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Item 1. Financial Statements

2024-11-07 compared with 2024-08-09 · 114 added, 91 removed, 372 unchanged (36% of the section changed)

4 unchanged sentences

(Amounts in thousands, except per share data)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(unaudited) (audited)

33 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

2 unchanged sentences

Total revenues 24,396 23,852 71,661 70,109

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

Real estate operating expenses - including $ 9 and $ 9 to related parties for the three months ended and $ 26 and $ 25 for the nine months ended

11,187 10,583 32,612 31,565

Interest expense 5,745 5,581 16,768 16,577

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

General and administrative - including $ 208 and $ 141 to related parties for the three months ended and $ 569 and $ 479 for the nine months ended

3,811 4,017 11,776 11,920

4 unchanged sentences

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

Gain on sale of real estate — 604 — 604

Insurance recovery of casualty loss — 261 — 476

26 unchanged sentences

Shares repurchased ( 1 ) ( 2,266 ) — — ( 2,267 )

Net loss — — ( 3,171 ) 35 ( 3,136 )

Net (loss) income — — ( 3,171 ) 35 ( 3,136 )

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

6 unchanged sentences

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

Net loss — — ( 2,345 ) 36 ( 2,309 )

Net (loss) income — — ( 2,345 ) 36 ( 2,309 )

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

Distributions - common stock - $ 0.25 per share

— — ( 4,690 ) — ( 4,690 )

Compensation expense - restricted stock and restricted stock units — 1,189 — — 1,189

Distributions to non-controlling interests — — — ( 75 ) ( 75 )

Shares issues through DRIP 1 950 — — 951

Shares repurchased — ( 115 ) — — ( 115 )

Net (loss) income — — ( 2,205 ) 38 ( 2,167 )

Balances, September 30, 2024 $ 178 $ 270,406 $ ( 60,716 ) $ ( 101 ) $ 209,767

See accompanying notes to consolidated financial statements.

11 unchanged sentences

Shares issued through DRIP — 763 — — 763

Net income — — ( 4,098 ) 36 ( 4,062 )

Net (loss) income — — ( 4,098 ) 36 ( 4,062 )

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

7 unchanged sentences

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

Distributions - common stock - $ 0.25 per share

— — ( 4,654 ) — ( 4,654 )

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

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

Shares issued through DRIP — 684 — — 684

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

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

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

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(Dollars in Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of debt fair value adjustment 421 463

Amortization of deferred rent concessions ( 413 ) —

Amortization of restricted stock and restricted stock units 3,621 4,076

1 unchanged sentence

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

Gain on sale of real estate — ( 604 )

Gain on insurance recovery — ( 240 )

Increases and decreases from changes in other assets and liabilities:

Increase in other assets ( 809 ) ( 1,762 )

Decrease in accounts payable and accrued liabilities ( 361 ) ( 1,229 )

Increase in accounts payable and accrued liabilities 1,661 1,575

Net cash provided by operating activities 16,562 15,669

1 unchanged sentence

Improvements to real estate properties ( 4,943 ) ( 7,406 )

Proceeds from the sale of real estate — 711

Distributions from unconsolidated joint ventures 3,821 24,646

Contributions to unconsolidated joint ventures ( 166 ) ( 122 )

Proceeds from insurance recoveries — 240

Net cash (used in) provided by investing activities ( 1,288 ) 18,069

8 unchanged sentences

Repurchase of shares of common stock ( 3,312 ) ( 10,786 )

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

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

Net cash provided by ( used in) financing activities 8,701 ( 23,944 )

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

$ 23,975 $ 9,794

Cash, cash equivalents, restricted cash and escrows at beginning of period 31,775 27,721

$ 26,100 $ 38,220

Cash, cash equivalents, restricted cash and escrows at end of period $ 55,750 $ 37,515

Supplemental disclosure of cash flow information:

7 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.

September 30,

Reconciliation of cash and cash equivalents and restricted cash:

6 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2024

September 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 June 30, 2024, the Company:

At September 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 $ 619,525,000 ;

1 unchanged sentence

and (iii) owns other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $ 1,854,000 .

