BRT Apartments Corp. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q (the "Quarterly Report"), together with other statements and information publicly disseminated by us, contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning matters that are not historical facts. Forward looking statements are generally identifiable by use of words such as "may," "will," "will likely result," "shall," "should," "could," "believe," "expect," "intend," "anticipate," "estimate," "project," "apparent," "experiencing," or similar expressions or variations thereof. Forward-looking statements contained in this Quarterly Report are based on our beliefs, assumptions and expectations of our future performance taking into account the information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors which may cause actual results to vary from our forward-looking statements include, but are not limited to: • inability to generate sufficient cash flows due to unfavorable economic and market conditions ( e.g. , inflation, volatile interest rates and the possibility of a recession), changes in supply and/or demand, competition, uninsured losses, changes in tax and housing laws or other factors; • adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in our significant markets, barriers of entry into new markets which we may seek to enter in the future, limitations on our ability to increase or collect rental rates, competition, our ability to identify and consummate attractive acquisitions and dispositions on favorable terms, and our ability to reinvest sale proceeds in a manner that generates favorable returns; • general and local real estate conditions, including any changes in the value of our real estate; • decreasing rental rates or increasing vacancy rates; • challenges in acquiring properties (including challenges in buying properties directly without the participation of joint venture partners and the limited number of multi-family property acquisition opportunities available to us), which acquisitions may not be completed or may not produce the cash flows or income expected; • the competitive environment in which we operate, including competition that could adversely affect our ability to acquire properties and/or limit our ability to lease apartments or increase or maintain rental rates; • exposure to risks inherent in investments in a single industry and sector; • the concentration of our multi-family properties in the Southeastern United States and Texas, which makes us more susceptible to adverse developments in those markets; • increases in expenses over which we have limited control, such as real estate taxes, insurance costs and utilities, due to inflation and other factors; • impairment in the value of real estate we own; • failure of property managers to properly manage properties; • accessibility of debt and equity capital markets; • disagreements with, or misconduct by, joint venture partners; • inability to obtain financing at favorable rates, if at all, or refinance existing debt as it matures due to the level and volatility of interest or capitalization rates or capital market conditions • extreme weather and natural disasters such as hurricanes, tornadoes and floods; 18 Table of Content • lack of or insufficient amounts of insurance to cover, among other things, losses from catastrophes; • risks associated with acquiring value-add multi-family properties, which involves greater risks than more conservative approaches; • the condition of Fannie Mae or Freddie Mac, which could adversely impact us; • changes in Federal, state and local governmental laws and regulations, including laws and regulations relating to taxes and real estate and related investments; • our failure to comply with laws, including those requiring access to our properties by disabled persons, which could result in substantial costs; • board determinations as to timing and payment of dividends, if any, and our ability or willingness to pay future dividends; • our ability to satisfy the complex rules required to maintain our qualification as a REIT for federal income tax purposes; • possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us or a subsidiary owned by us or acquired by us; • our dependence on information systems and risks associated with breaches of such systems; • disease outbreaks and other public health events, and measures that are taken by federal, state, and local governmental authorities in response to such outbreaks and events; • impact of climate change on our properties or operations; • risks associated with the stock ownership restrictions of the Internal Revenue Code of 1986, as amended (the "Code") for REITs and the stock ownership limit imposed by our charter; and • the other factors described in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report") including those set forth in such report under the captions "Item 1. Business," "Item 1A. Risk Factors," and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" . We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Except to the extent otherwise required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the filing of this report or to reflect the occurrence of unanticipated events thereafter. Overview We are an internally managed real estate investment trust, also known as a REIT, that owns, operates and, to a lesser extent, holds interests in joint ventures that own and operate multi-family properties. At March 31, 2024, we: (i) wholly-own 21 multi-family properties with an aggregate of 5,420 units and a carrying value of $629.2 million; (ii) have ownership interests, through unconsolidated entities, in eight multi-family properties with 2,527 units and a carrying value of $32.9 million; and (iii) own other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $1.8 million. The 29 properties are located in 11 states; most of the properties are located in the Southeast United States and Texas. 