What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-15 compared with 2022-03-16 · 399 added, 357 removed, 798 unchanged (49% of the section changed)

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Other Information.

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.

Not applicable

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Equity Compensation Plan Information

As of December 31, 2021, the only equity compensation plan under which equity compensation may be awarded is our 2020 Incentive Plan, which was approved by our stockholders in June 2020.

This plan permits us to grant stock options, restricted stock, restricted stock units ("RSUs"), dividend equivalent rights and performance based awards to our employees, officers, directors, consultants and other eligible participants.

The table below provides information as of December 31, 2021 with respect to our shares of common stock that may be issued upon exercise of outstanding options, warrants and rights.

(See note 10 of our consolidated financial statements for further information about our equity compensation plans).

Number of securities to be

issued upon exercise (or vesting) of outstanding options, restricted stock units, warrants and rights

The following table provides information as of December 31, 2022 about shares of our common stock that may be issued upon the exercise of options, warrants and rights under our 2018 Incentive Plan (the “2018 Plan”), and our 2020 Incentive Plan (the “2020 Plan”;

and together with the 2018 Plan, the “Prior Plans”) and our 2022 Incentive Plan (the “2022 Plan”;

and together with the Prior Plans, the “Incentive Plans”).

No further awards may be granted under the Prior Plans.

Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)

Weighted-average

price of outstanding

exercise price of outstanding options,

warrants and rights

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_______________________________________________________________________________

(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.

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.

(1) Includes up to 210,375 shares and 212,469 shares of common stock issuable pursuant to restricted stock units (“RSUs”) that vest as of March 31, 2024 and June 30, 2025, respectively, if and to the extent specified conditions are satisfied by such vesting dates.

RSUs granted pursuant to the 2020 Plan and the 2022 Plan account for 210,375 shares and 212,469 shares, respectively.

Excludes 934,092 shares of restricted stock issued pursuant to the Incentive Plans as such shares, although subject to forfeiture, are outstanding.

See Note 10 to our consolidated financial statements .

(2) Does not give effect to 163,914 shares of restricted stock granted January 5, 2023 pursuant to the 2022 Plan.

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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).

Form of Equity Distribution Agreement dated March 18, 2022 (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K on March 18, 2022).

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

1 to our Registration Statement on Form S-4 filed January 12, 2017 (the "S-4 Registration") (Reg.

Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed March 20, 2017).

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 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).

Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 filed with our Current Report on Form 8-K on March 20, 2017).

By-laws of the Registrant effective as of December 6, 2022 (incorporated by reference to Exhibit 3.2 filed with our Current Report on Form 8-K on December 6, 2022).

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 filed with our Current Report on Form 8-K on March 18, 2011).

Description of Registrant's Securities Registered Pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 filed with 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.

and REIT Management Corp.

(incorporated by reference to Exhibit 10.2 to our Form 10-K filed December 11, 2008).

* 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).

* 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 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).

(incorporated by reference to Exhibit 10.2 filed with our Annual Report on Form 10-K for the year ended September 30, 2008).

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

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

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

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).

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

* 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).

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

Amendment dated September 14, 2022 to the Loan Agreement (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on September 16, 2022).

* 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on June 10, 2022).

10.17 * Form of Performance Awards Agreement granted in 2022 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.5 filed with our Quarterly Report on Form 10-Q for the period ended June 30, 2022).

Form of Membership Interest Purchase Agreement used to effectuate the purchase of the interests of our joint venture partners (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2022).

* Form of Restricted Share Agreement for the 2022 Incentive Plan

Subsidiaries of the Registrant.

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

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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/s/ Carol Cicero Director March 15, 2023

/s/ ALAN GINSBURG Director March 15, 2022

Alan Ginsburg

/s/ FREDRIC H.

GOULD Director March 15, 2022

/s/ Matthew J.

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/s/ Gary Hurand Director March 15, 2023

/s/ JEFFREY RUBIN Director March 15, 2022

Jeffrey Rubin

/s/ Jonathan Simon Director March 15, 2023

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Consolidated Statements of Cash Flows for the years ended December 31, 202 2 and 202 1

Notes to Consolidated Financial Statements

Consolidated Financial Statement Schedule for the year ended December 31, 2022

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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 disclosures to which it relates.

Joint Venture Consolidation Assessment

Purchase Price Allocation

Joint Venture Consolidation Assessment

Description of the matter

The Company accounted for certain investments in real estate joint ventures under the equity method of accounting.

At December 31, 2021, the Company’s investments in unconsolidated joint ventures were $112.3 million.

As discussed in Note 1 to the consolidated financial statements, for each venture the Company evaluated the rights provided to each party in the venture to assess the consolidation of the venture.

Auditing management’s joint venture consolidation analyses was complex and highly judgmental due to the subjectivity in assessing which activities most significantly impact the respective joint venture’s economic performance based on the purpose and design of the entity over the duration of its expected life and assessing which party has rights to direct those activities.

During the year ended December 31, 2022, the Company bought out eleven of the remaining interests of joint venture partners for an aggregate purchase price of $377.4 million, making them wholly owned and consolidated.

The transactions were accounted for as asset acquisitions and the purchase prices were allocated based on the relative fair values of the tangible and identified intangible assets acquired and liabilities assumed.

As more fully described in Note 3 of the consolidated financial statements, the estimates used in determining the relative fair values may be based on comparable transactions, replacement costs of assets, and other market data, which are unobservable inputs.

Auditing management’s purchase price allocations was complex due to the judgement required in developing the fair value of the acquired tangible and intangible assets.

In particular, the estimate was sensitive to unobservable significant assumptions, including comparable transactions and replacement costs of assets.

How we addressed the matter in our audit

To test the Company’s consolidation assessment for real estate joint ventures, our procedures included, among others, reviewing joint venture agreements and discussing with management the nature of the rights conveyed to the Company through the joint venture agreements.

We reviewed management’s assessment of the activities that would most significantly impact the joint venture’s economic performance and evaluated whether the joint venture agreements provided participating or protective rights to the Company.

We also evaluated transactions with the joint ventures for events which would require a reconsideration of previous consolidation conclusions.

Our audit procedures included, among others, evaluating the appropriateness of the methodology and model applied to determine the fair value of the acquired tangible and intangible assets and liabilities used in the purchase price allocation and recalculating the models’ results.

With the assistance of our real estate valuation specialists, we compared the significant assumptions used by management, including comparable transactions and replacement costs of assets, to current market data.

We also tested the completeness and accuracy of the underlying data used in management’s models.

