BRT Apartments (BRT) 8 Aug 232023 Q2 Earnings call transcript

Good day, and welcome to the BRT Apartments Corp Second Quarter 2023 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Tripp Sullivan, Head of Investor Relations. ahead. go Please

joining for Thank us you today.

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

review I Litigation contains meaning statements call this and forward-looking current of statements place complete SEC the reliance other to Act Listeners any affect are to not XXXX XX-Q discussion more forward-looking would Private could these based within beliefs. and Securities company's expectations, on remind forward-looking including management's like the a that and Form conference undue risks its everyone factors filings, of that statements. encouraged Reform the on that should are for assumptions of

BRT publicly of rata obligation law, portfolio NOI, statements. liabilities of undertake as NOI of BRT's a forward-looking any AFFO, information required update pro NOI, revise call measures, regarding does to subsidiaries. share also This includes combined revenues, unconsolidated and and non-GAAP expenses, discussion by any assets not FFO, or including Except our

limitations All certain discussed reports and our the SEC. see earnings data in non-GAAP should be and for information conjunction filings today definitions these GAAP presented are with filed with non-GAAP then the and measure. with of our release supplemental, in each used the the reports caution Please and of

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

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

over performance call. our I'll environment. and additional Ryan comments welcome some our and turn to overall brief results. for and Then the around to some with transaction start George color you, Thank the call I'll the on

good in season. position. to were year by our well occupancy clear strong, still portfolio, fundamentals perform a It's our from in but and the to show in that ago leasing to spring across moderating, able influenced tenants the that our continue rent pandemic elevated markets the increases growth are financial continue we rent during solid the we're be and Operationally, were

a we range we expectations the properties of back hold the for we within year. overall outlined performance, While of had couple the are

something is point track industry and this the concern far so a that's of for been year. supply New closely, we very

across As it and in to and look the portfolio, we in Pensacola. Huntsville seen lesser primarily we've a Nashville extent,

Of course, that's we've absorbed West in really could that take Nashville work Dallas, has the that had nicely. some market has we a would to have I that presence in more that dynamics And Nashville particular is market impact only time say an to the related but beyond expected. through.

note that As the Ryan be to believe in year. positioned later, later back will we on track we've property

quite The ever transaction I've market as recall. as

which of Court We in Activity generated the rate, X-year need opportunities, with cap of costs to space sale to whether minimal continue during to the developers that at need potential rates. the a due underwrite review an is a acquisitions our buyers with insurance were complete over capital. as to IRR they that in joint pleased as working combined rates interest hold. Dallas well sub-X% a higher quarter venture Chatham or number of fact be second We higher property by XX% the cap the

after of secured in giving rata repaying on million net also We debt generated proceeds million share pro $XX.X $XX.X property. of effect our to the

from we stock. of common through the elected proceeds disposition mid-May, allocate in the disclosed to repurchase we As some

our elected to the where basis, increase the been Given repurchase and an million. our reallocate up trading has to to on $XX to authorization Board capital stock accretive opportunity

repurchase Based weighted on authorization. remaining $X XXX,XXX little in our activity, average shares in over $XX.XX. During at million the quarter, second we date of a we approximately quarter and third repurchase current the that a have to purchased

to they that accretive capital We we arise, remain to disciplined we capital. are will and allocate fortunate to opportunities very how have when deploy liquidity in the

us portfolio later very lack in patient and and into strong the XXXX year I in to rewarded be a this patience until XXXX. debt of think maturities that be The may allows market and

George, from here. it please take

Thank you, Jeff.

quarter on to continued reflect The portfolio. the margins results operating and partner a second buyouts the basis across year-over-year impact positive the improved from

However, at we improvement able full of portfolio the in two were disappointing due some to benefit our properties. not see of the to our results

will operational these properties moment. in plans our for into Ryan get a

$X.XX share was net prior per of a subsidiaries. So overall, period share of net decline owned income properties the with per was year the ago. common attributable from year-over-year compared year to The diluted by gain income $X.XX per reason in sale share two for $X.XX stockholders diluted primary the unconsolidated

