BRT Apartments
Annual Report 2023

Plain-text annual report

B R T A P A R T M E N T S C O R P . 2 0 2 3 A N N U A L R E P O R T 2023 Annual Report BRT Apartments Corp., a Maryland corporation, is an internally managed real estate investment trust, also known as a REIT, that is focused on the ownership, operation, and to a lesser extent, holds interest in joint ventures that own and operate multi-family properties. At December 31, 2023, we own or have interests in 28 multi-family properties located in 11 states with an aggregate of 7,707 units, including properties and units owned by unconsolidated joint ventures. Most of our properties are located in the Southeast United States and Texas. BRT’s shares of common stock trade on the New York Stock Exchange under the symbol “BRT.” As of December 31, 2023, there were 18,488,298 shares outstanding and 713 holders of record. Units by State (Including units owned by unconsolidated joint ventures) OH 264 MO 174 TN 702 MS 776 AL 940 GA 959 VA 220 NC 264 SC 1,187 FL 518 TX 1,703* * There are 881 units in the San Antonio/Austin area and 822 units in Dallas. To Our Fellow Stockholders: We write this letter in another year of near-term uncertainty in a multifamily industry that has been buffeted by inflationary headwinds and higher interest rates as well as new supply of competing properties muting rental and occupancy rates. In short, there are likely continued challenges in 2024 to what we experienced in 2023. We take comfort in knowing that the BRT management team has seen every sort of real estate cycle come and go in the past several decades and takes a long-term, diligent approach to manage through these cycles. We know what we need to do — focus on our people, our portfolio, values, balance sheet and capital allocation. Our portfolio is located predominantly in the Sunbelt. While this region has seen the greatest new supply increases of late, it also offers compelling advantages. The predominance of pro-business states, in- migration patterns and growing business investments are propelling better population and job growth. Once new supply is absorbed through at least 2024, we believe this region will once again offer attractive investment opportunities. In the interim, we will be focused on maintaining our properties and stabilizing occupancy in an uncertain leasing environment. We made substantial improvements to our balance sheet during 2023. Early in the year, we were able to pay down all outstanding borrowings on our $60 million credit facility to leave us with full availability. In August, we completed an amendment to the facility that changed the interest rate index from the Prime rate to 30-day SOFR plus 250 basis points with an interest rate floor of 6.0%. Our debt maturities are well-laddered as with our only significant mortgage debt maturities in early 2026. We take a very disciplined approach to capital allocation. Building on the significant work we achieved in 2021 and 2022 to consolidate the ownership of our properties and simplify our business through asset sales, we raised an additional $19.4 million of net proceeds in May 2023 and recognized an IRR of 22% over a seven-year hold from the sale of Chatham Court and Reflections in Dallas, Texas. This property was owned by an unconsolidated joint venture, of which we had a 50% interest, and left us with only seven unconsolidated joint venture properties totaling 2,287 units. After identifying an accretive use of these disposition proceeds as share repurchases, we began repur- chasing in May. During 2023, we repurchased a total of 779,423 shares at a weighted average price of $18.47. This represented a total investment of $14.4million. As of the date of this shareholder letter, we have repurchased an additional 123,061 shares in 2024 at a weighted average price of $18.43 and an investment of $2.3 million. Based on the AFFO yield, we were able to buy back these shares in both 2023 and 2024 on an accretive basis. B R T A PA R TM E NT S CO R P. 2023 A N N UA L R E P O R T 1 D I V I D E N D S P E R S H A R E $0.98 $1.00 $0.90 2021 2022 2023 R E N TA L R E V E N U E S In Millions $93.07 $70.52 $32.04 2021 2022 2023 2021 2022 2023 R E N TA L R E V E N U E S In Millions As we noted a year ago, we elected to pull back from the transactions mar- A F FO ket in late 2022 and maintained this stance throughout 2023. The transac- P E R S H A R E tions completed in our markets seem to be all-cash purchases where the sellers had to sell, or the buyers had to put capital allocated to the space to work. In that type of environment, a true readthrough on asset valuation doesn’t exist. It would have been ill-advised to transact without a better sense of future cap rates, and it was an easy decision for us to stick to our strict underwriting guidelines. The fact of the matter is that many properties purchased in the past two years have subsequently declined in value. We believe we have made the better long-term decision to buy back shares rather than buy new properties. $93.07 $32.04 $70.52 $1.52 $1.33 $1.52 2021 2022 2023 Even though we have described the acquisition environment as one that is as quiet as we can recall, we continue to believe that we will find new opportunities to deploy our available liquidity in situations where smaller, private owners and developers are needing to sell due to capital expendi- ture issues, expiring interest rate swaps, debt maturities and/or insurance issues. The pressures the industry has been facing in 2023 and that are expected to endure in 2024, will likely affect the under-capitalized owners and developers to an even greater extent. A F FO P E R S H A R E 2021 $1.52 $1.52 2022 2023 $1.33 The new opportunities we believe could arise in late 2024 and early 2025 include investments such as common equity, preferred equity, bridge loans or rescue capital. Given our management team’s history in these types of investments, we believe it is worth at least exploring multiple options to deploy capital. The disruption we and others are anticipating in the multi- family industry over the next 12 to 18 months demand that we consider more creative options for capital allocation. We will of course continue to screen these potential investments through a rigorous underwriting process. 2023 2022 2021 D I V I D E N D S P E R S H A R E $0.98 $1.00 $0.90 A F FO P E R S H A R E $1.52 $1.52 $1.33 We would like to thank our entire team and the Board for their diligence and counsel as we navigated 2023 to achieve our goals of strengthening the portfolio and our balance sheet. We know we are equally committed to success in 2024. To our fellow stockholders, we would like to thank you for your continued investment and support of BRT Apartments. Sincerely, 2021 2022 2023 2021 2022 2023 2021 2022 2023 ISR AEL ROSENZ WEIG Chairman of the Board JEFFRE Y A . GOULD President and Chief Executive Officer March 22, 2024 B R T A PA R TM E NT S CO R P. 2023 A N N UA L R E P O R T 2 D I V I D E N D S P E R S H A R E $0.98 $1.00 $0.90 R E N TA L R E V E N U E S In Millions $93.07 $70.52 $32.04 Financial Highlights (Dollar amounts in thousands except per share amounts) Rental and other revenue from real estate properties Other income Total revenues Real estate operating expenses Interest expense General and administrative Depreciation Total expenses Total revenues less total expenses Equity in earnings of unconsolidated joint ventures Equity in earnings from sale of unconsolidated joint venture properties Gain on sale of real estate Casualty loss Insurance recovery of casualty loss Gain on insurance recovery Loss on extinguishment of debt Income from continuing operations Provision for taxes Income from continuing operations, net of taxes Income attributable to non-controlling interests Year ended December 31, 2023 2022 $ 93,069 $ 70,515 548 93,617 41,821 22,161 15,433 28,484 107,899 (14,282) 2,293 14,744 604 (323) 793 240 — 4,069 54 4,015 (142) 12 70,527 30,558 15,514 14,654 24,812 85,538 (15,011) 1,895 64,531 6 (850) 850 62 (563) 50,920 821 50,099 (144) Net income attributable to common stockholders $ 3,873 $ 49,955 Per share amounts attributable to common stockholders Basic earnings per share Diluted earnings per share Total assets Real estate properties, net of accumulated depreciation Investment in unconsolidated joint ventures Cash and cash equivalents Mortgages payable, net of deferred costs Junior subordinated notes, net of deferred costs Credit facility $ $ 0.16 0.16 $ $ 2.67 2.66 December 31, 2023 $ 709,963 635,836 34,242 23,512 422,427 37,143 — 2022 $732,616 651,603 42,576 20,281 403,792 37,123 19,000 Total BRT Apartments Corp. stockholders’ equity 228,460 250,088 B R T A PA R TM E NT S CO R P. 2023 A N N UA L R E P O R T 3 52411_3-BRT_2023AR_FN.indd 1 52411_3-BRT_2023AR_FN.indd 1 4/1/24 6:19 PM 4/1/24 6:19 PM UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-07172 BRT APARTMENTS CORP. (Exact name of registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation or organization) 60 Cutter Mill Road, Great Neck, New York (Address of principal executive offices) 13-2755856 (I.R.S. employer identification no.) 11021 (Zip Code) 516-466-3100 Registrant's telephone number, including area code Securities registered pursuant to Section 12(b) of the Act: Title of each class Shares of common stock, par value $.01 per share Trading Symbol BRT Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No ý Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer. or a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer ý Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ý Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.x Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). .☐ The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $223.9 million based on the last sale price of the common equity on June 30, 2023, which is the last business day of the registrant's most recently completed second quarter. As of March 1,2024, the registrant had 18,582,627 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the proxy statement for the 2023 annual meeting of stockholders of the Registrant to be filed pursuant to Regulation 14A not later than April 29, 2024, are incorporated by reference into Part III of this Annual Report on Form 10-K. TABLE OF CONTENTS Form 10-K Explanatory Note Cautionary Statement Regarding Forward-Looking Statements Business Risk Factors Unresolved Staff Comments Cybersecurity Properties Legal Proceedings Mine Safety Disclosures Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [Reserved] Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes In and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Exhibits and Financial Statement Schedules Form 10-K Summary Item No. PART I 1 1A. 1B. 1C. 2 3 4 PART II 5 6 7 7A. 8 9 9A. 9B. 9C. PART III 10 11 12 13 14 PART IV 15 16 Signatures Page(s) 1 1 3 13 24 26 24 24 24 25 25 26 38 38 38 39 39 40 40 40 40 40 41 44 45 Explanatory Note Unless otherwise indicated or the context otherwise requires, (i) all references “us”, “we”, “BRT” or the “Company” refer to BRT Apartments Corp. and its consolidated and unconsolidated subsidiaries; (ii) all interest rates give effect to the related interest rate derivative, if any; (iii) "acquisitions" include investments in unconsolidated joint ventures; (iv) our "significant subsidiaries" (as such term is by Rule 1-02(w) of Regulation S-X, include TRB Holdings LLC, TRB Bells Bluff LLC, which own Bells Bluff, a property located in West Nashville, TN and TRB Civic Center LLC, which owns Civic Center I and II, properties located in Southaven MS, (v) the term "promote" refers to our joint venture partner's share of the income and/or cash flow from a multi-family property greater than that implied by their percentage of equity interest in such project and (vi) "same store properties" refer to properties that we owned and operated for the entirety of periods being compared, except for properties that are in lease-up. We move properties previously excluded from our same store portfolio (because they were in lease up) into the same store designation once they have stabilized (as described below) and such status has been reflected fully in all applicable periods of comparison. Newly constructed, lease-up, development and redevelopment properties are deemed stabilized upon the earlier to occur of the first full calendar quarter beginning (a) 12 months after the property is fully completed and put in service and (b) attainment of at least 90% physical occupancy. Cautionary Statement Regarding Forward-Looking Statements We consider this and other sections of this Annual Report on Form 10-K to contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Such forward-looking statements include, without limitation, statements regarding expected operating performance and results, property acquisition and disposition activity, joint venture activity, development and value add activity and other capital expenditures, and capital raising and financing activity, as well as revenue and expense growth, occupancy, interest rate and other economic expectations. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” “projects,” “assumes,” “will,” “may,” “could,” “should,” “budget,” “target,” “outlook,” “opportunity,” “guidance” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors as described below,which are in some cases beyond our control, which may cause our actual results, performance or achievements to be materially different from the results of operations, financial conditions or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such forward-looking statements included in this report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved and investors are cautioned not to place undue reliance on such information. The following factors, among others, could cause our actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements: • • • • • • • inability to generate sufficient cash flows due to unfavorable economic and market conditions (e.g., inflation, volatile interest rates and the possibility of a recession), changes in supply and/or demand, competition, uninsured losses, changes in tax and housing laws or other factors; adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in our significant markets, barriers of entry into new markets which we may seek to enter in the future, limitations on our ability to increase or collect rental rates, competition, our ability to identify and consummate attractive acquisitions and dispositions on favorable terms, and our ability to reinvest sale proceeds in a manner that generates favorable returns; general and local real estate conditions, including any changes in the value of our real estate; decreasing rental rates or increasing vacancy rates; challenges in acquiring properties (including challenges in buying properties directly without the participation of joint venture partners and the limited number of multi-family property acquisition opportunities available to us), which acquisitions may not be completed or may not produce the cash flows or income expected; the competitive environment in which we operate, including competition that could adversely affect our ability to acquire properties and/or limit our ability to lease apartments or increase or maintain rental rates; exposure to risks inherent in investments in a single industry and sector; 1 • • • • • • • • • • • • • • • • • • • • • the concentration of our multi-family properties in the Southeastern United States and Texas, which makes us more susceptible to adverse developments in those markets; increases in expenses over which we have limited control, such as real estate taxes, insurance costs and utilities, due to inflation and other factors; impairment in the value of real estate we own; failure of property managers to properly manage properties; accessibility of debt and equity capital markets; disagreements with, or misconduct by, joint venture partners; inability to obtain financing at favorable rates, if at all, or refinance existing debt as it matures due to the level and volatility of interest or capitalization rates or capital market conditions; extreme weather and natural disasters such as hurricanes, tornadoes and floods; lack of or insufficient amounts of insurance to cover, among other things, losses from catastrophes; risks associated with acquiring value-add multi-family properties, which involves greater risks than more conservative approaches; the condition of Fannie Mae or Freddie Mac, which could adversely impact us; changes in Federal, state and local governmental laws and regulations, including laws and regulations relating to taxes and real estate and related investments; our failure to comply with laws, including those requiring access to our properties by disabled persons, which could result in substantial costs; board determinations as to timing and payment of dividends, if any, and our ability or willingness to pay future dividends; our ability to satisfy the complex rules required to maintain our qualification as a REIT for federal income tax purposes; possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us or a subsidiary owned by us or acquired by us; our dependence on information systems and risks associated with breaches of such systems; disease outbreaks and other public health events, and measures that are taken by federal, state, and local governmental authorities in response to such outbreaks and events; impact of climate change on our properties or operations; risks associated with the stock ownership restrictions of the Internal Revenue Code of 1986, as amended (the "Code") for REITs and the stock ownership limit imposed by our charter; and the other factors described in this Annual Report, including those set forth under the captions "Item 1. Business," "Item 1A. Risk Factors," and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations". We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report. Except to the extent otherwise required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the filing of this Annual Report or to reflect the occurrence of unanticipated events thereafter. 2 Item l. Business. General PART I 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 December 31, 2023, we (i) wholly-own 21 multi-family properties with an aggregate of 5,420 units and a carrying value of $634.0 million; (ii) have ownership interests, through unconsolidated entities, in seven multi-family properties with an aggregate of 2,287 units for which the carrying value of our net equity investment therein is $30.4 million; and (iii) own other assets, through consolidated and unconsolidated subsidiaries, with a carrying value of $5.6 million. The 28 multi-family properties are located in 11 states primarily located in the Southeast United States and Texas. Our website can be accessed at www.brtapartments.com, where copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission, or SEC, can be obtained free of charge. 2023 and Recent Developments. During 2023: • The unconsolidated joint venture that owned Chatham Court and Reflections, a 494 unit multi-family property located in Dallas, TX, and in which we had a 50% interest, sold such property. Our share of the (i) gain from this sale was $14.7 million, (ii) related early extinguishment of debt charge was $212,000, and (iii) net proceeds from the sale, after the payoff of the related mortgage debt, were $19.4 million. In 2023 and 2022, this property accounted for $54,000 and $753,000, respectively, of equity in earnings from unconsolidated joint ventures. • We paid off our credit facility debt of $19.0 million - we accomplished this by using the proceeds of new mortgage debt of $21.2 million placed 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 repurchased 779,423 shares of our common stock for an aggregate purchase price of approximately $14.4 million (i.e., an average price per share of $18.47). From January 1, 2024 through March 1, 2024, we purchased 123,061 shares of our common stock for an aggregate purchase price of approximately $2.3 million (i.e., average price of $18.43 per share). 