In addition, we utilized third-party data to test management’s estimate and identify potential sources of corroborative or contrary information.

/s/ Ernst & Young LLP

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37,123 37,103

Credit facility, net of deferred costs of $ 498 and $ —

Accounts payable and accrued liabilities 22,631 19,607

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Additional paid-in capital 273,863 258,161

Accumulated other comprehensive income — ( 19 )

Accumulated deficit ( 23,955 ) ( 55,378 )

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Total revenues less total expenses ( 15,011 ) ( 10,068 )

Equity in loss from unconsolidated joint ventures ( 4,208 ) ( 6,024 )

Equity in earnings (loss) from unconsolidated joint ventures 1,895 ( 4,208 )

Equity in earnings from sale of unconsolidated joint venture properties 64,531 34,982

Gain on sale of real estate 6 7,693

Casualty loss ( 850 ) —

Insurance recovery of casualty loss 850 —

Gain on insurance recovery 62 —

Gain on sale of partnership interest — 2,632

Loss on extinguishment of debt ( 563 ) ( 1,575 )

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

Income from continuing operations 50,920 29,456

Provision for taxes 821 206

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

Income from continuing operations, net of taxes 50,099 29,250

Income attributable to non-controlling interests ( 144 ) ( 136 )

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

Net income attributable to common stockholders $ 49,955 $ 29,114

Weighted average number of shares of common stock outstanding:

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Year Ended December 31,

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 )

Net income $ 50,099 $ 29,250

Other comprehensive income:

Unrealized gain on derivative instruments — 22

Other comprehensive income — 22

Comprehensive income 50,099 29,272

Comprehensive income attributable to non-controlling interests ( 144 ) ( 140 )

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

Comprehensive income attributable to common stockholders $ 49,955 $ 29,132

See accompanying notes to consolidated financial statements.

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— — — ( 16,514 ) — ( 16,514 )

Restricted stock vesting 1 ( 1 ) — — — —

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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Shares issued through equity offering program, net 5 9,940 — — — 9,945

Shares issued through DRIP — 1,278 1,278

Net income — — — 49,955 144 50,099

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Cash flows from operating activities:

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

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

Net Income $ 50,099 $ 29,250

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

Depreciation and amortization 24,812 8,025

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Amortization of restricted stock and restricted stock units 4,486 2,941

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

Equity in (earnings) loss of unconsolidated joint ventures ( 1,895 ) 4,208

Equity in earnings on sale of real estate of unconsolidated ventures ( 64,531 ) ( 34,982 )

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

Gain on insurance recovery ( 62 ) —

Loss on extinguishment of debt 563 1,575

Increases and decreases from changes in other assets and liabilities:

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

Decrease in other assets 4,717 2,203

Decrease in accounts payable and accrued liabilities ( 3,923 ) ( 4,179 )

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

Net cash provided by (used in) operating activities 15,025 ( 529 )

Cash flows from investing activities:

Collections from real estate loans — 150

Proceeds from the sale of mortgage loan — 4,000

Improvements to real estate owned ( 6,295 ) ( 1,308 )

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Contributions to unconsolidated joint ventures ( 3,500 ) ( 6,031 )

Net cash provided by investing activities ( 22,098 ) 4,836

Proceeds from insurance recoveries 62 —

Net cash used in investing activities ( 19,371 ) ( 22,098 )

Cash flows from financing activities:

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Increase in deferred financing costs ( 693 ) ( 319 )

Dividends paid ( 17,863 ) ( 15,769 )

Distributions to non-controlling interests ( 157 ) ( 60 )

Proceeds from the sale of common stock 9,945 9,624

Proceeds from the issuance of DRP shares 1,278 —

Net cash (used in) provided by financing activities ( 13,422 ) 32,863

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

Repurchase of shares of common stock — ( 616 )

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

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

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

( 17,768 ) 10,236

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Decrease in investment in unconsolidated joint ventures 48,458 $ 23,358

$ ( 105,262 ) $ ( 111,956 )

Cash and cash equivalents $ 20,281 $ 32,339

Restricted cash 872 6,582

Total cash, cash equivalents and restricted cash, shown in consolidated statement of cash flows $ 21,153 $ 38,921

See accompanying notes to consolidated financial statements.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.

September 30,

Cash and cash equivalents $ 20,281 $ 32,339

Restricted cash 872 6,582

Total cash, cash equivalents and restricted cash, shown in consolidated statement of cash flows $ 21,153 $ 38,921

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

NOTE 1— ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES

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At December 31, 2022, BRT:

(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.

At December 31, 2021, the carrying value of the other real estate assets was $ 6,400,000 .

(i) wholly-owns twenty-one multi-family properties located in eleven states with an aggregate of 5,420 units and a carrying value of $ 649,701,000 ;

(ii) has ownership interests, through unconsolidated entities, in eight multi-family properties located in four states with an aggregate of 2,781 units, and the carrying value of its net equity investment is $ 39,076,000 ;

and (iii) owns other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $ 5,402,000 .

The Company's 29 multi-family properties are located in 11 states;

most of these properties are located in the Southeast United States and Texas.

BRT conducts its operations to qualify as a real estate investment trust, or REIT, for Federal income tax purposes.

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The consolidated financial statements include the accounts and operations of the Company and its wholly owned subsidiaries.

The joint venture that owns a property in Yonkers, New York was determined not to be a variable interest entity ("VIE") but is consolidated because the Company has controlling rights in such entity.

The joint venture that owns a property in Yonkers, NY was determined not to be a variable interest entity ("VIE") but is consolidated because the Company has controlling rights in such entity.

The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting.

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In accordance with Accounting Standards Codification ("ASC") Topic 740 - "Income Taxes", the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on the Company's financial position or results of operations.

The Company's income tax returns for the previous six years are subject to review by the Internal Revenue Service.

The Company's income tax returns for the tax years 2019 through 2021 are subject to review by the Internal Revenue Service.

Revenue Recognition

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Real Estate Properties

Real estate properties are stated at cost, net of accumulated depreciation, and include properties acquired through acquisition, development or foreclosure.

The Company assesses the fair value of real estate acquired (including land, buildings and improvements, and identified intangibles such as acquired in-place leases) and acquired liabilities and allocates the acquisition price, including transaction costs, based on these assessments.

Real estate properties are stated at cost, net of accumulated depreciation, and include properties acquired through acquisition or development.

When the Company purchases real estate assets from third-parties, the Company allocates the purchase price of real estate, including direct transaction costs applicable to an asset acquisition, among land, building, improvements and intangibles (e.g., the value of above, below and at market leases, and origination costs associated with in-place leases and above or below-market mortgages assumed at the acquisition date).

