What changed in this filing

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Item 1. Financial Statements

2023-11-06 compared with 2023-08-07 · 129 added, 90 removed, 408 unchanged (35% of the section changed)

4 unchanged sentences

(Amounts in thousands, except per share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(unaudited) (audited)

33 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

2 unchanged sentences

Total revenues 23,852 21,697 70,109 47,816

Real estate operating expenses - including $ 10 and $ 8 to related parties for the three months ended and $ 16 and $ 19 for the six months ended

Real estate operating expenses - including $ 9 and $ 9 to related parties for the three months ended and $ 25 and $ 28 for the nine months ended

10,583 9,195 31,565 20,296

Interest expense 5,581 5,061 16,577 9,994

General and administrative - including $ 165 and $ 185 to related parties for the three months ended and $ 337 and $ 431 for the six months ended

General and administrative - including $ 141 and $ 183 to related parties for the three months ended and $ 479 and $ 614 for the nine months ended

4,017 3,673 11,920 10,839

2 unchanged sentences

Total revenues less total expenses ( 2,873 ) ( 4,397 ) ( 12,048 ) ( 10,094 )

Equity in earnings (loss) of unconsolidated joint ventures 464 ( 50 ) 1,279 1,180

Equity in earnings of unconsolidated joint ventures 426 135 1,705 1,315

Equity in earnings from sale of unconsolidated joint ventures properties — 11,472 14,744 64,531

3 unchanged sentences

Loss on extinguishment of debt — — — ( 563 )

Income from continuing operations 11,289 36,367 7,303 47,985

Income tax provision 51 724 127 798

Income from continuing operations, net of taxes 11,238 35,643 7,176 47,187

(Loss) income from continuing operations ( 1,582 ) 7,272 5,721 55,257

Income tax (benefit) provision ( 122 ) 178 5 976

(Loss) income from continuing operations, net of taxes ( 1,460 ) 7,094 5,716 54,281

Net income attributable to non-controlling interest ( 34 ) ( 35 ) ( 106 ) ( 107 )

Net income attributable to common stockholders $ 11,202 $ 35,607 $ 7,104 $ 47,115

Net (loss) income attributable to common stockholders $ ( 1,494 ) $ 7,059 $ 5,610 $ 54,174

Weighted average number of shares of common stock outstanding:

27 unchanged sentences

Balances, June 30, 2023 $ 179 $ 272,064 $ ( 26,514 ) $ 17 $ 245,746

Distributions - common stock - $ 0.25 per share

— — ( 4,654 ) — ( 4,654 )

Compensation expense - restricted stock and restricted stock units — 1,473 — — 1,473

Distributions to non-controlling interests — — — ( 42 ) ( 42 )

Shares issues through DRIP — 684 — — 684

Shares repurchased ( 2 ) ( 4,948 ) — — ( 4,950 )

Net (loss) income — — ( 1,494 ) 34 ( 1,460 )

Balances, September 30, 2023 $ 177 $ 269,273 $ ( 32,662 ) $ 9 $ 236,797

BRT APARTMENTS CORP.

19 unchanged sentences

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

Distributions - common stock - $ 0.22 per share

— — ( 4,720 ) — ( 4,720 )

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

Contributions from non-controlling interests — — — — —

Consolidation of investment in limited partnership — — — — —

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

Purchase of non-controlling interest — — — — —

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

Shares issued through DRIP — 622 — — 622

Shares repurchased — — — — —

Net income — — 7,059 35 7,094

Other comprehensive income — — — — —

Comprehensive income 7,094

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

See accompanying notes to consolidated financial statements

3 unchanged sentences

(Dollars in Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Gain on sale of real estate ( 604 ) ( 6 )

Gain on insurance recovery ( 240 ) ( 62 )

Loss on extinguishment of debt — 563

Increases and decreases from changes in other assets and liabilities:

Decrease in other assets ( 2,056 ) ( 432 )

Increase in accounts payable and accrued liabilities ( 1,229 ) ( 851 )

(Increase) decrease in other assets ( 3,823 ) 1,820

Increase (decrease) in accounts payable and accrued liabilities 1,575 ( 2,635 )

Net cash provided by operating activities 13,608 8,450

5 unchanged sentences

Contributions to unconsolidated joint ventures ( 122 ) ( 3,500 )

Net cash provided by investing activities 18,245 31,420

Proceeds from insurance recoveries 240 62

Net cash provided by (used in) investing activities 18,069 ( 18,990 )

Cash flows from financing activities:

2 unchanged sentences

Mortgage principal payments ( 2,435 ) ( 1,475 )

Proceeds from credit facility — 22,000

Repayment of credit facility ( 19,000 ) ( 15,000 )

10 unchanged sentences

(Dollars in Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Net increase in cash, cash equivalents and restricted cash:

19 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 $ 28,117 $ 21,865

4 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023

September 30, 2023

Note 1 – Organization and Background

BRT Apartments Corp.

