BRT Apartments Corp. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, our CEO and CFO have concluded that our disclosure controls and procedures, as designed and implemented as of December 31, 2024, were effective. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of a company; and 40 Table of Contents • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial transactions. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on its assessment, our management concluded that, as of December 31, 2024, our internal control over financial reporting was effective based on these criteria. Changes in Internal Controls over Financial Reporting There have been no changes in our internal controls over financial reporting, as defined in in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, that occurred during the three months ended December 31, 2024 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. Item 9B. Other Information. None of our officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" in effect at any time during the three months ended December 31, 2024.” Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable 41 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Apart from certain information concerning our executive officers which is set forth in Part I of this report, the other information required by Item 10 will be incorporated herein by reference to the applicable information to be in the proxy statement to be filed by April 30, 2025 for our 2025 Annual Meeting of Stockholders. Item 11. Executive Compensation. The information concerning our executive compensation required by Item 11 is incorporated herein by reference to the proxy statement to be filed by April 30, 2025 with respect to our 2025 Annual Meeting of Stockholders. 42 Table of Contents Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Except as set forth below, the information required by Item 12 is incorporated herein by reference to the proxy statement to be filed by April 30, 2025 with respect to our 2025 Annual Meeting of Stockholders. Equity Compensation Plan Information The following table provides information as of December 31, 2024 about shares of our common stock that may be issued upon the exercise of options, warrants and rights under our 2018 Amended and Restated Incentive Plan (the “2018 Plan”), our 2020 Amended and Restated Incentive Plan (the “2020 Plan”), the 2022 Incentive Plan (the "2022 Plan"; and together with the 2018 Plan and the 2020 Plan, the “Prior Plans”), and our 2024 Incentive Plan (the “2024 Plan”; and together with the Prior Plans, the “Incentive Plans”). No further awards may be granted under the Prior Plans. Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (2) (c) Equity compensation plans approved by security holders 600,837 (1) — 798,175 (2) Equity compensation plans not approved by security holders — — — Total 600,837 (1) — 798,175 (2) _______________________________________________________________________________ (1) Includes up to 198,761, 200,251 and 201,825 shares of common stock issuable pursuant to restricted stock units (“RSUs”) that vest as of June 30, 2025, June 30, 2026 and June 30, 2027, respectively, if and to the extent specified conditions are satisfied by such vesting dates. RSUs granted pursuant to the 2022 Plan and the 2024 Plan account for 399,012 shares and 201,825 shares, respectively. Excludes 910,929 shares of restricted stock issued pursuant to the Incentive Plans as such shares, although subject to forfeiture, are outstanding. See Note 11 to our consolidated financial statements . (2) Does not give effect to 165,408 shares of restricted stock granted January 13, 2025 pursuant to the 2024 Plan. 43 Table of Contents Item 13. Certain Relationships and Related Transactions, and Director Independence. The information concerning relationships and certain transactions required by Item 13 is incorporated herein by reference to the proxy statement to be filed by April 30, 2025 with respect to our 2025 Annual Meeting of Stockholders. Item 14. Principal Accounting Fees and Services. The information concerning our principal accounting fees required by Item 14 is incorporated herein by reference to the proxy statement to be filed by April 30, 2025 with respect to our 2025 Annual Meeting of Stockholders. 44 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) 1. All Financial Statements. The response is submitted in a separate section of this report following Part IV. 2. Financial Statement Schedules. The response is submitted in a separate section of this report following Part IV. 3. Exhibits: In reviewing the agreements included as exhibits to this Annual Report on Form10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. Certain agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and: • should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; • have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; • may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and • were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. 45 Table of Contents Exhibit No. Title of Exhibits 1.1 Form of Equity Distribution Agreement dated May 12, 2023 (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed on May 12, 2023). 2.1 Plan of Conversion dated December 8, 2016 (incorporated by reference to Annex B of Amendment No. 1 to our Registration Statement on Form S-4 filed January 12, 2017 (the "S-4 Registration") (Reg. No. 333-215221). 3.1 Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 filed with our Current Report on Form 8-K on March 20, 2017). 3.2 By-laws of the Registrant effective as of December 6, 2022 (incorporated by reference to Exhibit 3.2 filed with our Current Report on Form 8-K on December 6, 2022). 4.1 Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 filed with our Current Report on Form 8-K on March 18, 2011). 4.2 Description of Registrant's Securities Registered Pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 filed with our Annual Report on Form 10-K for the year ended December 31, 2020). 10.1 * Shared Services Agreement, dated as of January 1, 2002, by and among Gould Investors L.P., us, One Liberty Properties, Inc., Majestic Property Management Corp., Majestic Property Affiliates, Inc. and REIT Management Corp. (incorporated by reference to Exhibit 10.2 filed with our Annual Report on Form 10-K for the year ended September 30, 2008). 10.2 * Form of Indemnification Agreement between the Registrant on the one hand, and its executive officers and directors, on the other hand (incorporated by reference to Exhibit 10.5 to our Annual Report of Form 10-K for the year ended September 30, 2017). 10.3 Membership Interest Purchase Agreement dated as of February 23, 2016 entered into between TRB Newark Assemblage, LLC ("TRB") and TRB Newark TRS, LLC ("TRB REIT" and together with TRB, collectively, the "Seller") and RBH Partners III, LLC, and joined by RBH-TRB Newark Holdings, LLC and GS-RBH Newark Holdings, LLC (incorporated by reference to exhibit 10.2 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2016). 46 Table of Contents Exhibit No. Title of Exhibits 10.4 Amended and Restated Loan Agreement (the "Loan Agreement") made as of November 18, 2021, by and among us and VNB New York, LLC. (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on November 18, 2021). 10.5 Unlimited guaranty given by us in favor of VNB (incorporated by reference to Exhibit 10.2 filed with our Current Report on Form 8-K on November 18, 2021). 10.6 Form of Pledge Agreement (incorporated by reference to Exhibit 10.3 filed with our Current Report on Form 8-K on November 18, 2021). 10.7 Form of Negative Pledge Agreement (incorporated by reference to Exhibit 10.4 filed with our Current Report on Form 8-K on November 18, 2021). 10.8 Letter agreement dated as of November 19, 2021 with respect to the Loan Agreement (incorporated by reference to exhibit 10.14 filed with our Annual Report on Form 10-K for the year ended December 31, 2021). 10.9 Amendment dated September 14, 2022 to the Loan Agreement (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on September 16, 2022). 10.10 Second amendment dated as of August 22, 2023 to the Amended and Restated Loan Agreement made as of November 18, 2021, as amended, by and between us and VNB New York, LLC. (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended September 30, 2023). 10.11 Third amendment dated as of July 9, 2024 to the Amended and Restated Loan Agreement made as of November 18, 2021, as amended, by and between us and VNB New York, LLC (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on July 15, 2024). 10.12 Form of Membership Interest Purchase Agreement used to effectuate the purchase of the interests of our joint venture partners (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2022). 10.13 * 2018 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.6 filed with our Current Report on Form 8-K on June 15, 2023). 10.14 * 2020 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.8 filed with our Current Report on Form 8-K on June 15, 2023). 10.15 * 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on June 10, 2022). 10.16 * 2024 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on June 11, 2024). 10.17 * Form of Restricted Shares Agreement for the 2018 Incentive Plan (incorporated by reference to Exhibit 10.10 filed with our Annual Report on Form 10-K filed December 10, 2018). 10.18 * Form of Restricted Share Agreement awarded in 2023 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.19 filed with our Annual Report on Form 10-K for the year ended December 31, 2022). 10.19 * Form of Restricted Share Agreement awarded in 2024 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.20 filed with our Annual Report on Form 10-K for the year ended December 31, 2023). 10.20 * Form of Performance Awards Agreement granted in 2021 pursuant to the 2020 Incentive Plan (incorporated by reference to exhibit 10.1 of our Current Report on Form 8-K filed on June 11, 2021) 10.21 * Form of Performance Awards Agreement granted in 2022 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.5 filed with our Quarterly Report on Form 10-Q for the period ended September 30, 2022). 10.22 * Form of Performance Awards Agreement granted in 2023 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended June 30, 2023). 