The value, as determined, is allocated to the gross assets acquired based on management’s determination of the relative fair values of these assets and liabilities.

Whenever the Company buys out the remaining interest from joint venture partners, the Company follows a cost-accumulation approach, wherein the Company allocates the cost basis of their existing interest and the purchase price of the remaining partner interest to the real estate acquired (including land, buildings and improvements, and identified intangibles such as acquired in-place leases) and acquired liabilities.

Depreciation for multi-family properties is computed on a straight-line basis over an estimated useful life of 30 years.

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Asset Impairments

The Company reviews each real estate asset owned to determine if there are indicators of impairment.

The Company reviews each real estate asset owned quarterly to determine if there are indicators of impairment.

If such indicators are present, the Company determines whether the carrying amount of the asset can be recovered.

Recognition of impairment is required if the undiscounted cash flows estimated to be generated by the asset are less than the asset's carrying amount and that carrying amount exceeds the estimated fair value of the asset.

The impairment recognized is the difference between the carrying value and the fair value.

The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property.

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Valuation adjustments may be necessary in the event that effective interest rates, rent-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property.

If future evaluations result in a decrease in the value of the property below its carrying value, the reduction will be recognized as an impairment charge.

The fair values related to the impaired real estate assets are considered to be a level 3 valuation within the fair value hierarchy.

For investment in real estate ventures, if indicators of impairment are present, the Company determines if the fair value of the investment is less than its carrying value.

Fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the asset.

The fair values related to the impaired investments in real estate ventures are considered to be a level 3 valuation within the fair value hierarchy.

If future evaluations result in a decrease in the value of the property below its carrying value, the reduction will be recognized as an

BRT APARTMENTS CORP.

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

impairment charge.

The fair values related to the impaired real estate assets are considered to be a level 3 valuation within the fair value hierarchy because they are based on unobservable inputs and are subjective in nature.

For investment in real estate ventures, if indicators of impairment are present, the Company determines if the fair value of the investment is less than its carrying value.

Fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the asset.

The fair values related to the impaired investments in real estate ventures are considered to be a level 3 valuation within the fair value hierarchy.

Equity Based Compensation

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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.

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

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

Cash Equivalents

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primarily, direct United States treasury obligations with maturities of three months or less when purchased.

Restricted Cash

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.

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

Restricted Cash

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

Deferred Costs

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Actual results could differ from those estimates.

New Pronouncements

In March 2020, the Financial Accounting Standard Board issued ASU 2020-04, Reference Rate Reform (Topic 848).

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, lease, derivatives and other contracts.

This guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

During the first quarter of 2020, the Company has elected to apply hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

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

NOTE 2— REAL ESTATE PROPERTIES

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A summary of activity in real estate properties, net for the year ended December 31, 2022 follows (dollars in thousands):

December 31, 2020 Balance Property Acquisitions

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

December 31, 2021 Balance Partner Buyouts

Improvements Depreciation December 31, 2022 Balance

Multi-family $ 291,538 $ 370,513 $ 6,295 $ ( 18,645 ) $ 649,701

Land - Daytona, FL 4,379 — — — — ( 4,379 ) —

Retail shopping center - Yonkers, NY/Other 2,012 — — ( 110 ) 1,902

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The following summarizes, by state, information for the year ended December 31, 2022 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

Location Number of Properties Number of Units 2022 Rental and

Other Revenue % of 2022 Rental and Other Revenue

Tennessee 2 702 $ 13,812 20 %

Georgia 3 688 8,785 12 %

Florida 1 276 4,594 14 %

South Carolina 2 474 8,111 12 %

Florida 2 518 7,605 11 %

Texas 3 600 7,578 11 %

Mississippi 2 776 5,438 8 %

Alabama 3 740 5,099 7 %

Virginia 1 220 4,556 6 %

Texas (a) 1 192 3,895 12 %

Tennessee 2 702 3,413 11 %

Ohio 1 264 3,563 5 %

Other (b) — — 1,509 5 %

Missouri 1 174 2,630 4 %

North Carolina 1 264 1,824 3 %

Other (a) — — 1,514 2 %

21 5,420 $ 70,515

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

(b) Represents non-multi-family revenues

__________________________________________

(a) 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, 2022, are as follows (dollars in thousands):

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Acquisitions of Interests in Joint Ventures

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

During 2022 and 2021, the Company purchased its partners' remaining interests in 11 and three joint ventures, respectively.

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):

Therefore, these transactions do not meet the definition of a business and are accounted for as asset acquisitions.

BRT APARTMENTS CORP.

2 unchanged sentences

December 31, 2022

NOTE 3—ACQUISITIONS, DISPOSITIONS AND IMPAIRMENT CHARGES

Location Purchase

Units Interest Purchased Purchase

Price Mortgage

Debt Assumed/Acquired

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

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

Buyout Date Property Name Location Units Remaining Interest Purchased Purchase Price (1)

03/23/2022 Verandas at Alamo San Antonio, TX 288 28 % $ 8,721

04/07/2022 Vanguard Heights Creve Coeur, MO 174 22 % 4,880

05/11/2022 Jackson Square Tallahassee, FL 242 20 % 7,215

05/24/2022 Brixworth at Bridge Street Huntsville, AL 208 20 % 10,697

05/26/2022 Woodland Apartments Boerne, TX 120 20 % 3,881

06/30/2022 Grove at River Place Macon, GA 240 20 % 7,485

07/12/2022 Civic I Southaven, MS 392 25 % 18,233

07/12/2022 Civic II Southaven, MS 384 25 % 17,942

07/14/2022 Abbotts Run Wilmington, NC 264 20 % 9,010

07/19/2022 Somerset at Trussville Trussville, AL 328 20 % 10,558

08/03/2022 Magnolia Pointe Madison, AL 204 20 % 7,246

Total 2,844 $ 105,868

08/18/2021 Bells Bluff Nashville, TN 402 42 % $ 27,860

1 unchanged sentence

12/01/2021 Crossings of Bellevue Nashville, TN 300 20 % 16,128

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 968 $ 45,588

____________________________

(1) The purchase price reflects our purchase of our joint venture partners' promote interest in the venture and in 2022 excludes closing costs of $ 2,191 and

operating cash acquired from the joint venture of $ 2,797 and in 2021 excludes closing costs of $ 793 , operating cash acquired from the joint

ventures of $ 2,608 and the payoff of the existing mortgages of $ 68,183 .

BRT APARTMENTS CORP.

