BRT Apartments Corp. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, our CEO and CFO have concluded that our disclosure controls and procedures, as designed and implemented as of December 31, 2023, were effective. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of a company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial transactions. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on its assessment, our management concluded that, as of December 31, 2023, our internal control over financial reporting was effective based on these criteria. Changes in Internal Controls over Financial Reporting There have been no changes in our internal controls over financial reporting, as defined in in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, that occurred during the three months ended December 31, 2023 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. Item 9B. Other Information. None of our officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" in effect at any time during the three months ended December 31, 2023.” Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable 39 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Apart from certain information concerning our executive officers which is set forth in Part I of this report, the other information required by Item 10 will be incorporated herein by reference to the applicable information to be in the proxy statement to be filed by April 29, 2024 for our 2024 Annual Meeting of Stockholders. Item 11. Executive Compensation. The information concerning our executive compensation required by Item 11 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Except as set forth below, the information required by Item 12 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. Equity Compensation Plan Information The following table provides information as of December 31, 2023 about shares of our common stock that may be issued upon the exercise of options, warrants and rights under our 2018 Amended and Restated Incentive Plan (the “2018 Plan”), our 2020 Amended and Restated Incentive Plan (the “2020 Plan”; and together with the 2018 Plan, the “Prior Plans”) and our 2022 Incentive Plan (the “2022 Plan”; and together with the Prior Plans, the “Incentive Plans”). No further awards may be granted under the Prior Plans. Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (2) (c) Equity compensation plans approved by security holders 634,490 (1) — 411,488 (2) Equity compensation plans not approved by security holders — — — Total 634,490 (1) — 411,488 (2) _______________________________________________________________________________ (1) Includes up to 209,322 shares, 211,417 and 213,751 shares of common stock issuable pursuant to restricted stock units (“RSUs”) that vest as of March 31, 2024, June 30, 2025 and June 30, 2026, respectively, if and to the extent specified conditions are satisfied by such vesting dates. RSUs granted pursuant to the 2020 Plan and the 2022 Plan account for 209,322 shares and 425,168 shares, respectively. Excludes 951,839 shares of restricted stock issued pursuant to the Incentive Plans as such shares, although subject to forfeiture, are outstanding. See Note 10 to our consolidated financial statements . (2) Does not give effect to 166,439 shares of restricted stock granted January 11, 2024 pursuant to the 2022 Plan. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information concerning relationships and certain transactions required by Item 13 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. Item 14. Principal Accounting Fees and Services. The information concerning our principal accounting fees required by Item 14 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. 40 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) 1. All Financial Statements. The response is submitted in a separate section of this report following Part IV. 2. Financial Statement Schedules. The response is submitted in a separate section of this report following Part IV. 3. Exhibits: In reviewing the agreements included as exhibits to this Annual Report on Form10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. Certain agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and: • should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; • have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; • may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and • were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. 41 Table of Contents Exhibit No. Title of Exhibits 1.1 Form of Equity Distribution Agreement dated May 12, 2023 (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed on May 12, 2023). 2.1 Plan of Conversion dated December 8, 2016 (incorporated by reference to Annex B of Amendment No. 1 to our Registration Statement on Form S-4 filed January 12, 2017 (the "S-4 Registration") (Reg. No. 333-215221). 3.1 Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 filed with our Current Report on Form 8-K on March 20, 2017). 3.2 By-laws of the Registrant effective as of December 6, 2022 (incorporated by reference to Exhibit 3.2 filed with our Current Report on Form 8-K on December 6, 2022). 4.1 Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 filed with our Current Report on Form 8-K on March 18, 2011). 4.2 Description of Registrant's Securities Registered Pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 filed with our Annual Report on Form 10-K for the year ended December 31, 2020). 10.1 * Shared Services Agreement, dated as of January 1, 2002, by and among Gould Investors L.P., us, One Liberty Properties, Inc., Majestic Property Management Corp., Majestic Property Affiliates, Inc. and REIT Management Corp. (incorporated by reference to Exhibit 10.2 filed with our Annual Report on Form 10-K for the year ended September 30, 2008). 10.2 * Form of Indemnification Agreement between the Registrant on the one hand, and its executive officers and directors, on the other hand (incorporated by reference to Exhibit 10.5 to our Annual Report of Form 10-K for the year ended September 30, 2017). 10.3 Membership Interest Purchase Agreement dated as of February 23, 2016 entered into between TRB Newark Assemblage, LLC ("TRB") and TRB Newark TRS, LLC ("TRB REIT" and together with TRB, collectively, the "Seller") and RBH Partners III, LLC, and joined by RBH-TRB Newark Holdings, LLC and GS-RBH Newark Holdings, LLC (incorporated by reference to exhibit 10.2 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2016). 10.4 * 2018 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.6 filed with our Current Report on Form 8-K on June 15, 2023). 42 Table of Contents Exhibit No. Title of Exhibits 10.5 * Form of Restricted Shares Agreement for the 2018 Incentive Plan (incorporated by reference to Exhibit 10.10 filed with our Annual Report on Form 10-K filed December 10, 2018). 10.6 * 2020 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.8 filed with our Current Report on Form 8-K on June 15, 2023). 10.7 * Form of Performance Awards Agreement granted in 2021 pursuant to the 2020 Incentive Plan (incorporated by reference to exhibit 10.1 of our Current Report on Form 8-K filed on June 11, 2021) 10.8 Amended and Restated Loan Agreement (the "Loan Agreement") made as of November 18, 2021, by and among us and VNB New York, LLC. (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on November 18, 2021). 10.9 Unlimited guaranty given by us in favor of VNB (incorporated by reference to Exhibit 10.2 filed with our Current Report on Form 8-K on November 18, 2021). 10.10 Form of Pledge Agreement (incorporated by reference to Exhibit 10.3 filed with our Current Report on Form 8-K on November 18, 2021). 10.11 Form of Negative Pledge Agreement (incorporated by reference to Exhibit 10.4 filed with our Current Report on Form 8-K on November 18, 2021). 10.12 Letter agreement dated as of November 19, 2021 with respect to the Loan Agreement. (incorporated by reference to exhibit 10.14 filed with our Annual Report on Form 10-K for the year ended December 31, 2021). 10.13 Amendment dated September 14, 2022 to the Loan Agreement (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on September 16, 2022). 10.14 * 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on June 10, 2022). 10.15 Second amendment dated as of August 22, 2023 to the Amended and Restated Loan Agreement made as of November 18, 2021, as amended, by and between us and VNB New York, LLC. (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q on November 6, 2023). 10.16 * Form of Performance Awards Agreement granted in 2022 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.5 filed with our Quarterly Report on Form 10-Q for the period ended September 30, 2022). 10.17 Form of Membership Interest Purchase Agreement used to effectuate the purchase of the interests of our joint venture partners (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2022). 10.18 * Form of Restricted Share Agreement awarded in 2023 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.19 filed with our Annual Report on Form 10-K for the year ended December 31, 2022). 10.19 * Form of Performance Awards Agreement granted in 2023 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended June 30, 2023). 10.20 * Form of Restricted Share Agreement awarded in 2024 pursuant to the 2022 Incentive Plan 21.1 Subsidiaries of the Registrant. 23.1 Consent of Ernst & Young, LLP. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Act"). 31.2 Certification of Senior Vice President—Finance pursuant to Section 302 of the Act. 31.3 Certification of Chief Financial Officer pursuant to Section 302 of the Act. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Act. 32.2 Certification of Senior Vice President—Finance pursuant to Section 906 of the Act. 32.3 Certification of Chief Financial Officer pursuant to Section 906 of the Act. 97.1 Registrant's Clawback Policy effective October 2, 2023. 101.INS The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. _______________________________________________________________________________ * Indicates management contract or compensatory plan or arrangement. 43 Table of Contents (b) Exhibits. See Item 15(a)(3) above. Except as otherwise indicated with respect to a specific exhibit, the file number for all of the exhibits incorporated by reference is: 001-07172. (c) Financial Statements. See Item 15(a)(2) above. Item 16. Form 10-K Summary Not applicable. 44 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRT APARTMENTS CORP. Date: March 14, 2024 By: /s/ Jeffrey A. Gould Jeffrey A. Gould Chief Executive Officer and President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Israel Rosenzweig Chairman of the Board March 14, 2024 Israel Rosenzweig /s/ Jeffrey A. Gould Chief Executive Officer, President and Director (Principal Executive Officer) March 14, 2024 Jeffrey A. Gould /s/ Carol Cicero Director March 14, 2024 Carol Cicero /s/ Alan Ginsburg Director March 14, 2024 Alan Ginsburg /s/ Fredric H. Gould Director March 14, 2024 Fredric H. Gould /s/ Matthew J. Gould Director March 14, 2024 Matthew J. Gould /s/ Louis C. Grassi Director March 14, 2024 Louis C. Grassi /s/ Gary Hurand Director March 14, 2024 Gary Hurand /s/ Jeffrey Rubin Director March 14, 2024 Jeffrey Rubin /s/ Jonathan Simon Director March 14, 2024 Jonathan Simon /s/ Elie Weiss Director March 14, 2024 Elie Weiss /s/ George E. Zweier Chief Financial Officer and Vice President (Principal Financial and Accounting Officer) March 14, 2024 George E. Zweier 45 Table of Contents Index Item 8, Item 15(a)(1) and (2) Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F- 2 Consolidated Balance Sheets as of December 31, 202 3 and 202 2 F- 4 Consolidated Statements of Operations for the years ended December 31, 202 3 and 202 2 F- 5 Consolidated Statements of Stockholders' Equity for the years ended December 31, 202 3 and 202 2 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F- 7 Notes to Consolidated Financial Statements F- 10 III—Real Estate Properties and Accumulated Depreciation F- 31 All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto. F-1 Table of Contents Index Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of BRT Apartments Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of BRT Apartments Corp. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2023 and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. F-2 Table of Contents Index Valuation of Investments in Real Estate Description of the Matter At December 31, 2023, the Company’s investments in real estate totaled approximately $636 million. As described in Notes 1 and 11 to the consolidated financial statements, the Company reviews its investments in real estate when events or circumstances change indicating the carry value of the investment may not be recoverable. Auditing the Company’s impairment analysis involved a high degree of subjectivity due to the judgment used by management to determine when indicators of impairment exist. How We Addressed the Matter in Our Audit For investments in real estate, we obtained and reviewed management’s analysis of whether any indicators of impairment were identified, evaluated whether the list of indicators of impairment was complete, and evaluated whether conclusions reached by management were reasonable based on property-specific factors. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020 New York, New York March 14, 2024 F-3 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data) December 31, 2023 2022 ASSETS Real estate properties, net of accumulated depreciation of $ 80,499 and $ 55,195 $ 635,836 $ 651,603 Investment in unconsolidated joint ventures 34,242 42,576 Cash and cash equivalents 23,512 20,281 Restricted cash 632 872 Other assets 15,741 17,284 Total Assets $ 709,963 $ 732,616 LIABILITIES AND EQUITY Liabilities: Mortgages payable, net of deferred costs of $ 4,009 and $ 4,166 $ 422,427 $ 403,792 Junior subordinated notes, net of deferred costs of $ 257 and $ 277 37,143 37,123 Credit facility — 19,000 Accounts payable and accrued liabilities 21,948 22,631 Total Liabilities 481,518 482,546 Commitments and contingencies Equity: BRT Apartments Corp. stockholders' equity: Preferred shares $ 0.01 par value 2,000 shares authorized, none outstanding — — Common stock, $ 0.01 par value, 300,000 shares authorized, 17,536 and 18,006 shares issued at December 31, 2023 and 2022 175 180 Additional paid-in capital 267,271 273,863 Accumulated deficit ( 38,986 ) ( 23,955 ) Total BRT Apartments Corp. stockholders' equity 228,460 250,088 Non-controlling interests ( 15 ) ( 18 ) Total Equity 228,445 250,070 Total Liabilities and Equity $ 709,963 $ 732,616 See accompanying notes to consolidated financial statements. F-4 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) Year Ended December 31, 2023 2022 Revenues: Rental and other revenue from real estate properties $ 93,069 $ 70,515 Other income 548 12 Total revenues 93,617 70,527 Expenses: Real estate operating expenses—including $ 34 and $ 36 to related parties 41,821 30,558 Interest expense 22,161 15,514 General and administrative—including $ 642 and $ 739 to related party 15,433 14,654 Depreciation and amortization 28,484 24,812 Total expenses 107,899 85,538 Total revenues less total expenses ( 14,282 ) ( 15,011 ) Equity in earnings from unconsolidated joint ventures 2,293 1,895 Equity in earnings from sale of unconsolidated joint venture properties 14,744 64,531 Gain on sale of real estate 604 6 Casualty loss ( 323 ) ( 850 ) Insurance recovery of casualty loss 793 850 Gain on insurance recovery 240 62 Loss on extinguishment of debt — ( 563 ) Income from continuing operations 4,069 50,920 Provision for taxes 54 821 Income from continuing operations, net of taxes 4,015 50,099 Income attributable to non-controlling interests ( 142 ) ( 144 ) Net income attributable to common stockholders $ 3,873 $ 49,955 Weighted average number of shares of common stock outstanding: Basic 17,918,270 17,793,035 Diluted 17,948,276 17,852,951 Per share amounts attributable to common stockholders Basic $ 0.16 $ 2.67 Diluted $ 0.16 $ 2.66 See accompanying notes to consolidated financial statements. F-5 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 2023 and 2022 (Dollars in thousands, except per share data) Shares of Common Stock Additional Paid-In Capital (Accumulated Deficit) Non-Controlling Interests Total Balances, December 31, 2021 $ 173 $ 258,161 $ ( 55,378 ) $ ( 5 ) $ 202,951 Distributions - Common Stock - $ 0.98 per share — — ( 18,532 ) — ( 18,532 ) Restricted stock and restricted stock units vesting 2 ( 2 ) — — — Compensation expense—restricted stock and restricted stock units — 4,486 — — 4,486 Distributions to non-controlling interests — — — ( 157 ) ( 157 ) Shares issued through equity offering program, net 5 9,940 — — 9,945 Shares issued through DRIP — 1,278 — — 1,278 Net income — — 49,955 144 50,099 Other comprehensive income — — — — — Comprehensive income — — — — 50,099 Balances, December 31, 2022 $ 180 $ 273,863 $ ( 23,955 ) $ ( 18 ) $ 250,070 Distributions - Common Stock - $ 1.00 per share — — ( 18,904 ) — ( 18,904 ) Restricted stock and restricted stock units vesting 2 ( 2 ) — — — Compensation expense—restricted stock and restricted stock units — 4,768 — — 4,768 Distributions to non-controlling interests — — — ( 139 ) ( 139 ) Shares issued through DRIP — 3,034 — — 3,034 Shares repurchased ( 7 ) ( 14,392 ) — — ( 14,399 ) Net income — — 3,873 142 4,015 Balances, December 31, 2023 $ 175 $ 267,271 $ ( 38,986 ) $ ( 15 ) $ 228,445 See accompanying notes to consolidated financial statements F-6 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Year Ended December 31, 2023 2022 Cash flows from operating activities: Net Income $ 4,015 $ 50,099 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,484 24,812 Amortization of deferred financing fees 1,072 628 Amortization of debt fair value adjustment 613 137 Amortization of restricted stock and restricted stock units 4,768 4,486 Equity in earnings of unconsolidated joint ventures ( 2,293 ) ( 1,895 ) Equity in earnings on sale of real estate of unconsolidated ventures ( 14,744 ) ( 64,531 ) 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: (Increase) decrease in other assets ( 787 ) 5,142 Decrease in accounts payable and accrued liabilities ( 678 ) ( 3,923 ) Net cash provided by operating activities 19,606 15,450 Cash flows from investing activities: Improvements to real estate owned ( 9,643 ) ( 6,295 ) Purchase and consolidation of joint venture properties — ( 101,666 ) Proceeds from the sale of real estate owned 711 4,385 Distributions from unconsolidated joint ventures 25,687 91,239 Contributions to unconsolidated joint ventures ( 316 ) ( 3,500 ) Proceeds from insurance recoveries 240 62 Net cash provided by (used in) investing activities 16,679 ( 15,775 ) Cash flows from financing activities: Proceeds from mortgages payable 21,173 18,953 Mortgage payoffs — ( 41,666 ) Mortgage principal payments ( 3,308 ) ( 2,219 ) Proceeds from credit facility — 43,000 Repayment of credit facility ( 19,000 ) ( 24,000 ) Increase in deferred financing costs ( 683 ) ( 693 ) Dividends paid ( 18,909 ) ( 17,863 ) Distributions to non-controlling interests ( 139 ) ( 157 ) Proceeds from the sale of common stock — 9,945 Proceeds from the issuance of DRP shares 3,034 1,278 Repurchase of shares of common stock ( 14,399 ) — Net cash used in financing activities ( 32,231 ) ( 13,422 ) Net increase (decrease) in cash, cash equivalents, restricted cash and escrows: 4,054 ( 13,747 ) F-7 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Year Ended December 31, 2023 2022 Cash, cash equivalents, restricted cash and escrows at beginning of year 27,721 41,468 Cash, cash equivalents,restricted cash and escrows at end of year $ 31,775 $ 27,721 Supplemental disclosures of cash flow information: Cash paid during the year for interest expense $ 20,433 $ 14,086 Cash paid during the year for income and excise taxes $ 689 $ 283 Consolidation on buyout of partnership interest: Increase in real estate assets $ — ( 370,513 ) Increase in other assets — ( 13,893 ) Increase in mortgage payable — 231,896 Increase in deferred loan costs — ( 3,892 ) Increase in accounts payable and accrued liabilities — 6,278 Decrease in investment in unconsolidated joint ventures — 48,458 $ — $ ( 101,666 ) See accompanying notes to consolidated financial statements. F-8 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. December 31, 2023 2022 Cash and cash equivalents $ 23,512 $ 20,281 Restricted cash 632 872 Escrows (Other assets) 7,631 $ 6,568 Total cash, cash equivalents, restricted cash and escrows shown in consolidated statement of cash flows $ 31,775 $ 27,721 F-9 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 1— ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES Organization and Background BRT Apartments Corp. (“BRT” or the “Company”) owns, operates and, to a lesser extent, develops multi-family properties. These multi-family properties may be wholly owned by us or by unconsolidated joint ventures in which the Company contributes a significant portion of the equity. At December 31, 2023, BRT: (i) wholly-owns 21 multi-family properties located in 11 states with an aggregate of 5,420 units and a carrying value of $ 634,046,000 ; (ii) has ownership interests, through unconsolidated entities, in seven multi-family properties located in four states with an aggregate of 2,287 units, and the carrying value of its net equity investment is $ 30,418,000 ; and (iii) owns other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $ 5,615,000 . The Company's 28 multi-family properties are located in 11 states primarily in the Southeast United States and Texas. BRT conducts its operations to qualify as a real estate investment trust, or REIT, for Federal income tax purposes. Substantially all of the Company's assets are comprised of multi-family real estate assets generally leased to tenants on a one-year basis. Therefore, the Company aggregates real estate assets for reporting purposes and operates in one reportable segment. Principles of Consolidation The consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries. The joint venture that owns a commercial property in Yonkers, NY was determined not to be a variable interest entity ("VIE") but is consolidated because the Company has controlling rights in such entity. The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. For each joint venture, the Company evaluated the rights provided to each party in the venture to assess the consolidation of the venture. All investments in unconsolidated joint ventures have sufficient equity at risk to permit the entity to finance its activities without additional subordinated financial support and, as a group, the holders of the equity at risk have power through voting rights to direct the activities of these ventures. As a result, none of these joint ventures are VIEs. Additionally, the Company does not exercise substantial operating control over these entities, and therefore the entities are not consolidated. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for their share of equity in earnings, cash contributions and distributions. The distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro-rata to the percentage equity interest each partner has in the applicable venture. Certain items on the consolidated financial statements for the year ended December 31, 2022, have been reclassified to conform with the current year's presentation including reclassifying (i) Credit Facility deferred fees to Other assets and (ii) Deposit and escrows within Cash and Restricted Cash on the statement of cash flows. Income Tax Status The Company qualifies as a real estate investment trust under sections 856-860 of the Internal Revenue Code of 1986, as amended. The board of directors may, at its option, elect to revoke or terminate the Company's election to qualify as a real estate investment trust. The Company will not be subject to federal, and generally state and local taxes on amounts it distributes to stockholders, provided it distributes 90% of its ordinary taxable income and meets other conditions. F-10 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) In accordance with Accounting Standards Codification ("ASC") Topic 740 - "Income Taxes", the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on the Company's financial position or results of operations. The Company's income tax returns for the tax years 2020 through 2022 are subject to review by the Internal Revenue Service. Revenue Recognition Rental revenue from multi-family properties is recorded when due from residents and is recognized monthly as it is earned. Rental payments are due in advance. Leases on residential properties are generally for terms that do not exceed one year . Rental revenue from commercial properties, including the base rent that each tenant is required to pay in accordance with the terms of their respective leases, net of any rent concessions and lease incentives, is reported on a straight-line basis over the non-cancellable term of the lease. Real Estate Properties Real estate properties are stated at cost, net of accumulated depreciation, and include properties acquired through acquisition or development. When the Company purchases real estate assets from third-parties, the Company allocates the purchase price of real estate, including direct transaction costs applicable to an asset acquisition, among land, building, improvements and intangibles ( e.g ., the value of above, below and at market leases, and origination costs associated with in-place leases and above or below-market mortgages assumed at the acquisition date). The value, as determined, is allocated to the gross assets acquired based on management’s determination of the relative fair values of these assets and liabilities. Whenever the Company buys out the remaining interest from joint venture partners, the Company follows a cost-accumulation approach, wherein the Company allocates the cost basis of its existing interest and the purchase price to the Company of its partners' remaining interest, to the real estate acquired (including land, buildings and improvements, and identified intangibles such as acquired in-place leases) and acquired liabilities. Depreciation for multi-family properties is computed on a straight-line basis over an estimated useful life of 30 years. Intangible assets (and liabilities) are amortized over the remaining life of the related leases at the time of acquisition and is usually less than one year. Expenditures for maintenance and repairs are charged to operations as incurred. Real estate is classified as held for sale when management has determined that the applicable criteria have been met. Real estate assets that are expected to be disposed of are valued at the lower of their carrying amount or their fair value less costs to sell on an individual asset basis. Real estate classified as held for sale is not depreciated. The Company accounts for the sale of real estate when title passes to the buyer, sufficient equity payments have been received, there is no continuing involvement by the Company and there is reasonable assurance that the remaining receivable, if any, will be collected. Asset Impairments The Company reviews each real estate asset owned quarterly to determine if there are indicators of impairment. If such indicators are present, the Company determines whether the carrying amount of the asset can be recovered. Recognition of impairment is required if the undiscounted cash flows estimated to be generated by the asset are less than the asset's carrying amount and that carrying amount exceeds the estimated fair value of the asset. The impairment recognized is the difference between the carrying value and the fair value. The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property. The analysis includes an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends, the effects of leasing demands, and other factors. In evaluating a property for impairment, various factors are considered, including estimated current and expected operating cash flow from the property during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of such real estate in the ordinary course of business. Valuation adjustments may be necessary in the event that effective interest rates, rent-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property. If future evaluations result in a decrease in the value of the property below its carrying value, the reduction will be recognized as an F-11 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) impairment charge. The fair values related to the impaired real estate assets are considered to be a level 3 valuation within the fair value hierarchy because they are based on unobservable inputs and are subjective in nature. For investment in real estate ventures, if indicators of impairment are present, the Company determines if the fair value of the investment is less than its carrying value. Fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the asset. The fair values related to the