Credit Facility

~~The~~On September 15, 2022, the Company's ~~amended and restated~~ credit facility ~~dated November 18, 2021~~ with an affiliate of Valley National Bank ("VNB") ~~allows~~, was amended to, among other things, increase the amount the Company tomay borrow, subject to compliance with borrowing base requirements and other conditions, up to ~~$35,000,000~~$60,000,000, extend the facility's maturity date to September 2025, reduce the adjustable interest rate to prime, with a floor of 3.50%, and revise certain financial and other covenants. The facility can be used to facilitate the acquisition of multi-family properties, repay mortgage debt secured by ~~multi family~~multi-family properties and for operating ~~expense~~expenses (i.e.,working capital (including dividend payments)); provided that no more than ~~$15,000,000~~$25,000,000 may be used for operating expenses. The facility is secured by the cash available in certain cash accounts maintained by the Company at VNB, matures November 2024 and bears an adjustable interest rate of 25 basis points over the prime rate, with a floor of 3.5%. The interest rate in effect as of ~~March 31,~~September 30, 2022 is ~~3.75%~~6.25%. There is an unused facility fee of 0.25% per ~~annum on the total amount committed by Valley National Bank and unused by the Company.~~annum. At ~~March 31,~~September 30, 2022, the Company is in compliance ~~with~~in all material respects with its obligations under the facility.

At ~~March 31,~~September 30, 2022, ~~and December 31, 2021,~~ there was no$7,000,000 outstanding balance on the facility and no outstanding balance at December 31, 2021. At September 30, 2022 and December 31, 2021, $53,000,000 and $35,000,000, respectively, was available to be ~~borrowed in both periods.~~borrowed. At November 4, 2022, there was an outstanding balance of $19,000,000 on the facility bearing an interest rate of 7.00% and $41,000,000 available to be borrowed. Interest expense for the three months ended ~~March 31,~~September 30, 2022 and 2021, which includes amortization of deferred financing costs and unused fees, was ~~$45,000~~$227,000 and ~~$17,000,~~$18,000, respectively. Interest expense for the nine months ended September 30, 2022 and 2021, which includes amortization of deferred financing costs and unused fees, was $334,000 and $54,000, respectively. Deferred financing costs of ~~$247,000~~$551,000 and $270,000, are recorded in other assets on the Consolidated balance sheets at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

Junior Subordinated Notes

At ~~March 31,~~September 30, 2022 and December 31, 2021, the outstanding principal balance of the Company's junior subordinated notes was $37,400,000, before deferred financing costs of ~~$292,000~~$282,000 and $297,000, respectively. The interest rate on the outstanding balance resets quarterly and is based on three months LIBOR + 2.00%. The rate in effect at ~~March 31,~~September 30, 2022 and 2021 was ~~2.30%~~4.78% and 2.21%, respectively. The notes mature April 30, 2036. The interest rate that will be in effect for the three months ending January 31, 2023 is 6.41%.

The junior subordinated notes require interest only payments through the maturity date of April 30, 2036, at which time repayment of the outstanding principal and unpaid interest become due. Interest expense for the three months ended ~~March 31,~~September 30, 2022 and 2021, which includes amortization of deferred financing costs, was ~~$212,000~~$413,000 and ~~$214,000,~~$210,000, respectively.

~~Table~~ Interest expense for the nine months ended September 30, 2022 and 2021, which includes amortization of ~~Contents~~

deferred financing costs, was $911,000 and $636,000, respectively.

Note 10 – Related Party Transactions

The Company has retained certain of its executive officers and Fredric H. Gould, a director, among other things, to participate in the Company's multi-family property analysis and approval process (which includes service on an investment committee), provide investment advice, and provide long-term planning and consulting with executives and employees with respect to other business matters, as required. The aggregate fees incurred for these services in each of the three months ended ~~March 31,~~September 30, 2022 and 2021 were $367,000 and $350,000, ,respectively, and $1,101,000 and $1,049,000 for the nine months ended September 30, 2022 and 2021, respectively.

Management of certain properties owned by the Company and certain joint venture properties is provided by Majestic Property Management, Corp. ("Majestic Property"), a company wholly owned by Fredric H. Gould. Certain of the Company's officers and directors are also officers and directors of Majestic Property. Majestic Property may also provide real estate brokerage and construction supervision services to these properties. These fees amounted to ~~$11,000~~$9,000 and ~~$7,000~~$9,000 for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and $28,000 and $23,000 for the nine months ended September 30, 2022 and 2021, respectively.

Pursuant to a shared services agreement between the Company and several affiliated entities, including Gould Investors

L.P. ("Gould Investors"), the owner and operator of a diversified portfolio of real estate and other assets, and One Liberty Properties, Inc., a NYSE listed equity REIT, (i) the ~~(i)~~ services of the part- time personnel that perform certain executive, administrative, legal, accounting and clerical functions and (ii) certain facilities and other resources, are provided to the Company. The allocation of expenses for the facilities, personnel and other resources shared by, among others, the Company and Gould Investors, is computed in accordance with such agreement and is included in general and administrative expense on the consolidated statements of operations. During the three months ended ~~March 31,~~September 30, 2022 and 2021, allocated general and administrative expenses reimbursed by the Company to Gould Investors pursuant to the shared services agreement aggregated ~~$246,000~~

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$183,000 and $172,000, respectively, and $614,000 and $523,000 for the nine months ended September 30, 2022 and 2021, respectively. Jeffrey A. Gould and Matthew J. Gould, executive officers and directors of the Company are executive officers of Georgetown Partners, LLC, the managing general partner of Gould Investors.

Note 11 – Fair Value Measurements

Financial Instruments Not Carried at Fair Value

The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not recorded at fair value on the consolidated balance sheets:

Cash and cash equivalents, restricted cash, accounts receivable (included in other assets), accounts payable and accrued liabilities: The carrying amounts reported in the balance sheets for these instruments approximate their fair value due to the short term nature of these accounts.

Junior subordinated notes: At ~~March 31,~~September 30, 2022 and December 31, 2021, the estimated fair value of the notes is lower than their carrying value by approximately ~~$8,150,000~~$6,772,000 and $8,296,000, respectively, based on a market interest rate of ~~4.30%~~6.78% and 4.21%, respectively.

Mortgages payable: At ~~March 31,~~September 30, 2022, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately ~~$36,739,000,~~$37,083,000, assuming market interest rates between ~~3.92%~~5.13% and ~~4.67%~~6.18%. At December 31, 2021, the estimated fair value of the Company's mortgages payable was greater than their carrying value by approximately $511,000, assuming market interest rates between 3.12% and 3.87%. Market interest rates were determined using rates which the Company believes reflects institutional lender yield requirements at the balance sheet dates.

Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value.

Non-recurring fair value measurements

The Company reviews each investment in real estate and joint venture interests when events or circumstances change, indicating the carrying value of the investment may not be recoverable. In the evaluation of an investment for impairment, many factors are considered, including estimated current and expected cash flows from the asset during the projected hold period, costs necessary to extend the life of the asset, expected capitalization rates, projected stabilized net operating income, and the ability to hold or dispose of the asset in the ordinary course of business.

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Note 12 – Derivative Financial Instruments

Cash Flow Hedges of Interest Rate Risk

The Company's objective in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company did not have any outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk.

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The following table presents the effect of the Company’s interest rate swaps on the consolidated statements of comprehensive income (loss) for the dates indicated (dollars in thousands):

~~Three Months Ended March 31,~~

~~2021~~

~~Amount of (loss) gain recognized on derivative in Other Comprehensive Income~~

—

~~Amount of (loss) gain reclassified from Accumulated Other Comprehensive Income into Interest expense~~

~~(5)~~

~~Total amount of Interest expense presented in the Consolidated Statements of Operations~~

~~1,660~~


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021		2021
Amount of (loss) gain recognized on derivative in Other Comprehensive Income	$	(1)	$	(1)
Amount of (loss) gain reclassified from Accumulated Other Comprehensive Income into Interest expense	$	(2)	$	(12)
Total amount of Interest expense presented in the Consolidated Statements of Operations	$	1,535	$	4,804

Note 13 – New Accounting Pronouncements

In March 2020, the Financial Accounting Standard Board issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, lease, derivatives and other contracts. This guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Note 14 – Commitments and Contingencies

From time to time, the Company and/or its subsidiaries are parties to legal proceedings that arise in the ordinary course of business, and in particular, personal injury claims involving the operations of the Company's properties. Although management believes that the primary and umbrella insurance coverage maintained with respect to such properties is sufficient to cover claims for compensatory damages, many of these personal injury claims also assert claims for exemplary (i.e punitive) damages. Generally, insurance does not cover claims for exemplary damages.

The Company is one of several defendants in a wrongful death lawsuit seeking an unspecified amount in excess of $1,000,000 and an unspecified amount of exemplary damages. The Company’s primary insurance carrier is defending the claim. Although management is not able to determine the probability and/or magnitude of any potential loss, if any, management believes the Company has sufficient primary and umbrella insurance to cover the claim for compensatory damages.

In connection with a mediation conducted subsequent to September 30, 2022, the parties to a personal injury lawsuit in which the Company is one of the defendants have agreed, subject to the signing of a definitive agreement, to a settlement pursuant to which the Company’s insurance carrier would pay the plaintiff $850,000.

Note 1415 – Subsequent Events

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of ~~March 31,~~September 30, 2022, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

1922

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the "Quarterly Report"), together with other statements and information publicly disseminated by us, contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning matters that are not historical facts. Forward looking statements are generally identifiable by use of words such as "may," "will," "will likely result," "shall," "should," "could," "believe," "expect," "intend," "anticipate," "estimate," "project," "apparent," "experiencing," or similar expressions or variations thereof.

Forward-looking statements contained in this Quarterly Report are based on our beliefs, assumptions and expectations of our future performance taking into account the information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors which may cause actual results to vary from our forward-looking statements include, but are not limited to:

•the impact of the COVID-19 pandemic and the governmental and non-governmental responses thereto;

•general economic and business conditions, including those currently affecting our nation’s economy and real estate ~~markets;~~markets, such as increasing inflation and interest rates;

•the availability of, and costs associated with, sources of capital and liquidity;

•accessibility of debt and equity capital markets;

•general and local real estate conditions, including any changes in the value of our real estate;

•changes in Federal, state and local governmental laws and regulations, including laws and regulations relating to taxes and real estate and related investments;

•the level and volatility of interest rates;

•our acquisition strategy, which may not produce the cash flows or income expected;

•the competitive environment in which we operate, including competition that could adversely affect our ability to acquire properties and/or limit our ability to lease apartments or increase or maintain rental income;

•a limited number of multi-family property acquisition opportunities acceptable to us;

•our multi-family properties are concentrated in the Southeastern United States and Texas, which makes us more susceptible to adverse developments in those markets;

•risks associated with our strategy of acquiring value-add multi-family properties, which involves greater risks than more conservative strategies;

•the condition of Fannie Mae or Freddie Mac, which could adversely impact us;

•our failure to comply with laws, including those requiring access to our properties by disabled persons, which could result in substantial costs;

•insufficient cash flows, which could limit our ability to make required payments on our debt obligations;

•our ability and the ability of our joint venture partners to maintain compliance with the covenants contained in our and our joint venture partners' debt facilities and debt instruments;

•impairment in the value of real estate we own;

•failure of property managers to properly manage properties;

•disagreements with, or misconduct by, joint venture partners;

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•decreased rental rates or ancillary revenues, or increasing vacancy rates;

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•our ability to lease units in newly acquired or newly constructed multi-family properties;

•potential defaults on or non-renewal of leases by tenants;

•creditworthiness of tenants;

•our ability to successfully evaluate, finance, complete and integrate acquisitions, including the acquisitions of the interests of our joint venture partners in unconsolidated subsidiaries;

•development and acquisition risks, including rising or unanticipated costs and failure of such acquisitions and developments to perform in accordance with projections;

•the timing of acquisitions and dispositions;

•our ability to reinvest the net proceeds of dispositions into more, or as favorable, acquisition opportunities;

•potential natural disasters such as hurricanes, tornadoes and floods;

•board determinations as to timing and payment of dividends, if any, and our ability or willingness to pay future dividends;

•financing risks, including the risks that our cash flows from operations may be insufficient to meet required debt service obligations and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;

•lack of or insufficient amounts of insurance to cover, among other things, losses from catastrophes;

•our ability to maintain our qualification as a REIT;

•possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us or a subsidiary owned by us or acquired by us;

•our dependence on information systems;

•risks associated with breaches of our or our joint venture partners' information technology systems;

•failure to comply with, or obtain waivers of, the provisions of, and covenants and coverage ratios in, our debt instruments;

•risks associated with the stock ownership restrictions of the Code for REITs and the stock ownership limit imposed by our charter;

•increases in real estate taxes at properties we acquire due to such acquisitions or other factors;

•the other factors described in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021 (the "Annual Report"), including those factors set forth under the sections of such reports, as applicable, entitled "Cautionary Statement Regarding Forward-Looking Statements," "Risk Factors," "Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations".

