Good day and welcome to the BRT Apartments Corp. Fourth Quarter and Year-end 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the floor over to Mr. Stephen Swett, Investor Relations. Thank you. You may begin.

Thank you for joining us today for BRT Apartment Corporation's fourth quarter and year-end 2021 earnings conference call. On the call today is Jeffrey Gould, President and Chief Executive Officer. Also available are George Zweier, Chief Financial Officer; Ryan Baltimore, Chief Operating Officer; and David Kalish, Senior Vice President. I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and beliefs. Forward-looking statements can often be identified by words such as believe, expect, estimate, anticipate, intend and similar expressions and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding BRT's strategy and expectations for the future. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's SEC filings including its Form 10-K and Form 10-Q for a more complete discussion of risks and other factors that could affect these forward-looking statements. Except as required by law, BRT does not undertake any obligation to publicly update or revise any forward-looking statements. This conference call also includes a discussion of funds from operations, or FFO, adjusted funds from operations, or AFFO, net operating income, or NOI, and information regarding our pro rata share of revenues, expenses, NOI, assets and liabilities of BRT's unconsolidated subsidiaries, all of which are non-GAAP financial measures of performance. These non-GAAP measures should be used as a supplement to, and not a substitute for, net income computed in accordance with GAAP. Unless otherwise indicated, or the context otherwise requires, discussions with respect to operating results at the unconsolidated ventures, reflect BRT's pro rata share of such results. For a more complete discussion of our financial results, as reported in accordance with GAAP, see the company's earnings release and supplemental information which are available on the Investor Relations tab at our website and the 10-K which BRT intends to file later today. All amounts are approximate and, among other things, reflect rounding. Unless otherwise indicated, or context otherwise requires, references to BRT's portfolio or its multifamily portfolio, and references to revenues, expenses, NOI, assets and liabilities, refer to results and accounts of BRT's wholly owned subsidiaries and its pro rata share of unconsolidated subsidiaries. BRT uses pro rata share to help provide a better understanding of our unconsolidated joint ventures. However, the use of pro rata information has certain limitations, and is not representative of our operations and accounts as presented in accordance with GAAP. Accordingly, pro rata information should be used with caution and in conjunction with the GAAP data presented in our supplemental and in our reports filed with the SEC. Further references to the current quarter refer to the quarter ended December 31, 2021, and references to the 2020 quarter refer to the quarter ended December 31, 2020. As a reminder, the company's supplemental information and earnings release have been posted on the Investor Relations section of BRT's website at www.brtapartments.com. I'd now like to turn the call over to President and Chief Executive Officer, Jeffrey Gould. Please, go ahead, Jeff.

