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Item 1. Financial Statements

2024-08-09 compared with 2024-05-08 · 132 added, 88 removed, 331 unchanged (40% of the section changed)

4 unchanged sentences

(Amounts in thousands, except per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(unaudited) (audited)

33 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Rental and other revenue from real estate properties $ 23,778 $ 23,255 $ 47,076 $ 46,194

1 unchanged sentence

Total revenues 23,862 23,318 47,265 46,257

Real estate operating expenses - including $ 9 and $ 6 to related parties

Real estate operating expenses - including $ 8 and $ 10 to related parties for the three months ended and $ 17 and $ 16 for the six months ended

10,846 10,548 21,425 20,982

Interest expense 5,500 5,513 11,023 10,996

General and administrative - including $ 182 and $ 173 to related parties

General and administrative - including $ 141 and $ 165 to related parties for the three months ended and $ 361 and $ 337 for the six months ended

3,813 3,848 7,965 7,903

Depreciation and amortization 6,466 7,543 12,901 15,551

2 unchanged sentences

Equity in earnings of unconsolidated joint ventures 389 464 617 1,279

Equity in earnings from sale of unconsolidated joint ventures properties — 14,744 — 14,744

Insurance recovery of casualty loss — 215 — 215

Gain on insurance recoveries — — — 240

Loss from continuing operations ( 3,058 ) ( 3,986 )

Income tax provision 78 76

Loss from continuing operations, net of taxes ( 3,136 ) ( 4,062 )

(Loss) income from continuing operations ( 2,374 ) 11,289 ( 5,432 ) 7,303

Income tax (benefit) provision ( 65 ) 51 13 127

(Loss) income from continuing operations, net of taxes ( 2,309 ) 11,238 ( 5,445 ) 7,176

Net income attributable to non-controlling interest ( 36 ) ( 36 ) ( 71 ) ( 72 )

Net loss attributable to common stockholders $ ( 3,171 ) $ ( 4,098 )

Net (loss) income attributable to common stockholders $ ( 2,345 ) $ 11,202 $ ( 5,516 ) $ 7,104

Weighted average number of shares of common stock outstanding:

Basic and diluted 17,625,577 18,064,301

Basic 17,737,452 18,155,062 17,681,514 18,110,508

Diluted 17,737,452 18,220,814 17,681,514 18,157,804

Per share amounts attributable to common stockholders:

Basic and diluted $ ( 0.17 ) $ ( 0.21 )

Basic $ ( 0.13 ) $ 0.59 $ ( 0.30 ) $ 0.37

Diluted $ ( 0.13 ) $ 0.58 $ ( 0.30 ) $ 0.37

See accompanying notes to consolidated financial statements.

15 unchanged sentences

Balances, March 31, 2024 $ 176 $ 267,276 $ ( 46,798 ) $ ( 40 ) $ 220,614

Distributions - common stock - $ 0.25 per share

— — ( 4,678 ) — ( 4,678 )

Restricted stock and restricted stock units vesting 1 ( 1 ) —

Compensation expense - restricted stock and restricted stock units — 1,090 — — 1,090

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

Shares issues through DRIP 1 946 — — 947

Shares repurchased ( 1 ) ( 929 ) — — ( 930 )

Net loss — — ( 2,345 ) 36 ( 2,309 )

Balances, June 30, 2024 $ 177 $ 268,382 $ ( 53,821 ) $ ( 64 ) $ 214,674

See accompanying notes to consolidated financial statements.

8 unchanged sentences

— — ( 4,847 ) — ( 4,847 )

Restricted stock vesting 2 ( 2 ) — — —

Restricted stock and restricted stock units vesting 2 ( 2 ) — — —

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

2 unchanged sentences

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

Distributions - common stock - $ 0.25 per share

— — ( 4,816 ) — ( 4,816 )

Compensation expense - restricted stock and restricted stock units — 1,193 — — 1,193

Distributions to non-controlling interests — — — ( 37 ) ( 37 )

Shares issued through DRIP — 670 — — 670

Shares repurchased ( 3 ) ( 5,833 ) — — ( 5,836 )

Net income — — 11,202 36 11,238

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

See accompanying notes to consolidated financial statements

3 unchanged sentences

(Dollars in Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net loss $ ( 3,136 ) $ ( 4,062 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net (loss) income $ ( 5,445 ) $ 7,176

