BRT Apartments Corp

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NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Background

BRT Apartments Corp. (“BRT” or the “Company”) owns, operates and, to a lesser extent, develops multi-family properties. These multi-family properties may be wholly owned by us or by unconsolidated joint ventures in which the Company contributes a significant portion of the equity. At December 31, 2023, BRT: (i) wholly-owns 21 multi-family properties located in 11 states with an aggregate of 5,420 units and a carrying value of $634,046,000; (ii) has ownership interests, through unconsolidated entities, inseven multi-family properties located infour states with an aggregate of 2,287 units, and the carrying value of its net equity investment is $30,418,000; and (iii) owns other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $5,615,000. The Company's 28 multi-family properties are located in 11 states primarily in the Southeast United States and Texas.

BRT conducts its operations to qualify as a real estate investment trust, or REIT, for Federal income tax purposes.

Substantially all of the Company's assets are comprised of multi-family real estate assets generally leased to tenants on a one-year basis. Therefore, the Company aggregates real estate assets for reporting purposes and operates inone reportable segment.

Principles of Consolidation

The consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries.

The joint venture that owns a commercial property in Yonkers, NY was determined not to be a variable interest entity ("VIE") but is consolidated because the Company has controlling rights in such entity.

The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. For each joint venture, the Company evaluated the rights provided to each party in the venture to assess the consolidation of the venture. All investments in unconsolidated joint ventures have sufficient equity at risk to permit the entity to finance its activities without additional subordinated financial support and, as a group, the holders of the equity at risk have power through voting rights to direct the activities of these ventures. As a result, none of these joint ventures are VIEs. Additionally, the Company does not exercise substantial operating control over these entities, and therefore the entities are not consolidated. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for their share of equity in earnings, cash contributions and distributions. The distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro-rata to the percentage equity interest each partner has in the applicable venture.

Certain items on the consolidated financial statements for the year ended December 31, 2022, have been reclassified to conform with the current year's presentation including reclassifying (i) Credit Facility deferred fees to Other assets and (ii) Deposit and escrows within Cash and Restricted Cash on the statement of cash flows.

Income Tax Status

The Company qualifies as a real estate investment trust under sections 856-860 of the Internal Revenue Code of 1986, as amended. The board of directors may, at its option, elect to revoke or terminate the Company's election to qualify as a real estate investment trust.

The Company will not be subject to federal, and generally state and local taxes on amounts it distributes to stockholders, provided it distributes 90% of its ordinary taxable income and meets other conditions.

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In accordance with Accounting Standards Codification ("ASC") Topic 740 - "Income Taxes", the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on the Company's financial position or results of operations. The Company's income tax returns for the tax years 2020 through 2022 are subject to review by the Internal Revenue Service.

Revenue Recognition

Rental revenue from multi-family properties is recorded when due from residents and is recognized monthly as it is earned. Rental payments are due in advance. Leases on residential properties are generally for terms that do not exceedone year.

Rental revenue from commercial properties, including the base rent that each tenant is required to pay in accordance with the terms of their respective leases, net of any rent concessions and lease incentives, is reported on a straight-line basis over the non-cancellable term of the lease.

Real Estate Properties

Real estate properties are stated at cost, net of accumulated depreciation, and include properties acquired through acquisition or development.

When the Company purchases real estate assets from third-parties, the Company allocates the purchase price of real estate, including direct transaction costs applicable to an asset acquisition, among land, building, improvements and intangibles (e.g., the value of above, below and at market leases, and origination costs associated with in-place leases and above or below-market mortgages assumed at the acquisition date). The value, as determined, is allocated to the gross assets acquired based on management’s determination of the relative fair values of these assets and liabilities.

Whenever the Company buys out the remaining interest from joint venture partners, the Company follows a cost-accumulation approach, wherein the Company allocates the cost basis of its existing interest and the purchase price to the Company of its partners' remaining interest, to the real estate acquired (including land, buildings and improvements, and identified intangibles such as acquired in-place leases) and acquired liabilities.