Thank you and welcome to the call. The fourth quarter was another strong quarter for BRT, capping off a solid year, during which we continue to make progress on our goals to increase our wholly owned portfolio, unlock value, decrease debt to enterprise value and strengthen our multifamily platform, while continuing to simplify our balance sheet. Let me begin with our results for the fourth quarter of 2021. Net loss attributable to common stockholders was $1.25 million or $0.08 per diluted share, compared to a net loss of $3.3 million or $0.19 per diluted share in the same quarter of 2020. FFO was $6.3 million or $0.35 per diluted share, compared to $4.96 million or $0.29 per diluted share in the same quarter last year. Contributing to the net increase in FFO are higher operating margins at same-store properties and the effect of our acquisition of our partner's interest in several joint ventures. AFFO was $7.5 million or $0.41 per diluted share compared to $5.64 million or $0.33 per diluted share in the fourth quarter of 2020. This 24% increase per share was for the same reasons as mentioned before, but is not affected by debt prepayment charges, non-cash amortization of restricted stock expenses, and insurance recoveries. For the full year 2021, net income attributable to common stockholders was $29.1 million or $1.62 per diluted share compared to a net loss of $19.86 million or $1.16 per diluted share in 2020. FFO was $17.43 million or $0.97 per diluted share compared to $17 million or $0.99 per diluted share in 2020, contributing to the FFO increase on an absolute basis for higher operating margins at same-store properties and the effect of our acquisition of our partner's interest in several joint ventures. AFFO was $23.81 million or $1.33 per diluted share compared to $19.21 million or $1.12 per diluted share in 2020. This 18.8% increase per share was primarily due to the same reasons contributing to the increase in FFO, but was not affected by debt prepayment costs, non-cash amortization of restricted stock expense, and insurance recoveries. Turning to our portfolio, at December 31st, 2021, our wholly-owned portfolio consists of 10 multifamily communities totaling 2,576 units. We also owned interest through unconsolidated entities and another 23 communities containing 6,697 units. Average occupancy was 96.4% for the quarter ended December 31, 2021, up 1.9% compared to the 2020 quarter. Average rents in the fourth quarter of 2021 were $1,233 per month, up 13.3% compared to the 2020 quarter. For leases signed in the fourth quarter of 2021, we saw favorable spreads on new leases at 10.7%, renewal spreads of 7.9%, and overall spreads of 9.3%. In the fourth quarter of 2021, our same-store pool included 8,305 units comprised of 1,608 wholly-owned units and 6,697 units in our unconsolidated joint ventures. For these properties, same-store revenue grew 9.2% compared to the 2020 quarter, same-store expenses increased 5.3% compared to the 2020 quarter, and same-store NOI increased 12.3% compared to the 2020 quarter. For the full year 2021, our same-store pool included 7,390 units comprised of 1,608 units wholly-owned and 5,782 units in our unconsolidated joint ventures. For these properties, 2021 same-store revenue grew 7% compared to the prior year, same-store expenses increased 5.6%, and same-store NOI increased 8.2% compared to the prior year. Regarding transactions both during and subsequent to the fourth quarter, we continue to execute on our unique ability to add to our wholly-owned portfolio by buying out joint venture partners. In October, we purchased for $1.6 million the remaining 10% interest in the venture that owns Crestmont at Thornblade, a 266-unit multifamily property in Greenville, South Carolina. In November, we sold our interest in two underperforming properties located in St. Louis for a sale price of $3 million. In December, we purchased for $16.1 million the remaining 20% interest in the venture that owns Crossings of Bellevue, a 300-unit property in Nashville, Tennessee. During the first quarter of 2022, we sold a 288-unit property in San Antonio, Texas and will recognize a gain of approximately $12.7 million and an internal rate of return of over 18%. Also, we announced that we entered into separate agreements to acquire the remaining venture partners' interest at five multifamily properties with an aggregate of approximately 1,100 units. The aggregate purchase price for these interests is approximately $30 million and we intend to assume approximately $98 million of non-recourse mortgage debt with a weighted average remaining term to maturity of 7.1 years and a weighted average interest rate of 4.17%. The completion of these purchases is subject to customary closing conditions and no purchase is contingent on the completion of the others. We are very excited about completing these transactions in the coming months, further extending our growth program to consolidate interest in our assets. On the value-add front, we repositioned 65 units at an average investment of approximately $5,900 per unit yielding an estimated annualized return on investment of approximately 44%. As reflected in our supplemental financial information, a portion of the cost may have been incurred in the prior period but we report the return on investment when the unit is re-leased. Across our entire portfolio, we have approximately 700 units available for innovation over the next several years. Turning to the balance sheet. During the fourth quarter, we entered into an amended credit facility allowing the company subject to certain conditions to borrow up to $35 million and up to a potential $60 million pursuant to an uncommitted accordion feature for the acquisition of multifamily properties, the repayment of mortgage debt and up to $15 million may be used for working capital. The secured facility bears an interest annual interest rate of 25 basis points over the prime rate with a floor of 3.5% and matures in 2024. We are pleased with this new credit facility, which provides enhanced ability to pursue attractive opportunities that will grow our portfolio. At December 31, 2021, we had total assets of $460 million, total debt of $237 million and total BRT stockholder equity of $203 million. Available liquidity at quarter end included $32.3 million of cash and cash equivalents; restricted cash of $6.6 million, primarily for capital improvements; and up to $35 million available under our credit facility. In addition, our unconsolidated joint ventures had approximately $13.7 million of cash and cash equivalents, which are used for the applicable ventures day-to-day working capital purposes and renovations. The aggregate mortgage debt for our wholly owned properties combined with our pro rata share of mortgage debt for our unconsolidated joint ventures totals $580 million with a weighted average interest rate of 3.92% and a weighted average remaining term to maturity of 8.2 years. Our debt to enterprise value as of December 31, 2021 was 61%, down from 75% at December 31, 2020. This was due in part to the repayment of mortgage debt on wholly owned properties as we continue to focus on our leverage. During 2021 we sold approximately 529,000 shares, pursuant to our ATM sales program at an average price of $18.47 per share. Net proceeds after commissions and fees were approximately $9.6 million. Subsequent to the fourth quarter, we sold 100,000 shares pursuant to our ATM sales program at a weighted average price per share of $22.06. Net proceeds were approximately $2.2 million. Finally, on March 9, 2022, we declared our quarterly dividend of $0.23 per share. The current dividend equates to an annualized yield of 4.02% based on our stock price of $22.91 as of the close of business on March 11, 2022. In conclusion, 2021 was a very solid year for BRT. Our portfolio delivered excellent results and we continue to advance our efforts to grow our wholly owned portfolio prudently while also enhancing our financial flexibility. Our geographic focus, primarily in the Southeast has proven to be successful as we directly benefit from the historic migratory wave of jobs and families to these markets. As we look ahead to 2022, I am excited about the opportunities in front of us. And finally, I want to thank the entire BRT team for their hard work and dedication.

