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 Tripp 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 Zweier, Chief Financial Officer, Ryan 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 filings, 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 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 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 Investor 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. Welcome to the call. I'll start with some brief comments on our overall performance and the transaction environment. 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. We're 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. The fundamentals in our markets are still strong. 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. 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 an impact beyond what 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 recall. 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, 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 pro rata 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 maturities 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. Thank you, Jeff t he second quarter results continue to reflect the positive impact on a year-over-year basis from the partner buyouts and improved operating margins across the portfolio. However, we were not able to see the full benefit of the improvement in our portfolio due to some disappointing results at two of our properties. Ryan will get into our operational plans for these properties in a moment. Overall, net income attributable to common stockholders was $0.58 per diluted share, compared with net income of $1.91 per diluted share a year ago. The primary reason for the year-over-year decline was a $2.26 per share gain in the prior year period from the sale of two properties owned by unconsolidated subsidiaries. FFO was $0.28 per diluted share, compared to $0.20 per diluted share a year ago, primarily due to a reduction in early extinguishment of debt and a decline in the income tax provision. This was offset somewhat by an increase in interest expense. AFFO was $0.37 per diluted share, compared to $0.37 per diluted share a year ago, primarily due to the decrease in the income tax provision and the increase in insurance recovery we disclosed last quarter, offset by the increase in interest expense. For the combined portfolio, recurring CapEx was $1.47 million for the quarter. When you add the $719,000 in replacements that flows through the real estate operating expenses on our PNL, that totals approximately $2.2 million, or $284 per unit. That continues to be below the $300 per unit of replacements we have been assuming in our expense growth, included in the Combined Portfolio NOI guidance. We completed the rehab of 65 units during the quarter for an investment of $477,000 and an estimated annualized ROI of 45%. Non-recurring CapEx, which represents revenue enhancing and major upgrades to properties, totaled $1.45 million during the quarter. Turning to the balance sheet, debt to enterprise value as of June 30th was flat at 63% compared with a year ago, primarily due to the lower market capitalization this period and the higher debt a year ago. Available liquidity at quarter end was $91 million, which is comprised of cash and availability under our credit facility. At August 1st, liquidity was $87 million. As of June thirtieth, our consolidated and unconsolidated mortgage debt had a weighted average interest rate of 4.1% and a weighted average remaining term to maturity of 7.1 years. Now I'll turn the call over to Ryan. Good morning, I'd like to start with the performance of our multifamily portfolio in the quarter. Consistent with our expectations, we held average occupancy for the portfolio steady at 94.3%, which compares with 94.2% for the first quarter and 96.2% a year ago. Although that's lower than in past Q2s, we were focused on pushing rents this quarter. Average monthly rents for the combined portfolio in the second quarter were up 7.3% compared to the 2022 quarter. For leases signed in the second quarter of 2023, we saw estimated spreads on new leases at 4.3%, renewal spreads of 5.4%, and overall spreads of 5%. For July, we have seen estimated spreads on new leases of 3.2%, renewal spreads of 5.3%, and overall spreads of 4.3%. Our rent-to-income ratio for all new leases signed in the second quarter is 24%, indicating tenants are having minimal financial stress and the properties are in the range of affordability that we've targeted. Combined Portfolio NOI was up 1.4% in the second quarter compared with the second quarter of 2022. The primary components were: revenue grew 5.9%, primarily due to increased rental rates across the portfolio. Total expenses increased by 11.8%, primarily due to higher insurance, replacements, and repairs and maintenance. Of this amount, controllable expenses were up 10.4%, while non-controllable expenses were up 14.4%. It's worth noting, given our past comments on this line item, that insurance was up 45% year-over-year. That's more in line with what we have been anticipating for a full year impact. The underperformance of Alamo Ranch in San Antonio and Bells Bluff in Nashville cost us approximately 320 basis points in Combined Portfolio NOI growth this quarter. Absent that underperformance, we would have experienced a 4.6% increase. It's unfortunate that two properties can have such an impact on our overall Combined Portfolio NOI growth, but that was the case this quarter. Alamo Ranch is a property we highlighted last quarter as underperforming. This has been primarily related to working through some tenant issues that have taken some time to clean up. We are confident we'll see an improvement during the second half of the year. At Bells Bluff, this is more related to that submarket in Nashville, where there has been a lot of new supply as of late. As Jeff noted earlier, we've seen very little impact of new supply in our markets. Nashville is one of the markets where, in order to maintain occupancy at Bells Bluff, we took the approach of offering more concessions in Q2 than we had anticipated. That plan has worked so far in Q3, but that improvement is likely to come later in the year. Based on the Q2 results, the outlook for improvement at these two properties, the completion of the disposition of Chatham Court in Dallas, and deployment of some of those proceeds to share repurchases, we affirmed our previously issued guidance for 2023. That completes our prepared remarks. Operator, will you please open the call to questions? We will now begin the question-and-answer session. To ask a question, you may press Star, then One on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star, then Two. We'll now take our first question from Barry Oxford of Colliers. Please go ahead. Great, guys. Thanks for taking my question. Some of it was, was answered, but if I could get a little more clarification. You know, it looked like in the same-store revenue, both Virginia and Texas, you touched on