19 Table of Content Challenges and Uncertainties as a Result of the Uncertain Economic Environment; Pursuit of Joint Venture Acquisition and Alternative Investment Opportunities As more fully described in (i) our Annual Report, and in particular, the sections thereof entitled " Risk Factors " and " Management's Discussion and Analysis of Financial Condition and Results of Operations" and (ii) below, we face challenges ( e.g ., inflation, rising interest rates and decelerating increases in rental rates) due to the uncertain economic environment which may limit our ability or willingness (i) to acquire properties, (ii) grow rental income or (iii) control our real estate operating expenses, some of which, such as real estate tax and insurance expense, we have a very limited ability to control. In light of the challenging acquisition environment and the limited funds available to us to acquire properties, we may, in the near term, pursue (i) the acquisition of multi-family properties through joint ventures and /or (ii) alternative investments in the multi-family property arena, such as rescue capital, which includes preferred equity investments ( e.g., an investment entitling the investor to a fixed rate of return prior to distributions to more junior investors) or bridge loans ( e.g. , a loan secured by a first mortgage on the subject property). We do not anticipate that in the near term, these type of investments(other than joint ventures already included in our portfolio), will constitute a significant part of our portfolio. We can provide no assurance that we will pursue such investments or that if we do, such investments will be profitable for us. 20 Results of Operations Three months ended March 31, 2024 compared to three months ended March 31, 2023 . As used herein, the term "same store properties" refers to operating properties that were wholly owned for the entirety of the periods presented. For the three months ended March 31, 2024 and 2023, all of the properties in our consolidated portfolio are same store properties. Revenues The following table compares our revenues for the periods indicated: Three Months Ended March 31, (Dollars in thousands): 2024 2023 Increase (Decrease) % Change Rental and other revenue from real estate properties $ 23,298 $ 22,939 $ 359 1.6 % Interest and other income 105 — 105 N/M Total revenues $ 23,403 $ 22,939 $ 464 2.0 % Rental and other revenue from real estate properties The change was due to an increase of $589,000 from same store properties primarily due to an increase in rental rates across most of the portfolio, offset by a $241,000 decrease due to a decline in occupancy rates across most of the portfolio. Other income The increase in the current three month period ended March 31, 2024, is primarily due to the impact of increased interest rates on our cash balances, which is invested primarily in short term US Treasury bills. Expenses The following table compares our expenses for the periods indicated: Three Months Ended March 31, (Dollars in thousands) 2024 2023 Increase (Decrease) % Change Real estate operating expenses $ 10,579 $ 10,434 $ 145 1.4 % Interest expense 5,523 5,483 40 0.7 % General and administrative 4,152 4,055 97 2.4 % Depreciation and amortization 6,435 8,008 (1,573) (19.6) % Total expenses $ 26,689 $ 27,980 $ (1,291) (4.6) % Real estate operating expense. The change is due to the following increases: • $156,000 from same store properties, including: – $171,000 due to increased real estate tax accruals- we anticipate that these accruals through the balance of 2024, will be similarly higher than such accruals in 2023; and – $100,000 of increased costs across several other expenses categories, including payroll, insurance and leasing and advertising expense. This increase was offset by a decline in repairs and maintenance due to the inclusion, in the corresponding period of the prior year, of $116,000 in expenses related to the December 2022 blizzard. 21 Table of Content Depreciation and amortization The decrease is due primarily to a $1.6 million decline in depreciation related to lease intangibles from properties where we purchased our partner's interests in 2022. Equity in Earnings of Unconsolidated Joint Ventures Equity in earnings from unconsolidated joint ventures declined to $228,000 for the three months ending March 31, 2024 from $815,000 for the three months ended March 31, 2023. The decline is due to the following: • $231,000 in charges from our Stono Oaks property which was previously in development. The property has been placed in service. Accordingly, interest which previously had been capitalized is now being expensed and the property is also now recording depreciation expense; • the loss of income of $240,000 from the Chatham Property which was sold in May 2023; and • $109,000 recorded in the quarter ended March 31, 2023, related to income from joint venture properties sold prior to January 1, 2023. Gain on Insurance Recovery We received a $240,000 payment during the quarter ended March 31, 2023, representing the insurance carrier's final payment with respect to damage we sustained at The Woodland Apartments - Boerne, TX in 2021. There was no corresponding payment in the current three month period. Liquidity and Capital Resources We require funds to pay operating expenses and debt service obligations, acquire