What changed in this filing

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Item 9A. Controls and Procedures

2022-03-16 compared with 2021-03-15 · 409 added, 309 removed, 746 unchanged (49% of the section changed)

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A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K.

Based on that review and evaluation, our CEO and CFO have concluded that our disclosure controls and procedures, as designed and implemented as of December 31, 2020, were not effective due to the material weakness in our internal control over financial reporting described in “Management’s Report on Internal Control Over Financial Reporting ”.

Based on that review and evaluation, our CEO and CFO have concluded that our disclosure controls and procedures, as designed and implemented as of December 31, 2021, were effective.

Management's Report on Internal Control Over Financial Reporting

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In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).

Based on its assessment, it was concluded that, as of December 31, 2020, our internal control over financial reporting was not effective based on these criteria.

In connection with the preparation of our audited consolidated financial statements for the year ended December 31, 2019, a material weakness in our internal control over financial reporting was identified.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a

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reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation and filing of our Annual Report on Form 10-K for the year ended December 31, 2019, we concluded that our internal controls surrounding the supervision and review of management’s analyses over the accounting for consolidated entities were ineffective and that we had consolidated the accounts and operations of many of our joint ventures into our consolidated financial statements in a manner inconsistent with the requirements of the Consolidation Standard.

Although we have taken action to remediate the material weakness, we can only evaluate the effectiveness of such actions when we acquire a property and properly apply the Consolidation Standard to such acquisition.

As we have not completed an acquisition since we reported the material weakness in April 2020, we are unable to (i) test the remedial action we have taken and (ii) conclude that our internal controls are effective.

Based on its assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was effective based on these criteria.

Changes in Internal Controls over Financial Reporting

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Other Information.

During the quarter ended December 31, 2020, the Board approved the payment of the following fees to the following related parties for the performance of Services in 2021:

Israel Rosenzweig, $60,800;

Gould, $210,000;

Gould, $243,100;

Kalish, $231,524;

Lundy, $110,250;

Isaac Kalish, $273,525;

and Steven Rosenzweig, $268,700.

Federal Income Tax Considerations

The discussion in Exhibit 99.1 filed herewith is incorporated herein by reference.

Adoption of 2022 Incentive Plan

In March 2022, our board of directors adopted, subject to stockholder approval, the 2022 Incentive Plan.

This plan permits us to grant:

(i) stock options, restricted stock, restricted stock units, performance share awards and any one or more of the foregoing, up to a maximum of 1,000,000 shares;

and (ii) cash settled dividend equivalent rights in tandem with the grant of certain awards.

Correction of Information in Current Report on Form 8-K Furnished on, and Press Release issued on, March 14, 2022.

Due to an error, our press release issued March 14, 2022 (page 9 to exhibit 99.1 to our Current Report on Form 8-K furnished to the SEC on March 14, 2022(the “8-K”)) and the supplemental financial information (page 5 to exhibit 99.2 to our 8-K) incorrectly reported the number of shares used in calculating in such documents per share FFO and AFFO for the quarter ended December 31, 2021.

The incorrect number of shares is 17,317,596.

The correct number of shares is 18,240,532 .This error did not impact the values reported in the 8-K (including the exhibits thereto) for per share FFO and AFFO as such reported values were correct.

We do not hereby incorporate by reference into this Annual Report on Form 10-K any of the information included in our 8-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable

Directors, Executive Officers and Corporate Governance.

Apart from certain information concerning our executive officers which is set forth in Part I of this report, the other information required by Item 10 will be incorporated herein by reference to the applicable information to be in the proxy statement to be filed by April 30, 2021 for our 2021 Annual Meeting of Stockholders.

Apart from certain information concerning our executive officers which is set forth in Part I of this report, the other information required by Item 10 will be incorporated herein by reference to the applicable information to be in the proxy statement to be filed by May 2, 2022 for our 2022 Annual Meeting of Stockholders.

Executive Compensation.

The information concerning our executive compensation required by Item 11 is incorporated herein by reference to the proxy statement to be filed by April 30, 2021 with respect to our 2021 Annual Meeting of Stockholders.

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The information concerning our executive compensation required by Item 11 is incorporated herein by reference to the proxy statement to be filed by May 2, 2022 with respect to our 2022 Annual Meeting of Stockholders.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Except as set forth below, the information required by Item 12 is incorporated herein by reference to the proxy statement to be filed by April 30, 2021 with respect to our 2021 Annual Meeting of Stockholders.

Except as set forth below, the information required by Item 12 is incorporated herein by reference to the proxy statement to be filed by May 2, 2022 with respect to our 2022 Annual Meeting of Stockholders.

Equity Compensation Plan Information

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Represents 450,000 shares of common stock underlying RSUs granted pursuant to our 2016 Amended and Restated Incentive Plan (the "2016 Plan").

Such units vest in 2021 subject to the satisfaction of time, market and performance based vesting conditions.

(1) Represents shares of common stock underlying RSUs granted in 2021 pursuant to our 2020 Incentive Plan (the "2020 Plan").

The RSUs vest in 2024 subject to the satisfaction of market and performance based vesting conditions.

There is no exercise price associated with such units.

No further awards may be granted under the 2016 Plan.

Represents the number of shares of common stock available for issuance pursuant to our 2020 Incentive Plan.

Does not give effect to 156,724 shares of restricted stock granted January 8, 2021 pursuant to the 2020 Incentive Plan.

Excludes 316,524 shares of restricted stock issued pursuant to the 2020 plan as such shares, though subject to forfeiture, are outstanding.

(2) Gives effect to the 316,524 shares of restricted stock issued and outstanding pursuant to the 2020 Plan.

Does not give effect to 158,973 shares of restricted stock granted January 13, 2022 pursuant to the 2020 Plan.

Certain Relationships and Related Transactions, and Director Independence.

The information concerning relationships and certain transactions required by Item 13 is incorporated herein by reference to the proxy statement to be filed by April 30, 2021 with respect to our 2021 Annual Meeting of Stockholders.

The information concerning relationships and certain transactions required by Item 13 is incorporated herein by reference to the proxy statement to be filed by May 2, 2022 with respect to our 2022 Annual Meeting of Stockholders.

Principal Accounting Fees and Services.

The information concerning our principal accounting fees required by Item 14 is incorporated herein by reference to the proxy statement to be filed by April 30, 2021 with respect to our 2021 Annual Meeting of Stockholders.

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The information concerning our principal accounting fees required by Item 14 is incorporated herein by reference to the proxy statement to be filed by May 2, 2022 with respect to our 2022 Annual Meeting of Stockholders.

Exhibits, Financial Statement Schedules.

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Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

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Title of Exhibits

Form of Equity Distribution Agreement (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K on November 26, 2019).

Amendment No.

1 to Equity Distribution Agreements entered into as of March 31, 2021 among us, B.

Riley Securities, Inc., JMP Securities LLC, and D.A.

Davidson & Co.

(incorporated by reference to exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2021).

Plan of Conversion dated December 8, 2016 (incorporated by reference to Annex B of Amendment No.

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By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed March 20, 2017).

Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to our Form 8-K filed March 18, 2011).

Description of Registrant's Securities Registered Pursuant to Section 12 of the Exchange Act.

Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed March 18, 2011).

Description of Registrant's Securities Registered Pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to our Annual Report on Form 10-K for the year ended December 31, 2020).

* Shared Services Agreement, dated as of January 1, 2002, by and among Gould Investors L.P., us, One Liberty Properties, Inc., Majestic Property Management Corp., Majestic Property Affiliates, Inc.

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* Form of Indemnification Agreement between the Registrant on the one hand, and its executive officers and directors, on the other hand (incorporated by reference to Exhibit 10.5 to our Annual Report of Form 10-K filed December 14, 2017).

* Form of Restricted Shares Agreement for the 2012 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 10-Q for the period ended December 31, 2013).

* 2012 Incentive Plan (incorporated by reference to exhibit 99.1 to our Registration Statement on Form S-8 filed on June 11, 2012 (File No.

333-182044)).

* Amended and Restated 2016 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended March 31, 2016)

Membership Interest Purchase Agreement dated as of February 23, 2016 entered into between TRB Newark Assemblage, LLC ("TRB") and TRB Newark TRS, LLC ("TRB REIT" and together with TRB, collectively, the "Seller") and RBH Partners III, LLC, and joined by RBH-TRB Newark Holdings, LLC and GS-RBH Newark Holdings, LLC (incorporated by reference to exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended March 31, 2016).

Form of Performance Awards Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 10, 2016).

* Form of Restricted Shares Agreement for the Amended and Restated 2016 Incentive Plan (incorporated by reference to Exhibit 10.40 to our Registration Statement on Form S-4/A filed with the SEC on January 12, 2017 (File No 333-215221)).

2018 Incentive Plan (incorporated by reference to exhibit 10.1 to our Current Report on Form 8-K filed on March 13, 2018).