Depreciation for multi-family properties is computed on a straight-line basis over an estimated useful life of 30 years. Intangible assets (and liabilities) are amortized over the remaining life of the related leases at the time of acquisition and is usually less than one year. Expenditures for maintenance and repairs are charged to operations as incurred.

Real estate is classified as held for sale when management has determined that the applicable criteria have been met. Real estate assets that are expected to be disposed of are valued at the lower of their carrying amount or their fair value less costs to sell on an individual asset basis. Real estate classified as held for sale is not depreciated.

The Company accounts for the sale of real estate when title passes to the buyer, sufficient equity payments have been received, there is no continuing involvement by the Company and there is reasonable assurance that the remaining receivable, if any, will be collected.

Asset Impairments

The Company reviews each real estate asset owned quarterly to determine if there are indicators of impairment. If such indicators are present, the Company determines whether the carrying amount of the asset can be recovered. Recognition of impairment is required if the undiscounted cash flows estimated to be generated by the asset are less than the asset's carrying amount and that carrying amount exceeds the estimated fair value of the asset. The impairment recognized is the difference between the carrying value and the fair value. The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property. The analysis includes an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends, the effects of leasing demands, and other factors. In evaluating a property for impairment, various factors are considered, including estimated current and expected operating cash flow from the property during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of such real estate in the ordinary course of business. Valuation adjustments may be necessary in the event that effective interest rates, rent-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property. If future evaluations result in a decrease in the value of the property below its carrying value, the reduction will be recognized as an

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impairment charge. The fair values related to the impaired real estate assets are considered to be a level 3 valuation within the fair value hierarchy because they are based on unobservable inputs and are subjective in nature.

For investment in real estate ventures, if indicators of impairment are present, the Company determines if the fair value of the investment is less than its carrying value. Fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the asset. The fair values related to the impaired investments in real estate ventures are considered to be a level 3 valuation within the fair value hierarchy.

Equity Based Compensation

Compensation expense for grants of restricted stock, restricted stock units ("RSUs") and dividend equivalent rights are amortized over the vesting period of such awards, based upon the estimated fair value of such award at the grant date. The Company recognizes the effect of forfeitures when they occur and previously recognized compensation expense is reversed in the period the grant or unit is forfeited. The deferred compensation related to the performance based RSUs to be recognized as expense is net of certain performance assumptions which are re-evaluated quarterly. For accounting purposes, the shares of restricted stock and the RSUs are not included in the outstanding shares shown on the consolidated balance sheets until they vest; however, the restricted stock is included in the calculation of basic and diluted earnings per share as it participates in the earnings of the Company.

Per Share Data

Basic earnings (loss) per share is determined by dividing net income (loss) applicable to holders of common stock for the applicable year by the weighted average number of shares of common stock outstanding during such year. Net income is also allocated to the unvested restricted stock outstanding during each period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. The RSU's are excluded from the basic earnings per share calculation, as they are not participating securities.

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock that share in the earnings of the Company. Diluted earnings per share is determined by dividing net income applicable to common stockholders for the applicable period by the weighted average number of shares of common stock deemed to be outstanding during such period.

In calculating diluted earnings per share, the Company includes only those shares underlying the RSUs that it anticipates will vest based on management's estimates which are evaluated quarterly. The Company excludes any shares underlying the RSUs from such calculation if their effect would have been anti-dilutive.

Cash Equivalents

Cash equivalents consist of highly liquid investments; primarily, direct United States treasury obligations with maturities of three months or less when purchased.

Restricted Cash

Restricted cash consists of cash held for construction costs and property improvements for specific joint venture properties as may be required by contractual arrangements.

Other Assets

Other assets consist of real estate tax , insurance and replacement escrows (classified as restricted cash within the consolidated statement of cash flows), lease intangibles, tenant receivables, prepaid expenses and other receivables.

