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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
ý    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2018
Or
o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-07172
BRT APARTMENTS CORP. 
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
13-2755856
(I.R.S. employer
identification no.)
60 Cutter Mill Road, Great Neck, New York
(Address of principal executive offices)
11021
(Zip Code)
516-466-3100
 Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Shares of common stock, par value $.01 per share
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o     No  ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes  o     No  ý
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý     No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ý     No  o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer. or a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  o
Accelerated filer  ý
Non-accelerated filer  o

Smaller reporting company  ý
Emerging growth company o


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 standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes  o     No  ý
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $92.1 million based on the last sale price of the common equity on March 31, 2018, which is the last business day of the registrant's most recently completed second quarter.
As of December 1, 2018, the registrant had 15,754,270 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual meeting of stockholders of BRT Apartments Corp. to be filed not later than January 28, 2019 are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS
Form 10-K
Item No.
Page(s)
PART I
1 
1A. 
1B. 
2 
3 
4 
PART II
5 
6 
7 
7A.
8 
9 
9A.
9B.
PART III
10 
11 
12 
13 
14 
PART IV
15 
16 


Explanatory Note
Unless otherwise indicated or the context otherwise requires, all references to (i) “us”, “we”, “BRT” or the “Company” refer (a) from and after the conversion described herein, to BRT Apartments Corp. and its consolidated subsidiaries and (b) prior to the conversion, to the predecessor BRT Realty Trust and its consolidated subsidiaries, (ii)“common stock” or “shares” refer (a) from and after the conversion, to common stock and (b) prior to the conversion, shares of beneficial interests, (iii) a year ( e.g ., 2018) refers to the applicable fiscal year ended September 30th, (iv) the sale of properties includes the sale, in 2016, of our partnership interest in a venture that owned Village Green, a Little Rock, AK multi-family property, (v) information regarding properties owned by unconsolidated joint ventures is separately described and is not included with information regarding our consolidated joint ventures; (vi) all interest rates give effect to the related interest rate derivative, if any; (vii) units under rehabilitation for which we have received or accrued rental income from business interruption insurance, while not physically occupied, are treated as leased ( i.e., occupied) at rental rates in effect at the time of the casualty, and (viii) "same store properties" refer to properties that we owned and operated for the entirety of both periods being compared, except for properties that are under construction, in lease-up, or are are undergoing development or redevelopment. We move properties previously excluded from our same store portfolio (because they were under construction, in lease up or are in development or redevelopment) into the same store designation once they have stabilized (as described below) and such status has been reflected fully in all quarters during the applicable periods of comparison. Newly constructed, lease-up, development and redevelopment properties are deemed stabilized upon attainment of at least 90% physical occupancy.  Our multi-family property Retreat at Cinco Ranch-Katy, Texas, is not included as a stabilized property because of the damage it suffered in August 2017 as a result of Hurricane Harvey.
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K, together with other statements and information publicly disseminated by us, contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning matters that are not historical facts. Forward looking statements are generally identifiable by use of words such as "may," "will," "will likely result," "shall," "should," "could," "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions or variations thereof.

Forward-looking statements contained in this Annual Report on Form 10- K are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors which may cause actual results to vary from our forward-looking statements include, but are not limited to:

• general economic and business conditions, including those currently affecting our nation’s economy and real estate markets;
• the availability of, and costs associated with, sources of capital and liquidity;
• accessibility of debt and equity capital markets;
• general and local real estate conditions, including any changes in the value of our real estate;
• changes in Federal, state and local governmental laws and regulations, including laws and regulations relating to taxes and real estate and related investments;
• the level and volatility of interest rates;
• our acquisition strategy, which may not produce the cash flows or income expected;
• the competitive environment in which we operate, including competition that could adversely affect our ability to acquire properties and/or limit our ability to lease apartments or increase or maintain rental income;
• a limited number of multi-family property acquisition opportunities acceptable to us;
• our multi -family properties are concentrated in the Southeastern United States and Texas, which makes us more susceptible to adverse developments in those markets;
1
• risk s associated with our strategy of acquiring value-add multi-family properties, which involves greater risks than more conservative strategies;
• the condition of Fannie Mae or Freddie Mac, which could adversely impact us;
• our failure to comply with laws, including those requiring access to our properties by disabled persons, which could result in substantial costs;
• insufficient cash flows, which could limit our ability to make required payments on our debt obligations;
• impairment in the value of real estate we own;
• failure of property managers to properly manage properties;
• disagreements with, or misconduct by, joint venture partners;
• decreased rental rates or increasing vacancy rates;
• our ability to lease units in newly acquired or newly constructed multi-family properties;
• potential defaults on or non-renewal of leases by tenants;
• creditworthiness of tenants;
• our ability to obtain financing for acquisitions;
• development and acquisition risks, including rising or unanticipated costs and failure of such acquisitions and developments to perform in accordance with projections;
• the timing of acquisitions and dispositions;
• our ability to reinvest the net proceeds of dispositions into more, or as favorable, acquisition opportunities;
• potential natural disasters such as hurricanes, tornadoes and floods;
• board determinations as to timing and payment of dividends, if any, and our ability or willingness to pay future dividends;
• financing risks, including the risks that our cash flows from operations may be  insufficient to meet required debt service obligations and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;
• lack of or insufficient amounts of insurance to cover, among other things, losses from catastrophes;
• our ability to maintain our qualification as a REIT;
• possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us or a subsidiary owned by us or acquired by us ;
• our dependence on information systems;
• risks assoc iated with breaches of our data security;
• ris ks associated with the stock ownership restrictions of the Code for REITs and the stock ownership limit imposed by our charter;
• increases in real estate taxes at properties we acquire due to such acquisitions or other factors; and
• the other factors described in this Annual Report on Form 10-K, including those set forth under the captions "Risk Factors" and "Business ."
We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. Except to the extent otherwise required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of the filing of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events.

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PART I
Item l.    Business.
General
We are an internally managed real estate investment trust, also known as a REIT, that is primarily focused on the ownership, operation and development of multi-family properties. Generally, these properties are owned by consolidated joint ventures in which we contributed 65% to 80% of the equity. At September 30, 2018, we: (i) own 36 multi-family properties located in eleven states with an aggregate of 10,121 units (including 402 units at a development property) and a carrying value of $1.0 billion; and (ii) have ownership interests, through unconsolidated entities, in three multi-family properties located in two states with an aggregate of 1,026 units (including 339 units at a development property), and a carrying value of $20.1 million. Most of our properties are located in the Southeast United States and Texas.
BRT Apartments Corp. is the successor to BRT Realty Trust pursuant to the conversion, which we refer to as the "conversion", of BRT Realty Trust from a Massachusetts business trust to a Maryland corporation on March 18, 2017. Our address is 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, telephone number 516-466-3100. Our website can be accessed at www.brtapartments.com , where copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission, or SEC, can be obtained free of charge.

2018 Highlights and Recent Developments
During 2018, we:
• acquired six multi-family properties with 1,921 units, for a purchase price of $230.3 million, including mortgage debt of $164.3 million and $50 million of our equity - we refer to these six properties as the "2018 Acquisitions";
• sold three multi-family properties with an aggregate of 1,368 units, which we refer to as the 2018 Sold Properties, and two cooperative apartment units, for a sales price of $171.4 million and a gain of $64.9 million - $27.6 million of this gain was allocated to our joint venture partners;
• entered into equity distribution agreements, as amended, with three placement agents-pursuant thereto, we raised approximately $20.4 million of equity from the sale of 1.59 million shares of our common stock;
• effected an 11% increase in our dividend rate and declared dividends of an aggregate of $0.78 per share; and
• bought out the interests of our joint venture partners in two multi-family properties for an aggregate of $5.2 million.

Subsequent to year end, we:
• acquired Crestmont at Thornblade, a 266-unit multi-family property located in Greensville, SC, for $37.8 million, including $26.4 million of mortgage debt obtained in connection with the acquisition ;  
• we sold Factory at Garco Park, for a sales price of $51.7 million , and anticipate that during the quarter ending December 31, 2018, we will recognize a gain on the sale of the property of approximately $12.0 million, of which approximately $6.3 million will be allocated to the non-controlling partner; and 

• e ntered into a contract to sell our Cedar Lakes - Lake St. Louis, MO property for a sales price of $ 41.3 million and anticipate such transaction will close in the quarter ending December 31, 2018.