10.23 * Form of Performance Awards Agreement granted in 2024 pursuant to the 2024 Incentive Plan (incorporated by reference to Exhibit 10.2 filed with our Quarterly Report on Form 10-Q for the period ended June 30, 2024). 19.1 Insider Trading Policy 21.1 Subsidiaries of the Registrant. 23.1 Consent of Ernst & Young, LLP. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Act"). 31.2 Certification of Senior Vice President—Finance pursuant to Section 302 of the Act. 31.3 Certification of Chief Financial Officer pursuant to Section 302 of the Act. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Act. 47 Table of Contents 32.2 Certification of Senior Vice President—Finance pursuant to Section 906 of the Act. 32.3 Certification of Chief Financial Officer pursuant to Section 906 of the Act. 97.1 Registrant's Clawback Policy effective October 2, 2023 (incorporated by reference to Exhibit 97.1 filed with our Annual Report on March 14, 2024). 101.INS The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. _______________________________________________________________________________ * Indicates management contract or compensatory plan or arrangement. (b) Exhibits. See Item 15(a)(3) above. Except as otherwise indicated with respect to a specific exhibit, the file number for all of the exhibits incorporated by reference is: 001-07172. (c) Financial Statements. See Item 15(a)(2) above. Item 16. Form 10-K Summary Not applicable. 48 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRT APARTMENTS CORP. Date: March 12, 2025 By: /s/ Jeffrey A. Gould Jeffrey A. Gould Chief Executive Officer and President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Israel Rosenzweig Chairman of the Board March 12, 2025 Israel Rosenzweig /s/ Jeffrey A. Gould Chief Executive Officer, President and Director (Principal Executive Officer) March 12, 2025 Jeffrey A. Gould /s/ Carol Cicero Director March 12, 2025 Carol Cicero /s/ Alan Ginsburg Director March 12, 2025 Alan Ginsburg /s/ Fredric H. Gould Director March 12, 2025 Fredric H. Gould /s/ Matthew J. Gould Director March 12, 2025 Matthew J. Gould /s/ Louis C. Grassi Director March 12, 2025 Louis C. Grassi /s/ Gary Hurand Director March 12, 2025 Gary Hurand /s/ Jeffrey Rubin Director March 12, 2025 Jeffrey Rubin /s/ Jonathan Simon Director March 12, 2025 Jonathan Simon /s/ Elie Weiss Director March 12, 2025 Elie Weiss /s/ George E. Zweier Chief Financial Officer and Vice President (Principal Financial and Accounting Officer) March 12, 2025 George E. Zweier 49 Table of Contents Index Item 8, Item 15(a)(1) and (2) Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F- 2 Consolidated Balance Sheets as of December 31, 202 4 and 202 3 F- 4 Consolidated Statements of Operations for the years ended December 31, 202 4 and 202 3 F- 5 Consolidated Statements of Stockholders' Equity for the years ended December 31, 202 4 and 202 3 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 202 4 and 202 3 F- 7 Notes to Consolidated Financial Statements F- 10 III—Real Estate Properties and Accumulated Depreciation F- 31 IV - Mortgage loans F- 34 All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto. F-1 Table of Contents Index Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of BRT Apartments Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of BRT Apartments Corp. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. F-2 Table of Contents Index Preferred Equity Investments Description of the Matter At December 31, 2024, the Company accounted for preferred equity investments totaling $17.7 million, net, as loans. As discussed in Notes 1 and 5 to the consolidated financial statements, at the inception of each such investment, the Company determined that the joint ventures in which the Company has the preferred equity investments are variable interest entities (“VIEs”), that the Company is not the primary beneficiary, and that such investments should be accounted for as loans. Auditing the Company’s accounting for its preferred equity investments was especially challenging because (i) assessing the economic rights and control of the activities of the VIEs that most significantly impact their economic performance to determine the primary beneficiary and (ii) evaluating, among other things, the classification and accounting for the preferred equity investments as loans, are highly judgmental. How We Addressed the Matter in Our Audit To test the Company’s determination that it is not the primary beneficiary of the VIEs as well as its classification and accounting for the preferred equity investments as loans, our procedures included, among others, inspecting the preferred equity agreements, evaluating the judgments used by management to identify the activities of the VIEs that most significantly impact the economic performance of the joint ventures, and assessing the characteristics of the preferred equity investments, specifically the Company’s participation in the expected residual profits and the cash equity investments funded by the borrowers. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020 New York, New York March 12, 2025 F-3 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data) December 31, 2024 2023 ASSETS Real estate properties, net of accumulated depreciation of $ 106,425 and $ 80,499 $ 615,915 $ 635,836 Investment in unconsolidated joint ventures 31,344 34,242 Loan receivables, net of deferred fees of $ 313 and allowance for credit loss of $ 270 17,667 — Cash and cash equivalents 27,856 23,512 Restricted cash 3,221 632 Other assets 17,460 15,741 Total Assets $ 713,463 $ 709,963 LIABILITIES AND EQUITY Liabilities: Mortgages payable, net of deferred costs of $ 4,010 and $ 4,009 $ 446,471 $ 422,427 Junior subordinated notes, net of deferred costs of $ 237 and $ 257 37,163 37,143 Credit facility — — Accounts payable, accrued and other liabilities 24,915 21,948 Total Liabilities 508,549 481,518 Commitments and contingencies Equity: BRT Apartments Corp. stockholders' equity: Preferred shares $ 0.01 par value 2,000 shares authorized, none outstanding — — Common stock, $ 0.01 par value, 300,000 shares authorized, 17,872 and 17,536 shares issued at December 31, 2024 and 2023 179 175 Additional paid-in capital 272,275 267,271 Accumulated deficit ( 67,485 ) ( 38,986 ) Total BRT Apartments Corp. stockholders' equity 204,969 228,460 Non-controlling interests ( 55 ) ( 15 ) Total Equity 204,914 228,445 Total Liabilities and Equity $ 713,463 $ 709,963 See accompanying notes to consolidated financial statements. F-4 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) Year Ended December 31, 2024 2023 Revenues: Rental and other revenue from real estate properties $ 94,773 $ 93,069 Loan interest and other income 857 548 Total revenues 95,630 93,617 Expenses: Real estate operating expenses—including $ 37 and $ 34 to related parties 43,555 41,821 Interest expense 22,596 22,161 General and administrative—including $ 698 and $ 642 to related party 15,595 15,433 Provision for credit loss 270 — Depreciation and amortization 25,926 28,484 Total expenses 107,942 107,899 Total revenues less total expenses ( 12,312 ) ( 14,282 ) Equity in earnings from unconsolidated joint ventures 1,644 2,293 Equity in earnings from sale of unconsolidated joint venture properties — 14,744 Gain on sale of real estate 806 604 Casualty loss — ( 323 ) Insurance recovery of casualty loss — 793 Gain on insurance recovery — 240 (Loss) income from continuing operations ( 9,862 ) 4,069 (Benefit) provision for taxes ( 226 ) 54 (Loss) income from continuing operations, net of taxes ( 9,636 ) 4,015 Income attributable to non-controlling interests ( 155 ) ( 142 ) Net (loss) income attributable to common stockholders $ ( 9,791 ) $ 3,873 Weighted average number of shares of common stock outstanding: Basic 17,752,226 17,918,270 Diluted 17,752,226 17,948,276 Per share amounts attributable to common stockholders Basic $ ( 0.52 ) $ 0.16 Diluted $ ( 0.52 ) $ 0.16 See accompanying notes to consolidated financial statements. F-5 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 2024 and 2023 (Dollars in thousands, except per share data) Shares of Common Stock Additional Paid-In Capital (Accumulated Deficit) Non-Controlling Interests Total Balances, December 31, 2022 $ 180 $ 273,863 $ ( 23,955 ) $ ( 18 ) $ 250,070 Distributions - Common Stock - $ 0.98 per share — — ( 18,904 ) — ( 18,904 ) Restricted stock and restricted stock units vesting 2 ( 2 ) — — — Compensation expense—restricted stock and restricted stock units — 4,768 — — 4,768 Distributions to non-controlling interests — — — ( 139 ) ( 139 ) Shares issued through DRIP — 3,034 — — 3,034 Shares repurchased ( 7 ) ( 14,392 ) — — ( 14,399 ) Net income — — 3,873 142 4,015 Balances, December 31, 2023 $ 175 $ 267,271 $ ( 38,986 ) $ ( 15 ) $ 228,445 Distributions - Common Stock - $ 1.00 per share — — ( 18,708 ) — ( 18,708 ) Restricted stock and restricted stock units vesting 3 ( 3 ) — — — Compensation expense—restricted stock and restricted stock units — 4,877 — — 4,877 Distributions to non-controlling interests — — — ( 195 ) ( 195 ) Shares issued through DRIP 3 3,623 — — 3,626 Shares repurchased ( 2 ) ( 3,493 ) — — ( 3,495 ) Net (loss) income — — ( 9,791 ) 155 ( 9,636 ) Balances, December 31, 2024 $ 179 $ 272,275 $ ( 67,485 ) $ ( 55 ) $ 204,914 See accompanying notes to consolidated financial statements. F-6 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Year Ended December 31, 2024 2023 Cash flows from operating activities: Net (loss) income $ ( 9,636 ) $ 4,015 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,926 28,484 Provision for credit loss 270 — Amortization of deferred financing fees 1,150 1,072 Amortization of debt fair value adjustment 558 613 Amortization of deferred loan fee income ( 9 ) — Amortization of restricted stock and restricted stock units 4,877 4,768 Equity in earnings of unconsolidated joint ventures ( 1,644 ) ( 2,293 ) Equity in earnings on sale of real estate of unconsolidated ventures — ( 14,744 ) Gain on sale of real estate ( 806 ) ( 604 ) Gain on insurance recovery — ( 240 ) Increases and decreases from changes in other assets and liabilities: Decrease (increase) in other assets 559 ( 787 ) Increase (decrease) in accounts payable and accrued liabilities 2,898 ( 678 ) Net cash provided by operating activities 24,143 19,606 Cash flows