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Title of Exhibits

* Form of Restricted Shares Agreement for the 2018 Incentive Plan (incorporated by reference Exhibit 10.10 to our Annual Report on Form 10-K filed December 10, 2018).

Loan Agreement (the "Loan Agreement") among us and VNB New York, LLC, dated April 18, 2019 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed May 9, 2019).

Amendment to the Loan Agreement (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed May 9, 2019).

Second Amendment dated January 31, 2020 to the Loan Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed February 14, 2020).

Modification Agreement dated as of December 21, 2020 to the Loan Agreement.

2020 Incentive Plan

2020 Incentive Plan (incorporated by reference to Exhibit 10.15 filed with our Annual Report on Form 10-K for the year ended December 31, 2020).

* Form of Performance Awards Agreement granted in 2021 pursuant to the 2020 Incentive Plan (incorporated by reference to exhibit 10.1 of our Current Report on Form 8-K filed on June 11, 2021)

Amended and Restated Loan Agreement (the "Loan Agreement") made as of November 18, 2021, by and among us and VNB New York, LLC.

(incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on November 18, 2021).

Unlimited guaranty given by us in favor of VNB (incorporated by reference to Exhibit 10.2 filed with our Current Report on Form 8-K on November 18, 2021).

Form of Pledge Agreement (incorporated by reference to Exhibit 10.3 filed with our Current Report on Form 8-K on November 18, 2021).

Form of Negative Pledge Agreement (incorporated by reference to Exhibit 10.4 filed with our Current Report on Form 8-K on November 18, 2021).

Letter agreement dated as of November 19, 2021 with respect to the Loan Agreement.

Subsidiaries of the Registrant.

Consent of Ernst & Young, LLP.

Consent of BDO USA, LLP.

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Act").

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Certification of Chief Financial Officer pursuant to Section 906 of the Act.

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Federal Income Tax Considerations (incorporated by reference to Exhibit 99.3 filed with our Current Report on Form 8-K on March 11, 2021)

101.INS The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

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Not applicable.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ ISRAEL ROSENZWEIG Chairman of the Board March 15, 2022

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GOULD Chief Executive Officer, President and Director (Principal Executive Officer) March 15, 2022

/s/ CAROL CICERO Director March 15, 2022

/s/ ALAN GINSBURG Director March 15, 2022

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Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of BRT Apartments Corp.

(the Company) as of December 31, 2020, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the year then ended, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of BRT Apartments Corp.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows for the years then ended, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

generally accepted accounting principles.

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These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Joint Venture Consolidation Assessment

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March 15, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and Board of Directors

BRT APARTMENTS CORP.

Great Neck, New York

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of BRT Apartments Corp.

(the “Company”) as of December 31, 2019, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for the year then ended , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, LLP

We served as the Company's auditor from 2011 to 2020

New York, New York

BRT APARTMENTS CORP.

AND SUBSIDIARIES

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Real estate properties, net of accumulated depreciation of $ 36,467 and $ 30,837

Real estate loan — 4,150

$ 293,550 $ 160,192

Investment in unconsolidated joint ventures 112,347 169,474

Cash and cash equivalents 32,339 19,885

Restricted cash 6,582 8,800

Investment in unconsolidated joint ventures 169,474 177,071

Other assets 10,341 7,390

Real estate property held for sale 4,379 —

Total Assets $ 459,538 $ 365,741

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Mortgages payable, net of deferred costs of $ 980 and $ 563

$ 199,877 $ 130,434

Junior subordinated notes, net of deferred costs of $ 297 and $ 317

37,103 37,083

Accounts payable and accrued liabilities 19,607 20,536

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stockholders' equity:

Preferred shares, $.01 par value:

Authorized 2,000 shares, none issued — —

Preferred shares $ 0.01 par value 2,000 shares authorized, none outstanding

Common stock, $ 0.01 par value, 300,000 shares authorized,

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Real estate operating expenses—including $ 31 and $ 32 to related parties

14,202 12,377

Interest expense 6,757 7,100

General and administrative—including $ 641 and $ 761 to related party

12,621 11,701

Impairment charge 520 3,642

Depreciation 6,742 5,916

Depreciation and amortization 8,025 6,742

Total expenses 42,125 41,562

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Gain on sale of real estate 7,693 —

Gain on sale of partnership interest 2,632 —

Loss on extinguishment of debt ( 1,575 ) —

(Loss) income from continuing operations ( 19,484 ) 1,963

Income (loss) from continuing operations 29,456 ( 19,484 )

Provision for taxes 206 248

(Loss) income from continuing operations, net of taxes ( 19,732 ) 1,693

Income (loss) from continuing operations, net of taxes 29,250 ( 19,732 )

(Income) attributable to non-controlling interests ( 136 ) ( 130 )

Net (loss) income attributable to common stockholders $ ( 19,862 ) $ 856

Net income (loss) attributable to common stockholders $ 29,114 $ ( 19,862 )

Weighted average number of shares of common stock outstanding:

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Year Ended December 31,

Net (loss) income $ ( 19,732 ) $ 1,693

Other comprehensive loss:

Unrealized loss on derivative instruments ( 12 ) ( 23 )

Other comprehensive loss ( 12 ) ( 23 )

Comprehensive (loss) income ( 19,744 ) 1,670

Net income (loss) $ 29,250 $ ( 19,732 )

Other comprehensive income (loss):

Unrealized gain (loss) on derivative instruments 22 ( 12 )

Other comprehensive income (loss) 22 ( 12 )

Comprehensive income (loss) 29,272 ( 19,744 )

Comprehensive (income) attributable to non-controlling interests ( 140 ) ( 128 )

Comprehensive (loss) income attributable to common stockholders $ ( 19,872 ) $ 837

Comprehensive income (loss) attributable to common stockholders $ 29,132 $ ( 19,872 )

See accompanying notes to consolidated financial statements.

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(Dollars in thousands, except share data)

Shares of Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) (Accumulated Deficit) Non Controlling Interests Total

Shares of Common Stock Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income (Accumulated Deficit) Non-Controlling Interests Total

Balances, December 31, 2019 $ 156 $ 232,331 $ ( 10 ) $ ( 32,824 ) $ ( 93 ) $ 199,560

Distributions - Common Stock - $ 0.88 per share

— — — ( 15,292 ) — ( 15,292 )

Restricted stock vesting 1 ( 1 ) — — — —

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Shares repurchased — ( 616 ) — — — ( 616 )

Net income — — — 856 837 1,693

Net (loss) income — — — ( 19,862 ) 130 ( 19,732 )

Other comprehensive loss — — ( 9 ) — ( 3 ) ( 12 )

Comprehensive income — — — — — 1,670

Comprehensive loss — — — — — ( 19,744 )

Balances, December 31, 2020 $ 164 $ 245,605 $ ( 19 ) $ ( 67,978 ) $ ( 84 ) $ 177,688

Distributions - Common Stock - $ 0.90 per share

Restricted stock vesting 1 ( 1 ) — — — —

— — — ( 16,514 ) — ( 16,514 )

Restricted stock and restricted stock units vesting 4 ( 4 ) — — — —

Compensation expense—restricted stock and restricted stock units — 2,941 — — — 2,941

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Shares issued through equity offering program, net 5 9,619 — — — 9,624

Shares repurchased — ( 616 ) — — — ( 616 )

Net (loss) income — — — ( 19,862 ) 130 ( 19,732 )

Other comprehensive loss — — ( 9 ) — ( 3 ) ( 12 )

Comprehensive loss — — — — — ( 19,744 )

Net income — — — 29,114 136 29,250

Other comprehensive income — — 19 — 3 22

Comprehensive income — — — — — 29,272

Balances, December 31, 2021 $ 173 $ 258,161 $ — $ ( 55,378 ) $ ( 5 ) $ 202,951

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Cash flows from operating activities:

Net (Loss) income $ ( 19,732 ) $ 1,693

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Depreciation 6,742 5,916

Net Income (loss) $ 29,250 $ ( 19,732 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization 8,025 6,742

Amortization of deferred financing fees 295 280

Amortization of restricted stock 1,821 1,492

Impairment charge 3,642 —

Amortization of debt fair value adjustment ( 60 ) —

Amortization of restricted stock and restricted stock units 2,941 1,821

Equity in loss of unconsolidated joint ventures 4,208 6,024

Equity in earnings on sale of real estate of unconsolidated ventures ( 34,982 ) —

Impairment charge 520 3,642

Gain on sale of real estate ( 7,693 ) —

Gain on sale of partnership interest ( 2,632 ) —

Loss on extinguishment of debt 1,575 —

Distributions from equity in earnings of unconsolidated joint ventures — 7,442

Increases and decreases from changes in other assets and liabilities:

(Decrease) increase in accounts payable and accrued liabilities ( 424 ) 3,766

Increase in other assets ( 108 ) ( 1,635 )

Net cash (used in) provided by operating activities ( 1,755 ) 8,648

Decrease (increase) in other assets 2,203 ( 108 )

Decrease in accounts payable and accrued liabilities ( 4,179 ) ( 424 )

Net cash used in operating activities ( 529 ) ( 1,755 )

Cash flows from investing activities:

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Proceeds from the sale of mortgage loan — 4,000

Net costs capitalized to real estate owned ( 887 ) ( 1,580 )

Purchase of partner interests — ( 1,316 )

Improvements to real estate owned ( 1,308 ) ( 887 )

Purchase and consolidation of joint venture properties ( 111,956 ) —

Proceeds from the sale of real estate owned 24,632 —

Proceeds from the sale of joint venture interests 10,540 —

Distributions from unconsolidated joint ventures 62,025 15,273

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Cash flows from financing activities:

Proceeds from mortgages payable 89,680 —

Mortgage payoffs ( 47,605 ) —

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Increase in deferred financing costs ( 319 ) —

Dividends paid ( 15,116 ) ( 13,468 )

Distributions to non-controlling interests ( 118 ) ( 1,257 )

BRT APARTMENTS CORP.