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Deferred Costs

Fees and costs incurred in connection with multi-family property financings are deferred and amortized over the term of the related debt obligations. Fees and costs paid related to the successful negotiation of commercial leases are deferred and amortized on a straight-line basis over the terms of the respective leases.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

Immaterial Error Correction

During the preparation of financial statements for the current year, it was determined that we were not correctly including the escrow accounts classified within other assets within cash flows from operating activities and cash flows from investing activities on the Consolidated Statements of Cash Flows. As a result, we have made an immaterial error correction to the prior period to reclassify the deposits and escrows within Cash and Restricted Cash on the Statement of Cash Flows resulting in an increase in net cash from operating activities of $425,000 and a decrease in net cash used in investing activities of $3,596,000 from what was previously reported.

NOTE 2—REAL ESTATE PROPERTIES

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

A summary of activity in real estate properties, net, for the year ended December 31, 2023 follows (dollars in thousands):

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NOTE 2—REAL ESTATE PROPERTIES (continued)

The following summarizes, by state, information for the year ended December 31, 2023 regarding consolidated properties (dollars in thousands):

(a) Represents non-multi-family revenues.

Future minimum rentals to be received pursuant to non-cancellable operating leases with terms in excess of one year, from a commercial property owned by the Company at December 31, 2023, are as follows (dollars in thousands):

Leases at the Company's multi-family properties are generally for a term ofone year or less and are not reflected in this table.

NOTE 3—ACQUISITIONS AND DISPOSITIONS

Acquisitions of Interests in Joint Ventures

During 2023, the Company didnot acquire any partnership interests. During 2022, the Company purchased its partners' remaining interests in 11 joint ventures. The Company determined that in each acquisition the gross assets acquired are concentrated in a single identifiable asset. Therefore, these transactions do not meet the definition of a business and are accounted for as asset acquisitions.

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NOTE 3—ACQUISITIONS AND DISPOSITIONS (continued)

The following table summarizes these purchases (dollars in thousands):

(1) The purchase price reflects the Company's purchase of its joint venture partner's promote interest in the venture. Includes $3,596 escrows but excludes closing costs of $2,191 and operating cash acquired from the joint venture of $2,797.

During 2022, the Company assessed the fair value of the tangible assets of each acquired property as of the applicable acquisition date using estimated building costs between $90 and $215 per square foot, with a weighted average square foot cost of $158 and estimated land costs between $4.11 and $50.14 per square foot with a weighted average square foot cost of $6.65, which are Level 3 unobservable input in the fair value hierarchy.

The following table summarizes the purchase price allocation of the book values of those properties whose remaining interest was purchased and consolidated in 2022 and is based on the proportionate share of the estimated fair value of the property on the acquisition date (dollars in thousands):

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NOTE 3—ACQUISITIONS AND DISPOSITIONS (continued)

Property Dispositions

During the year ended December 31, 2023, the Company sold a cooperative apartment unit located in New York, NY for a sales price of $785,000 and after closing costs, recognized a gain of $604,000 on the sale.

During the year ended December 31, 2022, the Company sold a land parcel located in Daytona, FL for a sales price of $4,700,000 and after closing costs, recognized a nominal gain.

NOTE 4—RESTRICTED CASH

The restricted cash reflected on the consolidated balance sheets represents funds held by the Company specifically allocated for capital improvements at joint venture multi-family properties; such funds are not generally available for general corporate purposes.

NOTE 5 -LEASES

Lessor Accounting

The Company owns a commercial property which is leased totwo tenants under operating leases with current expirations ranging from 2028 to 2035, with options to extend or terminate the leases. Revenues from such leases are reported as rental income, net, and are comprised of (i) lease components, which includes fixed lease payments and (ii) non-lease components, which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components as the timing and pattern of transfer are the same, and accounts for the combined component in accordance with ASC 842.

Lessee Accounting

The Company is a lessee under a ground lease in Yonkers, NY which is classified as an operating lease. The ground lease which was set to expire September 30, 2024, provided forone 21-year renewal option. The renewal option was exercised in 2023 and the ground lease is scheduled to expire on June 30, 2045. There are no further renewal options. As of December 31, 2023, the remaining lease term is 21.5 years.