These 29 multi-family properties are located in 11 states;

most of the properties are located in the Southeast United States and Texas.

The 29 multi-family properties are located in 11 states;

most of these properties are located in the Southeast United States and Texas.

Note 2 – Basis of Preparation

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

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

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

19 unchanged sentences

The Company’s Chief Operating Decision Makers (“CODMs”) are its Chief Executive Officer and Chief Operating Officer.

As the Company operates in one reportable segment, the CODMs are provided financial reports which include a (i) consolidated income statement (detailing total revenues, operating income and net income) and (iii) Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”).

As the Company operates in one reportable segment, the CODMs are provided financial reports which include (i) a consolidated income statement (detailing total revenues, total operating expenses, operating income and net income) and (iii) Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”).

These financial reports assist the CODMs in assessing the Company’s financial performance and in allocating resources appropriately.

1 unchanged sentence

Immaterial Error Correction

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 .

During the preparation of financial statements for the current period, it was determined that in the prior year period, 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 year period to reclassify the escrows within Cash and Restricted Cash on the Statement of Cash Flows resulting in a increase in net cash from operating activities of $ 2,061,000 .

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

During the three and nine months ended September 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 July 9, 2024 to stockholders of record on June 25, 2024.

The Company declared a quarterly cash distribution of $ 0.25 per share, payable on October 2, 2024 to stockholders of record on September 24, 2024.

Dividend Reinvestment Plan

1 unchanged sentence

The discount from the market price is currently 3 %.

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.

During the three and nine months ended September 30, 2024, 56,879 and 165,731 shares were issued in lieu of cash dividends of $ 951,000 and $ 2,829,000 respectively.

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

Stock Based Compensation

3 unchanged sentences

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

As of June 30, 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;

As of September 30, 2024, 784,675 shares are available for issuance pursuant to awards under the 2024 Plan.

Awards to acquire 1,602,722 shares of common stock are outstanding under the 2024 Plan, 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.

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

Restricted Stock Units

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.

As of September 30, 2024 , an aggregate of 640,493 of unvested restricted stock units are outstanding pursuant to the 2024 Plan and 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.

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 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.

For the three months ended September 30, 2024 and 2023, the Company recorded $ 303,000 and $ 651,000 , respectively, and for the nine months ended September 30, 2024 and 2023, the Company recorded $ 1,006,000 and $ 1,534,000 , respectively of compensation expense related to the amortization of unearned compensation with respect to the RSUs.

At September 30, 2024 and December 31, 2023, $ 2,125,000 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, 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.

As of September 30, 2024 , an aggregate of 962,229 shares of unvested restricted stock are outstanding.

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

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

For the three months ended June 30, 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.

For the three months ended September 30, 2024 and 2023, the Company recorded $ 886,000 and $ 822,000 , respectively and for the nine months ended September 30, 2024 and 2023, the Company recorded $ 2,615,000 and $ 2,542,000 , respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards.

At September 30, 2024 and December 31, 2023, $ 7,958,000 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 restricted stock awards is 2.2 years.

Share Repurchase

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 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 .

During the three months ended September 30, 2024, the Company repurchased 6,563 shares of common stock at an average price per share of $ 17.55 for an aggregate cost of $ 115,000 .

During the nine months ended September 30, 2024, the Company repurchased 183,243 shares of common stock at an average price of $ 18.08 for an aggregate cost of $ 3,312,000 .

As of September 30, 2024, the Company is authorized to repurchase up to $ 6,271,000 of shares through December 31, 2025.

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

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

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.

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.

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.

The Company excludes any shares underlying the RSUs from such calculation if their effect would have been anti-dilutive.