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Year Ended December 31,

Dividends paid ( 15,769 ) ( 15,116 )

Distributions to non-controlling interests ( 60 ) ( 118 )

Proceeds from the sale of common stock 9,624 12,077

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Net cash used in financing activities 32,863 ( 6,814 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 3,733 ) 699

Net increase (decrease) in cash, cash equivalents and restricted cash:

10,236 ( 3,733 )

Cash, cash equivalents and restricted cash at beginning of year 28,685 32,418

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Cash paid during the year for income and excise taxes $ 173 $ 291

Consolidation on buyout of partnership interest:

Increase in real estate assets $ 160,583

Increase in other assets 5,671

Increase in mortgage payable ( 29,067 )

Increase in deferred loan costs 748

Increase in accounts payable and accrued liabilities ( 2,621 )

Decrease in investment in unconsolidated joint ventures ( 23,358 )

See accompanying notes to consolidated financial statements.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

NOTE 1— ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES

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BRT Apartments Corp.

(“BRT” or the “Company”) is the successor to BRT Realty Trust pursuant to the conversion of BRT Realty Trust from a Massachusetts business trust to a Maryland corporation on March 18, 2017.

BRT owns, operates and develops multi-family properties.

Generally, these multi-family properties are owned by unconsolidated joint ventures in which the Company contributes a significant portion of the equity.

(“BRT” or the “Company”) owns, operates and, to a lesser extent, develops multi-family properties.

These multi-family properties may be wholly owned by us or by unconsolidated joint ventures in which the Company contributes a significant portion of the equity.

At December 31, 2021, BRT:

(i) wholly owns eight multi-family properties located in six states with an aggregate of 1,880 units and a carrying value of $ 153.6 million;

and (ii) has ownership interests, through unconsolidated entities, in 31 multi-family properties located in nine states with an aggregate of 9,162 units , and the carrying value of its net equity investment is $ 169.4 million.

In total, the Company has properties in 11 states, most of which are located in the Southeast United States and Texas.

(i) wholly-owns ten multi-family properties located in seven states with an aggregate of 2,576 units and a carrying value of $ 291,538,000 ;

and (ii) has ownership interests, through unconsolidated entities, in 23 multi-family properties located in eight states with an aggregate of 6,697 units, and the carrying value of its net equity investment is $ 112,347,000 .

In total, the Company has multi-family properties in 11 states, most of which are located in the Southeast United States and Texas.

The Company also owns and operates various other real estate assets.

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The distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro-rata to the percentage equity interest each partner has in the applicable venture.

Certain items on the consolidated financial statements for the year ended December 31, 2019, have been reclassified to conform with the current year's presentation including classifying Deposits and escrows within Other Assets on the consolidated balance sheet.

Income Tax Status

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Basic earnings (loss) per share is determined by dividing net income (loss) applicable to holders of common stock for the applicable year by the weighted average number of shares of common stock outstanding during such year.

Net income is also allocated to the unvested restricted stock outstanding during each period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security.

The RSU's are excluded from the basic earnings per share calculation, as they are not participating securities.

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock that share in the earnings of the Company.

Diluted earnings (loss) per share is determined using the treasury stock method by dividing net income (loss) applicable to the holders of common stock for the applicable year by the sum of the weighted average number of shares of common stock outstanding plus the dilutive effect of the Company's unvested RSUs.

Diluted earnings per share is determined by dividing net income applicable to common stockholders for the applicable period by the weighted average number of shares of common stock deemed to be outstanding during such period.

In calculating diluted earnings per share, the Company includes only those shares underlying the RSU's that it anticipates will vest based on management's current estimates.

The Company excludes any shares underlying the RSU's from such calculation if their effect would have been anti-dilutive.

Cash Equivalents

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Restricted cash consists of cash held for construction costs and property improvements for specific joint venture properties as may be required by contractual arrangements.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred Costs

4 unchanged sentences

Actual results could differ from those estimates.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

New Pronouncements

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The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement , which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC Topic 820.

This guidance is effective for public companies in fiscal years beginning after December 15, 2019, with early adoption permitted.

The Company adopted this guidance effective January 1, 2020.

The adoption of this guidance did not have a material effect on the consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting .

This update provides specific guidance for transactions for acquiring goods and services from nonemployees and specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards.

The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC Topic 606, Revenue from Contracts with Customers.

The Company adopted this guidance effective January 1, 2020.

the adoption of this guidance did not have a material effect on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) establishing ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”), as amended by subsequent ASUs on the topic.

ASU 2016-13 changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The guidance replaces the current “incurred loss” model with an “expected loss” model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the financial asset.

ASU 2016-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2022.

We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements.

NOTE 2— REAL ESTATE PROPERTIES

Real estate properties consist of the following (dollars in thousands):

Real estate properties, excluding a property held for sale in 2021 (see Note 7), consist of the following (dollars in thousands):

Land $ 38,822 $ 25,585

4 unchanged sentences

Total real estate properties, net $ 293,550 $ 160,192

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

NOTE 2 - REAL ESTATE PROPERTIES (Continued)

A summary of activity in real estate properties, net for the year ended December 31, 2021 follows (dollars in thousands):

December 31, 2019 Balance

Improvements Depreciation Impairment Charge December 31, 2020 Balance

December 31, 2020 Balance Property Acquisitions

Improvements Depreciation Asset Sale Held for Sale December 31, 2021 Balance

Multi-family $ 153,604 $ 160,583 $ 1,308 $ ( 7,116 ) $ ( 16,841 ) $ — $ 291,538

2 unchanged sentences

Total real estate properties $ 160,192 $ 160,583 $ 1,308 $ ( 7,227 ) $ ( 16,927 ) $ ( 4,379 ) $ 293,550

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 2—REAL ESTATE PROPERTIES (Continued)

The following summarizes, by state, information for the year ended December 31, 2021 regarding consolidated properties (dollars in thousands):

Location Number of Properties Number of Units 2021 Rental and Other Revenue from Real Estate Properties % of 2021 Rental and Other Revenue from Real Estate Properties

Texas 2 464 $ 5,443 20 %

Georgia 2 448 $ 6,723 21 %

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Virginia 1 220 4,273 13 %

Texas (a) 1 192 3,895 12 %

Tennessee 2 702 3,413 11 %

Ohio 1 264 3,232 10 %

Other (a) — — 1,429 5 %

Other (b) — — 1,509 5 %

____________________________ 10 2,576 $ 32,041 100 %

(a) Represents non multi-family revenues

(a) Includes the revenues of Kendall Manor which was sold in May 2021.

(b) Represents non-multi-family revenues

Future minimum rentals to be received pursuant to non-cancellable operating leases with terms in excess of one year, from a commercial property owned by the Company at December 31, 2021, are as follows (dollars in thousands):

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Leases at the Company's multi-family properties are generally for a term of one year or less and are not reflected in this table.

NOTE 3— ACQUISITIONS, DISPOSITIONS AND IMPAIRMENT CHARGES

Acquisitions of Interests in Joint Ventures

In 2021, the Company purchased all of its partners' interests in three joint ventures.

The Company determined that in each acquisition the gross assets acquired are concentrated in a single identifiable asset.

Therefore, the transaction does not meet the definition of a business and is accounted for as an asset acquisition.

The Company assessed the fair value of the tangible assets of the property as of the acquisitions dates using an income approach utilizing market capitalization rate of 4.75 % which is a Level 3 unobservable input in the fair value hierarchy.

The following table summarizes these purchases (dollars in thousands):

BRT APARTMENTS CORP.

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NOTE 3—ACQUISITIONS, DISPOSITIONS AND IMPAIRMENT CHARGES

Property Acquisitions

The Company did not acquire any real estate properties during the year ended December 31, 2020.