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

Depreciation and amortization 12,901 15,551

1 unchanged sentence

Amortization of debt fair value adjustment 282 311

Amortization of deferred rent concessions ( 413 ) —

Amortization of restricted stock and restricted stock units 2,432 2,603

Equity in earnings of unconsolidated joint ventures ( 617 ) ( 1,279 )

Equity in earnings from sale of unconsolidated joint venture properties — ( 14,744 )

Increases and decreases from changes in other assets and liabilities:

5 unchanged sentences

Distributions from unconsolidated joint ventures 2,847 23,191

Contributions to unconsolidated joint ventures ( 166 ) ( 122 )

Net cash (used in) provided by investing activities ( 675 ) 18,245

9 unchanged sentences

Net cash used in financing activities ( 12,594 ) ( 14,092 )

Net increase in cash, cash equivalents, restricted cash and escrows:

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

( 5,675 ) 10,499

18 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

Note 1 – Organization and Background

3 unchanged sentences

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

At March 31, 2024, the Company:

(i) wholly owns 21 multi-family properties located in eleven states with an aggregate of 5,420 units and a carrying value of $ 629,190,000 ;

At June 30, 2024, the Company:

(i) wholly owns 21 multi-family properties located in 11 states with an aggregate of 5,420 units and a carrying value of $ 624,502,000 ;

(ii) has interests, through unconsolidated entities, in eight multi-family properties located in four states with an aggregate of 2,527 units with a carrying value of $ 32,178,000 ;

4 unchanged sentences

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

The results of operations for the three months ended March 31, 2024 and 2023, are not necessarily indicative of the results for the full year.

The results of operations for the three and six months ended June 30, 2024 and 2023, are not necessarily indicative of the results for the full year.

The consolidated audited balance sheet as of December 31, 2023, has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States ("GAAP").

23 unchanged sentences

Immaterial Error Correction

During the preparation of financial statements for the current period, it was determined that we were not correctly including the escrow accounts classified within other assets within cash flows from operating 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 escrows within Cash and Restricted Cash on the Statement of Cash Flows resulting in an increase in net cash from operating activities of $ 2,729,000 .

During the preparation of financial statements for the current period, it was determined that the Company was not correctly including the escrow accounts classified within other assets within cash flows from operating activities on the Consolidated Statements of Cash Flows.

As a result, the Company made an immaterial error correction to the prior period to reclassify the escrows within Cash and Restricted Cash on the Statement of Cash Flows resulting in a decrease in net cash from operating activities of $ 514,000 .

Note 3 - Equity

1 unchanged sentence

The Company has equity distribution agreements with three sales agents to sell up to $ 40,000,000 of its common stock from time-to-time in an at-the-market offering.

During the three months ended March 31, 2024 and 2023, the Company did not sell any shares.

During the three and six months ended June 30, 2024 and 2023, the Company did not sell any shares.

Common Stock Dividend Distribution

The Company declared a quarterly cash distribution of $ 0.25 per share, payable on April 4, 2024 to stockholders of record on March 27, 2024.

The Company declared a quarterly cash distribution of $ 0.25 per share, payable on July 9, 2024 to stockholders of record on June 25, 2024.

Dividend Reinvestment Plan

1 unchanged sentence

The discount from the market price is currently 3 %.

During the three months ended March 31, 2024, 50,951 shares were issued in lieu of cash dividends of $ 931,000 .

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

During the three and six months ended June 30, 2024, 57,901 and 108,852 shares were issued in lieu of cash dividends of $ 947,000 and $ 1,878,000 respectively.

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

Stock Based Compensation

In 2022, the Company's board of directors adopted, and the stockholders' approved, the 2022 Incentive Plan (the "2022 Plan").

In June 2024, the Company's stockholders approved the 2024 Incentive Plan (the "2024 Plan").

This plan permits the Company to grant:

1 unchanged sentence

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

As of March 31, 2024, 245,049 shares are available for issuance pursuant to awards under the 2022 Plan.

Restricted shares and awards to acquire 632,446 shares of common stock are outstanding under the 2020 Amended and Restated Incentive Plan ("2020 Plan") and the 2018 Amended and Restated Incentive Plan (collectively the "Prior Plans") and no further awards may be made pursuant to the Prior Plans.

As of June 30, 2024, (i) 1,000,000 shares are available for issuance pursuant to awards under the 2024 Plan and (ii) awards to acquire 1,387,398 shares of common stock ( i.e.

