BRT Apartments Corp. Reports Mixed Results Amidst Market Challenges
Net Loss: BRT reported a net loss of $1.7 million in Q4 2023, compared to a net loss of $4.2 million in Q4 2022.
Funds from Operations (FFO): FFO per diluted share was $0.34 in Q4 2023, a decrease from $0.40 in Q4 2022.
Adjusted Funds from Operations (AFFO): AFFO per diluted share increased slightly to $0.38 in Q4 2023 from $0.37 in Q4 2022.
Combined Portfolio NOI: Increased by 6.4% in Q4 and 2.0% for the full year 2023 compared to the prior-year periods.
Share Repurchase: BRT repurchased 206,105 shares in Q4 at an average price of $17.53, totaling 779,423 shares for the year.
Dividend: Declared a dividend of $0.25 per share for Q1 2024.
Operational Outlook: BRT anticipates a consistent operational environment with a focus on stable occupancy and moderate expense growth.
On March 12, 2024, BRT Apartments Corp (NYSE:BRT), a real estate investment trust specializing in multi-family properties, released its 8-K filing, disclosing its financial results for the fourth quarter and full year of 2023. The company reported a net loss of $1.7 million, or $(0.11) per diluted share, for the fourth quarter, an improvement from the net loss of $4.2 million, or $(0.22) per diluted share, in the same period of the previous year. Despite the net loss, BRT's Combined Portfolio Net Operating Income (NOI) increased by 6.4% in the fourth quarter, reflecting the company's ability to increase rental rates and manage expenses effectively.
Financial Performance and Challenges
BRT's financial performance in the fourth quarter was marked by a net loss, which was attributed to various factors including property performance and market conditions. However, the company's Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) provide a more nuanced picture of its operating performance. FFO, a key metric for REITs, decreased to $0.34 per diluted share from $0.40 per diluted share year-over-year, while AFFO saw a slight increase to $0.38 per diluted share from $0.37 per diluted share. These figures are important as they exclude the effects of depreciation and provide a clearer view of the company's operating cash flows.
The challenges faced by BRT include the impact of two properties that weighed on Combined Portfolio NOI throughout the year. However, these properties showed improvement during the quarter. The company's performance is significant as it reflects the ability to navigate a complex real estate market, particularly in the multi-family property sector, which is sensitive to economic fluctuations and competitive pressures.
Strategic Financial Management
BRT's strategic financial management was evident in its share repurchase program, where it repurchased a total of 779,423 shares in 2023, demonstrating confidence in its intrinsic value. The company also successfully closed a $21.2 million loan and reduced the interest rate on its credit facility, enhancing its financial flexibility. These achievements are important for BRT as they help to optimize its capital structure and potentially enhance shareholder value.
Operational Highlights and Future Outlook
Operational highlights for BRT include an increase in Combined Portfolio NOI, driven by higher rental rates and efficient expense management. The company also reported equity in earnings of unconsolidated joint ventures of $588,000 for the quarter and $2.3 million for the full year. BRT's focus on maintaining stable occupancy rates and controlling expense growth is expected to continue into 2024, with an emphasis on moderating non-controllable expenses such as insurance.
Looking ahead, BRT anticipates a consistent operational environment with new supply affecting rent growth until the latter half of 2024. The company plans to deploy its liquidity strategically, with no debt maturities until the third quarter of 2025, and remains optimistic about finding new investment opportunities in the latter part of 2024 and into 2025.
Conference Call and Investor Relations
BRT will host a conference call and webcast to discuss its results and provide further insights into its performance and strategy. Investors and interested parties can access supplemental financial information and a transcript of the quarterly earnings call on the company's investor relations website.
In summary, BRT Apartments Corp's fourth quarter and full-year 2023 results reflect a mixed financial performance with challenges offset by strategic management and operational efficiency. The company's focus on maintaining stable occupancy and managing expenses, coupled with its proactive capital management, positions it to navigate the current market environment and capitalize on future growth opportunities.
Explore the complete 8-K earnings release (here) from BRT Apartments Corp for further details.
This article first appeared on GuruFocus.