(the "Company" or "BRT"), a Maryland corporation, owns, operates and, to a lesser extent, holds interest in joint ventures that own multi-family properties.

(the "Company" or "BRT"), a Maryland corporation, owns, operates and, to a lesser extent, holds interests in joint ventures that own multi-family properties.

The Company conducts its operations to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

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 June 30, 2023, the Company:

At September 30, 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 $ 638,170,000 ;

(ii) has interests, through unconsolidated entities, in seven multi-family properties located in four states with an aggregate of 2,287 units with a carrying value of $ 30,878,000 ;

and (iii) own other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $ 5,582,000 .

and (iii) owns other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $ 5,441,000 .

These 28 multi-family properties are located in 11 states;

2 unchanged sentences

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 six months ended June 30, 2023 and 2022, are not necessarily indicative of the results for the full year.

The results of operations for the three and nine months ended September 30, 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").

21 unchanged sentences

Effective as of May 12, 2023, the Company (i) terminated the equity distributions agreements dated March 18, 2022, and (ii) 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 and six months ended June 30, 2023, the Company did not sell any shares.

During the three and six months ended June 30, 2022 the Company sold 137,477 and 273,756 shares, respectively, for an aggregate sales price of $ 3,127,000 and $ 6,209,000 , before commissions and fees of $ 39,000 and $ 83,000 , respectively.

During the three and nine months ended September 30, 2023, the Company did not sell any shares.

During the three and nine months ended September 30, 2022, the Company sold 174,059 and 447,815 shares, respectively, at an average per share price of $ 22.22 and $ 22.50 , respectively, for an aggregate sales price of $ 3,867,000 and $ 10,076,000 , respectively, before commissions and fees of $ 48,000 and $ 131,000 , respectively.

Common Stock Dividend Distribution

The Company declared a quarterly cash distribution of $ 0.25 per share, payable on July 6, 2023 to stockholders of record on June 26, 2023.

The Company declared a quarterly cash distribution of $ 0.25 per share, payable on October 11, 2023 to stockholders of record on October 3, 2023.

Dividend Reinvestment Plan

1 unchanged sentence

The discount from the market price is currently 3 %.

In the three and six months ended June 30, 2023, we issued 35,634 and 75,852 shares in lieu of cash dividends of $ 670,000 and $ 1,433,000 , respectively.

In the three and six months ended June 30, 2022, no shares were issued.

During the three and nine months ended September 30, 2023, we issued 35,470 and 111,322 shares in lieu of cash dividends of $ 684,000 and $ 2,117,000 , respectively.

During the nine months ended September 30, 2022, 29,190 shares were issued in lieu of cash dividends of $ 622,000 .

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 June 30, 2023, 623,677 shares are available for issuance pursuant to awards under the 2022 Plan.

As of September 30, 2023, 408,746 shares are available for issuance pursuant to awards under the 2022 Plan.

Awards to acquire 789,345 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.

Restricted Stock Units

In June 2022 and 2021, the Company issued restricted stock units (the "RSUs") to acquire up to 212,469 and 210,375 shares of common stock pursuant to the 2022 Plan and the 2020 Incentive Plan, respectively.

In July 2023, the Company issued RSUs to acquire up to 214,988 shares of common stock pursuant to the 2022 Plan.

In July 2023 and June 2022, the Company issued restricted stock units (the "RSUs") to acquire up to 214,990 and 212,470 shares of common stock pursuant to the 2022 Incentive Plan, respectively.

As of September 30, 2023 , an aggregate of 637,835 of unvested restricted stock units are outstanding pursuant to the 2022 Plan and Prior Plans.

Generally, the RSUs entitle the recipients, subject to continued service through the three-year vesting period to receive (i) the underlying shares if and to the extent certain performance and/or market conditions are satisfied at the vesting date, and (ii) an amount equal to the cash dividends that would have been paid during the three-year performance period with respect to the shares of common stock underlying the RSUs if, when, and to the extent, the related RSUs vest.