, 962,229 shares of restricted stock and awards ( i.e., restricted stock units) to acquire 425,169 shares under our pay for performance plans), are outstanding under the 2022 Amended and Restated Incentive Plan (the "2022 Plan"), the 2020 Amended and Restated Incentive Plan (the "2020 Plan"), and the 2018 Amended and Restated Incentive Plan (the "2018 Plan;

and together with the 2020 Plan and the 2022 Plan, the "Prior Plans").

No further awards may be made pursuant to the Prior Plans.

Restricted Stock Units

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

As of March 31, 2024 , an aggregate of 634,491 of unvested restricted stock units are outstanding pursuant to the 2022 Plan and Prior Plans.

conditions are satisfied at the vesting date, and (ii) an amount equal to the cash dividends that would have been paid during the three-year performance period with respect to the shares of common stock underlying the RSUs if, when, and to the extent, the related RSUs vest.

In July 2024, the Company issued restricted stock units (the "RSUs") to acquire up to 215,325 shares of common stock pursuant to the 2024 Plan.

As of June 30, 2024 , an aggregate of 425,169 of unvested restricted stock units are outstanding pursuant to the Prior Plans.

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

The shares underlying the RSUs are not participating securities but are contingently issuable shares.

At March 31, 2024, the conditions to the vesting and issuance of 123,384 shares of common stock subject to RSUs (of the 209,322 shares subject to RSUs granted in 2021 and the payout of $ 359,000 pursuant to the related dividend equivalent rights),had been satisfied, subject to approval of the compensation committee of the Company’s board of directors.

Such committee approved such issuance and payout on May 6, 2024 and it is anticipated that such shares will be issued in May 2024 .The balance of 85,938 RSUs granted in 2021 have been forfeited.

On May 6, 2024, the compensation committee of the Company's board of directors approved the vesting and issuance of 123,384 shares of common stock subject to RSUs (of the 209,322 shares subject to RSUs) granted in 2021 and the payout of $ 359,000 pursuant to the related dividend equivalent rights.

The balance of 85,938 RSUs granted in 2021 that did not vest have expired.

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

For the three months ended March 31, 2024 and 2023, the Company recorded $ 472,000 and $ 514,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the RSUs issued under the 2020 and 2022 Incentive Plans.

At March 31, 2024 and December 31, 2023, $ 1,527,000 and $ 1,999,000 of compensation expense, respectively, has been deferred and will be charged to expense over the remaining vesting periods.

For the three months ended June 30, 2024 and 2023, the Company recorded $ 231,000 and $ 369,000 , respectively and for the six months ended June 30, 2024 and 2023, the Company recorded $ 703,000 and $ 883,000 , respectively of compensation expense related to the amortization of unearned compensation with respect to the RSUs issued under the Prior Plans.

At June 30, 2024 and December 31, 2023, $ 1,296,000 and $ 1,999,000 of compensation expense, respectively, has been deferred and will be charged to expense over the remaining vesting periods.

Restricted Stock

In January 2024 and 2023, the Company granted 166,439 and 163,914 shares, respectively, of restricted stock pursuant to the 2022 Plan and 2020 Plan, respectively.

As of March 31, 2024 , an aggregate of 962,229 shares of unvested restricted stock are outstanding pursuant to the 2022 Plan and Prior Plans.

In January 2024, the Company granted 166,439 shares, of restricted stock pursuant to the 2022 Plan.

As of June 30, 2024 , an aggregate of 962,229 shares of unvested restricted stock are outstanding pursuant to the 2024 Plan and Prior Plans.

The shares of restricted stock vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier.

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

For the three months ended March 31, 2024 and 2023, the Company recorded $ 870,000 and $ 896,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards.

At March 31, 2024 and December 31, 2023, $ 9,703,000 and $ 7,484,000 , respectively, has been deferred as unearned compensation and will be charged to expense over the remaining vesting periods of these restricted stock awards.

For the three months ended June 30, 2024 and 2023, the Company recorded $ 859,000 and $ 824,000 , respectively and for the six months ended June 30, 2024 and 2023, the Company recorded $ 1,729,000 and $ 1,720,000 , of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards.

At June 30, 2024 and December 31, 2023, $ 8,844,000 and $ 7,484,000 , respectively, has been deferred as unearned compensation and will be charged to expense over the remaining vesting periods of these restricted stock awards.

