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BRT Apartments Corp (NYSE:BRT)
Q3 2020 Earnings Call
Nov 6, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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.

Evelyn Infurna -- Managing Director

Thank you. Good day everyone and welcome to the BRT apartments Conference Call. On the call today is Jeffrey Gould, President and Chief Executive Officer. Also available are George Zweier, Chief Financial Officer David Kalish, Senior Vice President and Ryan Baltimore, Senior Vice President. As a reminder, this call is being webcast through the company's website at www.brtapartments.com additionally the Company's 10-Q supplemental information and earnings release are available free for your review on the Investor Relations section of the website.

Before we begin, 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 negative of these words. These forward-looking statements include, but are not limited to, statements regarding BRT 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 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 discussion of Funds From Operations or FFO, Adjusted Funds From Operations or AFFO, Net Operating Income or NOI, and regarding our pro rata share of the revenues, expenses, NOI assets and liabilities of BRTs unconsolidated subsidiaries, all of which are non-GAAP financial measures of performance.

These non-GAAP measures, should be used as a supplement to and are not a substitute for net income computed in accordance with GAAP. Unless otherwise indicated, or the context otherwise requires, discussions with respect to the operating results at the unconsolidated ventures reflects BRT's pro rata share of such results. For a more complete discussion of these non-GAAP measures, see the Company's earnings release supplemental and 10-Q. Unless otherwise indicated, or the context otherwise requires, references to be BRT's portfolio or it's multifamily portfolio and references to revenues, expenses, NOI, assets and liabilities refer to the results in the accounts of BRT's wholly owned subsidiaries and its pro rata share of unconsolidated subsidiaries. BRT's 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 SCC. Further, references to the current quarter refer to the quarter ended September 30, 2020 and references to the 2019 quarter, refer to the quarter ended September 30 2019. I would now like to turn the call over to Jeffrey Gould, President and CEO of BRT Apartments Corp. Please go ahead, Jeff.

Jeffrey Alan Gould -- President and Chief Executive Officer

Thank you, everyone. 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 add interest in non-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 is wholly owned by BRT. BRT's equity interest in these unconsolidated subsidiaries over which BRT actively overseas the management, generally ranges for 52% to 90%. We did not buy or sell any multifamily properties during the current quarter. Net loss attributed to common stockholders was $7,048,000 or $0.44 per diluted share in the current quarter versus net income of $3,027,000 or $0.20 per diluted share in the 2019 quarter.

The current quarter includes a $3,640,000 non-cash impairment charge related to a legacy asset of vacant land parcel in Daytona Florida. FFO grew to $4,560,000 in the current quarter or $0.27 per diluted share compared to $1,960,000 in the 2019 quarter or $0.12 per diluted share. AFFO increased to $4,890,000 for the current quarter or $0.28 per diluted share compared to $4,180,000 or $0.26 per diluted share in the 2019 quarter. Total rental revenues for our portfolio increased by 5% to $27,510,000 as compared to $26,20,000 in the 2019 quarter. And real estate operating expenses for the portfolio increased by 8.6% to $13,560,000 as compared to $12,490,000 in the 2019 quarter. NOI for our portfolio rose 1.8% to $13,950,000 for the current quarter from $13,710,000 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 $5800 per unit, yielding an estimated annualized return on investments of approximately 23%. As reflected in our supplemental financial information, a proportion of the cost 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 reposition and our properties, as the adverse economic impacts of the pandemic continue 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 that 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, where 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 valuation.

We also believe that the 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 appliances unless absolutely necessary. This resulted in much of the work being pushed to the current quarter, when we began to gain access to again resulting in higher repairs, maintenance and replace mix 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 30th 2020, we have $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.

On November 1st, 2020, our available liquidity was approximately $35.1 million dollars including $15.8 million dollars of cash and cash equivalents, $9.3 million dollars representing restricted cash for property improvements and up to $10 million dollars available for working capital under our credit facility. In addition, our unconsolidated joint ventures have approximately $16.6 million dollars 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 dollars, has a weighted average interest rate of 4.04% and a weighted average remaining term to maturity of 7.2 years.

On October 10th, 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 2nd 2020. We recognize that this is a 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.

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instruction] There are no questions at this time, I would like to turn the floor back over to management for any closing comments.

Jeffrey Alan Gould -- President and Chief Executive Officer

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'm 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.

Operator

[Operator Closing Remarks].

Duration: 14 minutes

Call participants:

Evelyn Infurna -- Managing Director

Jeffrey Alan Gould -- President and Chief Executive Officer

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