We caution you not to rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control, and which could materially affect actual results, performance or achievements. Except to the extent otherwise required by applicable law or regulation, we undertake no obligation to update forward-looking statements to reflect events or circumstances after the date of the filing of this Quarterly Report or to reflect the occurrence of unanticipated events.

Overview

We are an internally managed real estate investment trust, also known as a REIT, that is focused on the ownership, operation and, to a lesser extent, development of multi-family properties. These properties may be wholly owned or by unconsolidated joint ventures in which we generally contribute a significant portion of the equity. At ~~March 31,~~September 30, 2022, we: (i) wholly-own ~~eleven~~21 multi-family with an aggregate of ~~2,864~~5,420 units and a carrying value of ~~$326.3~~ $653.7million; (ii) have ownership interests, through unconsolidated entities, in 21eight multi-family properties with ~~6,121~~2,781 units and a carrying value of ~~$103.9~~ $40.3

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million; and (iii) have a 17.45% interest in a 240-unit multi-family development property with a carrying value of ~~$2.1 million~~

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~~(excluding $1.4 million held in escrow).~~$3.5 million. The 3329 properties are located in 11 states; most of the properties are located in the Southeast United States and Texas. See "~~-Off Balance Sheet~~-Other Financing Sources And Arrangements" for information regarding the contributions to, and our reliance on, the cash flow and liquidity provided by the properties owned by our unconsolidated subsidiaries.

Challenges and Uncertainties ~~Presented by COVID-19~~as a Result of the Volatile Economic Environment

~~The~~

During the three and nine months ended September 30, 2022, economic uncertainty and stock market volatility have increased due to a number of factors, including rising inflation, increasing interest rates, the continuing COVID-19 pandemic, ~~did not~~and lingering supply chain disruptions. This uncertainty, volatility and the related causes may adversely impact us in the future. Rising inflation could have ~~a direct material~~an adverse ~~effect~~impact on our ~~financial condition~~ operating expenses(and ~~results of operations; however, there were some direct negative effects~~in particular, real estate operating expenses and general and administrative expense) and interest expense on our floating rate debt (~~e.g.~~i.e., our junior subordinated notes and credit facility), as these costs could increase at a rate higher than our rental and other revenue. We can provide no assurance that we ~~were more conservative in raising rents, pursuing acquisitions and in implementing our value add program, all of which, if more aggressively pursued, may have allowed us~~will be able to ~~generate additional income). The~~mitigate the impact of rising inflation. The Federal Reserve has been raising interest rates to combat inflation and it is anticipated that rates will continue to rise throughout the ~~pandemic~~remainder of 2022. Increases in interest rates on any of our ~~business, financial condition, liquidity, results~~floating rate debt will result in higher debt service costs and increases in our operating expenses that we are unable to pass through to our tenants will adversely affect our profitability and cash flows. We cannot assure you that our access to capital and other sources of ~~operations~~funding will not become constrained, which could adversely affect the availability and ~~prospects~~terms of future borrowings, renewals or refinancings. Further, due to the uncertain economic environment, we anticipate that in the near term we will ~~depend on future developments, which are highly uncertain~~be especially cautious in pursuing acquiring properties. As a result, our ability, in the near term, to grow revenue and ~~cannot~~net income through acquisitions will be ~~predicted with confidence.~~adversely affected.

Buyout of Interests in Joint Ventures

~~As disclosed in our Annual Report, our acquisition efforts in~~In 2021 and the nine months ended September 30, 2022, ~~are focused on purchasing~~we completed the purchase of the remaining interests of our joint venture partners in ~~joint~~the unconsolidated ventures that own ~~multifamily properties.~~three and 11 multi-family properties, respectively. We refer to ~~such~~these 14 purchases and the related effects on our financial statements as the “Partner Buyouts”. After a Partner Buyout is completed, such ~~multifamily~~multi-family property ~~will be~~is wholly owned and the accounts and operations of such property ~~will be~~are included in our consolidated balance sheet and statements of operations, respectively, as of the date of completion of such purchase. ~~We anticipate that our~~Our assets, liabilities, revenues and expenses ~~will increase~~increased significantly as a result of these Partner Buyouts.

~~Due to~~ Had the ~~timing that contemplates that the sales of Retreat at Cinco Ranch and The Vive (the "Cinco/Vive Sales") described below ("-Property Dispositions - Dispositions of Joint Venture Properties - Contracts to Dispose of Joint Venture Properties") will be completed before all the Partner Buyouts described below (i.e., the~~11 Partner Buyouts completed ~~or to be completed after March 31, 2022) are completed, and after giving effect to~~in 2022 been included as of January 1, 2022 in our consolidated statements of operations, such properties would have contributed, for the ~~Shavano Sale (as described below), it is expected that there may be a slight decline in operating results in the quarter ending June~~nine months ended September 30, 2022, an aggregate of $18.4 million of rental income and that after the Cinco/Vive Sales and the Partner Buyouts described below are completed, such transactions will not have a material impact in the short-term on our net income, funds from operations or adjusted funds from operations. After giving effect to the Cinco/Vive Sales and the Partner Buyouts described below, our consolidated balance sheet will include an ~~additional~~ ~~(i) $217.4~~$17.4 million of expense (including $4.5 million of mortgage ~~debt with a weighted average remaining term to maturity of 6.5 years~~interest expense and ~~a weighted average interest rate of 4.24 % and (ii) $302.2~~$5.1 million of ~~real estate assets.~~

depreciation expense). We do not anticipate completing any Partner Buyouts in the near future.

Completed Purchases of the Remaining Interests of Joint Venture Partners

~~During~~Set forth below is information regarding the ~~Three Months Ended March 31, 2022~~

~~On March 23, 2022, we~~Partner Buyouts completed during the ~~acquisition~~three months ended September 30, 2022. The mortgage debt reflects the debt that was on such property at the time of the purchase of the remaining ~~28.1% interest owned by our joint venture partners in the entity that owns Verandas at Alamo Ranch, a 288-unit multi-family property located in San Antonio, TX.~~interest. The purchase ~~price for the interest, which gives effect to the cost of purchasing the promote interest (as described under "-Contracts to Purchase the Remaining Interests of Joint Venture Partners~~") of our joint venture partner, was $8.7 million. As a result, this property is wholly-owned and effective March 23, 2022, is included in our consolidated operations and accounts, including mortgage debt in principal amount of $27 million with an interest rate of 3.64% and maturing in December 2029. We anticipate that in the quarter ending June 30, 2022, this property will generate approximately $1.2 million of rental revenues, $579,000 of real estate operating expenses, $258,000 of interest expense and $518,000 of depreciation. For the quarter ended March 31, 2022, the average occupancy rate at this property was 94.7% and the average monthly rental rate was $1,206.

~~Subsequent to the Three Months Ended March 31, 2022~~

On April 7, 2022, we acquired the remaining 21.6% interest owned by our joint venture partners in the entity that owns Vanguard Heights, a 174-unit multi-family property located in Creve Couer, MO. The purchase price for the interest, which gives effect to the cost of purchasing the promote interest of our joint venture partner, was $4.8 million. As a result, this property is wholly-owned by us and effective April 7, 2022, is included in our consolidated operations and accounts, including mortgage debt of $29.7 million with an interest rate of 4.41% and maturing in July 2031. We anticipate that in the quarter ending June 30, 2022, this property will generate approximately $900,000 of rental revenues, $367,000 of real estate operating expenses, $337,000 of interest expense and $495,000 of depreciation. For the quarter ended March 31, 2022, the average occupancy rate at this property was 93.1% and the average monthly rental rate was $1,569.

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~~Contracts to Purchase the Remaining Interests of Joint Venture Partners in Nine Unconsolidated Ventures~~

From February 17, 2022 through April 6, 2022, we entered into agreements to acquire the remaining interests of our joint venture partners in the unconsolidated joint ventures that own the properties identified below. It is anticipated that these transactions, subject to the satisfaction of customary closing conditions, including the approval of the holders of the applicable mortgage debt, will be completed by August 1, 2022. Except as otherwise indicated, the mortgage debt reflected is currently on the property and after the completion of the applicable acquisition, will be included in our consolidated balance sheet (dollars in thousands):

Date of Agreement Property Name Location Units Remaining Interest to be Purchased Book Value of Property at 3/31/22 Purchase Price (1) Estimated Amount of Debt to be Included on our Consolidated Balance Sheet
February 2022 Jackson Square Tallahassee, FL 242 20 % $ 25,102 $ 6,220 $ 21,524
February 2022 Grove at River Place Macon, GA 240 20 % 12,829 7,485 11,481
February 2022 The Woodland Apartments Boerne, TX 120 20 % 11,394 3,550 7,935
March 2022 Brixworth at Bridge Street Huntsville, AL 208 20 % 11,844 10,851 18,500 (2)
April 2022 Abbotts Run Willmington, NC 264 20 % 37,552 8,560 23,160
April 2022
Civic Center I (3)
Southaven, MS 392 25 % 30,831 18,063 27,544
April 2022
Civic Center II (3)
Southaven, MS 384 25 % 32,725 17,694 30,288
April 2022 Magnolia Pointe at Madison Madison, AL 204 20 % 18,474 7,132 15,000
April 2022 Somerset at Trussville Birmingham, AL 328 20 % 40,300 9,785 32,250
Total 2,382 $ 221,051 $ 89,340 $ 187,682
~~____________________~~

~~(1) The purchase (i)~~ price gives effect to ~~the~~our purchase of the joint venture partners' "promote ~~interest"~~interests" (as more fully described in the Annual Report) ~~of our~~(dollars in thousands):


Property Name	Location	Units	Percent Acquired	Purchase Price (1)		Closing Date	Mortgage Debt (2)				Interest Rate		Maturity
Civic Center I	Southaven, MS	392	25%	$	18,233	July 12, 2022	27,389				4.24	%	March 2026
Civic Center II	Southaven, MS	384	25%	17,942		July 12, 2022	30,105				3.73	%	September 2026
Abbotts Run	Willmington, NC	264	20%	9,010		July 14, 2022	23,160				4.71	%	July 2030
Somerset at Trussville	Trussville, AL	328	20%	10,558		July 19, 2022	32,250				4.19	%	June 2029
Magnolia Pointe at Madison	Madison, AL	204	20%	7,246		Aug 3, 2022	15,000				4.08	%	January 2028
	Total	1,572		$	62,989		$	127,904	$	127,904,000

___________________________________

(1) Excludes closing costs and operating cash acquired from the joint ~~venture partners and~~

~~(ii) is subject to customary closing and similar adjustments.~~ventures.