impaired investments in real estate ventures are considered to be a level 3 valuation within the fair value hierarchy. Equity Based Compensation Compensation expense for grants of restricted stock, restricted stock units ("RSUs") and dividend equivalent rights are amortized over the vesting period of such awards, based upon the estimated fair value of such award at the grant date. The Company recognizes the effect of forfeitures when they occur and previously recognized compensation expense is reversed in the period the grant or unit is forfeited. The deferred compensation related to the performance based RSUs to be recognized as expense is net of certain performance assumptions which are re-evaluated quarterly. For accounting purposes, the shares of restricted stock and the RSUs are not included in the outstanding shares shown on the consolidated balance sheets until they vest; however, the restricted stock is included in the calculation of basic and diluted earnings per share as it participates in the earnings of the Company. Per Share Data Basic earnings (loss) per share is determined by dividing net income (loss) applicable to holders of common stock for the applicable year by the weighted average number of shares of common stock outstanding during such year. Net income is also allocated to the unvested restricted stock outstanding during each period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. The RSU's are excluded from the basic earnings per share calculation, as they are not participating securities. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock that share in the earnings of the Company. Diluted earnings per share is determined by dividing net income applicable to common stockholders for the applicable period by the weighted average number of shares of common stock deemed to be outstanding during such period. In calculating diluted earnings per share, the Company includes only those shares underlying the RSUs that it anticipates will vest based on management's estimates which are evaluated quarterly. The Company excludes any shares underlying the RSUs from such calculation if their effect would have been anti-dilutive. Cash Equivalents Cash equivalents consist of highly liquid investments; primarily, direct United States treasury obligations with maturities of three months or less when purchased. Restricted Cash Restricted cash consists of cash held for construction costs and property improvements for specific joint venture properties as may be required by contractual arrangements. Other Assets Other assets consist of real estate tax , insurance and replacement escrows (classified as restricted cash within the consolidated statement of cash flows), lease intangibles, tenant receivables, prepaid expenses and other receivables. F-12 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Costs Fees and costs incurred in connection with multi-family property financings are deferred and amortized over the term of the related debt obligations. Fees and costs paid related to the successful negotiation of commercial leases are deferred and amortized on a straight-line basis over the terms of the respective leases. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Immaterial Error Correction During the preparation of financial statements for the current year, it was determined that we were not correctly including the escrow accounts classified within other assets within cash flows from operating activities and cash flows from investing activities on the Consolidated Statements of Cash Flows. As a result, we have made an immaterial error correction to the prior period to reclassify the deposits and escrows within Cash and Restricted Cash on the Statement of Cash Flows resulting in an increase in net cash from operating activities of $ 425,000 and a decrease in net cash used in investing activities of $ 3,596,000 from what was previously reported. NOTE 2— REAL ESTATE PROPERTIES Real estate properties consist of the following (dollars in thousands): December 31, 2023 2022 Land $ 74,246 $ 74,246 Building 616,979 617,041 Building improvements 25,110 15,511 Real estate properties 716,335 706,798 Accumulated depreciation ( 80,499 ) ( 55,195 ) Total real estate properties, net $ 635,836 $ 651,603 A summary of activity in real estate properties, net, for the year ended December 31, 2023 follows (dollars in thousands): December 31, 2022 Balance Improvements Depreciation Asset Sale December 31, 2023 Balance Multi-family $ 649,701 $ 9,537 $ ( 25,193 ) $ — $ 634,045 Retail shopping center - Yonkers, NY/Other 1,902 106 ( 111 ) ( 106 ) 1,791 Total real estate properties $ 651,603 $ 9,643 $ ( 25,304 ) $ ( 106 ) $ 635,836 F-13 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 2—REAL ESTATE PROPERTIES (continued) The following summarizes, by state, information for the year ended December 31, 2023 regarding consolidated properties (dollars in thousands): Location Number of Properties Number of Units 2023 Rental and Other Revenue % of 2023 Rental and Other Revenue Tennessee 2 702 $ 14,088 15 % Mississippi 2 776 12,184 13 % Alabama 3 740 11,194 12 % Georgia 3 688 10,571 11 % Florida 2 518 9,428 10 % Texas 3 600 9,231 11 % South Carolina 2 474 8,585 9 % Virginia 1 220 4,586 5 % North Carolina 1 264 4,168 4 % Missouri 1 174 3,802 4 % Ohio 1 264 3,751 4 % Other (a) — — 1,481 2 % 21 5,420 $ 93,069 __________________________________________ (a) Represents non-multi-family revenues. Future minimum rentals to be received pursuant to non-cancellable operating leases with terms in excess of one year, from a commercial property owned by the Company at December 31, 2023, are as follows (dollars in thousands): Year Ending December 31, Amount 2024 $ 1,289 2025 1,319 2026 1,319 2027 1,319 2028 887 Thereafter 4,837 Total $ 10,970 Leases at the Company's multi-family properties are generally for a term of one year or less and are not reflected in this table. NOTE 3— ACQUISITIONS AND DISPOSITIONS Acquisitions of Interests in Joint Ventures During 2023, the Company did not acquire any partnership interests. During 2022, the Company purchased its partners' remaining interests in 11 joint ventures. The Company determined that in each acquisition the gross assets acquired are concentrated in a single identifiable asset. Therefore, these transactions do not meet the definition of a business and are accounted for as asset acquisitions. F-14 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 3—ACQUISITIONS AND DISPOSITIONS (continued) The following table summarizes these purchases (dollars in thousands): Buyout Date Property Name Location Units Remaining Interest Purchased Purchase Price (1) 03/23/2022 Verandas at Alamo San Antonio, TX 288 28 % $ 8,721 04/07/2022 Vanguard Heights Creve Coeur, MO 174 22 % 4,880 05/11/2022 Jackson Square Tallahassee, FL 242 20 % 7,215 05/24/2022 Brixworth at Bridge Street Huntsville, AL 208 20 % 10,697 05/26/2022 Woodland Apartments Boerne, TX 120 20 % 3,881 06/30/2022 Grove at River Place Macon, GA 240 20 % 7,485 07/12/2022 Civic I Southaven, MS 392 25 % 18,233 07/12/2022 Civic II Southaven, MS 384 25 % 17,942 07/14/2022 Abbotts Run Wilmington, NC 264 20 % 9,010 07/19/2022 Somerset at Trussville Trussville, AL 328 20 % 10,558 08/03/2022 Magnolia Pointe Madison, AL 204 20 % 7,246 Total 2,844 $ 105,868 ____________________________ (1) The purchase price reflects the Company's purchase of its joint venture partner's promote interest in the venture. Includes $ 3,596 escrows but excludes closing costs of $ 2,191 and operating cash acquired from the joint venture of $ 2,797 . During 2022, the Company assessed the fair value of the tangible assets of each acquired property as of the applicable acquisition date using estimated building costs between $ 90 and $ 215 per square foot, with a weighted average square foot cost of $ 158 and estimated land costs between $ 4.11 and $ 50.14 per square foot with a weighted average square foot cost of $ 6.65 , which are Level 3 unobservable input in the fair value hierarchy. The following table summarizes the purchase price allocation of the book values of those properties whose remaining interest was purchased and consolidated in 2022 and is based on the proportionate share of the estimated fair value of the property on the acquisition date (dollars in thousands): Property Land Building and Improvements Total Land and building Acquisition related lease intangible Total Assets Acquisition related mortgage intangible Verandas at Alamo $ 3,336 $ 33,465 $ 36,801 $ 797 $ 37,598 $ ( 61 ) Vanguard Heights 5,466 30,826 36,292 508 36,800 578 Jackson Square 3,398 27,167 30,565 634 31,199 283 Brixworth at Bridge Street 1,959 20,080 22,039 321 22,360 — Woodland Apartments 1,289 12,853 14,142 233 14,375 — Grove at River Place 2,866 16,416 19,282 396 19,678 136 Civic I 3,646 45,554 49,200 913 50,113 562 Civic II 3,847 46,452 50,299 1,013 51,312 1,254 Abbotts Run 3,468 37,312 40,780 701 41,481 481 Somerset at Trussville 4,095 42,943 47,038 869 47,907 1,090 Magnolia Pointe 2,052 22,023 24,075 503 24,578 396 $ 35,422 $ 335,091 $ 370,513 $ 6,888 $ 377,401 $ 4,719 F-15 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 3—ACQUISITIONS AND DISPOSITIONS (continued) Property Dispositions During the year ended December 31, 2023, the Company sold a cooperative apartment unit located in New York, NY for a sales price of $ 785,000 and after closing costs, recognized a gain of $ 604,000 on the sale. During the year ended December 31, 2022, the Company sold a land parcel located in Daytona, FL for a sales price of $ 4,700,000 and after closing costs, recognized a nominal gain. NOTE 4— RESTRICTED CASH The restricted cash reflected on the consolidated balance sheets