3 unchanged sentences

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

The Company assessed the fair value of the tangible assets of each acquired property as of the applicable acquisition date using estimated building costs between $ 90 and $ 215 per square foot, with a weighted average square foot cost of $ 158 and estimated land costs between $ 4.11 and $ 50.14 per square foot with a weighted average square foot cost of $ 6.65 , which are Level 3 unobservable input in the fair value hierarchy.

The following table summarizes the purchase price allocation of the book values of those properties whose remaining interest was purchased and consolidated in 2022 or 2021 and is based on the proportionate share of the estimated fair value of the property on the acquisition date (dollars in thousands):

Property Land Building and Improvements Total Land and building Acquisition related lease intangible Total Assets Acquisition related mortgage intangible

Verandas at Alamo $ 3,336 $ 33,465 $ 36,801 $ 797 $ 37,598 $ ( 61 )

Vanguard Heights 5,466 30,826 36,292 508 36,800 578

Jackson Square 3,398 27,167 30,565 634 31,199 283

Brixworth at Bridge Street 1,959 20,080 22,039 321 22,360 —

Woodland Apartments 1,289 12,853 14,142 233 14,375 —

Grove at River Place 2,866 16,416 19,282 396 19,678 136

Civic I 3,646 45,554 49,200 913 50,113 562

Civic II 3,847 46,452 50,299 1,013 51,312 1,254

Abbotts Run 3,468 37,312 40,780 701 41,481 481

Somerset at Trussville 4,095 42,943 47,038 869 47,907 1,090

Magnolia Pointe 2,052 22,023 24,075 503 24,578 396

$ 35,422 $ 335,091 $ 370,513 $ 6,888 $ 377,401 $ 4,719

Bells Bluff $ 6,172 $ 77,532 $ 83,704 $ 1,597 $ 85,301 —

Crestmont at Thornblade 4,033 34,052 38,085 818 38,903 $ 2,641

Crossings of Bellevue 9,679 29,115 38,794 730 39,524 —

$ 19,884 $ 140,699 $ 160,583 $ 3,145 $ 163,728 $ 2,641

The unamortized balance of acquisition related lease intangibles, which is included in Other assets in the consolidated balance sheet, was $ 3,181,000 at December 31, 2022, and amortizes over one year .

In March 2023, the Company entered into an agreement to acquire a 238 -unit multifamily property constructed in 2019 and located in Richmond, VA, for a purchase price of approximately $ 62,500,000 .

The purchase price includes the assumption of approximately $ 32,000,000 of mortgage debt bearing an interest rate of 3.34 % and maturing in 2061.

The purchase is subject to the satisfaction of various conditions, including the completion, to BRT’s satisfaction, of its due diligence investigation, as well as the approval by the mortgage lender of the Company’s assumption of the mortgage debt.

BRT anticipates that this transaction will be completed in the fourth quarter of 2023, although we can provide no assurance that this transaction will be completed.

Property Dispositions

During the year ended December 31, 2022, the Company sold a land parcel located in Daytona, FL for a sales price of $ 4,700,000 and after closing costs, recognized a nominal gain.

In 2020, the Company recognized an impairment charge of $ 3,600,000 in connection with this property.

At December 31, 2021, this property was classified as held-for-sale on the Company's consolidated balance sheet ( see Note 7 - Real Estate Property Held for Sale).

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

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

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

6 unchanged sentences

(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

The Company reviews each real estate asset owned, including those held through investments in unconsolidated joint ventures, for impairment when there is an event or a change in circumstances indicating that the carrying amount may not be recoverable.

The Company measures and records impairment charges, and reduces the carrying value of owned properties, when indicators of impairment are present and the expected undiscounted cash flows related to those properties are less than their carrying amounts.

For its unconsolidated joint venture investments, the Company measures and records impairment losses, and reduces the carrying value of the equity investment when indicators of impairment are present and the expected discounted cash flows related to the investment is less than the carrying value.

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 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.

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

The Company did not record any impairment charges in 2022.

NOTE 4— RESTRICTED CASH

Restricted cash represents funds for specific purposes and therefore are not generally available for general corporate purposes.

As reflected on the consolidated balance sheets, restricted cash represents funds held by or on behalf of the Company specifically allocated for capital improvements at multi-family properties.

As reflected on the consolidated balance sheets, restricted cash represents funds held by or on behalf of the Company specifically allocated for capital improvements at joint venture multi-family properties.

NOTE 5 - LEASES

2 unchanged sentences

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.

1 unchanged sentence

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.

In accordance with the FASB Staff Q&A, Topic 842 and 840 - Accounting for Lease Concessions Related to the Effects of COVID-19 Pandemic, a lessor may make an accounting policy election to (i) not evaluate whether such COVID-19 pandemic related rent-relief is a lease modification under ASC 842 and (ii) treat each tenant rent deferral or forgiveness as if it were contemplated as part of the existing lease contract.

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.

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

Lessee Accounting

2 unchanged sentences

As of December 31, 2022 , the remaining lease term, including the renewal option, is 22.8 years.

The Company is also a lessee under a corporate office lease in Great Neck, New York, which is classified as an operating lease.

The Company is also a lessee under a corporate office lease in Great Neck, NY, which is classified as an operating lease.

The lease expires on December 31, 2031 and provides a 5-year renewal option.

As of December 31, 2022, the remaining lease term, including renewal options deemed exercised, is 14.0 years.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

NOTE 5 - LEASES (continued)

As of December 31, 2022 , the Company's right-of-use ("ROU") assets and lease liabilities were $ 2,371,000 and $ 2,472,000 , respectively and as of December 31, 2021, the Company's ROU assets and lease liabilities were $ 2,568,000 and $ 2,629,000 , 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 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

2 unchanged sentences

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.

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

11 unchanged sentences

NOTE 6— INVESTMENT IN UNCONSOLIDATED VENTURES

At December 31, 2021, the Company owns interests in unconsolidated joint ventures that own 23 multi-family properties (the "Unconsolidated Properties").

The condensed balance sheet below presents information regarding such properties (dollars in thousands):

At December 31, 2022 and 2021, the Company owned interests in unconsolidated joint ventures that own eight and 23 multi-family properties (the "Unconsolidated Properties"), respectively.

The condensed balance sheets below presents information regarding such properties (dollars in thousands):

Real estate properties, net of accumulated depreciation of $ 66,945 and $ 133,615

17 unchanged sentences

NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (continued)

The condensed income statement below presents information regarding the Unconsolidated Properties (dollars in thousands):

The condensed income statements below presents information regarding the Unconsolidated Properties (dollars in thousands):

Year Ended December 31,

12 unchanged sentences

Loss on extinguishment of debt ( 3,491 ) ( 9,401 )

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 )

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

Units Purchase

Price Acquisition

Debt Initial BRT

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.