(2) ~~The current mortgage debt~~Excludes fair value adjustments of ~~$11,184 is to be refinanced with approximately $18,500 of new ten-year mortgage debt with an anticipated interest rate of~~

~~4.25% (the "New Mortgage Debt").~~

~~(3) The completion~~$4,719 determined as part of the ~~sale of each of Civic Center I and Civic Center II is conditioned upon the closing of one another. The~~ purchase price ~~reflected for~~

~~each represents an allocation of the total purchase price based on number of units.~~allocation.

To fund these purchases, we anticipate using our available cash, a portion of the proceeds from the Cinco/Vive Sales, a portion of the proceeds of the New Mortgage Debt, funds from our at-the-market equity offering program and, funds from our credit facility. After a purchase is completed, such property will be wholly-owned and the accounts (~~i.e.,~~ the assets and liabilities), and operations of such property will be included directly, from the date of such purchase, in our consolidated balance sheets and consolidated statement of operations, respectively.

~~Property Dispositions~~

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~~Dispositions of Joint Venture Properties~~

Completed ~~Dispositions~~Disposition

On ~~February 8,~~August 31, 2022, the unconsolidated joint venture ~~which owned Verandas At Shavano, a 288-unit multi-family property~~that owns Waters Edge at Harbison, located in Columbia, SC and in which we ~~had a 65%~~held an 80% equity interest, sold the property for ~~$53.8~~$32.4 million, ~~and~~ recognized a $16.9 million gain on the sale of this property ~~of $23.7 million (the "Shavano Sale").~~and recorded a $573,000 mortgage prepayment charge. As a result of the sale, we recorded a $11.5 million gain and $388,000 mortgage prepayment charge, representing our share of ~~$13.0 million.~~the gain and the mortgage prepayment charge, respectively. The mortgage debt ~~secured by this~~securing the property and ~~paid-off~~paid off in connection with the sale was in principal amount of ~~$25.1 million, had an interest rate of 3.61% and was scheduled to mature in May 2023. During 2021, this property contributed $526,000 of equity in earnings of unconsolidated joint ventures.~~

~~Contracts to Dispose of Joint Venture Properties~~

In April 2022, the unconsolidated joint venture that owns Retreat at Cinco Ranch, located in Katy, Texas, in which we hold a 75% equity interest, entered into an agreement to sell the property for $68.5 million. This property, which as of March 31, 2022, had mortgage debt of $30.2$12.2 million, with a remaining term to maturity of 3.8 years and an interest rate of ~~4.44%,~~4.28%. In the six months ended June 30, 2022, this property contributed ~~$336,000~~$103,000 of equity in loss of unconsolidated joint ~~ventures in 2021. We anticipate that our share of the gain, after giving effect to our approximate $1.1 million share of the mortgage prepayment charge, will be approximately $16.4 million.~~

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In May 2022, the unconsolidated joint venture that owns The Vive, a 312-unit multi-family property located in Kannapolis, NC, in which we hold a 65% equity interest, entered into an agreement to sell the property for $92.0 million. This property, which as of March 31, 2022, had mortgage debt of $31.6 million, with a remaining term to maturity of 30 years and an interest rate of 3.52%, contributed $77,000 of equity in earnings of unconsolidated joint ventures in 2021. We anticipate that our share of the gain, after giving effect to our approximate $738,000 share of the mortgage prepayment charge, will be approximately $21.5 million.

~~We anticipate that the Cinco/Vive Sales will be completed, subject to the satisfaction of customary closing conditions, during the quarter ending June 30, 2022.~~

~~Sale of Vacant Land Parcel~~

On February 2, 2022, we completed the sale of a vacant land parcel located in Daytona, Florida for a sales price of $4.7 million, and, after closing costs, recognized a nominal gain. In 2020, we recognized an impairment charge of $3.6 million in connection with this property. At December 31, 2021, this property was classified as held-for-sale.ventures.

Other Activities During the Three Months Ended ~~March 31,~~September 30, 2022

~~Investment in Multi-Family Development Project~~

On March 10, 2022, we purchased a 17.45% interest in Stono Oaks, a planned 240-unit ground-up multi-family development, located in Johns Island, SC. The purchase price for the interest was $3.5 million, including $1.4 million held in escrow. We anticipate that this project will be completed in the fourth quarter of 2023.

~~Debt Reduction~~

~~In addition to the debt pay-offs described in "-Completed Purchases of the Remaining Interests of Joint Venture Partner~~" in connection with property dispositions, we paid-off, one month prior to its maturity, mortgage debt of $14.6 million bearing an interest rate of 4.29% on the Avalon Apartments-Pensacola, FL (the "Avalon Debt").

Sale of Common Stock Pursuant to the ATM Program

We sold ~~136,279~~174,059 shares pursuant to our ~~ATM sales~~at-the-market offering program at an average price of ~~$22.61~~$22.22 per share. Net proceeds after commissions and fees was ~~$3.0~~$3.8 million.

Credit Facility Amendment

We entered into an amendment (the "Amendment") to our amended and restated credit facility (the "Facility") with VNB New York, LLC, an affiliate of Valley National Bank (“VNB”). Among other things, the Amendment (i) increased the amount we are permitted to borrow from $35 million to an aggregate of $60 million, subject to compliance with borrowing base requirements and other conditions, (ii) increased from $15 million to $25 million the amount that may be used for working capital (including dividend payments) and operating expenses, (iii) extended the term of the facility from November 2024 to September 2025, (iv) reduced the interest rate to the prime rate (subject to a floor of 3.5%) by eliminating the 25 basis point spread over the prime rate, (v) increased the number and value of the unencumbered properties we are required to maintain from two properties with a value of at least $50 million to three properties with a value of at least $75 million and (vi) requires that we maintain a tangible net worth of a least $140 million. In connection with the Amendment, we paid fees of approximately $357,000 which will be amortized over the remaining term of the facility.

Mortgage Payoff

On October 31, 2022, the mortgage debt on Silvana Oaks Apartments - N. Charleston, SC with an interest rate of 3.79% and in the amount of $14.9 million matured and was paid off. In connection with this payoff, we borrowed $15.0 million from our credit facility.

UPREIT Structure

We are evaluating whether to establish an UPREIT structure to enhance our ability to acquire multi-family properties.

There is no timetable for the completion of such evaluation or implementation of such structure and we can provide no assurance that we will implement an UPREIT structure.

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Results of Operations

– Three months ended ~~March 31,~~September 30, 2022 compared to three months ended ~~March 31, 2021.~~September 30, 2021.

As used herein, the term "same store properties" refers to operating properties that were wholly owned for the entirety of the periods presented. For the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, there were seven same store properties in our consolidated portfolio.

Revenues

The following table compares our revenues for the periods indicated:

Three Months Ended March 31,
(Dollars in thousands): 2022 2021 Increase
(Decrease) %
Change
Rental and other revenue from real estate properties $ 11,430 $ 7,095 $ 4,335 61.1
Other income 4 4 — —
Total revenues $ 11,434 $ 7,099 $ 4,335 61.1


	Three Months Ended September 30,
(Dollars in thousands):	2022		2021		Increase (Decrease)		% Change
Rental and other revenue from real estate properties	$	21,691	$	7,709	$	13,982	181.4	%
Other income	6		5		1		20.0	%
Total revenues	$	21,697	$	7,714	$	13,983	181.3	%

Rental and other revenue from real estate properties

The increase is due to the following changes:

•$~~4.4~~13.3 million due to the Partner Buyouts, ~~at four properties(i.e.,~~ ~~primarily Bells Bluff, Crestmont at Thornblade, Crossings of Bellevue in 2021 and, to a lesser extent, Verandas at Alamo Ranch in February 2022 (collectively,~~including $4.9 million from the ~~“Consolidating Transactions”));~~Partner Buyouts completed during the three months ended September 30, 2022; and

•$~~614,000~~727,000 at same store properties primarily due to an increase in average rental ~~rates at same store properties.~~rates.

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~~Offsetting the increase is a $739,000 decrease due to the sale of the Kendall Manor property in May 2021 (the "Kendall Sale").~~

Expenses

The following table compares our expenses for the periods indicated:


		Three Months Ended March 31,								Three Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Increase (Decrease)		% Change	(Dollars in thousands)	2022		2021		Increase (Decrease)		% Change
Real estate operating expenses	Real estate operating expenses	$	4,753	$	3,117	$	1,636	52.5	Real estate operating expenses	$	9,195	$	3,404	$	5,791	170.1	%
Interest expense	Interest expense	2,021		1,660		361		21.7	Interest expense	5,061		1,535		3,526		229.7	%
General and administrative	General and administrative	3,633		3,114		519		16.7	General and administrative	3,673		3,114		559		18.0	%

Depreciation and amortization	Depreciation and amortization	3,606		1,537		2,069		134.6	Depreciation and amortization	8,165		1,787		6,378		356.9	%
Total expenses	Total expenses	$	14,013	$	9,428	$	4,585	48.6	Total expenses	$	26,094	$	9,840	$	16,254	165.2	%

Real estate operating expense.

The increase is due primarily to $5.7 million from the Partner Buyouts, including $1.9 million from the Partner Buyouts completed during the three months ended September 30, 2022.

Interest expense.

The change is due to a:

•$2.2 million increase from the Partner Buyouts, including $1.4 million from the Partner Buyouts completed during the three months ended September 30, 2022;

•$208,000 increase due to the increase in the average outstanding balance on the credit facility to $13.8 million during the three months ended September 30, 2022 from no balance outstanding during the corresponding period of the prior year.

•$189,000 increase due to an increase on the interest rate on our junior subordinated debt which is based on three month LIBOR.

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The increase was offset by a decrease of $375,000 due to the payoff of $46.5 million of mortgage debt since October 1, 2021.

General and administrative

The increase is due primarily to a $367,000 increase in non-cash compensation expense - specifically, increases of:

•$207,000 due to the inclusion, for the entire three months ended September 30, 2022, of the amortization expense related to the performance and market based restricted stock units (the "RSUs") granted in June 2022; and

•$160,000 due to the amortization expense related to restricted stock, including $110,000 related to the restricted stock granted in January 2022 as a result of the higher fair value of the shares granted in 2022 in comparison to the restricted stock granted in 2017.

The balance of the increase is due primarily to increased professional fees and higher levels of compensation.

Depreciation and amortization

The increase is due primarily to $6.4 million from the Partner Buyouts, including $ 2.6 million from the Partner Buyouts completed during the three months ended September 30, 2022.

Income tax provision

In the three months ended September 30, 2022, income tax provision increased to $178,000 from $31,000 in the corresponding period of the prior year due to an increase in state level taxes accrued. The increase in the accrual is the result of income generated by property sales in the current period and the unavailability of net operating loss carryforwards available in certain states to offset such income.

Gain on sale of real estate

In the three months ended September 30, 2021, we sold a cooperative apartment in New York, NY for a sales price of $545,000 and recognized a gain of $414,000 on the sale. There was no comparable gain in the quarter ended September 30, 2022.

