10q10k10q10k.net

What changed in BRT Apartments Corp.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of BRT Apartments Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+173 added−168 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-15)

Top changes in BRT Apartments Corp.'s 2023 10-K

173 paragraphs added · 168 removed · 97 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

46 edited+22 added−13 removed30 unchanged
Biggest changeBusiness - Our Multi- Family Properties ", our equity interests in these properties range from 32% to 80% (dollars in thousands): Year Ended December 31, 2022 2021 Increase (Decrease) % change Rental revenues from unconsolidated joint ventures $ 72,873 $ 121,906 $ (49,033) (40.2) % Real estate operating expense from unconsolidated joint ventures 33,086 56,507 (23,421) (41.4) % Interest expense from unconsolidated joint ventures 16,269 30,964 (14,695) (47.5) % Depreciation from unconsolidated joint ventures 17,798 35,636 (17,838) (50.1) % Total expenses from unconsolidated joint ventures 67,153 123,107 (55,954) (45.5) % Total revenues less total expenses from unconsolidated joint ventures 5,720 (1,201) 6,921 (576.3) % Other equity in earnings from unconsolidated joint ventures 121 54 67 124.1 % Impairment of assets (8,553) (2,813) (5,740) N/A Insurance recoveries from unconsolidated joint ventures 8,553 2,813 5,740 N/A Gain on insurance proceeds from unconsolidated joint ventures 567 2,179 (1,612) (74.0) % Gain on sale of real estate from unconsolidated joint ventures 118,270 83,984 34,286 N/A Loss on extinguishment of debt from unconsolidated joint ventures (3,491) (9,401) 5,910 N/A Net income $ 121,187 $ 75,615 $ 45,572 Equity in earnings (loss) and gain on sale of real estate of unconsolidated joint ventures $ 66,426 $ 30,774 Rental revenue from unconsolidated joint ventures The decrease is due to: • $31.0 million from the Partner Buyouts, including $11.0 million from the 2021 Partner Buyouts; • $10.3 million from the sale, in 2021, of The Avenue Apartments-Ocoee, FL and Parc at 980-Lawrenceville, GA (collectively, the "Avenue/Parc Sale"); • $9.3 million from the sale, in 2022, of Verandas at Shavano-San Antonio, TX, Cinco Ranch-Katy, TX, Vive at Kellswater-Kannapolis, NC and Water's Edge-Columbia, SC (collectively, the "Shavano/Cinco/Vive /Waters Edge sales"); and • $3.2 million from the Anatole/OPOP Sale.
Biggest changeBusiness - Our Multi- Family Properties ", our equity interests in these properties range from 32% to 80% (dollars in thousands): Year Ended December 31, 2023 2022 Increase (Decrease) % change Rental revenues from unconsolidated joint ventures $ 44,785 $ 72,873 $ (28,088) (38.5) % Real estate operating expense from unconsolidated joint ventures 20,577 33,086 (12,509) (37.8) % Interest expense from unconsolidated joint ventures 9,268 16,269 (7,001) (43.0) % Depreciation from unconsolidated joint ventures 10,403 17,798 (7,395) (41.5) % Total expenses from unconsolidated joint ventures 40,248 67,153 (26,905) (40.1) % Total revenues less total expenses from unconsolidated joint ventures 4,537 5,720 (1,183) (20.7) % Other equity in earnings from unconsolidated joint ventures 126 121 5 4.1 % Impairment of assets — (8,553) 8,553 N/A Insurance recoveries from unconsolidated joint ventures — 8,553 (8,553) N/A Gain on insurance proceeds from unconsolidated joint ventures 65 567 (502) (88.5) % Gain on sale of real estate from unconsolidated joint ventures 38,418 118,270 (79,852) (67.5) % Loss on extinguishment of debt from unconsolidated joint ventures (561) (3,491) 2,930 (83.9) % Net income $ 42,585 $ 121,187 $ (78,602) (64.9) % Equity in earnings (loss) and gain on sale of real estate of unconsolidated joint ventures $ 17,037 $ 66,426 Set forth below is on explanation of the most significant changes in the components of the equity in earnings of unconsolidated joint ventures and equity in earnings from sale of unconsolidated joint venture properties.
The credit facility is secured by cash accounts maintained by us at VNB (and we are required to maintain substantially all of our bank accounts at VNB), and the pledge of our interests in the entities that own the unencumbered multi-family properties used in calculating the borrowing base.
The credit facility is secured by cash accounts maintained by us at VNB (and we are required to maintain substantially all of our bank accounts at VNB), and the pledge of our interests in the entities that own three unencumbered multi-family properties used in calculating the borrowing base.
Our operating cash flow and available cash is insufficient to fully fund the $118.4 million of balloon payments, and if we are unable to refinance such debt on acceptable terms, we may need to issue additional equity or dispose of properties, in each case on potentially unfavorable terms.
Our operating cash flow and available cash is insufficient to fully fund the $204.4 million of balloon payments, and if we are unable to refinance such debt on acceptable terms, we may need to issue additional equity or dispose of properties, in each case on potentially unfavorable terms.
Our ability to acquire additional multi-family properties and implement value-add projects is limited by our available cash and our ability to (i) draw on our credit facility, (ii) obtain, on acceptable terms, mortgage debt from lenders, and (iii) raise capital from the sale of our common stock.
Our ability to acquire multi-family properties and implement value-add projects is limited by our available cash and our ability to (i) draw on our credit facility, (ii) obtain, on acceptable terms, mortgage debt and (iii) raise capital from the sale of our common stock.
Net proceeds received from the sale, financing or refinancing of wholly-owned properties are generally required to be used to repay amounts outstanding under the credit facility. As of December 31, 2022, we were in compliance in all material respects with the requirements of the facility.
Net proceeds received from the sale, financing or refinancing of wholly-owned properties are generally required to be used to repay amounts outstanding under the credit facility. As of December 31, 2023, we were in compliance in all material respects with the requirements of the facility.
" Business-Mortgage Debt " for information regarding our mortgage debt at consolidated and unconsolidated subsidiaries. Inflation Substantially all of our multi-family property leases are for periods of one-year or less. The short-term nature of these leases generally serves to reduce our risk to adverse effects of inflation on our revenue.
" Business-Mortgage Debt " for information regarding our mortgage debt at consolidated and unconsolidated subsidiaries. 36 Table of Contents Inflation Substantially all of our multi-family property leases are for periods of one-year or less. The short-term nature of these leases generally serves to reduce our risk to adverse effects of inflation on our revenue.
The credit facility matures in September 2025. As of March 1, 2023, there was no balance outstanding and up to $60 million was available to be borrowed thereunder.
The credit facility matures in September 2025. As of March 1, 2024, there was no balance outstanding and up to $60 million was available to be borrowed thereunder.
Comparison of Years Ended December 31, 2021 and 2020 As we are a smaller reporting company, this comparison is omitted in accordance with Instruction 1 to Item 303(a) of Regulation S-K. 34 Table of Contents Funds from Operations; Adjusted Funds from Operations; Net Operating Income.
Comparison of Years Ended December 31, 2022 and 2021 As we are a smaller reporting company, this comparison is omitted in accordance with Instruction 1 to Item 303(a) of Regulation S-K. 30 Table of Contents Funds from Operations; Adjusted Funds from Operations; Net Operating Income.
During 2022, we experienced inflationary pressures that drove higher operating expenses, primarily in personnel, repairs and maintenance, insurance and real estate taxes; such increases may continue in 2023 and thereafter, which will adversely affect our operating results. Inflation affects the overall cost of our debt.
During 2023, we experienced inflationary pressures that drove higher operating expenses, primarily in personnel, repairs and maintenance, insurance and real estate taxes; such increases may continue in 2024 and thereafter, which would adversely affect our operating results. Inflation affects the overall cost of our debt.
Business—Our Structure." (3) Assumes that approximately $4.4 million of property management fees will be paid annually to the property managers of our multi-family properties, including $ 1.8 million related to unconsolidated joint ventures. Such sum reflects the amount we anticipate paying in 2023 on the multi-family properties we own at December 31, 2022.
Business—Our Structure." (3) Assumes that approximately $2.5 million of property management fees will be paid annually to the property managers of our multi-family properties, including $1.5 million related to unconsolidated joint ventures. Such sum reflects the amount we anticipate paying in 2024 on the multi-family properties we own at December 31, 2023.
NOI is a non-GAAP measure of performance. NOI is used by our management and many investors to evaluate and compare the performance of our properties to other comparable properties, to determine trends at our properties and to determine the estimated fair value of our properties.
NOI is used by our management and many investors to evaluate and compare the performance of our properties to other comparable properties, to determine trends at our properties and to determine the estimated fair value of our properties.
These notes mature in April 2036, contain limited covenants (including covenants prohibiting us from paying dividends or repurchasing capital stock if there is an event of default (as defined therein) on these 39 Table of Contents notes), are redeemable at our option and bear an interest rate, which resets and is payable quarterly, of three-month LIBOR plus 200 basis points.
These notes mature in April 2036, contain limited covenants (including covenants prohibiting us from paying dividends or repurchasing capital stock if there is an event of default (as defined therein) on these notes), are redeemable at our option and bear an interest rate, which resets and is payable quarterly, of three-month term SOFR plus 226 basis points.
See "-Results of Operations - Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021" for a discussion of these changes. Liquidity and Capital Resources We require funds to pay operating expenses and debt service obligations, acquire properties, make capital and other improvements, fund capital contributions and pay dividends.
See "-Results of Operations - Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022" for a discussion of these changes. Liquidity and Capital Resources We require funds to pay operating expenses and debt service obligations, acquire properties, make capital and other improvements, fund capital contributions, pay dividends and repurchase shares of our common stock.
Although BRT Apartments Corp. is not the obligor with respect to such mortgage debt, the loss of any of these properties due to mortgage foreclosure or similar proceedings would have a material adverse effect on our results of operations and financial condition.
Although BRT Apartments Corp. is not the obligor with respect to such mortgage debt, the loss of any of these properties due to mortgage foreclosure or similar proceedings would have a material adverse effect on our results of operations and financial condition. See note 6 to our consolidated financial statements. See Item 1.
(2) Assumes that $1.0 million will be paid annually for the next five years pursuant to the shared services agreement and $ 1.5 million will be paid annually through December 31, 2027 for the Services. See "Item 1.
(2) Assumes that $966,000 will be paid annually for the next five years pursuant to the shared services agreement and $1.6 million will be paid annually through December 31, 2027 for the Services. See "Item 1.
These fees are typically charges based on a percentage of rental revenues from a property. No amount has been reflected as payable pursuant thereto after five years as such amount is not determinable. Excludes $11.1 million of anticipated capital expenditures in 2023,including $3.6 million in connection with our value add program. Such expenditures subsequent to 2023 are not determinable.
These fees are typically charges based on a percentage of rental revenues from a property. No amount has been reflected as payable pursuant thereto after five years as such amount is not determinable. Excludes $10.1 million of anticipated capital expenditures in 2024,including $2.7 million in connection with our value add program.
As a REIT, we generally will not be subject to corporate federal, state or local income taxes on taxable income we distribute currently (in accordance with the Internal Revenue Code and applicable regulations) to our stockholders.
It is our current intention to comply with these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate federal, state or local income taxes on taxable income we distribute currently (in accordance with the Internal Revenue Code and applicable regulations) to our stockholders.
NOI is one of the measures we use to evaluate our performance because it (i) measures the core operations of property performance by excluding corporate level expenses and other items unrelated to property operating performance and (ii) captures trends in rental housing and property operating expenses.
NOI is one of the measures we use to evaluate our performance because it (i) measures the core operations of property performance by excluding corporate level expenses and other items unrelated to property operating performance and (ii) captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance.
At December 31, 2022, our investment in these joint venture properties have a net equity carrying value of $39.1 million and are subject to mortgage debt, which is not reflected on our consolidated balance sheet, of $ 256.7 million.