The weighted average remaining vesting period of these shares of restricted stock is 2.5 years.

1 unchanged sentence

Pursuant to the Company’s repurchase program, 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.

During the three months ended March 31, 2024, the Company repurchased 123,061 shares of common stock, respectively, at an average price per share of $ 18.43 , for an aggregate cost of $ 2,267,000 .

As of March 31, 2024, the Company is authorized to repurchase up to $ 7,316,000 of shares through December 31, 2025.

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

During the three months ended June 30, 2024, the Company repurchased 53,619 shares of common stock at an average price per share of $ 17.34 for an aggregate cost of $ 930,000 .

During the six months ended June 30, 2024, the Company repurchased 176,680 shares of common stock at an average price of $ 18.10 for an aggregate cost of $ 3,198,000 .

As of June 30, 2024, the Company is authorized to repurchase up to $ 6,386,000 of shares through December 31, 2025.

During the three and six months ended June 30, 2023, the Company repurchased 309,153 shares of common stock at an average price per share of $ 18.87 for an aggregate cost of $ 5,836,000 .

Per Share Data

3 unchanged sentences

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue 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.

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 as of the end of the most recent quarter.

1 unchanged sentence

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Numerator for basic and diluted earnings per share:

Net loss $ ( 3,136 ) $ ( 4,062 )

Net (loss) income $ ( 2,309 ) $ 11,238 $ ( 5,445 ) $ 7,176

Deduct net income attributable to non-controlling interests ( 36 ) ( 36 ) ( 71 ) ( 72 )

Deduct (loss) allocated to unvested restricted stock ( 120 ) ( 561 ) ( 285 ) ( 349 )

Net loss available for common stockholders:

Net (loss) income available for common stockholders:

basic and diluted $ ( 2,465 ) $ 10,641 $ ( 5,801 ) $ 6,755

2 unchanged sentences

Effect of dilutive securities:

RSUs — 65,752 — 47,296

Denominator for diluted earnings per share:

7 unchanged sentences

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.

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 .

Lessee Accounting

2 unchanged sentences

There are no renewal options.

As of March 31, 2024, the remaining lease term is 21.3 years.

As of June 30, 2024, the remaining lease term is 21.0 years.

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

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

As of March 31, 2024, the remaining lease term, including renewal options deemed exercised, is 12.8 years.

As of March 31, 2024, the Company's Right of Use ("ROU") assets and lease liabilities were $ 2,138,000 and $ 2,280,000 , respectively.

As of June 30, 2024, the remaining lease term, including renewal options deemed exercised, is 12.5 years.

As of June 30, 2024, the Company's Right of Use ("ROU") assets and lease liabilities were $ 2,092,000 and $ 2,242,000 , respectively.

As of December 31, 2023, the Company's ROU assets and lease liabilities were $ 2,183,000 and $ 2,318,000 , respectively.

6 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Land $ 74,246 $ 74,246

6 unchanged sentences

December 31, 2023

Balance Improvements Depreciation March 31, 2024

Balance Improvements Depreciation June 30, 2024

Multi-family $ 634,045 $ 3,303 $ ( 12,846 ) $ 624,502

5 unchanged sentences

Note 7 – Investment in Unconsolidated Ventures

At March 31, 2024 and December 31, 2023, the Company held interests in unconsolidated joint ventures that own eight multi-family properties (the "Unconsolidated Properties"), respectively, and a property-in-development.

At June 30, 2024 and December 31, 2023, the Company held interests in unconsolidated joint ventures that own eight multi-family properties (the "Unconsolidated Properties"), one which was in development at December 31, 2023.

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Real estate properties, net of accumulated depreciation of $ 75,768 and $ 69,970

13 unchanged sentences

______________________________________________________

(1) Includes $ 12,715 and $ 46,508 of work -in-process related to the Stono Oaks development at March 31, 2024 and December 31, 2023 respectively.

(1) Includes $ 46,508 of work -in-process related to the Stono Oaks development at December 31, 2023.

As of June 30, 2024 this property has been placed in service.

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Land $ 46,331 $ 46,331

4 unchanged sentences

Total real estate properties, net $ 324,214 $ 275,874

At March 31, 2024 and December 31, 2023, the weighted average interest rate on the mortgages payable is 4.07 % and 4.32 %, respectively, and the weighted average remaining term to maturity is 4.8 years and 5.0 years, respectively.