3 g n i m m w s i , e s u o h b u l c a s a h c u s , s e i t i n e m a h t i w s t n e d i s e r e d i v o r p t a h t s e i t r e p o r p e l y t s e m o h n w o t r o e s i r - d i m , t n e m t r a p a n e d r a g e r a s e i t r e p o r p y l i m a f - i t l u m r u o , y l l a r e n e G r e b m e c e D f o s a , t s e r e t n i n a e v a h e w h c i h w n i s e i t r e p o r p y l i m a f - i t l u m e h t g n i d r a g e r n o i t a m r o f n i d e t c e l e s s i w o l e b h t r o f t e S . s e t a r t e k r a m t a d e s a e l e r a s e i t r e p o r p e s e h t t a s t i n u e h t f o l l a y l l a i t n a t s b u S . t n e r ' s h t n o m e n o o t l a u q e s t i s o p e d y t i r u c e s e r i u q e r y a m d n a m r e t r a e y - e n o a r o f y l l a c i p y t e r a s e s a e l l a i t n e d i s e R . s s e c c a n o i s i v e l e t e l b a c d n a s e i t i l i c a f y r d n u a l , l o o p 4 : s e r u t n e v t n i o j d e t a d i l o s n o c n u y b d e n w o e r a t s e r e t n i p i h s r e n w o % 0 0 1 n a h t s s e l a e v a h e w h c i h w n i s e i t r e p o r p e h t ; 3 2 0 2 , 1 3 s e i t r e p o r P y l i m a F - i t l u M r u O ) % ( y c n a p u c c O l a c i s y h P e g a r e v A r e P e t a R l a t n e R y l h t n o M e g a r e v A ) $ ( t i n U d e i p u c c O 9 1 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 9 1 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 e g a t n e c r e P p i h s r e n w O ) 1 ( ) % ( r u O n o i t i s i u q c A e t a D e g A r e b m u N s t i n U f o 5 . 4 9 2 . 6 9 4 . 6 9 2 . 5 9 3 . 7 9 4 . 6 9 5 . 4 9 1 . 6 9 7 . 0 9 5 . 6 9 2 . 7 9 8 . 3 9 1 . 5 9 2 . 3 9 3 . 5 9 6 . 7 9 2 . 5 9 3 . 6 9 3 . 5 9 4 . 3 9 7 . 6 9 2 . 2 9 1 . 7 9 6 . 6 9 2 . 3 9 2 . 6 9 A N / 7 . 4 7 3 . 5 9 6 . 4 9 5 . 8 9 1 . 4 9 1 . 5 9 7 . 8 8 — 2 . 3 9 0 . 3 9 0 . 8 6 0 . 2 9 9 . 3 9 4 . 0 9 7 . 5 9 9 . 5 9 8 . 4 9 6 . 7 9 3 . 6 9 0 . 7 9 8 . 1 9 5 . 3 9 6 . 4 9 9 . 0 9 4 . 1 8 6 . 0 9 1 . 1 9 5 . 4 9 0 . 6 9 1 . 5 9 2 . 7 9 1 . 6 9 5 . 7 9 1 . 7 9 1 . 8 9 1 . 7 9 9 . 8 9 6 . 5 9 2 . 8 9 2 . 8 9 2 . 1 9 9 . 7 9 3 . 2 9 6 . 3 9 2 . 4 9 6 . 6 9 0 . 7 8 7 . 5 9 3 . 6 9 3 . 5 9 0 . 6 9 2 . 3 9 6 . 2 9 9 . 5 9 7 . 6 9 1 . 4 9 1 . 7 9 0 . 6 9 3 . 6 9 3 . 4 9 3 . 7 9 7 . 6 9 3 . 6 9 9 . 5 9 5 . 7 9 9 . 5 9 6 . 7 9 0 . 7 9 0 . 2 9 4 . 7 9 9 . 6 9 2 . 4 9 3 . 4 9 1 . 2 9 3 . 7 9 7 . 6 9 8 . 7 9 8 . 6 9 1 . 4 9 7 . 5 9 6 . 6 9 8 . 4 9 8 . 7 9 2 . 3 9 7 . 7 9 7 . 4 9 2 . 1 9 9 . 3 9 5 . 6 9 0 . 5 9 0 . 5 9 8 . 4 9 9 . 4 9 9 . 2 9 3 . 6 9 3 . 5 9 2 . 6 8 8 . 5 9 4 . 2 9 9 . 4 9 6 . 5 9 6 . 2 9 0 . 6 9 7 . 4 9 7 . 5 9 7 . 4 9 8 . 5 9 0 . 3 9 1 . 5 9 0 . 3 9 1 . 3 9 2 . 0 9 5 . 7 9 2 6 1 , 1 2 0 1 , 1 5 5 7 8 9 8 7 5 1 , 1 5 6 0 , 1 5 7 0 , 1 0 6 9 5 3 7 2 2 9 9 7 9 2 2 0 , 1 9 8 3 , 1 2 8 1 , 1 1 3 2 , 1 0 7 3 , 1 6 8 4 , 1 3 7 1 , 1 6 9 1 , 1 3 2 3 , 1 9 2 4 , 1 8 2 8 9 2 9 9 7 8 7 4 9 0 5 9 9 7 0 , 1 1 3 0 , 1 4 0 1 , 1 6 8 1 , 1 6 8 1 , 1 8 2 3 , 1 9 5 4 , 1 4 2 1 , 1 0 5 2 , 1 8 3 4 , 1 8 1 5 , 1 5 3 0 , 1 2 4 0 , 1 9 0 2 , 1 0 1 3 , 1 4 1 0 , 1 9 5 0 , 1 3 9 1 , 1 0 3 3 , 1 4 4 7 8 5 9 2 9 7 5 6 8 5 3 9 1 2 0 , 1 2 2 1 , 1 1 3 2 , 1 1 3 0 , 1 5 8 0 , 1 6 8 1 , 1 5 0 3 , 1 9 3 0 , 1 4 8 0 , 1 4 9 1 , 1 2 3 1 , 1 1 1 4 , 1 5 6 4 , 1 3 9 5 , 1 3 2 6 , 1 A N / 2 8 4 , 1 1 2 4 , 1 9 4 7 , 1 1 8 7 , 1 0 6 5 , 1 7 6 0 , 1 1 8 8 0 6 9 — 7 0 0 , 1 2 7 0 , 1 6 1 2 , 1 7 1 2 , 1 5 4 4 , 1 8 0 3 , 1 8 4 1 , 1 9 1 0 , 1 4 0 6 , 1 3 8 5 , 1 8 9 5 , 1 1 1 7 , 1 0 9 0 , 1 1 3 1 , 1 0 7 2 , 1 5 7 3 , 1 4 2 9 0 8 9 8 9 9 6 3 0 , 1 4 5 1 , 1 4 3 2 , 1 4 7 9 8 3 1 , 1 4 2 2 , 1 8 7 0 , 1 5 4 1 , 1 4 2 2 , 1 1 5 0 , 1 4 0 1 , 1 2 3 2 , 1 6 4 3 , 1 5 5 2 , 1 5 7 2 , 1 5 0 4 , 1 7 0 5 , 1 6 0 4 , 1 5 2 2 , 1 4 1 3 , 1 6 0 4 , 1 5 9 3 , 1 1 6 3 , 1 4 7 4 , 1 7 7 5 , 1 4 1 3 , 1 4 7 3 , 1 0 7 5 , 1 1 0 7 , 1 7 4 1 , 1 1 8 1 , 1 1 8 2 , 1 4 9 3 , 1 8 9 0 , 1 9 4 1 , 1 8 8 2 , 1 7 6 3 , 1 5 3 8 9 5 8 7 0 9 3 8 9 3 7 0 , 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 2 1 0 2 / 4 / 0 1 2 1 0 2 / 9 1 / 1 1 3 1 0 2 / 8 1 / 0 1 3 1 0 2 / 1 2 / 1 1 4 1 0 2 / 2 / 4 4 1 0 2 / 2 2 / 2 1 5 1 0 2 / 0 1 / 9 5 1 0 2 / 8 1 / 1 1 6 1 0 2 / 1 / 2 6 1 0 2 / 9 2 / 2 6 1 0 2 / 1 / 9 6 1 0 2 / 9 1 / 9 6 1 0 2 / 4 / 1 1 7 1 0 2 / 2 / 6 7 1 0 2 / 4 / 4 7 1 0 2 / 0 3 / 8 7 1 0 2 / 7 / 2 1 7 1 0 2 / 4 1 / 2 1 9 1 0 2 / 7 / 5 8 1 0 2 / 0 3 / 0 1 4 7 2 3 6 4 0 5 0 5 0 5 0 8 6 1 0 2 / 5 1 / 8 6 1 0 2 / 0 1 / 1 1 6 1 0 2 / 0 1 / 1 1 7 1 0 2 / 9 2 / 6 7 1 0 2 / 5 1 / 9 8 1 0 2 / 7 1 / 5 9 1 0 2 / 8 / 8 3 1 9 6 8 3 4 2 8 3 5 1 9 3 1 5 3 1 2 8 1 8 8 1 4 7 7 2 2 3 6 1 6 1 5 2 2 2 4 3 5 1 8 7 7 2 2 5 3 8 0 2 2 1 2 8 0 2 4 6 2 0 0 3 6 7 2 2 9 1 6 3 2 0 4 2 2 9 3 4 8 3 8 8 2 0 2 2 2 0 4 4 7 1 2 4 2 4 0 2 0 2 1 8 2 3 6 6 2 4 6 2 1 7 2 4 7 3 9 3 3 9 0 5 3 1 3 1 8 2 0 0 2 3 7 8 8 7 9 0 1 1 , 1 1 5 2 , 1 0 0 1 0 2 0 2 / 0 2 / 2 C S , n o t s e l r a h C . N — s t n e m t r a p A s k a O a n a v l i S L A , e l l i v s t n u H — t e e r t S e g d i r B t a h t r o w x i r B A G , r u t a c e D — n o i t a t S e l a d n o v A n o i t a c o L d n a e m a N y t r e p o r P H O , s u b m u l o C — s n o m m o C e g d i r b w e N N T , e l l i v h s a N — e u v e l l e B f o s g n i s s o r C L F , a l o c a s n e P — s t n e m t r a p A n o l a v A X T , s o c r a M n a S — e d n a r G y a w k r a P A G , e g n a r G a L — s l i a r T d n a l d o o W A G , n o c a M — e c a l P r e v i R t a e v o r G S M , n e v a h t u o S — I I r e t n e C c i v i C S M , n e v a h t u o S — I r e t n e C c i v i C X T , o i n o t n A n a S — h c n a R o m a l A t a s a d n a r e V A V , g r u b s k c i r e d e r F — g n i s s o r C n r u b l i K O M , r u e o C e v e r C — s t h g i e H d r a u g n a V L F , e e s s a h a l l a T — e r a u q S n o s k c a J N T , e l l i v h s a N t s e W — f f u l B s l l e B L A , n o s i d a M — n o s i d a M t a e t n i o P a i l o n g a M ) 2 ( X T , e n r e o B — s t n e m t r a p A d n a l d o o W e h T C S , e l l i v n e e r G — e d a l b n r o h T t a t n o m t s e r C L A , e l l i v s s u r T — e l l i v s s u r T t a t e s r e m o S A G , a t n a l t A — k r a P x o n e L t a e t n i o P e h T C N , n o t g n i m l i W — n u R s t o b b A X T , h c n a r B s r e m r a F — g n i s s o r C r e c r e M X T , y e n r o F — s k a O y a w e t a G ) 3 ( C S , a i b m u l o C — a l o S e d i s l a n a C C S , a i b m u l o C — s t f o L e d i s l a n a C X T , e i r i a r P d n a r G — y a w k r a P r e i r r a C f o s g n i d n a L L A , n r u b u A — e d i s e k a L t a e g a l l i V 5 7 0 7 , 7 ) 4 ( l a t o T y t i u q e e h t o t a t a r o r p t o n y l l a r e n e g e r a d n a s e i t r a p e h t n e e w t e b p i h s n o i t a l e r e h t g n i n r e v o g t n e m e e r g a e l b a c i l p p a e h t o t t n a u s r u p d e n i m r e t e d e r a , s r e n t r a p e r u t n e v t n i o j , n e e w t e b g n i r a h s t i f o r p d n a , o t s n o i t u b i r t s i D ) 1 ( _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . ) " m r o t S s a x e T " e h t ( s a x e T n i m r o t s e c i y r a u r b e F e h t m o r f e g a m a d y b d e t c e f f e s a w 1 2 0 2 n i y c n a p u c c O . e r u t n e v t n i o j e l b a c i l p p a e h t n i s a h r e n t r a p e r u t n e v t n i o j h c a e e g a t n e c r e p p i h s r e n w o . a n i l o r a C h t u o S , d n a l s I s n h o J n i t c e j o r p t n e m p o l e v e d a n i t n e m t s e v n i r u o s e d u l c x E . 0 2 0 2 r e b m e t p e S l i t n u p u e s a e l n i s a w y t r e p o r p s i h T ) 2 ( ) 3 ( ) 4 ( 6 The following table sets forth certain information, presented by state, related to our consolidated properties as of December 31, 2023 (dollars in thousands): State Number of Properties Number of Units 2023 Rental and Other Revenues Percent of 2023 Rental and Other Revenues Tennessee Mississippi Alabama Georgia Florida Texas South Carolina Virginia North Carolina Missouri Ohio Other (1) Total 2 2 3 3 2 3 2 1 1 1 1 — 21 $ 702 776 740 688 518 600 474 220 264 174 264 — 14,088 12,184 11,194 10,571 9,428 9,231 8,585 4,586 4,168 3,802 3,751 1,481 15 % 13 % 12 % 11 % 10 % 10 % 9 % 5 % 5 % 4 % 4 % 2 % 5,420 $ 93,069 100 % __________________ _________ (1) Includes non-multi- family revenues primarily from a commercial property located in Yonkers, NY. The following table sets forth certain information, presented by state, related to properties owned by unconsolidated joint ventures at of December 31, 2023 (dollars in thousands): State Texas South Carolina Georgia Alabama Other (2) Total ___________________________ Number of Properties 3 2 1 1 — 7 Number of Units 2023 JV Rental and Other Revenues (1) Percent of 2023 JV Rental and Other Revenues (1) 1,103 $ 713 271 200 20,977 13,002 5,153 2,797 47 % 29 % 12 % 6 % — 2,287 $ 2,856 6 % 44,785 4,478,500,000 % 100 % (1) The term "JV Rental and other Revenues" refers to the revenues generated at multi-family properties owned by unconsolidated joint ventures (2) Includes revenue generated in 2023 from Chatham Court and Reflections which was sold in May 2023. Our Acquisition Process and Underwriting Criteria We identify multi-family property acquisition opportunities primarily through relationships developed with, among others, current or former joint venture partners, real estate investors and brokers. We will acquire multi-family properties with joint venture partners (and especially with partner’s experienced in the target market), which allows us to benefit from such partner’s experience, or directly (i.e., without a joint venture partner) which allows for the (i) possibility for greater returns on our investment and (ii) the consolidation in our financial statements of the accounts and operations of such acquired properties, which investors may find more attractive and understandable than the presentation of information on an unconsolidated basis. We emphasize acquiring the following types of multi-family properties: • • • Class B or better properties with strong and stable cash flows in markets where we believe there exists opportunity for rental growth and further value creation; Class B or better properties that offer significant potential for capital appreciation through repositioning or rehabilitating the asset to drive rental growth; and properties available at opportunistic prices providing an opportunity for a significant appreciation in value. 7 We seek properties that provide stable risk adjusted total returns (i.e., operating income plus capital appreciation), including value-add opportunities (i.e., properties that can be repositioned or improved allowing us to generate higher rents or improved occupancy) and emphasize acquiring properties in the Southeast United States and Texas. We have been opportunistic in pursuing multi-family property acquisitions and have not mandated any specific acquisition criteria, although we take the following, among other things, into account in evaluating an acquisition opportunity: location, demographics, size of the target market, property quality, availability and terms and conditions of long-term fixed-rate mortgage debt, potential for capital appreciation or recurring income, extent and nature of contemplated capital improvements and property age. A key consideration in our acquisition process is the availability of mortgage debt to finance the acquisition (or the ability to assume the mortgage debt on the property) and the terms and conditions (e.g., interest rate, amortization and maturity) of such debt. Generally, approximately 35% to 50% of the purchase price has been paid in cash (all or a portion of our share of which may be funded by borrowing from our credit facility) and the balance is financed with mortgage debt. We believe that the use of leverage allows us the ability to earn a greater return on our investment than we would otherwise earn. Generally, the mortgage debt obtained in connection with an acquisition matures in five to ten years, is interest only for one to five years, and provides for a fixed interest rate and for the amortization of the principal of such debt over 30 years. Potential acquisitions are reviewed and approved by our investment committee. Approval requires the assent of not less than five of the eight members of this committee, all of whom are our executive officers. Board of director approval is required for any single multi-family property acquisition in which our equity investment exceeds $40 million. From time-to-time we have pursued development opportunities with joint venture partners when we believe the potential higher returns justify the additional risks. The factors considered in pursuing these opportunities generally include the factors considered in evaluating a standard acquisition opportunity, and we place additional emphasis on our joint venture partner's ability to execute a development project. In 2022, we acquired, for $3.5 million, a 17.45% interest in a planned 240-unit development property located in Johns Island, SC and in 2023, in response to capital calls, invested an additional $316,000 in this project. This project is our only development project. At December 31, 2023, this project is substantially complete and lease-up has begun at this property. We estimate that for 2024, we will record approximately $350,000 to $500,000 of equity in loss from unconsolidated ventures related to this property because the venture will begin recognizing revenue and expenses ( and in particular depreciation and interest which had been capitalized during the development phase). We do not anticipate development properties will constitute a significant part of our portfolio. In light of the challenging acquisition environment and the limited funds available to us to acquire properties, we may, in the near term, pursue alternative investments in the multi-family property arena, such as rescue capital, which includes preferred equity investments (e.g., an investment entitling the investor to a fixed rate of return prior to distributions to more junior investors) or bridge loans (e.g., a loan secured by a first mortgage on the subject property). We can provide no assurance that we will pursue such investments or that if we do, such investments will be profitable for us. We do not anticipate that these type of alternative investments will constitute a significant part of our portfolio. It is our policy, and the policy of our affiliated entities (as described below), that any investment opportunity presented to us or to any of our affiliated entities that involves the acquisition of a multi-family property with more than 100 units, will first be offered to us and may not be pursued by any of our affiliated entities unless we decline the opportunity. Our affiliated entities include Gould Investors L.P., a master limited partnership involved primarily in the ownership and operation of a diversified portfolio of real estate assets, One Liberty Properties, Inc., a NYSE listed net lease industrial focused REIT, and Majestic Property Management Corp., a property management company, which is wholly owned by Fredric H. Gould, a director. Gould Investors has purchased multifamily properties in the Southeast United States; all of such properties have less than 100 units. We have not been interested in acquiring any of the properties purchased by Gould Investors. Property and Joint Venture Dispositions We monitor our portfolio to identify properties that should be sold. Factors considered in deciding whether to sell a property generally include our evaluation of the current market price of such property compared to its projected economics (including the age of the property and anticipated maintenance costs), changes in the factors considered by us in acquiring such property, the ability to reinvest net proceeds from a sale into a more favorable acquisition opportunity or other productive purpose (e.g., repayment of debt), our liquidity requirements and, with respect to properties that are owned by unconsolidated joint ventures, our partners' desires with respect thereto. If our partners deem it in their own economic interest to dispose of a property at an earlier date than we would otherwise dispose of a property, we may accommodate such request and agree to sell the property to a third party or attempt to purchase our partner's interest. 8 Dispositions of Joint Venture Property Set forth below is information regarding the sale by an unconsolidated joint venture of a property in 2023 (dollars in thousands): Property Chatham Court and Reflections Location Units BRT Equity Interest Sale Date Sale Price Gain BRT Portion of Gain BRT Portion of Net Sale Proceeds Dallas, TX 494 50 % May 2023 $ 73,000 $ 38,418 $ 14,744 $ 19,384 Joint Venture Arrangements The arrangements with our multi-family property joint venture partners are deal-specific and vary from transaction-to- transaction. Generally, these arrangements provide for us and our joint venture partner to receive net cash flow available for distribution and/or profits in the following order of priority: (i) a preferred return of 8% to 10% on each party's unreturned capital contributions, until such preferred return has been paid in full; and (ii) the return in full of each party's capital contribution (and together with the preferred return, the "Mandatory Return"). Thereafter, distributions to, and profit sharing between, joint venture partners, is determined pursuant to the applicable agreement governing the relationship between the parties. The allocation and distribution of cash and profits to BRT after the Mandatory Return is generally less than that implied by BRT's percentage equity interest in the venture/property as a result of allocation/distribution provisions of our joint venture operating agreements. Although as noted above each joint venture operating agreement contains different terms, such agreements may limit our right to vote and receive dividends and distributions. Further, such agreements generally provide for a buy-sell procedure under specified circumstances, including, (i) if the partners are unable to agree on major decisions or (ii) upon a change in control of our subsidiary owning the interest in the joint venture. Further, these arrangements may also allow us, and in some cases, our joint venture partner, to force the sale of the property after it has been owned by the joint venture for a specified period (e.g., four to five years after the acquisition). Property Management The day-to-day management of our multi-family properties is overseen by property management companies operating in the market in which the property is located. (Four of our seven joint venture properties are managed by management companies that are owned by a joint venture partner or its affiliates). The property management companies that manage our properties are paid fees ranging from 2% to 4% of revenues generated by the applicable property. Generally, we can terminate these management companies upon specified notice or for cause, subject to the approval of the mortgage lender and, in some cases, our joint venture partner. We believe satisfactory replacements for property managers are available, if required. Mortgage Debt and Other Real Estate Financings In acquiring properties, we use fixed rate mortgage debt to pay from 50% to 65% of the purchase price. Although fixed rate mortgage debt is typically more expensive and less flexible than variable rate mortgage debt (e.g., the interest rate is higher at origination and there are typically high prepayment penalties, yield maintenance payments and/or defeasance penalties when refinancing the debt prior to maturity), we prefer using such debt as it caps our exposure to fluctuating interest rates. We also from time to time obtain supplemental mortgage debt on an acquired property which, among other things, allows us to generate additional cash resulting from the appreciation of the value of the property. As of December 31, 2023, 18 of our 21 wholly owned properties are subject to fixed-rate mortgage debt; our interests in the three remaining wholly-owned properties have been pledged to our credit facility lender. At December 31, 2023, the weighted average annual interest rate on these mortgages was 4.02% and the weighted average remaining term to maturity of such debt is 7.0 years. Each of our seven unconsolidated multi-family properties are subject to fixed-rate mortgage debt and our development project is subject to a variable-rate construction loan. As of December 31, 2023, the weighted average annual interest rate of the mortgage and construction debt on these multi-family properties is 4.32% and the weighted average remaining term to maturity of such debt is 5.0 years. 