properties, make capital and other improvements, fund capital contributions, and pay dividends. Generally, our primary sources of capital and liquidity are the operations of our multi-family properties (including distributions from the operations of our multi-family joint ventures), mortgage debt financings and re-financings, the sale/issuance of shares of our common stock pursuant to our at-the-market equity distribution and dividend reinvestment programs, borrowings from our credit facility and our available cash. At May 1, 2024, our available liquidity was $78.5 million, including $18.5 million of cash and cash equivalents and $60 million available under our credit facility. We anticipate that from April 1, 2024 through December 31, 2027, our operating expenses, $119.5 million of mortgage amortization and interest expense (including $47.3 million from unconsolidated joint ventures), $15.4 million and $126.1 million of balloon payments with respect to mortgages maturing in 2025 and 2026, respectively (including $56.6 million maturing in 2026 from unconsolidated joint ventures), estimated capital expenditures (for the remainder of 2024 only) of $8.0 million, interest expense on our junior subordinated notes, estimated cash dividend payments of at least $69.9 million (assuming (i) the current quarterly dividend rate of $0.25 per share and (ii) 18.6 million shares outstanding), will be funded from cash generated from operations (including distributions from unconsolidated joint ventures), property sales, obtaining mortgage debt financing on unencumbered properties and, to the extent available, our credit facility. Our operating cash flow and available cash is insufficient to fully fund the $141.1 million of balloon payments due through 2026, and if we are unable to refinance such debt on acceptable terms, we may need to issue additional equity or dispose of properties, in each case on potentially unfavorable terms. Our ability to acquire additional multi-family properties and implement value-add projects is limited by our available cash and our ability to (i) draw on our credit facility, (ii) obtain, on acceptable terms, mortgage debt from lenders, and (iii) raise capital from the sale of our common stock. At March 31, 2024, we had mortgage debt of $677.2 million (including $250.3 million of mortgage principal debt of our unconsolidated subsidiaries). The mortgage debt at our: (i) consolidated properties had a weighted average interest rate of 4.02% and a weighted average remaining term to maturity of approximately 6.8 years, and (ii) at our unconsolidated subsidiaries had a weighted average interest rate of 4.36% and a remaining term to maturity of approximately 4.7 years. Capital improvements at (i) two unconsolidated multi-family properties will be funded by approximately $589,000 of restricted cash available at March 31, 2024 and the cash flow from operations at such properties and (ii) other properties will be funded from the cash flow from operations of such properties. 22 Table of Content Junior Subordinated Notes As of March 31, 2024, $37.4 million (excluding deferred costs of $252,000) in principal amount of our junior subordinated notes is outstanding. These notes mature in April 2036, contain limited covenants (including covenants prohibiting us from paying dividends or repurchasing capital stock if there is an event of default (as defined therein) on these notes), are redeemable at our option and bear an interest rate, which resets and is payable quarterly, at a rate of three-month term SOFR plus 250 basis points. At March 31, 2024 and 2023, the interest rate on these notes was 7.58% and 6.80%, respectively. The interest rate that will be in effect for the three months ending July 31, 2024 is 7.59%. Credit Facility Our credit facility with VNB New York, LLC, an affiliate of Valley National Bank (collectively, "VNB"), allows us to borrow, subject to compliance with borrowing base requirements and other conditions, up to $60 million, (i) for the acquisition of, and investment in, multi-family properties, (ii) to repay mortgage debt secured by multi-family properties and (iii) for Operating Expenses ( i.e. , working capital (including dividend payments) and operating expenses); provided, that not more than $25 million may be used for Operating Expenses. The credit facility is secured by cash accounts maintained by us at VNB (and we are required to maintain substantially all of our bank accounts at VNB), and the pledge of our interests in the entities that own the unencumbered multi-family properties used in calculating the borrowing base. The credit facility bears an annual interest rate, which resets monthly, equal to one-month term SOFR plus 250 basis points, with a floor of 6.00%. The interest rate in effect as of March 31, 2024 was 7.82%. There is an annual fee of 0.25% on the total amount committed by VNB and unused by us. The credit facility matures in September 2025. Net proceeds received from the sale, financing or refinancing of our properties are generally required to be used to repay amounts outstanding on the facility. As of May 1, 2024, there was no outstanding balance on the credit facility and $60 million is available to be borrowed thereunder. The interest rate in effect at May 1, 2024 is 7.83% The terms of the credit facility include certain restrictions and covenants which, among other things, limit the incurrence of liens, require that we maintain and include in the collateral securing the facility at least three unencumbered properties with an aggregate value(as calculated pursuant to the facility) of at least $75 million, and require compliance