3
Our Multi-Family Properties  
Generally, our multi-family properties are garden apartment, mid-rise or town home style properties that provide residents with amenities, such as a clubhouse, swimming pool, laundry facilities and cable television access. Residential leases are typically for a one-year term and may require security deposits equal to one month's rent. Substantially all of the units at these properties are leased at market rates. Set forth below is selected information regarding the multi-family properties owned by us as of September 30, 2018: 
Percentage Ownership (%) (2) 
Average Monthly Rental Rate Per
Occupied Unit (3)($)
Average Physical Occupancy (%) 
Property Name and Location 
Number
of Units
Age (1) 
Acquisition
Date
2018 2017 2016 2015 2014 2018  2017 2016 2015 2014
Silvana Oaks Apartments—N. Charleston, SC  208  8  10/4/2012 100  1,135  1,126  1,077  998  970  94.5  94.5  93.3  93.6  93.4 
Avondale Station—Decatur, GA  212  64  11/19/2012 100  1,038  979  920  852  776  95.2  97.6  94.6  97.1  96.8 
Stonecrossing Apartments—Houston, TX  240  40  4/19/2013 91  874  891  906  884  856  93.4  90.8  92.1  93.5  94.3 
Stonecrossing East (Pathways)—Houston, TX 
144  39  6/7/2013 91  909  918  909  886  823  92.9  87.8  89.8  92.6  93.7 
Brixworth at Bridge Street—Huntsville, AL (4)  208  33  10/18/2013 80  743  690  688  655  650  94.3  95.9  96.8  93.7  93.3 
Newbridge Commons—Columbus, OH  264  19  11/21/2013 100  840  801  762  729  691  96.9  96.8  96.9  95.4  90.5 
Waterside at Castleton—Indianapolis, IN  400  35  1/21/2014 80  686  652  642  621  609  96.2  92.0  94.1  92.1  90.7 
Crossings of Bellevue—Nashville, TN  300  33  4/2/2014 80  1,113  1,066  1,032  955  907  98.6  97.3  97.8  97.1  97.9 
Kendall Manor—Houston, TX  272  37  7/8/2014 80  819  840  833  796  769  93.6  92.1  93.9  94.4  91.2 
Avalon Apartments—Pensacola, FL  276  10  12/22/2014 100  997  969  970  912  —  91.9  90.9  91.9  90.9  — 
Parkway Grande—San Marcos, TX  192  4  9/10/2015 80  1,064  1,044  998  852  —  93.5  95.0  93.6  95.3  — 
Cedar Lakes - Lake St. Louis, MO (5)  420  32  9/25/2015 80  782  789  788  715  —  95.5  92.9  91.9  93.4  — 
Factory at GARCO Park—N. Charleston, SC (6)  271  2  10/13/2015 65  1,162  889  N/A  N/A  —  86.0  33.8  N/A  N/A  — 
Woodland Trails—LaGrange, GA  236  9  11/18/2015 100  929  873  832  849  —  95.5  95.7  94.6  96.2  — 
Retreat at Cinco Ranch— Katy, TX (7)  268  10  1/22/2016 75  1,012  1,098  1,177  —  —  97.1  89.5  90.5  —  — 
Grove at River Place — Macon, GA  240  30  2/1/2016 80  707  662  622  —  —  93.9  95.2  97.2  —  — 
Civic Center I—Southaven, MS  392  16  2/29/2016 60  862  834  825  —  —  97.0  96.4  97.7  —  — 
The Veranda at Shavano — San Antonio, TX  288  5  5/6/2016 65  1,004  982  953  —  —  95.1  92.0  83.4  —  — 
Chatham Court and Reflections — Dallas, TX  494  32  5/11/2016 50  920  876  813  —  —  92.3  93.4  93.4  —  — 
Waters Edge at Harbison— Columbia, SC  204  22  5/31/2016 80  860  878  821  —  —  90.5  93.7  94.2  —  — 
The Pointe at Lenox Park— Atlanta, GA  271  29  8/15/2016 74  1,184  1,176  1,190  —  —  90.2  91.1  94.0  —  — 
Civic Center II — Southaven, MS  384  13  9/1/2016 60  913  883  879  —  —  96.6  96.7  97.4  —  — 
Verandas at Alamo Ranch—San Antonio, TX  288  3 9/19/2016 72  988  972  974 —  —  93.3  89.0  85.8  —  — 
Kilburn Crossing — Fredricksburg, VA  220  13 11/4/2016 100  1,287  1,246  —  —  —  95.4  95.0  —  —  — 
Tower at OPOP — St. Louis, MO  128  4 2/28/2017 76  1,544  1,544  —  —  —  85.8  93.5  —  —  — 
4
Percentage Ownership (%) (2) 
Average Monthly Rental Rate Per
Occupied Unit (3)($)
Average Physical Occupancy (%) 
Property Name and Location 
Number
of Units
Age (1) 
Acquisition
Date
2018 2017 2016 2015 2014 2018  2017 2016 2015 2014
Lofts at OPOP — St. Louis, MO  53  4 2/28/2017 76  1,435  1,577  —  —  —  88.5  95.0  —  —  — 
Vanguard Heights — Creve Coeur, MO (8)
174  2 4/4/2017 78  1,534  1,652  —  —  —  88.0  74.7  —  —  — 
Bells Bluff — West Nashville, TN (9)
402  N/A  6/2/2017 58  N/A  N/A  —  —  —  N/A  N/A  —  —  — 
Mercer Crossing — Farmers Branch, TX  509  2 6/29/2017 50  1,277  1,272  —  —  —  88.1  91.4  —  —  — 
Jackson Square — Tallahassee, FL  242  22 8/30/2017 80  1,000  1,062  —  —  —  92.0  94.2  —  —  — 
Magnolia Pointe at Madison — Madison, AL
204  27 12/7/2017 80  815  —  —  —  —  95.8  —  —  —  — 
The Woodland Apartments — Boerne, TX
120  11 12/14/2017 80  946  —  —  —  —  91.6  —  —  —  — 
The Avenue Apartments — Ocoee, FL
522  22 2/7/2018 50  986  —  —  —  —  95.7  —  —  —  — 
Parc at 980 — Lawrenceville, GA
586  21 2/15/2018 50  1,037  —  —  —  —  92.6  —  —  —  — 
Anatole Apartments — Daytona Beach, FL
208  32 4/30/2018 80  885  —  —  —  —  95.3  —  —  —  — 
Landings of Carrier Parkway — Grand Prairie, TX
281  17 5/17/2018 50  964  —  —  —  —  93.9  —  —  —  — 
Total  10,121 
________________________
(1)  Reflects the approximate age of the property based on the year original construction was completed, other than Lofts at OPOP which was rehabbed in 2014.
(2)  Distributions to, and profit sharing between, joint venture partners is determined pursuant to the applicable agreement governing the relationship between the parties and may not be pro rata to the equity ownership
  percentage each joint venture partner has in the applicable joint venture.
(3)  Monthly rental rate per unit reflects our period of ownership.
(4) Approximately 16 units at this property are uninhabitable due to fire damage. We estimate that in 2019, we will recognize a $1 million gain on insurance recoveries related to such damage and that business interruption  insurance will reimburse us for most of the loss of related rental income. The average monthly rental rate and average physical occupancy for 2018 give effect to the rental income received or accrued from business interruption insurance as if such damaged units were leased at rates in effect at the time of the casualty.
(5)  We anticipate that this property will be sold in December 2018. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments.”
(6)  This property was under development in 2015 and 2016, in lease up in 2017 through June 2018, and was sold in November 2018. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments.”
(7)  This property was impacted by Hurricane Harvey. The average monthly rental rate and average physical occupancy for 2018 give effect to rental income received or accrued from business interruption insurance as if such damaged units were leased at rates in effect at the time of the casualty. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Hurricane Harvey.”
(8) This property was in lease up until June 2018.
(9) We anticipate that this development property will be completed from time-to-time from the end of calendar year 2018 through the end of the third calendar quarter 2019.


