BRT - NYSE

Good day and welcome to the BRT Apartments Corporation Conference Call for the Third Quarter of 2020. Today’s conference is being recorded. At this time, I would like to turn the conference over to Evelyn Infurna of ICR. You may begin.

Thank you. Good day, everyone, and welcome to BRT Apartments conference call. On the call today is Jeffrey Gould, President and Chief Executive Officer. Also available are George

Thank you, Evelyn. I would like to welcome everyone to BRT’s third quarter conference call. We continue to see strong demand for rental housing in our markets, as rent collections continue to remain stable. We collected 98% of the rents build at our multifamily properties for the current quarter and collected 97.5% of rent build in October 2020. We have also remained current on all of our financial obligations. As mentioned on our previous calls, although we believe the multifamily sector will remain a strong asset class over the long-term, we anticipate that we will resume acquisition activities in early to mid-2021. We continue to focus on occupancy, collections and maintaining a strong cash position, while keeping the safety of our staff and residents a top priority. With respect to our portfolio, as of November 1, 2020, we owned or had interest in 39 multifamily properties consisting of 11,042 units in 11 states, including two properties in lease-up, 29 properties owned by unconsolidated joint ventures, and eight properties wholly-owned by BRT. BRT’s equity interest in these unconsolidated subsidiaries over which BRT actively oversees the management, generally ranges from 50% to 90%. We did not buy or sell any multifamily properties during the current quarter. Net loss attributed to common stockholders was $7.48 million or $0.44 per diluted share in the current quarter versus net income of $3.27 million or $0.20 per diluted share in the 2019 quarter. The current quarter includes $3.64 million non-cash impairment charge related to a legacy asset of vacant land parcel in Daytona, Florida. FFO grew to $4.56 million in the current quarter or $0.27 per diluted share compared to $1.96 million in 2019 quarter or $0.12 per diluted share. AFO increased to $4.89 million for the current quarter or $0.28 per diluted share compared to $4.18 million or $0.26 per diluted share in the 2019 quarter. Total rental revenues for our portfolio increased by 5% to $27.51 million as compared to $26.2 million in the 2019 quarter, and real estate operating expenses for the portfolio increased by 8.6% to $13.56 million as compared to $12.49 million in the 2019 quarter. NOI for our portfolio rose 1.8% to $13.95 million for the current quarter from $13.71 million for the 2019 quarter. The renewal percentage for our portfolio for the current quarter was 55%. Rental rates on renewals increased an average of 2.2% and increases in rental rates on new leases, averaged 2%. Excluding the value-add units, rental rates for new leases increased 1.8%. We continue to try to balance the impact of rental increases on our residents with our obligations to our stockholders. On the value-add front for the current quarter, 52 units were repositioned at an average of approximately $5,800 per unit, yielding an estimated annualized return on investments of approximately 23%. As reflected in our supplemental financial information, a proportion of the costs may have been incurred in the prior period, but we report the return on investment when the unit is released. We anticipate that in the near-term, there will be a continued slowdown in the number of units that we repositioned at our properties as the adverse economic impacts of the pandemic continued to unfold, which could impact our ability to achieve rent increases from repositioned units. That being said, we estimate that our portfolio has approximately 600 units in the renovation pipeline over the next couple of years. And at over time, the value-add strategy will continue to be a positive factor in our ability to drive same-store rent and NOI growth over the long-term. Our same-store pool in the current quarter is comprised of 34 properties with 9,317 units, seven of those properties totaling 1,688 units are wholly-owned assets. The remaining 27 assets totaling 7,629 units are unconsolidated joint ventures. Same-store revenues for our portfolio grew to $23.9 million in the current quarter, representing a 2.9% increase from $23.2 million in the 2019 quarter, whereas same-store expenses rose to $11.8 million in the current quarter, representing an increase of 9.5% from $10.8 million in the 2019 quarter. Same store NOI for the portfolio decreased to $12.1 million in the current quarter, a decline of 2.9% from $12.4 million in the 2019 quarter. The change in NOI was primarily due to an increase in non-controllable expenses, mainly taxes and insurance as well as an increase in repairs and maintenance, and replacements. We continue to appeal taxes when we feel that we can obtain a positive evaluation. We also believe that increases in repairs and maintenance, and replacements represents activity that had been deferred in the prior period due to COVID. During the second quarter of 2020, we will not – we were not able to enter many units to perform repairs or replace the appliances unless absolutely necessary. This resulted in much of the work being pushed to the current quarter, when we began to gain access to units again, resulting in higher repairs, maintenance and replacement expenses year-over-year. Same-store rental rate for our multifamily property portfolio grew 2.1% to $1,094 per unit for the current quarter from $1,072 per unit for the 2019 quarter. Turning to the balance sheet, at September 30, 2020, we had $15.7 million of cash and cash equivalents, total assets of $374.2 million, total debt of $168.2 million and total stockholders’ equity of $184.3 million. At November 1, 2020, our available liquidity was approximately $35.1 million, including $15.8 million of cash and cash equivalents, $9.3 million representing restricted cash for property improvements and up to $10 million available for working capital under our credit facility. In addition, our unconsolidated joint ventures have approximately $16.6 million of cash and cash equivalents, which is used for day-to-day working capital purposes. At a minimum, we intend to maintain one-month of expense and debt service at each of our properties. The aggregate mortgage debt for our wholly-owned properties combined with our share of mortgage debt for our unconsolidated joint ventures, totaled $659.5 million has a weighted average interest rate of 4.04% and a weighted average remaining term to maturity of 7.2 years. On October 10, we paid our quarterly dividend of $0.22 per share, which is equivalent to an annualized yield of 7.2% based on our stock price of $12.25 as of the close of business on November 2, 2020. We recognize that this is the time to be cautious and we continue to actively monitor our portfolio. We remain focused and determined as a company and I am proud of the team’s effort, particularly in these unusual times. We are pleased with our performance to-date and we will stay diligent as we close out the year. Thank you for joining us today on our conference call. And with that, I will turn the call over to the operator for your questions. Operator?

Thank you. Overall to summarize, things are going well for BRT during very difficult times in the world and we’re pleased with our performance to-date. As I said earlier, I am proud of our team. And thank you all for joining us today. If you have any further questions, feel free to call us at any time. Thank you very much.