Loss on extinguishment of debt

In the three months ended September 30, 2021, our consolidated subsidiaries paid off three first mortgage loans and three supplemental loans with an aggregate outstanding principal balance of $31.9 million and incurred an aggregate $902,000 of prepayment charges and deferred loan fee write-offs. There was no comparable expense in the quarter ended September 30, 2022.

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Unconsolidated Joint Ventures - Results of Operations

Equity in earnings (loss) of unconsolidated joint ventures.

The table below reflects the condensed income statements of our Unconsolidated Properties. In accordance with US generally accepted accounting principles, each of the line items in the chart below (other than equity in income (loss) of unconsolidated joint ventures and equity in earnings from sale of unconsolidated joint ventures) is presented as if these properties are wholly owned by us although our equity interests in these properties ranges from 17.45% to 80% (see note 8 of our consolidated financial statements) (dollars in thousands):


	Three Months Ended September 30,
	2022		2021		Increase (Decrease)		% change
Rental and other revenues from unconsolidated joint ventures	$	13,502	$	29,818	$	(16,316)	(54.7)	%

Real estate operating expense from unconsolidated joint ventures	6,512		14,587		(8,075)		(55.4)	%
Interest expense from unconsolidated joint ventures	2,843		7,568		(4,725)		(62.4)	%
Depreciation from unconsolidated joint ventures	3,113		8,288		(5,175)		(62.4)	%
Total expenses from unconsolidated joint ventures	12,468		30,443		(17,975)		(59.0)	%

Total revenues less total expenses from unconsolidated joint ventures	1,034		(625)		1,659		265.4	%

Other equity earnings	12		7		5		71.4	%


Gain on insurance recoveries from unconsolidated joint ventures	—		1,246		(1246)		N/A
Loss on extinguishment of debt from unconsolidated joint ventures	(573)		(9,401)		8,828		(93.9)	%
Gain on sale of real estate from unconsolidated joint ventures	16,937		83,984		(67,047)		(79.8)	%
Net income (loss) from unconsolidated joint ventures	$	17,410	$	75,211	$	(57,801)	(76.9)	%

Equity in earnings (loss) of unconsolidated joint ventures and equity in earnings from sale of unconsolidated joint venture properties	$	11,607	$	30,786	$	(19,179)

Set forth below is an explanation of the most significant changes in the components of the equity in earnings of unconsolidated joint ventures and equity in earnings from sale of unconsolidated joint venture properties. Same store properties at Unconsolidated Properties represent eight properties that were owned for the entirety of the periods being compared.

Rental and other revenues from unconsolidated joint ventures

The decrease is composed of :

•$11.9 million from the Partner Buyouts, including $4.4 million from the Partner Buyouts completed during the three months ended September 30, 2022;

•$3.8 million from the sale in 2022 of the properties owned by the unconsolidated joint ventures which owned Verandas at Shavano - San Antonio, TX ("Shavano"), Retreat at Cinco Ranch - Katy, TX ("Cinco") ,The Vive - Kanapolis, NC (the "Vive"), and Waters Edge at Harbison - Columbia, SC ("Waters Edge"; collectively with Shavano, Cinco, and Vive, the "Shavano/Cinco/Vive/Waters Edge Sales"), including $165,000 from the sale of Waters Edge completed during the three months ended September 30, 2022;

•$1.1 million from the sale in 2021 of the properties by the unconsolidated joint ventures which owned The Avenue Apartments-Ocoee, FL and Parc at 980-Lawrenceville, GA (collectively, the "Avenue/Parc Sales"); and

•$723,000 from the sale in 2021 of our interest in the unconsolidated joint venture that owned Tower at Opop and Lofts at Opop-St. Louis, MO (the "Opop Sale").

Offsetting the decrease was a $1.2 million increase from same store properties due primarily to increased rental rates.

Real estate operating expenses from unconsolidated joint ventures

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The decrease is composed of:

•$5.5 million from the Partner Buyouts, including $1.8 million from the Partner Buyouts completed during the three months ended September 30, 2022;

•$1.7 million from the Shavano/Cinco/Vive/Waters Edge Sales; and

•$669,000 from the Avenue/Parc Sales;

•$423,000 from the Opop Sale.

Offsetting this decrease was a $152,000 increase in such expenses at same store properties, with expenses generally increasing across most expense categories including utilities, repairs and maintenance and insurance.

Interest expense from unconsolidated joint ventures.

The decrease is due to the decrease in mortgage debt due to property sales and the Partner Buyouts-in particular:

•$3.1 million from the Partner Buyouts, including $1.1 million from the Partner Buyouts completed during the three months ended September 30, 2022;

•$926,000 from the sale of Shavano/Cinco/Vive/Waters Edge Sales;

•$341,000 from the Avenue/Parc Sales; and

•$330,000 from the Opop Sale.

Depreciation from unconsolidated joint ventures

The decrease is composed of:

•$3.6 million from the Partner Buyouts, including $1.3 million from the Partner Buyouts completed during the three months ended September 30, 2022;

•$1.2 million from the Shavano/Cinco/Vive/Waters Edge Sales; and

•$334,000 from the Opop Sale.

Gain on insurance recoveries from unconsolidated joint ventures

In the three months ended September 30, 2021, we recognized $1.2 million in gains primarily due to our receipt of insurance recoveries from claims on three properties located in Texas that were damaged in a February 2021 ice storm ( the "Texas Storm"), which receipts exceeded the assets previously written-off.

Loss on extinguishment of debt

See " - Completed Disposition" for information about the loss on extinguishment of debt from the sale of Water's Edge . In the three months ended September 30, 2021, we recognized a loss on extinguishment of debt of $9.4 million from the payoff of the mortgages in connection with the Avenue/ Parc sales.

Gain on sale of real estate from unconsolidated joint ventures

See "- Completed Dispositions" for information about the gain from the sales of Waters Edge. In the three months ended September 30, 2021, we recognized a gain on the sale of real estate of $84.0 million from the Avenue/ Parc Sales.

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Nine months ended September 30, 2022 compared to nine months ended September 30, 2021.

Revenues

The following table compares our revenues for the periods indicated:


	Nine Months Ended September 30,
(Dollars in thousands):	2022		2021		Increase (Decrease)		% Change
Rental and other revenue from real estate properties	47,804		21,762		$	26,042	119.7	%
Other income	12		12		—		—	%
Total revenues	$	47,816	$	21,774	$	26,042	119.6	%

Rental and other revenue from real estate properties

The increase is due to the following changes:

•$25.2 million due to the Partner Buyouts, including $12.7 million from the Partner Buyouts completed during the nine months ended September 30, 2022; and

•$2.0 million primarily due to an increase in average rental rates at same store properties.

Offsetting the increase is a $1.2 million decrease due to the sale of the Kendall Manor Property-Houston, TX (the "Kendall Sale").

Expenses

The following table compares our expenses for the periods indicated:


	Nine Months Ended September 30,
(Dollars in thousands)	2022	2021	Increase (Decrease)		% Change
Real estate operating expenses	20,296	9,687	$	10,609	109.5	%
Interest expense	9,994	4,804	5,190		108.0	%
General and administrative	10,839	9,382	1,457		15.5	%
Impairment charges	—	520	(520)		N/M
Depreciation and amortization	16,781	4,740	12,041		254.0	%
Total expenses	57,910	29,133	$	28,777	98.8	%

Real estate operating expense.

The increase is due primarily to:

•~~the inclusion of $1.9~~$10.9 million ~~relating~~due to the ~~Consolidating Transactions;~~Partner Buyouts, including $5.5 million from the Partner Buyouts completed during the nine months ended September 30, 2022; and

•$~~224,000~~596,000 at same store properties due to increases of $137,000 in payroll costs, $118,000 in replacement costs, $109,000 in utility costs and $232,000 across ~~most~~other expense categories.

The increase was offset by a decline of ~~$456,000~~$828,000 due to the Kendall Sale.

Interest expense.

The change is due to ~~a $1.0~~a:

•$6.4 million increase ~~from~~due to the inclusion of interest expense related to the ~~Consolidating Transactions. This was offset by a $664,000 decrease~~Partner Buyouts, including $3.6 million from Partner Buyouts completed during the nine months ended September 30, 2022;

•$279,000 increase in interest expense on our credit facility, due to an increase of $5.2 million in the average outstanding balances during the nine months ended September 30, 2022 from no outstanding balance during the nine months ended September 30, 2021; and

•$233,000 due to the ~~payoff of $31.9 million of mortgage debt in 2021 and, to a lesser extent, the payoff of the Avalon Debt~~increase in the ~~current period. See Item 3 "Quantitative and Qualitative Disclosures About Market Risks" for information regarding the impact of changing~~ interest ~~rates~~rate on our floating rate junior subordinated notes.

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The increase was offset by a (i) $1.4 million decrease due to the payoff of $46.5 million of mortgage debt since October 1, 2021 and (ii) $271,000 decrease due to the Kendall Sale.

General and administrative.

The increase is due ~~primarily~~ to a ~~$436,000~~$1.2 million increase in non-cash compensation expense, including ~~increased amortization~~increases of:

•~~$213,000 relating to the grant of performance and market based restricted stock units (the "RSUs") in June 2021;~~

•$~~130,000 with respect~~687,000 due to ~~restricted stock~~increased amortization expense from RSUs, of which (i) $479,000 was due primarily to the inclusion, for the entire nine months ended September 30, 2022, of the amortization expense related to the RSUs granted in 2021 and (ii) $208,000 due to the inclusion of amortization of expense related to RSU's granted in June ~~2021; and~~2022;

•$~~93,000~~294,000 due to the amortization expense related to the restricted stock granted in January ~~2021~~2022 (as a result of the higher fair value of the shares granted in ~~in 2021~~2022 in comparison to the restricted stock granted in ~~2016).~~2017); and

•$254,000 due to the inclusion, for the entire nine months ended September 30, 2022, of the amortization expense related to the restricted stock granted in June 2021; and

Also contributing to the increase was a $191,000 increase due to higher levels of cash compensation, including compensation allocated pursuant to the shared services agreement.

The increase was offset by the inclusion, in the corresponding period of the prior year, of $176,000 of professional fees related primarily to a terminated stock offering.

Impairment charges

In the nine months ended September 30, 2021, we recorded an impairment charge of $520,000 representing the excess of the book value of our investment in the Opop Tower and Loft properties, St Louis, MO, over the anticipated selling price of the investment. There was no comparable charge in the nine months ended September 30, 2022.

Depreciation and amortization

The increase is due primarily to the inclusion of ~~$2.2~~$12.1 million of such expense from the ~~Consolidating Transactions.~~Partner Buyouts, including $6.1 million from the Partner Buyouts completed during the nine months ended September 30, 2022.The increase was offset by $123,000 due to the Kendall Sale.

Gain on sale of real estate

In the nine months ended September 30, 2021, we recognized a $7.3 million gain on the Kendall Sale and a $414,000 gain from the sale of a cooperative apartment unit in New York, NY. There were no comparable gains in the nine months ended September 30, 2022.

Gain on sales of partnership interest

In the nine months ended September 30, 2021, we sold our interest in a joint venture that owned Anatole Apartments - Daytona, Beach, FL and recognized a gain of $2.2 million. There was no comparable gain in the nine months ended September 30, 2022.

Loss on extinguishment of debt

In the nine months ended September 30, 2022, we incurred $563,000 of loss on extinguishment of debt related to the mortgage refinancing that took place with the buyout of our joint venture partner's interest in Brixworth at Bridge Street. In the nine months ended September 30, 2021, we incurred $902,000 of loss on extinguishment of debt in connection with the payoff of $31.9 million of mortgage debt.