At June 30, 2024 and December 31, 2023, the weighted average interest rate on the mortgages payable is 4.38 % and 4.32 %, respectively, and the weighted average remaining term to maturity is 4.4 years and 5.0 years, respectively.

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Rental and other revenue $ 11,294 $ 11,476 $ 21,918 $ 23,608

7 unchanged sentences

Gain on insurance recoveries — — — 65

Net (loss) income $ ( 475 ) $ 1,473

BRT's equity in earnings $ 228 $ 815

Gain on sale of real estate — 38,418 — 38,418

Loss on extinguishment of debt — ( 561 ) — ( 561 )

Net income (loss) $ 122 $ 39,251 $ ( 353 ) $ 40,724

BRT's equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 389 $ 15,208 $ 617 $ 16,023

Joint Venture Sale

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

The gain on the sale of this property was $ 38,418,000 and BRT's share of the gain was $ 14,744,000 .

In connection with the sale, mortgage debt of $ 25,405,000 with 4.98 years of remaining term to maturity and bearing an interest rate of 4.01 % was repaid and the joint venture incurred $ 561,000 from the loss on the extinguishment of debt, of which the Company's share was $ 212,000 .

Note 8 – Debt Obligations

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Mortgages payable $ 424,834 $ 426,436

4 unchanged sentences

__________________________________________

(1) Excludes $ 236 and $ 289 of deferred financing costs which are reflected in other assets at March 31, 2024 and December 31, 2023 respectively..

(1) Excludes $ 182 and $ 289 of deferred financing costs related to the credit facility which are reflected in other assets at June 30, 2024 and December 31, 2023 respectively.

Mortgages Payable

At March 31, 2024, the weighted average interest rate on the Company's mortgage payables was 4.02 % and the weighted average remaining term to maturity is 6.8 years.

For the three months ended March 31, 2024 and 2023, interest expense, which includes amortization of deferred financing costs, was $ 4,699,000 and $ 4,546,000 , respectively.

At June 30, 2024, the weighted average interest rate on the Company's mortgage payables was 4.02 % and the weighted average remaining term to maturity is 6.5 years.

For the three months ended June 30, 2024 and 2023, interest expense, which includes amortization of deferred financing costs, was $ 4,686,000 and $ 4,743,000 , respectively.

For the six months ended June 30, 2024 and 2023, interest expense, which includes amortization of deferred financing costs, was $ 9,385,000 and $ 9,289,000 , respectively.

Credit Facility

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

On July 9, 2024, the Company's credit facility, with an affiliate of Valley National Bank ("VNB"), was amended to, among other things, reduce the borrowing capacity from $ 60,000,000 to $ 40,000,000 , extend the facility's maturity from September 2025 to September 2027 and revise certain financial and other covenants.The facility allows the Company to borrow, subject to compliance with borrowing base requirements and other conditions, up to $ 40,000,000 .

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

1 unchanged sentence

The facility is secured by the cash available at VNB and the Company's pledge of the interests in the entities that own the properties, and matures in September 2027.

Note 8 – Debt Obligations (continued)

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

The interest rate in effect as of March 31, 2024 is 7.82 %.

The interest rate in effect as of June 30, 2024 is 7.83 %.

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

At March 31, 2024, the Company is in compliance in all material respects with its obligations under the facility.

At March 31, 2024 and December 31, 2023, there was no outstanding balance on the facility and at each such date, $ 60,000,000 was available to be borrowed.

Interest expense for the three months ended March 31, 2024 and 2023, was $ 92,000 and $ 300,000 , respectively and includes amortization of deferred financing cost and unused fess of $ 92,000 and $ 83,000 respectively.

The remaining deferred financing costs of $ 236,000 and $ 289,000 , are recorded on the Consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively.

At June 30, 2024, the Company is in compliance in all material respects with its obligations under the facility.

At June 30, 2024 and December 31, 2023, there was no outstanding balance on the facility and at each such date, $ 60,000,000 was available to be borrowed.

Interest expense, which includes amortization of deferred financing costs and unused fees, for the three months ended June 30, 2024 and 2023, was $ 92,000 and $ 91,000 , respectively.

Interest expense for the six months ended June 30, 2024 and 2023, which includes amortization of deferred financing costs and unused fees was $ 184,000 and $ 391,000 , respectively.

