BRT Apartments Corp.

Previous wording

We are an internally managed real estate investment trust, also known as a REIT, that owns, operates and, to a lesser extent, holds interests in joint ventures that own and operate multi-family properties. At March 31, 2025, we: (i) wholly-own 21 multi-family properties with an aggregate of 5,420 units and a carrying value of $609.8 million; (ii) have ownership interests, through unconsolidated entities, in eight multi-family properties with 2,527 units and a carrying value of $30.8 million; (iii) have preferred equity interests in two multi-family properties with a carrying value of $17.7 million and (iii) own other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $1.7 million. The 29 multi-family properties are located in 11 states; most of these properties are located in the Southeast United States and Texas.

Current wording

We are an internally managed real estate investment trust, also known as a REIT, that owns, operates and, to a lesser extent, holds interests in joint ventures that own and operate multi-family properties. At June 30, 2025, we: (i) wholly-own 21 multi-family properties with an aggregate of 5,420 units and a carrying value of $605.3 million; (ii) have ownership interests, through unconsolidated entities, in eight multi-family properties with 2,527 units and a carrying value of $30.0 million; (iii) have preferred equity interests in two multi-family properties with a carrying value of $17.7 million and (iii) own other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $1.8 million. The 29 multi-family properties are located in 11 states; most of these properties are located in the Southeast United States and Texas.

Previous wording

We face challenges due to the uncertain national economic environment(e.g., the possibility of inflation, recession and/or stagflation, the potential impact of tariffs and trade wars, and/or volatile interest rates), and uncertainties in the multifamily property market(e.g., limited acquisition opportunities due to the mispricing of assets (i.e., cap rates that do not, in our belief, correlate appropriately to interest rates and other market factors) and oversupply of multifamily properties in several markets in which we compete (including Atlanta, GA., Huntsville, AL., Dallas, TX., San Antonio, TX., Nashville TN and West Nashville, TN.). These challenges and uncertainties have, and we anticipate will continue to (i) adversely impact the rental and occupancy rates at our properties, which will adversely impact our operating results, and (ii) as further noted below, limit our ability or willingness to acquire properties, grow rental income and/or control our real estate operating expenses, some of which, such as real estate taxes and insurance expense, we have a very limited ability to control.

Current wording

We face challenges due to the uncertain national economic environment(e.g., the possibility of inflation, recession and/or stagflation, the potential impact of tariffs and trade wars, and/or volatile interest rates), and uncertainties in the multifamily property market(e.g., limited acquisition opportunities due to the mispricing of assets (i.e., cap rates that do not, in our belief, correlate appropriately to interest rates and other market factors) and oversupply of multifamily properties in several markets in which we compete (including Atlanta, GA, Huntsville, AL, Dallas, TX, San Antonio, TX, Nashville TN, LaGrange, GA and San Marcos, TX). In addition, we use concessions (and in particular, in markets that are especially competitive) as a means to improve occupancy. The use of concessions will reduce our rental income and may add to the variability of our operating results. These challenges and uncertainties have, and we anticipate will continue to (i) adversely impact the rental and occupancy rates at our properties, which will adversely impact our operating results, and (ii) as further noted below, limit our ability or willingness to acquire properties, grow rental income and/or control our real estate operating expenses, some of which, such as real estate taxes and insurance expense, we have a very limited ability to control.

Previous wording

•an aggregate $142,000 of increases in ancillary income (i.e, storage income, amenity fees, termination fees etc.) and rental income from a commercial tenant.

Current wording

The change was due to an aggregate decrease of $166,000 due to a decline in ancillary income (i.e, storage income, amenity fees, termination fees, etc.) and to a lesser extent, a decline in rental rates (which includes the effect of straight line rent adjustments related to rent concessions),The change was offset by an aggregate $117,000 increase due to a lease extension and tenant reimbursements at a commercial property and an improvement in occupancy.

Previous wording

The increase is due primarily to interest income (including fee amortization) of $309,000 received from the preferred equity investments that were originated in the fourth quarter of 2024.

Current wording

The increase is due primarily to interest income (including fee amortization) of $315,000 earned from the preferred equity investments originated in the fourth quarter of 2024.

Previous wording

Interest expense increased $292,000 primarily due to the financing of our Woodland Trails - LaGrange, GA property which occurred in the third quarter of 2024, offset by a $106,000 decrease in interest on our subordinated debt to a reduction in interest rates.

Current wording

Interest expense increased primarily due to $393,000 of interest from the financing of our Woodland Trails - LaGrange, GA property which occurred in the third quarter of 2024, offset by a $98,000 decrease in interest on our subordinated debt due to a reduction in interest rates. We anticipate that interest expense may increase in the short term as we borrowed $7.0 million from our credit facility in connection with the Auburn Acquisition.