from investing activities: Improvements to real estate owned ( 6,152 ) ( 9,643 ) Additions to loan receivables ( 18,250 ) — Proceeds from the sale of real estate owned 953 711 Distributions from unconsolidated joint ventures 4,708 25,687 Contributions to unconsolidated joint ventures ( 166 ) ( 316 ) Proceeds from insurance recoveries — 240 Net cash (used in) provided by investing activities ( 18,907 ) 16,679 Cash flows from financing activities: Proceeds from mortgages payable 27,375 21,173 Mortgage principal payments ( 3,888 ) ( 3,308 ) Repayment of credit facility — ( 19,000 ) Increase in deferred financing costs ( 1,216 ) ( 683 ) Dividends paid ( 18,639 ) ( 18,909 ) Distributions to non-controlling interests ( 195 ) ( 139 ) Proceeds from the issuance of DRP shares 3,626 3,034 Repurchase of shares of common stock ( 3,495 ) ( 14,399 ) Net cash provided by (used in) financing activities 3,568 ( 32,231 ) Net increase in cash, cash equivalents, restricted cash and escrows: 8,804 4,054 Cash, cash equivalents, restricted cash and escrows at beginning of year 31,775 27,721 F-7 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Year Ended December 31, 2024 2023 Cash, cash equivalents, restricted cash and escrows at end of year $ 40,579 $ 31,775 Supplemental disclosures of cash flow information: Cash paid during the year for interest expense $ 20,870 $ 20,433 Cash paid (net of refunds received) during the year for income and excise taxes $ ( 439 ) $ 689 See accompanying notes to consolidated financial statements. F-8 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. December 31, 2024 2023 Cash and cash equivalents $ 27,856 $ 23,512 Restricted cash 3,221 632 Escrows (Other assets) 9,502 $ 7,631 Total cash, cash equivalents, restricted cash and escrows shown in consolidated statement of cash flows $ 40,579 $ 31,775 F-9 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 1— ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES Organization and Background BRT Apartments Corp. (“BRT” or the “Company”) owns, operates and, to a lesser extent, develops multi-family properties. These multi-family properties may be wholly owned by us or by unconsolidated joint ventures in which the Company contributes a significant portion of the equity. At December 31, 2024, BRT: (i) wholly-owns 21 multi-family properties located in eleven states with an aggregate of 5,420 units and a carrying value of $ 614,235,000 ; (ii) has ownership interests, through unconsolidated entities, in eight multi-family properties located in four states with an aggregate of 2,527 units, and the carrying value of its net equity investment is $ 31,258,000 ; (iii) have investments in joint ventures that own two multi-family properties which investments are treated for financial statement reporting purposes as loans ("the Preferred Equity Investments"), with a carrying value of $ 17,667,000 , and (iv) owns other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $ 1,765,000 . The Company's 29 multi-family properties are located primarily in the Southeast United States and Texas. BRT conducts its operations to qualify as a real estate investment trust, or REIT, for Federal income tax purposes. Most of the Company's assets are comprised of multi-family real estate assets generally leased to tenants on a one-year basis. Therefore, the Company aggregates real estate assets for reporting purposes and operates in one reportable segment. Principles of Consolidation The consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries. The joint venture that owns a commercial property in Yonkers, NY was determined not to be a variable interest entity ("VIE") but is consolidated because the Company has controlling rights in such entity. Other than the preferred equity investments (described in the following paragraph), the Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. For each joint venture, the Company evaluated the rights provided to each party in the venture to assess the consolidation of the venture. All investments in unconsolidated joint ventures have sufficient equity at risk to permit the entity to finance its activities without additional subordinated financial support and, as a group, the holders of the equity at risk have power through voting rights to direct the activities of these ventures. As a result, none of these joint ventures are VIEs. Additionally, the Company does not exercise substantial operating control over these entities, and therefore the entities are not consolidated. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for their share of equity in earnings, cash contributions and distributions. The distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro-rata to the percentage equity interest each partner has in the applicable venture. The joint ventures in which we have the preferred equity investments were determined to be VIE's, as it has been determined that the equity holders lack the ability to direct the activities of the legal entity that most significantly impact the entity's economic performance. It was determined that the Company is not the primary beneficiary as the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's performance, and therefore these entities are not consolidated. The Company qualifies as a real estate investment trust under sections 856-860 of the Internal Revenue Code of 1986, as amended. The board of directors may, at its option, elect to revoke or terminate the Company's election to qualify as a real estate investment trust. The Company will not be subject to federal, and generally state and local taxes on amounts it distributes to stockholders, provided it distributes 90% of its ordinary taxable income and meets other conditions. F-10 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) In accordance with Accounting Standards Codification ("ASC") Topic 740 - "Income Taxes", the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on the Company's financial position or results of operations. The Company's income tax returns for the tax years 2021 through 2023 are subject to review by the Internal Revenue Service. Revenue Recognition Rental revenue from multi-family properties is recorded when due from residents and is recognized monthly as it is earned. Rental payments are due in advance. Lease concessions are generally reported on a straight line basis over the lease term. Leases on residential properties are generally for terms that do not exceed one year . Rental revenue from commercial properties, including the base rent that each tenant is required to pay in accordance with the terms of their respective leases, net of any rent concessions and lease incentives, is reported on a straight-line basis over the non-cancellable term of the lease. Current Returns (as defined in Note 5- Loan receivables) from our preferred equity investments are recorded as interest income when it is earned from the sponsor of the joint venture and Hurdle Returns ( as defined in Note 5- Loan Receivable) are recorded as interest income when it is probable that it will be received. Deferred loan fees are capitalized and recorded into income over the life of the investment. Real Estate Properties Real estate properties are stated at cost, net of accumulated depreciation, and include properties acquired through acquisition or development. When the Company purchases real estate assets from third-parties, the Company allocates the purchase price of real estate, including direct transaction costs applicable to an asset acquisition, among land, building, improvements and intangibles ( e.g ., the value of above, below and at market leases, and origination costs associated with in-place leases and above or below-market mortgages assumed at the acquisition date). The value, as determined, is allocated to the gross assets acquired based on management’s determination of the relative fair values of these assets and liabilities. Depreciation for multi-family properties is computed on a straight-line basis over an estimated useful life of 30 years. Intangible assets (and liabilities) are amortized over the remaining life of the related leases at the time of acquisition and is usually less than one year. Expenditures for maintenance and repairs are charged to operations as incurred. Real estate is classified as held for sale when management has determined that the applicable criteria have been met. Real estate assets that are expected to be disposed of are valued at the lower of their carrying amount or their fair value less costs to sell on an individual asset basis. Real estate classified as held for sale is not depreciated. The Company accounts for the sale of real estate when title passes to the buyer, sufficient equity payments have been received, there is no continuing involvement by the Company and there is reasonable assurance that the remaining receivable, if any, will be collected. Real Estate Asset Impairments The Company reviews each real estate asset owned quarterly to determine if there are indicators of impairment. If such indicators are present, the Company determines whether the carrying amount of the asset can be recovered. Recognition of impairment is required if the undiscounted cash flows estimated to be generated by the asset are less than the asset's carrying amount and that carrying amount exceeds the estimated fair value of the asset. The impairment recognized is the difference between the carrying value and the fair value. The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property. The analysis includes an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends, the effects of leasing demands, and other factors. In evaluating a property for F-11 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) impairment, various factors are considered, including estimated current and expected operating cash flow from the property during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of such real estate in the ordinary course of business. Valuation adjustments may be necessary in the event that effective interest rates, rent-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property. If future evaluations result in a decrease in the value of the property below its carrying value, the reduction will be recognized as an impairment charge. The fair values related to the impaired real estate