The remaining deferred financing costs of $ 182,000 and $ 289,000 , are recorded as Other Assets on the Consolidated balance sheets at June 30, 2024 and December 31, 2023, respectively.

Junior Subordinated Notes

At March 31, 2024 and December 31, 2023, the outstanding principal balance of the Company's junior subordinated notes was $ 37,400,000 , before deferred financing costs of $ 252,000 and $ 257,000 , respectively.

At June 30, 2024 and December 31, 2023, the outstanding principal balance of the Company's junior subordinated notes was $ 37,400,000 , before deferred financing costs of $ 247,000 and $ 257,000 , respectively.

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

The interest rate in effect at March 31, 2024 and 2023 was 7.69 % and 6.80 %, respectively.

The interest rate that will be in effect for the three months beginning May 1, 2024 is 7.59 %.

The notes mature April 30, 2036.

The interest rate in effect at June 30, 2024 and 2023 was 7.59 % and 7.30 %, respectively.

The interest rate that will be in effect for the three months beginning July 30, 2024 is 7.52 %.

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

Interest expense for the three months ended March 31, 2024 and 2023, which includes amortization of deferred financing costs, was $ 732,000 and $ 637,000 , respectively.

Interest expense for the three months ended June 30, 2024 and 2023, which includes amortization of deferred financing costs, was $ 722,000 and $ 679,000 , respectively.

Interest expense for the six months ended June 30, 2024 and 2023, which includes amortization of deferred financing costs, was $ 1,454,000 and $ 1,316,000 , respectively.

Note 9 – Related Party Transactions

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

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

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

The aggregate fees incurred for these services in each of the three months ended March 31, 2024 and 2023 were $ 405,000 and $ 385,000 , respectively.

The aggregate fees incurred for these services in each of the three months ended June 30, 2024 and 2023 were $ 405,000 and $ 385,000 , respectively and $ 810,000 and $ 770,000 for the six months ended June 30, 2024 and 2023, 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.

Certain of the Company's officers and directors are also officers and directors of Majestic Property.

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

These fees amounted to $ 9,000 and $ 6,000 for the three months ended March 31, 2024 and 2023.

Certain of the Company's officers and management directors are also officers and directors of Majestic Property.

Majestic Property may also provide real

estate brokerage and construction supervision services to these properties.

These fees amounted to $ 8,000 and $ 10,000 for the three months ended June 30, 2024 and 2023 and $ 17,000 and $ 16,000 for the six months ended June 30, 2024 and 2023, respectively.

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

("Gould Investors"), the owner and operator of a diversified portfolio of real estate and other assets, and One Liberty Properties, Inc., a NYSE listed equity REIT, (i) the 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 by other entities 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 three months ended March 31, 2024 and 2023, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 182,000 and $ 172,000 , respectively.

The allocation of expenses for the facilities, personnel and other resources shared by, among others, the Company and Gould Investors, is determined in accordance with such agreement and is included in general and administrative expense on the consolidated statements of operations.

During the three months ended June 30, 2024 and 2023, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 141,000 and $ 165,000 , respectively and $ 361,000 and $ 337,000 for the six months ended June 30, 2024 and 2023, respectively.

Gould and Matthew J.

14 unchanged sentences

Junior subordinated notes:

At March 31, 2024 and December 31, 2023, the estimated fair value of the notes is lower than their carrying value by approximately $ 3,577,000 and $ 3,613,000 , respectively, based on a market interest rate of 8.60 % and 8.60 %, respectively.

At June 30, 2024 and December 31, 2023, the estimated fair value of the notes is lower than their carrying value by approximately $ 3,540,000 and $ 3,613,000 , respectively, based on a market interest rate of 8.59 % and 8.60 %, respectively.

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

Mortgages payable:

At March 31, 2024, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $ 39,019,000 , assuming market interest rates between 5.20 % and 6.55 %.

At June 30, 2024, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $ 36,987,000 , assuming market interest rates between 5.58 % and 6.36 %.

At December 31, 2023, the estimated fair value of the Company's mortgages payable was lower than their carrying value by approximately $ 34,195,000 , assuming market interest rates between 4.88 % and 6.23 %.

6 unchanged sentences

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 exemplary damages.

4 unchanged sentences

Note 13 – Subsequent Events

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of March 31, 2024, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of June 30, 2024, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

Table of Content

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

What changed 10-Q

Item 1. Financial Statements