Previous wording

Equity in earnings increased $185,000 from $228,000 in the three months ended March 31, 2024 to $413,000 in the three months ended March 31, 2025. This increase is primarily due to (i) a reduced loss at our Stono Oaks property which is in lease up and generated increased revenues as occupancy increased to 78% at March 31, 2025 and (ii) improved operating results at our other multi-family properties.

Current wording

Equity in earnings decreased $90,000 from $389,000 in the three months ended June 30, 2024 to $299,000 in the three months ended June 30, 2025. The decrease was the result of reduced revenues and increased real estate operating expense at many of our unconsolidated multi-family properties, offset by a reduced loss at our Stono Oaks property. This property is in lease up and generated increased revenues as occupancy increased to 78% at June 30, 2025.

Previous wording

The change is due primarily to a $179,000 non-cash reduction in amortization associated with restricted stock units ("RSUs") that vest upon the achievement of specified levels of adjusted funds from operations - we do not currently anticipate achieving the minimum performance level that would result in the vesting of such RSUs. This decrease was offset by an increase in professional fees, primarily related to the 2024 audit.

Current wording

Of the decrease, approximately (i) $145,000 is due to a temporary reduction in staffing and (ii) $114,000 is due to reduced amortization associated with RSUs that vest upon the achievement of specified levels of adjusted funds from operations; we do not currently anticipate achieving the minimum performance level that would result in the vesting of such RSUs. The decrease was offset by a $150,000 increase primarily due to professional fees related to the 2024 audit. We anticipate that during the quarter ending September 30, 2025, we will incur a $237,000 non-cash charge related to Mitchell Gould's, our former Executive Vice President, restricted stock awards.

Previous wording

We require funds to pay operating expenses and debt service obligations, acquire and/or invest in properties (including alternative investments), make capital and other improvements, fund capital contributions, and pay dividends. Generally, our primary sources of capital and liquidity are the operations of our multi-family properties (including distributions from the operations of the unconsolidated multi-family properties), mortgage debt financings and re-financings, the issuance of shares of our common stock pursuant to our at-the-market distribution and dividend reinvestment programs, borrowings from our credit facility and our available cash. At April 30, 2025, our available liquidity was $59.5 million, including $19.5 million of cash and cash equivalents and $40 million available under our credit facility.

Current wording

We require funds to pay operating expenses and debt service obligations, acquire and/or invest in properties (including alternative investments), make capital and other improvements, fund capital contributions, and pay dividends. Generally, our primary sources of capital and liquidity are the operations of our multi-family properties (including distributions and/or income from the preferred equity investments and the operations of the unconsolidated multi-family properties), mortgage debt financings and re-financings, the issuance of shares of our common stock pursuant to our at-the-market distribution and dividend reinvestment programs, borrowings from our credit facility and our available cash. At August 1, 2025, our available liquidity was approximately $49.0 million, including $16.0 million of cash and cash equivalents and $33 million available under our credit facility.

Previous wording

We anticipate that from April 1, 2025 through December 31, 2027, our operating expenses, $86.0 million of mortgage amortization and interest expense (including $30.6 million from unconsolidated joint ventures), $15.4 million, $130.3 million and $65.9 million of balloon payments with respect to mortgages maturing in 2025, 2026 and 2027, respectively (including $60.8 and $23.1 million maturing in 2026 and 2027, respectively, from unconsolidated joint ventures), interest expense on our junior subordinated notes, estimated cash dividend payments of at least $52.0 million (assuming (i) the current quarterly dividend rate of $0.25 per share and (ii) 18.9 million shares outstanding), and estimated capital expenditures (for the nine months ending December 31, 2025 only) of $6.5 million (including $1.4 million at our unconsolidated joint ventures), will be funded from cash generated from operations (including distributions from unconsolidated joint ventures). Our operating cash flow and available cash is insufficient to fully fund the $211.6 million (including $83.9 million at unconsolidated joint ventures) of balloon payments due through 2027, 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.

Current wording

We anticipate that from July 1, 2025 through December 31, 2027, our operating expenses, $77.4 million of mortgage amortization and interest expense (including $27.6 million from unconsolidated joint ventures), $15.4 million, $130.4 million and $65.9 million of balloon payments with respect to mortgages maturing in 2025, 2026 and 2027, respectively (including $60.9 and $23.1 million maturing in 2026 and 2027, respectively, from unconsolidated joint ventures), interest expense on our junior subordinated notes, estimated cash dividend payments of at least $47.2 million (assuming (i) the current quarterly dividend rate of $0.25 per share and (ii) 18.9 million shares outstanding), will be funded from cash generated from operations (including distributions from unconsolidated joint ventures). Our operating cash flow and available cash is insufficient to fully fund the $211.7 million (including $84.0 million at unconsolidated joint ventures) of balloon payments due through 2027, 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.

