BRT Apartments (BRT) 15 Mar 232022 Q4 Earnings call transcript

Good day, and welcome to the BRT Apartments Corp. Fourth Quarter 2022 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I’d now like to turn the conference over to [Trip Sullivan] of Investor Relations. ahead. go Please

joining XXXX for for Apartment's BRT Thank conference us call. quarter earnings fourth you today

On today and Officer; Kalish, George Operating the Chief as Senior Zweier, and call Officer; Chief are Vice Jeffrey President. Financial as Officer; well Ryan Chief President Baltimore, David Gould, Executive

Listeners SEC each update measures, information also and or I and to our revise any XX-Q based are assumptions, of Act non-GAAP discussion pro not Reform used with BRT's portfolio assets these liabilities reports unconsolidated of undertake that encouraged rata by the that the FFO, revenues, and are remind information of NOI, including of today All filings, has discussion factors subsidiaries. to not including limitations to more this NOI forward-looking supplemental, measures. the regarding Please see forward-looking expectations, and call obligation and a any contains share call combined in a with should Litigation includes would NOI, AFFO, expenses, non-GAAP affect SEC. within of and should discussed Private data the Form reliance forward-looking our in beliefs. filings conjunction review statements. This and certain forward-looking the non-GAAP of Securities management's Form with presented release caution be required GAAP undue the statements. earnings our in reported definitions like and on filings and could BRT and as current statements other statements, company's that law, XX-K meaning does everyone on conference complete of place publicly risks the its for these XXXX Except any for

Relations supplemental As information release Investor been the website a company's posted of BRT's at on the and section www.brtapartments.com. have reminder, earnings

call President CEO, I'd turn Please, to Jeffrey now ahead, Jeff. and Gould. to like over the go

our performance, overall on it to completed around the and have over call. market the some a George company few at significant the additional results. to on accomplished and insight year. turn our you, I'll such some welcome I'll guidance. to discuss I'll with BRT We the we've on ask Ryan come the color on state I'm at as this for Thank comments end very our of Then what strategic made our out the environment. progress pleased growing goals, be portfolio, XXXX to team trends front to that are for scale BRT our success. value. driving thank of owned our balance entire experiencing rates, We job creating the with emphasized their at our debt and of long-term NOI number a growth. improving secular position of mortgage portfolio in in our contributions and I'd wholly The sheet at and like enough. can't fixed in with to growth XXXX transactions we markets importance population of most the interest remain

for been inflation a supply have this of concerns others. impact the challenges ultimate and us are These industry several cost within quarter in our the markets, the and expressed scale among living, new on timing for industry. recession, Some and the real of about of

deliberate repeating. opportunities. appropriate and transactions last advantage any applies can take virtue in you in meet Patience to asset has Any been But a BRT's same recycling we might cycles pursue. to this growth the standards, through is still expect quarters. contemplate so The we underwriting stringent ready potential plans. economic it's our must we our remain will before, worth I've many of said management been and has several

Until been months. recently, to the term best several price has the has describe what been in past discovery transpiring

later redeploy that completed disposition by approximately proceeds tunnel. March, XXXX a million. into assumption multifamily Court one for can In sell The a approximately us recent joint purchase in $XX maturity is mortgage When Richmond, great at price agreement we purchase generate million Virginia a in end that net rate an X.XX% includes light XXX-unit the of this IRR built the The the We we a attractive to Chatham for should year. of of Dallas million hold the second ventures an and example. property entered in of of acquire an a are beginning to debt, of our XX% see with $XX.X X-year and $XX agreement XXXX. quarter, price over of of some of to in

assumption. the expect we quarter transaction fourth be must mortgage will as lender in completed We the the debt seek of approval

buyouts XXXX net transaction gains were In in XX% XX% partner capital properties. properties million. of unconsolidated sale totaling our realized our of interest for million and four from the related $XX XX between approximately the and IRRs to allocation, We at properties these on terms largest in $XXX approximately

such portfolio to While us control execute for portfolio allows the our increase more fully in as, on opportunistic investments. appropriate, wholly-owned plan if properties it also value-add this provides scale, business our these and

purchase capital X.X% providing allocated dividend also to increase a we dividend allowing instituted XXXX, our share of at shares reinvestment discount. to X% per $X.XX of to plan, stockholders During a a and