At December 31, 2023, our investment in these joint venture properties have a net equity carrying value of $30.4 million and are subject to mortgage debt, which is not reflected on our consolidated balance sheet, of $247.0 million.
Includes all of the debt of unconsolidated joint ventures. See the following table for information regarding same. Assumes that the interest rate on the junior subordinated notes will be 6.41% per annum and the interest rate on the credit facility will be 7.50% per annun, which were the rates in effect at December 31, 2022.
Includes all of the debt of unconsolidated joint ventures. See the following table for information regarding same. Assumes that the interest rate on the junior subordinated notes will be 7.65% per annum , which was the rate in effect at December 31, 2023.
We anticipate that for the four years beginning January 1, 2023, our operating expenses, $133.9 million of mortgage amortization and interest expense (including $55.4 million from unconsolidated joint ventures) and $118.4 million of balloon payments due with respect to mortgages maturing through 2026, estimated capital expenditures ( for 2023 only) of $11.1 38 Table of Contents million (including an estimated $3.6 million for our value add program), estimated cash dividend payments of at least $76.4 million (assuming (i) the current quarterly dividend rate of $0.25 per share and (ii) 19.1 million shares outstanding) will be funded from cash generated from operations (including distributions from unconsolidated joint ventures), mortgage financings and re-financings, sales of properties, the issuance of additional equity and, if available as noted below, our $60 million credit facility.
We anticipate that for the four years beginning January 1, 2024, our operating expenses, $127.8 million of mortgage amortization and interest expense (including $50.4 million from unconsolidated joint ventures) and $204.4 million of balloon payments due with respect to mortgages maturing through 2027 (including $76.7 million from unconsolidated joint ventures), anticipated capital expenditures (for 2024 only) of $10.1 million for both consolidated and unconsolidated properties (including an estimated $2.7 million for our value add program), estimated cash dividend payments of at least $74.0 million (assuming (i) the current quarterly dividend rate of $0.25 per share and (ii) 18.5 million shares outstanding) will be funded from cash generated from operations (including distributions from unconsolidated joint ventures), mortgage financings and re-financings, sales of properties, the issuance of additional equity and, if available, our $60 million credit facility.
Excluding funds held at our unconsolidated subsidiaries, at December 31, 2022 and March 1, 2023, our available liquidity was approximately $ 61.3 million and $75.3 million, respectively, including $20.3 million and $15.3 million, respectively, of cash and cash equivalents, and subject to compliance with borrowing base and other requirements, up to $41.0 million and $60.0 million, respectively, available under our credit facility.
Excluding funds held at our unconsolidated subsidiaries, at December 31, 2023 and March 1, 2024, our available liquidity was approximately $83.5 million and $81.2 million, respectively, including $23.5 million and $21.2 million, respectively, of cash and cash equivalents, and subject to compliance with borrowing base and other requirements, up to $60 million and $60 million, respectively, available under our credit facility.
(2) Assumes that the interest rate on the junior subordinated notes will be 6.41% per annum and includes $19 million on our credit facility which was paid off in February 2023. Corporate Level Financing Arrangements Junior Subordinated Notes As of December 31, 2022, $37.4 million (excluding deferred costs of $277,000) in principal amount of our junior subordinated notes is outstanding.
(2) Assumes that the interest rate on the junior subordinated notes will be 7.65% per annum. Corporate Level Financing Arrangements Junior Subordinated Notes As of December 31, 2023, $37.4 million (excluding deferred costs of $257,000) in principal amount of our junior subordinated notes is outstanding.
Management also reviews the reconciliation of net income (loss) to FFO and AFFO. 35 Table of Contents The table below provides a reconciliation of net income determined in accordance with GAAP to FFO and AFFO for each of the indicated years (amounts in thousands): 2022 2021 GAAP Net income attributable to common stockholders $ 49,955 $ 29,114 Add: depreciation of properties 24,812 8,025 Add: our share of depreciation in unconsolidated joint venture properties 10,677 23,083 Add: impairment charge — 520 Add: our share of impairment charge in unconsolidated joint venture properties 1,493 2,010 Add: casualty loss 850 — Deduct: gain on sales of real estate and partnership interests (6) (10,325) Deduct: our share of earnings in earnings from sale of unconsolidated joint venture properties (64,531) (34,982) Adjustment for non-controlling interests (16) (16) Funds from operations 23,234 17,429 Adjust for: straight-line rent accruals 24 (18) Add: loss on extinguishment of debt 563 1,575 Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties 1,880 4,581 Add: amortization of restricted stock and RSU expense 4,487 2,941 Add: amortization of deferred mortgage and debt costs 628 295 Add: our share of deferred mortgage costs from unconsolidated joint venture properties 227 542 Add: amortization of fair value adjustment for mortgage debt 148 — Less: insurance recovery of casualty loss (850) — Less: our share of insurance recovery from unconsolidated joint ventures (1,493) (2,010) Less: gain on insurance recovery (62) — Less: our share of gain on insurance proceeds from unconsolidated joint venture properties (432) (1,528) Adjustment for non-controlling interests (4) 4 Adjusted funds from operations $ 28,350 $ 23,811 The table below provides a reconciliation of net income per common share (on a diluted basis) determined in accordance with GAAP to FFO and AFFO. 2022 2021 Net income attributable to common stockholders $ 2.66 $ 1.62 Add: depreciation of properties 1.33 0.45 Add: our share of depreciation from unconsolidated joint venture properties 0.57 1.29 Add: impairment charge — 0.03 Add: our share of impairment charge in unconsolidated joint ventures 0.08 0.11 Add: casualty loss 0.05 — Deduct: gain on sales of real estate and partnership interest — (0.58) Deduct: our share of earnings from sale of unconsolidated joint venture properties (3.45) (1.95) Adjustment for non-controlling interests — — Funds from operations 1.24 0.97 Adjustment for: straight-line rent accruals — — Add: loss on extinguishment of debt 0.03 0.09 Add: our share of loss on extinguishment of debt from unconsolidated joint ventures 0.10 0.26 Add: amortization of restricted stock and RSU expense 0.25 0.16 Add: amortization of deferred mortgage and debt costs 0.03 0.02 Add: our share of amortization of deferred mortgage and debt costs from unconsolidated ventures 0.01 0.03 36 Table of Contents Add: amortization of fair value adjustment for mortgage debt 0.01 — Less: insurance recovery of casualty loss (0.05) — Deduct: our share of insurance recovery from unconsolidated joint ventures (0.08) (0.11) Deduct: gain on insurance recovery — — Deduct: our share of gain on insurance proceeds from unconsolidated joint ventures (0.02) (0.09) Adjustment for non-controlling interests — — Adjusted funds from operations $ 1.52 $ 1.33 Diluted shares outstanding for FFO and AFFO 18,782,695 17,936,465 FFO for 2022 increased $5.8 million, or 33%, to $23.2 million from $17.4 million in 2021.
Management also reviews the reconciliation of net income (loss) to FFO and AFFO. 31 Table of Contents The table below provides a reconciliation of net income determined in accordance with GAAP to FFO and AFFO for each of the indicated years (amounts in thousands): 2023 2022 GAAP Net income attributable to common stockholders $ 3,873 $ 49,955 Add: depreciation of properties 28,484 24,812 Add: our share of depreciation in unconsolidated joint venture properties 5,292 10,677 Add: our share of impairment charge in unconsolidated joint venture properties — 1,493 Add: casualty loss 323 850 Deduct: gain on sales of real estate and partnership interests (604) (6) Deduct: our share of earnings in earnings from sale of unconsolidated joint venture properties (14,744) (64,531) Adjustment for non-controlling interests (16) (16) Funds from operations 22,608 23,234 Adjust for: straight-line rent accruals 93 24 Add: loss on extinguishment of debt — 563 Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties 212 1,880 Add: amortization of restricted stock and RSU expense 4,768 4,487 Add: amortization of deferred mortgage and debt costs 1,072 628 Add: our share of deferred mortgage costs from unconsolidated joint venture properties 106 227 Add: amortization of fair value adjustment for mortgage debt 613 148 Less: insurance recovery of casualty loss (323) (850) Less: our share of insurance recovery from unconsolidated joint ventures — (1,493) Less: gain on insurance recovery (240) (62) Less: our share of gain on insurance proceeds from unconsolidated joint venture properties (30) (432) Adjustment for non-controlling interests (15) (4) Adjusted funds from operations $ 28,864 $ 28,350 32 Table of Contents The table below provides a reconciliation of net income per common share (on a diluted basis) determined in accordance with GAAP to FFO and AFFO. 2023 2022 Net income attributable to common stockholders $ 0.20 $ 2.66 Add: depreciation of properties 1.50 1.33 Add: our share of depreciation from unconsolidated joint venture properties 0.28 0.57 Add: our share of impairment charge in unconsolidated joint ventures — 0.08 Add: casualty loss 0.02 0.05 Deduct: gain on sales of real estate and partnership interest (0.03) — Deduct: our share of earnings from sale of unconsolidated joint venture properties (0.78) (3.45) Adjustment for non-controlling interests — — Funds from operations 1.19 1.24 Adjustment for: straight-line rent accruals — — Add: loss on extinguishment of debt — 0.03 Add: our share of loss on extinguishment of debt from unconsolidated joint ventures 0.01 0.10 Add: amortization of restricted stock and RSU expense 0.25 0.25 Add: amortization of deferred mortgage and debt costs 0.06 0.03 Add: our share of amortization of deferred mortgage and debt costs from unconsolidated ventures 0.01 0.01 Add: amortization of fair value adjustment for mortgage debt 0.03 0.01 Less: insurance recovery of casualty loss (0.02) (0.05) Deduct: our share of insurance recovery from unconsolidated joint ventures — (0.08) Deduct: gain on insurance recovery (0.01) — Deduct: our share of gain on insurance proceeds from unconsolidated joint ventures — (0.02) Adjustment for non-controlling interests — — Adjusted funds from operations $ 1.52 $ 1.52 Diluted shares outstanding for FFO and AFFO 18,931,026 18,782,695 FFO for 2023 decreased $626,000, or 2.7%, to $22.6 million from $23.2 million in 2022.
The credit facility bears an annual interest rate, which resets daily, equal to the prime rate, with a floor of 3.50%. The interest rate at December 31, 2022 and March 1, 2023, was 7.50% and 7.75% respectively. There is an annual fee of 0.25% on the total amount committed by VNB and unused by us.
The credit facility bears an annual interest rate, which resets monthly, equal to one-month term SOFR plus 250 basis points, with a floor of 6.00%. The interest rate at December 31, 2023 and March 1, 2024, was 7.85% and 7.82% respectively. There is an annual fee of 0.25% on the total amount committed by VNB and unused by us.
Same store NOI increased in 2022 by $1.6 million from 2021 due to a $2.6 million increase in rental revenues (and in particular, the increase in average rental rates) offset by a $1.0 million increase in real estate operating expenses.
The increase was offset by a $9.4 million increase, primarily due to the Partner Buyouts, in real estate operating expenses. Same store NOI remained flat in 2023 from 2022 due to a $1.8 million increase in rental revenues (and in particular, the increase in average rental rates) offset by a $1.8 million increase in real estate operating expenses.
Other Financing Sources and Arrangements At December 31, 2022, we are joint venture partners in unconsolidated joint ventures which own eight multi-family properties. The distributions from the properties owned by these ventures, $6.5 million in 2022 are a meaningful source of our liquidity and cash flow. Further, we may be required to make capital contributions with respect to these properties.
Other Financing Sources and Arrangements At December 31, 2023, we are joint venture partners in unconsolidated joint ventures which own seven multi-family properties which distributed $5.2 million to us in 2023. We may be required to make capital contributions with respect to these properties.
We evaluate our equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying value of our investments may exceed the fair value. If it is determined that a decline in the fair value of our investments is not temporary, and if such reduced fair value is below its carrying value, an impairment is recorded.
If it is determined that a decline in the fair value of our investments is not temporary, and if such reduced fair value is below its carrying value, an impairment is recorded. Determining fair value involves significant judgment.