Income tax provision

In the nine months ended September 30, 2022, income tax provision increased to $976,000 from $155,000 in the corresponding period of the prior year due to an increase in state level taxes accrued. The increase in the accrual is the result of income generated by property sales and the unavailability of net operating loss carryforwards available in certain states to offset such income.

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Unconsolidated Joint Ventures - Results of Operations

Equity in earnings (loss) of unconsolidated joint ventures.

The table below reflects the condensed income statements of our Unconsolidated Properties. In accordance with US generally accepted accounting principles, each of the line items in the chart below (other than equity in income (loss) of unconsolidated joint ventures) is presented as if these properties are wholly owned by us although our equity interests in these properties ranges from 17.45% to 80% (see note 8 of our consolidated financial statements) (dollars in thousands):


	Nine Months Ended September 30,
	2022		2021		Increase (Decrease)		% change
Rental and other revenues from unconsolidated joint ventures	$	60,840	$	95,495	$	(34,655)	(36.3)	%

Real estate operating expense from unconsolidated joint ventures	27,523		45,523		(18,000)		(39.5)	%
Interest expense from unconsolidated joint ventures	13,762		24,562		(10,800)		(44.0)	%
Depreciation from unconsolidated joint ventures	14,957		28,464		(13,507)		(47.5)	%
Total expenses from unconsolidated joint ventures	56,242		98,549		(42,307)		(42.9)	%

Total revenues less total expenses from unconsolidated joint ventures	4,598		(3,054)		7,652		250.6	%

Other equity earnings	89		21		68		323.8	%
Impairment of assets from unconsolidated joint ventures	—		(2,813)		2,813		N/A
Insurance recoveries from unconsolidated joint ventures	—		2,813		(2813)		N/A
Gain on insurance recoveries from unconsolidated joint ventures	567		1,246		(679)		N/A
Loss on extinguishment of debt from unconsolidated joint ventures	(3,491)		(9,401)		5,910		N/A
Gain on sale of real estate from unconsolidated joint ventures	118,270		83,984		34,286		N/A
Net income (loss) from unconsolidated joint ventures	$	120,033	$	72,796	$	47,237	N/A

Equity in earnings (loss) of unconsolidated joint ventures and equity in earnings from sale of unconsolidated joint venture properties	$	65,846	$	28,949	$	36,897

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Three Months Ended March 31,
2022 2021 Increase
(Decrease) % change
Rental and other revenues from unconsolidated joint ventures $ 25,231 $ 32,672 $ (7,441) (22.8) %
Real estate operating expense from unconsolidated joint ventures 11,169 15,703 (4,534) (28.9) %
Interest expense from unconsolidated joint ventures 6,026 8,522 (2,496) (29.3) %
Depreciation from unconsolidated joint ventures 6,636 10,385 (3,749) (36.1) %
Total expenses from unconsolidated joint ventures 23,831 34,610 (10,779) (31.1) %
Total revenues less total expenses from unconsolidated joint ventures 1,400 (1,938) 3,338 172.2 %
Other equity earnings 55 9 46 511.1 %
Impairment of assets from unconsolidated joint ventures — (2,323) 2,323 N/A
Insurance recoveries from unconsolidated joint ventures — 2,323 (2323) N/A
Gain on insurance recoveries 515 — 515 N/A
Loss on extinguishment of debt (30) — (30) N/A
Gain on sale of real estate 23,652 — 23,652 N/A
Net income (loss) $ 25,592 $ (1,929) $ 27,521 N/A
Equity in earnings (loss) of unconsolidated joint ventures and equity in earnings from sale of unconsolidated joint venture properties $ 14,191 $ (1,345) $ 15,536

Set forth below is an explanation of the most significant changes in the components of the equity in earnings (loss) of unconsolidated joint ventures. Same store properties at Unconsolidated Properties represent 27eight properties that were owned for the entirety of the periods being compared and excludes ~~four~~those properties ~~three of~~ which were ~~sold and the fourth~~or which isare the subject of the ~~Consolidating Transaction.~~Partner Buyouts.

Rental and other revenues from unconsolidated joint ventures

The decrease is composed of :

•$~~4.5~~20.3 million from the ~~sale in 2021 of~~Partner Buyouts, including $10.1 million from the ~~properties by~~Partner Buyouts completed during the ~~unconsolidated joint ventures which owned The Avenue Apartments-Ocoee, FL and Parc at 980-Lawrenceville, GA (collectively, the "Avenue/Parc Sales");~~nine months ended September 30, 2022;

•$~~3.4~~10.4 million from the ~~Consolidating Transactions;~~Avenue/Parc Sales;

•$~~1.4~~4.9 million, from the sale in 2021 of our interests in the unconsolidated joint ventures that owned Anatole Apartments-Daytona Beach, FL and Tower at Opop and Lofts at Opop-St. Louis, MO (collectively, the "Anatole/Opop Sales");Shavano/Cinco/Vive/Waters Edge Sales; and

•$~~514,000 due to~~3.0 million from the ~~Shavano Sale.~~Opop Sale and the sale of our partnership interests in Anatole Apartments , collectively (the"Anatole/Opop Sales").

Offsetting the decrease was ~~$2.4~~a $3.8 million increase from same store sales, including ~~$1.7~~$3.1 million from ~~increased~~higher rental rates, ~~$545,000~~$564,000 from increased occupancy and ~~$177,000~~$189,000 from increased ancillary fees.

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Real estate operating expenses from unconsolidated joint ventures

The decrease is composed of:

•$~~1.9~~10.0 million from the Partner Buyouts, including $5.0 million from the Partner Buyouts completed during the nine months ended September 30, 2022;

•$4.6 million from the Avenue/Parc Sales;

•$~~1.7~~2.4 million from the ~~Consolidating Transactions;~~

•~~$843,000~~ from the ~~Anatole/Opop~~Shavano/Cinco/Vive/Waters Edge Sales; and

•$~~239,000~~1.8 million from the ~~Shavano Sale.~~Anatole/Opop Sales.

Offsetting this decrease was a ~~$193,000~~$773,000 increase in such expenses at same store properties, ~~with expenses generally increasing across most expense categories.~~resulting from increases in utilities, payroll, insurance and repairs and maintenance.

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Interest expense from unconsolidated joint ventures.

The decrease is due to the decrease in mortgage debt due to property sales and the ~~Consolidated Transactions-in~~Partner Buyouts-in particular:

•$~~1.1~~5.8 million from the Partner Buyouts, including $3.2 million from the Partner Buyouts completed during the nine months ended September 30, 2022;

•$2.5 million from the Avenue/Parc Sales;

•$~~913,000~~1.3 million from the ~~Consolidating Transactions;~~Shavano/Cinco/Vive/Waters Edge Sales; and

•$~~464,000~~1.2 million from the Anatole/Opop Sales.

Depreciation from unconsolidated joint ventures

The decrease is composed of:

•$~~1.4~~7.4 million from the Partner Buyouts, including $3.6 million from the Partner Buyouts completed during the nine months ended September 30, 2022;

•$2.4 million from the Avenue/Parc Sale;

•$~~1.4~~2.4 million from the ~~Consolidating Transactions;~~

•~~$511,000 from the Anatole/Opop~~Shavano/Cinco/Vive/Waters Edge Sales; and

•$~~314,000~~1.2 million from the ~~Shavano Sale.~~Anatole/Opop Sales

Impairment ~~charges~~of assets from unconsolidated joint ventures

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we recognized ~~$2.3~~$2.8 million of impairment charges at three properties ~~located in Texas~~ due to ~~storm damage in 2021 (the "Texas Storm");~~the Texas Storm; there were no comparable charges in the ~~current period.~~nine months ended September 30, 2022.

Insurance recoveries from unconsolidated joint ventures

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we recognized ~~$2.3~~$2.8 million of insurance recoveries related to the impairment charges resulting from the Texas Storm; there were no comparable recoveries in the ~~current period.~~nine months ended September 30, 2022.

Gain on insurance recoveries from unconsolidated joint ventures.

In the ~~three~~nine months ended ~~March 31,~~September 30, 2022, we recognized ~~$515,000~~$567,000 in gains primarily due to the fact that the amounts we received on claims related to insurance recoveries from the Texas Storm exceeded the assets previously written-off. In the nine months ended September 30, 2021, we recognized $1.2 million related to these claims.

Loss on early extinguishment of debt from unconsolidated joint ventures

In the nine months ended September 30, 2022, we recognized $3.5 million of loss on extinguishment of debt from the Shavano/Cinco/Vive/Waters Edge Sales and in the nine months ended September 30, 2021, we recognized $9.4 million of loss from the extinguishment of debt from the Avenue/Parc Sale. These losses were incurred in connection with the payoff of the mortgages upon the respective property sales.

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Gain on sale of real estate from unconsolidated joint ventures

~~See "-~~ ~~Completed Dispositions"~~ ~~for information about~~In the nine months ended September 30, 2022, we recognized an aggregate gain of $118.2 million from the ~~Shavano Sale. There was no comparable gain~~Shavano/Cinco/Vive/Waters Edge Sales and in the ~~three~~nine months ended ~~March 31, 2021.~~September 30, 2021, we recognized an aggregate gain of $84.0 million from the Avenue/Parc Sale..

Liquidity and Capital Resources

We require funds to pay operating expenses and debt service obligations, acquire properties (including the acquisition of interests of our joint venture partners) , make capital and other improvements, fund capital contributions, pay dividends and, to the extent we deem appropriate, reduce, other than in the ordinary course, our indebtedness over time. Generally, our primary sources of capital and liquidity are the operations of our multi-family properties (including distributions from the operations of our multi-family joint ventures and distributions from sale transactions), mortgage debt financings and re-financings, our share of the proceeds from the sale of properties, the sale of shares of our common stock pursuant to our at-the-market equity distribution program, borrowings from our credit facility and our available ~~cash (including restricted cash). On March 31,~~cash. At November 4, 2022, ~~and May 2, 2022,~~ our available liquidity was $55.9 million, including $14.9 million of cash and cash equivalents ~~were approximately $29.7~~and $ 41.0 million ~~and $21.5 million, respectively,~~available under our credit facility and excludes funds held at our unconsolidated joint ventures. At November 4, 2022, the interest rate on the facility was 7%.

We anticipate that from ~~April~~October 1, 2022 through 2024, our operating expenses, ~~$104.5~~$74.0 million of mortgage amortization and interest expense (including $30.0 million from unconsolidated joint ventures), and ~~$25.7~~$14.9 million of balloon payments ~~(including $78.8 million and $10.8 million, respectively, from unconsolidated joint ventures)~~( which as noted below was paid off on October 31, 2022) due with respect to ~~mortgages~~a mortgage maturing from 2022 to 2024, interest expense on our credit facility and junior subordinated notes, estimated cash dividend payments of at least ~~$47.0~~$42.1 million (assuming (i) the current quarterly dividend rate of ~~$0.23~~$0.25 per share and (ii) ~~18.6~~18.7 million shares outstanding), will be funded from cash generated from operations (including distributions from unconsolidated joint ventures), property sales ~~of properties~~ and, to the extent available, our credit facility. ~~Our operating cash flow and available cash is insufficient~~On October 30, 2022, we borrowed $15.0 million from our credit facility to ~~fully fund~~pay off the ~~$25.7~~$14.9 million of ~~balloon payments, and if we are unable to refinance such~~mortgage debt ~~we may need to issue additional equity or dispose~~that matured at the end of ~~properties, in each case on potentially unfavorable terms.~~

~~Table~~ ~~of Contents~~

~~See "~~– ~~Contracts to Purchase the Remaining Interests of Joint Venture Partners in Nine Unconsolidated Ventures" for information regarding the source of funding to effectuate the Partner Buyouts of nine multi-family properties owned by unconsolidated joint ventures.~~

October 2022.