Our first question comes from the line of Gaurav Mehta with EF Hutton. You may proceed with your question.

Thanks. Good morning guys.

Good morning.

First question I have is on the acquisition to acquire JV interest in the five properties that you have under contract. Can you provide some color on those acquisitions? How those transactions came about? And then maybe comment on how the valuation on those acquisitions are as compared to the current market cap rates?

Yes, sure. Good morning. Yes, so how they come about and we've been talking to a bunch of our different JV partners, and they do come about in different ways. These particular understandings and contracts came about just from negotiations, conversations with them. There are times where a BOV is necessary from the partners. There are times where we go to a full marketing. But there are also times where we can conduct and have an understanding amongst us together where we come to value. And if we think it's a good buy, then we can move ahead and do so. In these particular cases, that's more or less what happened. As to market, we think we're executing at a bit better than what we can get in the market. Obviously, there's no other pursuers of the joint venture partners, so we have sort of exclusive access to them and that allows for us to do a little bit better than what we can do in the market. And we think it's obviously beneficial to consolidate.

Okay. Great. Jeff in your prepared remarks, you talked about a few goals for your company and one of those was to lower debt on your balance sheet. You have done that over the last year or so. Can you maybe provide some color on what's your target leverage or where do you expect your balance sheet to end up as you make progress towards deleveraging of the balance sheet?

Sure. We do focus on that quite a bit. We've heard from investors that it's a bit of a concern and it's also something that we watch carefully. We do have one other decent mortgage debt that we're considering paying off. But generally speaking, I would say, we're very focused on our loan-to-enterprise value and loans and mortgages-to-enterprise value. As our stock increases in time that will lower. And like I said, we've done a good job in lowering those ratios and we're going to continue to focus on that. So I think you will see some more decline in the loan to equity and the loan-to-enterprise value as we move forward.

Okay. Thank you for taking my questions.

Thank you.

Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Mr. Jeffrey Gould for closing remarks.

Yes. I just want to thank everyone for attending this morning. We appreciate your continued interest in BRT. If you have any further questions, you can always reach out to Ryan or myself. And just asking all to have a great day and thank you for your time.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.

Thank you.