As with to our increase you've total of very million during still We prudent with of in of range the a be seen the We $X.X covered as from ATM. execution the disciplined in payout a our dividend XX%. AFFO XXXX. to well year percentage and raised XX% during leaves XXXX our ratio guidance, that were

Given of quarter. utilize we in not where quarter fourth ATM with the the transactions, did the the most stock traded no and

for among in quarter, down Turning Average the in X.X% combined fourth of XXXX the rents the lack to from fourth XXXX our was the quarter due monthly of portfolio in our movement compared were for the portfolio portfolio tenants the multifamily occupancy XXXX which XX.X% Average the for primarily the the up the performance quarter. in quarter. of XXXX XX.X% quarter. to quarter, to is

and of fourth X%. leases new leases seen year, spreads in spreads overall Through estimated X.X%, as saw for of affordability favorably signed minimal with our X% to at spreads we quarter believe this X%. leases new X.X%, fourth like ratio have leases on estimated X% and Also, of I renewal we XXXX, quarter signed we of XX%, spreads February January peers. For our compares on of and spreads stress spreads in renewal the is of we which rent-to-income that and new would overall note the have all

long-term To improved conclude, stockholders. the materially frame is outlook for for best XXXX ability that in the to activities XXXX to date way in and I our our can to have say create value our XXXX

our debt with debt no have ever than under control of before. all until our XXXX. a fixed more We is mortgage rate of direct our portfolio Almost maturities

us be easier on selective and opportunities, value share to very more creation compelling new and to we an new potential have patience allowed with Our have investors. and diligence message

it please George, from take here.

you, Thank Jeff.

quarter by incurred year-over-year basis by positive Southeast. fourth related some on be impact fourth we results Our in across the quarter for the continue the expenses extreme partner from portfolio, margins driven operating a to in improved offset the buyouts the to and conditions the winter

per improved our results. insurance The buyouts, prior income a sub to year, share diluted a joint the by stockholders loss the portfolio of partner gain $X.XX to than on increased to: higher primarily facility, depreciation $X.XX net attributable was from diluted in recognized offset loss increased an due costs borrowing debt and due decline from and credit venture year we common in per ago, share

expense share increase to $X.XX compared increased extinguishment due in extreme per interest to diluted related of a primarily weather an net debt, increases $X.XX and of and the the to by ago, recoveries a offset result the insurance diluted was in gains decline early conditions year rate operating per FFO in debt. floating expenses, share on estate real corporate costs incurred and our

per the our the conditions debt. of due factors and and net represented $X.XX extreme AFFO properties share, was weather ago, the to insurance some expenses caused per diluted FFO, were increased $XXX,XXX excluding per in $X.XX early to share incurred share the costs that $X.XX year per gains or approximately $XXX,XXX share. $X.XX and a due to approximately primarily decline The impacting or the compared borrowing to extinguishment same diluted recoveries damage

for That's for a NOI new fourth measure portfolio combined X.X% was Our up quarter. us. the

venture the supplemental and additional to from in properties we've our true period, consolidated take and down we've completed is to partner joint same-store XXXX we in as this providing for properties sold several difficult. calculation, the to done a What composition metric in moment comparisons want while believe NOI we that change break had the the to With substantial the rationale it buyouts and unconsolidated XXXX, for of the reported. transparency. I were combined this portfolio provides explain as historically figures providing a still

be combined we in will discuss the going which Ryan to As a guiding portfolio metric NOI will forward. is moment,

ago, rates X.X% expenses increased where grew for extreme portfolio. The combined by to The rental the portfolio portfolio and to higher repairs Expenses I big XX.X%, the related on taxes. combined over due primarily X.X% a NOI to negatively moving quarter NOI year estate and the year-over-year impacted mentioned in same primarily fourth increased the X.X%, weather quarter previously basis. the increase a of parts by maintenance conditions real revenue across due

balance liquidity and average interest years. At and $XX.X term to unconsolidated was credit of Available consolidated X.XX% remaining to which weighted year-end, million, weighted mortgage had sheet. and Turning facility. maturity a rate our cash debt our under the year-end availability is average at a of comprised of X.X