In the year ended December 31, 2019, the Company purchased its partner's 20 % interest in Parkway Grande Apartments located in San Marcos, TX for $ 1,608,000 .

Location Purchase

Units Interest Purchased Purchase

Price Mortgage

Debt Assumed/Acquired

Bells Bluff, Nashville, TN 8/18/2021 402 42.0 % $ 27,860 $ 52,000

Crestmont at Thornblade, Greenville, SC 10/1/2021 266 10.0 % 1,600 26,425

Crossings of Bellevue, Nashville, TN 12/1/2021 300 20.0 % 16,128 37,680

968 $ 45,588 $ 116,105

The following table summarizes the purchase price allocation of the book values of those properties that are now wholly owned and is based on the proportionate share of the estimated fair value of the property on the acquisition date (dollars in thousands):

Bells Bluff Crestmont at Thornblade Crossings of Bellevue Total

Land $ 6,172 $ 4,033 $ 9,679 $ 19,884

Building and Improvements 77,532 34,052 29,115 140,699

Total Land and building $ 83,704 $ 38,085 $ 38,794 $ 160,583

Acquisition related lease intangibles 1,597 818 730 3,145

Total Assets $ 85,301 $ 38,903 $ 39,524 $ 163,728

Acquisition related mortgage intangible — $ 2,641 — $ 2,641

The unamortized balance of acquisition related lease intangibles, which is included in Other assets in the consolidated balance sheet, was $ 2,347,000 at December 31, 2021, and will be amortized within a one year period.

The unamortized balance of acquisition related mortgage intangible, which is included in mortgages payable in the consolidated balance sheet, was $ 2,582,000 at December 31, 2021 and will be amortized as follows (dollars in thousands):

Year Ending December 31, Amount

Thereafter 670

Total $ 2,582

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 3—ACQUISITIONS, DISPOSITIONS AND IMPAIRMENT CHARGES (Continued)

Property Dispositions

The Company did not dispose of any real estate properties during the year ended December 31, 2020.

The tables below provide information regarding the Company's disposition of real estate properties during the year ended December 31, 2021 (dollars in thousands):

Location Sale Date No.

of Units Sales Price Gain on Sale Non-Controlling Partner's Share of Gain on Sale

Houston, TX (two properties) 7/11/2019 384 $ 33,200 $ 9,938 $ 894

of Units Sales Price Gain on Sale

Kendall Manor - Houston, TX 5/26/2021 272 $ 24,500 $ 7,279

New York, NY (1) 8/20/2021 1 545 414

273 $ 25,045 $ 7,693

_______________________________________

(1) Reflects the sale of a cooperative apartment unit.

The Company did not dispose of any real estate properties during the year ended December 31, 2020.

Impairment Charges

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In cases where the Company does not expect to recover its carrying value on properties held for use, the Company reduces its carrying value to fair value, and for properties held for sale, the Company reduces its carrying value to the fair value less costs to sell.

In the quarter ended September 30, 2020, indicators of impairment were present on its 8.7 acre vacant land parcel located in South Daytona Beach, Florida.

In the year ended December 31, 2021, the Company took an impairment charge of $ 520,000 related to its investment in OPOP Tower and OPOP Loft properties, St Louis, MO, as the carrying value exceeded the fair vale by that amount.

The fair value is based upon the sale price at which the Company contracted to sell this joint venture interest.

This investment was sold in 2021 and no further impairments were recorded.

In the year ended ended December 31, 2020, indicators of impairment were present on a 8.7 acre vacant land parcel located in South Daytona Beach, Florida.

The Company had entered into a contract to sell this property at a sales price less than its carrying value and accordingly, the Company took an impairment charge related to this asset of $ 3,642,000 , representing the excess of the carrying value over the fair value.

During the year ended December 31, 2019, no impairment charges were recorded.

NOTE 4— REAL ESTATE LOAN

The Company had a loan receivable secured by several properties in Newark, NJ.

The principle balance of this loan was $ 4,000,000 .

This loan was sold on September 30, 2020, to an unrelated third party at its book value plus interest and fees of $ 325,000 .

Accordingly, no gain or loss was recognized on the sale.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

This property was sold on February 2, 2022 and no further impairments were recorded.

NOTE 4— RESTRICTED CASH

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The Company owns one commercial rental property which is leased to two tenants under operating leases with current expirations ranging from 2024 to 2028, with options to extend or terminate the leases.

Revenues from such leases are reported as rental income, net, and are comprised of (i) lease components, which includes fixed lease payments and (ii) non-lease components which includes reimbursements of property level operating expenses.

The Company does not separate non-lease components from the related lease components, as the timing and pattern of transfer are the same, and account for the combined component in accordance with ASC 842.

Revenues from such leases are reported

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 5 - LEASES (Continued)

as rental income, net, and are comprised of (i) lease components, which includes fixed lease payments and (ii) non-lease components which includes reimbursements of property level operating expenses.

The Company does not separate non-lease

components from the related lease components, as the timing and pattern of transfer are the same, and account for the combined component in accordance with ASC 842.

Due to the impact of the COVID-19 pandemic, concession agreements were entered into with the Company’s two commercial tenants.

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The Company elected to apply this accounting policy to the two lease agreements, based on the type of concessions provided to the tenants, where the revised cash flows are substantially the same or less than the original lease agreement.

As a result, during the year ended December 31, 2020, the Company issued total abatements of $ 75,000 for the two tenants.

During the year ended December 31, 2020, the Company issued total abatements of $ 75,000 for the two tenants.

Lessee Accounting

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As of December 31, 2021, the remaining lease term, including renewal options deemed exercised, is 15.0 years.

As of December 31, 2020 , the Company's right-of-use ("ROU") assets and lease liabilities were $ 2,652,000 and $ 2,674,000 , respectively.

As of December 31, 2019, the Company's ROU assets and lease liabilities were $ 2,822,000 and $ 2,833,000 , respectively and are reported on the consolidated balance sheets in Other assets and Accounts payable and accrued liabilitie s, respectively.

As of December 31, 2021 , the Company's right-of-use ("ROU") assets and lease liabilities were $ 2,568,000 and $ 2,629,000 , respectively and as of December 31, 2020, the Company's ROU assets and lease liabilities were $ 2,652,000 and $ 2,674,000 , respectively.

The ROU assets and lease liabilities are reported on the consolidated balance sheets in Other assets and Accounts payable and accrued liabilities , respectively.

The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing rate (“IBR”).

The Company considers the general economic environment and its historical borrowing rate activity and factors in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease.

The Company considers the general economic environment and its historical borrowing rate activity and factors

in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease.

As the Company did not elect to apply the hindsight practical expedient, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842.

The Company’s ground lease offers a renewal option which it assesses against relevant economic factors to determine whether it is reasonably certain of exercising or not exercising the option.

Lease payments associated with renewal periods that the Company is reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and ROU asset.

The Company’s ground lease

offers a renewal option which it assesses against relevant economic factors to determine whether it is reasonably certain of exercising or not exercising the option.

Lease payments associated with renewal periods that the Company is reasonably certain

will be exercised, if any, are included in the measurement of the corresponding lease liability and ROU asset.

As of December 31, 2021, the minimum future lease payments related to the operating ground and office leases are as follows (dollars in thousands):

Year Ending December 31, Amount

Thereafter 3,502

Total undiscounted cash flows $ 4,722

Present value discount ( 2,093 )

Lease liability $ 2,629

BRT APARTMENTS CORP.

6 unchanged sentences

Real estate properties, net of accumulated depreciation of $ 133,615 and $ 145,600

$ 734,247 $ 1,075,178

Cash and cash equivalents 13,741 16,939

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Mortgages payable, net of deferred costs of $ 3,423 and $ 5,537

$ 584,479 $ 829,646

Accounts payable and accrued liabilities 17,064 20,237

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Total Liabilities and Equity $ 773,523 $ 1,121,509

Company equity interest of joint venture equity $ 169,474 $ 177,071

Company equity interest in all joint venture equity $ 112,347 $ 169,474

BRT APARTMENTS CORP.

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Other equity earnings 54 117

Impairment of assets ( 2,813 ) —

Insurance recoveries 2,813 —

Gain on insurance recoveries 2,179 765

Gain on sale of real estate properties 83,984 —

Loss on extinguishment of debt ( 9,401 ) —

Gain on insurance recoveries 765 787

Net (loss) income from joint ventures ( 8,961 ) 3,097

Net income (loss) from joint ventures $ 75,615 $ ( 8,961 )

BRT equity in loss and equity in earnings from sale of unconsolidated joint venture properties $ 30,774 $ ( 6,024 )

On February 2, 2021, the Company entered into an agreement to sell to its joint venture partner, the Company's 80 % interest in Anatole Apartments, Daytona, FL for approximately $ 7.4 million.

It is anticipated the transaction will close, subject to satisfaction of customary closing conditions, in March or April 2021.