assets are considered to be a level 3 valuation within the fair value hierarchy because they are based on unobservable inputs and are subjective in nature. For investment in real estate ventures, if indicators of impairment are present, the Company determines if the fair value of the investment is less than its carrying value. Fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the asset. The fair values related to the impaired investments in real estate ventures are considered to be a level 3 valuation within the fair value hierarchy. Loan receivables Loan receivables represent preferred equity investments that were funded by the Company with the intent and ability to hold to maturity or payoff. At the inception of each investment we determine whether such investment should be accounted for as a loan, equity interest or real estate. We have determined that all such investments are properly accounted for and reported as loans. Loans receivable are held for investment and may be subordinate to other senior loans. Loans receivable are reported at their unpaid principal balance, net of any deferred loan costs, and allowance for current expected credit losses (“CECL”). Unamortized premiums, discounts or deferred loans costs are deferred and amortized over the estimated life of the loan using the effective interest method and recognized in "Loan interest and other income" in the Company’s Consolidated Statement of Operations. The Company monitors the credit quality of its loans receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the related property, the seniority of the Company’s loan in relation to other debt and the prospects of the borrower. Given the small number of loans outstanding, the Company believes the characteristics of these receivables are not sufficiently similar to allow an evaluation as a group for CECL allowance. As such, all of the Company’s loans are evaluated individually for this purpose. The Company evaluates the collectability of both principal and interest based upon an assessment of the underlying value of the investment to determine whether these receivables are impaired. In accordance with accounting guidance, the Company it treating its preferred equity investments as loans. Despite participating in the expected residual profit, each borrower (i.e., the sponsor/owner of the multi-family property in which the Company made a preferred equity investment) has a cash equity investment substantial to the project that are not funded by the mortgage lender. As such these arrangements are accounted for as loan receivables. Allowance for Credit Losses on Loan Receivables The CECL reserve required under ASU 2016-13 “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments (Topic 326)” (“ASU 2016-13”), reflects the Company's estimate as of the balance sheet date of potential credit losses related to its loan portfolio. Changes to the CECL reserve are recognized through a provision for or reversal of current expected credit loss reserve on the Company's consolidated statements of operations. ASU 2016-13 specifies the reserve should be based on relevant information about past events, including historical loss experience, current loan portfolio, market conditions and reasonable and supportable macroeconomic forecasts for the duration of each loan. The Company has elected to apply the practical expediant to exclude accrued interest receivable from the amortized cost basis of the receivables. The Company considers key credit quality indicators in underwriting loans and estimating credit losses, including: the capitalization of borrowers and sponsors; the expertise of the sponsors in a particular real estate sector and geographic market; collateral type; geographic region; use and occupancy of the property; property market value; loan amount and lien position; industry risk rating for the same and similar loans; and prior experience with the sponsor. Such analyses are completed and reviewed by asset management personnel and evaluated by senior management on at least a quarterly basis, utilizing various F-12 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) data sources, including, to the extent available, (i) periodic financial data such as property occupancy, rental rates, capitalization and discount rates, (ii) site inspections, (iii) sales and financing comparables, (iv) current credit spreads for refinancing and (v) other relevant market data. Ultimate repayment of our Preferred Loan Interests is sensitive to interest rate changes, general economic conditions, liquidity, existence of an active sales market for properties, and availability of replacement financing. Adjustments to the allowance are recorded on the Company's Consolidated Statements of Operations as "Provision for credit loss". If the Company has determined that a loan or a portion of the loan is uncollectable, it will write off the uncollectable portion of the loan through an adjustment to its CECL allowance based on the net present value of expected future cash flows. Write-offs are recorded in the period in which the loan balance is deemed uncollectible based on management’s judgment. Equity Based Compensation Compensation expense for grants of restricted stock, restricted stock units ("RSUs") and dividend equivalent rights are amortized over the vesting period of such awards, based upon the estimated fair value of such award at the grant date. The Company recognizes the effect of forfeitures when they occur and previously recognized compensation expense is reversed in the period the grant or unit is forfeited. The deferred compensation related to the performance based RSUs to be recognized as expense is net of certain performance assumptions which are re-evaluated quarterly. For accounting purposes, the shares of restricted stock and the RSUs are not included in the outstanding shares shown on the consolidated balance sheets until they vest; however, the restricted stock is included in the calculation of basic and diluted earnings per share as it participates in the earnings of the Company. Per Share Data Basic earnings (loss) per share is determined by dividing net income (loss) applicable to holders of common stock for the applicable year by the weighted average number of shares of common stock outstanding during such year. Net income is also allocated to the unvested restricted stock outstanding during each period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. The RSUs are excluded from the basic earnings per share calculation, as they are not participating securities. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock that share in the earnings of the Company. Diluted earnings per share is determined by dividing net income applicable to common stockholders for the applicable period by the weighted average number of shares of common stock deemed to be outstanding during such period. In calculating diluted earnings per share, the Company includes only those shares underlying the RSUs that it anticipates will vest based on management's estimates which are evaluated quarterly. The Company excludes any shares underlying the RSUs from such calculation if their effect would have been anti-dilutive. Cash Equivalents Cash equivalents consist of highly liquid investments; primarily, direct United States treasury obligations with maturities of three months or less when purchased. Restricted Cash Restricted cash consists of cash held for construction costs and property improvements for specific joint venture properties as may be required by contractual arrangements Segment Reporting On January 1, 2024, the Company adopted the FASB ASU No. 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. F-13 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) Substantially all of the Company’s real estate assets, at acquisition, are comprised of real estate owned that is leased to tenants on a short-term basis. Therefore, the Company aggregates real estate assets for reporting purposes and operates in one reportable segment. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. As the Company operates in one reportable segment, the CODM is provided financial reports which include (i) a consolidated and property level income statements (detailing total revenues, total real estate operating expenses and net income). These financial reports assist the CODM in assessing the Company’s financial performance and in allocating resources appropriately. Other Assets Other assets consist of real estate tax , insurance and replacement escrows (all of the foregoing classified as restricted cash within the consolidated statement of cash flows), lease intangibles, tenant receivables, prepaid expenses and other receivables. Deferred Costs Fees and costs incurred in connection with multi-family property financings are deferred and amortized over the term of the related debt obligations. Fees and costs paid related to the successful negotiation of commercial leases are deferred and amortized on a straight-line basis over the terms of the respective leases and are included in other assets on the consolidated balance sheets. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. NOTE 2— REAL ESTATE PROPERTIES Real estate properties consist of the following (dollars in thousands): December 31, 2024 2023 Land $ 74,246 $ 74,246 Building 616,979 616,979 Building improvements 31,115 25,110 Real estate properties 722,340 716,335 Accumulated depreciation ( 106,425 ) ( 80,499 ) Total real estate properties, net $ 615,915 $ 635,836 A summary of activity in real estate properties, net, for the year ended December 31, 2024 follows (dollars in thousands): December 31, 2023 Balance Improvements Depreciation Asset Sale December 31, 2024 Balance Multi-family $ 634,045 $ 6,005 $ ( 25,815 ) $ — $ 614,235 Retail shopping center - Yonkers, NY/Other 1,791 147 ( 111 ) ( 147 ) 1,680 Total real estate properties $ 635,836 $ 6,152 $ ( 25,926 ) $ ( 147 ) $ 615,915 F-14 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 2—REAL ESTATE PROPERTIES (continued) The following summarizes, by state, information for the year ended December 31, 2024 regarding consolidated properties (dollars in thousands): Location Number of Properties Number of Units 2024 Rental and Other Revenue % of 2024 Rental and Other Revenue Tennessee 2 702 $ 14,048 15 % Mississippi 2 776 12,648 13 % Alabama 3 740 11,391 12 % Georgia 3 688 10,610 11 % Florida 2 518 9,458 10 % Texas 3 600 9,342 10 % South Carolina 2 474 8,813 9 % Virginia 1 220 4,868 5 % North Carolina 1 264 4,295 5 % Ohio 1 264 3,935 4 % Missouri 1 174 3,770 4 % Other (a) — — 1,595 2 % 21 5,420 $ 94,773 __________________________________________ (a) Represents non-multi-family revenues. Future minimum rentals to be received pursuant to non-cancellable operating leases with terms in excess of one year, from a commercial property owned by the Company at December 31, 2024, are as follows (dollars in thousands): Year Ending December 31, Amount 2025 $ 1,319 2026 1,319 2027 1,319 2028 887 2029 704 Thereafter 4,132 Total $ 9,680 Leases at the Company's multi-family properties are generally for a term of one year or less and are not reflected in this table. NOTE 3— ACQUISITIONS AND DISPOSITIONS Property Dispositions During the year ended December 31, 2024, the Company sold a cooperative apartment unit located in New York, NY for a sales price of $ 1,050,000 and, after closing costs, recognized a gain of $ 806,000 on the sale. During the year ended December 31, 2023, the Company sold a cooperative apartment unit located in New York, NY for a sales price of $ 785,000 and, after closing costs, recognized a gain of $ 604,000 on the sale. F-15 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 4— RESTRICTED CASH The restricted cash reflected on the consolidated balance sheets represents funds held by the Company specifically allocated for capital improvements at properties where we have a preferred equity investment; such funds are not generally available for general corporate purposes. NOTE 5— LOANS The Company made preferred equity investments in two separate joint ventures which in turn acquired multifamily properties in the locations identified below. In accordance with GAAP, these investments are treated as loans. These investments are unsecured and are subordinate, including the payment of the returns thereon, to the mortgage debt encumbering the property acquired by the applicable joint venture. Information as to these investments at December 31, 2024 is summarized below (dollars and thousands): Location Investment Date Annual Return Current Return Hurdle Return Invested Amount Redemption Date Deferred fees Wilmington, NC October 2024 13 % 6.00 % 7.00 % $ 7,000 November 2031 $ 135 Kennesaw, GA November 2024 13 % 6.50 % 6.50 % 11,250 June 2029 178 $ 18,250 $ 313 These investments provide for (1) an Annual Return ( as set forth in the table above) to the Company, of which the Current Return ( as set forth in the table above) is payable monthly to the extent of remaining cash flow, if any, parri passu or after the sponsor's receipt of its management fees and specified returns on its investment and (2) the total amount invested by the Company, including any unpaid portion of the Current Return and the Hurdle Return, to be payable to the Company, prior to any payments to the sponsor, upon the earlier to occur of certain events ( e.g., sale of the property or the refinancing of the mortgage underlying the property) and the redemption date specified above. The Current Return is recorded as interest income when it is due from the sponsor and the Hurdle Return is recognized as interest income when it is received. The Company's exposure to loss is limited to its original Invested Amount (as set forth in the table above). The following table provides the net carrying value of our loans as of December 31, 2024 (dollars in thousands); December 31, 2024 Unpaid principal balance $ 18,250 less: allowance for credit loss ( 270 ) less: deferred loan fees ( 313 ) Net carrying value $ 17,667 We recorded $ 206,000 of interest income (including loan fee amortization of $ 9,000 ) related to these loans in the year ended December 31, 2024. As of December 31, 2024, these loans were current in their payment of the Current Return. F-16 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 6— ALLOWANCE FOR CREDIT LOSS Changes in the Company's allowance for credit loss were as follows for the year ended December 31, 2024 (in thousands): December 31, 2024 CECL allowance at beginning of year $ — Provision for credit loss 270 Write-offs — Balance at end of year $ 270 There was no CECL allowance for the year ended December 31, 2023. NOTE 7— LEASES Lessor Accounting The Company owns a commercial property which is leased to two tenants under operating leases with current expirations ranging from 2028 to 2035, with options to extend or terminate the leases. Revenues from such leases are reported as rental income, net, and are comprised of (i) lease components, which includes fixed lease payments and (ii) non-lease components, which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components as the timing and pattern of transfer are the same, and accounts for the combined component in accordance with ASC 842. Lessee Accounting The Company is a lessee under a ground lease in Yonkers, NY which is classified as an operating lease. The ground lease is scheduled to expire on June 30, 2045. There are no renewal options. As of December 31, 2024 , the remaining lease term is 20.5 years. The Company is a lessee under a corporate office lease in Great Neck, NY, which is classified as an operating lease. The lease expires on December 31, 2031 and provides a five-year renewal option. As of December 31, 2024, the remaining lease term, including renewal options deemed exercised, is 12.0 years. As of December 31, 2024 , the Company's right-of-use ("ROU") assets and lease liabilities were $ 2,003,000 and $ 2,167,000 , respectively and as of December 31, 2023, the Company's ROU assets and lease liabilities were $ 2,183,000 and $ 2,318,000 , respectively. The ROU assets and lease liabilities are reported on the consolidated balance sheets in Other assets and Accounts payable and accrued liabilities , respectively. The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing rate (“IBR”). The Company considers the general economic environment and its historical borrowing rate activity and factors in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. As the Company did not elect to apply the hindsight practical expedient, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842. F-17 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 7—LEASES continued) As of December 31, 2024, the minimum future lease payments related to the operating ground and office leases are as follows (dollars in thousands): Year Ending December 31, Amount 2025 $ 251 2026 257 2027 262 2028 267 2029 274 Thereafter 2,701 Total undiscounted cash flows $ 4,012 Present value discount ( 1,845 ) Lease liability $ 2,167 NOTE 8— INVESTMENT IN UNCONSOLIDATED VENTURES At December 31, 2024 and 2023, the Company owned interests in unconsolidated joint ventures (the "Unconsolidated Properties") that owns multi-family properties (including Stono Oaks that was in lease-up at December 31, 2024 and that was a development project at December 31, 2023). The condensed balance sheets below presents information regarding such investments (other than the preferred equity investments) (dollars in thousands): December 31, 2024 2023 ASSETS Real estate properties, net of accumulated depreciation of $ 81,843 and $ 69,970 $ 318,594 $ 275,874 Cash and cash equivalents 5,549 6,447 Other Assets (1) 5,567 54,715 Total Assets $ 329,710 $ 337,036 LIABILITIES AND EQUITY Liabilities: Mortgages payable, net of deferred costs of $ 837 and $ 1,135 $ 251,112 $ 246,966 Accounts payable and accrued liabilities 5,148 8,751 Total Liabilities 256,260 255,717 Commitments and contingencies Equity: Total unconsolidated joint venture equity 73,450 81,319 Total Liabilities and Equity $ 329,710 $ 337,036 Company equity interest in all joint venture equity $ 31,344 $ 34,242 ___________________________________ (1) Includes work-in-process at December 31, 2023 of approximately $ 46,509 , related to Stono Oaks. F-18 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 8—INVESTMENT IN UNCONSOLIDATED VENTURES (continued) The condensed income statements below presents information regarding the Unconsolidated Properties (dollars in thousands): Year Ended December 31, 2024 2023 Revenues: Rental and other revenue $ 45,182 $ 44,785 Total revenues 45,182 44,785 Expenses: Real estate operating expenses 21,840 20,577 Interest expense 11,357 9,268 Depreciation 11,873 10,403 Total expenses 45,070 40,248 Total revenues less total expenses 112 4,537 Other equity earnings 235 126 Gain on insurance recoveries — 65 Gain on sale of real estate properties — 38,418 Loss on extinguishment of debt — ( 561 ) Net income from joint ventures $ 347 $ 42,585 BRT equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 1,644 $ 17,037 Dispositions of Properties The table below provides information regarding the disposition of real estate properties by unconsolidated joint ventures in the year ended December 31, 2023 (dollars in thousands): Location Sale Date Number of Units Sale Price Gain on Sale BRT Share of Gain on Sale BRT Share of Loss of Extinguishment on Debt Chatham Court and Reflections - Dallas, TX 5/12/2023 494 $ 73,000 $ 38,418 $ 14,744 $ 212 F-19 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 9— DEBT OBLIGATIONS Debt obligations consist of the following (dollars in thousands): December 31, 2024 2023 Mortgages payable $ 450,481 $ 426,436 Junior subordinated notes 37,400 37,400 Credit facility — — Deferred loan costs (1) ( 4,247 ) ( 4,266 ) Total debt obligations $ 483,634 $ 459,570 ________________________ (1) Excludes $ 374 and $ 289 at December 31, 2024 and 2023, respectively, of deferred fees related to our credit facility which is reflected in Other Assets. A summary of activity in property debt, net of deferred loan fees, for the year ended December 31, 2024 is as follows (dollars in thousands): Balance at December 31, 2023 $ 422,427 New mortgage 27,375 Amortization of fair value adjustment 558 Principal amortization ( 3,888 ) Changes in deferred fees ( 1 ) Balance at December 31, 2024 $ 446,471 At December 31, 2024, $ 450,481,000 of mortgage debt, all of which is fixed rate, with a weighted average interest rate of 4.09 % and a weighted average remaining term to maturity of 6.1 years, is outstanding on 19 of the Company's multi-family properties. Scheduled