1 unchanged sentence

Expense is recognized on the RSUs which the Company expects to vest over the applicable vesting period.

For the three months ended June 30, 2023 and 2022, the Company recorded $ 369,000 and $ 250,000 , respectively, and for the six months ended June 30, 2023 and 2022, the Company recorded $ 883,000 and $ 500,000 , 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 June 30, 2023 and December 31, 2022, $ 2,536,000 and $ 4,269,000 of compensation expense, respectively, has been deferred and will be charged to expense over the remaining vesting periods.

For the three months ended September 30, 2023 and 2022, the Company recorded $ 651,000 and $ 457,000 , respectively, and for the nine months ended September 30, 2023 and 2022, the Company recorded $ 1,534,000 and $ 957,000 , 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, 2023 and December 31, 2022, $ 4,046,000 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 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 June 30, 2023 , an aggregate of 953,399 shares of unvested restricted stock are outstanding

pursuant to the 2022 Plan and 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, respectively.

As of September 30, 2023 , an aggregate of 953,139 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 June 30, 2023 and 2022, the Company recorded $ 824,000 and $ 751,000 , respectively, and for the six months ended June 30, 2023 and 2022, the Company recorded $ 1,720,000 and $ 1,475,000 of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards.

At June 30, 2023 and December 31, 2022, $ 9,152,000 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.

For the three months ended September 30, 2023 and 2022, the Company recorded $ 822,000 and $ 751,000 , respectively, and for the nine months ended September 30, 2023 and 2022, the Company recorded $ 2,542,000 and $ 2,226,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards.

At September 30, 2023 and December 31, 2022, $ 8,330,000 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 2.4 years.

Stock Buyback

On June 14, 2023, the Board of Directors extended the term of the Company's share repurchase program from December 31, 2023 to December 31, 2025 and authorized the repurchase of up to $ 10,000,000 of shares.

During the three and six months ended June 30, 2023, the Company repurchased 309,153 shares of common stock at an average market price of $ 18.76 for an aggregate cost of $ 5,836,000 .

From July 1, 2023 through July 31, 2023, the Company repurchased 45,612 shares of common stock at an average price of $ 20.11 for an aggregate cost of $ 917,000 .

During the three and six months ended June 30, 2022, the Company did not repurchase any shares of common stock.

Share Repurchase

In June 2023, the Board of Directors extended the term of the Company's share repurchase program from December 31, 2023 to December 31, 2025 and increased the existing repurchase authorization from $ 5,000,000 to $ 10,000,000 of shares.

In August 2023, the Board of Directors, after giving effect to repurchases of $ 3,250,000 of shares made since the June 2023 share repurchase authorization, increased the Company's share repurchase program by an additional $ 6,750,000 of shares to $ 10,000,000 of shares.

During the three and nine months ended September 30, 2023, the Company repurchased 264,165 and 573,318 shares of common stock, respectively, at an average price per share of $ 18.74 and $ 18.81 , respectively, for an aggregate cost of $ 4,950,000 and $ 10,786,000 , respectively.

As of September 30, 2023, the Company is authorized to repurchase up to $ 5,966,000 of shares.

From October 1, 2023 through October 31, 2023, the Company repurchased 98,014 shares of common stock at an average price per share of $ 17.23 for an aggregate cost of $ 1,689,000 .

At October 31, 2023, the Company is authorized to repurchase up to $ 4,278,000 of shares of common stock

During the three and nine months ended September 30, 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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

15 unchanged sentences

Lessor Accounting

The Company owns a commercial building leased to two tenants under operating leases expiring from 2028 to 2035, with tenant options to extend the leases.

The Company owns a commercial building in Yonkers, NY leased to two retail tenants under operating leases expiring from 2028 to 2035, with tenant options to extend the leases.

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

3 unchanged sentences

The ground lease was set to expire September 30, 2024 and provided for one 21-year renewal option.

During the quarter ended June 30, 2023, the renewal option was exercised and the ground lease will expire on June 30, 2045.

The renewal option was exercised and the ground lease will expire on June 30, 2045.

There are no further renewal options.

As of June 30, 2023, the remaining lease term, is 22.0 years.

As of September 30, 2023, the remaining lease term is 21.8 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 June 30, 2023, the remaining lease term, including renewal options deemed exercised, is 13.5 years.

