[16] - Shares repurchased for the six months ended June 30, 2025, amounted to $2,386k[16] Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :------- | | Net cash provided by operating activities | $8,724 | $7,594 | $1,130 | | Net cash used in investing activities | $(2,239) | $(675) | $(1,564) | | Net cash used in financing activities | $(12,514) | $(12,594) | $80 | | Net decrease in cash, cash equivalents, restricted cash and escrows | $(6,029) | $(5,675) | $(354) | | Cash, cash equivalents, restricted cash and escrows at end of period | $34,550 | $26,100 | $8,450 | Notes to Consolidated Financial Statements Provides detailed explanations of accounting policies, financial statement items, and significant events - BRT Apartments Corp. operates as a REIT, owning 21 wholly-owned multi-family properties (5,420 units) and interests in 8 unconsolidated joint ventures (2,527 units), primarily located in the Southeast U.S. and Texas[25][26][27] - The company declared a quarterly cash dividend of $0.25 per share and repurchased 142,080 shares for $2,386k during the six months ended June 30, 2025. All 2022 RSU grants were forfeited due to unmet performance conditions[39][41][48] - Preferred equity investments in two joint ventures, treated as loans, generated $624k in interest income for the six months ended June 30, 2025, with a net carrying value of $17,698k[62][64] - Total debt obligations, net, were $482,156k at June 30, 2025. The weighted average interest rate on mortgages payable was 4.09%, and junior subordinated notes bore an interest rate of 6.54%[73][74][79] - On July 10, 2025, a joint venture acquired a 214-unit multi-family property in Auburn, AL, for $36.5M, with BRT contributing $10.7M and borrowing $7M from its credit facility[72][78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting the challenging economic and market environment, strategic responses to limited acquisition opportunities, and detailed analysis of revenue, expense, and non-GAAP performance metrics for the three and six months ended June 30, 2025 Cautionary Statement Regarding Forward-Looking Statements Warns readers about the inherent uncertainties and risks associated with forward-looking information - The report contains forward-looking statements subject to various risks and uncertainties, including economic conditions, real estate market changes, competition, financing availability, and regulatory changes[95][96] - Readers are cautioned not to place undue reliance on these statements, which speak only as of the report date, and the company undertakes no obligation to update them[97] Overview Describes the company's business, market environment, and strategic responses to challenges - BRT Apartments Corp. is an internally managed REIT focused on multi-family properties, with a portfolio of 21 wholly-owned and 8 unconsolidated joint venture properties, primarily in the Southeast U.S. and Texas[98] - The company faces challenges from an uncertain national economic environment (inflation, recession, volatile interest rates) and a competitive multi-family market with limited acquisition opportunities and oversupply in several key markets[100] - To address the challenging acquisition environment, the company is pursuing alternative investments like preferred equity and bridge loans, and acquiring properties through joint ventures[101] - Mortgage interest expense is anticipated to increase as $174.5 million of debt matures through 2027, requiring refinancing at generally higher current interest rates[102] Results of Operations Analyzes the company's financial performance, revenues, and expenses for the reported periods - Three Months Ended June 30, 2025 vs 2024: - Total revenues increased by 1.4% to $24,197k, driven by a 457.1% increase in loan interest and other income to $468k, offsetting a slight 0.2% decrease in rental and other revenue - Total expenses rose by 2.0% to $27,148k, primarily due to a 2.5% increase in real estate operating expenses and a 3.8% rise in interest expense - Net loss attributable to common stockholders increased by 9.4% to $(2,566)k, while equity in earnings of unconsolidated joint ventures decreased by $90k[13][105][106][107][108][109][110][111] - Six Months Ended June 30, 2025 vs 2024: - Total revenues increased by 2.2% to $48,303k, largely due to a 405.3% increase in loan interest and other income to $955k, alongside a 0.6% increase in rental and other revenue - Total expenses increased by 1.3% to $53,985k, mainly from a 1.1% rise in real estate operating expenses and a 3.3% increase in interest expense - Net loss attributable to common stockholders decreased by 10.8% to $(4,918)k, and equity in earnings of unconsolidated joint ventures increased by $95k[13][115][116][117][118][119][121][124] Liquidity and Capital Resources Assesses the company's ability to meet short-term and long-term financial obligations and funding strategies - Available liquidity as of August 1, 2025, was approximately $49.0 million, comprising $16.0 million in cash and cash equivalents and $33 million available under its credit facility[127] - The company faces significant mortgage debt balloon payments totaling $211.7 million maturing through 2027, which operating cash flow is