represents funds held by the Company specifically allocated for capital improvements at joint venture multi-family properties; such funds are not generally available for general corporate purposes. NOTE 5 - LEASES Lessor Accounting The Company owns a commercial property which is leased to two tenants under operating leases with current expirations ranging from 2028 to 2035, with options to extend or terminate the leases. Revenues from such leases are reported as rental income, net, and are comprised of (i) lease components, which includes fixed lease payments and (ii) non-lease components, which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components as the timing and pattern of transfer are the same, and accounts for the combined component in accordance with ASC 842. Lessee Accounting The Company is a lessee under a ground lease in Yonkers, NY which is classified as an operating lease. The ground lease which was set to expire September 30, 2024, provided for one 21-year renewal option. The renewal option was exercised in 2023 and the ground lease is scheduled to expire on June 30, 2045. There are no further renewal options. As of December 31, 2023 , the remaining lease term is 21.5 years. The Company is a lessee under a corporate office lease in Great Neck, NY, which is classified as an operating lease. The lease expires on December 31, 2031 and provides a five-year renewal option. As of December 31, 2023, the remaining lease term, including renewal options deemed exercised, is 13.0 years. As of December 31, 2023 , the Company's right-of-use ("ROU") assets and lease liabilities were $ 2,183,000 and $ 2,318,000 , respectively and as of December 31, 2022, the Company's ROU assets and lease liabilities were $ 2,371,000 and $ 2,472,000 , respectively. The ROU assets and lease liabilities are reported on the consolidated balance sheets in Other assets and Accounts payable and accrued liabilities , respectively. The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing rate (“IBR”). The Company considers the general economic environment and its historical borrowing rate activity and factors in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. As the Company did not elect to apply the hindsight practical expedient, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842. F-16 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 5 - LEASES (continued) As of December 31, 2023, the minimum future lease payments related to the operating ground and office leases are as follows (dollars in thousands): Year Ending December 31, Amount 2024 $ 243 2025 252 2026 256 2027 261 2028 268 Thereafter 2,974 Total undiscounted cash flows $ 4,254 Present value discount ( 1,936 ) Lease liability $ 2,318 NOTE 6— INVESTMENT IN UNCONSOLIDATED VENTURES At December 31, 2023 and 2022, the Company owned interests in unconsolidated joint ventures that owned seven multi-family properties and an interest in a development property (the "Unconsolidated Properties"), respectively. The condensed balance sheets below presents information regarding such properties (dollars in thousands): December 31, 2023 2022 ASSETS Real estate properties, net of accumulated depreciation of $ 69,970 and $ 66,945 $ 275,874 $ 318,304 Cash and cash equivalents 6,447 6,591 Other Assets (1) 54,715 35,372 Total Assets $ 337,036 $ 360,267 LIABILITIES AND EQUITY Liabilities: Mortgages payable, net of deferred costs of $ 1,135 and $ 1,421 $ 246,966 $ 255,261 Accounts payable and accrued liabilities 8,751 8,222 Total Liabilities 255,717 263,483 Commitments and contingencies Equity: Total unconsolidated joint venture equity 81,319 96,784 Total Liabilities and Equity $ 337,036 $ 360,267 Company equity interest in all joint venture equity $ 34,242 $ 42,576 ___________________________________ (1) Includes work-in-process at December 31, 2023 and 2022 of approximately $ 46,509 and $ 24,335 , respectively, related to the Stono Oaks development project. F-17 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (continued) The condensed income statements below presents information regarding the Unconsolidated Properties (dollars in thousands): Year Ended December 31, 2023 2022 Revenues: Rental and other revenue $ 44,785 $ 72,873 Total revenues 44,785 72,873 Expenses: Real estate operating expenses 20,577 33,086 Interest expense 9,268 16,269 Depreciation 10,403 17,798 Total expenses 40,248 67,153 Total revenues less total expenses 4,537 5,720 Other equity earnings 126 121 Impairment of assets — ( 8,553 ) Insurance recoveries — 8,553 Gain on insurance recoveries 65 567 Gain on sale of real estate properties 38,418 118,270 Loss on extinguishment of debt ( 561 ) ( 3,491 ) Net income from joint ventures $ 42,585 $ 121,187 BRT equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 17,037 $ 66,426 Purchase of Interest in a Joint Venture On March 10, 2022, the Company acquired for $ 3,500,000 , a 17.45 % interest in a planned 240 -unit development property located in Johns Island, SC. In 2023, the Company contributed an additional $ 316,000 to this venture. In December 2022, the venture recorded an impairment charge of $ 8,553,000 due to a fire at the development. This loss is covered by insurance and accordingly, the venture recorded an insurance recovery of $ 8,553,000 . The Company recorded its proportionate share of the impairment charge and the insurance recovery. As of December 31, 2023, the property is substantially complete and leasing has commenced. F-18 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (continued) Dispositions of Properties The table below provides information regarding the disposition of real estate properties by unconsolidated joint ventures in the year ended December 31, 2023 and 2022 (dollars in thousands): Location Sale Date Number of Units Sale Price Gain on Sale BRT Share of Gain on Sale BRT Share of Loss of Extinguishment on Debt 2023 Chatham Court and Reflections - Dallas, TX 5/12/2023 494 $ 73,000 $ 38,418 $ 14,744 $ 212 2022 Verandas at Shavano - San Antonio, TX 2/8/2022 288 $ 53,750 $ 23,652 $ 12,961 $ — Reatreat at Cinco Ranch - Katy, TX 6/14/2022 268 68,300 30,595 17,378 686 The Vive - Kannapolis, NC 6/30/2022 312 91,250 47,086 22,720 787 Waters Edge - Columbia, SC 8/31/2022 204 32,400 16,937 11,472 388 Total 2022 1,072 $ 245,700 $ 118,270 $ 64,531 $ 1,861 Joint Venture Buyouts In 2022, the Company purchased its venture partners' remaining interests in joint ventures that owned 11 multi-family properties. The operations and accounts of these joint ventures which, as a result of such purchases, are wholly-owned by the Company are consolidated into the operations and accounts of the Company as of their respective acquisition dates. See Note 3 for information regarding these buyouts. NOTE 7— DEBT OBLIGATIONS Debt obligations consist of the following (dollars in thousands): December 31, 2023 2022 Mortgages payable $ 426,436 $ 407,958 Junior subordinated notes 37,400 37,400 Credit facility — 19,000 Deferred loan costs (1) ( 4,266 ) ( 4,443 ) Total debt obligations $ 459,570 $ 459,915 ________________________ (1) Excludes $ 289 and $ 498 at December 31, 2023 and 2022, respectively, of deferred fees related to our credit facility which is reflected in Other Assets F-19 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 7—DEBT OBLIGATIONS (continued) A summary of activity in property debt, net of deferred loan fees, for the year ended December 31, 2023 is as follows (dollars in thousands): Balance at December 31, 2022 $ 403,792 New mortgage 21,173 Amortization of fair value adjustment 613 Principal amortization ( 3,308 ) Changes in deferred fees 157 Balance at December 31, 2023 $ 422,427 At December 31, 2023, $ 426,436,000 of mortgage debt with a weighted average interest rate of 4.02 % and a weighted average remaining term to maturity of 7.0 years is outstanding on 18 of the Company's multi-family properties. Scheduled principal repayments for the periods indicated are as follows (dollars in thousands): Year Ending December 31, Scheduled Principal Payments 2024 $ 3,331 2025 19,860 2026 74,622 2027 46,189 2028 40,697 Thereafter 241,737 $ 426,436 The following table summarizes the information regarding the mortgages relating to the properties in which BRT purchased the remaining interests of its joint venture partners during the twelve months ended December 31, 2022 (dollars in thousands): Property Name Location Debt at Purchase Date (a) Interest Rate Maturity Date Interest only through Verandas at Alamo San Antonio, TX $ 27,000 3.64 % Oct 2029 Oct 2024 Vanguard Heights Creve Coeur, MO 29,700 4.41 % July 2031 June 2025 Jackson Square Tallahassee, FL 21,524 4.19 % Sept 2027 Sept 2022 Brixworth at Bridge Street (b) Huntsville, AL 11,147 4.25 % June 2032 Maturity The Woodland Apartments Boerne, TX 7,914 4.74 % Feb 2026 N/A Grove at River Place (c) Macon, GA 11,426 4.39 % Feb 2026 N/A Civic I Southaven, MS 27,389 4.24 % March 2026 N/A Civic II Southaven, MS 30,105 3.73 % Sept 2026 N/A Abbotts Run Wilmington, NC 23,160 4.71 % July 2030 July 2025 Somerset at Trussville Trussville, AL 32,250 4.19 % June 2029 May 2025 Magnolia Pointe Madison, AL 15,000 4.08 % Jan 2028 Dec 2022 $ 236,615 ________________________________ (a) Excludes fair value adjustments of $ 4,719 determined as part of the purchase price allocation. (b) The original mortgage debt of $ 11,147 was refinanced with new ten-year mortgage debt of $ 18,952 immediately following the buyout. The interest rate, maturity date and interest - only terms reflect the new mortgage. (c ) Includes a supplemental mortgage of $ 1,056 which was paid off immediately following the buyout. F-20 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 7—DEBT OBLIGATIONS (continued) The unamortized balance of acquisition related mortgage intangibles, which is included in mortgages payable in the consolidated balance sheet, was $ 1,387,000 at December 31, 2023 and will be amortized as follows (dollars in thousands): Year Ending December 31, Amount 2024 $ 556 2025 501 2026 215 2027 ( 29 ) 2028 1 Thereafter 143 Total $ 1,387 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. The Company paid off the following debt during the year ended December 31, 2022 (dollars in thousands): Property Name Location Mortgage Payoff Interest Rate Payoff Date Maturity Date 2022 Avalon Pensacola, FL $ 14,558 4.29 % 1/26/2022 3/1/2022 Silvana Oaks N. Charleston, SC 14,904 3.79 % 10/28/2022 11/1/2022 Total $ 29,462 Credit Facility The Company's credit facility with an affiliate of Valley National Bank ("VNB"), as amended, 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 expense ( i.e., working capital (including dividend payments)); provided that no more than $ 25,000,000 may be used for operating expenses. The facility, which was amended in August 2023 to change the interest rate from a prime based rate to a SOFR based rate, is secured by the cash available in certain cash accounts maintained by the Company at VNB and the Company's pledge of its interests in the entities that own the unencumbered properties used in calculating the borrowing base. The interest rate, which adjusts monthly and is subject to a floor of 6.00 %, equals one-month term SOFR plus 250 basis points. The interest rate in effect as of December 31, 2023 and March 1, 2024 was 7.85 % and 7.82 %, respectively. There is an unused facility fee of 0.25 % per annum on the total amount committed by VNB and unused by the Company. The facility matures in September 2025. At December 31, 2023, the Company is in compliance in all material respects with its obligations under the facility. At December 31, 2023, and March 1, 2024, there was no outstanding balance on the facility and $ 60,000,000 was available to be borrowed. At December 31, 2022, there was an outstanding balance of $ 19,000,000 on the facility. The average balance outstanding on the facility for 2023 and 2022 was $ 2,811,000 and $ 7,907,000 , respectively. Interest expense for the years ended December 31, 2023 and 2022, which includes amortization of deferred financing costs and unused fees, was $ 574,000 and $ 713,000 , respectively. Deferred costs of $ 289,000 and $ 498,000 are recorded in Other Assets on the consolidated balance sheets at December 31, 2023 and 2022, respectively. F-21 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 7—DEBT OBLIGATIONS (continued) Junior Subordinated Notes At December 31, 2023 and 2022, the outstanding principal balance of the Company's junior subordinated notes was $ 37,400,000 , before deferred financing costs of $ 257,000 and $ 277,000 , respectively. The interest rate on the outstanding balance resets quarterly and is based on three month term SOFR + 2.26 %. The rate in effect at December 31, 2023 and 2022 was 7.65 % and 6.41 %, respectively. The notes mature April 30, 2036. The notes require interest only payments through the maturity date, at which time repayment of all outstanding principal and unpaid interest is due. Interest expense for the years ended December 31, 2023 and 2022, which includes amortization of deferred costs, was $ 2,768,000 and $ 1,478,000 , respectively. NOTE 8— INCOME TAXES The Company elected to be taxed as a REIT pursuant to the Code. As a REIT, the Company is generally not subject to Federal income taxes at the corporate level if it distributes 100% of its REIT taxable income, as defined, to its stockholders. To maintain its REIT status, the Company must distribute at least 90% of its ordinary taxable income; however, if it does not distribute 100% of its taxable income, it will be taxed on undistributed income. There are a number of organizational and operational requirements the Company must meet to remain a REIT. If the Company fails to qualify as a REIT in any taxable year, its taxable income will be subject to Federal income tax at regular corporate tax rates and it may not be able to qualify as a REIT for four subsequent tax years. Even if it is qualified as a REIT, the Company is subject to certain state and local income taxes and to Federal income and excise taxes on undistributed taxable income. For income tax purposes, the Company reports on a calendar year basis. As of December 31, 2023, tax returns for the calendar years 2020 through 2022 remain subject to examination by the Internal Revenue Service and various state and local tax jurisdictions. During the years ended December 31, 2023 and 2022, the Company recorded $ 54,000 and $ 821,000 , respectively, of state franchise tax expense, net of refunds, relating to the 2023 and 2022 calendar years. Earnings and profits, which determine the taxability of dividends to stockholders, differs from net income reported for financial statement purposes due to various items, including timing differences related to impairment charges, depreciation methods and carrying values. NOTE 9— STOCKHOLDERS' EQUITY Common Stock Dividend Distribution During the years ended December 31, 2023 and 2022, the Company declared an aggregate of $ 1.00 and $ 0.98 per share in cash dividends, respectively. Stock Based Compensation In 2022, the Company's board of directors adopted and the stockholders' approved the 2022 Incentive Plan (the "2022 Plan"). This plan permits the Company to grant: (i) stock options, restricted stock, restricted stock units, performance shares awards and any one or more of the foregoing, up to a maximum of 1,000,000 shares; and (ii) cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards. Each of the Company's Amended and Restated 2020 Incentive Plan (the "2020 Plan") and the Amended and Restated 2018 Incentive Plan (the "2018 Plan"; and together with the 2020 Plan, the "Prior Plans") authorized the Company to grant up to 1,000,000 and 600,000 , respectively, of shares of common stock pursuant to the same type of awards available under the 2022 Plan. No further awards may be granted pursuant to the Prior Plans. F-22 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) Incentive Plan 2022 Plan 2020 Plan 2018 Plan Maximum shares 1,000,000 1,000,000 600,000 Restricted shares issued ( 163,914 ) ( 475,747 ) ( 459,495 ) RSUs issued ( 427,459 ) ( 210,375 ) — Restricted shares and RSUs forfeited 2,861 2,303 1,000 Expired shares — ( 316,181 ) ( 141,505 ) Remaining shares available to be issued 411,488 (1) — — (1) Excludes 166,439 shares of restricted shares issued in January 2024. Restricted Stock In January 2023 and January 2022, the Company granted shares of restricted stock pursuant to the 2022 Plan and 2020 Plan. The shares of restricted stock generally vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. For financial statement purposes, the restricted stock is not included in the outstanding shares shown on the consolidated balance sheets until they vest, but are included in the basic and diluted earnings per share computation. The weighted average remaining vesting period of the outstanding restricted stock is 2.1 years. Subsequent to December 31, 2023, the Company granted 166,439 stock of restricted stock pursuant to the 2022 Plan. The tables below presents information regarding the changes in the number of shares of restricted stock outstanding under the Company's equity incentive plans, compensation expense and unearned compensation for the periods indicated (dollars in thousands): Year Ended December 31, Restricted Stock Grants: 2023 2022 Unvested at beginning of the year 934,092 922,619 Grants 163,914 158,973 Forfeitures ( 1,670 ) ( 250 ) Vested during the year ( 144,497 ) ( 147,250 ) Unvested at the end of the year 951,839 934,092 Amounts charged to compensation expense $ 3,360 $ 2,978 Unearned compensation at period end $ 7,484 $ 7,728 F-23 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) Restricted Stock Units In June 2023 and June 2022, the Company issued restricted stock units (the "RSUs") to acquire shares of common stock. The RSUs granted entitle the recipients, subject to continued service during the applicable performance period, to (i) shares of common stock, (the "TSR Award"), based on achieving, during the three-year performance period (the "Measurement Period"), specified levels in compounded annual growth rate ("CAGR") in total stockholder return (“TSR”), and (ii) shares of common stock based on achieving, during the Measurement Period, specified levels in CAGR in adjusted funds from operations (the "AFFO Award"), in each case as determined pursuant to the award agreement. In addition, with respect to each of the RSUs granted in 2023 and 2022, additional shares (the "Peer Group Adjustment") may be added to or subtracted from the TSR Award based on attaining or failing to attain, as the case may be, during the Measurement Period, of specified levels of CAGR in TSR in comparison to the REITs that comprise, with specified exceptions, the FTSE NAREIT Equity Apartment Index. The RSU recipients also received dividend equivalent rights entitling them to an amount equal to cash dividends they would have received with respect to the shares of common stock underlying their RSUs as if the underlying shares were outstanding during the Measurement Period, if, when, and to the extent, the related RSUs vest. The shares underlying the RSUs are not participating securities but are contingently issuable shares. The tables below presents activity and changes in the number of RSUs under the Company's equity incentive plans, compensation expense and unearned compensation for the periods indicated (dollars in