principal repayments for the periods indicated are as follows (dollars in thousands): Year Ending December 31, Scheduled Principal Payments 2025 $ 19,860 2026 74,622 2027 46,190 2028 40,697 2029 56,272 Thereafter 212,840 $ 450,481 F-20 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 9—DEBT OBLIGATIONS (continued) The unamortized balance of acquisition related mortgage intangibles, which is included in mortgages payable in the consolidated balance sheet, was $ 829 at December 31, 2024 and will be amortized as follows (dollars in thousands): Year Ending December 31, Amount 2025 $ 501 2026 214 2027 ( 28 ) 2028 — 2029 127 Thereafter 15 Total $ 829 On August 22, 2024, the Company obtained mortgage debt of $ 27,375,000 on its Woodland Trails - LaGrange, GA multi-family property; such mortgage debt matures in September 2031, bears an interest rate of 5.22 % and is interest only for the term of the mortgage. On February 24, 2023, the Company obtained mortgage debt of $ 21,173,000 on its Silvana Oaks - North Charleston, SC multi-family property; such mortgage debt matures in March 2033, bears an interest rate of 4.45 % and is interest only for the term of the mortgage. Interest expense for the years ended December 31, 2024 and 2023, which includes amortization of deferred loans fees and fair value adjustments, was $ 19,372,000 and $ 18,819,000 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 can be used to facilitate the acquisition of multi-family properties, repay mortgage debt secured by multi family properties and for operating expense ( i.e., working capital (including dividend payments)); provided that no more than $ 25,000,000 may be used for operating expenses. The facility 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. The interest rate on the credit facility, which adjusts monthly and is subject to a floor of 6.00 %, equals one-month term SOFR plus 250 basis points. The interest rate in effect as of December 31, 2024 and February 28, 2025 was 6.96 % and 6.83 %, respectively. There is an unused facility fee of 0.25 % per annum on the total amount committed by VNB and unused by the Company. At December 31, 2024, the Company is in compliance in all material respects with its obligations under the facility. At December 31, 2024, and February 28, 2025, there was no outstanding balance on the facility and $ 40,000,000 was available to be borrowed. At December 31, 2023, there was no outstanding balance of on the facility. There was no average balance outstanding on the facility for 2024 and for 2023 it was $ 2,811,000 . Interest expense for the years ended December 31, 2024 and 2023, which includes amortization of deferred financing costs and unused fees, was $ 365,000 and $ 574,000 , respectively. Deferred costs of $ 374,000 and $ 289,000 are recorded in Other Assets on the consolidated balance sheets at December 31, 2024 and 2023, respectively. Junior Subordinated Notes At December 31, 2024 and 2023, the outstanding principal balance of the Company's junior subordinated notes was $ 37,400,000 , before deferred financing costs of $ 237,000 and $ 257,000 , respectively. The interest rate on the outstanding balance resets quarterly and is based on three month term SOFR + 2.26 %. The rate in effect at December 31, 2024 and 2023 was 6.85 % and 7.65 %, respectively. The notes mature April 30, 2036. F-21 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 9—DEBT OBLIGATIONS (continued) The notes require interest only payments through the maturity date, at which time repayment of all outstanding principal and unpaid interest is due. Interest expense for the years ended December 31, 2024 and 2023, which includes amortization of deferred costs, was $ 2,859,000 and $ 2,768,000 , respectively. NOTE 10— INCOME TAXES The Company elected to be taxed as a REIT pursuant to the Code. As a REIT, the Company is generally not subject to Federal income taxes at the corporate level if it distributes 100% of its REIT taxable income, as defined, to its stockholders. To maintain its REIT status, the Company must distribute at least 90% of its ordinary taxable income; however, if it does not distribute 100% of its taxable income, it will be taxed on undistributed income. There are a number of organizational and operational requirements the Company must meet to remain a REIT. If the Company fails to qualify as a REIT in any taxable year, its taxable income will be subject to Federal income tax at regular corporate tax rates and it may not be able to qualify as a REIT for four subsequent tax years. Even if it is qualified as a REIT, the Company is subject to certain state and local income taxes and to Federal income and excise taxes on undistributed taxable income. For income tax purposes, the Company reports on a calendar year basis. As of December 31, 2024, tax returns for the calendar years 2021 through 2023 remain subject to examination by the Internal Revenue Service and various state and local tax jurisdictions. During the years ended December 31, 2024 and 2023, the Company recorded $( 226,000 ) and $ 54,000 , respectively, of state franchise tax (benefit) expense, net of refunds, relating to the 2024 and 2023 calendar years. Earnings and profits, which determine the taxability of dividends to stockholders, differs from net income reported for financial statement purposes due to various items, including timing differences related to impairment charges, depreciation methods and carrying values. NOTE 11— STOCKHOLDERS' EQUITY Common Stock Dividend Distribution During the years ended December 31, 2024 and 2023, the Company declared an aggregate of $ 1.00 and $ 1.00 per share in cash dividends, respectively. Stock Based Compensation In 2024, the Company's stockholders approved the 2024 Incentive Plan (the "2024 Plan"). This plan permits the Company to grant: (i) stock options, restricted stock, restricted stock units, performance shares awards and any one or more of the foregoing, for up to a maximum of 1,000,000 shares; and (ii) cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards. As of December 31, 2024, 798,175 shares are available for issuance pursuant to awards under the 2024 Plan. Awards to acquire 600,837 shares of common stock are outstanding under the 2024 Plan, the 2022 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 granted pursuant to the Prior Plans. The table below reflects activity under the 2024 Plan and the Prior Plans: Incentive Plan 2024 Plan 2022 Plan 2020 Plan 2018 Plan Maximum shares 1,000,000 1,000,000 1,000,000 600,000 Restricted shares issued — ( 330,353 ) ( 475,747 ) ( 459,495 ) RSUs issued ( 215,325 ) ( 427,459 ) ( 210,375 ) — Restricted shares and RSUs forfeited 13,500 39,282 4,863 1,000 Expired shares — ( 281,470 ) ( 318,741 ) ( 141,505 ) Remaining shares available to be issued 798,175 (1) — — — (1) Excludes 165,408 restricted shares issued in January 2025. F-22 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 11—STOCKHOLDERS' EQUITY (continued) Restricted Stock In January 2024 and January 2023, the Company granted shares of restricted stock pursuant to the 2022 Plan and 2020 Plan, respectively. The shares of restricted stock generally vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. For financial statement purposes, the restricted stock is not included in the outstanding shares shown on the consolidated balance sheets until they vest, but are included in the basic and diluted earnings per share computation. The weighted average remaining vesting period of the outstanding restricted stock is 1.95 years. Subsequent to December 31, 2024, the Company granted 165,408 stock of restricted stock pursuant to the 2024 Plan. The tables below presents information regarding the changes in the number of shares of restricted stock outstanding under the Company's equity incentive plans, compensation expense and unearned compensation for the periods indicated (dollars in thousands): Year Ended December 31, Restricted Stock Grants: 2024 2023 Unvested at beginning of the year 951,839 934,092 Grants 166,439 163,914 Forfeitures ( 12,825 ) ( 1,670 ) Vested during the year ( 194,524 ) ( 144,497 ) Unvested at the end of the year 910,929 951,839 Amounts charged to compensation expense $ 3,674 $ 3,360 Unearned compensation at period end $ 6,660 $ 7,484 Restricted Stock Units In July 2024 and June 2023, the Company, pursuant to the 2024 Plan and the 2022 Plan, respectively, issued restricted stock units (the "RSUs") to acquire shares of common stock. The RSUs granted entitle the recipients, subject to continued service during the applicable performance period, to (i) shares of common stock, (the "TSR Award"), based on achieving, during the three-year performance period (the "Measurement Period"), specified levels in compounded annual growth rate ("CAGR") in total stockholder return (“TSR”), and (ii) shares of common stock based on achieving, during the Measurement Period, specified levels in CAGR in adjusted funds from operations (the "AFFO Award"), in each case as determined pursuant to the award agreement. In addition, with respect to each of the RSUs granted in 2024 and 2023, additional shares (the "Peer Group Adjustment") may be added to or subtracted from the TSR Award based on attaining or failing to attain, as the case may be, during the Measurement Period, of specified levels of CAGR in TSR in comparison to the REITs that comprise, with specified exceptions, the FTSE NAREIT Equity Apartment Index. The RSU recipients also received dividend equivalent rights entitling them to an amount equal to cash dividends they would have received with respect to the shares of common stock underlying their RSUs as if the underlying shares were outstanding during the Measurement Period, if, when, and to the extent, the related RSUs vest. The shares underlying the RSUs are not participating securities but are contingently issuable shares. F-23 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 11—STOCKHOLDERS' EQUITY (continued) The tables below presents activity and changes in the number of RSUs under the Company's equity incentive plans, compensation expense and unearned compensation for the periods indicated (dollars in thousands): Year Ended December 31, 2024 2023 RSUs: Unvested units at beginning of year 634,490 420,739 Grants - TSR Awards 95,700 95,550 Grants - TSR Peer group adjustment 