However, NOI should only be used as an alternative measure of our financial performance. 37 Table of Contents The following table provides a reconciliation of net income attributable to common stockholders as computed in accordance with GAAP to NOI for the periods presented (dollars in thousands): For the year ended December 31, 2022 2021 GAAP Net income attributable to common stockholders $ 49,955 $ 29,114 Less: Other Income (12) (16) Add: Interest expense 15,514 6,757 General and administrative 14,654 12,621 Depreciation 24,812 8,025 Impairment charge — 520 Provision for taxes 821 206 Less: Gain on sale of real estate (6) (7,693) Gain on the sale of partnership interests — (2,632) Add: Loss on extinguishment of debt 563 1,575 Equity in (earnings) loss of unconsolidated joint venture properties (1,895) 4,208 Casualty loss 850 — Less: Equity in earnings from sale of unconsolidated joint venture properties (64,531) (34,982) Insurance recovery of casualty loss (850) — Gain on insurance recovery (62) — Add: Net income attributable to non-controlling interests 144 136 Net Operating Income $ 39,957 $ 17,839 Less: Non same store and non multi family (1) Revenues (43,009) (7,125) Operating Expenses 18,720 3,393 Same Store Net Operating Income $ 15,668 $ 14,107 ________________________ (1) Prior year amounts have been adjusted to reflect the current year composition to reflect only those properties that were same store for both the current and the prior year.
The following table provides a reconciliation of net income attributable to common stockholders as computed in accordance with GAAP to NOI for the periods presented (dollars in thousands): For the year ended December 31, 2023 2022 GAAP Net income attributable to common stockholders $ 3,873 $ 49,955 Less: Other Income (548) (12) Add: Interest expense 22,161 15,514 General and administrative 15,433 14,654 Depreciation 28,484 24,812 Provision for taxes 54 821 Less: Gain on sale of real estate (604) (6) Add: Loss on extinguishment of debt — 563 Equity in (earnings) loss of unconsolidated joint venture properties (2,293) (1,895) Casualty loss 323 850 Less: Equity in earnings from sale of unconsolidated joint venture properties (14,744) (64,531) Insurance recovery of casualty loss (793) (850) Gain on insurance recovery (240) (62) Add: Net income attributable to non-controlling interests 142 144 Net Operating Income $ 51,248 $ 39,957 Less: Non same store and non multi family (1) Revenues 45,695 24,911 Operating Expenses 20,140 10,692 $ 25,555 $ 14,219 Same Store Net Operating Income $ 25,693 $ 25,738 _____________________________________ (1) Prior year amounts have been adjusted to reflect the current year composition to reflect only those properties that were same store for both the current and the prior year. 34 Table of Contents In 2023, NOI increased by $11.3 million from 2022 primarily due to a $20.8 million increase in rental revenues resulting from the Partner Buyouts.
Any impairment taken with respect to our real estate assets reduces our net income, assets and stockholders' equity to the extent of the amount of the allowance, but it will not affect our cash flow until such time as the property is sold. 41 Table of Contents Purchase Price Allocations We allocate the purchase price of properties, including acquisition costs and assumed debt, when appropriate, to the tangible and identified intangible assets and liabilities acquired based on their relative fair values.
Any impairment taken with respect to our real estate assets reduces our net income, assets and stockholders' equity to the extent of the amount of the allowance, but it will not affect our cash flow until such time as the property is sold.
The decrease was offset by a $1.5 million increase from unconsolidated same store properties, including increases of $417,000 in real estate taxes, $403,000 in utility costs, $258,000 in repairs, maintenance and replacement costs and $224,000 in payroll and leasing commissions. Interest expense from unconsolidated joint ventures.
The decrease was offset by an aggregate $1.2 million increase in such expenses including increases of $279,000 in utility costs, $260,000 in insurance costs, $245,000 in payroll and leasing commissions, and $191,000 in real estate taxes. Interest expense from unconsolidated joint ventures.
Accordingly, to qualify as a REIT, we must, among other things, meet a number of organizational and operational requirements, including a requirement that we distribute currently at least 90% of our ordinary taxable income to our stockholders. It is our current intention to comply with these requirements and maintain our REIT status.
Cash Distribution Policy We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. Accordingly, we must, among other things, meet a number of organizational and operational requirements, including a requirement that we distribute currently at least 90% of our ordinary taxable income to our stockholders.
During 2022, we recognized $8.6 million of impairment charges related to a fire at Stono Oaks, a development project located in Johns Island, SC. During 2021, we recognized $2.8 million of impairment charges related to the February 2021 Texas winter storm (the "Texas Storm"). Insurance recoveries from unconsolidated joint ventures.
The components of the decrease are: • $5.1 million due to the Partner Buyouts; • $1.2 million from the 2022 Sales; and • $878,000 from the Chatham Sale. Impairment of assets from unconsolidated joint ventures. During 2022, the venture recognized $8.6 million of impairment charges related to a fire at Stono Oaks, a development project located in Johns Island, SC.
However, increasing interest rates, which generally correlates to increasing inflation, may make it less attractive to obtain mortgage debt or use our credit facility in connection with acquisition, refinancing and value add activities. 40 Table of Contents Cash Distribution Policy We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended.
However, increasing interest rates, which generally correlates to increasing inflation, increases the interest expense on our junior subordinated notes and may make it less attractive to obtain mortgage debt or use our credit facility in connection with acquisition, refinancing and value add activities.
The components of the decrease are: • $8.5 million due to the Partner Buyouts, including $2.7 million from the 2021 Partner Buyouts; • $2.5 million due to the Avenue/Parc Sale; • $2.3 million from the Shavono/Cinco/Vive/Waters Edge sales; and • $1.3 million from the Anatole/OPOP Sales. Depreciation from unconsolidated joint ventures .
The components of the decrease are: • $4.5 million due to the Partner Buyouts; • $1.8 million from the 2022 Sales; and • $631,000 from the Chatham Sale. Depreciation from unconsolidated joint ventures .
Carrying Value of Real Estate Portfolio We conduct a quarterly review of each real estate asset owned by us and through our joint ventures. This review is conducted in order to determine if indicators of impairment are present on the real estate.
This review is conducted in order to determine if indicators of impairment are present on the real estate.
Under this method of accounting, our pro rata share of the applicable entity's earnings or losses is included in our consolidated statements of operations. We initially record our investments based on either the carrying value for properties contributed or the cash invested.
Equity method investments We report our investments in unconsolidated entities, over whose operating and financial policies we do not control, under the equity method of accounting. Under this method of accounting, our pro rata share of the applicable entity's earnings or losses is included in our consolidated statements of operations.
Disclosure of Known Material Contractual Obligations The following table sets forth as of December 31, 2022 our known material contractual obligations: Payment Due by Period (Dollars in thousands) Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Total Long-Term Debt Obligations (1) $ 36,900 $ 110,875 $ 230,437 $ 554,800 $ 933,012 Operating Lease Obligations 237 497 517 3,237 4,488 Purchase Obligations (2)(3) 6,994 13,988 13,988 — 34,970 Total $ 44,131 $ 125,360 $ 244,942 $ 558,037 $ 972,470 ____________________________ (1) Reflects payments of principal (including amortization payments) and interest and excludes deferred costs.
Disclosure of Known Material Contractual Obligations The following table sets forth as of December 31, 2023 our known material contractual obligations: Payment Due by Period (Dollars in thousands) Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Total Long-Term Debt Obligations (1) $ 37,669 $ 211,328 $ 222,229 $ 435,591 $ 906,817 Operating Lease Obligations 242 507 528 2,977 4,254 Purchase Obligations (2)(3) 6,595 13,190 13,190 — 32,975 Total $ 44,506 $ 225,025 $ 235,947 $ 438,568 $ 944,046 ____________________________ (1) Reflects payments of principal (including amortization payments) and interest and excludes deferred costs.
During 2022, we recognized $8.6 million of insurance recoveries related to the Stono Oaks fire. During 2021, we recognized $2.8 million of insurance recoveries related to the Texas Storm. Gain on insurance recoveries from unconsolidated joint ventures . During 2022, we recognized $567,000 in gains from insurance recoveries at Vernadas at Alamo-San Antonio, TX and Woodlands-Boerne, TX.
Insurance recoveries from unconsolidated joint ventures. During 2022, the venture recognized $8.6 million of insurance recoveries related to the Stono Oaks fire.
Generally, in 2022, our primary sources of capital and liquidity were the operations of our multi-family properties (including distributions of $10.9 million from the operations of our unconsolidated joint ventures and $80.2 million of distributions from sale transactions), $4.4 million from property sales owned by consolidated entities, net mortgage proceeds of $19.0 million from the refinancing of mortgage debt in connection with the 2022 Partner Buyouts, $9.9 million from the sale of our common stock through our at-the-market equity offering program, and our available cash.
Generally, in 2023, our primary sources of capital and liquidity were the operations of our multi-family properties (including distributions of $6.3 million from the operations of our unconsolidated joint ventures), our $19.4 million share of the net proceeds from the Chatham Sale, and our available cash.
Loss on early extinguishment of debt from unconsolidated joint ventures The loss in 2022 is due to prepayment charges from the Shavano/Cinco/Vive/Waters Edge sales. The loss in 2021 is due to prepayment charges in connection with the payoff of the mortgages related to the Avenue/Parc Sale.
Loss on extinguishment of debt from unconsolidated joint ventures During 2023 and 2022, we recognized loss on the early extinguishment of debt in connection with the Chatham Sale and the 2022 Sales, respectively.
Determining fair value involves significant judgment. Our estimates consider available evidence including the present value of the expected future cash flows discounted at market rates, general economic conditions and other relevant factors. In 2021, we recorded an impairment related to our equity investment in the OPOP Properties. We sold our interests in these properties in November 2021.
Our estimates consider available evidence including the present value of the expected future cash flows discounted at market rates, general economic conditions and other relevant factors. Carrying Value of Real Estate Portfolio We conduct a quarterly review of each real estate asset owned by us and through our joint ventures.
The decrease was offset by a $4.9 million increase in rental revenue from unconsolidated same store properties, primarily from an increase in rental rates.
The decrease was offset by a $2.7 million increase in rental revenue from unconsolidated same store properties, primarily due an increase in rental rates offset by a $729,000 decrease due to reduced occupancy. 29 Table of Contents Real estate operating expenses from unconsolidated joint ventures The components of the decrease include: • $7.8 million from the Partner Buyouts; • $4.2 million from the 2022 Sales; • $1.8 million from the Chatham Sale.
The following table sets forth as of December 31, 2022 information regarding the components of our long-term debt obligations: Payment due by Period (Dollars in thousands) Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Total Mortgages on consolidated properties (1) $ 19,233 $ 56,262 $ 144,122 $ 301,017 $ 520,634 Mortgages on unconsolidated properties (1) 13,845 28,325 81,520 191,610 315,300 Junior subordinated notes and credit facility(2) 3,822 26,288 4,795 62,173 97,078 Total $ 36,900 $ 110,875 $ 230,437 $ 554,800 $ 933,012 ___________________________ (1) Includes payments of principal (including amortization payments), and interest and excludes deferred financing costs.
Such expenditures subsequent to 2024 are not determinable. 35 Table of Contents The following table sets forth as of December 31, 2023 information regarding the components of our long-term debt obligations: Payment due by Period (Dollars in thousands) Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Total Mortgages on consolidated properties (1) $ 20,683 $ 126,006 $ 109,792 $ 281,670 $ 538,151 Mortgages on unconsolidated properties (1) 14,125 79,600 106,715 95,549 295,989 Junior subordinated notes and credit facility(2) 2,861 5,722 5,722 58,372 72,677 Total $ 37,669 $ 211,328 $ 222,229 $ 435,591 $ 906,817 ___________________________ (1) Includes payments of principal (including amortization payments), and interest and excludes deferred financing costs.
The increase was offset by: • a $7.6 million decrease from the sale of properties (including interests in properties), in 2022 and 2021; • a $2.0 million increase in General and administrative expense (including $1.5 million of non-cash compensation expense); • a $701,000 decrease in insurance recoveries and gains from insurance proceeds; and • an $615,000 increase in income tax provision.