As of June 30, 2023, the Company's Right of Use ("ROU") assets and lease liabilities were $ 2,276,000 and $ 2,394,000 , respectively.

As of September 30, 2023, the remaining lease term, including renewal options deemed exercised, is 13.3 years.

As of September 30, 2023, the Company's Right of Use ("ROU") assets and lease liabilities were $ 2,230,000 and $ 2,356,000 , respectively.

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

6 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Land $ 74,246 $ 74,246

6 unchanged sentences

December 31, 2022

Balance Improvements Depreciation June 30, 2023

Balance Improvements Depreciation Sale of Property September 30, 2023

Multi-family $ 649,701 $ 7,299 $ ( 18,830 ) $ — $ 638,170

2 unchanged sentences

Partner Buyouts

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

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 8 - "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):

6 unchanged sentences

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

2,844 $ 105,868

2 unchanged sentences

Property Disposition

There were no dispositions in the three and six months ended June 30, 2023.

In September 2023, the Company sold a cooperative apartment unit in New York, NY for a sale price of $ 785,000 and recognized a gain on the sale of $ 604,000 .

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.

1 unchanged sentence

On March 8, 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 price includes the assumption of approximately $ 32,000,000 of U.S.

Housing and Urban Development ("HUD") 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 approval by the mortgage lender of the Company's assumption of the mortgage debt.

As of June 30, 2023, the Company paid a non-refundable deposit of $ 1,250,000 on the property which will be forfeited, with certain exceptions, if the transaction is not completed.

This amount is recorded in Other Assets in the Consolidated Balance Sheet at June 30, 2023.

As of September 30, 2023, the Company paid a deposit of $ 1,250,000 on the property which will be forfeited, with certain exceptions, if the transaction is not completed.

This amount is recorded in Other Assets in the Consolidated Balance Sheet at September 30, 2023.

Note 6 - Restricted Cash

2 unchanged sentences

Note 7 – Investment in Unconsolidated Ventures

At June 30, 2023 and December 31, 2022, the Company held interests in unconsolidated joint ventures that own seven and eight multi-family properties (the "Unconsolidated Properties"), respectively, and a property in development.

At September 30, 2023 and December 31, 2022, the Company held interests in unconsolidated joint ventures that own seven and eight multi-family properties (the "Unconsolidated Properties"), respectively, and a property-in-development.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Real estate properties, net of accumulated depreciation of $ 67,399 and $ 66,945

13 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Land $ 46,331 $ 59,404

4 unchanged sentences

Total real estate properties, net $ 278,096 $ 318,304

At June 30, 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 5.6 years and 6.1 years, respectively.

At September 30, 2023 and December 31, 2022, the weighted average interest rate on the mortgages payable is 4.03 % and 3.99 %, respectively, and the weighted average remaining term to maturity is 5.3 years and 6.1 years, respectively.

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

Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

12 unchanged sentences

BRT's equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 426 $ 11,607 $ 16,449 $ 65,846

Joint Venture Sale

Joint Venture Sales

On May 12, 2023, the unconsolidated joint venture in which the Company had a 50 % equity interest sold Chatham Court and Reflections, a 494 unit multi family property located in Dallas, TX, for a sales price of $ 73,000,000 .

1 unchanged sentence

In connection with the sale, mortgage debt of $ 25,405,000 with 5.0 years of remaining term to maturity and bearing an interest rate of 4.01 % was repaid and the joint venture incurred $ 561,000 from the loss on the extinguishment of debt, of which the Company's share was $ 212,000 .

Joint Venture Sales

During the six months ended June 30, 2022, the unconsolidated joint ventures in which the Company had equity interests, sold the following properties:

During the nine months ended September 30, 2022, the unconsolidated joint ventures in which the Company had equity interests, sold the following properties:

Property Date of Sale Units Interest Sold Sales Price Gain on Sale BRT Share of Gain Mtge Debt at Sale Date Loss on extinguishment of debt BRT Share of extinguishment of debt

4 unchanged sentences

The Vive, Kannapolis, NC 6/30/2022 312 65 % 91,250 47,086 22,720 31,420 1,631 787

Waters Edge, Columbia, SC 8/31/2022 204 80 % $ 32,400 $ 16,937 $ 11,472 $ 12,241 573 388

1,072 $ 245,700 $ 118,270 $ 64,531 $ 98,857 $ 3,461 $ 1,861

2 unchanged sentences

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

During the quarter ended June 30, 2023, the Company funded a $ 122,000 capital call for this joint venture.

