BRT Apartments Corp. (MD)

Good day and welcome to the BRT Apartments Corp second quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Trip Sullivan, Head of Investor Relations. Please go ahead.

Thank you for joining us today. On the call are Jeffrey Gould, President and Chief Executive Officer, George Dwyer, Chief Financial Officer, Brian Baltimore, Chief Operating Officer, as well as David Kalish, Senior Vice President. I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's SEC filing, including its Form 10-Q, for a more complete discussion of risks and other factors that could affect these forward-looking statements. Except as required by law, BRT does not undertake any obligation to publicly update or advise 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 share of revenues, expenses, NOI, assets, and liabilities of BRT's unconsolidated subsidiaries. All the non-GAAP information discussed today have certain limitations and should be used with caution in conjunction with the GAAP data presented in our supplemental earnings release and in our reports filed 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 Best Relations section of BRT's website at www.brtapartments.com. I'd now 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. Operationally, we continue to perform well across our portfolio. and were able to show solid rent growth during the spring leasing season. It's clear that the elevated rent increases in occupancy from a year ago that were influenced by the pandemic are moderating, but the fundamentals in our markets are still strong and our tenants continue to be in good financial position. While we had a couple of properties hold back the overall performance, we are within the range of expectations we outlined for the year. New supply is something we track very closely, and that's been a point of concern for the industry so far this year. As we look across the portfolio, we've seen it primarily in Huntsville and Nashville, and to a lesser extent in Pensacola. Of course, we have a presence in Dallas, but that market has absorbed nicely. Nashville is really the only market that has had an impact beyond that we've expected, and I would say that's more related to the particular dynamics in West Nashville that could take some time to work through. As Ryan will note later, we believe we've positioned that property to be back on track later in the year. The transaction market is as quiet as I've ever recalled. We continue to review a number of potential opportunities, whether they be acquisitions or working with developers that need capital. Activity is minimal in this space due to the cap rates as well as the fact that buyers need to underwrite higher insurance costs combined with higher interest rates. We were pleased to complete the sale by our joint venture of the Chatham Court property in Dallas during the second quarter at a sub-5% cap rate which generated an IRR of 22% over a seven-year hold. We also generated net proceeds of $19.4 million after giving effect to repaying our prorated share of $12.7 million in secured debt on the property. As we disclosed in mid-May, we elected to allocate some of the proceeds from the disposition to repurchase common stock. Given where our stock has been trading and the opportunity to reallocate capital on an accretive basis, the board elected to increase our repurchase authorization to up to $10 million. During the second quarter and to date in the third quarter, we purchased approximately 355,000 shares at a weighted average of $19.03. Based on that repurchase activity, we have a little over $3 million remaining in our current repurchase authorization. We are fortunate to have the liquidity to deploy capital to accretive opportunities when they arise, and we will remain very disciplined in how we allocate that capital. The lack of debt matures until 2025 and a strong portfolio allows us to be very patient in this market, and I think that patience may be rewarded later in the year and into 2024. George, please take it from here.