Contributing to the change was a: • $1.5 million decrease in insurance recovery from a casualty loss at an unconsolidated joint venture; • $1.2 million increase in interest expense (including $465,000 of amortization of mortgage fair value costs); • $499,000 increase in general and administrative expense (excluding non cash-amortization of restricted stock and RSU expense); and • $402,000 decrease in gains from insurance proceeds.
The components of the decrease are: • $10.3 million due to the Partner Buyouts, including $3.9 million from the 2021 Partner Buyouts ; • $3.5 million from the Shavano/Cinco/Vive/Waters Edge sales; • $2.4 million due to to the Avenue/Parc Sale; and • $1.3 million from the Anatole/OPOP Sales. Impairment of assets from unconsolidated joint ventures.
Rental revenue from unconsolidated joint ventures The decrease is due to: • $18.4 million from the Partner Buyouts; • $7.5 million primarily from the sale, in 2022, of Verandas at Shavano-San Antonio, TX, Cinco Ranch-Katy, TX, Vive at Kellswater-Kannapolis, NC and Water's Edge-Columbia, SC (collectively, the "2022 Sales"); and • $4.4 million from the Chatham Sale.
Removed
Real estate operating expenses from unconsolidated joint ventures The components of the decrease include: • $14.0 million from the Partner Buyouts, including $5.2 million from the 2021 Partner Buyouts; • $4.6 million due to the Avenue/Parc Sale; 33 Table of Contents • $4.4 million from the Shavano/Cinco/Vive/Waters Edge sales; and • $2.0 million from the Anatole/OPOP Sales.
Added
Same store properties at Unconsolidated Properties represent seven properties that were owned for the entirety of the periods being compared.
Removed
In 2021, we recognized $1.9 million in gains from insurance recoveries at two properties ( i.e., Verandas at Shavano and Verandas at Alamo, both located in San Antonio, TX), that were damaged by the Texas Storm, and $325,000 from an insurance claim on Magnolia Pointe - Madison, AL, that sustained fire damage in a prior year.
Added
Gain on insurance recoveries from unconsolidated joint ventures During 2022, we recognized $567,000 in gains primarily due to our receipt of insurance recoveries from claims on two properties located in Texas that were damaged in a February 2021 ice storm, which receipts exceeded the assets previously written off.
Removed
In each year, the gain represents the amounts received on insurance recoveries in excess of the assets previously written-off. Gain on sale of real estate from unconsolidated joint ventures In 2022, we recognized an aggregate gain of $118.2 million from the Shavano/Cinco/Vive/Waters Edge sales and in 2021, we recognized an aggregate gain of $84.0 million from the Avenue/Parc Sales.
Added
Gain on sale of real estate from unconsolidated joint ventures During 2023, we recognized a gain on the sale of real estate of $38.4 million from the Chatham Sale. During 2022, we recognized gains on the sale of real estate of $118.3 million from the 2022 Sales.
Removed
Contributing to the improvement were: • an $8.2 million increase in our incremental share of the operating income due to the Partner Buyouts (the "Incremental Impact"), including $3.4 million from the inclusion, for all of 2022, of the Incremented Impact from the 2021 Partner Buyouts; • a $3.7 million decrease in loss on extinguishment of debt; • a $3.1 million increase due to improved operating margins across our portfolio; • a $1.7 million decrease in interest expense; and • an $850,000 increase in an insurance recovery from a casualty loss.
Added
The decrease was offset by a: • $2.2 million decrease in early extinguishment of debt; • $767,000 decrease in income tax expense; and • $536,000 increase in other income. AFFO increased $514,000 or 1.8%, to $28.9 million in 2023 from $28.4 million in 2022.
Removed
AFFO increased $4.5 million, or 19%, to $28.4 million in 2022 from $23.8 million in 2021, due to factors contributing to the improvement in FFO, excluding the $3.7 million loss on extinguishment of debt, $1.5 million in non-cash compensation expense, and a net $701,000 relating to insurance recoveries and gains.
Added
Contributing to this increase was a: • $767,000 decrease in income tax expense; • $536,000 increase in other income; and • $470,000 of insurance recoveries 33 Table of Contents The increase was offset by a: • $725,000 increase in interest expense; and • $499,000 increase in general and administrative expense .
Removed
See “—Comparison of Years Ended December 31, 2022 and 2021” for further information regarding these changes. Diluted per share FFO and AFFO were impacted in the year ended December 31, 2022 by an $846,000 increase in the weighted averages shares of common stock outstanding primarily due to stock issuances pursuant to our at-the-market offering and equity incentive programs.
Added
See “—Comparison of Years Ended December 31, 2023 and 2022” for further information regarding these changes. NOI is a non-GAAP measure of performance.
Removed
In 2022, NOI increased by $22.1 million from 2021 primarily due to a $38.5 million increase in rental revenues resulting from the Partner Buyouts. The increase was offset by a $16.4 million increase, primarily due to the Partner Buyouts, in real estate operating expenses.
Added
A significant amount of our cash and cash equivalents is maintained at our properties for general working capital purposes.
Removed
Although these notes provide for an alternate method of calculating interest when LIBOR becomes unavailable in June 2023, such alternative rate may not be available in which case we may have to negotiate a secondary alternative rate with the counterparties to such debt.
Added
At December 31, 2023 and 2022, the interest rate on these notes was 7.65% and 6.41%, respectively.
Removed
If we and the counterparties to this debt are unable to agree to a satisfactory secondary alternate rate, our cash flow and operating results may be adversely affected. At December 31, 2022 and 2021, the interest rate on these notes was 6.41% and 2.13%, respectively.
Added
We anticipate that if we do not sell any multi-family properties this year, that a significant amount of the dividends we will pay in 2024 will be treated for federal income tax purposes as a return of capital.
Removed
Prior to the 2022 Partner Buyouts, these joint venture arrangements were material to our liquidity and capital resource position. After giving affect to the 2022 Partner Buyouts, these arrangements will have a meaningful impact on our liquidity and capital resources. See note 6 to our consolidated financial statements. See Item 1.
Added
Critical Accounting Estimates Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
Removed
Critical Accounting Estimates Our significant accounting policies are more fully described in note 1 to our consolidated financial statements. The preparation of financial statements and related disclosure in conformity with accounting principles generally accepted in the United States requires management to make certain judgments and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes.
Added
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we reconsider and evaluate our estimates and assumptions.
Removed
Certain of our accounting policies are particularly important to understand our financial position and results of operations and require the application of significant judgments and estimates by our management; as a result they are subject to a degree of uncertainty.
Added
We base our estimates on historical experience, current trends and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Removed
These significant accounting policies include the following: Equity method investments We report our investments in unconsolidated entities, over whose operating and financial policies we have the ability to exercise significant influence but not control, under the equity method of accounting.
Added
Actual results could materially differ from any of our estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 1 of our consolidated financial statements in this report.
Added
We believe the accounting estimates listed below are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
Added
We initially record our investments based on either the carrying value for properties contributed or the cash invested. 37 Table of Contents We evaluate our equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying value of our investments may exceed the fair value.
Added
Purchase Price Allocations We allocate the purchase price of properties, including acquisition costs and assumed debt, when appropriate, to the tangible and identified intangible assets and liabilities acquired based on their relative fair values.
Added
Equity-Based Compensation We grant shares of restricted stock and restricted stock units ("RSUs") to eligible plan participants, subject to the recipient's continued service over a specified period and, with respect to the RSUs, the satisfaction of specified conditions over a specified period.
Added
A portion of the RSUs vest based upon satisfaction of specified metrics with respect to (i) total stockholder return(“TSR Awards”) and (ii) adjusted funds from operations(“AFFO Awards”), in each case as calculated pursuant to the applicable award agreement.
Added
We account for the restricted stock awards and RSUs in accordance with ASC 718, Compensation - Stock Compensation, which requires that such compensation be recognized in the financial statements based on its estimated grant-date fair value.
Added
The value of such awards is recognized as compensation expense in general and administrative expenses in the accompanying consolidated statements of operations over the applicable service periods.
Added
Grant date fair value is determined with respect to the (i) the restricted stock awards, by the closing stock price on the date of grant, (ii) TSR Awards, by using a Monte Carlo simulation relying upon various assumptions and (iii) AFFO Awards, by using the closing stock price on the grant date, subject to quarterly adjustment based upon management’s projection as to the achievability of the specified metrics related to the AFFO Awards.

… 1 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+4 added−12 removed103 unchanged
Biggest changeAt March 1, 2023, we had approximately $20.4 million of cash and cash equivalents and up to $60.0 million available to us under our credit facility. Our multi-family acquisition and value-add activities are constrained by funds available to us which will limit growth in our revenues and operating results.
Biggest changeOur multi-family acquisition and value-add activities are constrained by funds available to us which will limit growth in our revenues and operating results. Our failure to comply with our obligations under our debt instruments may reduce our stockholders’ equity, and adversely affect our net income and ability to pay dividends.
Though we maintain insurance coverage, such coverage may be insufficient to compensate us for losses sustained as a result of a casualty because, among other things: • the amount of insurance coverage maintained for any property may be insufficient to pay the full replacement cost following a casualty event; • the rent loss coverage under a policy may not extend for the full period of time that a tenant or tenants may be entitled to a rent abatement that is a result of, or that may be required to complete restoration following, a casualty event; • certain types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, and losses arising out of claims for exemplary or punitive damages, may be uninsurable or may not be economically feasible to insure; • changes in zoning, building codes and ordinances, environmental considerations and other factors may make it impossible or impracticable, to use insurance proceeds to replace damaged or destroyed improvements at a property; • insurance coverage is part of blanket insurance policies in which losses on properties in which we have no ownership interest could reduce significantly or eliminate the coverage available on our properties; and • the deductibles applicable to one or more buildings at a property may be greater than the losses sustained at such buildings.
Though we maintain insurance coverage, such coverage may be insufficient to compensate us for losses sustained as a result of a casualty because, among other things: • the amount of insurance coverage maintained for a property may be insufficient to pay the full replacement cost following a casualty event; • the rent loss coverage under a policy may not extend for the full period of time that a tenant or tenants may be entitled to a rent abatement that is a result of, or that may be required to complete restoration following, a casualty event; • certain types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, and losses arising out of claims for exemplary or punitive damages, may be uninsurable or may not be economically feasible to insure; • changes in zoning, building codes and ordinances, environmental considerations and other factors may make it impossible or impracticable, to use insurance proceeds to replace damaged or destroyed improvements at a property; • insurance coverage is part of blanket insurance policies in which losses on properties in which we have no ownership interest could reduce significantly or eliminate the coverage available on our properties; and • the deductibles applicable to one or more buildings at a property may be greater than the losses sustained at such buildings.
Certain provisions of the Maryland General Corporation Law (the “MGCL”) may impede a third party from making a proposal to acquire us or inhibit a change of control under circumstances that otherwise could be in the best interest of holders of shares of our common stock, including: • “business combination” provisions that, subject to certain exceptions and limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of BRT who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding voting stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose two super-majority stockholder voting requirements on these combinations; • “control share” provisions that provide that, subject to certain exceptions, holders of “control shares” of BRT (defined as voting shares which, when aggregated with other shares controlled by the stockholder, entitle the holder to exercise voting power in the election of directors within one of three increasing ranges) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to the control shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares; and • additionally, Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what is currently provided in the Charter or the Bylaws, to implement certain corporate governance provisions.
Certain provisions of the Maryland General Corporation Law (the “MGCL”) may impede a third party from making a proposal to acquire us or inhibit a change of control under circumstances that otherwise could be in the best interest of holders of shares of our common stock, including: 21 Table of Contents • “business combination” provisions that, subject to certain exceptions and limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of BRT who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding voting stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose two super-majority stockholder voting requirements on these combinations; • “control share” provisions that provide that, subject to certain exceptions, holders of “control shares” of BRT (defined as voting shares which, when aggregated with other shares controlled by the stockholder, entitle the holder to exercise voting power in the election of directors within one of three increasing ranges) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to the control shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares; and • additionally, Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what is currently provided in the Charter or the Bylaws, to implement certain corporate governance provisions.