5
The following table set forth certain information, presented by state, related to our properties as of September 30, 2018 (dollars in thousands):
State
Number of
Properties
Number of
Units
Estimated
2019 Revenues (1)
Percent of 2019
Estimated
Revenues
Texas  11  3,096  $ 38,656  32.1  %
Georgia  5  1,545  19,786  16.4  %
Florida  4  1,248  16,869  14.0  %
Missouri (2)  4  775  10,622  8.8  %
Mississippi  2  776  8,616  7.2  %
Tennessee (3)  2  702  5,949  4.9  %
South Carolina (4)  3  683  5,611  4.7  %
Alabama  2  412  4,179  3.5  %
Indiana  1  400  3,689  3.1  %
Virginia  1  220  3,589  3.0  %
Ohio  1  264  2,804  2.3  %
Total  36  10,121  $ 120,370  100.0  %
___________________________
(1) Reflects our estimate of the rental and other revenues to be generated in 2019 by our multi-family properties located in such state and generally assumes  the same rental and occupancy rates as in effect in 2018.
(2) Includes $4,500 representing estimated revenues from Cedar Lakes-Lake St. Louis, Missouri, for all of 2019. See “Item 7. Management’s   Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments.”
(3) Assumes $1,700 of rental and other revenues are generated from a 402-unit development property that began lease up in October 2018.
(4) Includes $413  representing estimated revenues from Factory at Garco Park-N. Charleston, South Carolina, from October 1, 2019 through the sale of such property on November 9, 2018.