thousands): Year Ended December 31, 2023 2022 RSUs: Unvested units at beginning of year 420,739 210,375 Grants - TSR Awards 95,550 94,431 Grants - TSR Peer group adjustment 23,890 23,608 Grants - AFFO Awards 95,550 94,431 Total RSUs granted in applicable year 214,990 212,470 Forfeitures ( 1,239 ) ( 2,106 ) Total unvested RSUs at end of year 634,490 420,739 Amounts charged to compensation expense $ 1,408 $ 1,508 Unearned compensation at period end $ 1,999 $ 4,269 For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to assist management in determining fair value. The Monte Carlo valuation consisted of computing the grant date fair value of the awards using the Company's simulated stock price. For these TSR awards, the per unit of share fair value was estimated using the following assumptions: Award Year Expected Life ( yrs) Dividend Rate Risk-Free Interest Rate Expected Price Volatility 2023 3 5.08 % 4.42 % to 5.28 % 28.99 % to 37.97 % 2022 3 4.57 % 2.23 % to 3.11 % 35.60 % to 47.40 % For the AFFO Awards granted, fair value is based on the market value on the date of grant. Expense is not recognized on RSUs which the Company does not expect to vest because the performance conditions are not expected to be satisfied. F-24 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) Performance assumptions are re-evaluated quarterly.The total amount recorded at the grant date as deferred compensation with respect to the AFFO awards granted in 2023 and 2022 was $ 1,879,000 and $ 2,068,000 respectively. The following table reflects the compensation expense recorded for all incentive plans (dollars in thousands): Year Ended December 31, 2023 2022 Restricted stock $ 3,360 $ 2,978 RSUs 1,408 1,508 Total compensation $ 4,768 $ 4,486 Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands): Year Ended December 31, 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 4,015 $ 50,099 Deduct (earnings) attributable to non-controlling interests ( 142 ) ( 144 ) Deduct (earnings) allocated to unvested restricted stock ( 953 ) ( 2,472 ) Net income available for common stockholders: basic and diluted $ 2,920 $ 47,483 Denominator for basic earnings per share: Weighted average number of common shares outstanding 17,918,270 17,793,035 Effect of dilutive securities: RSUs 30,006 59,916 Denominator for diluted earnings per share: Weighted average number of shares 17,948,276 17,852,951 Earnings per common share, basic $ 0.16 $ 2.67 Earnings per common share, diluted $ 0.16 $ 2.66 Equity Distribution Agreements Effective as of May 12, 2023, the Company (i) terminated the equity distribution agreements dated March 18, 2022 and (ii) entered into equity distribution agreements with three sales agents to sell up to $ 40,000,000 of shares of its common stock from time-to-time in an at-the-market offering. During the year ended December 31, 2023, the Company did not sell any shares. During the year ended December 31, 2022 the Company sold 347,815 shares, for an aggregate sales price of $ 7,870,000 , before commissions and fees of $ 98,000 . At December 31, 2023, the Company is authorized to sell an aggregate of $ 32,131,000 of shares pursuant to the equity distribution agreements. Share Repurchase Pursuant to the Company’s repurchase program(s), as amended from time to time, the Company is authorized to repurchase shares of its common stock through open-market transactions, privately negotiated transactions, or otherwise. F-25 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) 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 and December 2023, the Board of Directors, replenished the authorization by approximately $ 6,750,000 and $ 7,230,000 , respectively, to increase the repurchase authorization as of such date to $ 10,000,000 of shares. During the year ended December 31,2023, the Company repurchased 779,423 shares of common stock for total consideration of approximately $ 14,397,000 , net of commissions of $ 44,000 . As of December 31, 2023, the Company is authorized to repurchase approximately $ 9,584,000 of shares of common stock. From January 1, 2024 through March 1, 2024, the Company repurchased 123,061 shares of common stock at an average price per share of $ 18.43 for an aggregate cost of $ 2,268,000 . At March 1, 2024, the Company is authorized to repurchase up to $ 7,316,000 of shares of common stock. During the twelve months ended December 31, 2022, the Company did not repurchase any shares of common stock. Dividend Reinvestment Plan The Dividend Reinvestment Plan (the “DRP”), among other things, provides stockholders with the opportunity to reinvest all or a portion of their cash dividends paid on the Company’s common stock in additional shares of its common stock, at a discount, determined in the Company’s sole discretion, of up to 5 % from the market price for the common stock (as such price is calculated pursuant to the DRP). The discount from the market price as of December 31, 2023 was 3 %. In the year ended December 31, 2023 and 2022, the Company issued 165,228 and 62,360 shares in lieu of cash dividends of $ 3,034,000 and $ 1,279,000 , respectively. In March 2024, the Board of Directors reauthorized the DRP. NOTE 10— RELATED PARTY TRANSACTIONS The Company has retained certain of its part time executive officers and Fredric H. Gould, a director, to provide, among other things, the following services: participating in the Company's multi-family property analysis and approval process (which includes service on an investment committee), providing investment advice, and long-term planning and consulting with executives and employees with respect to other business matters, as required. The aggregate fees paid in 2023 and 2022 for these services were $ 1,541,000 and $ 1,468,000 , respectively. Management of certain properties owned by the Company and certain joint venture properties is provided by Majestic Property Management Corp. ("Majestic Property"), a company wholly owned by Fredric H. Gould, under renewable year-to-year agreements. Certain of the Company's officers and directors are also officers and directors of Majestic Property. Majestic Property provides real property management, real estate brokerage and construction supervision services for these properties. For the years ended December 31, 2023 and 2022, fees for these services were $ 34,000 and $ 36,000 , respectively. Pursuant to a shared services agreement between the Company and several affiliated entities, including Gould Investors L.P., the owner and operator of a diversified portfolio of real estate and other assets and One Liberty Properties, Inc., a NYSE listed equity REIT ("One Liberty"), the (i) services of the part time personnel that perform certain executive, administrative, legal, accounting and clerical functions and (ii) certain facilities and other resources, are provided to the Company. The allocation of expenses for the facilities, personnel and other resources shared by, among others, the Company and Gould Investors, is computed in accordance with such agreement and is included in general and administrative expense on the consolidated statements of operations. During the years ended December 31, 2023 and 2022, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 642,000 and $ 739,000 , respectively. As of December 31, 2023 and 2022, $ 142,000 and $ 126,000 , res pectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets. At December 31, 2023, Gould Investors owned approximately 19.1 % of BRT’s outstanding common stock. Certain of the Company's officers and directors are also officers and directors of One Liberty and Georgetown Partners, LLC, the managing general partner of Gould Investors. The Company obtains certain insurance in conjunction with Gould Investors and reimburses Gould Investors for the Company's share of the insurance cost. Insurance reimbursements to Gould Investors for the years ended December 31, 2023 and 2022 were $ 22,000 and $ 67,000 , respectively. F-26 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 11— FAIR VALUE OF FINANCIAL INSTRUMENTS The Company estimates the fair value of financial assets and liabilities based on the framework established in fair value accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: • Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets and liabilities in active markets • Level 2— inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3— inputs to the valuation methodology are unobservable and significant to fair value. The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not reported at fair value on the consolidated balance sheets: Cash and cash equivalents, restricted cash, accounts receivable (included in other assets), accounts payable and accrued liabilities: The carrying amounts reported on the balance sheets for these instruments approximate their fair value due to the short term nature of these accounts. Junior subordinated notes: At December 31, 2023, and 2022, the estimated fair value of the Company's junior subordinated notes is less than their carrying value by approximately $ 3,613,000 and $ 4,695,000 , respectively, based on market interest rates of 8.60 % and 7.91 %, respectively. Mortgages payable: At December 31, 2023, the estimated fair value of the Company's mortgages payable is less than their carrying value by approximately $ 34,195,000 , assuming market interest rates between 4.88 % and 6.23 %. At December 31, 2022, the estimated fair value was less than the carrying value by $ 37,500,000 , assuming market interest rates between 5.18 % and 6.23 %. Market interest rates were determined using current financing transaction information provided by third party institutions. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value assumptions. The fair values of debt obligations are considered to be Level 2 valuations within the fair value hierarchy. Financial Instruments Measured at Fair Value The Company's fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, there is a fair value hierarchy that distinguishes between markets participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions. Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other "observable" market inputs and Level 3 assets/liabilities are valued based significantly on "unobservable" market inputs. The Company does not currently own any financial instruments that are classified as Level 3. At December 31, 2023 and 2022, the Company had no financial assets or liabilities measured at fair value. Long-lived assets The Company reviews its investments in real estate when events or circumstances change indicating the carry value of the investment may not be recoverable. In the evaluation of an investment for impairment, many factors are considered, including estimated current and expected cash flows from the asset during the projected hold period, costs necessary to extend the life of the asset, expected capitalization rates, and projected stabilized net operating income and the ability to hold or dispose of the asset in the ordinary course of business. F-27 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 12— COMMITMENT AND CONTINGENCIES From time to time, the Company and/or its subsidiaries are parties to legal proceedings that arise in the ordinary course of business, and in particular, personal injury claims involving the operations of the Company's properties. Although management believes that the primary and umbrella insurance coverage maintained with respect to such properties is sufficient to cover claims for compensatory damages, many of these personal injury claims also assert claims for exemplary ( i.e punitive) damages. Generally, insurance does not cover claims for punitive or exemplary damages. The Company was one of several defendants in a wrongful death lawsuit which was settled. In connection with the settlement, the Company paid $ 325,000 which payment was funded by the Company's insurance carrier. The Company maintains a non-contributory defined contribution pension plan covering eligible employees and officers. Contributions by the Company are made through a money purchase plan and the amounts of such contributions are based upon a percent of qualified employees' total salary as defined therein. Pension expense approximated $ 473,000 and $ 424,000 during the years ended December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, $ 73,000 and $ 125,000 , respectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets. At December 31, 2023, the Company is the carve-out guarantor with respect to mortgage debt in principal amount of $ 419,349,000 at 18 multi-family properties. F-28 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 13— QUARTERLY FINANCIAL DATA (Unaudited) 2023 1st Quarter Jan - March 2nd Quarter April - June 3rd Quarter July - September 4th Quarter Oct - Dec Total For Year Revenues: Rental and other revenue $ 22,939 $ 23,255 $ 23,510 $ 23,365 $ 93,069 Other income — 63 342 143 548 Total revenues 22,939 23,318 23,852 23,508 93,617 Expenses: Real estate operating expenses 10,434 10,548 10,583 10,256 41,821 Interest expense 5,483 5,513 5,581 5,584 22,161 General and administrative 4,055 3,848 4,017 3,513 15,433 Depreciation 8,008 7,543 6,544 6,389 28,484 Total expenses 27,980 27,452 26,725 25,742 107,899 Total revenues less total expenses ( 5,041 ) ( 4,134 ) ( 2,873 ) ( 2,234 ) ( 14,282 ) Equity in earnings of unconsolidated joint ventures 815 464 426 588 2,293 Equity in earnings from sale of unconsolidated joint venture properties — 14,744 — — 14,744 Gain on sale of real estate — — 604 — 604 Casualty loss — — — ( 323 ) ( 323 ) Insurance recovery of casualty loss — 215 261 317 793 Gain on insurance recoveries 240 — — — 240 Income (loss) income from continuing operations ( 3,986 ) 11,289 ( 1,582 ) ( 1,652 ) 4,069 Provision for taxes 76 51 ( 122 ) 49 54 Net (loss) income from continuing operations, net of taxes ( 4,062 ) 11,238 ( 1,460 ) ( 1,701 ) 4,015 Income attributable to non-controlling interests ( 36 ) ( 36 ) ( 34 ) ( 36 ) ( 142 ) Net (loss) income attributable to common stockholders $ ( 4,098 ) $ 11,202 $ ( 1,494 ) $ ( 1,737 ) 3,873 Basic and diluted and per share amounts attributable to common stockholders Basic (loss) income per share $ ( 0.21 ) $ 0.59 $ ( 0.08 ) $ ( 0.11 ) $ 0.16 Diluted (loss) income per share $ ( 0.21 ) $ 0.58 $ ( 0.08 ) $ ( 0.11 ) $ 0.16 F-29 Table of Contents Ind e x BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 13—QUARTERLY FINANCIAL DATA (Unaudited) (Continued) 2022 1st Quarter Jan - March 2nd Quarter April - June 3rd Quarter July - September 4th Quarter Oct - Dec Total For Year Revenues: Rental and other revenue $ 11,430 $ 14,683 $ 21,691 $ 22,711 $ 70,515 Other income 4 2 6 — 12 Total revenues 11,434 14,685 21,697 22,711 70,527 Expenses: Real estate operating expenses 4,753 6,348 9,195 10,262 30,558 Interest expense 2,021 2,912 5,061 5,520 15,514 General and administrative 3,633 3,533 3,673 3,815 14,654 Impairment charge — — — — — Depreciation 3,606 5,010 8,165 8,031 24,812 Total expenses 14,013 17,803 26,094 27,628 85,538 Total revenues less total expenses ( 2,579 ) ( 3,118 ) ( 4,397 ) ( 4,917 ) ( 15,011 ) Equity in earnings (loss) of unconsolidated joint ventures 1,230 ( 50 ) 135 580 1,895 Equity in earnings from sale of unconsolidated joint venture properties 12,961 40,098 11,472 — 64,531 Gain on sale of real estate 6 — — — 6 Casualty loss — — — ( 850 ) ( 850 ) Insurance recovery of casualty loss — — — 850 850 Gain on insurance recoveries — — 62 — 62 Loss on extinguishment of debt — ( 563 ) — — ( 563 ) Income (loss) from continuing operations 11,618 36,367 7,272 ( 4,337 ) 50,920 Provision (benefit) for taxes 74 724 178 ( 155 ) 821 Income (loss) from continuing operations, net of taxes 11,544 35,643 7,094 ( 4,182 ) 50,099 Income attributable to non-controlling interests ( 36 ) ( 36 ) ( 35 ) ( 37 ) ( 144 ) Net income (loss) income attributable to common stockholders $ 11,508 $ 35,607 $ 7,059 $ ( 4,219 ) 49,955 Basic and per share amounts attributable to common stockholders Basic income (loss) per share $ 0.62 $ 1.91 $ 0.37 $ ( 0.22 ) $ 2.67 Diluted income (loss) per share $ 0.62 $ 1.91 $ 0.37 $ ( 0.22 ) $ 2.66 NOTE 14— SUBSEQUENT EVENTS Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of December 31, 2023 that warrant additional disclosure have been included in the notes to the consolidated financial statements. F-30 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (Dollars in thousands) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount At Which Carried at December 31, 2023 Depreciation Life Description Encumbrances Land Buildings and Improvements Land Improvements Land Buildings and Improvements Total (a) Accumulated Depreciation Date of Construction Date Acquired Commercial Yonkers, NY. $ — — $ 4,000 — $ 320 — $ 4,320 $ 4,320 $ 2,529 (b) Aug-2000 39 years Multi-Family Residential North Charleston, SC 21,173 2,435 18,970 — 1,928 2,435 20,897 23,332 8,253 2010 Oct-2012 30 years Decatur, GA — 1,698 8,676 — 3,091 1,698 11,767 13,465 4,671 1954 Nov-2012 30 years Columbus, OH 8,473 1,372 12,678 — 913 1,372 13,591 14,963 4,963 1999 Nov-2013 30 years Pensacola, FL — 2,758 25,192 — 2,051 2,758 27,243 30,001 8,616 2008 Dec-2014 30 years San Marcos, TX 15,951 2,303 17,605 — 512 2,303 18,117 20,420 3,206 2014 Oct-2019 30 years LaGrange, GA — 832 21,969 — 1183 832 23,152 23,984 6,676 2009 Nov-2015 30 years Fredericksburg, VA 25,486 7,540 33,196 — 1,552 7,540 34,748 42,288 7,511 2005 Jul-2018 30 years Nashville, TN 52,000 6,172 77,532 — 1,088 6,172 78,620 84,792 7,167 2017 Sept -2021 30 years Greenville, SC 26,392 4,033 34,052 — 761 4,033 34,813 38,846 3,023 1998 Oct-2021 30 years Nashville, TN 37,680 9,679 29,114 — 2,435 9,679 31,549 41,228 2,545 1985 Dec-2021 30 years San Antonio, TX 27,000 3,336 33,437 — 421 3,336 33,858 37,194 2,467 2018 March-2022 30 years Creve Coeur, MO 29,700 5,466 30,826 — 250 5,466 31,076 36,542 2,148 2019 April-2022 30 years Tallahassee, FL 21,078 3,398 27,167 — 482 3,398 27,649 31,047 1,858 1997 May-2022 30 years Huntsville, AL 18,952 1,959 20,079 — 924 1,959 21,003 22,962 1,334 1992 May-2022 30 years Boerne, TX 7,712 1,289 12,852 — 523 1,289 13,375 14,664 809 2008 May-2022 30 years Macon, GA 10,045 2,866 16,423 — 148 2,866 16,571 19,437 977 1989 June-2022 30 years Southaven, MS 26,701 3,646 45,554 — 1,335 3,646 46,889 50,535 2,855 2003 July-2022 30 years Southaven, MS 29,300 3,847 46,452 — 1,612 3,847 48,064 51,911 2,947 2006 July-2022 30 years Wilmington, NC 23,160 3,468 37,311 — 1,216 3,468 38,527 41,995 2,322 2003 July-2022 30 years Trussville, AL 32,250 4,095 42,943 — 547 4,095 43,490 47,585 2,354 2007 July-2022 30 years Madison, AL 14,769 2,054 22,023 — 747 2,054 22,770 24,824 1,268 1992 Aug-2022 30 years Total $ 427,822 $ 74,246 $ 618,051 $ — $ 24,039 $ 74,246 $ 642,089 $ 716,335 $ 80,499 F-31 Table of Contents Index BRT REALTY TRUST AND SUBSIDIARIES SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (Dollars in thousands) Notes to the schedule: (a) Total real estate properties $ 716,335 Less: Accumulated depreciation ( 80,499 ) Net real estate properties $ 635,836 (b) Information not readily obtainable. A reconciliation of real estate properties is as follows: 2023 2022 Balance at beginning of year $ 651,603 $ 297,929 Additions: Acquisitions — 370,513 Capital improvements 9,643 6,295 9,643 376,808 Deductions: Sales 106 4,379 Depreciation 25,304 18,755 25,410 23,134 Balance at end of year $ 635,836 $ 651,603 F-32