What changed in this filing

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Item 1A. Risk Factors

2024-03-14 compared with 2023-03-15 · 36 added, 58 removed, 261 unchanged (26% of the section changed)

11 unchanged sentences

We would expect that declines in our occupancy levels, rental revenues and/or the values of our multi-family properties would cause us to have less cash available to make payments on our debt and to pay dividends, which could adversely affect our financial condition or the market value of our securities.

We may be unable to compete to acquire, finance or dispose of our properties or to lease rental units.

We compete with many third parties including other REITs, specialty finance companies, public and private investors, investment and pension funds, in acquiring, obtaining financing for, and disposing of multi-family properties.

Many of these competitors have substantially greater financial and other resources than we do.

Larger and more established competitors enjoy significant competitive advantages that result from, among other things, enhanced operating efficiencies and more extensive networks providing greater and more favorable access to capital, financing and tax credit allocations and more favorable acquisition opportunities.

In attracting and retaining residents to occupy our multi-family properties, we compete with numerous other housing providers.

Our multi-family properties compete directly with other rental apartments, as well as condominiums and single-family homes that are available for rent or purchase in the markets in which our properties are located.

Principal factors of competition include rent or price charged, attractiveness of the location of multi-family properties, and the quality and breadth of services.

The number of competitive properties relative to demand in a particular area has a material effect on our ability to lease our properties and on the rents we charge.

Increasing real estate taxes, utilities and insurance premiums may negatively impact operating results

1 unchanged sentence

These expenses are subject to significant increases and fluctuations, including the impact of inflation, which we may be unable to control.

For example, our real estate taxes have increased and will continue to increase as our properties are reassessed by taxing authorities and as property tax rates increase.

For example, our real estate taxes have increased and will continue to increase as our properties are reassessed by

taxing authorities and as property tax rates increase.

Further, our real estate taxes have fluctuated and may not be comparable year-over-year because of, among other things, (i) the timing difference as to when we accrue real estate taxes and the results of any tax appeals with respect to such accrued taxes and (ii) determinations, over which we have no control, by governmental authorities to increase tax rates, assessments or procedures.

In 2022, we implemented a new insurance program for 17 of our wholly owned properties and we anticipate that our insurance costs will increase because of such program, the casualty losses that we have sustained the past several years and general increases in the cost of insurance coverage for multi-family properties.

We anticipate that our insurance costs will continue to increase because of our implementation, in 2022, of a master insurance program that directly covers our wholly-owned properties (as opposed to coverage obtained by our property managers), the casualty losses that we have sustained the past several years and general increases in the cost of insurance coverage for multi-family properties.

In addition, our share of the insurance premiums at joint venture properties is determined by our joint venture partner at such properties.

6 unchanged sentences

The concentration of our properties in the Southeast United States and Texas exposes us to risks of adverse developments which are greater than the risks of owning properties with a more geographically diverse portfolio.

We may be unable to compete to acquire, finance or dispose of our properties or to lease rental units.

Many of these competitors have substantially greater financial and other resources than we do.

In attracting and retaining residents to occupy our multi-family properties, we compete with numerous other housing providers.

Principal factors of competition include rent or price charged, attractiveness of the location of multi-family properties, and the quality and breadth of services.

The number of competitive properties relative to demand in a particular area has a material effect on our ability to lease our properties and on the rents we charge.

The failure of property management companies to properly manage our properties could adversely impact our results of operations.

2 unchanged sentences

If these property management companies do not perform their duties properly, or, in the case of unconsolidated properties, we and/or our joint venture partners do not effectively supervise the activities of these managers, the occupancy rates and rental rates at the properties managed by such property managers may decline and the expenses at such properties may increase.

At December 31, 2022, one property manager manages eight of our properties, a second property manager manages seven of our properties, and our six other property managers manage five or fewer properties.

Five of these properties are managed by a management company owned by or affiliated with a joint venture partner.

At December 31, 2023, one property manager manages ten properties, a second property manager manages seven properties, and five other property managers manage four or fewer properties.

Four properties are managed by a management company owned by or affiliated with a joint venture partner.

The loss of our property managers, and in particular, the managers that manage multiple properties, could result in a decrease in occupancy rates, rental rates or both or an increase in expenses.