I with our on credit a which $XX.X credit our a points mortgage rate million Silvana we new we Subsequent new and facility. is a reduced to facility. financing our interest-only loan is also on quarter, was we the very fourth throughout credit off off term. on would quarter rate exposure variable $XX.X its a Silvana from facility add significantly Oaks debt than Oaks the basis property the XXX paid This the During paid paid debt and all the maturing borrowings property. this XX-year of lower on borrowings attractive off X.XX%, that fixed of term million our end, with with a loan

was full from As XX% of value liquidity ago. XX with was up our as available Debt-to-enterprise That's X, $XX.X million, a of December slightly availability our year March on the XX%. line.

exposure earlier, in debt noted a much maturities sheet better variable Jeff balance is XXXX, rate liquidity, it until lower As was. with debt position no improved the than and

to turn guidance the over call Ryan I'll Now discuss our XXXX. for to

and in both our last earnings Good the on we tables provided that and guidance release morning. night. I'll assumptions be supplemental relying

today and the with As these reminder March available as this preface today, comments a XXXX. are that my to forecasts I of as outlook assumptions based we initial trends data for and is XX, on have our want year,

of Let's with AFFO of with to That the compared represents when X.X% full at headline midpoint the share results. $X.XX start year per XXXX diluted figure $X.XX XXXX. growth for

per FFO, XXXX. $X.XX a projecting diluted share for $X.XX of range For to we're

let outlined so these ones walk have through number ranges, me the a We to big of accompany assumptions briefly.

to discussion, refer ease For the ranges. the I'll of of generally midpoint

for the these $XX ranges dispositions Court additional except or that First, to acquisitions, disposition this it out like Chatham property markets second I'd include closes any from when to activity. point capital are do total quarter. in not the disposition, proceeds The million expected

we contract $X.XX we closing proceeds these for Although an have decreases acquisition a in year. assumed per for quarter, per AFFO guidance. disposition the in the by that of potential fourth share approximately have share Jeff and our This by not mentioned approximately FFO to redeployment earlier, under full $X.XX a $X.XX

have assumed XX.XX the as the share with little We average increase also shares weighted outstanding million very in for well count year.

meaningful basis utilization at of the the LIBOR. assuming our with rate XXX of credit only are debt we points notes comprised other over very subordinated little facility junior Second, variable

curve. are based is Otherwise, the assumed we the to on Our yield model. our debt, straightforward have in supplemental, as forward interest fairly outlined rates

bit combined I'll Third, properties. the represent XX the assumptions X,XXX break down pool and properties units, multifamily a portfolio further. this for those of all with assumptions accounting the for

insurance X.X% X.X% midpoint the the past Controllable recent property what The the the insurance growth estate of impact midpoint insurance line estate the is and X.X% few of midpoint. up based expense real particular. focus on some of the across uncertain at current operating at a with be economic seen The XX.X% NOI and to increase want in quarters. growth real the growth is assumed growth conservatism growth, with on we expense have and forecasting revenue moderation to at portfolio the midpoint on assumes in biggest and the tax taxes environment. in where at we're I up

greatly program will program policies our we many were QX. to that scheduled master in renewals, XX We throughout we experience by a that insurance accelerating at disclosed various a periods XXXX. we at a in expire earnings This release basis. higher replaced the properties In cases, on increase much implemented year-over-year effective believe

be within we in distorting to expired to is during this While These long believe out the and should from year. this make rate for which increase ultimately a of rates would topic each the us rate a greater the insurance was policy time. that been of a acceleration have have X.X% coverage benefit result right over normally properties midpoint. NOI term through of increase decision the had We earnings pool the renewed hot able real the property cycle, number increases to inputs smoothing bring to of a at the combined experienced

anticipating, or a to insurance midpoint. the assume expenses, XX% of little if basis X% of with of we peers would in higher property combined the more perspective, add be what NOI in our the To which the would reported, many at increase X.X% XX.X% we're points consistent our be instead XXX range

for XXXX. that highlight ranges I'll we and for expenditures Lastly, recurring, capital value-add nonrecurring provided

the maintain operations. is different this CapEx we define than REITs. at include properties other As do which a We as replacements not to incurred in what existing is their figure, reminder, recurring

historically in and to included operating have We replacements include continued expense.