The Company is a lessee under a corporate office lease in Great Neck, NY, which is classified as an operating lease. The lease expires on December 31, 2031 and provides afive-year renewal option. As of December 31, 2023, the remaining lease term, including renewal options deemed exercised, is 13.0 years.

As of December 31, 2023, the Company's right-of-use ("ROU") assets and lease liabilities were $2,183,000 and $2,318,000, respectively and as of December 31, 2022, the Company's ROU assets and lease liabilities were $2,371,000 and $2,472,000, respectively. The ROU assets and lease liabilities are reported on the consolidated balance sheets in Other assets and Accounts payable and accrued liabilities, respectively.

The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing

rate (“IBR”). The Company considers the general economic environment and its historical borrowing rate activity and factors

in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease.

As the Company did not elect to apply the hindsight practical expedient, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842.

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NOTE 5 - LEASES (continued)

As of December 31, 2023, the minimum future lease payments related to the operating ground and office leases are as follows (dollars in thousands):

NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES

At December 31, 2023 and 2022, the Company owned interests in unconsolidated joint ventures that owned seven multi-family properties and an interest in a development property (the "Unconsolidated Properties"), respectively. The condensed balance sheets below presents information regarding such properties (dollars in thousands):

(1) Includes work-in-process at December 31, 2023 and 2022 of approximately $46,509 and $24,335, respectively, related to the Stono Oaks development project.

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NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (continued)

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

Purchase of Interest in a Joint Venture

On March 10, 2022, the Company acquired for $3,500,000, a 17.45% interest in a planned 240-unit development property located in Johns Island, SC. In 2023, the Company contributed an additional $316,000 to this venture. In December 2022, the venture recorded an impairment charge of $8,553,000 due to a fire at the development. This loss is covered by insurance and accordingly, the venture recorded an insurance recovery of $8,553,000. The Company recorded its proportionate share of the impairment charge and the insurance recovery. As of December 31, 2023, the property is substantially complete and leasing has commenced.

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NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (continued)

Dispositions of Properties

The table below provides information regarding the disposition of real estate properties by unconsolidated joint ventures in the year ended December 31, 2023 and 2022 (dollars in thousands):

Joint Venture Buyouts

In 2022, the Company purchased its venture partners' remaining interests in joint ventures that owned 11 multi-family properties. The operations and accounts of these joint ventures which, as a result of such purchases, are wholly-owned by the Company are consolidated into the operations and accounts of the Company as of their respective acquisition dates. See Note 3 for information regarding these buyouts.

NOTE 7—DEBT OBLIGATIONS

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

(1) Excludes $289 and $498 at December 31, 2023 and 2022, respectively, of deferred fees related to our credit facility which is reflected in Other Assets

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A summary of activity in property debt, net of deferred loan fees, for the year ended December 31, 2023 is as follows (dollars in thousands):

At December 31, 2023, $426,436,000 of mortgage debt with a weighted average interest rate of 4.02% and a weighted average remaining term to maturity of 7.0 years is outstanding on 18 of the Company's multi-family properties. Scheduled principal repayments for the periods indicated are as follows (dollars in thousands):

The following table summarizes the information regarding the mortgages relating to the properties in which BRT purchased the remaining interests of its joint venture partners during the twelve months ended December 31, 2022 (dollars in thousands):

(a) Excludes fair value adjustments of $4,719 determined as part of the purchase price allocation.

(b) The original mortgage debt of $11,147 was refinanced with newten-year mortgage debt of $18,952 immediately following the buyout. The interest rate, maturity date and

interest - only terms reflect the new mortgage.

(c ) Includes a supplemental mortgage of $1,056 which was paid off immediately following the buyout.

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The unamortized balance of acquisition related mortgage intangibles, which is included in mortgages payable in the consolidated balance sheet, was $1,387,000 at December 31, 2023 and will be amortized as follows (dollars in thousands):

On February 24, 2023, the Company obtained mortgage debt of $21,173,000 on its Silvana Oaks - North Charleston, SC multi-family property; such mortgage debt matures in March 2033, bears an interest rate of 4.45% and is interest only for the term of the mortgage.