Previous wording

At March 31, 2025, we had mortgage debt of $701.3 million (including $251.1 million of mortgage debt at of our unconsolidated subsidiaries). The mortgage debt at our: (i) consolidated properties had a weighted average interest rate of 4.09% and a weighted average remaining term to maturity of approximately 5.8 years, and (ii) at our unconsolidated subsidiaries had a weighted average interest rate of 4.26% and a remaining term to maturity of approximately 3.6 years.

Current wording

At June 30, 2025, we had mortgage debt of $699.3 million (including $250.2 million of mortgage debt at of our unconsolidated subsidiaries). The mortgage debt at our: (i) consolidated properties had a weighted average interest rate of 4.09% and a weighted average remaining term to maturity of approximately 5.6 years, and (ii) at our unconsolidated subsidiaries had a weighted average interest rate of 4.26% and a remaining term to maturity of approximately 3.4 years.

Previous wording

As of March 31, 2025, $37.4 million (excluding deferred costs of $232,000) in principal amount of our junior subordinated notes is outstanding. 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, at a rate of three-month term SOFR plus 250 basis points. At March 31, 2025 and 2024, the interest rate on these notes was 6.55% and 7.58%, respectively.

Current wording

As of June 30, 2025, $37.4 million (excluding deferred costs of $232,000) in principal amount of our junior subordinated notes is outstanding. 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, at a rate of three-month term SOFR plus 250 basis points. At June 30, 2025 and 2024, the interest rate on these notes was 6.54% and 7.59%, respectively.

Previous wording

Our credit facility with VNB New York, LLC, an affiliate of Valley National Bank (collectively, "VNB"), allows us to borrow, subject to compliance with borrowing base requirements and other conditions, up to $40 million, (i) for the acquisition of, and investment in, multi-family properties, (ii) to repay mortgage debt secured by multi-family properties and (iii) for Operating Expenses (i.e., working capital (including dividend payments) and operating expenses); provided, that not more than $25 million may be used for Operating Expenses. 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 bears an annual interest rate, which resets monthly, equal to one-month term SOFR plus 250 basis points, with a floor of 6.00%. There is an annual fee of 0.25% on the total amount committed by VNB and unused by us. The credit facility matures in September 2027. Net proceeds received from the sale, financing or refinancing of our properties are generally required to be used to repay amounts outstanding on the facility. As of May 1, 2025, there was no outstanding balance on the credit facility and $40 million is available to be borrowed thereunder.

Current wording

Our credit facility with VNB New York, LLC, an affiliate of Valley National Bank (collectively, "VNB"), allows us to borrow, subject to compliance with borrowing base requirements and other conditions, up to $40 million, (i) for the acquisition of, and investment in, multi-family properties, (ii) to repay mortgage debt secured by multi-family properties and (iii) for Operating Expenses (i.e., working capital (including dividend payments) and operating expenses); provided, that not more than $25 million may be used for Operating Expenses. 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 bears an annual interest rate, which resets monthly, equal to one-month term SOFR plus 250 basis points, with a floor of 6.00%. There is an annual fee of 0.25% on the total amount committed by VNB and unused by us. The credit facility matures in September 2027. Net proceeds received from the sale, financing or refinancing of our properties are generally required to be used to repay amounts outstanding on the facility. The interest rate in effect at June 30, 2025 and August 1, 2025, was 6.95% and 6.83% respectively. As of August 1, 2025, there was an outstanding balance of $7 million on the credit facility and $33 million is available to be borrowed thereunder.

Previous wording

At March 31, 2025, we are joint venture partners in unconsolidated joint ventures which own eight multi-family properties and the distributions to us from these joint venture properties of $748,000 during the quarter ended March 31, 2025 contributed to our liquidity and cash flow. Further, we may be required to make significant capital contributions with respect to these properties. At March 31, 2025, our investments in these joint venture properties had a net-equity carrying value of $30.8 million. The underlying properties are subject to mortgage debt, which is not reflected on our consolidated balance sheet, of $251.1 million. 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 9 to our consolidated financial statements.

Current wording

At June 30, 2025, we are joint venture partners in unconsolidated joint ventures which own eight multi-family properties and the distributions to us from these joint venture properties of $603,000 during the quarter ended June 30, 2025 contributed to our liquidity and cash flow. Further, we may be required to make significant capital contributions with respect to these properties. At June 30, 2025, our investments in these joint venture properties had a net-equity carrying value of $30.0 million. The underlying properties are subject to mortgage debt, which is not reflected on our consolidated balance sheet, of $251.1 million. 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 9 to our consolidated financial statements.