Further, except for our multi-family properties covered by our Insurance Program, property managers are also generally responsible for obtaining insurance coverage with respect to the properties they manage, which coverage is often obtained pursuant to blanket policies covering many properties in which we have no interest.

Further, except for our multi-family properties covered by our master insurance program, property managers are also generally responsible for obtaining insurance coverage with respect to the properties they manage, which coverage is often obtained pursuant to blanket policies covering many properties in which we have no interest.

Losses at properties managed by our property managers but in which we have no interest could reduce significantly the insurance coverage available at our properties managed by these property managers.

3 unchanged sentences

Although historically we have acquired properties with joint venture partners with knowledge of the local markets in which we were acquiring properties, we are working to buy properties directly without joint venture partners.

In buying properties directly, we will not have the benefit of a partner’s understanding of the target markets nor the equity they would have contributed to the acquisition.

In buying properties directly, we do not have the benefit of a partner’s understanding of the target markets nor the equity they would have contributed to the acquisition.

We cannot provide any assurance that we will properly evaluate the acquisition opportunities we pursue in buying properties directly.

Risks involved in conducting real estate activity through joint ventures.

Eight of our multi-family properties are owned through joint ventures with other persons or entities.

Seven of our multi-family properties are owned through joint ventures with other persons or entities.

Joint venture investments involve risks not otherwise present when acquiring real estate directly, including the following:

20 unchanged sentences

Though we maintain insurance coverage, such coverage may be insufficient to compensate us for losses sustained as a result of a casualty because, among other things:

• the amount of insurance coverage maintained for any property may be insufficient to pay the full replacement cost following a casualty event;

• the amount of insurance coverage maintained for a property may be insufficient to pay the full replacement cost following a casualty event;

• the rent loss coverage under a policy may not extend for the full period of time that a tenant or tenants may be entitled to a rent abatement that is a result of, or that may be required to complete restoration following, a casualty event;

7 unchanged sentences

This concentration of ownership of properties with a limited number of joint venture partners exposes us to risks of adverse developments, and in particular, disputes or disagreements with such joint venture partners, which are greater than the risks of owning properties with a more diverse group of joint venture partners.

Our value-add activities involve greater risks than more conservative investment approaches.

From time-to-time, we seek to acquire properties at which we believe our investment of additional capital to enhance such properties will result in increased rental rates and higher resale value.

These efforts involve greater risks than more conservative investment approaches.

The risks related to these value-add activities include risks related to delays in the repositioning or improvement process, higher than expected capital improvement costs, the additional capital needed to execute our value-add program, the possibility that these value-add activities may not result in the anticipated higher rents and occupancy rates and the loss of revenue while these properties or units are undergoing capital improvements.

We may also be unable to complete the improvements of these properties and may be forced to hold or sell these properties at a loss.

For these and other reasons, we cannot assure you that we will realize growth in the value of our value-add multifamily properties, and as a result, our ability to make distributions to our stockholders could be adversely affected.

Short-term leases expose us to the effects of declining market rents and we may be unable to renew leases or relet units as leases expire.

7 unchanged sentences

The weighted average interest rate of this debt is 4.85%.

Our operating cash flow and funds available under our credit facility will likely be insufficient to discharge all of this debt when due.

Accordingly, we may seek to refinance this debt or sell the related property prior to the maturity of such debt.

Our operating cash flow and funds available under our credit facility will be insufficient to discharge all of this debt when due.

Accordingly, we will seek to refinance this debt or sell the related property prior to the maturity of such debt.

Increases in interest rates, or reduced access to credit markets due, among other things, to more stringent lending requirements or our high level of leverage, may make it difficult for us to refinance this mortgage debt on terms as favorable as the current debt.

If we are unsuccessful in refinancing such debt, or if the terms of the refinanced debt are less favorable than the current debt, we may be forced to dispose of properties on disadvantageous terms or convey properties secured by such mortgages to the mortgagees, which would reduce our income and impair the value of our portfolio.

If we are unsuccessful in refinancing such debt, or if the terms of the refinanced debt are less favorable than the current debt, we may be forced to

dispose of properties on disadvantageous terms or convey properties secured by such mortgages to the mortgagees, which would reduce our income and impair the value of our portfolio.

Our acquisition, development and value-add activities are limited by the funds available to us.