These provisions: • provide for a staggered board of directors consisting of three classes, with one class of directors being elected each year and each class being elected for three-year terms and until their successors are duly elected and qualify; • impose restrictions on ownership and transfer of our stock (such provisions being intended to, among other purposes, facilitate our compliance with certain requirements under the Internal Revenue Code of 1986, as amended (the "Code"), relating to our qualification as a REIT under the Code); • prevent our stockholders from amending the Bylaws; • limit who may call special meetings of stockholders; 24 Table of Contents • establish advance notice and informational requirements and time limitations on any director nomination or proposal that a stockholder wishes to make at a meeting of stockholders; • provide that directors may be removed only for cause and only by the vote of at least two-thirds of all votes generally entitled to be cast in the election of directors; • do not permit cumulative voting in the election of our board of directors, which would otherwise permit holders of less than a majority of outstanding shares to elect one or more directors; and • authorize our board of directors, without stockholder approval, to amend the Charter to increase or decrease the aggregate number of shares of our stock or the number of shares of stock of any class or series that we have authority to issue and classify or reclassify any unissued shares of common or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares.
These provisions: • provide for a staggered board of directors consisting of three classes, with one class of directors being elected each year and each class being elected for three-year terms and until their successors are duly elected and qualify; • impose restrictions on ownership and transfer of our stock (such provisions being intended to, among other purposes, facilitate our compliance with certain requirements under the Internal Revenue Code of 1986, as amended (the "Code"), relating to our qualification as a REIT under the Code); • prevent our stockholders from amending the Bylaws; • limit who may call special meetings of stockholders; • establish advance notice and informational requirements and time limitations on any director nomination or proposal that a stockholder wishes to make at a meeting of stockholders; • provide that directors may be removed only for cause and only by the vote of at least two-thirds of all votes generally entitled to be cast in the election of directors; • do not permit cumulative voting in the election of our board of directors, which would otherwise permit holders of less than a majority of outstanding shares to elect one or more directors; and • authorize our board of directors, without stockholder approval, to amend the Charter to increase or decrease the aggregate number of shares of our stock or the number of shares of stock of any class or series that we have authority to issue and classify or reclassify any unissued shares of common or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares.
Further, except for our multi-family properties covered by our Insurance Program, property managers are also generally responsible for obtaining insurance coverage with respect to the properties they manage, which coverage is often obtained pursuant to blanket policies covering many properties in which we have no interest.
Further, except for our multi-family properties covered by our master insurance program, property managers are also generally responsible for obtaining insurance coverage with respect to the properties they manage, which coverage is often obtained pursuant to blanket policies covering many properties in which we have no interest.
As a result, we are subject to risks inherent in investments in a single industry, and a decrease in the demand for multi-family properties would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio. 18 Table of Contents Our operating results and assets may be negatively affected if our insurance coverage is insufficient to compensate us for casualty events occurring at our properties.
As a result, we are subject to risks inherent in investments in a single industry, and a decrease in the demand for multi-family properties would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio. 15 Table of Contents Our operating results and assets may be negatively affected if our insurance coverage is insufficient to compensate us for casualty events occurring at our properties.
If we do not continue to pay cash dividends, the price of our common stock may decline. Our business and operations are subject to physical and transition risks related to climate change. Several of our multi-family properties are located along or near coastal areas that have historically been subject to the risk of extreme weather events.
If we do not continue to pay cash dividends, the price of our common stock will decline. Our business and operations are subject to physical and transition risks related to climate change. Several of our multi-family properties are located along or near coastal areas that have historically been subject to the risk of extreme weather events.
We may not have sufficient funds to make required or desired capital improvements. Our multi-family properties face competition from newer and updated properties. At December 31, 2022 the weighted average age (based on the number of units) of our multi-family properties is approximately 20 years.
We may not have sufficient funds to make required or desired capital improvements. Our multi-family properties face competition from newer and updated properties. At December 31, 2023 the weighted average age (based on the number of units) of our multi-family properties is approximately 20 years.
To facilitate our qualification as a REIT under the Code, among other purposes, the Charter generally prohibits any person from actually or constructively owning more than 6.0%, in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or more 25 Table of Contents than 6.0% in value of the aggregate outstanding shares of all classes and series of our stock, which we refer to as the “ownership limits,” unless our board of directors exempts the person from such ownership limit.
To facilitate our qualification as a REIT under the Code, among other purposes, the Charter generally prohibits any person from actually or constructively owning more than 6.0%, in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or more than 6.0% in value of the aggregate outstanding shares of all classes and series of our stock, which we refer to as the “ownership limits,” unless our board of directors exempts the person from such ownership limit.
Our inability to reconfigure our portfolio to profitably reinvest the proceeds of property sales promptly could adversely affect our financial condition and results of operations. We may incur impairment charges in 2023. We evaluate on a quarterly basis our real estate portfolio for indicators of impairment.
Our inability to reconfigure our portfolio to profitably reinvest the proceeds of property sales promptly could adversely affect our financial condition and results of operations. We may incur impairment charges in 2024. We evaluate on a quarterly basis our real estate portfolio for indicators of impairment.
Our operating cash flow and funds available under our credit facility will likely be insufficient to discharge all of this debt when due. Accordingly, we may seek to refinance this debt or sell the related property prior to the maturity of such debt.
Our operating cash flow and funds available under our credit facility will be insufficient to discharge all of this debt when due. Accordingly, we will seek to refinance this debt or sell the related property prior to the maturity of such debt.
If our common stock is removed from the Russell 3000® Index because it does not meet the criteria for continued inclusion in such index, index funds, 26 Table of Contents institutional investors, or other holders attempting to track the composition of that index may be required to sell our common stock, which would adversely impact the price and frequency at which it trades.
If our common stock is removed from the Russell 3000® Index because it does not meet the criteria for continued inclusion in such index, index funds, institutional investors, or other holders attempting to track the composition of that index may be required to sell our common stock, which would adversely impact the price and frequency at which it trades.
Any loss of this information or unauthorized distribution of funds as a result of a breach of information technology systems may result in loss of funds to which we are entitled, legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business and financial performance.
Any loss of this information or unauthorized distribution of funds as a result of a breach of information technology systems may result in loss of funds to which we are entitled, legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business and financial performance. 23 Table of Contents
Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances 21 Table of Contents released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.
Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.
If we are unsuccessful in refinancing such debt, or if the terms of the refinanced debt are less favorable than the current debt, we may be forced to dispose of properties on disadvantageous terms or convey properties secured by such mortgages to the mortgagees, which would reduce our income and impair the value of our portfolio.
If we are unsuccessful in refinancing such debt, or if the terms of the refinanced debt are less favorable than the current debt, we may be forced to 16 Table of Contents dispose of properties on disadvantageous terms or convey properties secured by such mortgages to the mortgagees, which would reduce our income and impair the value of our portfolio.
Although we believe that “bad boy” carve out guarantees are not guarantees of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under 20 Table of Contents such guarantees.
Although we believe that “bad boy” carve out guarantees are not guarantees of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under such guarantees.
In buying properties directly, we will not have the benefit of a partner’s understanding of the target markets nor the equity they would have contributed to the acquisition.
In buying properties directly, we do not have the benefit of a partner’s understanding of the target markets nor the equity they would have contributed to the acquisition.
We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations. Risks Associated with the Real Estate Industry and REITs.
We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations. 18 Table of Contents Risks Associated with the Real Estate Industry and REITs.
See "Item 1 - Business - Our Acquisition Approach" Senior management and other key personnel are critical to our business and our future success may depend on our ability to retain them. We depend on the services of Jeffrey A.
See "Item 1 - Business - Our Acquisition Approach" 20 Table of Contents Senior management and other key personnel are critical to our business and our future success may depend on our ability to retain them. We depend on the services of Jeffrey A.
We cannot provide any assurance that we will properly evaluate the acquisition opportunities we pursue in buying properties directly. 17 Table of Contents Risks involved in conducting real estate activity through joint ventures. Eight of our multi-family properties are owned through joint ventures with other persons or entities.
We cannot provide any assurance that we will properly evaluate the acquisition opportunities we pursue in buying properties directly. 14 Table of Contents Risks involved in conducting real estate activity through joint ventures. Seven of our multi-family properties are owned through joint ventures with other persons or entities.
Should these agencies have their mandates changed or reduced, lose key personnel, be disbanded or reorganized by the government or otherwise discontinue providing liquidity for the multi-family sector, our ability to obtain financing through loan programs sponsored by the agencies could be negatively impacted.
Should these agencies have their mandates changed or reduced, lose key personnel, be disbanded or reorganized by the government or otherwise discontinue providing liquidity for the multi-family sector, our ability to obtain financing through loan programs sponsored by 17 Table of Contents the agencies could be negatively impacted.
This requirement could cause us to dispose of assets for consideration of less than their true value and could lead to a material adverse impact on our results of operations and financial condition. Because real estate investments are illiquid, we may not be able to reconfigure our portfolio on a timely basis. Real estate investments generally cannot be sold quickly.
This requirement could cause us to dispose of assets for consideration of less than their true value and could lead to a material adverse impact on our results of operations and financial condition. 19 Table of Contents Because real estate investments are illiquid, we may not be able to reconfigure our portfolio on a timely basis.
For example, our real estate taxes have increased and will continue to increase as our properties are reassessed by taxing authorities and as property tax rates increase.
For example, our real estate taxes have increased and will continue to increase as our properties are reassessed by 13 Table of Contents taxing authorities and as property tax rates increase.
We may not be able to reconfigure our portfolio promptly in response to economic or other conditions. Further, even if we are able to sell properties, we may be unable to reinvest the proceeds of such sales in opportunities that are as favorable as the properties sold.
Real estate investments generally cannot be sold quickly. We may not be able to reconfigure our portfolio promptly in response to economic or other conditions. Further, even if we are able to sell properties, we may be unable to reinvest the proceeds of such sales in opportunities that are as favorable as the properties sold.
Our ability to acquire additional multi-family properties, develop new properties and improve the properties in our portfolio is limited by the funds available to us (including funds available pursuant to our credit facility) and our ability to obtain, on acceptable terms, mortgage debt.
Our acquisition, development and value-add activities are limited by the funds available to us. Our ability to acquire additional multi-family properties, develop new properties and improve the properties in our portfolio is limited by the funds available to us (including funds available pursuant to our credit facility) and our ability to obtain, on acceptable terms, mortgage debt.
We must continually satisfy tests concerning, among other things, our sources of income, the amounts we distribute to our stockholders and the ownership of our common stock, to qualify as a REIT for Federal income tax purposes.
Compliance with REIT requirements may hinder our ability to maximize profits. We must continually satisfy tests concerning, among other things, our sources of income, the amounts we distribute to our stockholders and the ownership of our common stock, to qualify as a REIT for Federal income tax purposes.
However, there is no limitation on Gould Investors, Fredric H. Gould, Matthew J. Gould or Jeffrey A.
However, there is no limitation on Gould Investors, 22 Table of Contents Fredric H. Gould, Matthew J. Gould or Jeffrey A.
Failure to meet interest and other payment obligations under our debt instruments or a breach by us of the covenants to comply with certain financial ratios would place us in non-compliance under such instruments.
Several of our debt instruments include covenants that require us to maintain certain financial ratios, including various coverage ratios, and comply with other requirements. Failure to meet interest and other payment obligations under our debt instruments or a breach by us of the covenants to comply with certain financial ratios would place us in non-compliance under such instruments.
At December 31, 2022, one property manager manages eight of our properties, a second property manager manages seven of our properties, and our six other property managers manage five or fewer properties. Five of these properties are managed by a management company owned by or affiliated with a joint venture partner.
At December 31, 2023, one property manager manages ten properties, a second property manager manages seven properties, and five other property managers manage four or fewer properties. Four properties are managed by a management company owned by or affiliated with a joint venture partner.