On March 3, 2021, we entered into an agreement to sell Kendall Manor - Houston, Texas to an unrelated third party for approximately $ 24.5 million and anticipate the transaction will close, subject to satisfaction of certain conditions, in April or May 2021.

We estimate that we will recognize a gain on the sale of this property of approximately $ 7.5 million.

In 2020, our rental revenues, operating expenses, interest expense and depreciation associated with this property were $ 2.9 million, $ 1.9 million, $ 675,000 and $ 848,000 , respectively.

The tables below provides information regarding the Company's property acquisitions, through unconsolidated joint ventures, and the properties they purchased during the years ended December 31, 2020 and 2019 (dollars in thousands):

In 2021, the Company did not make any acquisitions through unconsolidated joint ventures.

The table below provides information regarding the Company's property acquisition through an unconsolidated joint venture during the year ended December 31, 2020 (dollars in thousands):

Location Purchase

2 unchanged sentences

Debt Initial BRT

Equity Ownership Percentage Capitalized Property Acquisition Costs

Wilmington, NC 2/20/2020 264 $ 38,000 $ 23,160 $ 13,700 80 % $ 459

Equity Ownership Percentage Capitalized Property

Abbotts Run, Wilmington, NC 2/20/2020 264 $ 38,000 $ 23,160 $ 13,700 80 % $ 459

On March 10, 2022 we acquired for $ 3,500,000 a 17.45 % interest in a planned 240 -unit development property located in Johns Island, SC.

BRT APARTMENTS CORP.

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NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (Continued)

Location Purchase

Units Purchase

Price Acquisition

Debt Initial BRT

Equity Ownership Percentage Capitalized Property

Kannapolis, NC 3/12/2019 312 $ 48,065 $ 33,347 $ 11,231 65 % $ 559

Trussville, AL 5/72019 328 43,000 32,250 11,625 80 % 546

Auburn, AL 8/8/2019 200 18,400 14,500 4,320 80 % 140

The table below provides information regarding the disposition of real estate properties by an unconsolidated joint venture in the year ended December 31, 2021 (dollars in thousands):

Location Sale Date No.

of Units Sales Price BRT's Share of Gain on Sale Partner's Share of Gain on Sale BRT Share of Loss of Extinguishment of Debt

Avenue Apts,Ocoee, FL 7/20/2021 522 $ 107,661 $ 19,518 $ 20,150 $ 4,474

Parc at 980, Lawrenceville, GA 7/28/2021 586 118,250 15,464 28,852 107

1,108 $ 225,911 $ 34,982 $ 49,002 $ 4,581

The table below provides information regarding the disposition of a real estate property by an unconsolidated joint venture in the year ended December 31, 2019 (dollars in thousands):

There were no sales of properties by unconsolidated joint ventures in the year ended December 31, 2020.

On February 8, 2022, the unconsolidated joint venture in which we have a 65 % equity interest sold The Veranda at Shavano, a 288 -unit multi-family property in San Antonio, Texas, for a sales price of $ 53,800,000 .

We estimate that the gain on the sale of this property will be approximately $ 23,700,000 and that our share of the gain, which will be recognized in the first quarter of 2022, will be approximately $ 12,700,000 .

This property was secured by $ 25,100,000 of mortgage debt with 1.4 years years of remaining term to maturity and bearing an interest rate of 3.61 % which was repaid in connection with the sale.

The table below provides information regarding the sale of venture interests to our joint venture partners in the year ended December 31, 2021:

Location Sale Date No.

of Units Sales Price Gain on Sale Non-Controlling Partner's Share of Gain on Sale

Indianapolis, IN 12/17/2019 400 $ 36,500 $ 16,898 $ 9,932

of Units Sales Price BRT's Share of Gain on Sale

Anatole, Daytona Beach, FL 4/20/2021 208 $ 7,540 $ 2,244

OPOP Tower and Lofts, St.

Louis, MO 11/4/2021 181 3,000 388

389 $ 10,540 $ 2,632

There were no sales of interest in joint ventures in the year ended December 31, 2020.

Joint Venture Buyouts

In 2021, the Company purchased its venture partners' remaining interests in three joint ventures that own three properties and increased its ownership interest in a fourth joint venture that owns two properties.

The operations and accounts of the three joint ventures which, as a result of such purchases, are wholly-owned by the Company are consolidated into the operations and accounts of the Company as of their respective acquisition dates.

The table below provides information regarding these four acquisitions (dollars in thousands):

Location Buyout Date No.

of Units Percentage of Interest Purchased Purchase Price New Ownership Percentage Mortgage Balance at Acquisition

Civic Center I/II, Southaven, MS 5/4/2021 776 14.7 % $ 6,031 74.7 % N/A

Bells Bluff, West Nashville, TN 8/18/2021 402 41.9 % 27,860 100 % $ 52,000

Crestmont at Thornblade, Greenville, SC 10/1/2021 266 10.0 % 1,600 100 % 26,425

Crossings of Bellevue, Nashville, TN 12/1/2021 300 20.0 % 16,128 100 % 37,680

1,744 $ 51,619 $ 116,105

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 7— REAL ESTATE PROPERTY HELD FOR SALE

In September 2020, the Company entered into a contract to sell a vacant parcel of land located in South Daytona Beach, FL for $ 4,700,000 with a net book value of $ 4,379,000 .

The buyer's right to terminate the contract expired on November 1, 2021.

At December 31, 2021, the Company reclassified the net book value of the land as Real estate property held-for-sale in the accompanying balance sheet.

The property was sold on February 2, 2022.

NOTE 8— DEBT OBLIGATIONS

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Total debt obligations $ 236,980 $ 167,517

At December 31, 2020, $ 130,997,000 of mortgage debt is outstanding on the Company's eight multi-family properties and one commercial property with a weighted average interest rate of 4.15 % and a weighted average remaining term to maturity of 4.4 years.

A summary of activity in property debt for the year ended December 31, 2021 is as follows (dollars in thousands):

Balance at December 31, 2020 $ 130,434

Acquisitions 116,105

Fair value adjustment upon consolidation 2,582

Debt payoff in conjunction with property sales ( 14,260 )

Debt Payoff ( 31,879 )

Principal Amortization ( 2,688 )

Changes in Deferred Fees ( 417 )

Balance at December 31, 2021 $ 199,877

At December 31, 2021, $ 200,857,000 of mortgage debt with a weighted average interest rate of 3.78 % and a weighted average term to maturity of 10.1 years is outstanding on eight of the Company's multi-family properties.

Scheduled principal repayments for the next five years and thereafter are as follows (dollars in thousands):

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NOTE 8—DEBT OBLIGATIONS (Continued)

The Company incurred the following mortgage debt in connection with the purchase of our partner's' interest in the year ended December 31, 2019 (dollars in thousands):

The Company incurred the following mortgage debt in connection with the purchase of its venture partners' interests in the year ended December 31, 2021 (dollars in thousands):

Location Acquisition Date Mortgage balance at acquisition Interest Rate Maturity Date

San Marcos, TX 10/4/2019 $ 17,158 4.42 % October 2025

Bells Bluff - West Nashville, TN 8/18/2021 $ 52,000 3.48 % August 2041

Crestmont at Thornblade - Greenville, SC 10/1/2021 26,425 (a) 4.69 % November 2028

Crossings - Nashville, TN 12/1/2021 37,680 3.11 % December 2031

________________________________

(a) Debt assumed in connection with the purchase of the joint venture partner's remaining interest in the venture does not include purchase price allocation of

$ 2,642 related to this debt.

The Company paid off the following debt in the year ended December 31, 2021 (dollars in thousands):

Mortgage Payoff Interest Rate Maturity Date Prepayment Charges

Avalon - supplemental $ 2,903 4.92 % 3/1/2022 $ 29

Avondale Station 7,140 3.74 % 12/1/2022 376

Avondale Station - supp1emental 6,866 5.53 % 12/1/2022 277

Woodland Trails 14,025 4.36 % 2/1/2022 140

RIPCO 945 5.25 % 4/1/2022 —

Total debt paid $ 31,879 $ 822

In connection with the pay off of the RIPCO debt, the Company terminated the interest rate swap associated with this debt.

The Company did not incur any debt in the year ended December 31, 2020.

Credit Facility

The Company entered into a credit facility dated April 18, 2019, as amended and modified from time-to-time, with an affiliate of Valley National Bank.

The facility allows the Company to borrow, subject to compliance with borrowing base requirements and other conditions, up to $ 10,000,000 to facilitate the acquisition of multi-family properties and for working capital (including dividend payments) and operating expenses.

The facility is secured by the cash available in certain cash accounts maintained by the Company at Valley National Bank, matures April 2021 and bears an adjustable interest rate of 50 basis points over the prime rate, with a floor of 4.25 %.

The Company entered into an amended and restated credit facility dated November 18, 2021 with an affiliate of Valley National Bank ("VNB").