share BRT on P&L, real replacement operating was costs, our flowed which XXXX, estate of to million. During expenses $X.X

Our in expense growth of combined portfolio $XXX per include replacements. unit approximately NOI assumptions

portfolio. to Our units rehabilitate throughout our value-add we related expenditures to are the continue

program During going investment and incremental continue an achieved with anticipate forward. This creation units the and XXXX, of million past, has us we we estimated of for approximately to annualized of $X.X over in one source XXX be ROI value been an will a rehabbed XX%.

CapEx assumptions and to major represent we The properties. revenue what nonrecurring enhancing upgrades truly believe include

solid look believe to for in throughout continued reporting the progress year. case we forward growth XXXX we our a In and you summary, BRT, to we've outlined for

you That please to will the completes Operator, prepared open our questions? remarks. call

comes Our E.F. Instructions] first Hutton. with question [Operator from Mehta Gaurav

could guys acquisition assume? the are your the have fund if I including of pricing contract, outside $XX you you mortgage color remaining hoping debt and to want of you the on on planning the some that to on market. to ask was you transaction maybe some provide then I million plans under amount color that

Sure, yes. of a last the of generally over lot to market Good the speaking, morning, difficult of It's tough. Gaurav. demand lot had a is buy. There's Yes, We've pent-up interest. couple years.

the easy of about the of interest talk just sale to minute, a for buy. in property, had properties, incredible an it's you we our If time and one not

low about but As cap we're with -- realize as to rate, leverage really that and specifically, the the in probably we're getting. far into we that finance the we have have you we're that you we're is what X, acquisition excited realize HUD Day looking the positive have seeing and Xs, great financing to described. there but in

high to would I that typically, talked and we've a and in about some you with the construction moving of is say, idea. XXXX forward like The sale job. that just we're Xs, that's probably property give the

you Just to give idea. some

little X% we're say. more newer bit transactions cap happening. say, from X.X% So peak X.X% rates are a the overall, a of would in the were as getting where I to X% I to range, the in would rule, We're range more probably general as clarity

to as basically, cap sales, of the the that et there. XX financial basis demand up to But using rates, as basis we're our -- sale we we the from use out acquisition a in is ATM, goes, I points on there's maybe cetera. funding tops, cash replace through points line likely lot XXX high further say as fashion the plans as And potential availability, would some far to will our well get which Chatham from short-term

our of very we're lines. our So and the on focused line cost

And of if a pulled So we that. we're it to keep conscious want very minimum all. that to

address we'll So it accordingly.

Do until proceeds, acquire to you you your from the $XX the carry plan guys proceeds balance on disposition. Okay. million cash property? on that Maybe the of

said we no down. Like line have we pay to outstanding earlier, Yes. we need that

for to sell it and sale effect. a Chatham going appropriate was are short-term going but cash. the for few take it's to We the is months recognize hold the an be buy new to going to same property, time, it the the We that us, not between time that's ideal at and in

comfortable it. So cash. And hold we will with the we're yes, very them

add. wanted on also you to value I the ask Okay.

in kind well? in Is return that guys to XX% as you You XXXX. talked ROI get the 'XX expect about of

is Gaurav, Hi, this Ryan.

come to the that in will that, the think market down. of general. I return partially softening due That's

As that rent moderation anticipating seen are we we conservatism mentioned that as we've now. some built as of our economic we've with with guidance, some this growth well in backdrop right

anticipating add. looking value So even we're as probably the but not do as to XX%, that high XX% to generally XX% the we're in

metric minimum kind even to that start of process. that's our So there

Our next Aaron question comes JMP Hecht Securities. from with

portfolio. occupancy consolidated down of rate to pretty been the the growth rate both strong Has and that been it drive you was like growth? looks unconsolidated Do obviously, here, but kind planned across Rental to thoughts side about of expect guidance? the give of Kind that on the going some into level what's how kind business 'XX? in of occupancy think us now? And should occupancy we off implied has,