with financial ratios relating to, among other things, maintaining a minimum tangible net worth of $140 million, the minimum amount of debt service coverage with respect to the properties (and amounts drawn on the credit facility) used in calculating the borrowing base. Net proceeds received from the sale, financing or refinancing of wholly-owned properties are generally required to be used to repay amounts outstanding under the credit facility. At March 31, 2024, we were in compliance in all material respects with the requirements of the facility. Other Financing Sources and Arrangements At March 31, 2024, we are joint venture partners in unconsolidated joint ventures which own eight multi-family properties and the distributions to us from these joint venture properties of $1.4 million in the quarter ended March 31, 2024 contributed to our liquidity and cash flow. Further, we may be required to make significant capital contributions with respect to these properties. At March 31, 2024, these joint venture properties have a net-equity carrying value of $32.9 million and are subject to mortgage debt, which is not reflected on our consolidated balance sheet, of $250.3 million. Although BRT Apartments Corp. is not the obligor with respect to such mortgage debt, the loss of any of these properties due to mortgage foreclosure or similar proceedings would have a material adverse effect on our results of operations and financial condition. See note 7 to our consolidated financial statements. Cash Distribution Policy We have elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the “Code.” To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute to our stockholders within the time frames prescribed by the Code at least 90% of our ordinary taxable income. Management currently intends to maintain our REIT status. As a REIT, we generally will not be subject to corporate Federal income tax on taxable income we distribute to stockholders in accordance with the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify for Federal taxation as a REIT, we are subject to certain state and local taxes on our income and to Federal income and excise taxes on undistributed taxable income ( i.e ., taxable income not distributed in the amounts and in the time frames prescribed by the Code). 23 Table of Content On April 4, 2024, we paid a quarterly cash dividend of $0.25 per share to holders of record of our common stock as of the close of business on March 27, 2024. We carefully monitor our discretionary spending. Our largest recurring discretionary expenditure has been our quarterly dividend (which was $0.25 per share of common stock, or in the approximate amount of $4.7 million, for the most recent quarter). Each quarter, our board of directors evaluates the timing and amount of our dividend based on its assessment of, among other things, our short and long- term cash and liquidity requirements, prospects, debt maturities, projections of our REIT taxable income, net income, funds from operations, and adjusted funds from operations. Application of Critical Accounting Estimates A complete discussion of our critical accounting estimates is included in our Annual Report. There have been no changes in such estimates. 24 Table of Contents Funds from Operations, Adjusted Funds from Operations and Net Operating Income We disclose below funds from operations (“FFO”), adjusted funds from operations (“AFFO”) and net operating income ("NOI") because we believe that such metrics are a widely recognized and appropriate measure of the performance of an equity REIT. We compute FFO in accordance with the “White Paper on Funds From Operations” issued by the National Association of Real Estate Investment Trusts (“NAREIT”) and NAREIT’s related guidance. FFO is defined in the White Paper as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. In computing FFO, we do not add back to net income the amortization of costs in connection with our financing activities or depreciation of non-real estate assets. We compute AFFO by adjusting FFO for the loss of extinguishment of debt, our straight-line rent accruals, restricted stock and RSU compensation expense, fair value adjustment of mortgage debt, gain on insurance recovery, insurance recovery from casualty loss and deferred mortgage and debt costs ( including, in each case as applicable, from our share from our unconsolidated joint ventures). Since the NAREIT White Paper only provides guidelines for computing FFO, the computation of AFFO may vary from one REIT to another. We believe that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assumes that the carrying value of real estate assets diminishes predictably over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a performance measure that when compared year over year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions. FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our performance, management is careful to examine GAAP measures such as net income and cash flows from operating, investing and financing activities. 