9 The following table sets forth scheduled principal (including amortization) mortgage payments due for all of our multi- family properties as of December 31, 2023 (dollars in thousands): YEAR 2024 2025 2026 2027 2028 Thereafter Total Principal Payments Due for Consolidated Properties (1) $ 3,887 20,362 74,835 46,162 40,697 241,879 Principal Payments Due for Unconsolidated Joint Ventures (2) 3,424 $ $ 3,585 57,142 26,246 68,734 88,970 $ 427,822 $ 248,101 $ Total Principal Payments Due 7,311 23,947 131,977 72,408 109,431 330,849 675,923 _____________________ (1) Does not give effect to mortgage fair value adjustments of $1.4 million. (2) Includes all of the mortgage debt on properties owned by such joint venture. The mortgage debt associated with our multi-family properties, including the mortgage debt at our significant subsidiaries generally contain covenants, including covenants that require, (i) the guarantor of the mortgage debt to maintain a certain level of net worth and liquid assets or (ii) in connection with the sale or other transfer of the property, the mortgage debt to be paid off (or assumed by the buyer with the consent of the mortgage lender). The mortgage debt is generally non-recourse to us and the entity that owns the property, subject to standard carve-outs. We, at the parent entity level (i.e., BRT Apartments Corp.), are the standard carve-out guarantor with respect to our wholly owned properties. (The term "standard carve-outs" refers to recourse items to an otherwise non-recourse mortgage and are customary to mortgage financing. While carve-outs vary from lender to lender and transaction to transaction, the carve-outs may include, among other things, a voluntary bankruptcy filing, environmental liabilities, the sale, financing or encumbrance of the property in violation of loan documents, damage to property as a result of intentional misconduct or gross negligence, failure to pay valid taxes and other claims which could create a lien on a property and the conversion of security deposits, insurance proceeds or condemnation awards). At December 31, 2023, the principal amount of mortgage debt outstanding with respect to the properties at which we are the carve-out guarantor is approximately $419.3 million. Corporate Level Financing Arrangements See "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. 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). 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. 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. 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. 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. 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. 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. 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 owns several multi-family properties in Newark, NJ. 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. 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. 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). 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. The expenses 11 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. 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. 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. 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. Most of our employees have a long tenure with us, which we believe is indicative of the employee-friendly work environment we provide. 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. These workplace protections and compensation benefits are afforded to the part-time personnel providing services to us pursuant to the shared services agreement. 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 Israel Rosenzweig (1) Jeffrey A. Gould (2) Ryan Baltimore George E. Zweier Mitchell K. Gould (3) Matthew J. Gould (2) David W. Kalish (4) Mark H. Lundy Steven Rosenzweig (1) Isaac Kalish (4) Age 76 58 32 60 51 64 76 61 48 48 Office Chairman of the Board of Directors President, Chief Executive Officer and Director Chief Operating Officer Vice President and Chief Financial Officer Executive Vice President Senior Vice President and Director Senior Vice President - Finance Senior Vice President and Counsel Senior Vice President - Legal 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. 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. 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. 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. 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 Mark H. Lundy has been our Counsel and/or General Counsel since 2007, Senior Vice President since 2005 and Vice President from 1993 to 2005. He served as a Vice President of One Liberty Properties from 2000 to 2006 and has been its Assistant Secretary/Secretary and Senior Vice President since June 1993 and 2006, respectively. Since 2013, Mr. Lundy has served as President and Chief Operating Officer, and from 1990 through 2013 served as a Vice President/Senior Vice President, of Georgetown Partners. He is licensed to practice law in New York and Washington, D.C. Steven Rosenzweig has been associated with us since 2013, served as a Vice President from 2015 through 2019 and as Senior Vice President - Legal since 2019. He has served as Vice President of Georgetown Partners since January 2016. Mr. Rosenzweig is licensed to practice law in New York. Isaac Kalish, a certified public accountant, has been associated with us since 2004, served as Assistant Treasurer from 2007 through 2014, as Vice President and Treasurer since 2013 and 2014, respectively, and as Senior Vice President since 2022. He served as Vice President of One Liberty Properties from 2013 through 2022, as its Senior Vice President since 2022 and as its Chief Financial Officer since 2023. Mr. Kalish served as Assistant Treasurer of Georgetown Partners, LLC from 2012 through 2013, and as its Treasurer since 2013. Item 1A. Risk Factors. Set forth below is a discussion of certain risks affecting our business. The categorization of risks set forth below is meant to help you better understand the risks facing our business and is not intended to limit your consideration of the possible effects of these risks to the listed categories.Any adverse effects arising from the realization of any of the risks discussed, including our financial condition and results of operation, may, and likely will, adversely affect many aspects of our business. Risks Related to Real Estate Investments and Our Operations Unfavorable market and economic conditions could adversely affect rental revenues, occupancy levels and the value of our properties. General economic conditions in the U.S. have fluctuated significantly in recent quarters with the U.S. experiencing negative macroeconomic conditions such as increasing inflationary and labor market concerns. Unfavorable market and economic conditions may significantly affect our occupancy levels, our rental rates and collections, the value of our properties and our ability to acquire or dispose of multifamily properties on economically favorable terms. Our ability to lease our multifamily properties at favorable rates is adversely affected by the increase in supply in the multifamily and other rental markets and is dependent upon the overall level in the economy, which may continue to be adversely affected by, among other things, inflationary conditions, job losses and unemployment levels, personal debt levels, a downturn in the housing market, stock market volatility, and uncertainty about the future. Some of our major expenses generally do not decline when related rents decline. We would expect that declines in our occupancy levels, rental revenues and/or the values of our multi-family properties would cause us to have less cash available to make payments on our debt and to pay dividends, which could adversely affect our financial condition or the market value of our securities. We may be unable to compete to acquire, finance or dispose of our properties or to lease rental units. We compete with many third parties including other REITs, specialty finance companies, public and private investors, investment and pension funds, in acquiring, obtaining financing for, and disposing of multi-family properties. Many of these competitors have substantially greater financial and other resources than we do. Larger and more established competitors enjoy significant competitive advantages that result from, among other things, enhanced operating efficiencies and more extensive networks providing greater and more favorable access to capital, financing and tax credit allocations and more favorable acquisition opportunities. In attracting and retaining residents to occupy our multi-family properties, we compete with numerous other housing providers. Our multi-family properties compete directly with other rental apartments, as well as condominiums and single- family homes that are available for rent or purchase in the markets in which our properties are located. Principal factors of competition include rent or price charged, attractiveness of the location of multi-family properties, and the quality and breadth of services. The number of competitive properties relative to demand in a particular area has a material effect on our ability to lease our properties and on the rents we charge. Increasing real estate taxes, utilities and insurance premiums may negatively impact operating results The cost of real estate taxes, utilities and insurance is a significant component of real estate operating expense. These expenses are subject to significant increases and fluctuations, including the impact of inflation, which we may be unable to control. For example, our real estate taxes have increased and will continue to increase as our properties are reassessed by 13 taxing authorities and as property tax rates increase. Further, our real estate taxes have fluctuated and may not be comparable year-over-year because of, among other things, (i) the timing difference as to when we accrue real estate taxes and the results of any tax appeals with respect to such accrued taxes and (ii) determinations, over which we have no control, by governmental authorities to increase tax rates, assessments or procedures. 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. In addition, our share of the insurance premiums at joint venture properties is determined by our joint venture partner at such properties. 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. 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. 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. Accordingly, adverse developments in such markets, including economic developments, pandemics, or natural or man-made disasters, could adversely impact the cash flow and value of these properties. The concentration of our properties in the Southeast United States and Texas exposes us to risks of adverse developments which are greater than the risks of owning properties with a more geographically diverse portfolio. The failure of property management companies to properly manage our properties could adversely impact our results of operations. We rely on property management companies to manage our properties. These management companies are responsible for, among other things, leasing and marketing rental units, selecting tenants (including an evaluation of the creditworthiness of tenants), collecting rent, paying operating expenses and maintaining our properties . If these property management companies do not perform their duties properly, or, in the case of unconsolidated properties, we and/or our joint venture partners do not effectively supervise the activities of these managers, the occupancy rates and rental rates at the properties managed by such property managers may decline and the expenses at such properties may increase. 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. The loss of our property managers, and in particular, the managers that manage multiple properties, could result in a decrease in occupancy rates, rental rates or both or an increase in expenses. 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. Losses at properties managed by our property managers but in which we have no interest could reduce significantly the insurance coverage available at our properties managed by these property managers. It may be difficult to terminate a non-performing management company, particularly a management company owned or affiliated with a joint venture, because such termination may require the approval of the mortgagee, our joint venture partner or both. If we are unable to terminate an underperforming property manager on a timely basis, our occupancy and rental rates may decrease and our expenses may increase. Our efforts to buy properties directly may involve greater risks than buying properties with joint venture partners. Although historically we have acquired properties with joint venture partners with knowledge of the local markets in which we were acquiring properties, we are working to buy properties directly without joint venture partners. 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 cannot provide any assurance that we will properly evaluate the acquisition opportunities we pursue in buying properties directly. 14 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. Joint venture investments involve risks not otherwise present when acquiring real estate directly, including the following: • • • • • • • • • • • • • our joint venture partners may have economic or business interests or objectives which are or become inconsistent with our business interests or objectives, including differing objectives relating to the sale or refinancing of properties held by the joint venture or the timing of the termination or liquidation of the joint venture; the more successful a joint venture project, the more likely that profits or distributions generated above a negotiated threshold will be allocated disproportionately in favor of our joint venture partner at a rate greater than that implied by our partner's equity interest in the venture; several of our joint venture partners have other competing real estate interests in the markets in which our properties are located that could influence such partners to take actions favoring their properties to the detriment of the jointly owned properties; our joint venture partners obtain blanket property casualty and business interruption insurance insuring properties we own jointly and other properties in which we have no ownership interest and as a result, claims or losses with respect to properties owned by our joint venture partners but in which we have no interest could significantly reduce or eliminate the insurance available to properties in which we have an interest; our joint venture partner might become bankrupt, insolvent or otherwise refuse or be unable to meet their obligations to us or the venture (including their obligation to make capital contributions or property distributions when due); we may incur liabilities as a result of action taken by our joint venture partner; our joint venture partner may not perform its property oversight responsibilities; our joint venture partner may be in a position to take action or withhold consent contrary to our instructions or requests, including actions that may make it more difficult to maintain our qualification as a REIT; our joint venture partner might engage in unlawful or fraudulent conduct with respect to our jointly owned properties or other properties in which they have an ownership interest; changes in personnel managing our joint venture partners have resulted in greater difficulty in working with the new personnel; our joint venture partner may trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner's interest, at a time when we otherwise would not have initiated such a transaction; disputes between us and our joint venture partners may result in litigation or arbitration that would increase our expenses and divert management's attention from operating our business; and disagreements with our joint venture partners with respect to property management (including with respect to whether a property should be sold, refinanced, or improved) could result in an impasse resulting in the inability to operate the property effectively. Joint venture partners have acted without our authorization (e.g., a partner modified a mortgage term without our consent). We also have had, and expect to continue to have, disagreements with joint venture partners over various issues including, among others, as to whether, and the extent to which, value add programs should be implemented at a property, whether a mortgage debt on a property should be refinanced and the terms and conditions of such refinancing, and, because our joint venture structure may incentivize our joint venture partner to sell the property sooner than we would otherwise desire, the timing and terms and conditions of property sales. Our operating results are significantly influenced by demand for multi-family properties generally, and a decrease in such demand will likely have a greater adverse effect on our revenues than if we owned a more diversified real estate portfolio. Our current portfolio is focused on multi-family properties, and we expect that going forward we will continue to focus on the acquisition, disposition and operation of such 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 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. Our multi-family properties, including the properties owned by the joint ventures in which we are members, carry all risk property insurance covering the property and improvements thereto for the cost of replacement in the event of a casualty. 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. If our insurance coverage is insufficient to cover losses sustained as a result of one or more casualty events, our operating results and the value of our portfolio will be adversely affected. We may be adversely effected if we are unable to maintain a satisfactory working relationship with any one or more of our joint venture partners. Two of our joint venture partners or their affiliates own an aggregate of six of the eight properties we own through unconsolidated joint ventures. This concentration of ownership of properties with a limited number of joint venture partners exposes us to risks of adverse developments, and in particular, disputes or disagreements with such joint venture partners, which are greater than the risks of owning properties with a more diverse group of joint venture partners. Short-term leases expose us to the effects of declining market rents and we may be unable to renew leases or relet units as leases expire. Our multi-family leases are generally for a term of one year or less. The short-term nature of these leases generally serves to reduce our risk to adverse effects of inflation as our leases allow for adjustments in the rental rate at the time of renewal, which may enable us to seek rent increases. However, since our leases typically permit the residents to leave at the end of the lease term without penalty, our revenues are impacted by declines in market rents more quickly than if our leases were for longer 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. 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. 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%. 