$X.XX $X.XX $X.XX offset per income to to debt primarily compared the offset the ago, interest in diluted per to a was diluted due per due was quarter, insurance AFFO a and year of in share by diluted expense. provision by to tax increase increase ago, per the year decline decrease early somewhat share in a extinguishment the diluted tax compared This interest reduction we a expense. the and in provision. share an in primarily was last disclosed $X.XX income increase in share recovery FFO

unit you That unit. on per our add NOI portfolio, the guidance. $XXX CapEx in per estate real continues included totals have that our in combined the $XXX,XXX for portfolio $XXX growth expenses the to or P&L, flows operating combined approximately in the that be replacements quarter. we was of assuming For below expense million the $X.XX recurring $X.X through been the million replacements When

major annualized million during and an investment represents We properties, completed $XXX,XXX rehab revenue an enhancing XX totaled $X.XX of the upgrades the quarter. CapEx, quarter units XX%. the to and which during estimated Nonrecurring ROI of for of

million, and due our $XX which to was and with Turning debt capitalization facility. enterprise under balance in the Available as this sheet. flat was lower of comprised XX% year credit at value Debt is ago. higher cash period quarter to to of a June primarily the XX year at a ago, a compared liquidity end market availability

$XX X, million. was At liquidity August

June term X.X of unconsolidated and XX, debt of years. X.XX% weighted average weighted mortgage interest maturity our of a rate to at consolidated average and a As remaining

over I'll to the Now call turn Ryan.

Good like the performance Consistent ago. at with in multifamily held the compares occupancy for morning. portfolio first to quarter portfolio with XX.X%, I'd average with which the for we XX.X% steady year XX.X% of expectations, our the quarter. start a and our

this past Although rents QX, pushing in quarter. than were lower is focused on we this

quarter. in Average quarter monthly the compared portfolio up were second for combined XXXX the to rents X.X% the

overall For leases of X.X%, signed of X%. of on saw we X.X% spreads quarter leases XXXX, second spreads of estimated the in spreads and new renewal

X.X% X.X%. renewal spreads on of seen For and overall July, spreads of estimated we of have X.X%, new leases spreads

to range for the -- affordability indicating targeted. quarter financial new are in signed all Combined grew are X.X% components ratio is up rent-to-income due X.X%, primary leases properties minimal NOI primarily Our across The XX%, we've were in the having second second and rental portfolio the the that quarter tenants in of compared was XXXX. portfolio. revenue of rates the with stress quarter have increased second

line XX.X%, up XX.X%. this our we year by to have amount, line what controllable and impact. due and item, insurance for primarily up increased was while XX% noting, higher past up expenses worth repairs replacements insurance expenses were in comments given with maintenance. noncontrollable been XX.X%, It's on expenses That's Total more were that anticipating a year-over-year. Of this full

portfolio combined cost combined impact underperformance, such approximately us San a NOI Bluff in quarter. quarter. on Alamo XXX our of two that an in growth in Nashville and Absent It's have properties would this overall X.X% Ranch Bells Antonio portfolio was can points the experienced NOI underperformance increase. we but basis that The this that case unfortunate growth, have

property a highlighted that underperforming. is some related we quarter through to Ranch to taken clean time Alamo tenant issues working has been is primarily This last up. some have

improvement we'll of Bell's is Bluff, Nashville, has a to the half second during new supply there this that of the submarket confident are of as year. been see lot where an more in related late. We At

earlier, improvement seen in Bell's than noted the markets. little maintain at we very in in year. impact order so we've of worked in Nashville come later Jeff that is offering QX, likely to had of we markets occupancy plan our of more Bluff, the but That new one QX to concessions approach in supply far where anticipated. the is took has As

at Dallas remarks. for Based disposition share of two on we affirmed repurchases, of the our deployment in XXXX. outlook guidance proceeds the of properties, and the Chatham completion issued Court our previously these the improvement prepared for QX some completes to results, of those That

will Operator, please to questions? you open the call

ahead. We'll first now Instructions] Oxford Colliers. from our go Please Barry [Operator of question take

why could it you was those XQ? Kind me revenue, both same-store if to looked Texas negative as answered, more guidance. walk through of going on in It touched Texas, both clarification. of Virginia I those be numbers better get a and were held you yet like but numbers numbers the in are Some and little

Yes.