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

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

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

2024 2023 2024 2023

2 unchanged sentences

Deduct net income attributable to non-controlling interests ( 38 ) ( 34 ) ( 109 ) ( 106 )

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

Deduct loss (income) allocated to unvested restricted stock 113 73 398 ( 268 )

Net (loss) income available for common stockholders:

6 unchanged sentences

Weighted average number of shares 17,796,206 17,851,715 17,720,024 18,045,767

Earnings (loss) per common share, basic $ ( 0.13 ) $ 0.59 $ ( 0.30 ) $ 0.37

Earnings (loss) per common share, diluted $ ( 0.13 ) $ 0.58 $ ( 0.30 ) $ 0.37

(Loss) earnings per common share, basic $ ( 0.12 ) $ ( 0.08 ) $ ( 0.41 ) $ 0.30

(Loss) earnings per common share, diluted $ ( 0.12 ) $ ( 0.08 ) $ ( 0.41 ) $ 0.27

Note 4 - Leases

10 unchanged sentences

There are no renewal options.

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

As of September 30, 2024, the remaining lease term is 20.8 years.

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

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

As of June 30, 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 September 30, 2024, the remaining lease term, including renewal options deemed exercised, is 12.3 years.

As of September 30, 2024, the Company's Right of Use ("ROU") assets and lease liabilities were $ 2,047,000 and $ 2,205,000 , 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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Land $ 74,246 $ 74,246

6 unchanged sentences

December 31, 2023

Balance Improvements Depreciation June 30, 2024

Balance Improvements Depreciation September 30, 2024

Multi-family $ 634,045 $ 4,797 $ ( 19,317 ) $ 619,525

1 unchanged sentence

Total real estate properties $ 635,836 $ 4,943 $ ( 19,400 ) $ 621,379

On October 10, 2024, the Company sold a cooperative apartment unit in New York, NY for a sale price of $ 1,050,000 and will recognize a gain of approximately $ 806,000 in the quarter ending December 31, 2024.

Note 6 - Restricted Cash

2 unchanged sentences

Note 7 – Investment in Unconsolidated Ventures

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.

At September 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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Real estate properties, net of accumulated depreciation of $ 78,684 and $ 69,970

14 unchanged sentences

(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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Land $ 46,331 $ 46,331

4 unchanged sentences

Total real estate properties, net $ 320,839 $ 275,874

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.

At September 30, 2024 and December 31, 2023, the weighted average interest rate on the mortgages payable is 4.41 % and 4.32 %, respectively, and the weighted average remaining term to maturity is 4.1 years and 5.0 years, respectively.

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

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

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

2024 2023 2024 2023

12 unchanged sentences

BRT's equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 369 $ 426 $ 986 $ 16,449

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 .

Subsequent to the quarter ended September 30, 2024 the Company provided an aggregate of $ 18,300,000 to joint ventures that purchased a 204 -unit multi-family property in Wilmington, North Carolina and a 184 -unit multi-family property in Kennesaw, Georgia - generally the transaction documents provide for (1) an annual return to the of approximately 13.0 % (of which 6.0 % to 6.5 % is payable monthly (to the extent of available cash-flow, with the balance of 6.5 % to 7.0 % also to be paid monthly from any remaining cash flow after sponsor's receipt of a specified return) and (2) the total amount provided, including all accrued return , in any event to be payable to the company from 2029 to 2031.

Note 8 – Debt Obligations

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Mortgages payable $ 451,401 $ 426,436

4 unchanged sentences

__________________________________________

(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.

(1) Excludes $ 409 and $ 289 of deferred financing costs related to the credit facility which are reflected in other assets at September 30, 2024 and December 31, 2023 respectively.

Mortgages Payable

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.

On August 22, 2024, we obtained a $ 27,375,000 mortgage on our Woodland Trails - LA Grange, GA property.

The debt bears a fixed rate of interest of 5.22 %, is interest only until maturity and matures in September 2031.

At September 30, 2024, the weighted average interest rate on the Company's mortgage payables was 4.09 % and the weighted average remaining term to maturity is 6.3 years.

For the three months ended September 30, 2024 and 2023, interest expense, which includes amortization of deferred financing costs, was $ 4,886,000 and $ 4,774,000 , respectively.