As of December 31, 2022: (i) our wholly-owned properties generated approximately 72% and 11% of our 2022 revenues from properties located in the Southeast and Texas, respectively, and (ii) the properties owned by unconsolidated joint ventures at December 31, 2022, generated 58% and 42% of our 2022 JV Rental and Other Revenues at properties located in Texas and the Southeast, respectively.
As of December 31, 2023: (i) our wholly-owned properties generated approximately 75% and 10% of our 2023 revenues from properties located in the Southeast and Texas, respectively, and (ii) the properties owned by unconsolidated joint ventures at December 31, 2023, generated 53% and 47% of our 2023 JV Rental and Other Revenues at properties located in Texas and the Southeast, respectively.
Our results of operations and financial conditions may be adversely affected if we are required to expend significant funds (other than funds earmarked for such purposes) to repair or improve our properties. Our acquisition, development and value-add activities are limited by the funds available to us.
Our results of operations and financial conditions may be adversely affected if we are required to expend significant funds (other than funds earmarked for such purposes) to repair or improve our properties.
As of December 31, 2022, we have balloon payments of $118.4 million on mortgage debt (including $33.5 million of mortgage debt on properties owned by unconsolidated joint ventures) due in 2025 and 2026 ( i.e., $15.4 million and $103.1 million due in 2025 and 2026, respectively). The weighted average interest rate of this debt is 4.30%.
As of December 31, 2023, we have balloon payments of $138.5 million on mortgage debt (including $53.5 million of mortgage debt on properties owned by unconsolidated joint ventures) due in 2025 and 2026 ( i.e., $15.3 million and $123.0 million due in 2025 and 2026, respectively). The weighted average interest rate of this debt is 4.85%.
These charges and provisions may be required in the future as a result of factors beyond our control, including, among other things, changes in the economic environment and market conditions affecting the value of real property assets or natural or man-made disasters.
These charges and provisions may be required in the future as a result of factors beyond our control, including, among other things, changes in the economic environment and market conditions affecting the value of real property assets or natural or man-made disasters. If we do not continue to pay cash dividends, the price of our common stock may decline .
Moreover, other factors may adversely affect our results of operations, including potential liability under environmental and other laws and other unforeseen events, many of which are discussed elsewhere in the following risk factors.
Moreover, other factors may adversely affect our results of operations, including potential liability under environmental and other laws and other unforeseen events, many of which are discussed elsewhere in the following risk factors. Any or all of these factors could materially adversely affect our results of operations through decreased revenues or increased costs.
If the costs associated with real estate taxes, utilities and insurance premiums should rise, without being offset by a corresponding increase in revenues, our results of operations could be negatively impacted, and our ability to make payments on our debt and to make distributions could be adversely affected. 16 Table of Contents Most of our multi-family properties are located in the Southeast and Texas which makes us susceptible to adverse developments in such markets.
If the costs associated with real estate taxes, utilities and insurance premiums should rise, without being offset by a corresponding increase in revenues, our results of operations could be negatively impacted, and our ability to make payments on our debt and to make distributions could be adversely affected.
The operating performance and value of our multi-family properties is impacted by the economic environment and other conditions of the specific markets in which our properties are concentrated.
Most of our multi-family properties are located in the Southeast and Texas which makes us susceptible to adverse developments in such markets. The operating performance and value of our multi-family properties is impacted by the economic environment and other conditions of the specific markets in which our properties are concentrated.
Based on information supplied to us, as of December 31, 2022, Gould Investors owns approximately 17.2% of the outstanding shares of common stock and, by virtue of the applicable attribution rules under the Code, one individual currently beneficially owns 22.3% of outstanding shares of common stock.
Based on information supplied to us, as of December 31, 2023, Gould Investors owns approximately 19.1% of the outstanding shares of common stock and, by virtue of the applicable attribution rules under the Code, these individuals beneficially own approximately 23.3% of outstanding shares of common stock.
In 2022, we implemented a new insurance program for 17 of our wholly owned properties and we anticipate that our insurance costs will increase because of such program, the casualty losses that we have sustained the past several years and general increases in the cost of insurance coverage for multi-family properties.
We anticipate that our insurance costs will continue to increase because of our implementation, in 2022, of a master insurance program that directly covers our wholly-owned properties (as opposed to coverage obtained by our property managers), the casualty losses that we have sustained the past several years and general increases in the cost of insurance coverage for multi-family properties.
The imposition of such requirements could increase the costs of maintaining or improving our existing properties (for example by requiring retrofits of existing multi-family properties to improve their energy efficiency and/or resistance to inclement weather) without creating corresponding increases in rental revenues, which would have an adverse impact on our operating results. 23 Table of Contents Risks Related to BRT's Organization, Structure and Ownership of its Stock Our transactions with affiliated entities involve conflicts of interest ; certain of our affiliated entities have purchased multi-family properties in the Southeast United States .
The imposition of such requirements could increase the costs of maintaining or improving our existing properties (for example by requiring retrofits of existing multi-family properties to improve their energy efficiency and/or resistance to inclement weather) without creating corresponding increases in rental revenues, which would have an adverse impact on our operating results.
We cannot assure you that our subsidiaries will be able to, or be permitted to, make distributions to us that will enable us to fund our operations.
Accordingly, our only source of cash to fund our operations and pay our obligations are distributions from our subsidiaries. We cannot assure you that our subsidiaries will be able to, or be permitted to, make distributions to us that will enable us to fund our operations.
If we are unable to promptly renew the leases or relet the units, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then our financial condition and results of operations may be adversely affected . 19 Table of Contents Risks Related to Our Financing Activities, Indebtedness and Capital Resources If we are unable to refinance $118.4 million in balloon payments on mortgage debt maturing through 2026, we may be forced to sell properties on disadvantageous terms.
If we are unable to promptly renew the leases or relet the units, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then our financial condition and results of operations may be adversely affected .
We obtain certain executive, administrative, legal, accounting and clerical personnel and the use of certain facilities pursuant to the shared services agreement. During 2022 and 2021, we reimbursed Gould Investors $739,000 and $641,000, respectively, for the personnel and facilities provided pursuant to the shared services agreement.
During 2023 and 2022, we reimbursed Gould Investors $642,000 and $739,000, respectively, for the personnel and facilities provided pursuant to the shared services agreement. We also obtain certain insurance in conjunction with Gould Investors and reimbursed Gould Investors $22,000 and $67,000, in 2023 and 2022, respectively, for our share of the insurance cost.
We also obtain certain insurance in conjunction with Gould Investors and reimbursed Gould Investors $67,000 and $61,000, in 2022 and 2021, respectively, for our share of the insurance cost. These transactions may not be on terms as favorable as those that we would receive if the transactions were entered into with unaffiliated entities and persons.
These transactions may not be on terms as favorable as those that we would receive if the transactions were entered into with unaffiliated entities and persons. Gould Investors from time-to time buys multi-family properties, including properties located in the Southeast United States.
We conduct, and intend to conduct, substantially all of our business operations through our subsidiaries including our unconsolidated subsidiaries. Accordingly, our only source of cash to fund our operations and pay our obligations are distributions from our subsidiaries.
We depend on our subsidiaries for cash flow and will be adversely impacted if these subsidiaries are prohibited from distributing cash to us. We conduct, and intend to conduct, substantially all of our business operations through our subsidiaries, including our unconsolidated subsidiaries.
Entities affiliated with us and with certain of our executive officers provide services to us and on our behalf. Among other things, we retain certain executive officers and others to provide the Services. The aggregate fees to be paid for the Services in 2023, and paid in 2022 and 2021, are $1.54 million, $1.47 million and $1.40 million, respectively.
Risks Related to BRT's Organization, Structure and Ownership of its Stock Our transactions with affiliated entities involve conflicts of interest Entities affiliated with us and with certain of our executive officers provide services to us and on our behalf. Among other things, we retain certain executive officers and others to provide the Services.
Removed
Our value-add activities involve greater risks than more conservative investment approaches. From time-to-time, we seek to acquire properties at which we believe our investment of additional capital to enhance such properties will result in increased rental rates and higher resale value. These efforts involve greater risks than more conservative investment approaches.
Added
Risks Related to Our Financing Activities, Indebtedness and Capital Resources If we are unable to refinance $138.5 million in balloon payments on mortgage debt maturing through 2026, we may be forced to sell properties on disadvantageous terms.
Removed
The risks related to these value-add activities include risks related to delays in the repositioning or improvement process, higher than expected capital improvement costs, the additional capital needed to execute our value-add program, the possibility that these value-add activities may not result in the anticipated higher rents and occupancy rates and the loss of revenue while these properties or units are undergoing capital improvements.
Added
At March 1, 2024, we had approximately $ 21.2 million of cash and cash equivalents (of which a significant portion is at the property level for day-to-day operating expenses) and up to $60 million available to us under our credit facility.
Removed
We may also be unable to complete the improvements of these properties and may be forced to hold or sell these properties at a loss.
Added
The aggregate fees to be paid for the Services in 2024, and paid in 2023 and 2022, are $1.62 million, $1.54 million and $1.47 million, respectively. We obtain certain executive, administrative, legal, accounting and clerical personnel and the use of certain facilities pursuant to the shared services agreement.
Removed
For these and other reasons, we cannot assure you that we will realize growth in the value of our value-add multifamily properties, and as a result, our ability to make distributions to our stockholders could be adversely affected.
Added
Although the properties purchased by Gould Investors are much smaller than the properties in which we are interested, a conflict of interest could arise should Gould Investors or we decide to pursue the acquisition of similar sized properties in such regions.
Removed
Our failure to comply with our obligations under our debt instruments may reduce our stockholders’ equity, and adversely affect our net income and ability to pay dividends. Several of our debt instruments include covenants that require us to maintain certain financial ratios, including various coverage ratios, and comply with other requirements.
Removed
The phasing out of LIBOR may adversely affect our cash flow and financial results. At December 31, 2022 we had $37.4 million junior subordinated notes maturing in 2036; these notes bear interest based on three-month LIBOR plus 200 basis points.
Removed
The authority regulating LIBOR announced that after June 2023 it intends to stop compelling banks to submit rates for the calculation of LIBOR.
Removed
Although these junior subordinated notes provide for alternative methods of calculating the interest rate when LIBOR becomes unavailable, such alternative rates may be unavailable in which case we may have to negotiate a secondary alternative rate with the counterparties to such debt – we can provide no assurance that we and our counterparties will be able to agree to a secondary alternative rate.
Removed
Our cash flow and financial results may be adversely affected if we are unable to arrange a mutually satisfactory alternative rate to LIBOR for our junior subordinated notes. We depend on our subsidiaries for cash flow and will be adversely impacted if these subsidiaries are prohibited from distributing cash to us.
Removed
Any or all of these factors could materially adversely affect our results of operations through decreased revenues or increased costs. 22 Table of Contents Compliance with REIT requirements may hinder our ability to maximize profits.
Removed
In 2021, we incurred a $520,000 impairment charge related to our investment in the joint venture that owned the OPOP Properties. If we are required to take additional impairment charges, our results of operations will be adversely impacted. If we do not continue to pay cash dividends, the price of our common stock may decline .
Removed
Gould Investors from time-to time buys multi-family properties, including properties located in the Southeast United States. Such properties are generally much smaller than the properties in which we are interested.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+2 added−0 removed0 unchanged
Biggest changeOur primary insurance carrier is defending the claim; we believe we have sufficient primary and umbrella insurance to cover the claim for compensatory damages. Insurance generally does not cover claims for exemplary damages.
Biggest changeAlthough we believe that the primary and umbrella insurance coverage maintained with respect to our properties is sufficient to cover claims for compensatory damages, many of these personal injury claims also assert exemplary( i.e; punitive) damages. Generally, insurance does not cover claims for exemplary damages and we may be adversely affected if claims for exemplary damages are asserted successfully.
Item 3. Legal Proceedings. A wholly-owned subsidiary of ours that owns a property in Houston, TX is named as a defendant, along with multiple defendants in an action (Takakura et al. v.