I'll and Yes. bit little to then too. Ryan, start, that I'll a pass one

interesting occupancy the There comparing renewal weren't movement the around moving. was -- greater. of people throes a of enough lack just freight during -- and year-to-year. was activity just COVID COVID, recognized We So of obviously, and

So -- because on year-to-year, is around days the primarily trend the what's more main occupancy comfort of the environment. down occupancy and main going the COVID versus with reason

same. do. the to summer that? Obviously, occupancy add jump during Do quarter-to-quarter anything we But to they there's spring but seasonality, up that's always expect you months and to the have as

no. No,

past, Jeff generally, I keep mid-XXs. about the try mentioned. the to spoken think the we in as main that's we've as And driver, occupancy in

push higher, we believe rents maximize can down we get back where to the we to revenue. to we look As that bring

wasn't to means. by us this any surprising So

months winter that, last occupancy abnormally we as mentioned, Jeff these year. think an I high during had

what the this we past. seen line in So with was had in more

than occupancy given the the you conditions? there? Do change economic rate more difficulties little prioritize bit strategy growth the out Does a all given at

say around to would like XX%, I focus or take give number. Yes, we'd that on

or So product, that accordingly that rents on XX% a X-bedroom in We've generally do a when be a continue whether see we that or seen of little as certain a occupancy we speaking. we'll lowering see keep activity if we possible. occupancy. bit, occupancy to for apartment something it as activity adjustments a to spot as dropping close would us, a X-bedroom to And far lack complex, when specific make sweet

with on that pushing we XXXX. as that of anticipate also didn't definitely the had rents to that kind of conservatism part built in included. terms add just And as mentioned in into We guidance, real Yes. that nearly of we quickly what happened it is aggressively

So I our think assumption. that's all built guidance into kind of

Okay. you do are to variability And from And insurance master talk the you much then that is in see how a of X.X% disclosure. And understandably, maybe then decision agreement some obviously, tax you because do in big groups on the we've guidance, side, did 'XX pretty there work increase. a would much on about given on the expense impact baked side space. in, across I property think could there, that higher think some And growth, 'XX? was tax big or increase growth on you the the assumptions was side property have insurance the the was then than recoveries that How a which I any seen the increase? that

Yes.

start Aaron, let more generally. a me So little

use, of is we guidance. we appropriate than careful as this We addressed figures want this go, it's market. comfortable we're wanted to some this at ourselves giving our where and are giving you conservative. be far be say hear that we look, As We've were in peers. said and that first guidance But to to surprised guidance, to not these our to think higher it's time

to I positive the far answer questions why insurance and Ryan to specifics, we that? was company. for specifically regarding can change, went this the answer which think you thing significant As Ryan, as of a as can some

Yes.

municipality consultants we So based time. properties. start of based in the the being where know our tax on work on militates just we taxes, real anticipate We to on at with what we estate budget the all

assumptions years, being That markets reassess built the based to do years. we -- know more we than That's our a guidance. all obviously, it we but X some don't hope some said, and aggressive on every if little We time. what markets better X and we at are can, our into do others

potential based So variability there's were be that to know But on for that's from a what today, standpoint, where varied. obviously we we comfortable.

so may due obviously, of side, large lot insurance mentioned of is to been the to the these control where last that bring of this as have call, the heading. a wanted more possible. But that on midyear. the as as on then these was increase, market accelerating saw I insurance And our kind we're the increase year had We the under timing year partners, out bought we and much as ending renewals

really this the to on So new advantage these under our we jumped were get bring year-end, us be opportunity to XX control. positive really able lot renewals properties before to a and take for of in-house wholly-owned of own properties, a before treaty all our and specific,

we mentioned, this the we grow grow over insurance that and portfolio smooth program, out as to with short we term, increase, time. in this this as yes, large very year with obviously So hope is but a

session. This for concludes Gould like the conference any our back I to to Jeff remarks. over turn closing would question-and-answer

for may want in have. any I and you time thank follow-up available for BRT. all We're continued you always say just interest calls your to

feel much please ring. free to it. So that's pretty give us And a

and a have So you. day, thank great

now for you has conference attending Thank The today's presentation. concluded.

You may now disconnect.