The Company paid off the following debt during the year ended December 31, 2022 (dollars in thousands):

Credit Facility

The Company's credit facility with an affiliate of Valley National Bank ("VNB"), as amended, allows the Company to borrow, subject to compliance with borrowing base requirements and other conditions, up to $60,000,000. The facility can be used to facilitate the acquisition of multi-family properties, repay mortgage debt secured by multi family properties and for operating expense (i.e., working capital (including dividend payments)); provided that no more than $25,000,000 may be used for operating expenses. The facility, which was amended in August 2023 to change the interest rate from a prime based rate to a SOFR based rate, is secured by the cash available in certain cash accounts maintained by the Company at VNB and the Company's pledge of its interests in the entities that own the unencumbered properties used in calculating the borrowing base. The interest rate, which adjusts monthly and is subject to a floor of 6.00%, equals one-month term SOFR plus 250 basis points. The interest rate in effect as of December 31, 2023 and March 1, 2024 was 7.85% and 7.82%, respectively. There is an unused facility fee of 0.25% per annum on the total amount committed by VNB and unused by the Company. The facility matures in September 2025. At December 31, 2023, the Company is in compliance in all material respects with its obligations under the facility.

At December 31, 2023, and March 1, 2024, there wasno outstanding balance on the facility and $60,000,000 was available to be borrowed. At December 31, 2022, there was an outstanding balance of $19,000,000 on the facility. The average balance outstanding on the facility for 2023 and 2022 was $2,811,000 and $7,907,000, respectively. Interest expense for the years ended December 31, 2023 and 2022, which includes amortization of deferred financing costs and unused fees, was $574,000 and $713,000, respectively. Deferred costs of $289,000 and $498,000 are recorded in Other Assets on the consolidated balance sheets at December 31, 2023 and 2022, respectively.

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Junior Subordinated Notes

At December 31, 2023 and 2022, the outstanding principal balance of the Company's junior subordinated notes was $37,400,000, before deferred financing costs of $257,000 and $277,000, respectively. The interest rate on the outstanding balance resets quarterly and is based on three month term SOFR +2.26%. The rate in effect at December 31, 2023 and 2022 was 7.65% and 6.41%, respectively. The notes mature April 30, 2036.

The notes require interest only payments through the maturity date, at which time repayment of all outstanding principal and unpaid interest is due. Interest expense for the years ended December 31, 2023 and 2022, which includes amortization of deferred costs, was $2,768,000 and $1,478,000, respectively.

NOTE 8—INCOME TAXES

The Company elected to be taxed as a REIT pursuant to the Code. As a REIT, the Company is generally not subject to Federal income taxes at the corporate level if it distributes 100% of its REIT taxable income, as defined, to its stockholders. To maintain its REIT status, the Company must distribute at least 90% of its ordinary taxable income; however, if it does not distribute 100% of its taxable income, it will be taxed on undistributed income. There are a number of organizational and operational requirements the Company must meet to remain a REIT. If the Company fails to qualify as a REIT in any taxable year, its taxable income will be subject to Federal income tax at regular corporate tax rates and it may not be able to qualify as a REIT for four subsequent tax years. Even if it is qualified as a REIT, the Company is subject to certain state and local income taxes and to Federal income and excise taxes on undistributed taxable income. For income tax purposes, the Company reports on a calendar year basis. As of December 31, 2023, tax returns for the calendar years 2020 through 2022 remain subject to examination by the Internal Revenue Service and various state and local tax jurisdictions.

During the years ended December 31, 2023 and 2022, the Company recorded $54,000 and $821,000, respectively, of state franchise tax expense, net of refunds, relating to the 2023 and 2022 calendar years.

Earnings and profits, which determine the taxability of dividends to stockholders, differs from net income reported for financial statement purposes due to various items, including timing differences related to impairment charges, depreciation methods and carrying values.