The facility allows the Company to borrow, subject to compliance with borrowing base requirements and other conditions, up to $ 35,000,000 to facilitate the acquisition of multi-family properties, repay mortgage debt secured by multi family properties and for operating expense ( i.e., working capital (including dividend payments));

provided that no more than $ 15,000,000 may be used for operating expenses.

The facility is secured by the cash available in certain cash accounts maintained by the Company at VNB and the Company's pledge of its interests in the entities that own the unencumbered properties used in calculating the borrowing base.

The facility matures November 2024 and bears an adjustable interest rate of 25 basis points over the prime rate, with a floor of 3.50 %.

The interest rate in effect as of December 31, 2021 is 3.50 %.

There is an unused facility fee of 0.25 % per annum on the difference between the outstanding loan balance and maximum amount then available under the facility.

There is an unused facility fee of 0.25 % per annum on the total amount committed by VNB and unused by the Company.

At December 31, 2021, the Company is in compliance in all material respects with its obligations under the facility.

At December 31, 2020 and December 31, 2019, there was no outstanding balance on the facility.

At December 31, 2021 and 2020, there was no outstanding balance on the facility and $ 35,000,000 and $ 15,000,000 , respectively, was available to be borrowed.

Interest expense for the years ended December 31, 2021 and 2020, which includes amortization of deferred financing costs and unused fees, was $ 101,000 and $ 96,000 , respectively.

Deferred costs of $ 270,000 and $ 12,000 are recorded in other assets on the consolidated balance sheets at December 31, 2021 and 2020, respectively.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 8—DEBT OBLIGATIONS (Continued)

Junior Subordinated Notes

At December 31, 2021 and 2020, the outstanding principal balance of the Company's junior subordinated notes was $ 37,400,000 before deferred financing costs of $ 297,000 and $ 317,000 , respectively.

The interest rate on the outstanding balance resets quarterly and is based on three month LIBOR + 2.00 % The rate in effect at December 31, 2020 and 2019 was 2.21 % and 3.94 % respectively.

The interest rate on the outstanding balance resets quarterly and is based on three month LIBOR + 2.00 %.

The rate in effect at December 31, 2021 and 2020 was 2.13 % and 2.21 % respectively.

The notes mature April 30, 2036.

12 unchanged sentences

During the years ended December 31, 2021 and 2020, the Company recorded $ 206,000 and $ 248,000 , respectively, of state franchise tax expense, net of refunds, relating to the 2021 and 2020 calendar years.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

NOTE 9—INCOME TAXES (Continued)

Earnings and profits, which determine the taxability of dividends to stockholders, differs from net income reported for financial statement purposes due to various items, including timing differences related to loan loss provisions, impairment charges, depreciation methods and carrying values.

At December 31, 2020, the Company had a net operating loss carryforward of $ 16,800,000 .

At December 31, 2021, it is estimated the Company had a net operating loss carryforward of $ 26,500,000 .

These net operating losses may be available in future years to reduce taxable income when and if it is generated.

5 unchanged sentences

Stock Based Compensation

During the year ended December 31, 2020, the Company's board of directors adopted and the stockholders' approved the 2020 Incentive Plan.

In 2020, the Company's board of directors adopted and the stockholders' approved the 2020 Incentive Plan (the "2020 Plan").

This plan permits the Company to grant:

1 unchanged sentence

and (ii) cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards.

Each of the Company's 2018 Incentive Plan (the "2018 Plan"), Amended and Restated 2016 Incentive Plan (the "2016

Plan") and the 2012 Incentive Plan (the "2012 Plan") authorized the Company to grant:

(i) up to 600,000 shares of common stock pursuant to stock options, restricted stock, restricted stock units, and performance shares awards;

and (ii) except for the 2012 Plan which did not authorize such awards, cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards.

No further awards may be granted pursuant to the 2018 Plan, the 2016 Plan and the 2012 Plan, which are referred to collectively as the "Prior Plans."

Restricted Stock Units

In June 2016, pursuant to the 2016 Plan, the Company issued restricted stock units (the "Units") to acquire up to 450,000 shares of common stock.

The Units entitle the recipients, subject to continued service through March 31,2021 (the “Performance Period”), to receive in the aggregate (i) up to 200,000 shares (the “TSR Award”) of common stock based on achieving, during the Performance Period, specified levels in compounded annual growth rate (“CAGR”) in total stockholder return (“TSR”), and (ii) up to 200,000 shares of common stock based on achieving, during the Performance Period, specified levels in CAGR in adjusted funds from operations, as determined pursuant to the performance agreement (the "AFFO Award").

In addition, up to 50,000 shares (the "Adjustment Award") may be added to or subtracted from the TSR Award, based on attaining or failing to attain, as the case may be, during the Performance Period, of CAGR in TSR relative to the CAGR in TSR

for the REITs that comprise, with specified exceptions, the FTSE NAREIT Equity Apartment Index.

The recipients also received dividend equivalent rights entitling them to receive cash dividends with respect to the shares of common stock underlying their Units as if the underlying shares were outstanding during the Performance Period, if, when, and to the extent, the related Units vest.

The Units were determined not to be participating securities and accordingly, for financial statement purposes, the shares underlying the Units are excluded in the outstanding shares reflected on the consolidated balance sheet and from the calculation of basic earnings per share.

Though the 450,000 shares underlying the units are contingently issuable shares, 250,000 of such shares have not been included in the calculation of diluted earnings per share as the criteria with respect to the AFFO Award and the Adjustment Award were not met at December 31, 2020.

The Company included 200,000 shares of

Each of the Company's 2018 Incentive Plan (the "2018 Plan") and the Amended and Restated 2016 Incentive Plan (the "2016 Plan") authorized the Company to grant up to 600,000 shares of common stock pursuant to the same type of awards available under the 2020 Plan.

No further awards may be granted pursuant to the 2018 Plan or the 2016 Plan, which are referred to collectively as the "Prior Plans."

BRT APARTMENTS CORP.

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NOTE 10—STOCKHOLDERS' EQUITY (Continued)

common stock underlying the TSR Awards in the calculation of diluted earnings per share as the market criteria with respect to the TSR award have been met at December 31, 2020.

Restricted Stock Units

In March 2021, pursuant to the 2020 Plan, the Company issued restricted stock units (the "RSUs") to acquire up to 210,375 shares of common stock.

The RSUs entitle the recipients, subject to continued service through March 31, 2024 (the "Performance Period"), to receive in the aggregate (i) up to 93,500 shares (the "TSR Award") of common stock based on achieving, during the Performance Period, specified levels in compounded annual growth rate ("CAGR") in total stockholder return (“TSR”), and (ii) up to 93,500 shares of common stock based on achieving, during the Performance Period, specified levels in CAGR in adjusted funds from operations (the "AFFO Award"), in each case as determined pursuant to the performance agreement.

In addition, up to 23,375 shares (the "Adjustment Award") may be added to or subtracted from the TSR Award, based on attaining or failing to attain, as the case may be, during the Performance Period, of CAGR in TSR relative to the CAGR in TSR for the REITs that comprise, with specified exceptions, the FTSE NAREIT Equity Apartment Index.

The recipients also receive dividend equivalent rights entitling them to receive cash dividends with respect to the shares of common stock underlying their RSUs as if the underlying shares were outstanding during the Performance Period, if, when, and to the extent, the related RSUs vest.

The shares underlying the RSU's are not participating securities but are contingently issuable shares.

For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to assist management in determining fair value.

In preparing its simulation, the appraiser assumed an estimated life of three years , a dividend rate of 4.93 %, a risk free interest rate ranging from 0.02 % to 0.34 % and an expected price volatility ranging from 47.19 % to 59.01 %.

For the AFFO Awards, fair value is based on the market value on the date of grant.

Expense is not recognized on the Units which the Company does not expect to vest as a result of conditions the Company does not expect to be satisfied.

The total amount recorded at the grant date as deferred compensation with respect to the Units was $ 2,117,000 .

As of December 31, 2020, $ 1,432,000 of deferred compensation allocated to the AFFO Award has been reversed, as it is not anticipated that the performance goals will be met.

The remaining $ 685,000 allocated to the TSR Award is being charged to general and administrative expense over the Performance Period.

The deferred compensation expense to be recognized is net of certain forfeiture and performance assumptions.

The Company recorded $ 140,000 and $ 142,000 of compensation expense related to the amortization of unearned compensation with respect to the Units in the years ended December 31, 2020, and 2019, respectively.

At December 31, 2020 and 2019, $ 35,000 and $ 177,000 respectively, has been deferred as unearned compensation and will be charged to expense over the balance of the Performance Period.

Expense is not recognized on RSUs which the Company does not expect to vest because the performance conditions are not expected to be satisfied.

Performance assumptions are re-evaluated quarterly.

The total amount recorded at the grant date as deferred compensation with respect to the RSUs was $ 1,995,000 .

