BRT Apartments Corp
For the period ended Dec 31, 2024. Filed Mar 12, 2025.
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FY2024 · Filed Mar 12, 2025
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Report of Independent Registered Public Accounting Firm (PCAOB ID:
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of BRT Apartments Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BRT Apartments Corp. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
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Preferred Equity Investments
| Description of the Matter | At December 31, 2024, the Company accounted for preferred equity investments totaling $17.7 million, net, as loans. As discussed in Notes 1 and 5 to the consolidated financial statements, at the inception of each such investment, the Company determined that the joint ventures in which the Company has the preferred equity investments are variable interest entities (“VIEs”), that the Company is not the primary beneficiary, and that such investments should be accounted for as loans. Auditing the Company’s accounting for its preferred equity investments was especially challenging because (i) assessing the economic rights and control of the activities of the VIEs that most significantly impact their economic performance to determine the primary beneficiary and (ii) evaluating, among other things, the classification and accounting for the preferred equity investments as loans, are highly judgmental. |
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| How We Addressed the Matter in Our Audit | To test the Company’s determination that it is not the primary beneficiary of the VIEs as well as its classification and accounting for the preferred equity investments as loans, our procedures included, among others, inspecting the preferred equity agreements, evaluating the judgments used by management to identify the activities of the VIEs that most significantly impact the economic performance of the joint ventures, and assessing the characteristics of the preferred equity investments, specifically the Company’s participation in the expected residual profits and the cash equity investments funded by the borrowers. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2020
New York, New York
March 12, 2025
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