NOTE 9—STOCKHOLDERS' EQUITY

Common Stock Dividend Distribution

During the years ended December 31, 2023 and 2022, the Company declared an aggregate of $1.00 and $0.98 per share in cash dividends, respectively.

Stock Based Compensation

In 2022, the Company's board of directors adopted and the stockholders' approved the 2022 Incentive Plan (the "2022 Plan"). This plan permits the Company to grant: (i) stock options, restricted stock, restricted stock units, performance shares awards and any one or more of the foregoing, up to a maximum of 1,000,000 shares; and (ii) cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards.

Each of the Company's Amended and Restated 2020 Incentive Plan (the "2020 Plan") and the Amended and Restated 2018 Incentive Plan (the "2018 Plan"; and together with the 2020 Plan, the "Prior Plans") authorized the Company to grant up to 1,000,000 and 600,000, respectively, of shares of common stock pursuant to the same type of awards available under the 2022 Plan. No further awards may be granted pursuant to the Prior Plans.

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(1) Excludes 166,439 shares of restricted shares issued in January 2024.

Restricted Stock

In January 2023 and January 2022, the Company granted shares of restricted stock pursuant to the 2022 Plan and 2020 Plan. The shares of restricted stock generally vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. For financial statement purposes, the restricted stock is not included in the outstanding shares shown on the consolidated balance sheets until they vest, but are included in the basic and diluted earnings per share computation. The weighted average remaining vesting period of the outstanding restricted stock is 2.1 years. Subsequent to December 31, 2023, the Company granted 166,439 stock of restricted stock pursuant to the 2022 Plan.

The tables below presents information regarding the changes in the number of shares of restricted stock outstanding under the Company's equity incentive plans, compensation expense and unearned compensation for the periods indicated (dollars in thousands):

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Restricted Stock Units

In June 2023 and June 2022, the Company issued restricted stock units (the "RSUs") to acquire shares of common stock. The RSUs granted entitle the recipients, subject to continued service during the applicable performance period, to (i) shares of common stock, (the "TSR Award"), based on achieving, during thethree-year performance period (the "Measurement Period"), specified levels in compounded annual growth rate ("CAGR") in total stockholder return (“TSR”), and (ii) shares of common stock based on achieving, during the Measurement Period, specified levels in CAGR in adjusted funds from operations (the "AFFO Award"), in each case as determined pursuant to the award agreement. In addition, with respect to each of the RSUs granted in 2023 and 2022, additional shares (the "Peer Group Adjustment") may be added to or subtracted from the TSR Award based on attaining or failing to attain, as the case may be, during the Measurement Period, of specified levels of CAGR in TSR in comparison to the REITs that comprise, with specified exceptions, the FTSE NAREIT Equity Apartment Index.

The RSU recipients also received dividend equivalent rights entitling them to an amount equal to cash dividends they would have received with respect to the shares of common stock underlying their RSUs as if the underlying shares were outstanding during the Measurement Period, if, when, and to the extent, the related RSUs vest. The shares underlying the RSUs are not participating securities but are contingently issuable shares.

The tables below presents activity and changes in the number of RSUs under the Company's equity incentive plans, compensation expense and unearned compensation for the periods indicated (dollars in thousands):

For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to assist management in determining fair value. The Monte Carlo valuation consisted of computing the grant date fair value of the awards using the Company's simulated stock price. For these TSR awards, the per unit of share fair value was estimated using the following assumptions:

For the AFFO Awards granted, fair value is based on the market value on the date of grant. Expense is not recognized on RSUs which the Company does not expect to vest because the performance conditions are not expected to be satisfied.

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Performance assumptions are re-evaluated quarterly.The total amount recorded at the grant date as deferred compensation with respect to the AFFO awards granted in 2023 and 2022 was $1,879,000 and $2,068,000 respectively.