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. Increases in interest rates, or reduced access to credit markets due, among other things, to more stringent lending requirements or our high level of leverage, may make it difficult for us to refinance this mortgage debt on terms as favorable as the current debt. 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 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. 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. 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. 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. 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. 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. If the lender called a default and required us to repay the full amount outstanding under such instrument, we might be required to rapidly dispose of our properties, including properties securing such debt instruments, which could have an adverse impact on the amounts we receive on such disposition. From time to time we have failed to comply with certain debt covenants. If we are unable to satisfy the covenants of our debt obligations, the lender could exercise remedies available to it under the applicable debt instrument and as otherwise provided by law, including the possible appointment of a receiver to manage the property, application of deposits or reserves maintained under the debt instrument for payment of the debt, or foreclose and/or cause the forced sale of the property or asset securing such debt. A foreclosure or other forced disposition of our assets could result in the disposition of same at below the carrying value of such asset. The disposition of our properties or assets at below our carrying value may adversely affect our net income, reduce our stockholders’ equity and adversely affect our ability to pay dividends. 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 remain competitive and increase occupancy at these properties and/or make them attractive to potential tenants or purchasers, we may have to make significant capital improvements and/or incur deferred maintenance costs with respect to these properties. The cost of future improvements and deferred maintenance is uncertain and the amounts earmarked for specific properties may be insufficient to effectuate needed improvements. 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. If we are required to make payments under any “bad boy” carve out guarantees that we have provided in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected. In obtaining certain non-recourse loans, we have provided our lenders with standard carve out guarantees. These guarantees are only applicable if and when the borrower directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper (commonly referred to as “bad boy” 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 the event such a claim were made against us under a “bad boy” carve out guarantee, following foreclosure on mortgages or related loans, and such claim were successful, our business and financial results could be materially adversely affected. We could be negatively impacted by changes in our relationship with Fannie Mae or Freddie Mac, changes in the condition of Fannie Mae or Freddie Mac and by changes in government support for multi-family housing. Fannie Mae and Freddie Mac have been a major source of financing for multi-family real estate in the United States and we have used loan programs sponsored by these agencies to finance most of our acquisitions of multi-family properties. There have been ongoing discussion by the government and other interested parties with regard to the long term structure and viability of Fannie Mae and Freddie Mac, which could result in adjustments to guidelines for their loan products. 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 the agencies could be negatively impacted. In addition, changes in our relationships with Fannie Mae and Freddie Mac, and the lenders that participate in these loan programs, with respect to our existing mortgage financing could impact our ability to obtain comparable financing for new acquisitions or refinancing for our existing multi-family real estate investments. Should our access to financing provided through Fannie Mae and Freddie Mac loan programs be reduced or impaired, it would significantly reduce our access to debt capital and/or increase borrowing costs and could significantly limit our ability to acquire properties on acceptable terms and reduce the values to be realized upon property sales. 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. 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. Each of our subsidiaries is or will be a distinct legal entity and, under certain circumstances, legal and contractual restrictions(e.g., restrictions imposed pursuant to mortgage debt on a property), limit our ability to obtain cash from such entities. In addition, because we operate through our subsidiaries, your claims as stockholders will be structurally subordinated to all existing and future liabilities and obligations of our subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our subsidiaries will be able to satisfy your claims as stockholders only after all our and our subsidiaries' liabilities and obligations have been paid in full. Regulatory and Tax Risks Changes to the U.S. federal income tax laws could have an adverse impact on our business and financial results. At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations. Liabilities relating to environmental matters may impact the value of our properties. We may be subject to environmental liabilities arising from the ownership of properties. 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. The presence of hazardous substances on our properties may adversely affect our ability to finance or sell the property and we may incur substantial remediation costs. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition. Compliance or failure to comply with the ADA or other safety regulations and requirements could result in substantial costs. The ADA generally requires that public buildings, including the public areas at our properties, be made accessible to disabled persons. Non-compliance could result in the imposition of fines by governmental authorities or the award of damages to private litigants. From time-to-time claims may be asserted against us with respect to some of our properties under the ADA. If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our properties, it could adversely affect our financial condition and results of operations. Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. 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 Risks Associated with the Real Estate Industry and REITs. We face numerous risks associated with the real estate industry that could adversely affect our results of operations through decreased revenues or increased costs. As a real estate company, we are subject to various changes in real estate conditions, and any negative trends in such real estate conditions may adversely affect our results of operations through decreased revenues or increased costs. These conditions include: • • • • • • • • • • changes in national, regional and local economic conditions, which may be negatively impacted by concerns about inflation, deflation, government deficits, unemployment rates and decreased consumer confidence particularly in markets in which we have a high concentration of properties; increases in interest rates, which could adversely affect our ability to obtain financing or to buy or sell properties on favorable terms or at all; the inability of tenants to pay rent; the existence and quality of the competition, such as the attractiveness of our properties as compared to our competitors' properties based on considerations such as convenience of location, rental rates, amenities and safety record; increased operating costs, including increased real property taxes, maintenance, insurance and utility costs (including increased prices for fossil fuels); weather conditions that may increase or decrease energy costs and other weather-related expenses; oversupply of apartments or single-family housing or a reduction in demand for real estate in the markets in which our properties are located; a favorable interest rate environment that may result in a significant number of residents or potential residents of our multi-family properties deciding to purchase homes instead of renting; changes in, or increased costs of compliance with, laws and/or governmental regulations, including those governing usage, zoning, the environment and taxes; and rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs. 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. 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. We may also be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Accordingly, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits. To qualify as a REIT, we must also ensure that at the end of each calendar quarter at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investment in securities cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of such issuer. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer, other than a qualified REIT security. If we fail to comply with these requirements, we must dispose of the portion of our assets in excess of such amounts within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences. 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 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. 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 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. Impairment charges reflect management's judgment of the probability and severity of the decline in the value of real estate assets we own. 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. REIT's are generally required to distribute annually at least 90% of their ordinary taxable income to maintain our REIT status under the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, which we refer to as the Code. Because we continue to generate operating losses primarily due to the impact of depreciation, we are not currently required, and may not be required in the future, to pay dividends to maintain our REIT status. Accordingly, we cannot assure you that we will pay dividends in the future. 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. To the extent climate change causes changes in weather patterns, areas where many of our properties are located could experience more frequent and intense extreme weather events and rising sea levels, which may cause significant damage to our properties, disrupt our operations and adversely impact our residents. Over time, such conditions could result in reduced demand for housing in areas where our properties are located and increased costs related to further developing our properties to mitigate the effects of climate change or repairing damage related to the effects of climate change that may or may not be fully covered by insurance. Likewise, such conditions also may negatively impact the types and pricing of insurance we are able to procure. Changes in federal, state and local laws and regulations on climate change could result in increased operating costs and/or capital expenditures to improve the energy efficiency of our existing properties without a corresponding increase in rental revenues. 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. 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. 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. 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. 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. 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. See "Item 1 - Business - Our Acquisition Approach" 20 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. Gould, our president and chief executive officer, and other members of senior management to carry out our business and investment strategies. Although Jeffrey A.Gould devotes substantially all of his business time to our affairs, he devotes a portion of his business time to entities affiliated with us. In addition to Jeffrey A. Gould, only three other executive officers, Mitchell Gould, our executive vice president, Ryan Baltimore, chief operating officer, and George Zweier, vice president and chief financial officer, devote all or substantially all of their business time to us. Many of our executives (i) also provide the Services (see "Item 1. Business-Human Capital Resources") and (ii) provide their services on a part-time basis pursuant to the shared services agreement. We rely on part-time executive officers to provide certain services to us, including legal and certain accounting services, since we do not employ full-time executive officers to handle all of these services. If the shared services agreement is terminated or the executives performing Services are unwilling to continue to do so, we will have to obtain such services from other sources or hire employees to perform them. We may not be able to replace these services or hire such employees in a timely manner or on terms, including cost and level of expertise, that are equivalent to or better than those we receive pursuant to the Services and the shared services agreement. In addition, in the future we may need to attract and retain qualified senior management and other key personnel, both on a full-time and part-time basis. The loss of the services of any of our senior management or other key personnel or our inability to recruit and retain qualified personnel in the future, could impair our ability to carry out our business and our investment strategies. We do not carry key man life insurance on members of our senior management. Certain provisions of our Articles of Incorporation, our Bylaws and Maryland law may inhibit a change in control that stockholders consider favorable and could also limit the market price of our common stock Certain provisions of our Articles of Incorporation (the "Charter"), our Bylaws and Maryland law may impede, or prevent, a third party from acquiring control of us without the approval of our board of directors. 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. 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 • • • “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. We have (1) exempted all business combinations between us and any other person, provided that each such business combination is first approved by our board of directors (including a majority of directors who are not affiliates or associates of such other person), from the Maryland Business Combination Act and (2) opted out of the Maryland Control Share Acquisition Act. Ownership of less than 6.0% of our outstanding shares or less than 6.0% of the aggregate outstanding shares of all classes and series of our stock could violate the restrictions on ownership and transfer in our Charter, which would result in the transfer of the shares owned or acquired in violation of such restrictions to a trust for the benefit of a charitable beneficiary and loss of the right to receive dividends and other distributions on, and the economic benefit of any appreciation of, such shares, and you may not have sufficient information to determine at any particular time whether an acquisition of our shares will result in the loss of the economic benefit of such shares. In order for us to qualify as a real estate investment trust under the Code, no more than 50% of the value of the outstanding shares of our stock may be owned, directly or indirectly or through application of certain attribution rules, by five or fewer “individuals” (as defined in the Code) at any time during the last half of a taxable year. 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. In addition, the Charter prohibits any person from beneficially or constructively owning shares of our stock that would result in more than 50% of the value of the outstanding shares of our stock to be beneficially owned by five or fewer individuals, regardless of whether such ownership is during the last half of any taxable year, which we refer to as the “Five or Fewer Limit.” Shares owned or acquired in violation of either of these restrictions will be transferred automatically to a trust for the benefit of a charitable beneficiary selected by us. The person that owned or acquired our stock in violation of the restrictions in the Charter will not be entitled to any dividends or distributions paid after the date of the transfer to the trust and, upon a sale of such shares by the trust, will generally be entitled to receive only the lesser of the market value on the date of the event that resulted in the transfer to the trust or the net proceeds of the sale by the trust to a person who could own the shares without violating the ownership limits. Our board of directors has exempted Gould Investors, Fredric H. Gould, Matthew J. Gould and Jeffrey A. Gould from the ownership limits and has not established a limitation on ownership for such persons. 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. As a result, the acquisition by each of four other individuals of 6.0% of our outstanding common stock, when combined with the ownership of our common stock of Gould Investors, Fredric H. Gould, Matthew J. Gould and Jeffrey A. Gould, generally would not result in a violation of the Five or Fewer Limit. However, there is no limitation on Gould Investors, 22 Fredric H. Gould, Matthew J. Gould or Jeffrey A. Gould acquiring additional shares of our common stock or otherwise increasing their percentage of ownership of our common stock, meaning that the amount of our stock that other persons or entities may acquire without violating the Five or Fewer Limit could be reduced in the future and without notice. To the extent that Gould Investors, Fredric H. Gould, Matthew J. Gould and Jeffrey A. Gould, or their affiliates, acquire additional shares or our stock, or any other event occurs (including a repurchase of shares of our stock), that results in an individual beneficially or constructively owning 26.0% or more of the outstanding shares of our stock within the meaning of the Charter, the acquisition by four other individuals of 6.0% or less of our outstanding stock would violate the Five or Fewer Limit and, therefore, could cause the stock acquired by one or more of these other individuals to be transferred to the charitable trust, despite their compliance with the 6.0% ownership limits. If any of the foregoing occurs, compliance with the 6.0% ownership limit will not ensure that your ownership of our stock does not cause a violation of the Five or Fewer Limit or that your shares of our stock are not transferred to the charitable trust. Gould Investors, Fredric H. Gould, Matthew J. Gould and Jeffrey A. Gould will be required by the Exchange Act and regulations promulgated thereunder to report, with certain exceptions, their acquisition of additional shares of our stock within two days of such acquisitions, and all holders of our stock will be required to file reports of their acquisition of beneficial ownership (as defined in the Exchange Act) of more than 5% of our outstanding stock. However, beneficial ownership for purposes of the reporting requirements under the Exchange Act is calculated differently than beneficial ownership for purposes of determining compliance with the Five or Fewer Limit. Further, to the extent that any one or more of Gould Investors, Fredric H. Gould, Matthew J. Gould or Jeffrey A. Gould acquires 30% or more of our outstanding stock, ownership of five percent or less of our outstanding stock could still result in a violation of the Five or Fewer Limit and, therefore, cause newly-acquired stock in our company to be transferred to the charitable trust. As a result, you may not have enough information currently available to you at any time to determine the percentage of ownership of our stock that you can acquire without violating the Five or Fewer Limit and losing the economic benefit of the ownership of such newly-acquired shares. The stock market is volatile, and fluctuations in our operating results, removal from various indices and other factors could cause our stock price to decline. The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies. Market fluctuations could adversely affect our stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as pandemics, recessions, loss of investor confidence, interest rate changes, government shutdowns, or trade wars, may negatively affect the market price of our common stock. Moreover, our operating results may fluctuate and vary from period to period due to the risk factors set forth herein. Although our common stock is quoted on the New York Stock Exchange, the volume of trades on any given day has been limited historically, as a result of which stockholders might not have been able to sell or purchase our common stock at the volume, price or time desired. In June 2018, our common stock was added to the Russell 3000® Index. 