Item 3. Legal Proceedings. As previously reported, a wholly-owned subsidiary of ours that owns a property in Houston, TX was named as a defendant, along with multiple other defendants, in a wrongful death action entitled Takakura et al. v.
Houston Pizza Venture, LP, and Papa John’s USA., Inc. et.al., 129th Judicial District, Harris County, TX, Cause No. 2019-42425), alleging the wrongful death as a result of a homicide of a delivery person at our property. The complaint seeks compensatory damages in an unspecified amount in excess of $1 million and an unspecified amount of exemplary damages.
Houston Pizza Venture, LP, and Papa John’s USA., Inc. et.al., 129th Judicial District, Harris County, TX, Cause No. 2019-42425 (the "Takakura Lawsuit"). The lawsuit has been settled, all claims against us were released and our share of the settlement costs were covered by our insurance policy.
Added
From time to time, we are party to legal proceedings that arise in the ordinary course of our business, and in particular, personal injury claims involving the operations of our properties.
Added
See Note 12 of our Consolidated Financial Statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+2 added−1 removed0 unchanged
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information; Holders Our shares of common stock are listed on the New York Stock Exchange, or the NYSE, under the symbol "BRT." As of March 1, 2023, there were approximately 729 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information; Holders Our shares of common stock are listed on the New York Stock Exchange, or the NYSE, under the symbol "BRT." As of March 1, 2024, there were approximately 713 holders of record of our common stock.
Removed
Issuer Purchases of Equity Securities As of December 31, 2022, we are authorized to repurchase up to $5.0 million of shares of our common stock through December 31, 2023. During the quarter ended December 31, 2022, we did not repurchase any shares of common stock.
Added
Issuer Purchases of Equity Securities Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - October 31, 2023 98,014 $ 17.23 98,014 $ 4,277,693 November 1 - November 30, 2023 67,005 17.25 67,005 3,121,741 December 1 - December 31, 2023 41,086 18.69 41,086 9,584,218 (1) Total 206,105 $ 17.53 206,105 (1) On December 4, 2023, the Board of Directors authorized the the replenishment of the stock repurchase plan to $10 million.
Added
From January 1, 2024 through March 1, 2024 we purchased, pursuant to our publicly announced repurchase program, 123,061 shares at a weighted average price of $18.43 per share. As of March 1, 2024, we are authorized to purchase $7.3 million of shares through December 31, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

0 edited+45 added−45 removed0 unchanged
Removed
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview We are an internally managed real estate investment trust, also known as a REIT, that is focused on the ownership, operation and, to a lesser extent, development of multi-family properties.
Added
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Corporate Level Financing Arrangements " for information about our corporate level financing arrangements.
Removed
These properties may be wholly owned or owned by unconsolidated joint ventures in which we generally have contributed a significant portion of the equity.
Added
Insurance The multi-family properties are covered by all risk property insurance covering 100% of the replacement cost for each building and business interruption and rental loss insurance (covering up to twelve months of loss).
Removed
At December 31, 2022, we: (i) wholly-own 21 multi-family properties with an aggregate of 5,420 units and a carrying value of $649.7 million, (ii) have ownership interests, through unconsolidated entities, in eight multi-family properties with an aggregate of 2,781 units, for which the carrying value of our net equity investment therein is $39.1 million and (iii) own other assets, through consolidated and unconsolidated entities, with a carrying value of $5.4 million.
Added
On a case-by-case basis, based on an assessment of the likelihood of the risk, availability of insurance, cost of insurance and in accordance with standard market practice, we obtain earthquake, windstorm, flood, terrorism and boiler and machinery insurance.
Removed
The 29 multi-family properties are located in eleven states; most of these properties are located in the Southeast United States and Texas. 2022 and Recent Developments. During 2022: Partner Buyouts We purchased the interests of our joint venture partners in ventures that owned 11 multi-family properties for an aggregate purchase price of $105.9 million (the "2022 Partner Buyouts").
Added
We carry comprehensive liability insurance and umbrella policies for each of our properties which generally provide no less than $10 million to $25 million of coverage per incident. We request certain extension of coverage, valuation clauses, and deductibles in accordance with standard market practice and availability.
Removed
As a result, these properties are wholly-owned and the accounts (including mortgage debt of approximately $236.6 million) and results of operations of these properties are included directly in our consolidated financial statements as of the applicable date of purchase.
Added
Although we may carry insurance for potential losses associated with our multi-family properties, we may still incur losses due to uninsured risks, deductibles, co-payments or losses in excess of applicable insurance coverage and those losses may be material.
Removed
In 2022, (i) since the applicable Partner Buyout, these properties contributed in the aggregate $23.4 million in rental revenues, $10.2 million in operating expenses, $6.6 million in interest expense and $11.2 million in depreciation, and (ii) prior to the applicable Partner Buyout contributed an aggregate of $1.2 million in income from unconsolidated joint ventures.
Added
In addition, insurance coverage at our unconsolidated properties is provided through blanket policies obtained by our joint venture partners or the property managers for such property.
Removed
In 2023, we anticipate that these 11 properties will generate approximately $41.8 million in rental revenues, $18.0 million of real estate operating expense, $11.9 million in interest expense and $16.6 million in depreciation.
Added
A consequence of obtaining insurance coverage in this manner is that losses on properties in which we have no ownership interest could reduce significantly or eliminate the coverage available on one or more properties in which we have an interest.
Removed
These estimates for 2023 assume that rental income and real estate operating expense will remain at the same level in 2023 as in 2022 (although we anticipate that real estate operating expense will be higher in 2023 due to the master insurance program), and assumes an anticipated increases in 2023 from 2022 in interest expense due to a mortgage refinance that occured in May 2022 and depreciation as a result of the additional investments ( i.e. , the purchase price paid for the remaining interest) made in such properties .
Added
Our Other Real Estate Assets and Activities In addition to our multi-family properties, we own assets, and in particular, real estate assets, with an aggregate carrying value of $5.6 million at December 31, 2023.
Removed
Since August, 2021, we completed the purchase of the remaining interests of our joint venture partners in 14 joint ventures including three partner buyouts completed in 2021 (the "2021 Partner Buyouts"; and together with the 2022 Partner Buyouts, the "Partner Buyouts").
Added
These assets include cooperative apartment units located in Lawrence and Washington Heights, NY, a leasehold position with two commercial tenants at a property in Yonkers, NY, an equity interest in a development project, which is substantially complete, in John's Island, SC and a nominal profit participation in an entity that 10 Table of Contents owns several multi-family properties in Newark, NJ.
Removed
Sales We recorded an aggregate gain of $64.5 million from the sale by unconsolidated subsidiaries, in four separate transactions, of four multi-family properties, and our share of the related aggregate loss on extinguishment of debt was $1.9 million.
Added
None of these assets generate significant net income or revenue other than the leasehold interest which generated $1.3 million of rental income and $1.1 million of cash flow from operation in 2023 before giving effect to the non-controlling interest. See notes 2 and 3 to our consolidated financial statements.
Removed
During 2022 (through the applicable sales dates) and 2021, these properties contributed a loss of $1.6 million (including our share of the early extinguishment of debt charge related to these sales) and income of $201,000 respectively, of equity in earnings (loss) of unconsolidated joint ventures. Financing; Other We: • entered into the Amendment to our Facility.
Added
Competition We compete to acquire multi-family properties with pension and investment funds, real estate developers, private real estate investors and other owners and operators of such properties.
Removed
Among other things, the Amendment (i) increased the amount we are permitted to borrow from $35 million to an aggregate of $60 million, subject to compliance with borrowing base requirements and other conditions, (ii) increased from $15 million to $25 million the amount that may be used for working capital (including dividend payments) and operating expenses, (iii) extended the term of the facility from November 2024 to September 2025, (iv) reduced the interest rate to the prime rate (subject to a floor of 3.5%) by eliminating the 25 basis point spread over the prime rate, (v) increased the number and value of the unencumbered properties we are required to maintain from two properties with a value of at least $50 million to three properties with a value of at least $75 million and (vi) requires that we maintain a tangible net worth of a least $140 million. • raised approximately $9.9 million of equity from the sale of 447,815 shares of our common stock pursuant to our at-the-market equity offering program. • implemented, effective with the dividend declared in June 2022, an 8.7% per share increase in our quarterly cash dividends from the immediately preceding dividend payment, and declared dividends of an aggregate of $0.98 per share. 29 Table of Contents • implemented a dividend reinvestment plan which allows our stockholders to purchase our common stock at a discount (currently 3.0% to the trading price) and which reduced our cash outlay for dividends paid in 2022 by $1.3 million. • maintained an average occupancy rate of 95.9% across our portfolio of multi-family properties. • began participating in a master insurance program which covers 17 wholly-owned properties comprising 4,316 units located in 10 states.
Added
Competition to acquire such properties, among other things, is based on price, the ability to secure financing on a timely basis to complete the acquisition, an extensive network able to introduce us to appropriate acquisition opportunities and the ability to absorb certain risks that we may be unwilling to absorb (and that larger competitors may be willing to absorb).
Removed
Generally, the coverage limit is $100 million ($50 million for named hurricanes) per occurrence with a deductible of $100,000 for all other perils, and varying deductibles for, among other things, wind, flood, and earthquake damage.
Added
We compete for tenants at our multi-family properties—such competition depends upon various factors, including alternative housing options available in the applicable sub-market, rent, amenities provided and proximity to employment and quality of life venues. Many of our competitors possess greater financial and other resources than we possess.
Removed
We also obtained, on a per occurrence per property basis, general liability and umbrella coverage of $1 million and $25 million, respectively. • used our available cash to pay-off $14.5 million of 4.29% mortgage debt of Avalon Apartments - Pensacola, FL, a wholly owned property. • used our credit facility in October 2022 to pay off $14.9 million of maturing mortgage debt at our Silvana Oaks-North Charleston, SC property.
Added
To the extent that a potential joint venture introduces us to a multi-family acquisition opportunity, we compete with other sources of equity capital to participate in such joint venture based on the financial returns we are willing to offer such potential partner and the other terms and conditions of the such arrangement.
Removed
In February 2023, we obtained mortgage debt of $ 21.2 million on our 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. We used the net proceeds of such mortgage debt to fully pay down our credit facility.
Added
Government Regulation Multifamily properties are subject to various laws, ordinances and regulations, including regulations relating to common areas, such as swimming pools, activity centers, and recreational facilities. We believe that each of our properties has the necessary permits and approvals to operate its business.
Removed
On March 13, 2023, the unconsolidated joint venture that owns Chatham Court and Reflections, a 494 unit multi-family property located in Dallas, TX, and in which we have a 50% interest, entered into a contract to sell such property.
Added
Americans with Disabilities Act Our properties must comply with applicable provisions of the Americans with Disabilities Act, which we refer to as the "ADA". Among other things, the ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
Removed
We estimate that our share of the gain from this sale will be approximately $14.3 million and that our share of the related early extinguishment of debt charge will be $167,000. In 2022, this property accounted for $753,000 of equity in earnings from unconsolidated joint ventures.
Added
We believe that our properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants.
Removed
We anticipate that the closing of this transaction, which is subject to customary closing conditions, will be completed in the quarter ending June 30,2023, although we can provide no assurance that this transaction will be completed.
Added
Our obligations under the ADA are ongoing and we will continue to assess our properties and make alterations as appropriate. Fair Housing Act The Fair Housing Act, which we refer to as the "FHA", its state law counterparts and the regulations promulgated by the U.S.
Removed
In March 2023, the Company entered into an agreement to acquire a 238-unit multifamily property constructed in 2019 and located in Richmond, VA, for a purchase price of approximately $62.5 million.
Added
Department of Housing and Urban Development and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status or handicap (disability) and, in some jurisdictions, financial capability or other bases.
Removed
The purchase price includes the assumption of approximately $32 million of mortgage debt bearing an interest rate of 3.34% and maturing in 2061.The purchase is subject to the satisfaction of various conditions, including the completion, to BRT’s satisfaction, of its due diligence investigation, as well as the approval by the mortgage lender of the Company’s assumption of the mortgage debt.