Texas as, you know, both those numbers were negative numbers. Yet you held guidance. Kind of walk me through why those numbers are going to be better in, in three Q? Yeah. hi, Barry it's Jeff. Yeah. Yeah. Yes. Yeah. So in Alamo, I mean, basically, really, the focus on and the issue was, we had, we have, tenants that were put in place prior to our buyout that were a little suspect on credit. When we bought this out, our standards were increased, which left us with more vacancy, and the older tenants had some delinquency issues. We're cleaning this up, and it takes a little time to clean it up, but as you clean up delinquency issues and stabilize occupancy, obviously, then you can, you can look and focus on rent and pushing rents. You know, we're seeing positive results already, and it's moving in the right direction, and we expect the next couple of quarters to be back online and stabilized. As far as Bells go, you know, there were some test concessions as, as Ryan, I think, mentioned in his, in his remarks. There have been some new builds in West Nashville. Again, it's an improving situation. They're, they're being leased up. We love the property long term, we love the location, and again, the same comment I'll make is, you know, you have to absorb some of the new, new development, but in the next couple of quarters, we think it'll, definitely improve, vastly. Those are the two specific ones that, you know, caused some issue with our numbers. Right. Right. Are you seeing decent foot traffic? Is that what's kind of giving you the confidence to say, "Hey, look, we think we can re-lease these properties fairly quickly? Yes. On Alamo, for sure in Texas, there's no doubt that we're seeing better foot traffic. On Bells, I would say it still continues to be a little slower just because of the new builds and the time it's needed to absorb the, you know, new units coming onto the market. We, we do see it, and, and it's improving. I think the West Nashville market may take a little longer to see positive signs just because of the new builds that are in the market. Again, they'll, they'll be absorbed, and we're very confident that we have a terrific property there that will stabilize over the next few quarters. Okay, great. Turning to acquisitions, two questions. One, are there any opportunities that you see over the next couple of quarters, in the joint venture properties, to kind of bring them in, you know, on a wholly owned basis? Or, look, my guys are staying pat right now. Yeah, no, my guys generally are staying pat right now. I think there's. Yeah Opportunity, potential in that, and we're looking at assets that we may consider, or partners and I, are considering potentially selling. As far as acquiring other partnership interests right now, we don't have any specific plans to do so. Yeah. Then the second question, Jeff i f you looked at the inventory in your marketplaces of things to buy or that are on the market, and you look at it now, today, are you seeing more, less of the same? It is very quiet. Yeah We alluded to this earlier, or I alluded to this earlier. That in my entire career here, 37 years, I've never seen the acquisitions and transactional market in multifamily so quiet. It's just, you know, with cap rates where they are versus interest rates, it is very hard to make any deal make much sense. At the same time, I think sellers are still living with an old-school mentality that insurance costs have not gone up, cap rates have not gone up, et cetera. That's leading to, you know, very little of anything happening. That goes with, for us directly to buy or with our JV partners looking to buy, the market is very, very quiet. Do you think it could pick up, let's say, going into 2024, that, you could start to see some distress, maybe because debt starts to roll over, and now you got to deal with that higher interest rate, or maybe you can't get, the, the mortgage amount that you were hoping to get? Yeah, that's a good question. We're, we're seeing that already. It's starting. There's definitely, we're seeing opportunity by way of partnerships looking to sell because they don't want to do capital calls, because their caps have, you know, their locks have, have, expired or on interest rates or, other reasons for them needing to sell. We're starting to see more of that, and I think there'll be a bit more distress, and I think there'll be more opportunities in 2024 for sure, as opposed to 2023. 2023, it's just been a very strange, quiet year, and I would expect, velocity and transactional velocity to increase pretty substantially in 2024. Okay. Great, guys. Thanks for the color. Again, if you have a question, please press Star, then One. There are no further questions at this time. I would like now to turn the conference back over to BRT Apartments Corp. Excuse me, we have a follow-up from Barry Oxford. Your call is free, go ahead. Hey, Jeff, as long as I'm the only one asking questions, one last one from me. When you look at what Fannie Mae and Freddie Mac are doing as far as underwriting, are they also-- I know banks are getting tighter, but are they also, getting tighter and, and, and more tough to deal with, or not necessarily? Yeah, let me turn over to Ryan to answer that, please. Yeah. Hey, Barry. Hey, Ryan. How are you doing? How are you doing? It's not that they're necessarily getting tighter. I just think the, the numbers are not, you know, the, the debt coverage ratios that they require are just getting. Harder to meet. I think that's why you're seeing proceeds come in a little bit lower than, you know, the, the 65% range that, that kind of was the standard in the past. You're seeing probably more in the 55%-60% loan to value range. I don't think it's necessarily them getting tighter. I think it's just the, the nature of where the properties are at and where the valuations are at. Okay, that makes sense. Thanks, guys. Thanks, Barry. The next question comes from the line of Aaron Hecht with JMP Securities. Please go ahead. Yes, thanks for taking my questions Jeff, you guys used the disposition proceeds to buy back stock this quarter. I think the authorization is pretty low now. What are your thoughts on re-upping that authorization? Just bigger picture, capital structure plans going forward, any insights you can give us there? Yeah, obviously, we're gonna consult the board at our next meeting and consider upping that. We think it's a good opportunity, and that's why we took advantage of buying the stock at certain levels over the last quarter, and I think that will likely continue. I will have to speak to the board about it and make a judgment after our next board meeting. I appreciate that. That's all I got. Okay. Well, in that case, I guess I don't see there's any more questions. I just want to thank you all for your continued interest in BRT. We appreciate the confidence in us. Have a great day. If you need to chat with us, please feel free to pick up the phone and give us a ring. Have a good day. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.