At ~~March 31,~~September 30, 2022, we had mortgage debt of ~~$747.3~~$673.2 million (including ~~$534.5~~$247.6 million of mortgage principal debt of our unconsolidated subsidiaries). The mortgage debt at our: (i) consolidated subsidiaries had a weighted average interest rate of ~~3.73%~~3.99% and a weighted average remaining term to maturity of approximately ~~10.2~~7.8 years, and (ii) at our unconsolidated subsidiaries had a weighted average interest rate of ~~4.07%~~3.96% and a remaining term to maturity of approximately ~~7.6~~7.3 years.

Capital improvements at (i) 13two unconsolidated multi-family properties will be funded by approximately ~~$6.5 million~~$872,000 of restricted cash available at ~~March 31,~~September 30, 2022 and the cash flow from operations at such properties and (ii) other properties will be funded from the cash flow from operations of such properties.

Junior Subordinated Notes

As of ~~March 31,~~September 30, 2022, $37.4 million (excluding deferred costs of ~~$292,000)~~$282,000) in principal amount of our junior subordinated notes is outstanding. These notes mature in April 2036, contain limited covenants (including covenants prohibiting us from paying dividends or repurchasing capital stock if there is an event of default (as defined therein) on these notes), are redeemable at our option and bear an interest rate, which resets and is payable quarterly, of three-month LIBOR plus 200 basis points. At ~~March 31,~~November 4, 2022, September 30, 2022 and 2021, the interest rate on these notes was ~~2.30%~~6.41%, 4.78% and ~~2.21%~~2.13%, respectively.

Credit Facility

Our credit facility with VNB New York, LLC, an affiliate of Valley National Bank (collectively, "VNB"), ~~as amended and restated,~~ allows us to borrow, subject to compliance with borrowing base requirements and other conditions, up to ~~$35~~$60 million, (i) for the acquisition of, and investment in, multi-family properties, (ii) to repay mortgage debt secured by multi-family properties and (iii) for Operating Expenses (i.e., working capital (including dividend payments) and operating expenses); provided, that not more than ~~$15~~$25 million may be used for Operating Expenses. ~~(The facility provides that it may be expanded to provide for up to $60 million of availability if another lender(s) is willing to provide an additional $25 million of availability).~~ The credit facility is secured by cash accounts maintained by us at VNB (and we are required to maintain substantially all of our bank accounts at VNB), and the pledge of our interests in the entities that own the unencumbered multi-family properties used in calculating the borrowing base. The credit facility bears an annual interest rate, which resets daily, ~~of 25 basis points over~~equal to the prime rate, with a floor of 3.50%. There is an annual fee of 0.25% on the total amount committed by VNB and unused by us. The credit facility matures in ~~November 2024.~~September 2025. Net proceeds received from the sale, financing or refinancing of our properties are generally required to be used to repay amounts outstanding on the facility. As of ~~the date of this filing, no amounts are~~November 4, 2022, $19..0 million is outstanding on the credit facility and ~~$35~~$41.0 million is available to be borrowed thereunder.

The terms of the credit facility include certain restrictions and covenants which, among other things, limit the incurrence of liens, require that we maintain and include in the collateral securing the facility at least ~~two~~three unencumbered properties with an

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aggregate value(as calculated pursuant to the facility) of at least ~~$50~~$75 million, and require compliance with financial ratios relating to, among other things, maintaining a minimum tangible net worth of $140 million, the minimum amount of debt service coverage with respect to the properties (and amounts drawn on the credit facility) used in calculating the borrowing base. Net proceeds received from the sale, financing or refinancing of wholly-owned properties are generally required to be used to repay amounts outstanding under the credit facility.

At ~~March 31,~~September 30, 2022, we were in compliance in all material respects with the requirements of the facility.

Other Financing Sources and Arrangements

At ~~March 31,~~September 30, 2022, we are joint venture partners in ~~approximately 22~~ unconsolidated joint ventures which own 23eight multi-family properties ~~(including~~and a development ~~project)~~project, and ~~that~~ the distributions to us from these joint venture properties ($~~19.7~~14.8 million (including ~~$14.9~~$13.3 million from the sale of ~~the~~a property) in the quarter ended ~~March 31,~~September 30, 2022) are a ~~material~~significant source of our liquidity and cash flow. Further, we may be required to make significant capital contributions with respect to these properties. At ~~March 31,~~September 30, 2022, these joint venture properties have a net equity carrying value of ~~$109.4~~$43.8 million and are subject to ~~net~~ mortgage debt, which is not reflected on our consolidated balance sheet, of ~~$534.5~~$247.6 million. Although BRT Apartments Corp. is not the obligor with respect to such mortgage debt, the loss of any of these properties due to mortgage foreclosure or similar proceedings would have a material adverse effect on our results of operations and financial condition. These joint venture arrangements have been, and we anticipate that they will continue to be, material to our liquidity and capital resource position. See note 8 to our consolidated financial statements.

Cash Distribution Policy

We have elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the “Code.” To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement

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that we distribute to our stockholders within the time frames prescribed by the Code at least 90% of our ordinary taxable income. Management currently intends to maintain our REIT status. As a REIT, we generally will not be subject to corporate Federal income tax on taxable income we distribute to stockholders in accordance with the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify for Federal taxation as a REIT, we are subject to certain state and local taxes on our income and to Federal income and excise taxes on undistributed taxable income (i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Code).

Our net operating loss at December 31, 2021 was approximately ~~$35.7 million; therefore,~~$36.0 million and we ~~are not currently required by Code provisions relating~~anticipate applying this amount to ~~REITs to pay cash dividends to maintain our status as a REIT. Notwithstanding the foregoing, on April~~offset income generated in 2022. On October 7, 2022, we paid a quarterly cash dividend of ~~$0.23~~$0.25 per share.

We carefully monitor our discretionary spending. Our largest recurring discretionary expenditure has been our quarterly dividend (which was ~~$0.23~~$0.25 per share of common stock, or in the approximate amount of ~~$4.3~~$4.7 million, for the most recent quarter). Each quarter, our board of directors evaluates the timing and amount of our dividend based on its assessment of, among other things, our short and long- term cash and liquidity requirements, prospects, debt maturities, projections of our REIT taxable income, net income, funds from operations, and adjusted funds from operations.

Application of Critical Accounting Estimates

A complete discussion of our critical accounting estimates is included in our Annual Report. There have been no significant changes in such estimates since December 31, 2021.

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Funds from ~~Operations;~~Operations, Adjusted Funds from ~~Operations;~~Operations and Net Operating Income

We disclose below funds from operations (“FFO”), adjusted funds from operations (“AFFO”) and net operating income ("NOI") because we believe that such metrics are a widely recognized and appropriate measure of the performance of an equity REIT.

We compute FFO in accordance with the “White Paper on Funds From Operations” issued by the National Association of Real Estate Investment Trusts (“NAREIT”) and NAREIT’s related guidance. FFO is defined in the White Paper as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. In computing FFO, we do not add back to net income the amortization of costs in connection with our financing activities or depreciation of non-real estate assets. We compute AFFO by deducting from FFO our straight-line rent accruals, loss on extinguishment of debt, restricted stock and restricted stock unit expense, deferred mortgage costs and gain on insurance recovery. Since the NAREIT White Paper only provides guidelines for computing FFO, the computation of AFFO may vary from one REIT to another.

We believe that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assumes that the carrying value of real estate assets diminishes predictably over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a performance measure that when compared year over year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions.

FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP.

Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our performance, management is careful to examine GAAP measures such as net income and cash flows from operating, investing and financing activities.

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The tables below provides a reconciliation of net loss determined in accordance with GAAP to FFO and AFFO on a dollar and per share basis for each of the indicated periods (dollars in thousands, except per share amounts):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021				2022		2021		2022		2021
GAAP Net income (loss) attributable to common stockholders		$	11,508	$	(3,765)
GAAP Net income attributable to common stockholders							GAAP Net income attributable to common stockholders	$	7,059	$	28,106	$	54,174	$	30,368
Add: depreciation of properties	Add: depreciation of properties	3,606		1,537			Add: depreciation of properties	8,165		1,787		16,781		4,740
Add: our share of depreciation in unconsolidated joint venture properties	Add: our share of depreciation in unconsolidated joint venture properties	4,318		6,599			Add: our share of depreciation in unconsolidated joint venture properties	1,657		5,514		9,234		18,389

Add: Impairment charge							Add: Impairment charge	—		—		—		520
Add: our share of impairment charge in unconsolidated joint venture properties	Add: our share of impairment charge in unconsolidated joint venture properties	—		1,662			Add: our share of impairment charge in unconsolidated joint venture properties	—		—		—		2,010
Deduct: our share of equity in earnings from sale of unconsolidated joint venture properties	Deduct: our share of equity in earnings from sale of unconsolidated joint venture properties	(12,961)		—			Deduct: our share of equity in earnings from sale of unconsolidated joint venture properties	(11,472)		(34,982)		(64,531)		(34,982)
Deduct: gain on sale of real estate and partnership interests	Deduct: gain on sale of real estate and partnership interests	(6)		—			Deduct: gain on sale of real estate and partnership interests	—		(414)		(6)		(9,937)
Adjustments for non-controlling interests	Adjustments for non-controlling interests	(4)		(4)			Adjustments for non-controlling interests	(4)		(4)		(12)		(12)
NAREIT Funds from operations attributable to common stockholders	NAREIT Funds from operations attributable to common stockholders	6,461		6,029			NAREIT Funds from operations attributable to common stockholders	5,405		7		15,640		11,096

Adjustments for: straight-line rent accruals	Adjustments for: straight-line rent accruals	6		(10)			Adjustments for: straight-line rent accruals	6		(10)		18		(30)

Add: loss on extinguishment of debt							Add: loss on extinguishment of debt	—		902		563		902
Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties	Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties	19		—			Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties	388		4,581		1,880		4,581
Add: amortization of restricted stock and RSU expense	Add: amortization of restricted stock and RSU expense	974		538			Add: amortization of restricted stock and RSU expense	1,208		843		3,183		1,950
Add: amortization of deferred mortgage and debt costs	Add: amortization of deferred mortgage and debt costs	77		80			Add: amortization of deferred mortgage and debt costs	191		62		370		215
Add: our share of deferred mortgage costs from unconsolidated joint venture properties	Add: our share of deferred mortgage costs from unconsolidated joint venture properties	93		148			Add: our share of deferred mortgage costs from unconsolidated joint venture properties	33		148		199		439
Less: our share of insurance recovery		—		(1,662)
Less: our share of insurance recovery from unconsolidated joint venture properties							Less: our share of insurance recovery from unconsolidated joint venture properties	—		—		—		(2,010)
Less: gain on insurance proceeds							Less: gain on insurance proceeds	(62)		—		(62)		—
Less: our share of gain on insurance proceeds from unconsolidated joint venture properties	Less: our share of gain on insurance proceeds from unconsolidated joint venture properties	(386)		—			Less: our share of gain on insurance proceeds from unconsolidated joint venture properties	—		(880)		(432)		(880)
Adjustments for non-controlling interests	Adjustments for non-controlling interests	(1)		2			Adjustments for non-controlling interests	(1)		2		(3)		6
Adjusted funds from operations attributable to common stockholders	Adjusted funds from operations attributable to common stockholders	$	7,243	$	5,125		Adjusted funds from operations attributable to common stockholders	$	7,168	$	5,655	$	21,356	$	16,269

