Company Update

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 8, 2019 BRT APARTMENTS CORP. (Exact name of Registrant as specified in charter) Maryland 001-07172 13-2755856 (State or other jurisdiction of incorporation) (Commission file No.) (IRS Employer I.D. No.) 60 Cutter Mill Road , Suite 303 , Great Neck , New York 11021 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 516 - 466-3100 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock BRT NYSE Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) of Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b2 of this chapter).   o Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Explanatory Note We are filing this current report on Form 8-K (the "Current Report") to include under (i) Item 9.01(a), the audited statement of revenues and certain expenses of Village at Lakeside Apartments, a 200-unit multi-family property located at 1309 Gatewood Drive, Auburn, AL ("Village at Lakeside"), for the year ended December 31, 2018, and the unaudited statement of revenues and certain expense for the six months ended June 30, 2019, and (ii) Item 9.01(b), our unaudited pro-forma financial statements reflecting the acquisition of Village at Lakeside Apartments. On August 8, 2019, a subsidiary of ours and our joint venture partner acquired for $18.4 million (including $14.5 million of mortgage debt obtained in connection with the acquisition) the entity that owns Village at Lakeside. The mortgage debt bears interest at a fixed rate of 3.79%, matures in September 2031, is interest only for four years, amortizes thereafter on a 30-year schedule, with a balloon payment of the unpaid principal and interest due at maturity. We contributed $4.3 million for our 80% controlling interest in the entity that owns the property. Item 9.01   Financial Statements and Exhibits. (a) Financial Statement of Property Acquired - Village at Lakeside Apartments Page (i) Independent Auditor’s Report 1 (ii) Statement of Revenues and Certain Expenses for the Year ended December 31, 2018 2        Statement of Revenues and Certain Expenses for the Six Months ended June 30, 2019 (unaudited) 2 (iii) Notes to Statement of Revenues and Certain Expenses 3 (b) Unaudited Pro Forma Consolidated Financial Statements (i) Pro Forma Consolidated Balance Sheet at June 30, 2019 5 (ii) Pro Forma Consolidated Statements of Income:        For the year ended September 30, 2018 6        For the six months ended June 30, 2019 (iii) Notes to Pro Forma Consolidated Financial Statements 7 (d) Exhibits Exhibit No. Title of Exhibit 23.1 Consent of BDO USA, LLP, dated September 18, 2019 101 Cover Page Interactive Data File - 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 Data File - the cover page XBRL tags are embedded within the Inline XBRL document Independent Auditor’s Report Stockholders and Board of Directors BRT Apartments Corp. Great Neck, New York We have audited the accompanying statement of revenues and certain expenses of the property located at 1309 Gatewood Drive, Auburn, AL ("Village at Lakeside") for the year ended December 31, 2018. Management’s Responsibility for the Statement of Revenues and Certain Expenses Management is responsible for the preparation and fair presentation of the statement of revenues and certain expenses in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues and certain expenses' that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the statement of revenues and certain expenses based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and certain expenses is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement of revenues and certain expenses. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the statement of revenues and certain expenses, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the statement of revenues and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the revenues and certain expenses. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the statement of revenues and certain expenses referred to above presents fairly, in all material respects, the revenues and certain expenses of Village at Lakeside for the year ended December 31, 2018, in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with rules and regulations of the U.S. Securities and Exchange Commission and for inclusion in a Current Report on Form 8-K of BRT Apartments Corp. as described in Note 2 to the statement of revenues and certain expenses and is not intended to be a complete presentation of Village at Lakeside's revenues and expenses. Our opinion is not modified with respect to this matter. /s/ BDO USA, LLP New York, New York September 18, 2019 Village at Lakeside Statements of Revenues and Certain Expenses (Amounts in Thousands) Year ended December 31, 2018 Six Months ended June 30, 2019 (unaudited) REVENUES:    Rental Revenue $ 1,972    $ 985    CERTAIN EXPENSES:   Payroll 237 106   Real estate taxes 150 83   Utilities 172 88   Repairs and maintenance 133 59   Management fees 84 45   Insurance 51 28 Total certain expenses 827 409 Revenues in excess of certain expenses $ 1,145    $ 576    See Independent Auditor’s Report and accompanying notes to the Statement of Revenues and Certain Expenses Village at Lakeside Notes to Statement of Revenues and Certain Expenses 1. Organization Village at Lakeside, located at 1309 Gatewood Dr, Auburn, AL (the "Property") is a 200-unit multi-family property. BRT Apartments Corp. (“BRT” or the “Company”) is a corporation organized in Maryland. BRT is a real estate investment trust, also known as a REIT, that is focused on the ownership, operation and development of multi-family properties. On August 8, 2019, an indirect subsidiary of BRT and a joint venture partner acquired the entity that owned the Property for $18.4 million (including $14.5 million of mortgage debt in connection with the acquisition of the Property). BRT has an 80% controlling interest in the entity that owns the property. 2. Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying statement of revenues and certain expenses of the Property have been prepared in accordance with Rule 3-14 of Regulation S-X of the U.S. Securities and Exchange Commission for inclusion in the Company’s Current Report on Form 8-K. Accordingly, the statement of revenues and certain expenses excludes certain expenses that may not be comparable to those expected to be incurred in the future operations of the aforementioned property. Items excluded consist of interest expense, depreciation, amortization, corporate expenses, and other costs not directly related to future operations. Significant Accounting Policies Use of Estimates The preparation of the statement of revenues and certain expenses in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the statement of revenues and certain expenses. Actual results could differ from those estimates. Revenue Recognition Rental revenue is recognized on an accrual basis when earned and due from tenants. Leases are generally for a one-year term and have no renewal options. Repairs and Maintenance Major replacements and betterments that improve or extend the life of the Property are capitalized. Expenditures for ordinary repairs and maintenance are charged to operations as incurred. 3. Subsequent Events Subsequent events were evaluated through September 18, 2019, the date on which the statement of revenues and certain expenses were available to be issued. BRT APARTMENTS CORP. AND SUBSIDIARIES Pro Forma Consolidated Financial Statements (Unaudited) Acquisitions On August 8, 2019, TRB Lakeside LLC, an indirect wholly owned subsidiary of BRT Apartments Corp. ("BRT" or the "Company") and an unaffiliated joint venture partner, acquired the entity that owned a 200-unit multi-family property, Village at Lakeside, located at 1309 Gatewood Dr, Auburn, AL, for $18.4 million, including $14.5 million of mortgage debt obtained in connection with the acquisition. The Company owns a controlling 80% interest in the entity that owns the property. On May 7, 2019, TRB Trussville LLC, an indirect wholly owned subsidiary of BRT and an unaffiliated joint venture partner, acquired the entity that owned a 328 - unit multi-family property, Somerset at Trussville, located at 3539 Mary Taylor Rd. Birmingham, Alabama, for $43.0 million, including $32.2 million of mortgage debt obtained in connection with the acquisition. The Company owns a controlling 80% interest in the entity that owns the property. This transaction is referred to as "Previously Reported Acquisition of Trussville". On October 30, 2018, TRB Crestmont LLC, an indirect wholly owned subsidiary of BRT, and an unaffiliated joint venture partner, acquired a 266 - unit multi-family property, Crestmont at Thornblade located at 75 Crestmont Way Greenville, South Carolina, for $37.8 million, including $26.4 million of mortgage debt obtained in connection with the acquisition. The Company owns a controlling 90% interest in the joint venture that owns the property. This transaction and the Previously Reported Acquisition of Trussville are collectively referred to as the "Previously Reported Acquisitions". Presentation The pro forma unaudited consolidated balance sheet is presented as if the acquisition of the Property had been completed on June 30, 2019. The pro forma unaudited consolidated statement of income for the year ended September 30, 2018 is presented as if the acquisition of the Property and the Previously Reported Acquisitions had been completed on October 1, 2017. The pro forma unaudited consolidated statement of income for the six months ended June 30, 2019, is presented as if the acquisition of the Property and the Previously Reported Acquisition of Trussville had been completed on January 1, 2019. These pro forma unaudited consolidated financial statements are presented for informational purposes only and should be read in conjunction with the Company’s Annual Report on Form 10-K filed December 10, 2018. The pro forma unaudited consolidated financial statements are based on assumptions and estimates considered appropriate by the Company’s management; however, such statements do not purport to represent what the Company’s financial position and results of operations would have been assuming the completion of the acquisition on October 1, 2017, nor do they purport to project the Company’s financial position and results of operations at any future date or for any future period. In the opinion of the Company’s management, all adjustments necessary to reflect the effects of the transactions described above have been included in the pro forma consolidated financial statements. BRT APARTMENTS CORP. AND SUBSIDIARIES PRO FORMA - UNAUDITED CONSOLIDATED BALANCE SHEET At June 30, 2019 (Amounts in thousands, except per share data) The Company Historical Purchase of Village at Lakeside The Company Pro Forma as Adjusted ASSETS Real estate properties, net of accumulated depreciation $1,098,932 $18,540 $1,117,472 Real estate loan 4,450 — 4,450 Cash and cash equivalents 17,336 (4,335) 13,001 Restricted cash 9,962 1,001 10,963 Deposits and escrows 17,103 250 17,353 Investment in unconsolidated joint ventures 18,474 — 18,474 Other assets 8,929 — 8,929 Real estate property held for sale 22,722 — 22,722      Total Assets $1,197,908 $15,456 $1,213,364 LIABILITIES AND EQUITY Liabilities:   Mortgages payable, net of deferred costs 846,409 14,295 860,704   Junior subordinated notes, net of deferred costs 37,053 — 37,053   Credit Facility 8,923 — 8,923   Accounts payable and accrued liabilities 28,738 81 28,819     Total Liabilities 921,123 14,376 935,499 Commitments and contingencies Equity: BRT Apartments Corp. stockholders' equity:    Preferred stock, $.01 par value: 2,000 shares    none issued — — —    Common stock $.01 par value: 300,000 shares authorized    15,175 shares outstanding 152 — 152    Additional paid-in capital 217,671 — 217,671    Accumulated other comprehensive income 143 — 143    Accumulated deficit (35,049) — (35,049)      Total BRT Apartments Corp. stockholders' equity 182,917 — 182,917 Non-controlling interests 93,868 1,080 94,948      Total Equity 276,785 1,080 277,865 Total Liabilities and Equity $1,197,908 $15,456 $1,213,364 See accompanying notes to the unaudited pro forma consolidated financial statements BRT APARTMENTS CORP. AND SUBSIDIARIES PRO FORMA - UNAUDITED CONSOLIDATED STATEMENT OF INCOME For The Year Ended September 30, 2018 (Dollars in thousands, except share data) The Company Historical Purchase of Village at Lakeside Previously Reported Acquisitions The Company Pro Forma as Adjusted Revenues:    Rental revenues $118,872 $2,017 $7,915 $128,804    Other income 763    —    —    763       Total revenues 119,635    2,017    7,915    129,567    Expenses:    Real estate operating expenses 57,665    1,008    3,451    62,124       Interest expense 34,389    567    2,613    (a)   37,569    General and administrative 9,210    —    —    9,210       Depreciation 38,504    989    4,363    (b)   43,856       Total expenses 139,768    2,564    10,427    152,759    Total revenues less total expenses (20,133)   (547)   (2,512)   (23,192)   Equity in loss of unconsolidated joint ventures (388)   —    —    (388)   Gain on sale of