During the nine months ended September 30, 2023, the Company funded a $ 122,000 capital call for this joint venture.

Note 8 – Debt Obligations

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Mortgages payable $ 427,159 $ 407,958

3 unchanged sentences

Total debt obligations, net of deferred costs $ 460,073 $ 459,417

__________________________________________

(1) Excludes $ 342,000 of deferred financing costs which are reflected in other assets at September 30, 2023.

Mortgages Payable

At June 30, 2023, the weighted average interest rate on the Company's mortgage payables was 4.02 % and the weighted average remaining term to maturity is 7.7 years.

For the three months ended June 30, 2023 and 2022, interest expense, which includes amortization of deferred financing costs, was $ 4,743,000 and $ 2,563,000 , respectively.

For the six months ended June 30, 2023 and 2022, interest expense, which includes amortization of deferred financing costs, was $ 9,289,000 and $ 4,326,000 , respectively.

At September 30, 2023, the weighted average interest rate on the Company's mortgage payables was 4.02 % and the weighted average remaining term to maturity is 7.3 years.

For the three months ended September 30, 2023 and 2022, interest expense, which includes amortization of deferred financing costs, was $ 4,774,000 and $ 4,423,000 , respectively.

For the nine months ended September 30, 2023 and 2022, interest expense, which includes amortization of deferred financing costs, was $ 14,063,000 and $ 8,749,000 , respectively.

On February 24, 2023, the Company obtained mortgage debt of $ 21,173,000 on its Silvana Oaks - North Charleston, SC multi-family property;

such mortgage debt matures in March 2033, bears an interest rate of 4.45 % and is interest only for the term of the mortgage.

During the three and six months ended June 30, 2022, the Company paid off mortgage debt of $ 14,558,000 at Avalon- Pensacola, FL.

Credit Facility

3 unchanged sentences

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 and matures in September 2025.

The interest rate in effect as of June 30, 2023 is 8.25 %.

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

At June 30, 2023, the Company is in compliance in all material respects with its obligations under the facility.

At June 30, 2023, there was no outstanding balance on the facility and at December 31, 2022, the outstanding balance was $ 19,000,000 .

At June 30, 2023 and December 31, 2022, $ 60,000,000 and $ 41,000,000 , respectively, was available to be borrowed.

At August 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 June 30, 2023 and 2022, which includes amortization of deferred financing costs and unused fees, was $ 91,000 and $ 62,000 , respectively.

Interest expense for the six months ended June 30, 2023 and 2022, which includes amortization of deferred financing costs and unused fees, was $ 391,000 and $ 107,000 , respectively.

Deferred financing costs of $ 392,000 and $ 498,000 , are recorded on the Consolidated balance sheets at June 30, 2023 and December 31, 2022, respectively.

On August 28, 2023, the facility was amended to convert the index on which interest on the credit facility is calculated from the prime rate to SOFR and to adjust the interest rate floor.

After giving effect to the amendment, the interest rate on the credit facility, which adjusts monthly and is subject to a floor of 6.0 %, equals one-month term SOFR plus 250 basis points.

The interest rate in effect as of September 30, 2023 is 7.81 %.

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

At September 30, 2023, the Company is in compliance in all material respects with its obligations under the facility.

At September 30, 2023, there was no outstanding balance on the facility and at December 31, 2022, the outstanding balance was $ 19,000,000 .

At September 30, 2023 and December 31, 2022, $ 60,000,000 and $ 41,000,000 , respectively, was available to be borrowed.

At November 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 September 30, 2023 and 2022, which includes amortization of deferred financing costs and unused fees, was $ 91,000 and $ 227,000 , respectively.

Interest expense for the nine months ended September 30, 2023 and 2022, which includes amortization of deferred financing costs and unused fees, was $ 482,000 and $ 334,000 , respectively.

Deferred financing costs of $ 342,000 and $ 498,000 , are recorded on the Consolidated balance sheets at September 30, 2023 and December 31, 2022, respectively.

Junior Subordinated Notes

At June 30, 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 $ 267,000 and $ 277,000 , respectively.

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

The rate in effect at June 30, 2023 and 2022 was 7.30 % and 2.30 %, respectively.

The interest rate converted to 3 month Term SOFR + 2.26 % effective with the next payment due October 2023.

The interest rate that will be in effect for the three months ending October 31, 2023 is 7.63 %.