Our ability to acquire additional multi-family properties, develop new properties and improve the properties in our portfolio is limited by the funds available to us (including funds available pursuant to our credit facility) and our ability to obtain, on acceptable terms, mortgage debt.

At March 1, 2024, we had approximately $ 21.2 million of cash and cash equivalents (of which a significant portion is at the property level for day-to-day operating expenses) and up to $60 million available to us under our credit facility.

Our multi-family acquisition and value-add activities are constrained by funds available to us which will limit growth in our revenues and operating results.

Our failure to comply with our obligations under our debt instruments may reduce our stockholders’ equity, and adversely affect our net income and ability to pay dividends.

12 unchanged sentences

Our results of operations and financial conditions may be adversely affected if we are required to expend significant funds (other than funds earmarked for such purposes) to repair or improve our properties.

Our acquisition, development and value-add activities are limited by the funds available to us.

At March 1, 2023, we had approximately $20.4 million of cash and cash equivalents and up to $60.0 million available to us under our credit facility.

Our multi-family acquisition and value-add activities are constrained by funds available to us which will limit growth in our revenues and operating results.

If we are required to make payments under any “bad boy” carve out guarantees that we have provided in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.

1 unchanged sentence

These guarantees are only applicable if and when the borrower directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper (commonly referred to as “bad boy” guarantees).

Although we believe that “bad boy” carve out guarantees are not guarantees of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under

such guarantees.

In the event such a claim were made against us under a “bad boy” carve out guarantee, following foreclosure on mortgages or related loans, and such claim were successful, our business and financial results could be materially adversely affected.

2 unchanged sentences

There have been ongoing discussion by the government and other interested parties with regard to the long term structure and viability of Fannie Mae and Freddie Mac, which could result in adjustments to guidelines for their loan products.

Should these agencies have their mandates changed or reduced, lose key personnel, be disbanded or reorganized by the government or otherwise discontinue providing liquidity for the multi-family sector, our ability to obtain financing through loan programs sponsored by the agencies could be negatively impacted.

the agencies could be negatively impacted.

In addition, changes in our relationships with Fannie Mae and Freddie Mac, and the lenders that participate in these loan programs, with respect to our existing mortgage financing could impact our ability to obtain comparable financing for new acquisitions or refinancing for our existing multi-family real estate investments.

Should our access to financing provided through Fannie Mae and Freddie Mac loan programs be reduced or impaired, it would significantly reduce our access to debt capital and/or increase borrowing costs and could significantly limit our ability to acquire properties on acceptable terms and reduce the values to be realized upon property sales.

The phasing out of LIBOR may adversely affect our cash flow and financial results.

At December 31, 2022 we had $37.4 million junior subordinated notes maturing in 2036;

these notes bear interest based on three-month LIBOR plus 200 basis points.

The authority regulating LIBOR announced that after June 2023 it intends to stop compelling banks to submit rates for the calculation of LIBOR.

Although these junior subordinated notes provide for alternative methods of calculating the interest rate when LIBOR becomes unavailable, such alternative rates may be unavailable in which case we may have to negotiate a secondary alternative rate with the counterparties to such debt – we can provide no assurance that we and our counterparties will be able to agree to a secondary alternative rate.

Our cash flow and financial results may be adversely affected if we are unable to arrange a mutually satisfactory alternative rate to LIBOR for our junior subordinated notes.

We depend on our subsidiaries for cash flow and will be adversely impacted if these subsidiaries are prohibited from distributing cash to us.

18 unchanged sentences

We may be subject to environmental liabilities arising from the ownership of properties.

Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances

released on its property.

Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property.

These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.

43 unchanged sentences

These charges and provisions may be required in the future as a result of factors beyond our control, including, among other things, changes in the economic environment and market conditions affecting the value of real property assets or natural or man-made disasters.

In 2021, we incurred a $520,000 impairment charge related to our investment in the joint venture that owned the OPOP Properties.

If we are required to take additional impairment charges, our results of operations will be adversely impacted.

If we do not continue to pay cash dividends, the price of our common stock may decline .

2 unchanged sentences

Accordingly, we cannot assure you that we will pay dividends in the future.

If we do not continue to pay cash dividends, the price of our common stock may decline.

If we do not continue to pay cash dividends, the price of our common stock will decline.