real estate assets 64,924    —    —    64,924    Gain on insurance recovery 4,498    —    —    4,498    Loss on extinguishment of debt (850)   —    —    (850)   Income (loss) from continuing operations 48,051    (547)   (2,512)   44,992    Provision for taxes 50    —    —    50    Net income (loss) 48,001    (547)   (2,512)   44,942    (Income) loss attributable to non-controlling interests (24,228)   109    374    (23,745)   Net income (loss) attributable to common stockholders $ 23,773    $ (438)   $ (2,138)   $ 21,197    Basic and diluted per share amounts attributable to common stockholders:    Basic earnings (loss) per share $ 1.63    $ (.03)   $ (.15)   $ 1.45       Diluted earnings (loss) per share $ 1.61    $ (.03)   $ (.15)   $ 1.43    Weighted average number of shares of common stock outstanding: Basic 14,580,398 14,580,398 14,580,398 14,580,398 Diluted 14,780,398 14,780,398 14,780,398 14,780,398 See accompanying notes to the pro forma unaudited consolidated financial statements BRT APARTMENTS CORP. AND SUBSIDIARIES PRO FORMA - UNAUDITED CONSOLIDATED STATEMENT OF INCOME For The Six Months Ended June 30, 2019 (Dollars in thousands, except share data) The Company Historical Purchase of Village at Lakeside Previously Reported Acquisition of Trussville The Company Pro Forma as Adjusted Revenues:    Rental revenues $ 63,632    $ 1,009    $ 782    $ 65,423       Other income 434    —    —    434       Total revenues 64,066    1,009    782    65,857    Expenses:    Real estate operating expenses 30,914    504    356    31,774       Interest expense 18,508    284    248    (a)   19,040    General and administrative 5,025    —    —    5,025       Depreciation 19,964    495    862    (b)   21,321       Total expenses 74,411    1,283    1,466    77,160    Total revenues less total expenses (10,345)   (274)   (684)   (11,303)   Equity in loss of unconsolidated joint ventures (384)   —    —    (384)   Gain on insurance recoveries 517    —    —    517    Loss from continuing operations (10,212)   (274)   (684)   (11,170)   Provision for taxes 121    —    —    121    Net loss (10,333)   (274)   (684)   (11,291)   Loss attributable to non-controlling interests 1,769    55    136    1,960    Net loss attributable to common stockholders $ (8,564)   $ (219)   $ (548)   $ (9,331)   Basic and diluted per share amounts attributable to common stockholders:    Basic and diluted loss per share $ (0.54)   $ (.01)   $ (.03)   $ (0.58)   Weighted average number of shares of common stock outstanding: Basic and Diluted 15,893,443 15,893,443 15,893,443 15,893,443 See accompanying notes to the pro forma unaudited consolidated financial statements BRT APARTMENTS CORP. AND SUBSIDIARIES Notes to Pro Forma Unaudited Consolidated Financial Statements (Unaudited) Basis of Pro Forma Presentation 1. The historical consolidated financial statements of the Company include the accounts of the Company and consolidated subsidiaries in which the Company is presumed to have control in accordance with the consolidation guidance of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”). Investments in entities for which the Company has the ability to exercise significant influence but does not have financial or operating control, are accounted for under the equity method of accounting. Accordingly, the Company’s share of the net earnings (or losses) of entities accounted for under the equity method are included in consolidated net income (loss) under the caption “Equity in loss of unconsolidated joint ventures”. Investments in entities for which the Company does not have the ability to exercise any influence are accounted for under the cost method of accounting. 2. Notes to the pro forma unaudited consolidated balance sheet and statements of income for the year ended September 30, 2018 and the six months ended June 30, 2019. a. To reflect the interest expense resulting from the mortgages securing Village at Lakeside, Somerset at Trussville and Crestmont at Thornblade whose expense is calculated at an interest rate of 3.79%, 4.19% and 4.69% respectively, and includes the amortization of deferred financing costs. b. To reflect depreciation expense on the estimated useful life of the property of 30 years. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BRT APARTMENTS CORP. By: /s/ George Zweier George Zweier September 18, 2019 Vice President and Great Neck, NY Chief Financial Officer