At September 30, 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 $ 262,000 and $ 277,000 , respectively.

The interest rate on outstanding balance resets quarterly and is equal to three month term SOFR + 2.26 %.

The interest rate in effect at September 30, 2023 and 2022 was 7.63 % and 4.78 %, respectively.

The interest rate that will be in effect for the three months beginning October 31, 2023 is 7.65 %.

The notes mature April 30, 2036.

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 June 30, 2023 and 2022, which includes amortization of deferred financing costs, was $ 679,000 and $ 286,000 , respectively.

Interest expense for the six months ended June 30, 2023 and 2022, which includes amortization of deferred financing costs, was $ 1,316,000 and $ 498,000 , respectively.

Interest expense for the three months ended September 30, 2023 and 2022, which includes amortization of deferred financing costs, was $ 716,000 and $ 413,000 , respectively.

Interest expense for the nine months ended September 30, 2023 and 2022, which includes amortization of deferred financing costs, was $ 2,032,000 and $ 911,000 , respectively.

Note 9 – Related Party Transactions

1 unchanged sentence

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 June 30, 2023 and 2022 were $ 385,000 and $ 367,000 , respectively, and $ 770,000 .and $ 734,000 for the six months ended June 30, 2023 and 2022, respectively.

The aggregate fees incurred for these services in each of the three months ended September 30, 2023 and 2022 were $ 385,000 and $ 367,000 , respectively, and $ 1,155,000 and $ 1,101,000 for the nine months ended September 30, 2023 and 2022, respectively.

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

2 unchanged sentences

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

These fees amounted to $ 10,000 and $ 8,000 for the three months ended June 30, 2023 and 2022, respectively and $ 16,000 and $ 19,000 for the six months ended June 30, 2023 and 2022, respectively.

These fees amounted to $ 17,000 and $ 9,000 for the three months ended September 30, 2023 and 2022, respectively and $ 33,000 and $ 28,000 for the nine months ended September 30, 2023 and 2022, respectively.

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

1 unchanged sentence

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 June 30, 2023 and 2022, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 165,000 and $ 185,000 , respectively and $ 337,000 and $ 431,000 for the six months ended June 30, 2023 and 2022, respectively.

During the three months ended September 30, 2023 and 2022, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 141,000 and $ 183,000 , respectively and $ 478,000 and $ 614,000 for the nine months ended September 30, 2023 and 2022, respectively.

Gould and Matthew J.

Gould, executive officers and directors of the Company are executive officers of Georgetown Partners, LLC, the managing general partner of Gould Investors.

During the quarter ended June 30, 2023, in connection with its stock repurchase program, the Company purchased from Mitchell Gould, an Executive Vice President, 50,000 shares of Company common stock at a total cost of $ 1,007,500 , at the closing price of the common stock on the date the parties agreed to the transaction.

During the nine months ended September 30, 2023, in connection with its stock repurchase program, the Company purchased from Mitchell Gould, an Executive Vice President, 50,000 shares of Company common stock at a total cost of $ 1,008,000 , at the closing price of the common stock on the date the parties agreed to the transaction.

Note 10 – Fair Value Measurements

12 unchanged sentences

Junior subordinated notes:

At June 30, 2023 and December 31, 2022, the estimated fair value of the notes is lower than their carrying value by approximately $ 3,666,000 and $ 4,695,000 , respectively, based on a market interest rate of 8.55 % and 7.91 %, respectively.

At September 30, 2023 and December 31, 2022, the estimated fair value of the notes is lower than their carrying value by approximately $ 3,668,000 and $ 4,695,000 , respectively, based on a market interest rate of 8.52 % and 7.91 %, respectively.

The Company values its junior subordinated notes using a discounted cash flow analysis on the expected cash flows of each instrument.

Mortgages payable:

At June 30, 2023, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $ 35,025,000 , assuming market interest rates between 4.81 % and 6.16 %.

At September 30, 2023, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $ 50,853,000 , assuming market interest rates between 5.59 % and 6.94 %.

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

10 unchanged sentences

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.

The Company and certain other defendants have agreed to settle this lawsuit for approximately $ 325,000 ;

the settlement remains subject to, among other things, the execution of certain additional documentation and court approval.

This settlement amount will be fully funded by the Company’s insurance carrier.

Note 12 – Subsequent Events

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of June 30, 2023, 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 September 30, 2023, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

Table of Content

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