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. General Business Risks Breaches of information technology systems could materially harm our business and reputation. We, our joint venture partners and the property managers managing our properties, collect and retain, through information technology systems, financial, personal and other sensitive information provided by third parties, including tenants, vendors and employees. Such persons also rely on information technology systems for the collection and distribution of funds. Our information technology systems have been breached though, to our knowledge, none of our properties nor tenants have suffered any material damages therefrom. There can be no assurance that we, our joint venture partners or property managers will be able to prevent unauthorized access to sensitive information or the unauthorized distribution of funds. 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 Item 1B. Unresolved Staff Comments. Not applicable. Item 1C. Cybersecurity Our information technology, communication networks, enterprise applications, accounting and financial reporting platforms and related systems are integral to our operations. We use these systems, among others, for internal communications, for accounting and record-keeping functions, and for many other key aspects of our business. Our operations rely on securing, collecting, storing, transmitting, and processing of proprietary and confidential data. We have deployed various safeguards designed to protect our information technology (“IT”) systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls. At the management level, these cybersecurity defense systems are overseen by our network administrator who performs services for us on a part-time basis pursuant to the shared services agreement. Our network administrator has more than 20 years of experience with IT systems and holds various IT certifications. Our network administrator reports to, and is in regular contact with, our Senior Vice President-Finance and Senior Vice President. These officers do not have formal IT or cybersecurity training. In the event of a cybersecurity incident, among other things, the network administrator and these officers would consult with one another and, as needed or appropriate, other members of management to determine the appropriate course of action (including whether such incident should be reported to other members of management and/or the audit committee and whether public disclosure should, or is, required to be made). Our internal auditor perform certain procedures to test the integrity and functionality of our IT systems (which includes a high-level review of our cybersecurity defenses). In addition, we have retained a third-party cybersecurity consulting firm that (i) advises us as to cybersecurity matters (including prevailing cybersecurity threats), (ii) performs, on a periodic basis, assessments of our cybersecurity defenses and (iii) on a continuous basis, monitors our IT systems for cybersecurity threats and intrusions. We are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us. See “Item 1A. Risk Factors” in this Annual Report for additional discussion about cybersecurity-related risks. To operate our business, we use certain third-party service providers to perform a variety of functions. We seek to engage reliable, reputable service providers that maintain cybersecurity programs and we generally rely on such providers to maintain appropriate cybersecurity practices. At the Board level, our cybersecurity practices are overseen by the audit committee as part of its oversight of our risk management activities. The committee meets periodically with , among others, our internal auditor and network administrator to review and discuss cybersecurity matters. Item 2. Properties. Our principal executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, NY. We believe that this facility is satisfactory for our current and projected needs. See "Item 1—Business" for additional information regarding our properties. 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 (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. 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. Although 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. See Note 12 of our Consolidated Financial Statements. Item 4. Mine Safety Disclosures. Not applicable. 24 PART II Item 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. Issuer Purchases of Equity Securities Period October 1 - October 31, 2023 November 1 - November 30, 2023 December 1 - December 31, 2023 (a) Total Number of Shares Purchased 98,014 67,005 41,086 Total 206,105 $ (d) (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs 98,014 $ 67,005 41,086 206,105 4,277,693 3,121,741 9,584,218 (1) (b) Average Price Paid per Share 17.23 $ 17.25 18.69 17.53 (1) On December 4, 2023, the Board of Directors authorized the the replenishment of the stock repurchase plan to $10 million. 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 6. [Reserved] 25 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 owns, operates and to a lesser extent holds interest in joint ventures that own and operate multi family properties. At December 31, 2023, we: (i) wholly-own 21 multi-family properties with an aggregate of 5,420 units and a carrying value of $634.0 million, (ii) have ownership interests, through unconsolidated entities, in seven multi-family properties with an aggregate of 2,287 units, with a carrying value of $30.4 million and (iii) own other assets, through consolidated and unconsolidated entities, with a carrying value of $5.6 million. The 28 multi-family properties are located in 11 states; primarily in the Southeast United States and Texas. During 2023: • The unconsolidated joint venture that owned Chatham Court and Reflections, a 494 unit multi-family property located in Dallas, TX, and in which we had a 50% interest, sold such property. Our share of the (i) gain from this sale was $14.7 million, (ii) the related early extinguishment of debt charge was $212,000, and (iii) proceeds from the sale were $19.4 million. In 2023 and 2022, this property accounted for $54,000 and $753,000, respectively, of equity in earnings from unconsolidated joint ventures. • We paid off our credit facility debt of $19.0 million - we accomplished this by using the proceeds of new mortgage debt of $21.2 million placed 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 repurchased 779,423 shares of our common stock for an aggregate purchase price of approximately $14.4 million (i.e., an average price per share of $18.47). • Entered into an amendment (the "Amendment") to our amended and restated credit facility (the "Facility") with VNB New York, LLC, an affiliate of Valley National Bank (“VNB”), which converted the Facility's interest rate to one- month term SOFR plus 250 basis points, and increased the interest rate floor to 6%. Immediately prior to the amendment, the interest rate on the facility was 8.5%; immediately thereafter, the interest rate was 7.82% From January 1, 2024 through March 1, 2024, we purchased 123,061 shares of our common stock for an aggregate purchase price of approximately $2.3 million (i.e., an average price of $18.43per share). Challenges and Uncertainties as a Result of the Volatile Economic Environment; Impact of Development Property During the past two years, there has been a significant economic uncertainty due, among other things, to volatile interest rates and the challenges presented by an inflationary/potential recessionary environment. Due to this uncertainty and our belief that pricing for acquisition opportunities did not appropriately reflect market conditions, we were especially cautious in pursuing acquisition opportunities in 2023 and may continue to be cautious in pursuing such opportunities in the near future. Further, the competitive environment in several of our markets as well as anticipated expense increases create uncertainty as to our ability to improve income from continuing operations. We have a 17.45% interest in a 240-unit development property located in Johns Island, SC. As of December 31, 2023, this project is substantially complete and lease-up has begun. We estimate that for 2024, we will record approximately $350,000 to $500,000 of equity in loss from unconsolidated ventures related to this property because the venture will begin recognizing revenue and expenses (and in particular depreciation and interest which had been capitalized during the development phase). 26 Results of Operations Comparison of Years Ended December 31, 2023 and 2022 The term "same store properties" refers to ten multi-family properties with an aggregate of 2,576 units that were owned for all of 2023 and 2022. The term "unconsolidated same store properties" with an aggregate of 2,287 units refers to seven properties that were owned for all of 2023 and 2022. As used in the comparison of the year ended December 31, 2023 and 2022, the term "Partner Buyouts" refers to our purchase in 2022 of the interests of our joint venture partners at 11 properties. Revenues The following table compares our revenues for the years indicated: (Dollars in thousands): 2023 2022 Change % Change Rental and other revenue from real estate properties $ 93,069 $ 70,515 $ 22,554 32.0 % Other income Total revenues 548 12 536 N/M $ 93,617 $ 70,527 $ 23,090 32.7 % Rental and other revenue from real estate properties. The components of the increase include: • • $20.8 million from the Partner Buyouts; and $2.6 million from same store properties, substantially all of which is due to higher average rental rates. Offsetting the increase is a $1.0 million decrease due to a decline in occupancy from 96.4% to 93.6% at same store properties, including $343,000 at Bells Bluff-West Nashville, TN, which experienced a decline in occupancy due to increased supply in the market and change in demand for certain unit types. Other Income The increase is due primarily to increased earnings on our cash balances due to higher interest rates. Expenses The following table compares our expenses for the periods indicated: (Dollars in thousands) Real estate operating expenses Interest expense General and administrative Depreciation and amortization Total expenses 2023 2022 Change % Change $ 41,821 $ 30,558 $ 11,263 22,161 15,433 28,484 15,514 14,654 24,812 6,647 779 3,672 $ 107,899 $ 85,538 $ 22,361 36.9 % 42.8 % 5.3 % 14.8 % 26.1 % Real estate operating expenses. The components of the increase include: • • $9.4 million from the Partner Buyouts; and $1.8 million from same store properties, including: – – – $880,000 due to the master insurance program implemented in December 2022 and increases in insurance costs overall.; $295,000 in real estate taxes due to increases primarily at four properties; and general cost increases, including $228,000 in property level payroll costs, $201,000 in utilities costs and $211,000 across other expense categories. 27 Interest expense The components of the increase include: • • • $5.2 million due to the Partner Buyouts; $1.3 million due to the increase in the interest rate on our floating rate junior subordinated notes; and $372,000 of interest expense on the Silvana Oaks mortgage which was obtained in February 2023. The increase was offset by a $139,000 decrease in interest expense on our credit facility primarily due to the payoff of the facility in February 2023 in connection with the receipt of proceeds from the Silvana Oaks mortgage. General and administrative. The components of the increase include: • • $379,000 due to the amortization expense related to the restricted stock granted in January 2023 (as a result of the higher fair value of the shares granted in 2023 in comparison to the restricted stock granted in 2018); and $232,000 of cash compensation and related payroll expense due to higher levels of compensation and increased employee headcount. Depreciation and amortization The increase is due $5.8 million from the Partner Buyouts, offset by a $2.1 million decrease due to reduced depreciation related to lease intangibles resulting from such buyouts. Equity in earnings (loss) of unconsolidated joint ventures and equity in earnings from sale of unconsolidated joint venture properties. Please see a detailed explanation of these categories in the next section entitled "Unconsolidated Joint Ventures - Results of Operations". Casualty loss During the year ended December 31, 2023, we settled the Takakura Lawsuit for $323,000. During the year ended December 31, 2022, we settled a personal injury lawsuit for $850,000 Insurance recovery of casualty loss During 2023, we received insurance proceeds of (i) $323,000 in connection with the settlement of the Takakura Lawsuit and (ii) $470,000 as reimbursement for expenses incurred related to a winter storm in December 2022. During 2022, we received $850,000 in insurance proceeds upon the settlement of a personal injury lawsuit. Gain on Sale of Real Estate In 2023, we sold a cooperative apartment in New York for a sales price of $785,000 and recognized a gain of $604,000. Loss on extinguishment of debt In 2022, we incurred $563,000 of loss on extinguishment of debt related to the mortgage refinancing affected in connection with the buyout of our joint venture partner's interest in Brixworth at Bridge Street - Huntsville, AL. Income tax provision Income tax provision in the year ended December 31, 2023, decreased $767,000 (i.e., from $821,000 in 2022 to $54,000 in 2023). The decrease reflects the inclusion, in 2022 of increased tax provision related to gains from the sale of properties by several joint ventures and the reversal, in 2023, of approximately $200,000 due to the over-accrual of taxes. 28 Unconsolidated Joint Ventures - Results of Operations. Equity in (loss) earnings of unconsolidated joint ventures The table below reflects the condensed income statements of our unconsolidated properties included in note 6 of our consolidated financial statements. In accordance with US generally accepted accounting principles, each of the line items in the chart below is presented as if these properties are wholly owned by us, although as reflected under " Item 1. Business - 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 Interest expense from unconsolidated joint ventures Depreciation from unconsolidated joint ventures Total expenses from unconsolidated joint ventures 20,577 9,268 10,403 40,248 33,086 16,269 17,798 67,153 (12,509) (37.8) % (7,001) (43.0) % (7,395) (41.5) % (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 Impairment of assets Insurance recoveries from unconsolidated joint ventures Gain on insurance proceeds from unconsolidated joint ventures 126 — — 65 121 (8,553) 8,553 567 5 4.1 % 8,553 (8,553) N/A N/A (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. Same store properties at Unconsolidated Properties represent seven properties that were owned for the entirety of the periods being compared. 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. 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 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 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. 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. 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. Insurance recoveries from unconsolidated joint ventures. During 2022, the venture recognized $8.6 million of insurance recoveries related to the Stono Oaks fire. 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. 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. 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. 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 Funds from Operations; Adjusted Funds from Operations; Net Operating Income. In view of our multi-family property activities, we disclose funds from operations ("FFO") ,adjusted funds from operations ("AFFO") and net operating income ("NOI") because we believe that such metrics are a widely recognized and appropriate measure of the performance of a multi-family REIT. We compute FFO in accordance with the "White Paper on Funds From Operations" issued by the National Association of Real Estate Investment Trusts ("NAREIT") and NAREIT's related guidance. FFO is defined in the White Paper as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. In computing FFO, we do not add back to net income the amortization of costs in connection with our financing activities or depreciation of non-real estate assets. We compute AFFO by adjusting FFO for loss on extinguishment of debt, our straight-line rent accruals, restricted stock and RSU compensation expense, fair value adjustment of mortgage debt, gain on insurance recovery, insurance recovery from casualty loss and deferred mortgage and debt costs (including, in each case as applicable, from our share from our unconsolidated joint ventures). Since the NAREIT White Paper does not provide guidelines for computing AFFO, the computation of AFFO may vary from one REIT to another. We believe that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assures that the value of real estate assets diminish predictability over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a performance measure that, when compared year-over-year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions. FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our performance, management is careful to examine GAAP measures such as net income (loss) and cash flows from operating, investing and financing activities. Management also reviews the reconciliation of net income (loss) to FFO and AFFO. 31 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 $ 28,484 5,292 — 323 (604) 49,955 24,812 10,677 1,493 850 (6) (14,744) (64,531) (16) 22,608 93 — 212 4,768 1,072 106 613 (323) — (240) (30) (15) (16) 23,234 24 563 1,880 4,487 628 227 148 (850) (1,493) (62) (432) (4) $ 28,864 $ 28,350 Add: depreciation of properties Add: our share of depreciation in unconsolidated joint venture properties Add: our share of impairment charge in unconsolidated joint venture properties Add: casualty loss Deduct: gain on sales of real estate and partnership interests Deduct: our share of earnings in earnings from sale of unconsolidated joint venture properties Adjustment for non-controlling interests Funds from operations Adjust for: straight-line rent accruals Add: loss on extinguishment of debt Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties Add: amortization of restricted stock and RSU expense Add: amortization of deferred mortgage and debt costs Add: our share of deferred mortgage costs from unconsolidated joint venture properties Add: amortization of fair value adjustment for mortgage debt Less: insurance recovery of casualty loss Less: our share of insurance recovery from unconsolidated joint ventures Less: gain on insurance recovery Less: our share of gain on insurance proceeds from unconsolidated joint venture properties Adjustment for non-controlling interests Adjusted funds from operations 32 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. Net income attributable to common stockholders Add: depreciation of properties Add: our share of depreciation from unconsolidated joint venture properties Add: our share of impairment charge in unconsolidated joint ventures Add: casualty loss Deduct: gain on sales of real estate and partnership interest Deduct: our share of earnings from sale of unconsolidated joint venture properties Adjustment for non-controlling interests Funds from operations Adjustment for: straight-line rent accruals Add: loss on extinguishment of debt Add: our share of loss on extinguishment of debt from unconsolidated joint ventures Add: amortization of restricted stock and RSU expense Add: amortization of deferred mortgage and debt costs Add: our share of amortization of deferred mortgage and debt costs from unconsolidated ventures Add: amortization of fair value adjustment for mortgage debt Less: insurance recovery of casualty loss Deduct: our share of insurance recovery from unconsolidated joint ventures Deduct: gain on insurance recovery Deduct: our share of gain on insurance proceeds from unconsolidated joint ventures Adjustment for non-controlling interests Adjusted funds from operations 2023 2022 $ 0.20 $ 1.50 0.28 — 0.02 (0.03) (0.78) — 1.19 — — 0.01 0.25 0.06 0.01 0.03 (0.02) — (0.01) — — $ 1.52 $ 2.66 1.33 0.57 0.08 0.05 — (3.45) — 1.24 — 0.03 0.10 0.25 0.03 0.01 0.01 (0.05) (0.08) — (0.02) — 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. 