Our business and operations are subject to physical and transition risks related to climate change.

7 unchanged sentences

Our transactions with affiliated entities involve conflicts of interest

certain of our affiliated entities have purchased multi-family properties in the Southeast United States .

Entities affiliated with us and with certain of our executive officers provide services to us and on our behalf.

6 unchanged sentences

Gould Investors from time-to time buys multi-family properties, including properties located in the Southeast United States.

Such properties are generally much smaller than the properties in which we are interested.

Although the properties purchased by Gould Investors are much smaller than the properties in which we are interested, a conflict of interest could arise should Gould Investors or we decide to pursue the acquisition of similar sized properties in such regions.

See "Item 1 - Business - Our Acquisition Approach"

2 unchanged sentences

Gould, our president and chief executive officer, and other members of senior management to carry out our business and investment strategies.

Although Jeffrey A.

Gould devotes substantially all of his business time to our affairs, he devotes a portion of his business time to entities affiliated with us.

Although Jeffrey A.Gould devotes substantially all of his business time to our affairs, he devotes a portion of his business time to entities affiliated with us.

In addition to Jeffrey A.

26 unchanged sentences

In order for us to qualify as a real estate investment trust under the Code, no more than 50% of the value of the outstanding shares of our stock may be owned, directly or indirectly or through application of certain attribution rules, by five or fewer “individuals” (as defined in the Code) at any time during the last half of a taxable year.

than 6.0% in value of the aggregate outstanding shares of all classes and series of our stock, which we refer to as the “ownership limits,” unless our board of directors exempts the person from such ownership limit.

To facilitate our qualification as a REIT under the Code, among other purposes, the Charter generally prohibits any person from actually or constructively owning more than 6.0%, in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or more than 6.0% in value of the aggregate outstanding shares of all classes and series of our stock, which we refer to as the “ownership limits,” unless our board of directors exempts the person from such ownership limit.

In addition, the Charter prohibits any person from beneficially or constructively owning shares of our stock that would result in more than 50% of the value of the outstanding shares of our stock to be beneficially owned by five or fewer individuals, regardless of whether such ownership is during the last half of any taxable year, which we refer to as the “Five or Fewer Limit.” Shares owned or acquired in violation of either of these restrictions will be transferred automatically to a trust for the benefit of a charitable beneficiary selected by us.

4 unchanged sentences

Gould from the ownership limits and has not established a limitation on ownership for such persons.

Based on information supplied to us, as of December 31, 2022, Gould Investors owns approximately 17.2% of the outstanding shares of common stock and, by virtue of the applicable attribution rules under the Code, one individual currently beneficially owns 22.3% of outstanding shares of common stock.

Based on information supplied to us, as of December 31, 2023, Gould Investors owns approximately 19.1% of the outstanding shares of common stock and, by virtue of the applicable attribution rules under the Code, these individuals beneficially own approximately 23.3% of outstanding shares of common stock.

As a result, the acquisition by each of four other individuals of 6.0% of our outstanding common stock, when combined with the ownership of our common stock of Gould Investors, Fredric H.

2 unchanged sentences

Gould, generally would not result in a violation of the Five or Fewer Limit.

However, there is no limitation on Gould Investors, Fredric H.

However, there is no limitation on Gould Investors,

Gould, Matthew J.

24 unchanged sentences

In June 2018, our common stock was added to the Russell 3000® Index.

If our common stock is removed from the Russell 3000® Index because it does not meet the criteria for continued inclusion in such index, index funds,

institutional investors, or other holders attempting to track the composition of that index may be required to sell our common stock, which would adversely impact the price and frequency at which it trades.

If our common stock is removed from the Russell 3000® Index because it does not meet the criteria for continued inclusion in such index, index funds, institutional investors, or other holders attempting to track the composition of that index may be required to sell our common stock, which would adversely impact the price and frequency at which it trades.

General Business Risks

5 unchanged sentences

Any loss of this information or unauthorized distribution of funds as a result of a breach of information technology systems may result in loss of funds to which we are entitled, legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business and financial performance.

Unresolved Staff Comments.

Not applicable.

Our principal executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, NY.

We believe that this facility is satisfactory for our current and projected needs.

See "Item 1—Business" for additional information regarding our properties.

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

What changed 10-K

Item 1A. Risk Factors