insufficient to cover, potentially requiring refinancing, equity issuance, or property dispositions[128] - Total mortgage debt at June 30, 2025, was $699.3 million, with a weighted average interest rate of 4.09% for consolidated properties and 4.26% for unconsolidated subsidiaries[130] - The $40 million credit facility, with an interest rate of 6.95% at June 30, 2025, had no outstanding balance at period-end but was used for a $7 million borrowing post-period for an acquisition[132] - The company maintains its REIT status, requiring distribution of at least 90% of ordinary taxable income, and paid a quarterly cash dividend of $0.25 per share in July 2025[136][137] Funds from Operations, Adjusted Funds from Operations and Net Operating Income Presents key non-GAAP financial metrics used to evaluate the company's operational performance Non-GAAP Performance Metrics (Amounts in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | | :----------------------------------- | :------------------------------- | :------------------------------- | :----- | | NAREIT FFO attributable to common stockholders | $5,446 | $5,490 | $(44) | | Adjusted FFO attributable to common stockholders | $6,847 | $6,568 | $279 | | Net Operating Income (NOI) | $12,612 | $12,932 | $(320) | | Same store Net Operating Income | $12,296 | $12,681 | $(385) | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :------- | | NAREIT FFO attributable to common stockholders | $11,164 | $10,117 | $1,047 | | Adjusted FFO attributable to common stockholders | $14,235 | $13,002 | $1,233 | | Net Operating Income (NOI) | $25,681 | $25,651 | $30 | | Same store Net Operating Income | $25,043 | $25,130 | $(87) | Item 3. Quantitative and Qualitative Disclosures About Market Risks This section discusses the company's exposure to market risks, primarily focusing on interest rate risk affecting its variable-rate junior subordinated notes and credit facility, while noting that mortgage debt is fixed-rate - All of the company's mortgage debt bears interest at fixed rates[158] - Junior subordinated notes bear interest at a variable rate of three-month term SOFR plus 226 basis points, which was 6.54% at June 30, 2025[158][79] - The credit facility bears interest at one-month term SOFR plus 250 basis points, with an interest rate of 6.95% at June 30, 2025, and no outstanding balance at that date[158][76][77] - A 100 basis point increase in interest rates would increase the annual interest expense on junior subordinated notes by approximately $374k[158] Item 4. Controls and Procedures This section confirms that management evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective, and reported no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated under management's supervision and concluded to be effective as of June 30, 2025[159] - There have been no material changes in internal control over financial reporting during the quarter ended June 30, 2025[160] Part II – Other Information Covers unregistered equity sales, other disclosures, and regulatory exhibits Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases and purchases by an affiliated entity during the second quarter of 2025 - The company repurchased 63,356 shares of common stock at an average price of $15.84 per share, totaling $1,004k, during April 2025[163] - An affiliated entity, Gould Investors L.P., purchased 76,966 shares of common stock at an average price of $15.57 per share, totaling $1,198,090, during May and June 2025[163] - As of April 30, 2025, $8,752,028 of shares remained available for repurchase under the company's program[163] Item 5. Other Information This section discloses information regarding executive trading plans, recent equity incentive awards, forfeiture of prior RSU grants, and the impact of the newly enacted "One Big Beautiful Bill Act" on REIT tax provisions - No officers or directors had any contract, instruction, or written plan for the purchase or sale of securities intended to satisfy Rule 10b5-1(c) conditions during the three months ended June 30, 2025[166] - On July 11, 2025, approximately 173,700 shares subject to restricted stock units (RSUs) were awarded, generally vesting in 2028 subject to market and performance conditions[167] - All 2022 RSU grants were forfeited as of June 30, 2025, because none of the performance and market conditions for vesting had been met[168] - The "One Big Beautiful Bill Act" (OBBBA), enacted July 4, 2025, increases the REIT asset test limit for securities of Taxable REIT Subsidiaries (TRSs) to 25% (from 20%) for taxable years ending after December 31, 2025[170][171] - The OBBBA also permanently extends the 20% deduction for "qualified REIT dividends" and eases limitations on interest deductibility by modifying the definition of "adjusted taxable income" for taxable years beginning after December 21, 2025[172] Item 6. Exhibits Lists all supplementary documents and certifications filed with the quarterly report - Includes certifications from the President and Chief Executive Officer, Senior Vice President—Finance, and Vice President and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[174] - Financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, is formatted in Inline XBRL (Exhibit 101)[174]