23,925 23,890 Grants - AFFO Awards 95,700 95,550 Total RSUs granted in applicable year 215,325 214,990 Vested ( 123,384 ) — Forfeitures ( 39,656 ) ( 1,239 ) Expired ( 85,938 ) — Total unvested RSUs at end of year 600,837 634,490 Amounts charged to compensation expense $ 1,203 $ 1,408 Unearned compensation at period end $ 1,692 $ 1,999 For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to assist management in determining fair value. The Monte Carlo valuation consisted of computing the grant date fair value of the awards using the Company's simulated stock price. For these TSR awards, the per unit of share fair value was estimated using the following assumptions: Award Year Expected Life ( yrs) Dividend Rate Risk-Free Interest Rate Expected Price Volatility 2024 3 5.38 % 4.26 % to 5.17 % 29.84 % to 31.70 % 2023 3 5.08 % 4.42 % to 5.28 % 28.99 % to 37.97 % For the AFFO Awards granted, fair value is based on the market value on the date of grant. Expense is not recognized on RSUs which the Company does not expect to vest because the performance conditions are not expected to be satisfied. Performance assumptions are re-evaluated quarterly.The total amount recorded at the grant date as deferred compensation with respect to the AFFO awards granted in 2024 and 2023 was $ 1,132,000 and $ 1,879,000 respectively. The following table reflects the compensation expense recorded for all equity incentive plans (dollars in thousands): Year Ended December 31, 2024 2023 Restricted stock $ 3,674 $ 3,360 RSUs 1,203 1,408 Total compensation $ 4,877 $ 4,768 F-24 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 11—STOCKHOLDERS' EQUITY (continued) Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands): Year Ended December 31, 2024 2023 Numerator for basic and diluted earnings per share: Net (loss) income $ ( 9,636 ) $ 4,015 Deduct (earnings) attributable to non-controlling interests ( 155 ) ( 142 ) Deduct loss (earnings) allocated to unvested restricted stock 493 ( 953 ) Net (loss) income available for common stockholders: basic and diluted $ ( 9,298 ) $ 2,920 Denominator for basic earnings per share: Weighted average number of common shares outstanding 17,752,226 17,918,270 Effect of dilutive securities: RSUs — 30,006 Denominator for diluted earnings per share: Weighted average number of shares 17,752,226 17,948,276 (Loss) earnings per common share, basic $ ( 0.52 ) $ 0.16 (Loss) earnings per common share, diluted $ ( 0.52 ) $ 0.16 Equity Distribution Agreements In May 2023, the Company (i) terminated the equity distribution agreements dated March 18, 2022 and (ii) entered into equity distribution agreements with three sales agents to sell up to $ 40,000,000 of shares of its common stock from time-to-time in an at-the-market offering. During the years ended December 31, 2024 and 2023, the Company did not sell any shares. At December 31, 2024, the Company is authorized to sell an aggregate of $ 40,000,000 of shares pursuant to the equity distribution agreements. Share Repurchase Pursuant to the Company’s repurchase program(s), as amended from time to time, the Company is authorized to repurchase shares of its common stock through open-market transactions, privately negotiated transactions, or otherwise. During the year ended December 31, 2024, the Company purchased 193,529 shares of common stock for total consideration of approximately $ 3,495,000 , net of commissions of $ 12,000 . During the year ended December 31,2023, the Company repurchased 779,423 shares of common stock for total consideration of approximately $ 14,397,000 , net of commissions of $ 44,000 . As of December 31, 2024, the Company is authorized to repurchase approximately $ 6,089,000 of shares of common stock. From January 1, 2025 through February 28, 2025, the Company repurchased 65,018 shares of common stock at an average price per share of $ 17.49 for an aggregate cost of $ 1,137,000 . At February 28, 2025, the Company is authorized to repurchase up to $ 4,952,000 of shares of common stock through December 31, 2025. On March 11, 2025, the Board of Directors authorized the repurchase of up to $ 10,000,000 shares of stock through December 31, 2026. F-25 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 11—STOCKHOLDERS' EQUITY (continued) Dividend Reinvestment Plan The Dividend Reinvestment Plan (the “DRP”), which was reauthorized in 2024, among other things, provides stockholders with the opportunity to reinvest all or a portion of their cash dividends paid on the Company’s common stock in additional shares of its common stock, at a discount, determined in the Company’s sole discretion, of up to 5 % from the market price for the common stock (as such price is calculated pursuant to the DRP). The discount from the market price as of December 31, 2024 was 3 %. In the year ended December 31, 2024 and 2023, the Company issued 211,135 and 165,228 shares in lieu of cash dividends of $ 3,626,000 and $ 3,034,000 , respectively. NOTE 12— RELATED PARTY TRANSACTIONS The Company has retained certain of its part-time executive officers and Fredric H. Gould, a director, to provide, among other things, the following services: participating in the Company's multi-family property analysis and approval process (which includes service on an investment committee), providing investment advice, and long-term planning and consulting with executives and employees with respect to other business matters, as required. The aggregate fees paid in 2024 and 2023 for these services were $ 1,618,000 and $ 1,541,000 , respectively. Management of certain properties owned by the Company and certain joint venture properties is provided by Majestic Property Management Corp. ("Majestic Property"), a company wholly owned by Fredric H. Gould, under renewable year-to-year agreements. Certain of the Company's officers and directors are also officers and directors of Majestic Property. Majestic Property provides real property management, real estate brokerage and construction supervision services for these properties. For the years ended December 31, 2024 and 2023, fees for these services were $ 37,000 and $ 34,000 , respectively. Pursuant to a shared services agreement between the Company and several affiliated entities, including Gould Investors L.P., the owner and operator of a diversified portfolio of real estate and other assets and One Liberty Properties, Inc., a NYSE listed equity REIT ("One Liberty"), the (i) services of the part time personnel that perform certain executive, administrative, legal, accounting and clerical functions and (ii) certain facilities and other resources, are provided to the Company. The allocation of expenses for the facilities, personnel and other resources shared by, among others, the Company and Gould Investors, is computed in accordance with such agreement and is included in general and administrative expense on the consolidated statements of operations. During the years ended December 31, 2024 and 2023, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $ 698,000 and $ 642,000 , respectively. As of December 31, 2024 and 2023, $ 130,000 and $ 142,000 , res pectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets. At December 31, 2024, Gould Investors owned approximately 20.5 % of BRT’s outstanding common stock. Certain of the Company's officers and directors are also officers and directors of One Liberty and Georgetown Partners, LLC, the managing general partner of Gould Investors. The Company obtains certain insurance in conjunction with Gould Investors and reimburses Gould Investors for the Company's share of the insurance cost. Insurance reimbursements to Gould Investors for the years ended December 31, 2024 and 2023 were $ 28,000 and $ 22,000 , respectively. F-26 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 13— FAIR VALUE OF FINANCIAL INSTRUMENTS The Company estimates the fair value of financial assets and liabilities based on the framework established in fair value accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: • Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets and liabilities in active markets • Level 2— inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3— inputs to the valuation methodology are unobservable and significant to fair value. The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not reported at fair value on the consolidated balance sheets: Cash and cash equivalents, restricted cash, accounts receivable (included in other assets), accounts payable and accrued liabilities: The carrying amounts reported on the balance sheets for these instruments approximate their fair value due to the short term nature of these accounts. Loan Receivables: At December 31, 2024, the estimated fair value of the Company's loan receivables, equaled their carrying value due to their recent origination. Junior subordinated notes: At December 31, 2024, and 2023, the estimated fair value of the Company's junior subordinated notes is less than their carrying value by approximately $ 3,578,000 and $ 3,613,000 , respectively, based on market interest rates of 7.94 % and 8.60 %, respectively. Mortgages payable: At December 31, 2024, the estimated fair value of the Company's mortgages payable is less than their carrying value by approximately $ 39,277,000 , assuming market interest rates between 5.38 % and 6.61 %. At December 31, 2023, the estimated fair value was less than the carrying value by $ 34,195,000 , assuming market interest rates between 4.88 % and 6.23 %. Market interest rates were determined using current financing transaction information provided by third party institutions. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value assumptions. The fair values of debt obligations are considered to be Level 2 valuations within the fair value hierarchy. Financial Instruments Measured at Fair Value The Company's fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, there is a fair value hierarchy that distinguishes between markets participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions. Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other "observable" market inputs and Level 3 assets/liabilities are valued based significantly on "unobservable" market inputs. The Company does not currently own any financial instruments that are classified as Level 3. At December 31, 2024 and 2023, the Company had no financial assets or liabilities measured at fair value. F-27 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 14— COMMITMENT AND CONTINGENCIES From time to time, the Company and/or its subsidiaries are parties to legal proceedings that arise in the ordinary course of business, and in particular, personal injury claims involving the operations of the Company's properties. Although management believes that the primary and umbrella insurance coverage maintained with respect to such properties is sufficient to cover NOTE 14—COMMITMENT AND CONTINGENCIES (continued) claims for compensatory damages, many of these personal injury claims also assert claims for exemplary ( i.e punitive) damages. Generally, insurance does not cover claims for punitive or exemplary damages. The Company maintains a non-contributory defined contribution pension plan covering eligible employees and officers. Contributions by the Company are made through a money purchase plan and the amounts of such contributions are based upon a percent of qualified employees' total salary as defined therein. Pension expense approximated $ 515,000 and $ 473,000 during the years ended December 31, 2024 and 2023, respectively. At December 31, 2024 and 2023, $ 120,000 and $ 73,000 , respectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets. At December 31, 2024, the Company is the carve-out guarantor with respect to mortgage debt in principal amount of $ 443,107,000 at 18 multi-family properties. NOTE 15— NEW ACCOUNTING PRONOUNCEMENT In November 2024, the FASB issued ASU No. 2024 – 03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220–40): Disaggregation of Income Statement Expenses. This ASU aims to enhance financial reporting transparency by requiring disaggregated disclosure of income statement expenses for public business entities ("PBEs"). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories within the footnotes to the financial statements. ASU 2024-03 adds ASC 220-40 to require a footnote disclosure about specific expenses by requiring PBEs to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization (DD&A) recognized as part of oil- and gas-producing activities or other types of depletion expenses. The tabular disclosure would also include certain other expenses, when applicable. The ASU does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. ASU No. 2024 – 03 is applicable for fiscal years beginning after December 15, 2026. The Company is evaluating the new guidance to determine impact on the Company’s consolidated financial statements. F-28 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 16— QUARTERLY FINANCIAL DATA (Unaudited) 2024 1st Quarter Jan - March 2nd Quarter April - June 3rd Quarter July - Sept 4th Quarter Oct - Dec Total For Year Revenues: Rental and other revenue $ 23,298 $ 23,778 $ 24,177 $ 23,520 $ 94,773 Other income 105 84 219 449 857 Total revenues 23,403 23,862 24,396 23,969 95,630 Expenses: Real estate operating expenses 10,579 10,846 11,187 10,943 43,555 Interest expense 5,523 5,500 5,745 5,828 22,596 General and administrative 4,152 3,813 3,811 3,819 15,595 Provision for credit loss — — — 270 270 Depreciation 6,435 6,466 6,499 6,526 25,926 Total expenses 26,689 26,625 27,242 27,386 107,942 Total revenues less total expenses ( 3,286 ) ( 2,763 ) ( 2,846 ) ( 3,417 ) ( 12,312 ) Equity in earnings of unconsolidated joint ventures 228 389 369 658 1,644 Gain on sale of real estate — — — 806 806 Income (loss) income from continuing operations ( 3,058 ) ( 2,374 ) ( 2,477 ) ( 1,953 ) ( 9,862 ) Provision for taxes 78 ( 65 ) ( 310 ) 71 ( 226 ) Net (loss) income from continuing operations, net of taxes ( 3,136 ) ( 2,309 ) ( 2,167 ) ( 2,024 ) ( 9,636 ) Income attributable to non-controlling interests ( 35 ) ( 36 ) ( 38 ) ( 46 ) ( 155 ) Net (loss) income attributable to common stockholders $ ( 3,171 ) $ ( 2,345 ) $ ( 2,205 ) $ ( 2,070 ) ( 9,791 ) Basic and diluted and per share amounts attributable to common stockholders Basic (loss) income per share $ ( 0.17 ) $ ( 0.13 ) $ ( 0.12 ) $ ( 0.11 ) $ ( 0.52 ) Diluted (loss) income per share $ ( 0.17 ) $ ( 0.13 ) $ ( 0.12 ) $ ( 0.11 ) $ ( 0.52 ) F-29 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2024 NOTE 16—QUARTERLY FINANCIAL DATA (Unaudited) (Continued) 2023 1st Quarter Jan - March 2nd Quarter April - June 3rd Quarter July - Sept 4th Quarter Oct - Dec Total For Year Revenues: Rental and other revenue $ 22,939 $ 23,255 $ 23,510 $ 23,365 $ 93,069 Interest and other income — 63 342 143 548 Total revenues 22,939 23,318 23,852 23,508 93,617 Expenses: Real estate operating expenses 10,434 10,548 10,583 10,256 41,821 Interest expense 5,483 5,513 5,581 5,584 22,161 General and administrative 4,055 3,848 4,017 3,513 15,433 Depreciation 8,008 7,543 6,544 6,389 28,484 Total expenses 27,980 27,452 26,725 25,742 107,899 Total revenues less total expenses ( 5,041 ) ( 4,134 ) ( 2,873 ) ( 2,234 ) ( 14,282 ) Equity in earnings of unconsolidated joint ventures 815 464 426 588 2,293 Equity in earnings from sale of unconsolidated joint venture properties — 14,744 — — 14,744 Gain on sale of real estate — — 604 — 604 Casualty loss — — — ( 323 ) ( 323 ) Insurance recovery of casualty loss — 215 261 317 793 Gain on insurance recoveries 240 — — — 240 Income (loss) from continuing operations ( 3,986 ) 11,289 ( 1,582 ) ( 1,652 ) 4,069 Provision (benefit) for taxes 76 51 ( 122 ) 49 54 Income (loss) from continuing operations, net of taxes ( 4,062 ) 11,238 ( 1,460 ) ( 1,701 ) 4,015 Income attributable to non-controlling interests ( 36 ) ( 36 ) ( 34 ) $ ( 36 ) ( 142 ) Net income (loss) income attributable to common stockholders $ ( 4,098 ) $ 11,202 $ ( 1,494 ) $ ( 1,737 ) 3,873 Basic and per share amounts attributable to common stockholders Basic income (loss) per share $ ( 0.21 ) $ 0.59 $ ( 0.08 ) $ ( 0.11 ) $ 0.16 Diluted income (loss) per share $ ( 0.21 ) $ 0.58 $ ( 0.08 ) $ ( 0.11 ) $ 0.16 NOTE 17— SUBSEQUENT EVENTS Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of December 31, 2024 that warrant additional disclosure have been included in the notes to the consolidated financial statements. F-30 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION DECEMBER 31, 2024 (Dollars in thousands) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount At Which Carried at December 31, 2024 Depreciation Life Description Encumbrances Land Buildings and Improvements Land Improvements Land Buildings and Improvements Total (a) Accumulated Depreciation Date of Construction Date Acquired Commercial Yonkers, NY. $ — — $ 4,033 — $ 287 — $ 4,320 $ 4,320 $ 2,640 (b) Aug-2000 39 years Multi-Family Residential North Charleston, SC 21,173 2,435 18,970 — 2,025 2,435 20,994 23,429 9,044 2010 Oct-2012 30 years Decatur, GA — 1,698 8,676 — 3,251 1,698 11,927 13,625 5,175 1954 Nov-2012 30 years Columbus, OH 8,202 1,372 12,678 — 960 1,372 13,638 15,010 5,454 1999 Nov-2013 30 years Pensacola, FL — 2,758 25,192 — 2,387 2,758 27,579 30,337 9,639 2008 Dec-2014 30 years San Marcos, TX 15,628 2,303 17,309 — 933 2,303 18,242 20,545 3,958 2014 Oct-2019 30 years LaGrange, GA 27,375 832 21,969 — 1240 832 23,209 24,041 7,517 2009 Nov-2015 30 years Fredericksburg, VA 24,764 7,540 32,316 — 2,865 7,540 35,181 42,721 8,825 2005 Jul-2018 30 years Nashville, TN 52,000 6,172 77,532 — 1,289 6,172 78,821 84,993 10,296 2017 Sept -2021 30 years Greenville, SC 25,999 4,033 34,064 — 1,143 4,033 35,207 39,240 4,429 1998 Oct-2021 30 years Nashville, TN 37,680 9,679 29,114 — 2,983 9,679 32,097 41,776 3,887 1985 Dec-2021 30 years San Antonio, TX 26,920 3,336 33,437 — 522 3,336 33,959 37,295 3,902 2018 March-2022 30 years Creve Coeur, MO 29,700 5,466 30,796 — 462 5,466 31,258 36,724 3,392 2019 April-2022 30 years Tallahassee, FL 20,708 3,398 27,167 — 736 3,398 27,903 31,301 3,004 1997 May-2022 30 years Huntsville, AL 18,952 1,959 20,079 — 1,391 1,959 21,470 23,429 2,232 1992 May-2022 30 years Boerne, TX 7,576 1,289 12,984 — 493 1,289 13,477 14,766 1,337 2008 May-2022 30 years Macon, GA 9,816 2,866 16,423 — 218 2,866 16,641 19,507 1,638 1989 June-2022 30 years Southaven, MS 26,191 3,646 45,535 — 2,002 3,646 47,536 51,182 4,837 2003 July-2022 30 years Southaven, MS 28,707 3,847 46,433 — 2,075 3,847 48,508 52,355 4,992 2006 July-2022 30 years Wilmington, NC 23,160 3,468 37,311 — 1,597 3,468 38,908 42,376 3,955 2003 July-2022 30 years Trussville, AL 32,250 4,095 42,943 — 1,109 4,095 44,052 48,147 4,063 2007 July-2022 30 years Madison, AL 14,508 2,054 22,018 — 1,149 2,054 23,167 25,221 2,209 1992 Aug-2022 30 years Total $ 451,309 $ 74,246 $ 616,979 $ — $ 31,117 $ 74,246 $ 648,094 $ 722,340 $ 106,425 F-31 Table of Contents Index BRT REALTY TRUST AND SUBSIDIARIES SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION DECEMBER 31, 2024 (Dollars in thousands) Notes to the schedule: (a) Total real estate properties $ 722,340 Less: Accumulated depreciation ( 106,425 ) Net real estate properties $ 615,915 (b) Information not readily obtainable. A reconciliation of real estate properties is as follows: 2024 2023 Balance at beginning of year $ 635,836 $ 651,603 Additions: Acquisitions — — Capital improvements 6,152 9,643 Capitalized development expenses and carrying costs — — 6,152 9,643 Deductions: Sales 147 106 Depreciation 25,926 25,304 26,073 25,410 Balance at end of year $ 615,915 $ 635,836 F-32 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 2024 (Dollars in thousands) Description Interest Rate Final Maturity Date Periodic Payment Terms Prior Liens Face Amount of Mortgages Carrying Value of Mortgages Principal Amount of Loans subject to delinquent principal or interest Multi-Family, Wilmington, NC 6 % November 2031 Current Return monthly;principal at maturity $ 30,191 $ 7,000 $ 6,763 $ — Multi-Family, Kennesaw, GA 7 % June 2029 Current Return monthly;principal at maturity 21,123 11,250 10,904 — Total $ 18,250 $ 17,667 $ — See notes 1,5 and 6 to the consolidated financial statements. F-33 Table of Contents Index BRT APARTMENTS CORP. AND SUBSIDIARIES SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 2024 Notes to the schedule: (a) The following summary reconciles mortgage loans at their carrying values: 2024 Balance at beginning of year $ — New loan receivables 18,250 Deferred loan fee income amortization 9 18,259 Deductions: Deferred fees 322 Provision for credit loss 270 592 Balance at end of year $ 17,667 F-34