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 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. 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 The increase was offset by a: • • $725,000 increase in interest expense; and $499,000 increase in general and administrative expense . See “—Comparison of Years Ended December 31, 2023 and 2022” for further information regarding these changes. 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. The usefulness of NOI may be limited in that it does not take into account, among other things, general and administrative expense, interest expense, loss on extinguishment of debt, casualty losses, insurance recoveries and gains or losses as determined by GAAP. NOI is a property specific performance metric and does not measure our performance as a whole. Same store NOI reflects the operations of seven of our ten wholly-owned properties. We compute NOI by adjusting net income (loss) to (a) add back (1) interest expense, (2) general and administrative expenses, (3) depreciation expense, (4) impairment charges, (5) provision for taxes, (6) loss on extinguishment of debt, (7) equity in loss of unconsolidated joint ventures, (8) casualty loss and (9) the impact of non-controlling interests, and (b) deduct (1) other income, (2) gain on sale of real estate (3) gain on sale of partnership interest, (4) equity in earnings from sale of consolidated joint venture properties, (5) insurance recovery of casualty loss and (6) gain on insurance recoveries. 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. 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 $ Less: Other Income Add: Interest expense General and administrative Depreciation Provision for taxes Less: Gain on sale of real estate Add: Loss on extinguishment of debt Equity in (earnings) loss of unconsolidated joint venture properties Casualty loss Less: Equity in earnings from sale of unconsolidated joint venture properties Insurance recovery of casualty loss Gain on insurance recovery Add: Net income attributable to non-controlling interests Net Operating Income Less: Non same store and non multi family (1) Revenues Operating Expenses Same Store Net Operating Income (548) 22,161 15,433 28,484 54 (604) — (2,293) 323 49,955 (12) 15,514 14,654 24,812 821 (6) 563 (1,895) 850 (14,744) (64,531) (793) (240) 142 (850) (62) 144 $ 51,248 $ 39,957 45,695 20,140 25,555 25,693 $ $ 24,911 10,692 14,219 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 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. 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. 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. 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. 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. A significant amount of our cash and cash equivalents is maintained at our properties for general working capital purposes. 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. 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 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. Further, if and to the extent we generate ordinary taxable income, we will be required to make distributions to stockholders to maintain our REIT status and as a result, will be limited in our ability to use gains, if any, from property sales, as a source of funds for operating expenses, debt service and property acquisitions. Disclosure of Known Material Contractual Obligations The following table sets forth as of December 31, 2023 our known material contractual obligations: (Dollars in thousands) Payment Due by Period 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 Purchase Obligations (2)(3) Total 242 6,595 507 528 13,190 13,190 2,977 — 4,254 32,975 $ 44,506 $ 225,025 $ 235,947 $ 438,568 $ 944,046 ____________________________ (1) Reflects payments of principal (including amortization payments) and interest and excludes deferred costs. 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. (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. 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. 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. Such expenditures subsequent to 2024 are not determinable. 35 The following table sets forth as of December 31, 2023 information regarding the components of our long-term debt obligations: (Dollars in thousands) Payment due by Period 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) Junior subordinated notes and credit facility(2) Total 14,125 2,861 79,600 106,715 5,722 5,722 95,549 58,372 295,989 72,677 $ 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. (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. 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. At December 31, 2023 and 2022, the interest rate on these notes was 7.65% and 6.41%, respectively. Credit Facility 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 $60 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 three 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%. 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. 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. The terms of the credit facility include certain restrictions and covenants which, among other things, limit the incurrence of liens, require that we maintain and include in the collateral securing the facility at least three unencumbered properties with an aggregate value(as calculated pursuant to the facility) of at least $75 million, and require compliance with financial ratios relating to, among other things maintaining a minimum tangible net worth of $140 million, the minimum amount of debt service coverage with respect to the properties (and amounts drawn on the credit facility) used in calculating the borrowing base. 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. 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. 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. 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. "Business-Mortgage Debt" for information regarding our mortgage debt at consolidated and unconsolidated subsidiaries. 36 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. 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. We mitigate the risks presented by inflation through the use of long-term fixed interest rate debt and interest rate hedges and by paying down, when we deem appropriate, our credit facility debt. 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. 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. 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. If we fail to qualify as a REIT in any taxable year, we will be subject to federal, state and local 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 may be subject to certain state and local taxes on our income and to federal income taxes on our undistributed taxable income (i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Internal Revenue Code and applicable regulations thereunder) and are subject to Federal excise taxes on our undistributed taxable income. It is our intention to pay to our stockholders within the time periods prescribed by the Internal Revenue Code no less than 90%, and, if possible, 100% of our annual taxable income, including taxable gains from the sale of real estate. It will continue to be our policy to make sufficient distributions to stockholders in order for us to maintain our REIT status under the Internal Revenue Code. 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. Our board of directors will continue to evaluate, on a quarterly basis, the amount of dividend payments based on its assessment of, among other things, our short and long-term cash and liquidity requirements, prospects, debt maturities, net income, funds from operations, and adjusted funds from operations. 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”). 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. 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. 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. 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. 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. We initially record our investments based on either the carrying value for properties contributed or the cash invested. 37 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. 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. 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. In reviewing the value of the real estate assets owned, if there is an indicator of impairment and the carrying value of the real estate asset is determined to be unrecoverable, we seek to arrive at the fair value of each real estate asset by using one or more valuation techniques, such as comparable sales, discounted cash flow analysis or replacement cost analysis. A real estate asset is considered to be unrecoverable when an analysis suggests that the undiscounted cash flows to be generated by the property will be insufficient to recover our investment. 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. 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. In making estimates of fair values for purposes of allocating purchase price, we use a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. We also consider information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. 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. 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. 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. 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. 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. See Note 9 to our consolidated financial statements. Item 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. 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%. 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. Item 8. Financial Statements and Supplementary Data. The information required by this item appears in a separate section of this Report following Part IV. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. 38 Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10- K. Based on that review and evaluation, our CEO and CFO have concluded that our disclosure controls and procedures, as designed and implemented as of December 31, 2023, were effective. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: • • • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of a company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial transactions. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on its assessment, our management concluded that, as of December 31, 2023, our internal control over financial reporting was effective based on these criteria. Changes in Internal Controls over Financial Reporting There have been no changes in our internal controls over financial reporting, as defined in in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, that occurred during the three months ended December 31, 2023 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. Item 9B. Other Information. None of our officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" in effect at any time during the three months ended December 31, 2023.” Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable 39 Item 10. Directors, Executive Officers and Corporate Governance. PART III Apart from certain information concerning our executive officers which is set forth in Part I of this report, the other information required by Item 10 will be incorporated herein by reference to the applicable information to be in the proxy statement to be filed by April 29, 2024 for our 2024 Annual Meeting of Stockholders. Item 11. Executive Compensation. The information concerning our executive compensation required by Item 11 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Except as set forth below, the information required by Item 12 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. Equity Compensation Plan Information The following table provides information as of December 31, 2023 about shares of our common stock that may be issued upon the exercise of options, warrants and rights under our 2018 Amended and Restated Incentive Plan (the “2018 Plan”), our 2020 Amended and Restated Incentive Plan (the “2020 Plan”; and together with the 2018 Plan, the “Prior Plans”) and our 2022 Incentive Plan (the “2022 Plan”; and together with the Prior Plans, the “Incentive Plans”). No further awards may be granted under the Prior Plans. Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total (a) 634,490 — 634,490 (1) (1) (b) — — — _______________________________________________________________________________ Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (2) (c) 411,488 — 411,488 (2) (2) (1) Includes up to 209,322 shares, 211,417 and 213,751 shares of common stock issuable pursuant to restricted stock units (“RSUs”) that vest as of March 31, 2024, June 30, 2025 and June 30, 2026, respectively, if and to the extent specified conditions are satisfied by such vesting dates. RSUs granted pursuant to the 2020 Plan and the 2022 Plan account for 209,322 shares and 425,168 shares, respectively. Excludes 951,839 shares of restricted stock issued pursuant to the Incentive Plans as such shares, although subject to forfeiture, are outstanding. See Note 10 to our consolidated financial statements. (2) Does not give effect to 166,439 shares of restricted stock granted January 11, 2024 pursuant to the 2022 Plan. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information concerning relationships and certain transactions required by Item 13 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. Item 14. Principal Accounting Fees and Services. The information concerning our principal accounting fees required by Item 14 is incorporated herein by reference to the proxy statement to be filed by April 29, 2024 with respect to our 2024 Annual Meeting of Stockholders. 40 PART IV Item 15. Exhibits, Financial Statement Schedules. (a) 1. All Financial Statements. The response is submitted in a separate section of this report following Part IV. 2. Financial Statement Schedules. The response is submitted in a separate section of this report following Part IV. 3. Exhibits: In reviewing the agreements included as exhibits to this Annual Report on Form10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. Certain agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and: • • should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; • may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and • were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. 41 Exhibit No. 1.1 2.1 3.1 3.2 4.1 4.2 Title of Exhibits Form of Equity Distribution Agreement dated May 12, 2023 (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed on May 12, 2023). Plan of Conversion dated December 8, 2016 (incorporated by reference to Annex B of Amendment No. 1 to our Registration Statement on Form S-4 filed January 12, 2017 (the "S-4 Registration") (Reg. No. 333-215221). Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 filed with our Current Report on Form 8-K on March 20, 2017). By-laws of the Registrant effective as of December 6, 2022 (incorporated by reference to Exhibit 3.2 filed with our Current Report on Form 8-K on December 6, 2022). Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 filed with our Current Report on Form 8-K on March 18, 2011). Description of Registrant's Securities Registered Pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 filed with our Annual Report on Form 10-K for the year ended December 31, 2020). 10.1 * Shared Services Agreement, dated as of January 1, 2002, by and among Gould Investors L.P., us, One Liberty Properties, Inc., Majestic Property Management Corp., Majestic Property Affiliates, Inc. and REIT Management Corp. (incorporated by reference to Exhibit 10.2 filed with our Annual Report on Form 10-K for the year ended September 30, 2008). 10.2 * Form of Indemnification Agreement between the Registrant on the one hand, and its executive officers and directors, on the other hand (incorporated by reference to Exhibit 10.5 to our Annual Report of Form 10-K for the year ended September 30, 2017). 10.3 Membership Interest Purchase Agreement dated as of February 23, 2016 entered into between TRB Newark Assemblage, LLC ("TRB") and TRB Newark TRS, LLC ("TRB REIT" and together with TRB, collectively, the "Seller") and RBH Partners III, LLC, and joined by RBH-TRB Newark Holdings, LLC and GS-RBH Newark Holdings, LLC (incorporated by reference to exhibit 10.2 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2016). 10.4 * 2018 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.6 filed with our Current Report on Form 8-K on June 15, 2023). 42 Exhibit No. Title of Exhibits 10.5 * Form of Restricted Shares Agreement for the 2018 Incentive Plan (incorporated by reference to Exhibit 10.10 filed with our Annual Report on Form 10-K filed December 10, 2018). 10.6 * 2020 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.8 filed with our Current Report on Form 8-K on June 15, 2023). 10.7 * Form of Performance Awards Agreement granted in 2021 pursuant to the 2020 Incentive Plan (incorporated by reference to exhibit 10.1 of our Current Report on Form 8-K filed on June 11, 2021) 10.8 Amended and Restated Loan Agreement (the "Loan Agreement") made as of November 18, 2021, by and among us and VNB New York, LLC. (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on November 18, 2021). 10.9 Unlimited guaranty given by us in favor of VNB (incorporated by reference to Exhibit 10.2 filed with our Current Report on Form 8-K on November 18, 2021). 10.11 10.10 Form of Pledge Agreement (incorporated by reference to Exhibit 10.3 filed with our Current Report on Form 8- K on November 18, 2021). Form of Negative Pledge Agreement (incorporated by reference to Exhibit 10.4 filed with our Current Report on Form 8-K on November 18, 2021). Letter agreement dated as of November 19, 2021 with respect to the Loan Agreement. (incorporated by reference to exhibit 10.14 filed with our Annual Report on Form 10-K for the year ended December 31, 2021). 10.13 Amendment dated September 14, 2022 to the Loan Agreement (incorporated by reference to Exhibit 10.1 filed 10.12 with our Current Report on Form 8-K on September 16, 2022). 10.14 * 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K on 10.15 June 10, 2022). Second amendment dated as of August 22, 2023 to the Amended and Restated Loan Agreement made as of November 18, 2021, as amended, by and between us and VNB New York, LLC. (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q on November 6, 2023). 