The following table reflects the compensation expense recorded for all incentive plans (dollars in thousands):

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands):

Equity Distribution Agreements

Effective as of May 12, 2023, the Company (i) terminated the equity distribution agreements dated March 18, 2022 and (ii) entered into equity distribution agreements with three sales agents to sell up to $40,000,000 of shares of its common stock from time-to-time in an at-the-market offering. During the year ended December 31, 2023, the Company didnot sell any shares. During the year ended December 31, 2022 the Company sold 347,815 shares, for an aggregate sales price of $7,870,000, before commissions and fees of $98,000. At December 31, 2023, the Company is authorized to sell an aggregate of $32,131,000 of shares pursuant to the equity distribution agreements.

Share Repurchase

Pursuant to the Company’s repurchase program(s), as amended from time to time, the Company is authorized to repurchase shares of its common stock through open-market transactions, privately negotiated transactions, or otherwise.

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In June 2023, the Board of Directors extended the term of the Company's share repurchase program from December 31, 2023 to December 31, 2025 and increased the existing repurchase authorization from $5,000,000 to $10,000,000 of shares. In August 2023 and December 2023, the Board of Directors, replenished the authorization by approximately $6,750,000 and $7,230,000, respectively, to increase the repurchase authorization as of such date to $10,000,000 of shares.

During the year ended December 31,2023, the Company repurchased 779,423 shares of common stock for total consideration of approximately $14,397,000, net of commissions of $44,000. As of December 31, 2023, the Company is authorized to repurchase approximately $9,584,000 of shares of common stock.

From January 1, 2024 through March 1, 2024, the Company repurchased 123,061 shares of common stock at an average price per share of $18.43 for an aggregate cost of $2,268,000. At March 1, 2024, the Company is authorized to repurchase up to $7,316,000 of shares of common stock.

During the twelve months ended December 31, 2022, the Company didnot repurchase any shares of common stock.

Dividend Reinvestment Plan

The Dividend Reinvestment Plan (the “DRP”), among other things, provides stockholders with the opportunity to reinvest all or a portion of their cash dividends paid on the Company’s common stock in additional shares of its common stock, at a discount, determined in the Company’s sole discretion, of up to 5% from the market price for the common stock (as such price is calculated pursuant to the DRP). The discount from the market price as of December 31, 2023 was 3%. In the year ended December 31, 2023 and 2022, the Company issued 165,228 and 62,360 shares in lieu of cash dividends of $3,034,000 and $1,279,000, respectively. In March 2024, the Board of Directors reauthorized the DRP.

NOTE 10—RELATED PARTY TRANSACTIONS

The Company has retained certain of its part time executive officers and Fredric H. Gould, a director, to provide, among other things, the following services: participating in the Company's multi-family property analysis and approval process (which includes service on an investment committee), providing investment advice, and long-term planning and consulting with executives and employees with respect to other business matters, as required. The aggregate fees paid in 2023 and 2022 for these services were $1,541,000 and $1,468,000, respectively.

Management of certain properties owned by the Company and certain joint venture properties is provided by Majestic Property Management Corp. ("Majestic Property"), a company wholly owned by Fredric H. Gould, under renewable year-to-year agreements. Certain of the Company's officers and directors are also officers and directors of Majestic Property. Majestic Property provides real property management, real estate brokerage and construction supervision services for these properties. For the years ended December 31, 2023 and 2022, fees for these services were $34,000 and $36,000, respectively.

Pursuant to a shared services agreement between the Company and several affiliated entities, including Gould Investors L.P., the owner and operator of a diversified portfolio of real estate and other assets and One Liberty Properties, Inc., a NYSE

listed equity REIT ("One Liberty"), the (i) services of the part time personnel that perform certain executive, administrative, legal, accounting and clerical functions and (ii) certain facilities and other resources, are provided to the Company. The allocation of expenses for the facilities, personnel and other resources shared by, among others, the Company and Gould Investors, is computed in accordance with such agreement and is included in general and administrative expense on the consolidated statements of operations. During the years ended December 31, 2023 and 2022, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated $642,000 and $739,000, respectively. As of December 31, 2023 and 2022, $142,000 and $126,000, respectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets. At December 31, 2023, Gould Investors owned approximately 19.1% of BRT’s outstanding common stock. Certain of the Company's officers and directors are also officers and directors of One Liberty and Georgetown Partners, LLC, the managing general partner of Gould Investors.