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		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021				2022		2021		2022		2021
Net income (loss) attributable to common stockholders		$	0.62	$	(0.22)
Net income attributable to common stockholders							Net income attributable to common stockholders	$	0.37	$	1.54	$	2.91	$	1.69
Add: depreciation of properties	Add: depreciation of properties	0.20		0.09			Add: depreciation of properties	0.44		0.10		0.90		0.29
Add: our share of depreciation in unconsolidated joint venture properties	Add: our share of depreciation in unconsolidated joint venture properties	0.23		0.38			Add: our share of depreciation in unconsolidated joint venture properties	0.09		0.30		0.50		1.04

Add: Impairment charge							Add: Impairment charge	—		—		—		0.03
Add: our share of impairment charge in unconsolidated joint venture properties	Add: our share of impairment charge in unconsolidated joint venture properties	—		0.10			Add: our share of impairment charge in unconsolidated joint venture properties	—		—		—		0.11
Deduct: our share of equity in earnings from sale of unconsolidated joint venture properties	Deduct: our share of equity in earnings from sale of unconsolidated joint venture properties	(0.70)		—			Deduct: our share of equity in earnings from sale of unconsolidated joint venture properties	(0.61)		(1.92)		(3.47)		(1.97)
Deduct: gain on sale of real estate and partnership interests	Deduct: gain on sale of real estate and partnership interests	—		—			Deduct: gain on sale of real estate and partnership interests	—		(0.02)		—		(0.56)
Adjustment for non-controlling interests	Adjustment for non-controlling interests	—		—			Adjustment for non-controlling interests	—		—		—		—
NAREIT Funds from operations per diluted common share	NAREIT Funds from operations per diluted common share	0.35		0.35			NAREIT Funds from operations per diluted common share	0.29		—		0.84		0.63

Adjustments for: straight line rent accruals	Adjustments for: straight line rent accruals	—		—			Adjustments for: straight line rent accruals	—		—		—		—

Add: loss on extinguishment of debt							Add: loss on extinguishment of debt	—		0.05		0.03		0.05
Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties	Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties	—		—			Add: our share of loss on extinguishment of debt from unconsolidated joint venture properties	0.02		0.25		0.10		0.26
Add: amortization of restricted stock and RSU expense	Add: amortization of restricted stock and RSU expense	0.05		0.04			Add: amortization of restricted stock and RSU expense	0.06		0.05		0.16		0.11
Add: amortization of deferred mortgage and debt costs	Add: amortization of deferred mortgage and debt costs	—		—			Add: amortization of deferred mortgage and debt costs	0.01		—		0.02		0.01
Add: our share of deferred mortgage and debt costs from unconsolidated joint venture properties	Add: our share of deferred mortgage and debt costs from unconsolidated joint venture properties	0.01		0.01			Add: our share of deferred mortgage and debt costs from unconsolidated joint venture properties	—		0.01		0.01		0.02
Less: our share of insurance recovery from unconsolidated joint venture properties	Less: our share of insurance recovery from unconsolidated joint venture properties	—		(0.10)			Less: our share of insurance recovery from unconsolidated joint venture properties	—		—		—		(0.11)
Less: gain on insurance proceeds							Less: gain on insurance proceeds	—		—		—		—
Less: our share of gain on insurance proceeds from unconsolidated joint venture properties	Less: our share of gain on insurance proceeds from unconsolidated joint venture properties	(0.02)		—			Less: our share of gain on insurance proceeds from unconsolidated joint venture properties	—		(0.05)		(0.02)		(0.05)
Adjustments for non-controlling interests	Adjustments for non-controlling interests	—		—			Adjustments for non-controlling interests	—		—		—		—
Adjusted funds from operations per diluted common share	Adjusted funds from operations per diluted common share	$	0.39	$	0.30		Adjusted funds from operations per diluted common share	$	0.38	$	0.31	$	1.14	$	0.92

Diluted shares outstanding for FFO and AFFO	Diluted shares outstanding for FFO and AFFO	18,570,639		17,319,222			Diluted shares outstanding for FFO and AFFO	18,928,648		18,215,924		18,712,740		17,820,909


Maryland						13-2755856
(State or other jurisdiction of						(I.R.S. Employer Identification No.)
incorporation or organization)


60 Cutter Mill Road, Great Neck, NY						11021
(Address of principal executive offices)						(Zip Code)


Large accelerated filer ☐						Accelerated filer ☐
Non-accelerated filer ☒						Smaller reporting company ☒
Emerging growth company ☐


Part I - Financial Information		Page No.
Item 1.	Financial Statements
	Consolidated Balance Sheets - Consolidated Balance Sheets - ~~March~~ 3 1 ~~, 202~~2 September 30, 2022 (unaudited) and December 31, ~~202~~1 2021 (audited)	3
	Consolidated Statements of Operations – Three and nine months ended ~~March~~ 3 1 ~~, 202~~2 September 30, 2022 and ~~202~~1 2021 (unaudited)	4
	Consolidated Statements of Comprehensive Income ~~(loss)~~ – Three m ~~onths~~and nine months ended ~~March~~ 3 1 ~~, 202~~2 September 30, 2022 and ~~202~~1 2021 (unaudited)	5
	Consolidated Statements of Equity – Three and nine months ended ~~March~~ 3 1 ~~, 202~~2 September 30, 2022 and ~~202~~1 2021 (unaudited)	6
	Consolidated Statements of Cash Flows – ~~Three~~Nine months ended ~~March~~ 3 1 ~~, 202~~2 September 30, 2022 and ~~202~~1 2021 (unaudited)	78
	Notes to Consolidated Financial Statements	1011

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2023

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	3442

Item 4.	Controls and Procedures	3442

Part II – Other Information

Item 1.	Legal Proceedings	43

Item 6.	Exhibits	3543


	March 31, 2022		December 31, 2021
	(unaudited)		(audited)
ASSETS
Real estate properties, net of accumulated depreciation and amortization of $39,259 and $36,467	$	328,334	$	293,550
Investments in unconsolidated joint ventures	106,025		112,347
Cash and cash equivalents	29,688		32,339
Restricted cash	6,543		6,582
Other assets	12,410		10,341
Real estate property held for sale	—		4,379
Total Assets	$	483,000	$	459,538
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net of deferred costs of $1,297 and $980	$	211,565	$	199,877
Junior subordinated notes, net of deferred costs of $292 and $297	37,108		37,103

Accounts payable and accrued liabilities	20,125		19,607
Total Liabilities	268,798		256,587

Commitments and contingencies	0		0
Equity:
BRT Apartments Corp. stockholders' equity:
Preferred shares $0.01 par value 2,000 shares authorized, none outstanding	—		—
Common stock, $0.01 par value, 300,000 shares authorized; 17,632 and 17,349 shares outstanding	176		173
Additional paid-in capital	262,170		258,161

Accumulated deficit	(48,175)		(55,378)
Total BRT Apartments Corp. stockholders’ equity	214,171		202,956
Non-controlling interest	31		(5)
Total Equity	214,202		202,951
Total Liabilities and Equity	$	483,000	$	459,538


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BRT	NYSE


	September 30, 2022		December 31, 2021
	(unaudited)		(audited)
ASSETS
Real estate properties, net of accumulated depreciation and amortization of $49,008 and $36,467	$	655,645	$	293,550
Investments in unconsolidated joint ventures	43,759		112,347
Cash and cash equivalents	21,865		32,339
Restricted cash	872		6,582
Other assets	21,518		10,341
Real estate property held for sale	—		4,379
Total Assets	$	743,659	$	459,538
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net of deferred costs of $4,327 and $980	$	419,115	$	199,877
Junior subordinated notes, net of deferred costs of $282 and $297	37,118		37,103
Credit facility, net of deferred costs of $551 and $—	6,449		—
Accounts payable and accrued liabilities	23,862		19,607
Total Liabilities	486,544		256,587

Commitments and contingencies
Equity:
BRT Apartments Corp. stockholders' equity:
Preferred shares $0.01 par value 2,000 shares authorized, none outstanding	—		—
Common stock, $0.01 par value, 300,000 shares authorized; 17,973 and 17,349 shares outstanding	180		173
Additional paid-in capital	271,904		258,161

Accumulated deficit	(14,952)		(55,378)
Total BRT Apartments Corp. stockholders’ equity	257,132		202,956
Non-controlling interest	(17)		(5)
Total Equity	257,115		202,951
Total Liabilities and Equity	$	743,659	$	459,538


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021				2022		2021		2022		2021
Revenues:	Revenues:						Revenues:
Rental and other revenue from real estate properties	Rental and other revenue from real estate properties	$	11,430	$	7,095		Rental and other revenue from real estate properties	$	21,691	$	7,709	$	47,804	$	21,762
Other income	Other income	4		4			Other income	6		5		12		12
Total revenues	Total revenues	11,434		7,099			Total revenues	21,697		7,714		47,816		21,774
Expenses:	Expenses:						Expenses:
Real estate operating expenses - including $11 and $7 to related parties		4,753		3,117
Real estate operating expenses - including $9 and $8 to related parties for the three months ended and $28 and $23 for the nine months ended							Real estate operating expenses - including $9 and $8 to related parties for the three months ended and $28 and $23 for the nine months ended	9,195		3,404		20,296		9,687
Interest expense	Interest expense	2,021		1,660			Interest expense	5,061		1,535		9,994		4,804
General and administrative - including $246 and $172 to related parties		3,633		3,114

General and administrative - including $183 and $172 to related parties for the three months ended and $614 and $523 for the nine months ended							General and administrative - including $183 and $172 to related parties for the three months ended and $614 and $523 for the nine months ended	3,673		3,114		10,839		9,382
Impairment charge							Impairment charge	—		—		—		520
Depreciation and amortization	Depreciation and amortization	3,606		1,537			Depreciation and amortization	8,165		1,787		16,781		4,740
Total expenses	Total expenses	14,013		9,428			Total expenses	26,094		9,840		57,910		29,133
Total revenues less total expenses	Total revenues less total expenses	(2,579)		(2,329)			Total revenues less total expenses	(4,397)		(2,126)		(10,094)		(7,359)
Equity in earnings (loss) of unconsolidated joint ventures	Equity in earnings (loss) of unconsolidated joint ventures	1,230		(1,345)			Equity in earnings (loss) of unconsolidated joint ventures	135		(4,196)		1,315		(6,033)
Equity in earnings from sale of unconsolidated joint ventures properties	Equity in earnings from sale of unconsolidated joint ventures properties	12,961		—			Equity in earnings from sale of unconsolidated joint ventures properties	11,472		34,982		64,531		34,982
Gain on sale of real estate	Gain on sale of real estate	6		—			Gain on sale of real estate	—		414		6		7,693

Income (loss) from continuing operations		11,618		(3,674)
Gain on sale of partnership interest							Gain on sale of partnership interest	—		—		—		2,244
Gain on insurance recoveries							Gain on insurance recoveries	62		—		62		—
Loss on extinguishment of debt							Loss on extinguishment of debt	—		(902)		(563)		(902)
Income from continuing operations							Income from continuing operations	7,272		28,172		55,257		30,625
Income tax provision	Income tax provision	74		57			Income tax provision	178		31		976		155
Net income (loss) from continuing operations, net of taxes		11,544		(3,731)
Net income from continuing operations, net of taxes							Net income from continuing operations, net of taxes	7,094		28,141		54,281		30,470
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	(36)		(34)			Net income attributable to non-controlling interest	(35)		(35)		(107)		(102)
Net income (loss) attributable to common stockholders		$	11,508	$	(3,765)
Net income attributable to common stockholders							Net income attributable to common stockholders	$	7,059	$	28,106	$	54,174	$	30,368

Weighted average number of shares of common stock outstanding:	Weighted average number of shares of common stock outstanding:						Weighted average number of shares of common stock outstanding:
Basic	Basic	17,561,802		17,319,222			Basic	17,928,197		17,261,520		17,721,700		16,916,623
Diluted	Diluted	17,654,349		17,319,222			Diluted	17,994,457		17,292,988		17,784,362		16,992,974

Per share amounts attributable to common stockholders:	Per share amounts attributable to common stockholders:						Per share amounts attributable to common stockholders:
Basic and Diluted		$	0.62	$	(0.22)

Basic							Basic	$	0.37	$	1.55	$	2.91	$	1.71
Diluted							Diluted	$	0.37	$	1.54	$	2.89	$	1.70


	Three Months Ended March 31,

	2022		2021
Net income (loss)	$	11,544	$	(3,731)
Other comprehensive income :
Unrealized income on derivative instruments	—		5
Other comprehensive income	—		5
Comprehensive income (loss)	11,544		(3,726)
Comprehensive (income) attributable to non-controlling interests	(36)		(35)
Comprehensive income (loss) attributable to common stockholders	$	11,508	$	(3,761)


		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) income		Accumulated Deficit		Non- Controlling Interest		Total			Common Stock		Additional Paid-In Capital		Accumulated Deficit		Non- Controlling Interest		Total
Balances, December 31, 2021	Balances, December 31, 2021	$	173	$	258,161	$	—	$	(55,378)	$	(5)	$	202,951	Balances, December 31, 2021	$	173	$	258,161	$	(55,378)	$	(5)	$	202,951
Distributions - common stock - $0.23 per share	Distributions - common stock - $0.23 per share	—		—		—		(4,305)		—		(4,305)		Distributions - common stock - $0.23 per share	—		—		(4,305)		—		(4,305)
Restricted stock and restricted stock units vesting	Restricted stock and restricted stock units vesting	2		(2)		—		—		—		—		Restricted stock and restricted stock units vesting	2		(2)		—		—		—
Compensation expense - restricted stock and restricted stock units	Compensation expense - restricted stock and restricted stock units	—		974		—		—		—		974		Compensation expense - restricted stock and restricted stock units	—		974		—		—		974

Shares issued through equity offering program, net	Shares issued through equity offering program, net	1		3,037		—		—		—		3,038		Shares issued through equity offering program, net	1		3,037		—		—		3,038

Net income	Net income	—		—		—		11,508		36		11,544		Net income	—		—		11,508		36		11,544
Other comprehensive income		—		—		—		—		—		—

Comprehensive income	Comprehensive income											11,544		Comprehensive income									11,544
Balances, March 31, 2022	Balances, March 31, 2022	$	176	$	262,170	$	—	$	(48,175)	$	31	$	214,202	Balances, March 31, 2022	$	176	$	262,170	$	(48,175)	$	31	$	214,202

Distributions - common stock - $0.25 per share														Distributions - common stock - $0.25 per share	—		—		(4,723)		—		(4,723)
Compensation expense - restricted stock and restricted stock units														Compensation expense - restricted stock and restricted stock units	—		1,001		—		—		1,001

Distributions to non-controlling interests														Distributions to non-controlling interests	—		—		—		(60)		(60)

Shares issued through equity offering program, net														Shares issued through equity offering program, net	2		3,085		—		—		3,087

Net income														Net income	—		—		35,607		36		35,643

Comprehensive income														Comprehensive income									35,643
Balances, June 30, 2022														Balances, June 30, 2022	$	178	$	266,256	$	(17,291)	$	7	$	249,150

Distributions - common stock - $0.25 per share														Distributions - common stock - $0.25 per share	—		—		(4,720)		—		(4,720)
Compensation expense - restricted stock and restricted stock units														Compensation expense - restricted stock and restricted stock units	—		1,208		—		—		1,208

Distributions to non-controlling interests														Distributions to non-controlling interests	—		—		—		(59)		(59)
Shares issued through equity offering program, net														Shares issued through equity offering program, net	2		3,818		—		—		3,820
Shares issues through DRIP														Shares issues through DRIP	—		622		—		—		622

Net income														Net income	—		—		7,059		35		7,094

Comprehensive income														Comprehensive income									7,094
Balances, September 30, 2022														Balances, September 30, 2022	$	180	$	271,904	$	(14,952)	$	(17)	$	257,115


The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.

	March 31,
	2022		2021
Cash and cash equivalents	$	29,688	$	19,406
Restricted cash	6,543		8,511
Total cash, cash equivalents and restricted cash, shown in consolidated statement of cash flows	$	36,231	$	27,917


The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.

	September 30,
	2022		2021
Cash and cash equivalents	$	21,865	$	29,598
Restricted cash	872		7,560
Total cash, cash equivalents and restricted cash, shown in consolidated statement of cash flows	$	22,737	$	37,158


	December 31, 2021 Balance		Additions		Capitalized Costs and Improvements		Depreciation		Sale of Property		March 31, 2022 Balance
Multi-family	$	291,538	$	36,802	$	802	$	(2,792)	$	—	$	326,350
Land - Daytona, FL	4,379		—		—		—		(4,379)		—
Retail shopping center and other	2,012		—		—		(28)		—		1,984
Total real estate properties	$	297,929	$	36,802	$	802	$	(2,820)	$	(4,379)	$	328,334


	December 31, 2021 Balance		Partner Buyouts		Improvements		Depreciation		September 30, 2022 Balance
Multi-family	$	291,538	$	370,513	$	4,151	$	(12,486)	$	653,716
Retail shopping center and other	2,012		—		—		(83)		1,929
Total real estate properties	$	293,550	$	370,513	$	4,151	$	(12,569)	$	655,645


Buyout Date	Property Name	Location	Units	Remaining Interest Purchased		Purchase Price (1)
03/23/2022	Verandas at Alamo	San Antonio, TX	288	28.1	%	$	8,721
04/07/2022	Vanguard Heights	Creve Coeur, MO	174	21.6	%	4,880
05/11/2022	Jackson Square	Tallahassee, FL	242	20	%	7,215
05/24/2022	Brixworth at Bridge Street	Huntsville, AL	208	20	%	10,697
05/26/2022	Woodland Apartments	Boerne, TX	120	20	%	3,881
06/30/2022	Grove at River Place	Macon, GA	240	20	%	7,485
07/12/2022	Civic I	Southaven, MS	392	25	%	18,233
07/12/2022	Civic II	Southaven, MS	384	25	%	17,942
07/14/2022	Abbotts Run	Wilmington, NC	264	20	%	9,010
07/19/2022	Somerset at Trussville	Trussville, AL	328	20	%	10,558
08/03/2022	Magnolia Pointe	Madison, AL	204	20	%	7,246
		Total	2,844			$	105,868


	~~Purchase Price Allocation~~
~~Land~~	$	~~3,336~~
~~Building and improvements~~	~~33,404~~
~~Total land and buildings~~	~~36,740~~

~~Acquisition related intangible assets~~	~~797~~
~~Total Asset~~	$	~~37,537~~

~~Acquisition related mortgage intangible~~	$	62


Property	Land		Building and Improvements		Total Land and Building		Acquisition and Intangible Assets		Total Assets		Acquisition Related Mortgage Intangible
Verandas at Alamo	$	3,336	$	33,465	$	36,801	$	797	$	37,598	$	(61)
Vanguard Heights	5,466		30,826		36,292		508		36,800		578
Jackson Square	3,398		27,167		30,565		634		31,199		283
Brixworth at Bridge Street	1,959		20,080		22,039		321		22,360		—
The Woodland Apts	1,289		12,853		14,142		233		14,375		—
Grove at River Place	2,866		16,416		19,282		396		19,678		136
Civic I	3,646		45,554		49,200		913		50,113		562
Civic II	3,847		46,452		50,299		1,013		51,312		1,254
Abbotts Run	3,468		37,312		40,780		701		41,481		481
Somerset at Trussville	4,095		42,943		47,038		869		47,907		1,090
Magnolia Pointe	2,052		22,023		24,075		503		24,578		396
Total Purchase Price Allocation	$	35,422	$	335,091	$	370,513	$	6,888	$	377,401	$	4,719


Property Name	Location	Debt at Purchase Date (1)		Interest Rate		Maturity Date	Interest Only through
Verandas at Alamo	San Antonio, TX	$	27,000	3.64	%	Oct 2029	October 2024
Vanguard Heights	Creve Coeur, MO	29,700		4.41	%	July 2031	June 2025
Jackson Square	Tallahassee, FL	21,524		4.19	%	Sept 2027	September 2022
Brixworth at Bridge Street (2)	Huntsville, AL	11,147		4.25	%	June 2032	Maturity
The Woodland Apartments	Boerne, TX	7,914		4.74	%	Feb 2026	N/A
Grove at River Place (3)	Macon, GA	11,426		4.39	%	Feb 2026	N/A
Civic I	Southaven, MS	27,389		4.24	%	March 2026	N/A
Civic II	Southaven, MS	30,105		3.73	%	September 2026	N/A
Abbotts	Wilmington, NC	23,160		4.71	%	July 2030	July 2025
Somerset at Trussville	Trussville, AL	32,250		4.19	%	June 2029	May 2025
Magnolia Pointe	Madison, AL	15,000		4.08	%	January 2028	December 2022
	Total	$	236,615


Date of Agreement	Property Name	Location	Units	Remaining Interest to be Purchased		Book Value of Property at 3/31/22		Purchase Price (1)		Estimated Amount of Debt to be Included on our Consolidated Balance Sheet
February 2022	Jackson Square	Tallahassee, FL	242	20	%	$	25,102	$	6,220	$	21,524
February 2022	Grove at River Place	Macon, GA	240	20	%	12,829		7,485		11,481
February 2022	The Woodland Apartments	Boerne, TX	120	20	%	11,394		3,550		7,935
March 2022	Brixworth at Bridge Street	Huntsville, AL	208	20	%	11,844		10,851		18,500		(2)
April 2022	Abbotts Run	Willmington, NC	264	20	%	37,552		8,560		23,160
April 2022	Civic Center I (3)	Southaven, MS	392	25	%	30,831		18,063		27,544
April 2022	Civic Center II (3)	Southaven, MS	384	25	%	32,725		17,694		30,288
April 2022	Magnolia Pointe at Madison	Madison, AL	204	20	%	18,474		7,132		15,000
April 2022	Somerset at Trussville	Birmingham, AL	328	20	%	40,300		9,785		32,250
		Total	2,382			$	221,051	$	89,340	$	187,682


Exhibit No.						Title of Exhibits
~~10.1~~10.5						Form of ~~Membership Interest~~Performance Award Agreement ~~used~~granted pursuant to ~~effectuate Partner Buyouts~~the 2022 Incentive Plan
31.1						Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certification of Senior Vice President—Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3						Certification of Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2						Certification of Senior Vice President—Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3						Certification of Vice President and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101						The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements. XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104						Cover Page Interactive Date File (formatted as inline XBRL and contained in Exhibit 101)




~~May 10,~~November 8, 2022			/s/ Jeffrey A. Gould
			Jeffrey A. Gould, President and
			Chief Executive Officer





~~May 10,~~November 8, 2022			/s/ George Zweier
			George Zweier, Vice President
			and Chief Financial Officer
			(principal financial officer)