Previous wording

At March 31, 2025, we had preferred equity investments in two multi-family properties and during the quarter ended March 31, 2025, we generated $293,000 of loan interest and other income from these investments. At March 31, 2025, these investments had a carrying value of $ 17.7 million, are unsecured and are structurally subordinate to (including the payment of the returns thereon), to an aggregate of $51.3 million of mortgage debt (which is not reflected on our consolidated balance sheet) bearing a weighted average interest rate of 4.81% and a weighted average remaining term to maturity of 5.6 years. Although we are not the obligor with respect to such mortgage debt, the loss of any of these investments 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.

Current wording

At June 30, 2025, we had preferred equity investments in two multi-family properties and during the quarter ended June 30, 2025, we generated $301,000 of loan interest income from these investments. At June 30, 2025, these investments had a carrying value of $17.7 million, are unsecured and are structurally subordinate to (including the payment of the returns thereon), to an aggregate of $51.2 million of mortgage debt (which is not reflected on our consolidated balance sheet) bearing a weighted average interest rate of 4.81% and a weighted average remaining term to maturity of 5.4 years. Although we are not the obligor with respect to such mortgage debt, the loss of any of these investments 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.

Previous wording

We have elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the “Code.” To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute to our stockholders within the time frames prescribed by the Code at least 90% of our ordinary taxable income. Management currently intends to maintain our REIT status. As a REIT, we generally will not be subject to corporate Federal income tax on taxable income we distribute to stockholders in accordance with the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify for Federal taxation as a REIT, we are subject to certain state and local taxes on our income and to Federal income and excise taxes on undistributed taxable income (i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Code).

Current wording

We have elected to be treated as a REIT under the Code. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute to our stockholders within the time frames prescribed by the Code at least 90% of our ordinary taxable income. Management currently intends to maintain our REIT status. As a REIT, we generally will not be subject to corporate Federal income tax on taxable income we distribute to stockholders in accordance with the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify for Federal taxation as a REIT, we are subject to certain state and local taxes on our income and to Federal income and excise taxes on undistributed taxable income (i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Code).

Previous wording

FFO for the three months ended March 31, 2025 increased from the corresponding quarter in the prior year primarily due to (i) increases in rental revenues and (ii) loan interest and other income. This increase was offset primarily due to the increase in interest expense.

Current wording

FFO for the three months ended June 30, 2025 decreased on an absolute basis (but not a per share basis) from the corresponding quarter in the prior year primarily due to (i) increased interest expense, (ii) a decrease in rental income (which includes the effect of straight line rent adjustments related to concessions) and (iii) increased tax expense. The decrease was offset primarily due to the increases in loan interest and other income and insurance proceeds from a casualty event, and a decline in general and administrative expense.

Previous wording

AFFO for the three months ended March 31, 2025 increased from the corresponding period in the prior year primarily due to the factors contributing to the increase in FFO and the impact of the reduction of amortization associated with the RSUs.

Current wording

AFFO for the three months ended June 30, 2025 increased from the corresponding period in the prior year primarily due to the factors contributing to the changes in FFO, excluding the impact of the straight line rent adjustments.

Previous wording

See "-Results of Operations - Three Months Ended March 31, 2025 compared to three months ended March 31, 2024".

Current wording

See "Results of Operations - Three Months Ended June 30, 2025 compared to three months ended June 30, 2024" for a discussion of these changes.

Previous wording

We compute NOI, by adjusting net (loss) income to (a) add back (1) depreciation expense, (2) general and administrative expenses, (3) interest expense, (4) loss on extinguishment of debt, (5) equity in earnings (loss) from sale of unconsolidated joint venture properties, (6) provision for taxes, and (7) the impact of non-controlling interests, and (b) deduct (1) other income, (2) gain on sale of real estate, (3) insurance recovery of casualty loss, and (4) gain on insurance recoveries related to casualty loss. Other REIT’s may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REIT’s. We believe NOI provides an operating perspective not immediately apparent from GAAP operating income or net income (loss). 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.

Current wording

NOI is defined as "Rental and other revenue from real estate properties" less "Real estate operating expenses" in each case as presented on our statements of operations. Real estate operating expenses include real estate taxes, insurance, property management expense, utilities, repairs and maintenance, administrative and marketing. Other REIT’s may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REIT’s. We believe NOI provides an operating perspective not immediately apparent from GAAP operating income or net income (loss). 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.

Previous wording

For the three months ended March 31, 2025, NOI increased from the corresponding period in 2024 primarily due to a $321,000 increase in rental revenue. See"-Results of Operations - Three Months Ended March 31, 2025 Compared to the Three Months ended March 31, 2024 " for a discussion of these changes.

Current wording

For the three months ended June 30, 2025, NOI decreased from the corresponding period in 2024 primarily due to a $271,000 increase in real estate operating expenses. See"Results of Operations - Three Months Ended June 30, 2025 Compared to the Three Months ended June 30, 2024" for a discussion of these changes.