BRT Apartments Corp. (MD)

Good day, and welcome to the BRT Apartment Corporation's first quarter earnings conference call. Today's conference is being recorded. At this time, I would like to turn the floor over to Mr. Tripp Sullivan of Investor Relations. Thank you. You may begin.

Thank you for joining us today. On the call are Jeffrey Gould, President and Chief Executive Officer, George Swire, Chief Financial Officer, and Ryan Baltimore, Chief Operating Officer, as well as David Kalish, Senior Vice President. I'd like to remind everyone this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs. Listeners should not place undue reliance on any forward-looking statement and are encouraged to review the company's SEC filings, including its Form 10-Q, for more complete discussion of risk and other factors that can affect these forward-looking statements. Except as required by law, BRT does not undertake any obligation to publicly update or revise any forward-looking statements. This call also includes a discussion of non-GAAP measures, including FFO, AFFO, NOI, combined portfolio NOI, and information regarding our pro rata shared revenues, expenses, NOI, assets, and liabilities of BRT's unconsolidated subsidiaries. All the non-GAAP information discussed today has certain limitations and should be used with caution and in conjunction with the GAAP data presented in our supplemental earnings release in our report spot with the SEC. Please see these reports and filings for the definitions of each non-GAAP measure. As a reminder, the company's supplemental information and earnings release have been posted on the Investor Relations section of BRT's website at www.brtapartments.com. And now I'd like to turn the call over to President and CEO, Jeffrey Gould. Please go ahead, Jeff.

Thank you, and welcome to the call. I'll start with some brief comments on our overall performance and the transaction environment. Then I'll turn the call over to George and Ryan for some additional color around our results. Our first quarter results were consistent with what we've seen across the sector this quarter. Revenues were in line with what we were anticipating. Leasing was positive, although down from the levels achieved a year ago, and expenses were in line with what we have estimated, barring some unexpected costs that George will discuss later. We're in the midst of the spring leasing season now, which is where we typically see a lift in occupancy and rents. With the continued strong population growth and demand in our markets, we have an opportunity to outperform the winter months. It's clear that rental growth in the sector won't be as strong as last year, with 5% to 6% rental growth as a reasonable target, so we'll need to control operating expenses as much as we can. It has been relatively quiet on the transaction front, with both sellers and buyers remaining cautious. The environment hasn't changed much since last quarter. However, there seems to be a better understanding of where cap rates are settling. The expected sale of the Chatham Court property in Dallas during the second quarter should be completed at a sub-5% cap rate, generate an IRR of 22% over a seven-year hold, and generate net proceeds of $19 million, which we intend to redeploy into our acquisition in Richmond. That acquisition is on track for a closing by year-end. Recall that's a $62.5 million acquisition. total purchase price, including the assumption of approximately $32 million of mortgage debt at a fixed rate of 3.34% and maturing in 2061. We are hard on the contract and awaiting HUD approval. This is a great long-term play for us, and there are a number of similar opportunities we can pursue if we are able to source capital at the right terms. We did not utilize the ATM again this quarter, given where the stock is traded, but you may have noticed we filed an amended shelf registration statement last month. The shelf was expiring in mid-May. In the interest of good corporate governance, we expect to renew our ATM program in the near future. We are pleased with how well the portfolio continues to perform and expect that we will see the longer-term benefits of owning and controlling more of our portfolio in the years to come. We have the liquidity to deploy for new opportunities if they meet our return thresholds, and we have substantial flexibility with no debt matures until 2025. George, please take it from here.