10.16 * Form of Performance Awards Agreement granted in 2022 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.5 filed with our Quarterly Report on Form 10-Q for the period ended September 30, 2022). 10.17 Form of Membership Interest Purchase Agreement used to effectuate the purchase of the interests of our joint venture partners (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2022). 10.18 * Form of Restricted Share Agreement awarded in 2022 for the 2022 Incentive Plan (incorporated by reference to Exhibit 10.19 filed with our Annual Report on Form 10-K for the year ended December 31, 2022. Form of Performance Awards Agreement granted in 2023 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 filed with our Quarterly Report on Form 10-Q for the period ended June 30, 2023). Subsidiaries of the Registrant. 10.19 21.1 23.1 Consent of Ernst & Young, LLP. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Act"). 31.2 Certification of Senior Vice President—Finance pursuant to Section 302 of the Act. 31.3 Certification of Chief Financial Officer pursuant to Section 302 of the Act. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Act. 32.2 Certification of Senior Vice President—Finance pursuant to Section 906 of the Act. 32.3 Certification of Chief Financial Officer pursuant to Section 906 of the Act. 97.1 Registrant's Clawback Policy effective October 2, 2023. 101.INS The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. _______________________________________________________________________________ * Indicates management contract or compensatory plan or arrangement. (b) Exhibits. 43 See Item 15(a)(3) above. Except as otherwise indicated with respect to a specific exhibit, the file number for all of the exhibits incorporated by reference is: 001-07172. (c) Financial Statements. See Item 15(a)(2) above. Item 16. Form 10-K Summary Not applicable. 44 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES March 14, 2024 Date : BRT APARTMENTS CORP. By: /s/ Jeffrey A. Gould Jeffrey A. Gould Chief Executive Officer and President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Israel Rosenzweig Israel Rosenzweig /s/ Jeffrey A. Gould Jeffrey A. Gould /s/ Carol Cicero Carol Cicero /s/ Alan Ginsburg Alan Ginsburg /s/ Fredric H. Gould Fredric H. Gould /s/ Matthew J. Gould Matthew J. Gould /s/ Louis C. Grassi Louis C. Grassi /s/ Gary Hurand Gary Hurand /s/ Jeffrey Rubin Jeffrey Rubin /s/ Jonathan Simon Jonathan Simon /s/ Elie Weiss Elie Weiss /s/ George E. Zweier George E. Zweier Chairman of the Board March 14, 2024 Chief Executive Officer, President and Director (Principal Executive Officer) March 14, 2024 Director Director Director Director Director Director Director Director Director March 14, 2024 March 14, 2024 March 14, 2024 March 14, 2024 March 14, 2024 March 14, 2024 March 14, 2024 March 14, 2024 March 14, 2024 Chief Financial Officer and Vice President (Principal Financial and Accounting Officer) March 14, 2024 45 This page is intentionally left blank Item 8, Item 15(a)(1) and (2) Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) Consolidated Balance Sheets as of December 31, 2023 and 2022 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023 and 2022 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 Notes to Consolidated Financial Statements III—Real Estate Properties and Accumulated Depreciation Page No. F-2 F-4 F-5 F-6 F-7 F-10 F-31 All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto. F-1 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, 2023 and 2022, the related consolidated statements of operations, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2023 and the related notes and financial statement schedule 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, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. F-2 Description of the Matter Valuation of Investments in Real Estate At December 31, 2023, the Company’s investments in real estate totaled approximately $636 million. As described in Notes 1 and 11 to the consolidated financial statements, the Company reviews its investments in real estate when events or circumstances change indicating the carry value of the investment may not be recoverable. Auditing the Company’s impairment analysis involved a high degree of subjectivity due to the judgment used by management to determine when indicators of impairment exist. How We Addressed the Matter in Our Audit For investments in real estate, we obtained and reviewed management’s analysis of whether any indicators of impairment were identified, evaluated whether the list of indicators of impairment was complete, and evaluated whether conclusions reached by management were reasonable based on property-specific factors. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020 New York, New York March 14, 2024 F-3 BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data) ASSETS Real estate properties, net of accumulated depreciation of $80,499 and $55,195 $ 635,836 $ 651,603 December 31, 2023 2022 Investment in unconsolidated joint ventures Cash and cash equivalents Restricted cash Other assets Total Assets LIABILITIES AND EQUITY Liabilities: 34,242 23,512 632 15,741 $ 709,963 $ 42,576 20,281 872 17,284 732,616 Mortgages payable, net of deferred costs of $4,009 and $4,166 $ 422,427 $ 403,792 Junior subordinated notes, net of deferred costs of $257 and $277 Credit facility Accounts payable and accrued liabilities Total Liabilities Commitments and contingencies Equity: BRT Apartments Corp. stockholders' equity: Preferred shares $0.01 par value 2,000 shares authorized, none outstanding Common stock, $0.01 par value, 300,000 shares authorized, 17,536 and 18,006 shares issued at December 31, 2023 and 2022 Additional paid-in capital Accumulated deficit Total BRT Apartments Corp. stockholders' equity Non-controlling interests Total Equity Total Liabilities and Equity 37,143 — 21,948 481,518 — 175 267,271 (38,986) 228,460 (15) 228,445 $ 709,963 $ 37,123 19,000 22,631 482,546 — 180 273,863 (23,955) 250,088 (18) 250,070 732,616 See accompanying notes to consolidated financial statements. F-4  BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) Revenues: Rental and other revenue from real estate properties $ 93,069 $ 70,515 Year Ended December 31, 2023 2022 Other income Total revenues Expenses: Real estate operating expenses—including $34 and $36 to related parties Interest expense General and administrative—including $642 and $739 to related party Depreciation and amortization Total expenses Total revenues less total expenses Equity in earnings from unconsolidated joint ventures Equity in earnings from sale of unconsolidated joint venture properties Gain on sale of real estate Casualty loss Insurance recovery of casualty loss Gain on insurance recovery Loss on extinguishment of debt Income from continuing operations Provision for taxes Income from continuing operations, net of taxes Income attributable to non-controlling interests Net income attributable to common stockholders Weighted average number of shares of common stock outstanding: Basic Diluted Per share amounts attributable to common stockholders Basic Diluted 548 93,617 41,821 22,161 15,433 28,484 107,899 (14,282) 2,293 14,744 604 (323) 793 240 — 4,069 54 4,015 (142) 12 70,527 30,558 15,514 14,654 24,812 85,538 (15,011) 1,895 64,531 6 (850) 850 62 (563) 50,920 821 50,099 (144) $ 3,873 $ 49,955 17,918,270 17,793,035 17,948,276 17,852,951 $ $ 0.16 $ 0.16 $ 2.67 2.66 See accompanying notes to consolidated financial statements. F-5  BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 2023 and 2022 (Dollars in thousands, except per share data) Shares of Common Stock Additional Paid-In Capital (Accumulated Deficit) Non- Controlling Interests Total Balances, December 31, 2021 $ 173 $ 258,161 $ (55,378) $ (5) $ 202,951 Distributions - Common Stock - $0.98 per share Restricted stock and restricted stock units vesting Compensation expense—restricted stock and restricted stock units Distributions to non-controlling interests Shares issued through equity offering program, net Shares issued through DRIP Net income Other comprehensive income Comprehensive income Balances, December 31, 2022 — 2 — — 5 — — — — — (2) 4,486 — 9,940 1,278 — — — (18,532) — — — — — — — — (157) — — (18,532) — 4,486 (157) 9,945 1,278 49,955 144 50,099 — — — — — 50,099 $ 180 $ 273,863 $ (23,955) $ (18) $ 250,070 Distributions - Common Stock - $1.00 per share Restricted stock and restricted stock units vesting Compensation expense—restricted stock and restricted stock units Distributions to non-controlling interests Shares issued through DRIP Shares repurchased Net income — 2 — — — (7) — — (2) 4,768 — 3,034 (14,392) (18,904) — — — — — — 3,873 — — — (139) — — 142 (18,904) — 4,768 (139) 3,034 (14,399) 4,015 Balances, December 31, 2023 $ 175 $ 267,271 $ (38,986) $ (15) $ 228,445 See accompanying notes to consolidated financial statements F-6 BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Cash flows from operating activities: Net Income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of deferred financing fees Amortization of debt fair value adjustment Amortization of restricted stock and restricted stock units Equity in earnings of unconsolidated joint ventures Equity in earnings on sale of real estate of unconsolidated ventures Gain on sale of real estate Gain on insurance recovery Loss on extinguishment of debt Increases and decreases from changes in other assets and liabilities: (Increase) decrease in other assets Decrease in accounts payable and accrued liabilities Net cash provided by operating activities Cash flows from investing activities: Improvements to real estate owned Purchase and consolidation of joint venture properties Proceeds from the sale of real estate owned Distributions from unconsolidated joint ventures Contributions to unconsolidated joint ventures Proceeds from insurance recoveries Net cash provided by (used in) investing activities Cash flows from financing activities: Proceeds from mortgages payable Mortgage payoffs Mortgage principal payments Proceeds from credit facility Repayment of credit facility Increase in deferred financing costs Dividends paid Distributions to non-controlling interests Proceeds from the sale of common stock Proceeds from the issuance of DRP shares Repurchase of shares of common stock Net cash used in financing activities Net increase (decrease) in cash, cash equivalents, restricted cash and escrows: F-7 Year Ended December 31, 2023 2022 $ 4,015 $ 50,099 28,484 1,072 613 4,768 (2,293) (14,744) (604) (240) — (787) (678) 19,606 (9,643) — 711 25,687 (316) 240 16,679 21,173 — (3,308) — (19,000) (683) (18,909) (139) — 3,034 (14,399) (32,231) 4,054 24,812 628 137 4,486 (1,895) (64,531) (6) (62) 563 5,142 (3,923) 15,450 (6,295) (101,666) 4,385 91,239 (3,500) 62 (15,775) 18,953 (41,666) (2,219) 43,000 (24,000) (693) (17,863) (157) 9,945 1,278 — (13,422) (13,747) BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Cash, cash equivalents, restricted cash and escrows at beginning of year Cash, cash equivalents,restricted cash and escrows at end of year Supplemental disclosures of cash flow information: Cash paid during the year for interest expense Cash paid during the year for income and excise taxes Consolidation on buyout of partnership interest: Increase in real estate assets Increase in other assets Increase in mortgage payable Increase in deferred loan costs Increase in accounts payable and accrued liabilities Decrease in investment in unconsolidated joint ventures $ $ $ $ Year Ended December 31, 2023 2022 27,721 31,775 $ 20,433 $ 689 $ — — — — — — 41,468 27,721 14,086 283 (370,513) (13,893) 231,896 (3,892) 6,278 48,458 $ — $ (101,666) See accompanying notes to consolidated financial statements. F-8 BRT APARTMENTS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. December 31, 2023 2022 $ 23,512 $ 20,281 632 7,631 872 6,568 27,721 $ $ Cash and cash equivalents Restricted cash Escrows (Other assets) Total cash, cash equivalents, restricted cash and escrows shown in consolidated statement of cash flows $ 31,775 F-9 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 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, in seven multi-family properties located in four 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 in one reportable segment. Principles of Consolidation The consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries. The joint venture that owns a commercial property in Yonkers, NY was determined not to be a variable interest entity ("VIE") but is consolidated because the Company has controlling rights in such entity. 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. F-10 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) In accordance with Accounting Standards Codification ("ASC") Topic 740 - "Income Taxes", the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on the Company's financial position or results of operations. The Company's income tax returns for the tax years 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 exceed one year. Rental revenue from commercial properties, including the base rent that each tenant is required to pay in accordance with the terms of their respective leases, net of any rent concessions and lease incentives, is reported on a straight-line basis over the non-cancellable term of the lease. 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 F-11 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) 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. F-12 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (continued) 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): Land Building Building improvements Real estate properties Accumulated depreciation Total real estate properties, net December 31, 2023 2022 $ 74,246 $ 616,979 25,110 716,335 (80,499) $ 635,836 $ 74,246 617,041 15,511 706,798 (55,195) 651,603 A summary of activity in real estate properties, net, for the year ended December 31, 2023 follows (dollars in thousands): December 31, 2022 Balance Improvements Depreciation Asset Sale December 31, 2023 Balance Multi-family Retail shopping center - Yonkers, NY/Other Total real estate properties $ $ 649,701 $ 9,537 $ (25,193) $ — $ 634,045 1,902 106 (111) (106) 1,791 651,603 $ 9,643 $ (25,304) $ (106) $ 635,836 F-13 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 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): Location Tennessee Mississippi Alabama Georgia Florida Texas South Carolina Virginia North Carolina Missouri Ohio Other (a) Number of Properties Number of Units 2023 Rental and Other Revenue % of 2023 Rental and Other Revenue 2 2 3 3 2 3 2 1 1 1 1 — 21 702 $ 776 740 688 518 600 474 220 264 174 264 — 14,088 12,184 11,194 10,571 9,428 9,231 8,585 4,586 4,168 3,802 3,751 1,481 5,420 $ 93,069 15 % 13 % 12 % 11 % 10 % 11 % 9 % 5 % 4 % 4 % 4 % 2 % __________________________________________ (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): Year Ending December 31, 2024 2025 2026 2027 2028 Thereafter Total Amount $ 1,289 1,319 1,319 1,319 887 4,837 $ 10,970 Leases at the Company's multi-family properties are generally for a term of one year or less and are not reflected in this table. NOTE 3—ACQUISITIONS AND DISPOSITIONS Acquisitions of Interests in Joint Ventures During 2023, the Company did not 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. F-14 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 3—ACQUISITIONS AND DISPOSITIONS (continued) The following table summarizes these purchases (dollars in thousands): Buyout Date Property Name Location Units Remaining Interest Purchased Purchase Price (1) 03/23/2022 Verandas at Alamo San Antonio, TX 04/07/2022 Vanguard Heights Creve Coeur, MO 05/11/2022 Jackson Square Tallahassee, FL 05/24/2022 Brixworth at Bridge Street Huntsville, AL 05/26/2022 Woodland Apartments 06/30/2022 Grove at River Place 07/12/2022 Civic I 07/12/2022 Civic II 07/14/2022 Abbotts Run Boerne, TX Macon, GA Southaven, MS Southaven, MS Wilmington, NC 07/19/2022 Somerset at Trussville Trussville, AL 08/03/2022 Magnolia Pointe Madison, AL 288 174 242 208 120 240 392 384 264 328 204 28 % $ 22 % 20 % 20 % 20 % 20 % 25 % 25 % 20 % 20 % 20 % 8,721 4,880 7,215 10,697 3,881 7,485 18,233 17,942 9,010 10,558 7,246 ____________________________ (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. Total 2,844 $ 105,868 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): Property Verandas at Alamo Vanguard Heights Jackson Square Brixworth at Bridge Street Woodland Apartments Grove at River Place Civic I Civic II Abbotts Run Somerset at Trussville Magnolia Pointe Land Building and Improvements Total Land and building Acquisition related lease intangible Total Assets Acquisition related mortgage intangible $ 3,336 $ 33,465 $ 36,801 $ 5,466 3,398 1,959 1,289 2,866 3,646 3,847 3,468 4,095 2,052 30,826 27,167 20,080 12,853 16,416 45,554 46,452 37,312 42,943 22,023 36,292 30,565 22,039 14,142 19,282 49,200 50,299 40,780 47,038 24,075 797 508 634 321 233 396 913 1,013 701 869 503 $ 37,598 $ 36,800 31,199 22,360 14,375 19,678 50,113 51,312 41,481 47,907 24,578 (61) 578 283 — — 136 562 1,254 481 1,090 396 $ 35,422 $ 335,091 $ 370,513 $ 6,888 $ 377,401 $ 4,719 F-15 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 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 to two tenants under operating leases with current expirations ranging from 2028 to 2035, with options to extend or terminate the leases. Revenues from such leases are reported as rental income, net, and are comprised of (i) lease components, which includes fixed lease payments and (ii) non-lease components, which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components as the timing and pattern of transfer are the same, and accounts for the combined component in accordance with ASC 842. Lessee Accounting The Company is a lessee under a ground lease in Yonkers, NY which is classified as an operating lease. The ground lease which was set to expire September 30, 2024, provided for one 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 a five-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. F-16 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 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): Year Ending December 31, 2024 2025 2026 2027 2028 Thereafter Total undiscounted cash flows Present value discount Lease liability Amount 243 252 256 261 268 2,974 4,254 (1,936) 2,318 $ $ $ 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): ASSETS Real estate properties, net of accumulated depreciation of $69,970 and $66,945 $ 275,874 $ 318,304 December 31, 2023 2022 Cash and cash equivalents Other Assets (1) Total Assets LIABILITIES AND EQUITY Liabilities: Mortgages payable, net of deferred costs of $1,135 and $1,421 Accounts payable and accrued liabilities Total Liabilities Commitments and contingencies Equity: Total unconsolidated joint venture equity Total Liabilities and Equity 6,447 54,715 6,591 35,372 $ 337,036 $ 360,267 $ 246,966 $ 255,261 8,751 8,222 255,717 263,483 81,319 96,784 $ 337,036 $ 360,267 Company equity interest in all joint venture equity $ 34,242 $ 42,576 ___________________________________ (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. F-17 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 6—INVESTMENT IN UNCONSOLIDATED VENTURES (continued) The condensed income statements below presents information regarding the Unconsolidated Properties (dollars in thousands): Revenues: Rental and other revenue Total revenues Expenses: Real estate operating expenses Interest expense Depreciation Total expenses Total revenues less total expenses Other equity earnings Impairment of assets Insurance recoveries Gain on insurance recoveries Gain on sale of real estate properties Loss on extinguishment of debt Net income from joint ventures Year Ended December 31, 2023 2022 $ 44,785 $ 44,785 72,873 72,873 20,577 9,268 10,403 40,248 4,537 126 — — 65 38,418 (561) 33,086 16,269 17,798 67,153 5,720 121 (8,553) 8,553 567 118,270 (3,491) $ 42,585 $ 121,187 BRT equity in earnings and equity in earnings from sale of unconsolidated joint venture properties $ 17,037 $ 66,426 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. F-18 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 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): Location 2023 Sale Date Number of Units Sale Price Gain on Sale BRT Share of Gain on Sale BRT Share of Loss of Extinguishment on Debt Chatham Court and Reflections - Dallas, TX 5/12/2023 494 $ 73,000 $ 38,418 $ 14,744 $ 212 2022 Verandas at Shavano - San Antonio, TX Reatreat at Cinco Ranch - Katy, TX The Vive - Kannapolis, NC Waters Edge - Columbia, SC 2/8/2022 6/14/2022 6/30/2022 8/31/2022 288 $ 53,750 $ 23,652 $ 12,961 $ 268 312 204 68,300 91,250 32,400 30,595 47,086 16,937 17,378 22,720 11,472 — 686 787 388 Total 2022 1,072 $ 245,700 $ 118,270 $ 64,531 $ 1,861 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): Mortgages payable Junior subordinated notes Credit facility Deferred loan costs (1) Total debt obligations ________________________ December 31, 2023 2022 $ 426,436 $ 407,958 37,400 — (4,266) 37,400 19,000 (4,443) $ 459,570 $ 459,915 (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 F-19 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 7—DEBT OBLIGATIONS (continued) 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): Balance at December 31, 2022 New mortgage Amortization of fair value adjustment Principal amortization Changes in deferred fees Balance at December 31, 2023 $ $ 403,792 21,173 613 (3,308) 157 422,427 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): Year Ending December 31, 2024 2025 2026 2027 2028 Thereafter Scheduled Principal Payments 3,331 19,860 74,622 46,189 40,697 241,737 426,436 $ $ 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): Property Name Location Debt at Purchase Date (a) Interest Rate Maturity Date Interest only through Verandas at Alamo Vanguard Heights Jackson Square San Antonio, TX $ Creve Coeur, MO Tallahassee, FL Brixworth at Bridge Street (b) Huntsville, AL The Woodland Apartments Grove at River Place (c) Civic I Civic II Abbotts Run Somerset at Trussville Magnolia Pointe Boerne, TX Macon, GA Southaven, MS Southaven, MS Wilmington, NC Trussville, AL Madison, AL ________________________________ 27,000 29,700 21,524 11,147 7,914 11,426 27,389 30,105 23,160 32,250 15,000 3.64% 4.41% 4.19% 4.25% 4.74% 4.39% 4.24% 3.73% 4.71% 4.19% 4.08% Oct 2029 July 2031 Sept 2027 June 2032 Feb 2026 Feb 2026 March 2026 Sept 2026 July 2030 June 2029 Jan 2028 Oct 2024 June 2025 Sept 2022 Maturity N/A N/A N/A N/A July 2025 May 2025 Dec 2022 $ 236,615 (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 new ten-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. F-20 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 7—DEBT OBLIGATIONS (continued) 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): Year Ending December 31, 2024 2025 2026 2027 2028 Thereafter Total Amount $ 556 501 215 (29) 1 143 $ 1,387 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): Property Name Location Mortgage Payoff Interest Rate Payoff Date Maturity Date 2022 Avalon Silvana Oaks Total Credit Facility Pensacola, FL N. Charleston, SC $ $ 14,558 14,904 29,462 4.29 % 3.79 % 1/26/2022 3/1/2022 10/28/2022 11/1/2022 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 was no 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. F-21 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 7—DEBT OBLIGATIONS (continued) 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. F-22 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) Incentive Plan Maximum shares Restricted shares issued RSUs issued Restricted shares and RSUs forfeited Expired shares 2022 Plan 2020 Plan 2018 Plan 1,000,000 (163,914) (427,459) 2,861 — 1,000,000 (475,747) (210,375) 2,303 (316,181) — 600,000 (459,495) — 1,000 (141,505) — Remaining shares available to be issued 411,488 (1) (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): Year Ended December 31, 2023 2022 934,092 163,914 (1,670) (144,497) 951,839 922,619 158,973 (250) (147,250) 934,092 2,978 7,728 Restricted Stock Grants: Unvested at beginning of the year Grants Forfeitures Vested during the year Unvested at the end of the year Amounts charged to compensation expense Unearned compensation at period end $ $ 3,360 7,484 $ $ F-23 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) 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 the three-year performance period (the "Measurement Period"), specified levels in compounded annual growth rate ("CAGR") in total stockholder return (“TSR”), and (ii) shares of common stock based on achieving, during the Measurement Period, specified levels in CAGR in adjusted funds from operations (the "AFFO Award"), in each case as determined pursuant to the award agreement. In addition, with respect to each of the RSUs granted in 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): RSUs: Unvested units at beginning of year Grants - TSR Awards Grants - TSR Peer group adjustment Grants - AFFO Awards Total RSUs granted in applicable year Forfeitures Total unvested RSUs at end of year Year Ended December 31, 2023 2022 420,739 210,375 95,550 23,890 95,550 214,990 (1,239) 634,490 94,431 23,608 94,431 212,470 (2,106) 420,739 1,508 4,269 Amounts charged to compensation expense Unearned compensation at period end $ $ 1,408 1,999 $ $ For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to assist management in determining fair value. The Monte Carlo valuation consisted of computing the grant date fair value of the awards using the Company's simulated stock price. For these TSR awards, the per unit of share fair value was estimated using the following assumptions: Award Year Expected Life ( yrs) Dividend Rate Risk-Free Interest Rate Expected Price Volatility 2023 2022 3 3 5.08% 4.57% 4.42% to 5.28% 2.23% to 3.11% 28.99% 35.60% to to 37.97% 47.40% 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. F-24 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) 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): Restricted stock RSUs Total compensation Earnings Per Share Year Ended December 31, 2023 2022 $ $ 3,360 $ 1,408 4,768 $ 2,978 1,508 4,486 The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands): Numerator for basic and diluted earnings per share: Net income Deduct (earnings) attributable to non-controlling interests Deduct (earnings) allocated to unvested restricted stock Net income available for common stockholders: basic and diluted Denominator for basic earnings per share: Weighted average number of common shares outstanding Effect of dilutive securities: RSUs Denominator for diluted earnings per share: Weighted average number of shares Earnings per common share, basic Earnings per common share, diluted Equity Distribution Agreements Year Ended December 31, 2023 2022 4,015 $ (142) (953) 2,920 $ 50,099 (144) (2,472) 47,483 17,918,270 17,793,035 30,006 59,916 17,948,276 17,852,951 0.16 0.16 $ $ 2.67 2.66 $ $ $ $ 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 did not 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. F-25 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 9—STOCKHOLDERS' EQUITY (continued) 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 did not 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. F-26 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 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 had no 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. F-27 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 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. F-28 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 13—QUARTERLY FINANCIAL DATA (Unaudited) 1st Quarter Jan - March 2nd Quarter April - June 3rd Quarter July - September 4th Quarter Oct - Dec Total For Year 2023 Revenues: Rental and other revenue $ 22,939 $ 23,255 $ 23,510 $ 23,365 $ 93,069 Other income Total revenues Expenses: — 63 342 143 548 22,939 23,318 23,852 23,508 93,617 Real estate operating expenses 10,434 10,548 10,583 10,256 41,821 22,161 15,433 28,484 14,744 604 (323) 793 240 4,069 54 Interest expense General and administrative Depreciation Total expenses Total revenues less total expenses 5,483 4,055 8,008 5,513 3,848 7,543 27,980 27,452 (5,041) (4,134) Equity in earnings of unconsolidated joint ventures 815 464 Equity in earnings from sale of unconsolidated joint venture properties Gain on sale of real estate Casualty loss Insurance recovery of casualty loss Gain on insurance recoveries — — — — 240 14,744 — — 215 — 5,581 4,017 6,544 26,725 (2,873) 426 — 604 — 261 — 5,584 3,513 6,389 — — (323) 317 — 25,742 107,899 (2,234) (14,282) 588 2,293 Income (loss) income from continuing operations (3,986) 11,289 (1,582) (1,652) Provision for taxes 76 51 (122) 49 Net (loss) income from continuing operations, net of taxes (4,062) 11,238 (1,460) (1,701) 4,015 Income attributable to non-controlling interests (36) (36) (34) (36) (142) Net (loss) income attributable to common stockholders $ (4,098) $ 11,202 $ (1,494) $ (1,737) 3,873 Basic and diluted and per share amounts attributable to common stockholders Basic (loss) income per share Diluted (loss) income per share $ $ (0.21) $ 0.59 $ (0.08) $ (0.11) $ (0.21) $ 0.58 $ (0.08) $ (0.11) $ 0.16 0.16 F-29 BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 NOTE 13—QUARTERLY FINANCIAL DATA (Unaudited) (Continued) Revenues: Rental and other revenue Other income Total revenues Expenses: Real estate operating expenses Interest expense General and administrative Impairment charge Depreciation Total expenses 2022 1st Quarter Jan - March 2nd Quarter April - June 3rd Quarter July - September 4th Quarter Oct - Dec Total For Year $ 11,430 $ 14,683 $ 21,691 $ 22,711 $ 70,515 4 2 6 — 12 11,434 14,685 21,697 22,711 70,527 4,753 2,021 3,633 — 3,606 14,013 6,348 2,912 3,533 — 5,010 17,803 9,195 5,061 3,673 — 8,165 26,094 10,262 5,520 3,815 — 8,031 27,628 30,558 15,514 14,654 — 24,812 85,538 Total revenues less total expenses (2,579) (3,118) (4,397) (4,917) (15,011) 1,230 (50) 135 580 1,895 12,961 40,098 11,472 Equity in earnings (loss) of unconsolidated joint ventures Equity in earnings from sale of unconsolidated joint venture properties Gain on sale of real estate Casualty loss Insurance recovery of casualty loss Gain on insurance recoveries Loss on extinguishment of debt 6 — — — — — — — — (563) Income (loss) from continuing operations Provision (benefit) for taxes 11,618 36,367 74 724 Income (loss) from continuing operations, net of taxes 11,544 35,643 Income attributable to non-controlling interests (36) (36) — — — 62 — 7,272 178 7,094 (35) — — (850) 850 — — (4,337) (155) (4,182) (37) 64,531 6 (850) 850 62 (563) 50,920 821 50,099 (144) Net income (loss) income attributable to common stockholders $ 11,508 $ 35,607 $ 7,059 $ (4,219) 49,955 Basic and per share amounts attributable to common stockholders Basic income (loss) per share Diluted income (loss) per share $ $ 0.62 $ 0.62 $ 1.91 $ 1.91 $ 0.37 $ (0.22) $ 0.37 $ (0.22) $ 2.67 2.66 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. F-30 BRT APARTMENTS CORP. AND SUBSIDIARIES SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (Dollars in thousands) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount At Which Carried at December 31, 2023 Encumbranc es Land Buildings and Improvements Land Improvements Land Buildings and Improvements Total (a) Accumulated Depreciation Date of Constructio n Date Acquired Depreciation Life $ — — $ 4,000 — $ 320 — $ 4,320 $ 4,320 $ 2,529 (b) Aug-2000 39 years 21,173 — 8,473 — 15,951 — 25,486 52,000 26,392 37,680 27,000 29,700 21,078 18,952 7,712 10,045 26,701 29,300 23,160 32,250 14,769 2,435 1,698 1,372 2,758 2,303 832 7,540 6,172 4,033 9,679 3,336 5,466 3,398 1,959 1,289 2,866 3,646 3,847 3,468 4,095 2,054 18,970 8,676 — — 12,678 — 25,192 17,605 21,969 33,196 77,532 34,052 29,114 33,437 30,826 27,167 20,079 12,852 16,423 45,554 46,452 37,311 42,943 22,023 — — — — — — — — — — — — — — — — — — 1,928 3,091 913 2,051 512 1183 1,552 1,088 761 2,435 421 250 482 924 523 148 1,335 1,612 1,216 547 747 2,435 1,698 1,372 2,758 2,303 832 7,540 6,172 4,033 9,679 3,336 5,466 3,398 1,959 1,289 2,866 3,646 3,847 3,468 4,095 2,054 20,897 23,332 11,767 13,465 13,591 14,963 27,243 30,001 18,117 20,420 23,152 23,984 34,748 78,620 34,813 31,549 33,858 31,076 27,649 21,003 13,375 16,571 46,889 48,064 38,527 43,490 22,770 42,288 84,792 38,846 41,228 37,194 36,542 31,047 22,962 14,664 19,437 50,535 51,911 41,995 47,585 24,824 8,253 4,671 4,963 8,616 3,206 6,676 7,511 7,167 3,023 2,545 2,467 2,148 1,858 1,334 809 977 2,855 2,947 2,322 2,354 1,268 2010 Oct-2012 30 years 1954 Nov-2012 30 years 1999 Nov-2013 30 years 2008 Dec-2014 30 years 2014 Oct-2019 30 years 2009 Nov-2015 30 years 2005 Jul-2018 30 years 2017 Sept -2021 30 years 1998 Oct-2021 30 years 1985 Dec-2021 30 years 2018 March-2022 30 years 2019 April-2022 30 years 1997 May-2022 30 years 1992 May-2022 30 years 2008 May-2022 30 years 1989 June-2022 30 years 2003 July-2022 30 years 2006 July-2022 30 years 2003 July-2022 30 years 2007 July-2022 30 years 1992 Aug-2022 30 years $ 427,822 $ 74,246 $ 618,051 $ — $ 24,039 $ 74,246 $ 642,089 $ 716,335 $ 80,499 Description Commercial Yonkers, NY. Multi-Family Residential North Charleston, SC Decatur, GA Columbus, OH Pensacola, FL San Marcos, TX LaGrange, GA Fredericksburg, VA Nashville, TN Greenville, SC Nashville, TN San Antonio, TX Creve Coeur, MO Tallahassee, FL Huntsville, AL Boerne, TX Macon, GA Southaven, MS Southaven, MS Wilmington, NC Trussville, AL Madison, AL Total F-31 SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION BRT REALTY TRUST AND SUBSIDIARIES DECEMBER 31, 2023 (Dollars in thousands) Notes to the schedule: (a) Total real estate properties Less: Accumulated depreciation Net real estate properties (b) Information not readily obtainable. A reconciliation of real estate properties is as follows: Balance at beginning of year Additions: Acquisitions Capital improvements Deductions: Sales Depreciation $ 716,335 (80,499) $ 635,836 2023 2022 $ 651,603 $ 297,929 — 9,643 9,643 106 25,304 25,410 370,513 6,295 376,808 4,379 18,755 23,134 Balance at end of year $ 635,836 $ 651,603 F-32 Corporate Directory ISRAEL ROSENZWEIG Chairman of the Board of Directors; Senior Vice President of Georgetown Partners, LLC; Senior Vice President of One Liberty Properties, Inc. MARK H. LUNDY Senior Vice President; President and Chief Operating Officer of Georgetown Partners LLC; Senior Vice President of One Liberty Properties, Inc. JEFFREY A. GOULD Director, President and Chief Executive Officer; Senior Vice President and Manager of Georgetown Partners, LLC; Director and Senior Vice President of One Liberty Properties, Inc. GEORGE E. ZWEIER Vice President and Chief Financial Officer MITCHELL K. GOULD Executive Vice President FREDRIC H. GOULD Director; Vice Chairman of the Board of Directors of One Liberty Properties Inc. LOUIS C. GRASSI Director; Chief Executive Officer and Managing Director, Grassi Advisory Group, Inc. GARY J. HURAND Director; President of Management Diversified Inc. MATTHEW J. GOULD Director and Senior Vice President; Chairman of the Board and Chief Executive Officer and Manager of Georgetown Partners LLC; Chairman of the Board of Directors of One Liberty Properties, Inc.; Managing General Partner of Gould Investors, LP; Chairman of Rainbow Realty Group; Director of Halsa Holdings, Inc.; Director of MJ Real Estate Investment Trust DAVID W. KALISH Senior Vice President — Finance; Senior Vice President and Chief Financial Officer of Georgetown Partners, LLC; Senior Vice President — Finance of One Liberty Properties, Inc. ISAAC KALISH Senior Vice President and Treasurer — Finance; Vice President and Treasurer of Georgetown Partners, LLC; Senior Vice President and Chief Financial Officer of One Liberty Properties, Inc. JEFFREY RUBIN Director; Chief Executive Officer and President of the JR Group; Chief Executive Officer of Summit Processing Group, LLC; Chief Executive Officer and President of Excel Payments STEVEN ROSENZWEIG Senior Vice President, Legal; Vice President of Georgetown Partners LLC RYAN BALTIMORE Chief Operating Officer ALAN H. GINSBURG Director; Chairman of The CED Companies and AHG Group of Companies JONATHAN H. SIMON Director; Chief Executive Officer of The Simon Development Group ELIE WEISS Director; Chief Executive Officer of Five Forty Investments CAROL CICERO Director REGISTRAR AND TRANSFER Equiniti 55 Challenger Road Ridgefield Park, NJ 07660 877-814-9664 www.equiniti.com COMMON STOCK The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol BRT. WEB SITE ADDRESS www.brtapartments.com INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young, LLP 1 Manhattan West New York, NY 10001 FORM 10-K AVAILABLE A copy of the annual report (Form 10-K) filed with the Securities and Exchange Commission may be obtained by writing to BRT Apartments Corp., 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, Attn: Secretary. Annual Report Design by Curran & Connors, Inc. / www.curran-connors.com Corporate Directory ISRAEL ROSENZWEIG Chairman of the Board of Directors; Senior Vice President of Georgetown Partners, LLC; Senior Vice President of One Liberty Properties, Inc. MARK H. LUNDY Senior Vice President; President and Chief Operating Officer of Georgetown Partners LLC; Senior Vice President of One Liberty Properties, Inc. JEFFREY A. GOULD Director, President and Chief Executive Officer; Senior Vice President and Manager of Georgetown Partners, LLC; Director and Senior Vice President of One Liberty Properties, Inc. GEORGE E. ZWEIER Vice President and Chief Financial Officer MITCHELL K. GOULD Executive Vice President FREDRIC H. GOULD Director; Vice Chairman of the Board of Directors of One Liberty Properties Inc. LOUIS C. GRASSI Director; Chief Executive Officer and Managing Director, Grassi Advisory Group, Inc. GARY J. HURAND Director; President of Management Diversified Inc. MATTHEW J. GOULD Director and Senior Vice President; Chairman of the Board and Chief Executive Officer and Manager of Georgetown Partners LLC; Chairman of the Board of Directors of One Liberty Properties, Inc.; Managing General Partner of Gould Investors, LP; Chairman of Rainbow Realty Group; Director of Halsa Holdings, Inc.; Director of MJ Real Estate Investment Trust DAVID W. KALISH Senior Vice President — Finance; Senior Vice President and Chief Financial Officer of Georgetown Partners, LLC; Senior Vice President — Finance of One Liberty Properties, Inc. ISAAC KALISH Senior Vice President and Treasurer — Finance; Vice President and Treasurer of Georgetown Partners, LLC; Senior Vice President and Chief Financial Officer of One Liberty Properties, Inc. JEFFREY RUBIN Director; Chief Executive Officer and President of the JR Group; Chief Executive Officer of Summit Processing Group, LLC; Chief Executive Officer and President of Excel Payments STEVEN ROSENZWEIG Senior Vice President, Legal; Vice President of Georgetown Partners LLC RYAN BALTIMORE Chief Operating Officer ALAN H. GINSBURG Director; Chairman of The CED Companies and AHG Group of Companies JONATHAN H. SIMON Director; Chief Executive Officer of The Simon Development Group ELIE WEISS Director; Chief Executive Officer of Five Forty Investments CAROL CICERO Director REGISTRAR AND TRANSFER Equiniti 55 Challenger Road Ridgefield Park, NJ 07660 877-814-9664 www.equiniti.com COMMON STOCK The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol BRT. WEB SITE ADDRESS www.brtapartments.com INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young, LLP 1 Manhattan West New York, NY 10001 FORM 10-K AVAILABLE A copy of the annual report (Form 10-K) filed with the Securities and Exchange Commission may be obtained by writing to BRT Apartments Corp., 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, Attn: Secretary. Annual Report Design by Curran & Connors, Inc. / www.curran-connors.com B R T A P A R T M E N T S C O R P . 2 0 2 3 A N N U A L R E P O R T BRT APARTMENTS CORP. 60 Cutter Mill Road, Suite 303 Great Neck, New York 11021 (516) 466-3100 www.brtapartments.com 

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