Net income from joint ventures $ 121,187 $ 75,615

BRT equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 66,426 $ 30,774

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

In December 2022, the venture recorded an impairment charge of $ 8,553,000 due to a fire at the development.

This loss is covered by insurance and accordingly, the venture recorded an insurance recovery of $ 8,553,000 .

The Company recorded its proportionate share of the impairment charge and the insurance recovery.

Dispositions of Properties

The table below provides information regarding the disposition of real estate properties by unconsolidated joint ventures in the year ended December 31, 2022 (dollars in thousands):

Location Sale Date Number of Units Sale Price Gain on Sale BRT Gain on Sale BRT Share of Loss of Extinguishment of Debt

Verandas at Shavano - San Antonio, TX 2/8/2022 288 $ 53,750 $ 23,652 $ 12,961 $ —

Reatreat at Cinco Ranch - Katy, TX 6/14/2022 268 68,300 30,595 17,378 686

The Vive - Kannapolis, NC 6/30/2022 312 91,250 47,086 22,720 787

Waters Edge - Columbia, SC 8/31/2022 204 32,400 16,937 11,472 388

1,072 $ 245,700 $ 118,270 $ 64,531 $ 1,861

BRT APARTMENTS CORP.

3 unchanged sentences

NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (continued)

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):

The table below provides information regarding the disposition of real estate properties by unconsolidated joint ventures 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

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

Avenue Apts,Ocoee, FL 7/20/2021 522 $ 107,661 $ 39,668 $ 19,518 $ 4,474

1 unchanged sentence

1,108 $ 225,911 $ 83,984 $ 34,982 $ 4,581

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.

On March 13, 2023 , the unconsolidated joint venture that owns Chatham Court and Reflections, a 494 unit multi-family property located in Dallas and in which we have a 50 % interest entered into a contract to sell the property.

The contract sale price is $ 73,000,000 and we estimate our share of the gain will be approximately $ 14,300,000 and our share of the early extinguishment of debt charge will be approximately $ 167,000 .

Dispositions of Joint Venture Interests

There were no sales of joint venture interests in 2022.

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

5 unchanged sentences

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

In 2022 and 2021, the Company purchased its venture partners' remaining interests in joint ventures that owned 11 and three multi-family properties, respectively.

The operations and accounts of these 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.

See Note 3 for information regarding these buyouts.

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.

( See Note 3) .

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

NOTE 8— DEBT OBLIGATIONS

2 unchanged sentences

Junior subordinated notes 37,400 37,400

Credit Facility 19,000 —

Deferred loan costs ( 4,941 ) ( 1,277 )

3 unchanged sentences

Acquisitions 236,615

Increase due to refinancing/payoff of acquisition debt 6,749

Fair value adjustment upon consolidation ( 4,719 )

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

Amortization of fair value adjustment 137

Debt Payoff ( 29,462 )

2 unchanged sentences

Balance at December 31, 2022 $ 403,792

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):

At December 31, 2022, $ 407,958,000 of mortgage debt with a weighted average interest rate of 4.00 % and a weighted average remaining term to maturity of 7.9 years is outstanding on 17 of the Company's multi-family properties.

Scheduled principal repayments for the periods indicated are as follows (dollars in thousands):

Year Ending December 31, Scheduled Principal Payments

Thereafter 260,519

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

NOTE 8—DEBT OBLIGATIONS (continued)

The following table summarizes the information regarding the mortgages relating to the properties in which BRT purchased the remaining interests of its joint venture partners during the twelve months ended December 31, 2022 and 2021 (dollars in thousands):

Property Name Location Debt at Purchase Date (a) Interest Rate Maturity Date Interest only through

Verandas at Alamo San Antonio, TX $ 27,000 3.64 % Oct 2029 Oct 2024

Vanguard Heights Creve Coeur, MO 29,700 4.41 % July 2031 June 2025

Jackson Square Tallahassee, FL 21,524 4.19 % Sept 2027 Sept 2022

Brixworth at Bridge Street (b) Huntsville, AL 11,147 4.25 % June 2032 Maturity

The Woodland Apartments Boerne, TX 7,914 4.74 % Feb 2026 N/A

Grove at River Place (c) Macon, GA 11,426 4.39 % Feb 2026 N/A

Civic I Southaven, MS 27,389 4.24 % March 2026 N/A

Civic II Southaven, MS 30,105 3.73 % Sept 2026 N/A

Abbotts Wilmington, NC 23,160 4.71 % July 2030 July 2025

Somerset at Trussville Trussville, AL 32,250 4.19 % June 2029 May 2025

Magnolia Pointe Madison, AL 15,000 4.08 % Jan 2028 Dec 2022

Bells Bluff Nashville, TN $ 52,000 3.48 % Aug 2041 N/A

Crestmont at Thornblade Greenville, SC 26,425 4.69 % Nov 2028 N/A

Crossings of Bellevue Nashville, TN 37,680 3.11 % Dec 2031 N/A

________________________________

(a) Excludes fair value adjustments of $ 4,719 determined as part of the purchase price allocation.

(b) The original mortgage debt of $ 11,147 was refinanced with new ten-year mortgage debt of $ 18,952 immediately following the buyout.

The interest rate, maturity date and interest - only terms reflect the new mortgage.

The unamortized balance of acquisition related mortgage intangibles, which is included in mortgages payable in the consolidated balance sheet, was $ 2,000,000 at December 31, 2022 and will be amortized as follows (dollars in thousands):

Year Ending December 31, Amount

Thereafter 144

Total $ 2,000

BRT APARTMENTS CORP.

3 unchanged sentences

NOTE 8—DEBT OBLIGATIONS (continued)

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

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

The Company paid off the following debt in the years ended December 31, 2022 and 2021 (dollars in thousands):

Property Name Location Mortgage Payoff Interest Rate Payoff Date Maturity Date Prepayment Charges

Avalon Pensacola, FL $ 14,558 4.29 % 1/26/2022 3/1/2022 $ —

Silvana Oaks N.

Charleston, SC 14,904 3.79 % 10/28/2022 11/1/2022 —

Total $ 29,462 $ —

Avalon - supplemental Pensacola, FL 2,903 4.92 % 7/29/2021 3/1/2022 29

Avondale Station Decatur, GA 7,140 3.74 % 8/30/2021 12/1/2022 376

Avondale Station - supplemental Decatur, GA 6,866 5.53 % 8/31/2021 12/1/2022 277

Woodland Trails LaGrange, GA 14,025 4.36 % 7/30/2021 2/1/2022 140

Ripco (a) Yonkers, NY 945 5.25 % 8/18/2021 4/1/2022 —

Total $ 31,879 $ 822

________________________________

(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.

(a) In connection with the payoff of this debt, the Company terminated the related interest rate swap.

Credit Facility

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));

On September 15, 2022, the Company's credit facility with an affiliate of Valley National Bank ("VNB"),was amended to, among other things, increase the amount the Company can borrow, subject to compliance with borrowing base requirements and other conditions, up to $ 60,000,000 , extend the facility's maturity date to September 2025, reduce the adjustable interest rate to the prime rate, with a floor of 3.50 % and revise certain financing covenants.

The facility can be used 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 $ 25,000,000 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 %.

The interest rate in effect as of December 31, 2022 and March 1, 2023 is 7.50 % and 7.75 %, respectively.

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, 2022, the Company is in compliance in all material respects with its obligations under 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.

At December 31, 2022, there was an outstanding balance on the facility of $ 19,000,000 and $ 41,000,000 was available to be borrowed.

At December 31, 2021, there was no outstanding balance on the facility.

The average balance outstanding on the facility for 2022 and 2021 was $ 7,907,000 and $ — .

At March 1, 2023, there is no balance outstanding on the facility.

Interest expense for the years ended December 31, 2022 and 2021, which includes amortization of deferred financing costs and unused fees, was $ 713,000 and $ 101,000 , 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)

Deferred costs of $ 498,000 and $ 270,000 are recorded on the consolidated balance sheets at December 31, 2022 and 2021, respectively.

Junior Subordinated Notes

3 unchanged sentences

The notes mature April 30, 2036.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

NOTE 8—DEBT OBLIGATIONS (continued)

The notes require interest only payments through the maturity date, at which time repayment of all outstanding principal and unpaid interest is due.

11 unchanged sentences

During the years ended December 31, 2022 and 2021, the Company recorded $ 821,000 and $ 206,000 , respectively, of state franchise tax expense, net of refunds, relating to the 2022 and 2021 calendar years.

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, 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.

These loss carryforwards no longer expire and are available to offset 100% of taxable income.

Net operating losses generated in 2018 and thereafter will be available to offset 80% of taxable income.

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 impairment charges, depreciation methods and carrying values.

For the 2022 tax year, the Company expects to use its remaining available net operating loss carryforwards and at December 31, 2022, the Company does not have any net operating loss carryforwards available.

The Company's net operating losses had previously been available to reduce taxable income.

NOTE 10— STOCKHOLDERS' EQUITY

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No further awards may be granted pursuant to the 2020 Plan or the 2018 Plan, which are referred to collectively as the "Prior Plans."

Restricted Stock Units

In each of March 2021 (pursuant to the 2020 Plan) and June 2022 (pursuant to the 2022 Plan), the Company issued restricted stock units (the "RSUs") to acquire up to 210,375 and 212,470 shares of common stock respectively.

The RSUs granted in each of 2021 and 2022 entitle the recipients, subject to continued service during the applicable performance period to

BRT APARTMENTS CORP.

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NOTE 10—STOCKHOLDERS' EQUITY (continued)

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.

(i) up to 93,500 and 94,431 and shares of common stock, respectively, (the "TSR Award"), based on achieving, during the three-year performance period, specified levels in compounded annual growth rate ("CAGR") in total stockholder return (“TSR”), and (ii) up to 93,500 and 94,431 shares of common stock based, respectively, on achieving, during the measurement period, specified levels in CAGR in adjusted funds from operations (the "AFFO Award"), in each case as determined pursuant to the award agreement.

In addition, with respect to each of the RSUs granted in 2021 and 2022, up to 23,375 and 23,608 shares, respectively, (the "Peer Group Adjustment") may be added to or subtracted from the TSR Award, based on attaining or failing to attain, as the case may be, during the applicable performance period, of CAGR in TSR for the REITs that comprise, with specified exceptions, the FTSE NAREIT Equity Apartment Index.

The RSU recipients also received 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 applicable 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.

The Monte Carlo valuation consisted of computing the grant date fair value of the awards using the Company's simulated stock price.

For these TSR awards, the per unit of share fair value was estimated using the following assumptions:

Award Year Expected Life ( yrs) Dividend Rate Risk-Free Interest Rate Expected Price Volatility

2022 3 4.57 % 2.23 % to 3.11 % 35.60 % to 47.40 %

2021 3 4.93 % 0.02 % to 0.34 % 47.19 % to 59.01 %

For the AFFO Awards granted in 2022 and 2021, fair value is based on the market value on the date of grant.

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.

The total amount recorded at the grant date as deferred compensation with respect to the RSUs granted in 2022 and 2021 was $ 2,068,000 and $ 1,995,000 respectively.

In June 2016, the Company issued RSUs to acquire up to 450,000 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;

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Restricted Stock

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.

In January 2022, June 2021 and January 2021, the Company granted 158,973 , 160,000 and 156,774 shares, respectively, of restricted stock pursuant to the 2020 Plan.

As of December 31, 2022, an aggregate of 934,092 shares of unvested restricted stock are outstanding pursuant to the Prior Plans.

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.

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At December 31, 2022 and 2021, $ 7,728,000 and $ 7,332,000 , respectively, has been deferred as unearned compensation and will be charged to expense over the remaining vesting periods of these restricted stock awards.

The weighted average vesting period of these restricted shares is 2.8 years.

Subsequent to December 31, 2021, the Company granted 158,973 shares of restricted stock pursuant to the 2020 Plan.

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

The weighted average vesting period of the 934,092 restricted shares is 2.3 years.

Subsequent to

BRT APARTMENTS CORP.

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NOTE 10—STOCKHOLDERS' EQUITY (continued)

December 31, 2022, the Company granted 163,974 shares of restricted stock pursuant to the 2022 Plan.

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

Year Ended December 31,

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Numerator for basic and diluted earnings per share:

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

Net income $ 50,099 $ 29,250

Deduct (earnings) attributable to non-controlling interests ( 144 ) ( 136 )

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

Net income (loss) available for common stockholders:

Deduct (earnings) allocated to unvested restricted stock ( 2,472 ) ( 1,412 )

Net income available for common stockholders:

basic and diluted $ 47,483 $ 27,702

5 unchanged sentences

Weighted average number of shares 17,852,951 17,084,642

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.

Earnings per common share, basic $ 2.67 $ 1.63

Earnings per common share, diluted $ 2.66 $ 1.62

BRT APARTMENTS CORP.

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Equity Distribution Agreements

The following table reflects the sale of shares pursuant to the equity distribution agreements entered into on March 18, 2022, 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 agreements $ 40,000

2022 (a) 347,815 $ 22.62 $ 7,870 $ 98 $ 7,772 ( 7,870 )

347,815 $ 7,870 $ 98 $ 7,772

Remaining amount available under agreements:

____________________________

(a) Subsequent to March 17, 2022.

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

Aggregate amount available under agreements $ 30,000

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

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2021 529,126 18.47 9,771 147 $ 9,624 ( 9,771 )

2022 (a) 100,000 22.06 2,206 33 $ 2,173 ( 2,206 )

1,435,387 $ 26,292 $ 396 $ 25,896

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 .

Remaining amount not available under agreements (b):

____________________________

(a) Through March 17, 2022.

(b) The amount remaining was no longer available after March 17, 2022.

Stock Buyback

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.

During the years ended December 31, 2022 and 2021, the Company did no t repurchase any shares of common stock.

Dividend Reinvestment Plan

The Dividend Reinvestment Plan (the “DRP”), among other things, provides stockholders with the opportunity to reinvest all or a portion of their cash dividends paid on the Company’s common stock in additional shares of its common stock, at a discount, determined in the Company’s sole discretion, of up to 5 % from the market price for the common stock (as such price is calculated pursuant to the DRP).

The discount from the market price is currently 3 %.

The DRP is effective with the dividend paid on July 8, 2022.

In the year ended December 31, 2022, the Company issued 62,360 shares in lieu of cash dividends of $ 1,279,000 .

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

NOTE 11— RELATED PARTY TRANSACTIONS

The Company has retained certain of its executive officers and Fredric H.

The Company has retained certain of its part time executive officers and Fredric H.

Gould, a director, to provide, among other things, the following services:

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For the years ended December 31, 2022 and 2021, fees for these services were $ 36,000 and $ 31,000 , respectively.

Pursuant to a shared services agreement between the Company and several affiliated entities, including Gould Investors L.P., the owner and operator of a diversified portfolio of real estate and other assets and One Liberty Properties, Inc., a NYSE listed equity REIT, the (i) services of the part time personnel that perform certain executive, administrative, legal, accounting and clerical functions and (ii) certain facilities and other resources, are provided to the Company.

Pursuant to a shared services agreement between the Company and several affiliated entities, including Gould Investors L.P., the owner and operator of a diversified portfolio of real estate and other assets and One Liberty Properties, Inc., a NYSE listed equity REIT ("One Liberty"), the (i) services of the part time personnel that perform certain executive, administrative, legal, accounting and clerical functions and (ii) certain facilities and other resources, are provided to the Company.

The allocation of expenses for the facilities, personnel and other resources shared by, among others, the Company and Gould Investors, is computed in accordance with such agreement and is included in general and administrative expense on the consolidated statements of operations.

During the years ended December 31, 2022 and 2021, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 739,000 and $ 641,000 , respectively.

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, 2022 and 2021, $ 126,000 and $ 118,000 , res pectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets.

At December 31, 2022, Gould Investors owned approximately 17.2 % of BRT’s outstanding common stock.

Certain of the Company's officers and directors are also officers and directors of One Liberty and Georgetown Partners, LLC, the managing general partner of Gould Investors.

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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NOTE 12— FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Not Measured at Fair Value

The Company estimates the fair value of financial assets and liabilities based on the framework established in fair value accounting guidance.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).

The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities.

This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available.

The hierarchy is broken down into three levels based on the reliability of inputs as follows:

• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets and liabilities in active markets

• Level 2— inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3— inputs to the valuation methodology are unobservable and significant to fair value.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not reported at fair value on the consolidated balance sheets:

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The carrying amounts reported on the balance sheets for these instruments approximate their fair value due to the short term nature of these accounts.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

Junior subordinated notes:

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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):

Fair Value Measurements Using Fair Value Hierarchy

Financial Liabilities:

Interest rate swap

$ 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:

Fair values are approximated using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives.

This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, and implied volatilities.

At December 31, 2020, this derivative is included in Accounts payable and accrued liabilities on the consolidated balance sheet.

Although the Company has determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with it utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparty.

As of December 31, 2020, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative position and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

As a result, the Company determined that its derivative valuation is classified in Level 2 of the fair value hierarchy.

At December 31, 2022 and 2021, the Company had no financial assets or liabilities measured at fair value.

Long-lived assets

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.

The Company measures its real estate investments at fair value on a nonrecurring basis.

During the year ended December 31, 2021, 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:

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):

In the quarter ended June 30, 2021, the fair value of the real estate investment was determined based on the expected sale price per the contract using the following input levels (dollars in thousands):

Carrying and Fair Value Fair Value Measurements Using Fair Value Hierarchy

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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.

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

Long-lived assets - Opop Tower and Lofts, St Louis, MO $ 3,000 $ — $ 3,000 $ —

NOTE 13— COMMITMENT AND CONTINGENCIES

From time to time, the Company and/or its subsidiaries are parties to legal proceedings that arise in the ordinary course of business, and in particular, personal injury claims involving the operations of the Company's properties.

Although management believes that the primary and umbrella insurance coverage maintained with respect to such properties is sufficient to cover claims for compensatory damages, many of these personal injury claims also assert claims for exemplary ( i.e punitive) damages.

Generally, insurance does not cover claims for punitive or exemplary damages.

BRT APARTMENTS CORP.

2 unchanged sentences

December 31, 2022

NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Quantitative information about Level 3 measurements is as follows:

Fair Value Valuation Technique Significant Unobservable Inputs

Non-Financial Assets:

Long-Lived assets:

Vacant land - South Daytona Beach, FL $ 4,379 Discounted cash flow Non-binding sales contract /Discount rate 12.5 %

NOTE 13— COMMITMENT AND CONTINGENCIES

NOTE 13—COMMITMENT AND CONTINGENCIES (continued)

The Company is one of several defendants in a wrongful death lawsuit seeking an unspecified amount in excess of $ 1,000,000 and an unspecified amount of exemplary damages.

The Company’s primary insurance carrier is defending the claim.

Although management is not able to determine the probability and/or magnitude of any potential loss, if any, management believes the Company has sufficient primary and umbrella insurance to cover the claim for compensatory damages.

In December 2022, a personal injury lawsuit in which the Company and others were defendants settled - the Company’s insurance carrier paid the plaintiff $ 850,000 .

The Company maintains a non-contributory defined contribution pension plan covering eligible employees and officers.

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At December 31, 2022 and 2021, $ 125,000 and $ 23,000 , respectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets.

At December 31, 2021, the Company is the carve-out guarantor with respect to mortgage debt in principal amount of $ 189,290,000 at seven multi-family properties.

At December 31, 2022, the Company is the carve-out guarantor with respect to mortgage debt in principal amount of $ 401,225,000 at seventeen multi-family properties.

NOTE 14— DERIVATIVE FINANCIAL INSTRUMENTS

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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, 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

Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements and other identified risks but do not meet the hedge accounting requirements.

Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

At December 31, 2020, the Company did not have any outstanding derivatives that were not designated as hedges in qualifying hedging relationships.

The table below presents the fair value of the Company's derivative financial instruments as well as its classification on the consolidated balance sheets as of the dates indicated (dollars in thousands):

Derivatives as of:

December 31, 2021 December 31, 2020

Balance Sheet Location Fair Value Balance Sheet Location Fair Value

Other Assets $ — Other assets $ —

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):

As of December 31, 2022 and 2021, the Company did not have any outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk.

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

Year ended December 31,

Amount of loss recognized on derivative in Other Comprehensive Income $ ( 1 )

Amount of (loss) gain reclassified from Accumulated Other Comprehensive (loss) income into Interest Expense $ ( 12 ) $ ( 15 )

Amount of gain reclassified from Accumulated Other Comprehensive (loss) income into Interest Expense $ ( 12 )

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

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General and administrative 3,633 3,533 3,673 3,815 14,654

Impairment charge — 520 — — 520

Depreciation 3,606 5,010 8,165 8,031 24,812

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Total revenues less total expenses ( 2,579 ) ( 3,118 ) ( 4,397 ) ( 4,917 ) ( 15,011 )

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

Equity in earnings (loss) of unconsolidated joint ventures 1,230 ( 50 ) 135 580 1,895

Equity in earnings from sale of unconsolidated joint venture properties 12,961 40,098 11,472 — 64,531

Gain on sale of real estate 6 — — — 6

Casualty loss — — — ( 850 ) ( 850 )

Insurance recovery of casualty loss — — — 850 850

Gain on sale of partnership interest — — — —

Gain on insurance recoveries — 62 — 62

Loss on extinguishment of debt — ( 563 ) — — ( 563 )

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

Income (loss) from continuing operations 11,618 36,367 7,272 ( 4,337 ) 50,920

Provision for taxes 74 724 178 ( 155 ) 821

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

Net income (loss) from continuing operations, net of taxes 11,544 35,643 7,094 ( 4,182 ) 50,099

(Income) attributable to non-controlling interests ( 36 ) ( 36 ) ( 35 ) ( 37 ) ( 144 )

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

Net income (loss) attributable to common stockholders $ 11,508 $ 35,607 $ 7,059 $ ( 4,219 ) 49,955

Basic and diluted and per share amounts attributable to common stockholders

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

Basic income (loss) per share $ 0.62 $ 1.91 $ 0.37 $ ( 0.22 ) $ 2.67

Diluted income (loss) per share $ 0.62 $ 1.91 $ 0.37 $ ( 0.22 ) $ 2.66

BRT APARTMENTS CORP.

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Total revenues less total expenses ( 2,329 ) ( 2,904 ) ( 2,126 ) ( 2,709 ) ( 10,068 )

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

Equity in (loss) earnings 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 )

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

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

Provision for taxes 57 67 31 51 206

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

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

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

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

Basic and diluted 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 and per share amounts attributable to common stockholders

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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Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of December 31, 2022 that warrant additional disclosure have been included in the notes to the consolidated financial statements.

The Company is presented with the risks presented by the novel coronavirus or COVID-19, which has spread and may continue to spread, to markets in which it operates.

The ultimate extent of the impact of the pandemic on the Company’s business, financial condition, liquidity, results of operations and prospects will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration, the severity of, and the actions taken to control, the pandemic, and the short-term and long-term economic impact thereof.

BRT APARTMENTS CORP.

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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$ — — $ 4,000 — $ 320 — — $ 4,320 $ 4,320 $ 2,419 (b) Aug-2000 39 years

South Daytona, FL.

— $ 10,437 — $ 49 — — $ 4,379 — 4,379 — N/A Feb-2008 N/A

Multi-Family Residential

9 unchanged sentences

Nashville, TN 37,680 9,679 29,114 — 1,462 — 9,679 30,576 40,255 1,255 1985 Dec-2021 30 years

San Antonio, TX 27,000 3,336 33,437 — 18 — 3,336 33,455 36,791 1,053 2018 March-2022 30 years

Creve Coeur, MO 29,700 5,466 30,826 — 118 — 5,466 30,944 36,410 915 2019 April-2022 30 years

Tallahassee, FL 21,436 3,398 27,167 — 171 — 3,398 27,338 30,736 732 1997 May-2022 30 years

Huntsville, AL 18,952 1,959 20,079 — 404 — 1,959 20,483 22,442 487 1992 May-2022 30 years

Boerne, TX 7,842 1,289 12,852 — 174 — 1,289 13,026 14,315 301 2008 May-2022 30 years

Macon, GA 10,265 2,866 16,423 — 65 — 2,866 16,488 19,354 322 1989 June-2022 30 years

Southaven, MS 27,194 3,646 45,554 — 477 — 3,646 46,031 49,677 930 2003 July-2022 30 years

Southaven, MS 29,875 3,847 46,452 — 584 — 3,847 47,036 50,883 956 2006 July-2022 30 years

Wilmington, NC 23,160 3,468 37,311 — 222 — 3,468 37,533 41,001 759 2003 July-2022 30 years

Trussville, AL 32,250 4,095 42,943 — 242 — 4,095 43,185 47,280 683 2007 July-2022 30 years

Madison, AL 15,000 2,054 22,023 — 240 — 2,054 22,263 24,317 364 1992 Aug-2022 30 years

Total $ 409,958 $ 74,246 $ 618,051 $ — $ 14,501 $ — $ 74,246 $ 632,552 $ 706,798 $ 55,195

12 unchanged sentences

Capital improvements 6,295 1,308

Capitalized development expenses and carrying costs — —

376,808 161,891

Sales 4,379 16,927

1 unchanged sentence

Impairment Charge — —

Reconciliation of partnership interest — —

23,134 24,154

1 unchanged sentence

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