The Company obtains certain insurance in conjunction with Gould Investors and reimburses Gould Investors for the Company's share of the insurance cost. Insurance reimbursements to Gould Investors for the years ended December 31, 2023 and 2022 were $22,000 and $67,000, respectively.

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NOTE 11—FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company estimates the fair value of financial assets and liabilities based on the framework established in fair value accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

•Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets and liabilities in active markets

•Level 2— inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3— inputs to the valuation methodology are unobservable and significant to fair value.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not reported at fair value on the consolidated balance sheets:

Cash and cash equivalents, restricted cash, accounts receivable (included in other assets), accounts payable and accrued liabilities: The carrying amounts reported on the balance sheets for these instruments approximate their fair value due to the short term nature of these accounts.

Junior subordinated notes: At December 31, 2023, and 2022, the estimated fair value of the Company's junior subordinated notes is less than their carrying value by approximately $3,613,000 and $4,695,000, respectively, based on market interest rates of 8.60% and 7.91%, respectively.

Mortgages payable: At December 31, 2023, the estimated fair value of the Company's mortgages payable is less than their carrying value by approximately $34,195,000, assuming market interest rates between 4.88% and 6.23%. At December 31, 2022, the estimated fair value was less than the carrying value by $37,500,000, assuming market interest rates between 5.18% and 6.23%. Market interest rates were determined using current financing transaction information provided by third party institutions.

Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value assumptions. The fair values of debt obligations are considered to be Level 2 valuations within the fair value hierarchy.

Financial Instruments Measured at Fair Value

The Company's fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, there is a fair value hierarchy that distinguishes between markets participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions. Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other "observable" market inputs and Level 3 assets/liabilities are valued based significantly on "unobservable" market inputs. The Company does not currently own any financial instruments that are classified as Level 3.

At December 31, 2023 and 2022, the Company hadno financial assets or liabilities measured at fair value.

Long-lived assets

The Company reviews its investments in real estate when events or circumstances change indicating the carry value of the investment may not be recoverable. In the evaluation of an investment for impairment, many factors are considered, including estimated current and expected cash flows from the asset during the projected hold period, costs necessary to extend the life of the asset, expected capitalization rates, and projected stabilized net operating income and the ability to hold or dispose of the asset in the ordinary course of business.

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NOTE 12—COMMITMENT AND CONTINGENCIES

From time to time, the Company and/or its subsidiaries are parties to legal proceedings that arise in the ordinary course of business, and in particular, personal injury claims involving the operations of the Company's properties. Although management believes that the primary and umbrella insurance coverage maintained with respect to such properties is sufficient to cover claims for compensatory damages, many of these personal injury claims also assert claims for exemplary (i.e punitive) damages. Generally, insurance does not cover claims for punitive or exemplary damages.

The Company was one of several defendants in a wrongful death lawsuit which was settled. In connection with the settlement, the Company paid $325,000 which payment was funded by the Company's insurance carrier.

The Company maintains a non-contributory defined contribution pension plan covering eligible employees and officers. Contributions by the Company are made through a money purchase plan and the amounts of such contributions are based upon a percent of qualified employees' total salary as defined therein. Pension expense approximated $473,000 and $424,000 during the years ended December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, $73,000 and $125,000, respectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets.

At December 31, 2023, the Company is the carve-out guarantor with respect to mortgage debt in principal amount of $419,349,000 at 18 multi-family properties.

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NOTE 13—QUARTERLY FINANCIAL DATA (Unaudited)

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NOTE 13—QUARTERLY FINANCIAL DATA (Unaudited) (Continued)

NOTE 14—SUBSEQUENT EVENTS

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of December 31, 2023 that warrant additional disclosure have been included in the notes to the consolidated financial statements.