25 Table of Contents The tables below provides a reconciliation of net loss determined in accordance with GAAP to FFO and AFFO on a dollar and per share basis for each of the indicated periods (dollars in thousands, except per share amounts): Three Months Ended March 31, 2024 2023 GAAP Net loss attributable to common stockholders $ (3,171) $ (4,098) Add: depreciation and amortization of properties 6,435 8,008 Add: our share of depreciation in unconsolidated joint venture properties 1,367 1,376 Adjustments for non-controlling interests (4) (4) NAREIT Funds from operations attributable to common stockholders 4,627 5,282 Adjustments for: straight-line rent accruals 25 19 Add: amortization of restricted stock and RSU expense 1,342 1,410 Add: amortization of deferred mortgage and debt costs 271 252 Add: our share of deferred mortgage costs from unconsolidated joint venture properties 30 27 Add: amortization of fair value adjustment for mortgage debt 143 157 Less: gain on insurance recoveries — (240) Less: our share of gain on insurance recoveries from unconsolidated joint venture properties — (30) Adjustments for non-controlling interests (4) (3) Adjusted funds from operations attributable to common stockholders $ 6,434 $ 6,874 26 Table of Contents Three Months Ended March 31, 2024 2023 Net loss attributable to common stockholders $ (0.17) $ (0.21) Add: depreciation and amortization of properties 0.35 0.42 Add: our share of depreciation in unconsolidated joint venture properties 0.07 0.07 Adjustment for non-controlling interests — — NAREIT Funds from operations per diluted common share 0.25 0.28 Adjustments for: straight line rent accruals — — Add: amortization of restricted stock and RSU expense 0.08 0.07 Add: amortization of deferred mortgage and debt costs 0.01 0.01 Add: our share of deferred mortgage and debt costs from unconsolidated joint venture properties — — Add: amortization of fair value adjustment for mortgage debt 0.01 0.01 Less: gain on insurance recoveries — (0.01) Less: our share of gain on insurance recoveries from unconsolidated joint venture properties — — Adjustments for non-controlling interests — — Adjusted funds from operations per diluted common share $ 0.35 $ 0.36 Diluted shares outstanding for FFO and AFFO 18,579,691 19,137,577 Three Months Ended March 31, 2024 and 2023 FFO for the three months ended March 31, 2024 decreased from the corresponding quarter in the prior year primarily due to the sale by an unconsolidated joint venture of the Chatham property in May 2023, and the inclusion, in the three months ended March 31, 2023, of the gain on insurance recoveries. AFFO for the three months ended March 31, 2024 decreased from the corresponding period in the prior year, primarily due to the sale by an unconsolidated joint venture of the Chatham property in May 2023. Diluted per share FFO and AFFO were favorably impacted in the three months ended March 31, 2024 by a 558,000 decrease in the current quarter from the corresponding quarter in the prior year in the weighted average shares of common stock outstanding, primarily due to stock buybacks. See "- Results of Operations - Three Months Ended March 31, 2024 compared to three months ended March 31, 2023 ", for a discussion of these changes. 27 Table of Contents Net Operating Income, or NOI, is a non-GAAP measure of performance. NOI is used by our management and many investors to evaluate and compare the performance of our properties to other comparable properties, to determine trends at our properties and to determine the estimated fair value of our properties. The usefulness of NOI may be limited in that it does not take into account, among other things, general and administrative expense, interest expense, loss on extinguishment of debt, casualty losses, insurance recoveries and gains or losses as determined by GAAP. NOI is a property specific performance metric and does not measure our performance as a whole. We compute NOI, by adjusting net income (loss) to (a) add back (1) depreciation expense, (2) general and administrative expenses, (3) interest expense, (4) loss on extinguishment of debt, (5) equity in earnings (loss) from sale of unconsolidated joint venture properties, (6) provision for taxes, and (7) the impact of non-controlling interests, and (b) deduct (1) other income, (2) gain on sale of real estate, (3) insurance recovery of casualty loss, and (4) gain on insurance recoveries related to casualty loss. Other REIT’s may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REIT’s. We believe NOI provides an operating perspective not immediately apparent from GAAP operating income or net income (loss). NOI is one of the measures we use to evaluate our performance because it (i) measures the core operations of property performance by excluding corporate level expenses and other items unrelated to property operating performance and (ii) captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance. The following table provides a reconciliation of net income attributable to common stockholders as computed in accordance with GAAP to NOI of our consolidated properties for the periods presented (dollars in thousands): Three Months Ended March 31, 2024 2023 Variance GAAP Net loss attributable to common stockholders $ (3,171) $ (4,098) $ 927 Less: Other Income (105) — (105) Add: Interest expense 5,523 5,483 40 General and administrative 4,152 4,055 97 Depreciation and amortization 6,435 8,008 (1,573) Provision for taxes 78 76 2 Less: Gain on insurance recoveries — (240) 240 Adjust for: Equity in (earnings) loss of unconsolidated joint venture properties (228) (815) 587 Add: Net income attributable to non-controlling interests 35 36 (1) Net Operating Income $ 12,719 $ 12,505 $ 214 Less: Non-same store Net Operating Income 270 267 3 Same store Net Operating Income $ 12,449 $ 12,238 $ 211 For the three months ended March 31, 2024, NOI increased $ 214,000 from the corresponding period in 2023 primarily due to a $359,000 increase in rental revenue offset by a $145,000 increase in real estate operating expenses. See "-Results of Operations - Three Months Ended March 31, 2024 Compared to the Three Months ended March 31, 2023 " for a discussion of these changes. 28 Table of Contents