In June 2016, the Company issued RSUs to acquire up to 450,000 shares shares of common stock, pursuant to the 2016 Plan.

In 2021, it was determined that the market conditions with respect to 250,000 shares underlying RSU's issued under the 2016 Plan had been satisfied;

such shares with an aggregate market value of $ 4,200,000 as of the measurement date, were issued and an aggregate of $ 775,000 of RSU dividend equivalents were paid.

It was also determined that the performance conditions with respect to 200,000 shares underlying RSU's under the 2016 Plan had not been satisfied and accordingly, the 200,000 RSU's did not vest.

The Company recorded $ 620,000 and $ 140,000 of compensation expense related to the amortization of unearned compensation with respect to the RSUs in the year ended December 31, 2021 and 2020 respectively.

At December 31, 2021 and 2020, $ 2,248,000 and $ 37,000 had been deferred as unearned compensation and is to be charged to expense over the balance of the applicable performance period.

Restricted Stock

In January 2020, the Company granted 158,299 shares of restricted stock pursuant to the 2018 Plan.

In January 2021 and June 2021, the Company granted 156,774 shares and 160,000 shares, respectively, of restricted stock pursuant to the 2020 Plan.

As of December 31, 2021, an aggregate of 922,619 shares of unvested restricted stock are outstanding pursuant to the Plan and the Prior Plans.

All shares of restricted stock vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier.

The shares of restricted stock vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier.

For financial statement purposes, the restricted stock is not included in the outstanding shares shown on the consolidated balance sheets until they vest, but are included in the basic and diluted earnings per share computation.

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Changes in the number of restricted shares outstanding under the Company's equity incentive plans are shown below:

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 10—STOCKHOLDERS' EQUITY (Continued)

Year Ended December 31,

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Total compensation $ 2,941 $ 1,821

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands):

Year Ended December 31,

Numerator for basic and diluted earnings per share:

Net income (loss) $ 29,250 $ ( 19,732 )

Deduct (earnings) attributable to non-controlling interests ( 136 ) ( 130 )

Deduct (earnings) loss allocated to unvested restricted stock ( 1,412 ) 1,520

Net income (loss) available for common stockholders:

basic and diluted $ 27,702 $ ( 18,342 )

Denominator for basic earnings per share:

Weighted average number of common shares outstanding 17,017,690 17,115,697

Effect of dilutive securities:

RSUs (1) 66,952 —

Denominator for diluted earnings per share:

Weighted average number of shares 17,084,642 17,115,697

Earnings (loss) per common share, basic $ 1.63 $ ( 1.16 )

Earnings (loss) per common share, diluted $ 1.62 $ ( 1.16 )

_______________________________________

(1) For the year ended December 31, 2020, excludes the shares underlying RSUs as their effect would have been anti-dilutive.

BRT APARTMENTS CORP.

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NOTE 10—STOCKHOLDERS' EQUITY (Continued)

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands):

Year Ended December 31,

Numerator for basic and diluted earnings per share attributable to common stockholders:

Net (loss) income attributable to common stockholders $ ( 19,862 ) $ 856

Denominator for basic earnings per share—weighted average number of shares 17,115,697 15,965,631

Effect of dilutive securities — 200,000

Denominator for diluted earnings per share—adjusted weighted average number of shares and assumed conversions 17,115,697 16,165,631

Basic earnings per share $ ( 1.16 ) $ 0.05

Diluted earnings per share $ ( 1.16 ) $ 0.05

Equity Distribution Agreements

On or about November 26, 2019, the Company terminated the prior ATM and entered into new agreements with three sales agents to sell an aggregate of $ 30,000,000 of its common stock from time-to-time in an at-the market offering.

Between November 26, 2019 and December 31, 2019, the Company sold 111,963 shares of common stock for net proceeds of $ 1,966,000 after giving effect to related fees, commissions and offering related expenses of $ 56,000 .

During the year ended December 31, 2020, the Company sold 694,298 shares of common stock for net proceeds of $ 12,077,000 after giving effect to related fees, commissions and offering related expenses of $ 185,000 .

All of the shares sold in 2020 were sold by February 28, 2020.

The following table reflects the sale of shares pursuant to the equity distribution agreements entered into on November 26, 2019, as amended, with three sales agents in an at-the-market offering (dollars in thousands):

Number of Shares Sold Average Price Gross Proceeds Commissions and Fees Net Proceeds Dollar Value of Shares Sold

Aggregate amount available under agreement $ 30,000

2019 111,963 $ 18.06 $ 2,022 $ 31 $ 1,991 ( 2,022 )

2020 694,298 $ 17.71 12,293 185 $ 12,108 ( 12,293 )

2021 529,126 $ 18.47 9,772 147 $ 9,625 ( 9,772 )

1,335,387 $ 24,087 $ 363 $ 23,724

Remaining amount available under agreement:

Subsequent to year end, the Company sold an additional 200,000 shares and received net proceeds of $ 2,173,000 .

Stock Buyback

On September 5, 2017, the Board of Directors approved a repurchase plan authorizing the Company, effective as of October 1, 2017, to repurchase up to $ 5,000,000 of shares of common stock through September 30, 2019.

Pursuant to this authorization, the Company, from such date through September 30, 2019, repurchased 17,364 shares of common stock at an average market price of $ 11.95 per share, for an aggregate purchase price, including commissions, of $ 207,000 .

On September 12, 2019, the Board of Directors authorized the Company, effective as of October 1, 2019, to purchase up to $ 5,000,000 of shares of common stock through September 30, 2021.

During the year ended December 31, 2020, the Company repurchased 39,093 shares of common stock (all of which were repurchased during the three months ended March 31, 2020), at an average market price of $ 15.76 for an aggregate cost of $ 616,000 .

At December 31, 2020, the remaining availability under this authorization is $ 4,384,000 of shares of common stock.

Effective as of October 1, 2019, the Board of Directors authorized the Company to purchase up to $ 5,000,000 of shares of common stock through September 30, 2021.

During the year ended December 31, 2020, the Company repurchased 39,093 shares of common stock , at an average market price of $ 15.76 for an aggregate cost of $ 616,000 .

No other shares were repurchased under this authorization.

On September 13, 2021, the Board of Directors approved a stock purchase plan authorizing the Company, effective as of October 1, 2021, to repurchase up to $ 5,000,000 of shares of common stock through December 31, 2023.

During the year ended December 31, 2021, the Company did no t repurchase any shares of common stock.

NOTE 11— RELATED PARTY TRANSACTIONS

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The aggregate fees paid in 2021 and 2020 for these services were $ 1,398,000 and $ 1,398,000 , respectively.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

NOTE 11—RELATED PARTY TRANSACTIONS (Continued)

Management of certain properties owned by the Company and certain joint venture properties is provided by Majestic Property Management Corp.

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During the years ended December 31, 2021 and 2020 allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 641,000 and $ 761,000 , respectively.

Gould is executive officer and sole stockholder of Georgetown Partners, Inc., the managing general partner of Gould Investors L.P.("Gould Investors").

Mr Gould is also the vice chairman of the board of directors of One Liberty Properties and certain of the Company's officers and directors are also officers or directors of One Liberty Properties and Georgetown Partners.

Gould is executive officer and sole stockholder of Georgetown Partners, LLC, the managing general partner of Gould Investors L.P.("Gould Investors").

Gould is also the vice chairman of the board of directors of One Liberty

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 11—RELATED PARTY TRANSACTIONS (Continued)

Properties and certain of the Company's officers and directors are also officers or directors of One Liberty Properties and Georgetown Partners.

As of December 31, 2021 and 2020, $ 118,000 and $ 124,000 , res pectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets.

Management of two of the Company's multi-family properties which were sold in 2019, was performed by its joint venture partners or their affiliates, none of which are related to the Company.

These management fees amounted to $ 68,000 in the year ended December 31, 2019.

The Company obtains certain insurance in conjunction with Gould Investors and reimburses Gould Investors for the Company's share of the insurance cost.

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At December 31, 2021, the estimated fair value of the Company's mortgages payable is less than their carrying value by approximately $ 511,000 , assuming market interest rates between 3.12 % and 3.87 %.

At December 31, 2019, the estimated fair value was lower than the carrying value by $ 321,000 , assuming market interest rates between 3.89 % and 4.33 %.

At December 31, 2020, the estimated fair value was greater than the carrying value by $ 3,831,000 , assuming market interest rates between 2.87 % and 3.28 %.

Market interest rates were determined using current financing transaction information provided by third party institutions.

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The fair values of debt obligations are considered to be Level 2 valuations within the fair value hierarchy.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Financial Instruments Measured at Fair Value

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The Company does not currently own any financial instruments that are classified as Level 3.

At December 31, 2021, the Company had no financial assets or liabilities measured at fair value.