For the nine months ended September 30, 2024 and 2023, interest expense, which includes amortization of deferred financing costs, was $ 14,271,000 and $ 14,063,000 , respectively.

Credit Facility

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 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));

2 unchanged sentences

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 June 30, 2024 is 7.83 %.

The interest rate in effect as of September 30, 2024 is 7.70 %.

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

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.

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

At September 30, 2024 and December 31, 2023, there was no outstanding balance on the facility and at each such date, the full amount was available to be borrowed.

Interest expense for the three months ended September 30, 2024 and 2023, which includes amortization of deferred financing costs and unused fees was $ 134,000 and $ 91,000 , respectively.

Interest expense for the nine months ended September 30, 2024 and 2023, which includes amortization of deferred financing costs and unused fees was $ 318,000 and $ 482,000 , respectively.

The remaining deferred financing costs of $ 409,000 and $ 289,000 , are recorded as Other Assets on the Consolidated balance sheets at September 30, 2024 and December 31, 2023, respectively.

Junior Subordinated Notes

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.

At September 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 $ 242,000 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 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 interest rate in effect at September 30, 2024 and 2023 was 7.52 % and 7.63 %, respectively.

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

Interest expense for the three months ended June 30, 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.

Interest expense for the three months ended September 30, 2024 and 2023, which includes amortization of deferred financing costs, was $ 725,000 and $ 716,000 , respectively.

Interest expense for the nine months ended September 30, 2024 and 2023, which includes amortization of deferred financing costs, was $ 2,179,000 and $ 2,032,000 , respectively.

Note 9 – Related Party Transactions

1 unchanged sentence

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

The aggregate fees incurred for these services in each of the three months ended June 30, 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.

The aggregate fees incurred for these services in each of the three months ended September 30, 2024 and 2023 were $ 404,000 and $ 385,000 , respectively and $ 1,214,000 and $ 1,155,000 for the nine months ended September 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.

1 unchanged sentence

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.

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

These fees amounted to $ 9,000 and $ 17,000 for the three months ended September 30, 2024 and 2023 and $ 26,000 and $ 33,000 for the nine months ended September 30, 2024 and 2023, respectively.

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

1 unchanged sentence

The allocation of expenses for the facilities, personnel and other resources shared by, among others, the Company and Gould Investors, is 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.

During the three months ended September 30, 2024 and 2023, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 208,000 and $ 141,000 , respectively and $ 569,000 and $ 478,000 for the nine months ended September 30, 2024 and 2023, respectively.

Gould and Matthew J.

14 unchanged sentences

Junior subordinated notes:

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.

At September 30, 2024 and December 31, 2023, the estimated fair value of the notes is lower than their carrying value by approximately $ 3,504,000 and $ 3,613,000 , respectively, based on a market interest rate of 8.56 % 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 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 September 30, 2024, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $ 25,498,000 , assuming market interest rates between 4.57 % and 5.94 %.

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 %.

8 unchanged sentences

Generally, insurance does not cover claims for exemplary damages.

Note 12 – New Accounting Pronouncements

Note 12 – New Accounting Pronouncement

On January 1, 2024, the Company adopted the FASB ASU No.

2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures , which enhances disclosures of significant segment expenses regularly provided to the chief operating decision maker.

2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures , as amended, which enhances disclosures of significant segment expenses regularly provided to the chief operating decision maker.

This adoption did not have any impact on its consolidated financial statements.

Substantially all of the Company’s real estate assets, at acquisition, are comprised of real estate owned that is leased to tenants on a long-term basis.

Therefore, the Company aggregates real estate assets for reporting purposes and operates in one reportable segment.

The Company’s Chief Operating Decision Makers (“CODMs”) are its Chief Executive Officer and Chief Operating Officer.

As the Company operates in one reportable segment, the CODMs are provided financial reports which include (i) a consolidated income statement (detailing total revenues, total operating expenses, operating income and net income) and (ii) Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”).

These financial reports assist the CODMs in assessing the Company’s financial performance and in allocating resources appropriately.

Note 13 – Subsequent Events

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.

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of September 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