So Barry, it's Jeff.

tenants the mean, delinquency I were put focus with And part increased, we us were basically, which and some tenants vacancy out, a really we the Alamo, credit. that this place left older -- standards issue when have on the that in buyout prior our suspect were So our bought issues. to little in was had more and

But So we're clean delinquency cleaning rents this look focus you then up as little issues stabilize on a the and to takes you rents. and pushing can clean obviously, time occupancy, and it up. up. And

expect seeing to couple results be online positive already. next we the stabilize. in It's back quarters direction, in we're and and moving So right of the

comment go, Bells in think is development, you a some term. an were We quarter, some up. Ryan, same absorb in at will improve property Nashville. there in mentioned it's They're being his Again, concessions as as definitely look leased it the long West new think the There As remarks. the make situation. of location. builds again, far we been have I'll vastly. have but And I We the to love new some improving

that the those issue caused with are ones our two So specific some numbers.

kind the to seeing we can you re-lease you quickly? properties look, what's think of Is foot that's are hey, giving these say, we decent And traffic? confidence

will there's a needed and time it's confident still see next be think and side new But On absorb that new on the no new little again, slower do traffic. Yes. it's just positive Texas, On a But In to quarters. better to a Nashville will continues market terrific it market. see little the improving. the be just doubt have they But in we're of because say market. to take coming would builds that for we are there absorbed foot few stabilize that I longer property very to units because Alamo that West we're Bell's, we it, and I may sure. seeing over the builds the the the of

right packed couple bring of Or them two kind Turning any in the One, to my you next a guys are opportunities look, of joint staying owned over quarters questions. see venture on the now? basis? there are that acquisitions, wholly in

right my packed No, guys Yes. generally staying now.

I don't partnership as at think right may met, do assets there's that as and our looking acquiring we're opportunity our we have is consider now, selling. other we consider potential potentially and far an specific so. any plans to partners But

question, are on And of today, if inventory seeing Jeff, in same? your the second you it look market look things that or the are at at now marketplaces buyers the more, you you to less the and

really directly living cap and It is is still or at are are goes that my make sellers never and rates multifamily the with hard interest much not the insurance It's not old Cap have cetera, mentality earlier very quick. very of -- if looking costs transactional partners rates anything very think same have I that's years, to is happening seen just up, I And up. -- an it to I've to XX -- little, any et don't career sense. very with versus quiet. is gone with that with they quiet. the gone make rates, market to school acquisitions entire we us here, at buy market time, this where JV looked our in for very, leading so buy,

with that the amount that to pick and some up, get got roll think mortgage Do Or starts you've that going distress over that maybe to say, you get? you higher let's because you can't to interest you it hoping maybe see rate? start now to could into were deal could 'XX

to their partnerships already. have to sell. rates looking seeing of of started. that. or caps have because way -- There's sell starting definitely other or want We're that -- reasons because interest they for don't their them seeing on more It’s we're capital needing to calls do locks expired We're to opportunity by see

expect strange I more velocity I 'XX and think a quiet distressed, just I as and think to and would year, bit opportunities a substantially to 'XX. they'll very be for increase there'll be been in QX. 'XX, transactional sure pretty it's opposed more in velocity

this -- me, turn follow-up go now BRT Colliers. I would from conference There Barry like we for ahead. from are over to time. Please Apartments at to a back the no Oxford questions further have excuse

one as they they necessarily? far As from also what May long also questions. tighter, I'm deal are are doing know me. the When you One to look Freddie one with getting Mac tough only last and to as are I at -- or ask and but not underwriting, banks are tighter Freddie getting

Yes.

Let me to turn it over answer to Ryan that.

not that -- getting meet. tighter. they're they necessarily that require I the It's numbers ratios is the harder not debt think getting coverage just to are

necessarily XX% range it's range. little getting the than the standard past, So a lower them that in seeing XX% loan-to-value of more to you're in seeing you're proceeds don't probably XX% I kind the come think was bit tighter. in the

of I are the think nature the are where at at. just and properties valuations where it's the

comes the of with The Securities. line Aaron go Hecht Please ahead. from question next JMP

Jeff, stock the buy quarter. you disposition guys proceeds this to use back

I now. What picture, that pretty think authorization? us can is there? capital bigger re-upping the are you give structure any authorization plans thoughts forward, insights just going low your And on

opportunity, make it Yes. likely at the advantage I to up consider the quarter, continue. good after buying Obviously, to levels program. and next our meeting over judgment and consult last speak at about in But that. stock it's think Board think took going next certain have will to we We that of that's we Board and a and the why we're a

got. I all that, appreciate I

that there's no in more guess case, any I Well, questions. Okay.

good So with us feel and you. us, free I all chat confidence the give BRT, interest and in you Thank ring pick we to great continued phone appreciate us, a a in to want a thank your day. If just have the and need for have up and please to day. we