Set forth below is information regarding the Company's financial liabilities measured at fair value as of December 31, 2020 (dollars in thousands):

3 unchanged sentences

$ 23 — $ 23 —

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Derivative financial instruments:

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Non-Financial Assets:

Investment in unconsolidated joint venture $ 3,000 $ — $ 3,000 $ —

During the year ended December 31, 2020, the fair value of the real estate investment was determined using the following input levels (dollars in thousands):

Carrying and Fair Value Fair Value Measurements Using Fair Value Hierarchy

Level 1 Level 2 Level 3

Non-Financial Assets:

Long-lived assets $ 4,379 $ — $ — $ 4,379

The Company reviews its investments in real estate when events or circumstances change indicating the carry value of the investment may not be recoverable.

In the evaluation of an investment for impairment, many factors are considered, including estimated current and expected cash flows from the asset during the projected hold period, costs necessary to extend the life of the asset, expected capitalization rates, and projected stabilized net operating income and the ability to hold or dispose of the asset in the ordinary course of business.

Quantitative information about Level 2 measurements is as follows:

Fair Value Valuation Technique Significant Unobservable Inputs

Non-Financial Assets:

Long-Lived assets:

OPOP Tower and Lofts, St.

Louis, MO $ 3,000 Sales Contract Sales Contract

BRT APARTMENTS CORP.

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NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The Company reviews its investments in real estate when events or circumstances change indicating the carry value of the investment may not be recoverable.

Quantitative information about Level 3 measurements is as follows:

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The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of December 31, 2020, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk (dollars in thousands):

Interest Rate Derivative Notional Amount Rate Maturity

Interest Rate Swap $ 1,036,000 5.25 % April 1, 2022

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

NOTE 14—DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

As of December 31, 2021, the Company did not have any outstanding interest rate derivatives that was designated as a cash flow hedge of interest rate risk (dollars in thousands):

Non-designated Derivatives

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Accounts payable and accrued liabilities $ — Accounts payable and accrued liabilities $ 23

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

NOTE 14—DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

The following table presents the effect of the Company's derivative financial instrument on the consolidated statements of comprehensive income (loss) for the years ended December 31, 2021 and 2020 and (dollars in thousands):

3 unchanged sentences

Total amount of Interest expense presented in the Consolidated Statement of Operations $ 6,757 $ 7,100

No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Company's cash flow hedge during the years ended December 31, 2020 or 2019.

During the twelve months ending December 31, 2021, the Company estimates an additional $ 19,000 will be reclassified from other comprehensive loss as a decrease to interest expense.

Credit-risk-related Contingent Features

The agreement between the Company and its derivative counterparty provides that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, the Company could be declared in default on its derivative obligation.

As of December 31, 2020, the fair value of derivative in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $ 25,000 .

As of December 31, 2020, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions.

If the Company had breached any of these provisions, it could have been required to settle its obligation under the agreements the termination value of $ 25,000 at December 31, 2020.

During the year ended December 31, 2021, the Company accelerated the reclassification of losses of $ 12,000 from other comprehensive income to earnings as a result of the hedged forecasted transaction becoming probable not to occur.

BRT APARTMENTS CORP.

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Equity in loss of unconsolidated joint ventures ( 1,345 ) ( 492 ) ( 4,196 ) 1,825 ( 4,208 )

Equity in earnings from sale of unconsolidated joint venture properties — — 34,982 — 34,982

Gain on sale of real estate — 7,279 414 — 7,693

Gain on sale of partnership interest 2,244 — 388 2,632

Loss on extinguishment of debt — — ( 902 ) ( 673 ) ( 1,575 )

Loss from continuing operations ( 3,674 ) 6,127 28,172 ( 1,169 ) 29,456

Provision for taxes 57 67 31 51 206

Loss from continuing operations, net of taxes ( 4,799 ) ( 4,215 ) ( 7,450 ) ( 3,268 ) ( 19,732 )

(Loss) income from continuing operations, net of taxes ( 3,731 ) 6,060 28,141 ( 1,220 ) 29,250

(Income) attributable to non-controlling interests ( 34 ) ( 33 ) ( 35 ) ( 34 ) ( 136 )

Net loss attributable to common stockholders $ ( 4,831 ) $ ( 4,246 ) $ ( 7,484 ) $ ( 3,301 ) ( 19,862 )

Net (loss) income attributable to common stockholders $ ( 3,765 ) $ 6,027 $ 28,106 $ ( 1,254 ) 29,114

Basic and diluted and per share amounts attributable to common stockholders

Basic loss per share $ ( 0.29 ) $ ( 0.25 ) $ ( 0.44 ) $ ( 0.19 ) $ ( 1.16 )

Diluted loss per share $ ( 0.29 ) $ ( 0.25 ) $ ( 0.44 ) $ ( 0.19 ) $ ( 1.16 )

Basic (loss) income per share $ ( 0.22 ) $ 0.34 $ 1.55 $ ( 0.08 ) $ 1.63

Diluted (loss) income per share $ ( 0.22 ) $ 0.34 $ 1.54 $ ( 0.08 ) $ 1.62

BRT APARTMENTS CORP.

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Oct - Dec Total

Rental and other revenue from real estate properties $ 6,886 $ 7,097 $ 6,261 $ 6,765 $ 27,009

Rental and other revenue $ 6,745 $ 6,657 $ 7,020 $ 7,029 $ 27,451

Other income 179 159 293 20 651

3 unchanged sentences

General and administrative 3,367 2,957 2,730 2,647 11,701

Impairment charge — — 3,642 — 3,642

Depreciation 1,561 1,809 1,777 1,595 6,742

1 unchanged sentence

Total revenues less total expenses ( 2,922 ) ( 2,763 ) ( 5,856 ) ( 1,919 ) ( 13,460 )

Equity in loss from unconsolidated joint venture properties ( 2,068 ) ( 2,218 ) ( 2,390 ) ( 2,150 ) ( 8,826 )

Equity in (loss) of unconsolidated joint ventures ( 1,815 ) ( 1,387 ) ( 1,529 ) ( 1,293 ) ( 6,024 )

Equity in earnings from sale of unconsolidated joint venture properties — — — — —

1 unchanged sentence

Loss on extinguishment of debt — — — — —

(Loss) income from continuing operations ( 4,151 ) ( 4,214 ) 4,169 6,159 1,963

Income (loss) from continuing operations ( 4,737 ) ( 4,150 ) ( 7,385 ) ( 3,212 ) ( 19,484 )

Provision for taxes 62 65 65 56 248

(Loss) income from continuing operations, net of taxes ( 4,799 ) ( 4,215 ) ( 7,450 ) ( 3,268 ) ( 19,732 )

Net (income) loss attributable to non-controlling interests ( 34 ) ( 44 ) ( 799 ) 40 ( 837 )

Net (income) attributable to non-controlling interests ( 32 ) ( 31 ) ( 34 ) ( 33 ) ( 130 )

Net (loss) income attributable to common stockholders $ ( 4,831 ) $ ( 4,246 ) $ ( 7,484 ) $ ( 3,301 ) ( 19,862 )

Basic and diluted per share amounts attributable to common stockholders

Basic (loss) income per share $ ( 0.27 ) $ ( 0.27 ) $ 0.21 $ 0.38 $ 0.05

Diluted income (loss) per share $ ( 0.27 ) $ ( 0.27 ) $ 0.20 $ 0.38 $ 0.05

Basic loss per share $ ( 0.29 ) $ ( 0.25 ) $ ( 0.44 ) $ ( 0.19 ) $ ( 1.16 )

Diluted loss per share $ ( 0.29 ) $ ( 0.25 ) $ ( 0.44 ) $ ( 0.19 ) $ ( 1.16 )

BRT APARTMENTS CORP.

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AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2021

BRT APARTMENTS CORP.

AND SUBSIDIARIES

SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION

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Columbus, OH 8,985 1,372 12,678 — 724 — 1,372 13,402 14,774 3,998 1999 Nov-2013 30 years

Houston, TX 14,380 2,268 15,811 — 288 — 2,268 16,099 18,367 1,474 1981 Dec-2018 30 years

Pensacola, FL 14,558 2,758 25,192 — 1506 — 2,758 26,698 29,456 6,654 2008 Dec-2014 30 years

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Fredericksburg, VA 26,856 7,540 33,196 — 835 — 7,540 34,031 41,571 4,822 2005 Jul-18 30 years

Other assets — — — — — — — 86.00 87 87

Nashville, TN 52,000 6,172 77,532 — 190 — 6,172 77,722 83,894 1,009 2017 Sept -21 30 years

Greenville, SC 29,007 4,033 34,052 — 50 — 4,033 34,102 38,135 326 1998 Oct-21 30 years

Nashville, TN 37,680 9,679 29,114 — 47 — 9,679 29,161 38,840 94 1985 Dec-21 30 years

Total $ 200,857 $ 49,259 $ 282,984 $ 49 $ 8,211 $ — $ 43,201 $ 291,195 $ 334,396 $ 36,467

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures