What changed in this filing

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Item 1. Financial Statements

2023-05-08 compared with 2022-11-09 · 111 added, 277 removed, 317 unchanged (55% of the section changed)

4 unchanged sentences

(Amounts in thousands, except per share data)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(unaudited) (audited)

5 unchanged sentences

Other assets 14,980 16,786

Real estate property held for sale — 4,379

Total Assets $ 719,701 $ 732,118

26 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Rental and other revenue from real estate properties $ 22,939 $ 11,430

1 unchanged sentence

Total revenues 22,939 11,434

Real estate operating expenses - including $ 9 and $ 8 to related parties for the three months ended and $ 28 and $ 23 for the nine months ended

9,195 3,404 20,296 9,687

Real estate operating expenses - including $ 6 and $ 11 to related parties

Interest expense 5,483 2,021

General and administrative - including $ 183 and $ 172 to related parties for the three months ended and $ 614 and $ 523 for the nine months ended

3,673 3,114 10,839 9,382

Impairment charge — — — 520

General and administrative - including $ 173 and $ 246 to related parties

Depreciation and amortization 8,008 3,606

1 unchanged sentence

Total revenues less total expenses ( 5,041 ) ( 2,579 )

Equity in earnings (loss) of unconsolidated joint ventures 135 ( 4,196 ) 1,315 ( 6,033 )

Equity in earnings of unconsolidated joint ventures 815 1,230

Equity in earnings from sale of unconsolidated joint ventures properties — 12,961

Gain on sale of real estate — 6

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

Gain on insurance recoveries 240 —

Loss on extinguishment of debt — ( 902 ) ( 563 ) ( 902 )

Income from continuing operations 7,272 28,172 55,257 30,625

(Loss) income from continuing operations ( 3,986 ) 11,618

Income tax provision 76 74

Net income from continuing operations, net of taxes 7,094 28,141 54,281 30,470

(Loss) income from continuing operations, net of taxes ( 4,062 ) 11,544

Net income attributable to non-controlling interest ( 36 ) ( 36 )

Net income attributable to common stockholders $ 7,059 $ 28,106 $ 54,174 $ 30,368

Net (loss) income attributable to common stockholders $ ( 4,098 ) $ 11,508

Weighted average number of shares of common stock outstanding:

2 unchanged sentences

Per share amounts attributable to common stockholders:

Basic $ 0.37 $ 1.55 $ 2.91 $ 1.71

Diluted $ 0.37 $ 1.54 $ 2.89 $ 1.70

See accompanying notes to consolidated financial statements.

BRT APARTMENTS CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income $ 7,094 $ 28,141 $ 54,281 $ 30,470

Other comprehensive income :

Unrealized gain on derivative instruments — 12 — 22

Other comprehensive income — 12 — 22

Comprehensive income 7,094 28,153 54,281 30,492

Comprehensive (income) attributable to non-controlling interests ( 35 ) ( 37 ) ( 107 ) ( 106 )

Comprehensive income attributable to common stockholders $ 7,059 $ 28,116 $ 54,174 $ 30,386

Basic and diluted $ ( 0.21 ) $ 0.62

See accompanying notes to consolidated financial statements.

10 unchanged sentences

Compensation expense - restricted stock and restricted stock units — 1,410 — — 1,410

Shares issued through equity offering program, net 1 3,037 — — 3,038

Net income — — 11,508 36 11,544

Comprehensive income 11,544

Shares issued through DRIP — 763 — — 763

Net (loss) income — — ( 4,098 ) 36 ( 4,062 )

Balances, March 31, 2023 $ 182 $ 276,034 $ ( 32,900 ) $ 18 $ 243,334

Distributions - common stock - $ 0.25 per share

— — ( 4,723 ) — ( 4,723 )

Compensation expense - restricted stock and restricted stock units — 1,001 — — 1,001

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

Shares issued through equity offering program, net 2 3,085 — — 3,087

Net income — — 35,607 36 35,643

Comprehensive income 35,643

Balances, June 30, 2022 $ 178 $ 266,256 $ ( 17,291 ) $ 7 $ 249,150

Distributions - common stock - $ 0.25 per share

— — ( 4,720 ) — ( 4,720 )

Compensation expense - restricted stock and restricted stock units — 1,208 — — 1,208

Distributions to non-controlling interests — — — ( 59 ) ( 59 )

Shares issued through equity offering program, net 2 3,818 — — 3,820

Shares issues through DRIP — 622 — — 622

Net income — — 7,059 35 7,094

Comprehensive income 7,094

Balances, September 30, 2022 $ 180 $ 271,904 $ ( 14,952 ) $ ( 17 ) $ 257,115

BRT APARTMENTS CORP.

3 unchanged sentences

Common Stock Additional

Paid-In Capital Accumulated

Other Comprehensive income Accumulated Deficit Non- Controlling Interest Total

Paid-In Capital Accumulated Deficit Non- Controlling Interest Total

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

3 unchanged sentences

Compensation expense - restricted stock and restricted stock units — 974 — — 974

Net (loss) income — — — ( 3,765 ) 34 ( 3,731 )

Other comprehensive income — — 4 — 1 5

Comprehensive loss ( 3,726 )

Balances, March 31, 2021 $ 168 $ 246,139 $ ( 15 ) $ ( 75,754 ) $ ( 49 ) $ 170,489

Distributions - common stock - $ 0.22 per share

— — — ( 4,007 ) — ( 4,007 )

Compensation expense - restricted stock and restricted stock units — 569 — — — 569

Shares issued through equity offering program, net 1 3,037 — — 3,038

Net income — — 11,508 36 11,544

Other comprehensive income — — 4 — 1 5

Comprehensive income 6,065

Balances, June 30, 2021 $ 172 $ 254,053 $ ( 11 ) $ ( 73,734 ) $ ( 15 ) $ 180,465

Distributions - common stock - $ 0.22 per share

— — — ( 4,233 ) — ( 4,233 )

Compensation expense - restricted stock and restricted stock units — 842 — — — 842

Shares issued through equity offering program, net 1 1,065 — — — 1,066

Net income — — — 28,106 35 28,141

Other comprehensive income — — 11 — 1 12

Comprehensive income 28,153

Balances, September 30, 2021 $ 173 $ 255,960 $ — $ ( 49,861 ) $ 21 $ 206,293

Balances, March 31, 2022 $ 176 $ 262,170 $ ( 48,175 ) $ 31 $ 214,202

See accompanying notes to consolidated financial statements

3 unchanged sentences

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income $ 54,281 $ 30,470

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

Net (loss) income $ ( 4,062 ) $ 11,544

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

Depreciation and amortization 8,008 3,606

2 unchanged sentences

Amortization of restricted stock and restricted stock units 1,410 974

Equity in (earnings) loss of unconsolidated joint ventures ( 1,315 ) 6,033

Equity in earnings of unconsolidated joint ventures ( 815 ) ( 1,230 )

Equity in earnings from sale of real estate of unconsolidated

joint venture properties — ( 12,961 )

Impairment charge — 520

Gain on sale of real estate — ( 6 )

Gain on sale of partnership interest — ( 2,244 )

Gain on insurance recovery ( 62 ) —

Loss on extinguishment of debt 563 902

Increases and decreases from changes in other assets and liabilities:

Decrease in other assets ( 2,538 ) ( 1,071 )

Decrease in accounts payable and accrued liabilities ( 2,635 ) ( 2,000 )

Net cash provided by (used in) operating activities 8,450 ( 221 )

Decrease (increase) in accounts payable and accrued liabilities 528 ( 350 )

Net cash provided by operating activities 2,940 469

Cash flows from investing activities:

2 unchanged sentences

Proceeds from the sale of real estate — 4,385

Proceeds from the sale of partnership interest — 7,540

Distributions from unconsolidated joint ventures 2,228 19,796

Contributions to unconsolidated joint ventures — ( 2,122 )

Proceeds from insurance recoveries 62 —

Net cash (used in) provided by investing activities ( 18,990 ) 61,239

Net cash provided by investing activities 70 12,969

Cash flows from financing activities:

2 unchanged sentences

Mortgage principal payments ( 813 ) ( 410 )

Proceeds from credit facility 22,000 —

Repayment of credit facility ( 19,000 ) —

1 unchanged sentence

Dividends paid ( 9,521 ) ( 4,198 )

Distributions to non-controlling interests ( 119 ) —

Proceeds from the sale of common stock — 3,038

5 unchanged sentences

(Dollars in Thousands)

Nine Months Ended September 30,

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

Three Months Ended March 31,

Net decrease in cash, cash equivalents and restricted cash:

( 5,071 ) ( 2,690 )

18 unchanged sentences

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 $ 15,252 $ 29,688

4 unchanged sentences

Notes to Consolidated Financial Statements

September 30, 2022

March 31, 2023

Note 1 – Organization and Background

3 unchanged sentences

These multi-family properties may be wholly owned by the Company (including its consolidated subsidiaries) or by unconsolidated joint ventures in which the Company generally contributes a significant portion of the equity.

At September 30, 2022, the Company:

(a) wholly owns 21 multi-family properties located in eleven states with an aggregate of 5,420 units and a carrying value of $ 653,716,000 ;

(b) has interests, through unconsolidated entities, in eight multi-family properties located in four states with an aggregate of 2,781 units with a carrying value of $ 40,281,000 ;

and (c) has a 17.45 % interest in a development project with a carrying value of $ 3,500,000 .

BRT's equity interests in these unconsolidated entities range from 17.45 % to 80 %.

Most of the Company's properties are located in the Southeast United States and Texas.

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

At September 30, 2022, the carrying value of the other real estate assets was $ 1,929,000 .

At March 31, 2023, the Company:

(i) wholly owns 21 multi-family properties located in eleven states with an aggregate of 5,420 units and a carrying value of $ 645,564,000 ;

(ii) has interests, through unconsolidated entities, in eight multi-family properties located in four states with an aggregate of 2,781 units with a carrying value of $ 37,660,000 ;

and (iii) own other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $ 5,415,000 .

These 29 multi-family properties are located in 11 states;

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

Note 2 – Basis of Preparation

The accompanying interim unaudited consolidated financial statements, reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results for such interim periods.

The results of operations for the three and nine months ended September 30, 2022 and 2021, are not necessarily indicative of the results for the full year.

The results of operations for the three months ended March 31, 2023 and 2022, are not necessarily indicative of the results for the full year.

The consolidated audited balance sheet as of December 31, 2022, has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States ("GAAP").

15 unchanged sentences

Equity Distribution Agreements

Effective as of March 18, 2022, the Company (i) terminated the equity distribution agreements dated November 26, 2019, as amended March 31, 2021 and (ii) entered into separate equity distribution agreements with three sales agents to sell up to $ 40,000,000 of its common stock from time-to-time in an at-the-market offering.

During the three and nine months ended September 30, 2022, the Company sold 174,059 and 447,815 shares for an aggregate sales price of $ 3,867,000 and $ 10,076,000 before commissions and fees of $ 48,000 and $ 131,166 , respectively.

During the three and nine months ended September 30, 2021, the Company sold 469,490 shares for an aggregate sales price of $ 8,542,000 before commissions and fees of $ 126,000 .

Effective as of March 18, 2022, the Company entered into equity distribution agreements with three sales agents to sell up to $ 40,000,000 of its common stock from time-to-time in an at-the-market offering.

During the three months ended March 31, 2023, the Company did not sell any shares.

During the three months ended March 31, 2022, the Company sold 136,279 shares (at an average per share price of $ 22.61 ), for an aggregate sales price of $ 3,082,000 , before commissions and fees of $ 44,000 .

Common Stock Dividend Distribution

The Company declared a quarterly cash distribution of $ 0.25 per share, payable on October 7, 2022 to stockholders of record on September 27, 2022.

The Company declared a quarterly cash distribution of $ 0.25 per share, payable on April 4, 2023 to stockholders of record on March 27, 2023.

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 Dividend Reinvestment Plan (the “DRP”) which has been in effect since July, 2022, 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 three and nine months ended September 30, 2022, we issued 29,190 shares in lieu of cash dividends of $ 622,000 .

In the three months ended March 31, 2023, we issued 40,218 shares in lieu of cash dividends of $ 763,000 .

Stock Based Compensation

3 unchanged sentences

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

As of September 30, 2022, 787,531 shares are available for issuance pursuant to awards under the 2022 Plan.

As of March 31, 2023, 623,617 shares are available for issuance pursuant to awards under the 2022 Plan.

Awards to acquire 789,595 shares of common stock are outstanding under the 2020 Incentive Plan and the 2018 Incentive Plan (collectively the "Prior Plans") and no further awards may be made pursuant to the Prior Plans.

4 unchanged sentences

Expense is recognized on the RSU's which the Company expects to vest over the applicable vesting period.

For the three months ended September 30, 2022 and 2021, the Company recorded $ 457,000 and $ 200,000 , respectively, and for the nine months ended September 30, 2022 and 2021, the Company recorded $ 957,000 and $ 271,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the RSUs issued under the 2020 and 2022 Incentive Plans.

At September 30, 2022 and December 31, 2021, $ 3,786,000 and $ 2,248,000 of compensation expense, respectively, has been deferred and will be charged to expense over the remaining vesting periods.

For the three months ended March 31, 2023 and 2022, the Company recorded $ 514,000 and $ 250,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the RSUs issued under the 2020 and 2022 Incentive Plans.

At March 31, 2023 and December 31, 2022, $ 3,111,000 and $ 4,269,000 of compensation expense, respectively, has been deferred and will be charged to expense over the remaining vesting periods.

Restricted Stock

In January 2022, the Company granted 158,973 shares of restricted stock pursuant to the 2020 Plan.

As of September 30, 2022 , an aggregate of 934,092 shares of unvested restricted stock are outstanding pursuant to the Prior Plans.

In January 2023 and 2022, the Company granted 163,914 and 158,973 shares, respectively, of restricted stock pursuant to the 2022 and 2020 Plan.

As of March 31, 2023 , an aggregate of 953,509 shares of unvested restricted stock are outstanding pursuant to the 2022 Plan and 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.

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

For the three months ended September 30, 2022 and 2021, the Company recorded $ 751,000 and $ 642,000 , respectively, and for the nine months ended September 30, 2022 and 2021, the Company recorded $ 2,226,000 and $ 1,678,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards.

At September 30, 2022 and December 31, 2021, $ 8,480,000 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.

For the three months ended March 31, 2023 and 2022, the Company recorded $ 896,000 and $ 724,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards.

At March 31, 2023 and December 31, 2022, $ 9,976,000 and $ 7,728,000 , 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 remaining vesting period of these shares of restricted stock is 3.0 years.

1 unchanged sentence

On September 13, 2021, the Board of Directors approved a stock repurchase 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 three and nine months ended September 30, 2022 and 2021, the Company did not repurchase any shares of common stock.

During the three months ended March 31, 2023 and 2022, the Company did not repurchase any shares of common stock.

Per Share Data

7 unchanged sentences

The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Numerator for basic and diluted earnings per share:

Net income $ 7,094 $ 28,141 $ 54,281 $ 30,470

Net (loss) income $ ( 4,062 ) $ 11,544

Deduct net income attributable to non-controlling interests ( 36 ) ( 36 )

Deduct earnings allocated to unvested restricted stock ( 349 ) ( 1,426 ) ( 2,684 ) ( 1,441 )

Net income available for common stockholders:

Deduct (loss) earnings allocated to unvested restricted stock 260 ( 574 )

Net (loss) income available for common stockholders:

basic and diluted $ ( 3,838 ) $ 10,934

5 unchanged sentences

Weighted average number of shares 18,064,301 17,654,349

Earnings per common share, basic $ 0.37 $ 1.55 $ 2.91 $ 1.71

Earnings per common share, diluted $ 0.37 $ 1.54 $ 2.89 $ 1.70

(Loss) earnings per common share, basic $ ( 0.21 ) $ 0.62

(Loss) earnings per common share, diluted $ ( 0.21 ) $ 0.62

(1) At March 31, 2023, excludes 35,206 shares subject to RSU's as their effect would have been anti-dilutive.

Note 4 - Leases

6 unchanged sentences

The ground lease expires September 30, 2024 and provides for one 21-year renewal option.

As of September 30, 2022, the remaining lease term, including the renewal option deemed exercised, is 23.0 years.

As of March 31, 2023, the remaining lease term, including the renewal option deemed exercised, is 22.5 years.

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

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

As of September 30, 2022, the remaining lease term, including renewal options deemed exercised, is 14.3 years.

As of September 30, 2022, the Company's Right of Use ("ROU") assets and lease liabilities were $ 2,420,000 and $ 2,510,000 , respectively.

As of March 31, 2023, the remaining lease term, including renewal options deemed exercised, is 13.8 years.

As of March 31, 2023, the Company's Right of Use ("ROU") assets and lease liabilities were $ 2,324,000 and $ 2,433,000 , respectively.

As of December 31, 2022, the Company's ROU assets and lease liabilities were $ 2,371,000 and $ 2,472,000 , respectively.

5 unchanged sentences

Note 5 ‑ Real Estate Properties

Real estate properties, excluding real estate held for sale in December 2021, consists of the following (dollars in thousands):

September 30, 2022 December 31, 2021

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

March 31, 2023 December 31, 2022

Land $ 74,246 $ 74,246

6 unchanged sentences

December 31, 2022

Balance Partner Buyouts Improvements Depreciation September 30, 2022

Balance Improvements Depreciation March 31, 2023

Multi-family $ 649,701 $ 2,120 $ ( 6,257 ) $ 645,564

1 unchanged sentence

Total real estate properties $ 651,603 $ 2,158 $ ( 6,285 ) $ 647,476

Partner Buyouts

In the nine months ended September 30, 2022, the Company completed the purchase of its partners' remaining interests in the unconsolidated joint ventures that own the properties identified below.

As a result of these purchases, these properties (including the related mortgage debt - see note 9 - "Debt Obligations") are wholly-owned and effective as of the closing of such purchase, are included in the Company's consolidated balance sheet and results of operations (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 28.1 % $ 8,721

04/07/2022 Vanguard Heights Creve Coeur, MO 174 21.6 % 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

_________________

(1) The purchase price gives effect to the purchase of the "promote interest" (as more fully described in the Annual Report) of the Company's joint venture partners and does not include closing costs of $ 2,191 and operating cash acquired from the ventures of $ 2,797 .

The Company determined that the gross assets purchased in each of these 11 acquisitions is concentrated in a single identifiable asset.

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

The Company assessed the fair value of the tangible assets of the properties as of the acquisition date using the cost accumulation and income approach which utilized market capitalization rates between 4.25 % and 4.75 %, which are Level 3 unobservable inputs in the fair value hierarchy.

The following table summarizes the allocation of the book value 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 and Intangible Assets 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 —

The Woodland Apts 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

Total Purchase Price Allocation $ 35,422 $ 335,091 $ 370,513 $ 6,888 $ 377,401 $ 4,719

Property Disposition

On February 2, 2022 the Company sold a vacant land parcel located in Daytona, Florida for a sales price of $ 4,700,000 , and, after closing costs, recognized a nominal gain.

In 2020, we 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.

Note 6 - 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.

When 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.

When the Company does not expect to recover its carrying value on unconsolidated joint ventures that are under contract for sale, the Company, when it is determined that the sale is probable, reduces its carrying value to its fair value.

For the three and nine months ended September 30, 2022, the Company did not record any impairment charges.

In the three and nine months ended September 30, 2021, the Company recorded an impairment charge of $ 520,000 related to its investment in the OPOP Towers and Loft properties, St Louis, MO, as the carrying value exceeded the fair value by that amount.

The fair value was based upon the contractual price of the sale agreement which closed in November 2021.

Contract to Acquire a Property

On March 8, 2023, we 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 our satisfaction, of its due diligence investigation, as well as the approval by the mortgage lender of our assumption of the mortgage debt.

We anticipate that this transaction will be completed by year end 2023, although we can provide no assurance that this transaction will be completed.

Property Acquisition - Prior Year

On March 23, 2022, the Company completed the purchase of its partners' remaining 28.1 % interest in Verandas at Alamo, San Antonio, TX, for a purchase price of $ 8,721,000 , with a mortgage debt in principal amount of $ 27,000,000 with a fixed rate of 3.64 % and interest only until October 2024 and a maturity of December 2029.

As a result of this purchase, this property is wholly-owned and is included in the Company's consolidated balance sheet.

Note 6 - Restricted Cash

2 unchanged sentences

Note 7 – Investment in Unconsolidated Ventures

At September 30, 2022 and December 31, 2021, the Company held interests in unconsolidated joint ventures that own eight and 23 multi-family properties (the "Unconsolidated Properties"), respectively.

At March 31, 2023 and December 31, 2022, the Company held interests in unconsolidated joint ventures that own eight multi-family properties (the "Unconsolidated Properties") and a property in development.

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Real estate properties, net of accumulated depreciation of $ 62,273 and $ 66,945

2 unchanged sentences

Other assets 37,563 35,372

Real estate property held for sale 33,970 —

Total Assets $ 360,771 $ 360,267

9 unchanged sentences

At the indicated dates, real estate properties of the unconsolidated joint ventures consist of the following (dollars in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Land $ 46,331 $ 59,404

4 unchanged sentences

Total real estate properties, net $ 282,329 $ 318,304

At September 30, 2022 and December 31, 2021, the weighted average interest rate on the mortgages payable is 3.90 % and 3.97 %, respectively, and the weighted average remaining term to maturity is 6.5 years and 7.6 years, respectively.

At March 31, 2023 and December 31, 2022, the weighted average interest rate on the mortgages payable is 4.07 % and 3.99 %, respectively, and the weighted average remaining term to maturity is 5.8 years and 6.1 years, respectively.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Rental and other revenue $ 12,132 $ 25,231

6 unchanged sentences

Other equity earnings 113 55

Impairment of assets — — — ( 2,813 )

Insurance recoveries — — — 2,813

Gain on insurance recoveries 65 515

2 unchanged sentences

Net income from joint ventures $ 1,473 $ 25,592

BRT's equity in (loss) earnings and equity in earnings from sale of unconsolidated joint venture properties $ 11,607 $ 30,786 $ 65,846 $ 28,949

Joint Venture Sales

On February 8, 2022, the unconsolidated joint venture in which the Company had a 65 % equity interest sold The Verandas at Shavano, a 288 -unit multi-family property in San Antonio, TX, for a sales price of $ 53,750,000 .

The gain on the sale of this property was $ 23,652,000 and BRT's share of the gain was $ 12,961,000 .

In connection with the sale, mortgage debt of $ 25,100,000 with 1.2 years of remaining term to maturity and bearing an interest rate of 3.61 % was repaid.

On June 14, 2022, the unconsolidated joint ventures in which the Company had a 75 % equity interest sold Retreat at Cinco Ranch, a 268 -unit multi family property in San Antonio, TX for $ 68,300,000 .

The gain on the sale of this property was $ 30,595,000 and BRT's share of the gain was $ 17,378,000 .

In connection with the sale, mortgage debt of $ 30,096,000 with 3.6 years of remaining term to maturity and bearing an interest rate of 4.44 % was repaid and the joint venture incurred $ 1,257,000 from the loss on the extinguishment of debt, of which BRT's share was $ 686,000 .

On June 30, 2022, the unconsolidated joint venture in which the Company had a 65 % equity interest sold The Vive, a 312 -unit multi-family property in Kannapolis, NC for $ 91,250,000 .

The gain on the sale of this property was $ 47,086,000 and BRT's share of the gain was $ 22,720,000 .

In connection with the sale, mortgage debt of $ 31,420,000 with 29.7 years of remaining term to maturity and bearing an interest rate of 3.52 % was repaid and the joint venture incurred $ 1,631,000 from the loss on extinguishment of debt, of which BRT's share was $ 787,000 .

On August 31, 2022, the unconsolidated joint venture in which the Company had a 80 % equity interest sold Water's Edge, a 204 -unit multi-family property in Columbia, SC for $ 32,400,000 .

The gain on the sale of this property was $ 16,937,000 and BRT's share of the gain was $ 11,472,000 .

In connection with the sale, mortgage debt of $ 12,241,000 with 3.8 years of remaining term to maturity and bearing an interest rate of 4.28 % was repaid and the joint venture incurred $ 573,000 from the loss on extinguishment of debt, of which BRT's share was $ 388,000 .

Acquisition of Interest in Joint Venture

On March 10, 2022, the Company purchased a 17.45 % interest in a planned 240 -unit development property, Stono Oaks, located in Johns Island, SC.

The purchase price for the interest was $ 3,500,000 .

Joint Venture Buyouts

The Company completed the partner buyout transactions in the unconsolidated joint ventures that own the properties identified in note 5 - Real Estate Properties - Partner Buyouts.

As a result of these purchases, these properties (including the related mortgage debt - see note 9 - Debt Obligations) are wholly-owned effective as of the closing of each purchase, and are included in the Company's consolidated balance sheet and results of operations as of such applicable date.

BRT's equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 815 $ 14,191

Contract to sell property

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 the Company has a 50 % interest entered into a contract to sell the property.

The contract sales price is $ 73,000,000 and the Company estimates that its share of the (i) gain will be approximately $ 14,600,000 and (ii) early extinguishment of debt charge will be approximately $ 167,000 .

This property is reflected as held for sale at March 31, 2023.

The Company anticipates that this sale will be completed in the quarter ending June 30, 2023.

Note 8 – Debt Obligations

Debt obligations consist of the following (dollars in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Mortgages payable $ 428,475 $ 407,958

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Mortgages Payable

At September 30, 2022, the weighted average interest rate on the Company's mortgages payable was 3.99 % and the weighted average remaining term to maturity is 7.8 years.

For the three months ended September 30, 2022 and 2021, interest expense, which includes amortization of deferred financing costs, was $ 4,423,000 and $ 1,305,000 , respectively.

For the nine months ended September 30, 2022 and 2021, interest expense, which includes amortization of deferred financing costs, was $ 8,749,000 and $ 4,113,000 , respectively.

During the three and nine months ended September 30, 2022, the Company paid off mortgage debt of $ 15,613,000 on two properties.

On October 31, 2022, the Company paid off maturing mortgage debt of $ 14,900,000 .

Partner Buyouts

The following table summarizes the information regarding the mortgages relating to the property in which BRT purchased the remaining interests of its joint venture partners during the nine months ended September 30, 2022 (dollars in thousands):

Property Name Location Debt at Purchase Date (1) Interest Rate Maturity Date Interest Only through

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

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

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

Brixworth at Bridge Street (2)

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 (3) 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 % September 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 % January 2028 December 2022

Total $ 236,615

___________________

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

(2) The original mortgage debt of $ 11,147 was refinanced with a new ten-year mortgage debt of $ 18,592 immediately following the buyout.

(3) Includes a supplemental mortgage of $ 1,056 which was paid off immediately following the buyout.

At March 31, 2023, the weighted average interest rate on the Company's mortgages payable was 4.02 % and the weighted average remaining term to maturity is 7.8 years.

For the three months ended March 31, 2023 and 2022, interest expense, which includes amortization of deferred financing costs, was $ 4,546,000 and $ 1,763,000 , respectively.

On February 24, 2023, we obtained mortgage debt of $ 21,173,000 on our Silvana Oaks- North Charleston, SC multi-family property, such mortgage debt matures in March 2033, bears an interest rate of 4.55 % and is interest only for the term of the mortgage.

Credit Facility

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 may borrow, subject to compliance with borrowing base requirements and other conditions, to $ 60,000,000 , extend the facility's maturity date to September 2025, reduce the adjustable interest rate to prime, with a floor of 3.50 %, and revise certain financial and other covenants.

The Company's amended credit facility with an affiliate of Valley National Bank ("VNB"), allows the Company to borrow, subject to compliance with borrowing base requirements and other conditions, up to $ 60,000,000 .

The facility can be used to facilitate the acquisition of multi-family properties, repay mortgage debt secured by multi-family properties and for operating expenses (i.e.,working capital (including dividend payments));

provided that no more than $ 25,000,000 may be used for operating expenses.

The interest rate in effect as of September 30, 2022 is 6.25 %.

The facility is secured by the cash available at VNB and the Company's pledge of the interests in the entities that own the properties.

The interest rate in effect as of March 31, 2023 is 8.00 %.

There is an unused facility fee of 0.25 % per annum.

At September 30, 2022, the Company is in compliance in all material respects with its obligations under the facility.

At September 30, 2022, there was $ 7,000,000 outstanding balance on the facility and no outstanding balance at December 31, 2021.

At September 30, 2022 and December 31, 2021, $ 53,000,000 and $ 35,000,000 , respectively, was available to be borrowed.

At November 4, 2022, there was an outstanding balance of $ 19,000,000 on the facility bearing an interest rate of 7.00 % and $ 41,000,000 available to be borrowed.

Interest expense for the three months ended September 30, 2022 and 2021, which includes amortization of deferred financing costs and unused fees, was $ 227,000 and $ 18,000 , respectively.

Interest expense for the nine months ended September 30, 2022 and 2021, which includes amortization of deferred financing costs and unused fees, was $ 334,000 and $ 54,000 , respectively.

Deferred financing costs of $ 551,000 and $ 270,000 , are recorded in other assets on the Consolidated balance sheets at September 30, 2022 and December 31, 2021, respectively.

At March 31, 2023, the Company is in compliance in all material respects with its obligations under the facility.

At March 31, 2023, there was no outstanding balance on the facility and at December 31, 2022 the outstanding balance was $ 19,000,000 .

At March 31, 2023 and December 31, 2022, $ 60,000,000 and $ 41,000,000 , respectively, was available to be borrowed.

At May 1, 2023, there was no outstanding balance on the facility and $ 60,000,000 available to be borrowed.

Interest expense for the three months ended March 31, 2023 and 2022, which includes amortization of deferred financing costs and unused fees, was $ 300,000 and $ 45,000 , respectively.

Deferred financing costs of $ 445,000 and $ 498,000 , are recorded in on the Consolidated balance sheets at March 31, 2023 and December 31, 2022, respectively.

Junior Subordinated Notes

At September 30, 2022 and December 31, 2021, the outstanding principal balance of the Company's junior subordinated notes was $ 37,400,000 , before deferred financing costs of $ 282,000 and $ 297,000 , respectively.

At March 31, 2023 and December 31, 2022, the outstanding principal balance of the Company's junior subordinated notes was $ 37,400,000 , before deferred financing costs of $ 272,000 and $ 277,000 , respectively.

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

The rate in effect at September 30, 2022 and 2021 was 4.78 % and 2.21 %, respectively.

The rate in effect at March 31, 2023 and 2022 was 6.80 % and 2.30 %, respectively.

The notes mature April 30, 2036.

The interest rate that will be in effect for the three months ending January 31, 2023 is 6.41 %.

The interest rate that will be in effect for the three months ending July 31, 2023 is 7.30 %.

The junior subordinated notes require interest only payments through the maturity date of April 30, 2036, at which time repayment of the outstanding principal and unpaid interest become due.

Interest expense for the three months ended September 30, 2022 and 2021, which includes amortization of deferred financing costs, was $ 413,000 and $ 210,000 , respectively.

Interest expense for the nine months ended September 30, 2022 and 2021, which includes amortization of deferred financing costs, was $ 911,000 and $ 636,000 , respectively.

Interest expense for the three months ended March 31, 2023 and 2022, which includes amortization of deferred financing costs, was $ 637,000 and $ 212,000 , respectively.

Note 9 – Related Party Transactions

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

Gould, a director, among other things, to participate in the Company's multi-family property analysis and approval process (which includes service on an investment committee), provide investment advice, and provide long-term planning and consulting with executives and employees with respect to other business matters, as required.

The aggregate fees incurred for these services in each of the three months ended September 30, 2022 and 2021 were $ 367,000 and $ 350,000 , respectively, and $ 1,101,000 and $ 1,049,000 for the nine months ended September 30, 2022 and 2021, respectively.

respect to other business matters, as required.

The aggregate fees incurred for these services in each of the three months ended March 31, 2023 and 2022 were $ 385,000 and $ 367,000 , respectively.

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

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Majestic Property may also provide real estate brokerage and construction supervision services to these properties.

These fees amounted to $ 9,000 and $ 9,000 for the three months ended September 30, 2022 and 2021, respectively, and $ 28,000 and $ 23,000 for the nine months ended September 30, 2022 and 2021, respectively.

These fees amounted to $ 6,000 and $ 11,000 for the three months ended March 31, 2023 and 2022, respectively.

Pursuant to a shared services agreement between the Company and several affiliated entities, including Gould Investors

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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 three months ended September 30, 2022 and 2021, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated

$ 183,000 and $ 172,000 , respectively, and $ 614,000 and $ 523,000 for the nine months ended September 30, 2022 and 2021, respectively.

During the three months ended March 31, 2023 and 2022, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 172,000 and $ 246,000 , respectively.

Gould and Matthew J.

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Note 10 – Fair Value Measurements

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.

Financial Instruments Not Carried at Fair Value

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Junior subordinated notes:

At September 30, 2022 and December 31, 2021, the estimated fair value of the notes is lower than their carrying value by approximately $ 6,772,000 and $ 8,296,000 , respectively, based on a market interest rate of 6.78 % and 4.21 %, respectively.

At March 31, 2023 and December 31, 2022, the estimated fair value of the notes is lower than their carrying value by approximately $ 4,487,000 and $ 4,695,000 , respectively, based on a market interest rate of 8.53 % and 7.91 %, respectively.

Mortgages payable:

At September 30, 2022, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $ 37,083,000 , assuming market interest rates between 5.13 % and 6.18 %.

At March 31, 2023, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $ 28,532,000 , assuming market interest rates between 4.48 % and 5.83 %.

At December 31, 2022, the estimated fair value of the Company's mortgages payable was greater than their carrying value by approximately $ 37,500,000 , assuming market interest rates between 5.18 % and 6.23 %.

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The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value.

Non-recurring fair value measurements

The Company reviews each investment in real estate and joint venture interests when events or circumstances change, indicating the carrying 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, projected stabilized net operating income, and the ability to hold or dispose of the asset in the ordinary course of business.

Note 12 – Derivative Financial Instruments

Cash Flow Hedges of Interest Rate Risk

The Company's objective in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

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 September 30, 2022 and December 31, 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 interest rate swaps on the consolidated statements of comprehensive income (loss) for the dates indicated (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

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

Amount of (loss) gain reclassified from Accumulated Other Comprehensive Income into Interest expense $ ( 2 ) $ ( 12 )

Total amount of Interest expense presented in the Consolidated Statements of Operations $ 1,535 $ 4,804

Note 13 – New Accounting 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.

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

Note 11 – Commitments and Contingencies

5 unchanged sentences

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 connection with a mediation conducted subsequent to September 30, 2022, the parties to a personal injury lawsuit in which the Company is one of the defendants have agreed, subject to the signing of a definitive agreement, to a settlement pursuant to which the Company’s insurance carrier would pay the plaintiff $ 850,000 .

Note 12 – Subsequent Events

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of September 30, 2022, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of March 31, 2023, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

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-Q

Item 1. Financial Statements