Added
Our failure to comply with these laws could result in litigation, fines, penalties or other adverse claims, or could result in limitations or restrictions on our ability to operate, any of which could materially and adversely affect us. We believe that we operate our properties in substantial compliance with the FHA.
Removed
BRT anticipates that this transaction will be completed in the fourth quarter of 2023, although we can provide no assurance that this transaction will be completed. UPREIT Structure We are evaluating whether to establish an UPREIT structure to enhance our ability to acquire multi-family properties.
Added
Environmental Matters We are subject to regulation at the federal, state and municipal levels and are exposed to potential liability should our properties or actions result in damage to the environment or to other persons or properties.
Removed
There is no timetable for the completion of such evaluation or implementation of such structure and we can provide no assurance that we will implement an UPREIT structure and that if implemented, that it will be beneficial to us and our stockholders.
Added
These conditions include the presence or growth of mold, potential leakage of underground storage tanks, breakage or leaks from sewer lines and risks pertaining to waste handling.
Removed
Results of Operations Comparison of Years Ended December 31, 2022 and 2021 The term "same store properties" refers to seven multi-family properties with an aggregate of 1,608 units that were owned for all of 2022 and 2021.
Added
The potential costs of compliance, property damage restoration and other costs for which we could be liable or which could occur without regard to our fault or knowledge, are unknown and could potentially be material.
Removed
The term "unconsolidated same store properties" with an aggregate of 2,781 units refers to eight properties that were owned for all of 2022 and 2021.
Added
There are no material claims made or pending against us with regard to environmental damage, nor are we aware of any potential environmental hazards related to any of our properties which could reasonably be expected to result in a material loss.
Removed
Revenues The following table compares our revenues for the years indicated: 30 Table of Contents (Dollars in thousands): 2022 2021 Increase (Decrease) % Change Rental and other revenue from real estate properties $ 70,515 $ 32,041 $ 38,474 120.1 % Other income 12 16 (4) (25.0) % Total revenues $ 70,527 $ 32,057 $ 38,470 120.0 % Rental and other revenue from real estate properties.
Added
Human Capital Resources As of December 31, 2023, we had 10 full-time employees who devote substantially all of their business time to us. In addition, part-time personnel (including part-time executive officers), perform certain executive, administrative, legal, accounting and clerical functions for us.
Removed
The components of the increase include: • $37.1 million due to the revenues from the Partner Buyouts, including $13.7 million from the inclusion, for all of 2022, of the revenues from the 2021 Partner Buyouts; and • $2.6 million from same store properties, substantially all of which is due to higher rental rates.
Added
The services of the part-time personnel as well as the provision to us of certain facilities and other resources are supplied pursuant to a shared services agreement between us and several affiliated entities, including Gould Investors L.P., the owner and operator of a diversified portfolio of real estate and other assets.
Removed
Offsetting the increase is a $1.2 million decrease due to the sale of the Kendall Manor Property - Houston, TX (the "Kendall Sale") in 2021 and a $191,000 decrease due to lower occupancy at same store properties.
Added
The expenses 11 Table of Contents for the shared personnel, facilities and resources is allocated to us and the other affiliated entities in accordance with the shared services agreement. The allocation is based on the estimated time devoted by such part-time personnel to the affairs of the parties to this agreement.
Removed
Expenses The following table compares our expenses for the periods indicated: (Dollars in thousands) 2022 2021 Increase (Decrease) % Change Real estate operating expenses $ 30,558 $ 14,202 $ 16,356 115.2 % Interest expense 15,514 6,757 8,757 129.6 % General and administrative 14,654 12,621 2,033 16.1 % Impairment charge — 520 (520) (100.0) % Depreciation 24,812 8,025 16,787 209.2 % Total expenses $ 85,538 $ 42,125 $ 43,413 103.1 % Real estate operating expenses.
Added
We also retain several related parties, among other things, to analyze and approve multi-family property acquisitions and dispositions, develop and maintain banking and financing relationships and provide investment advice and long-term planning (the “Services”). The aggregate fees to be paid in 2024, and paid in 2023 and 2022, for the Services, are $1.62 million, $1.54 million and $1.47 million, respectively.
Removed
The components of the increase include: • $16.2 million from the Partner Buyouts, of which $6.0 million is from the inclusion, for all of 2022, of the expenses from the properties included in the 2021 Partner Buyouts; and • $1.0 million from same store properties, including increases of $440,000 in repairs and maintenance and replacement costs, which includes turnover costs, $160,000 in payroll costs, $132,000 in insurance costs and $106,000 in utility expense.
Added
See note 10 to our consolidated financial statements for further information regarding the shared services agreement and the Services. We provide a competitive benefits program to help meet the needs of our employees.
Removed
The increase was offset by a $828,000 decrease due to the Kendall Sale. We anticipate that these expenses will increase in 2023 because of our implementation of the Insurance Program, industry-wide increases in the cost of property insurance coverage and the impact of inflation.
Added
In addition to salaries, the program includes annual cash bonuses, stock awards, pension plan contributions, healthcare and insurance benefits, health savings accounts, flexible spending accounts, paid-time off, family leave and an education benefit. Employees are offered flexibility to meet personal and family needs and regular opportunities to participate in professional development programs.
Removed
Interest expense The change is due to a: • $9.6 million increase due to the Partner Buyouts, including $2.9 million from the inclusion, for all of 2022, of such expense from the properties included in the 2021 Partner Buyouts; • $612,000 increase in interest expense on our credit facility, due to a $7.9 million increase in the average outstanding balance during 2022; and • $592,000 due to the increase in the interest rate on our floating rate junior subordinated notes.
Added
Most of our employees have a long tenure with us, which we believe is indicative of the employee-friendly work environment we provide.
Removed
The increase was offset by a (i) $1.8 million decrease due to the payoff of $61.3 million of mortgage debt since August 2021 ($31.9 million in 2021 and $29.5 million in 2022) and (ii) $271,000 decrease due to the Kendall Sale. 31 Table of Contents General and administrative.
Added
We maintain a work environment that is free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law, and our employees are compensated in a manner unrelated to their inclusion in any of the foregoing categories.
Removed
The increase is due to a $1.5 million increase in non-cash compensation expense, including increases of: • $890,000 due to increased amortization expense from RSUs, of which increases of (i) $510,000 reflects amortization expense related to RSU's granted in June 2022 and (ii) $380,000 reflects net amortization expense primarily related to the RSUs granted in 2021; • $400,000 due to the amortization expense related to the restricted stock granted in January 2022 (as a result of the higher fair value of the shares granted in 2022 in comparison to the restricted stock granted in 2017); and • $254,000 due to the inclusion, for all of 2022, of the amortization expense related to the restricted stock granted in June 2021.
Added
These workplace protections and compensation benefits are afforded to the part-time personnel providing services to us pursuant to the shared services agreement.
Removed
Also contributing to the increase was a $461,000 increase due to higher levels of cash compensation. The increase was offset by the inclusion, in 2021, of $114,000 of professional fees related primarily to a terminated stock offering.
Added
Executive Officers of Registrant Set forth below is a list of our executive officers whose terms will expire at our 2024 annual Board of Directors' meeting (the business history of officers who are also directors will be provided in our proxy statement to be filed not later than April 29, 2024): Name Age Office Israel Rosenzweig (1) 76 Chairman of the Board of Directors Jeffrey A.
Removed
Impairment charges In 2021, we recorded an impairment charge of $520,000 representing the excess of the book value of our investment in the Opop Tower and Loft properties, St Louis, MO, over the anticipated selling price of the investment. There was no comparable charge in 2022.
Added
Gould (2) 58 President, Chief Executive Officer and Director Ryan Baltimore 32 Chief Operating Officer George E. Zweier 60 Vice President and Chief Financial Officer Mitchell K. Gould (3) 51 Executive Vice President Matthew J. Gould (2) 64 Senior Vice President and Director David W. Kalish (4) 76 Senior Vice President - Finance Mark H.
Removed
Depreciation and amortization The increase is due $16.9 million of such expense from the Partner Buyouts, including $5.7 million from the inclusion, for all of 2022, of such expense from the properties included in the 2021 Partner Buyouts.
Added
Lundy 61 Senior Vice President and Counsel Steven Rosenzweig (1) 48 Senior Vice President - Legal Isaac Kalish (4) 48 Senior Vice President and Treasurer __________________________________________________________________________ (1) Steven Rosenzweig is the son of Israel Rosenzweig. (2) Jeffrey A. Gould and Matthew J. Gould are sons of Fredric H.
Removed
Gain on sale of real estate In 2022, we recognized a gain of $6,000 on the sale of a vacant parcel of land in South Daytona Beach, FL. In 2021, we recognized a $7.3 million gain on the Kendall Sale and a $414,000 gain from the sale of a cooperative apartment unit in New York, NY.
Added
Gould, the former chairman of our board of directors and currently a director. (3) Mitchell K. Gould is a cousin of Fredric H. Gould. (4) Isaac Kalish is the son of David W. Kalish.
Removed
Casualty loss / Insurance recovery of casualty loss In 2022, we settled a personal injury lawsuit for $850,000. Our insurance carrier reimbursed us for this loss. Gain on sale of partnership interest In 2021, we sold our interest in a joint venture that owned Anatole Apartments - Daytona, Beach, FL and OPOP Towers and Lofts - St.
Added
Ryan Baltimore has been employed by us since 2013, served as Senior Vice President - Corporate Strategy and Finance from 2019 through 2022, and since 2022 as our Chief Operating Officer. George E. Zweier, a certified public accountant, has served as our Chief Financial Officer and a Vice President since 1998. Mitchell K.
Removed
Louis, MO (collectively, the Anatole/OPOP Sale) and recognized an aggregate gain of $2.6 million. There was no comparable gain in 2022.
Added
Gould has been employed by us since 1998, served as a Vice President from 1999 through 2007 and since 2007 Executive Vice President. David W. Kalish, a certified public accountant, has served as our Vice President and Chief Financial Officer from 1990 to 1998, and as our Senior Vice President, Finance since 1998.
Removed
Loss on extinguishment of debt In 2022, we incurred $563,000 of loss on extinguishment of debt related to the mortgage refinancing that took place with the buyout of our joint venture partner's interest in Brixworth at Bridge Street - Huntsville, AL.
Added
From 1990 to 2023, he served as Chief Financial Officer of One Liberty Properties, Inc. and since 1990 has served as Chief Financial Officer of Georgetown Partners, LLC. Georgetown Partners is the managing general partner of Gould Investors, a related party. 12 Table of Contents Mark H.

… 10 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+1 added−0 removed0 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. All of our mortgage debt bears interest at fixed rates. Our junior subordinated notes bear interest at the rate of three-month LIBOR plus 200 basis points. At December 31, 2022, the interest rate on these notes was 6.41%. Our credit facility bears interest at the prime rate.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. All of our mortgage debt bears interest at fixed rates. Our credit facility bears interest at 30 day term SOFR plus 250 basis points, with an interest rate floor of 6%. At December 31, 2023, no amounts were drawn on the facility.
A 100 basis point increase in the rate would result in an increase in interest expense in 2023 of $564,000 (of which $374,000 would be due to the change in rate on the junior subordinated notes) and a 100 basis point decrease in the rate would result in a $ 564,000 decrease (of which $374,000 would be due to the change in rate on the junior subordinated notes) in interest expense in 2023.
A 100 basis point increase in the rate would result in an increase in interest expense in 2023 of $374,000 (all of which would be due to the change in rate on the junior subordinated notes) and a 100 basis point decrease in the rate would result in a $374,000 decrease (all of which would be due to the change in rate on the junior subordinated notes) in interest expense in 2023.
Added
Our junior subordinated notes bear interest at the rate of three-month term SOFR plus 226 basis points. At December 31, 2023, the interest rate on these notes was 7.65%.

Other BRT 10-K year-over-year comparisons