Our Acquisition Process and Underwriting Criteria
We identify multi-family property acquisition opportunities primarily through relationships developed over time by our officers with former borrowers, current joint venture partners, real estate investors and brokers. We are interested in acquiring the following types of multi-family properties:
• Class B or better properties with strong and stable cash flows in markets where we believe there exists opportunity for rental growth and further value creation;
• Class B or better properties that offer significant potential for capital appreciation through repositioning or rehabilitating the asset to drive rental growth;
• properties available at opportunistic prices providing an opportunity for a significant appreciation in value; and
• development of Class A properties in markets where we believe we can generate significant returns from the operation and if appropriate, sale of the development. 

Our current business plan is to acquire properties with cap rates ranging from 5% to 6.25% that will provide stable risk adjusted total returns ( i.e., operating income plus capital appreciation). In identifying opportunities that will achieve these goals, we seek acquisitions that will achieve an initial approximate 7% to 8% annual return on invested cash and an internal rate of return of approximately 10% to 16%. We have also focused, but have not limited ourselves to, acquiring properties located in the Southeast United States and Texas. Subject to the foregoing, we are opportunistic in pursuing multi-family property acquisitions and do not mandate any specific acquisition criteria, though we take the following into account in evaluating an acquisition opportunity: location, demographics, size of the target market, property quality, availability and terms and conditions of long-term fixed-rate mortgage debt, potential for capital appreciation or recurring income, extent and nature of contemplated capital improvements and property age. We generally acquire properties with a joint venture partner with knowledge and experience in owning and operating multi-family properties in the target market as this enhances our understanding of such market and assists us in managing our risk with respect to a particular acquisition.
Approvals of the acquisition of a multi-family property are based on a review of property information as well as other due diligence activities undertaken by us and, as applicable, our venture partner. Those activities include a consideration of economic, demographic and other factors with respect to the target market and sub-market (including the stability of its population and the potential for population growth, the economic and employment base, presence of and barriers to entry of
6
alternative housing stock, rental rates for comparable properties, the competitive positioning of the proposed acquisition and the regulatory environment ( i.e . applicable rent regulation)), a review of an independent third-party property condition report, a Phase I environmental report with respect to the property, a review of recent and projected results of operations for the property prepared by the seller, us or our joint venture partner, an assessment of our joint venture partner's knowledge and expertise with respect to the acquisition and operation of multi-family properties and the relevant market and sub-market, a site visit to the property and the surrounding area, an inspection of a sample of units at the property, the potential for rent increases and the possibility of enhancing the property and the costs thereof. To the extent a property to be acquired requires renovations or improvements, or if we and our joint venture partner believe that improving a property will generate greater rent, funds are generally set aside by us and our joint venture partner at the time of acquisition to provide the capital needed for such renovation and improvements. At September 30, 2018, an aggregate of $6.7 million has been allocated to fund improvements at 17 multi-family properties.
A key consideration in our acquisition process is the availability of mortgage debt to finance the acquisition (or the ability to assume the mortgage debt on the property) and the terms and conditions ( e.g ., interest rate, amortization and maturity) of such debt. Currently, approximately 30% to 40% of the purchase price is paid in cash and the balance is financed with mortgage debt. We believe that the use of leverage of up to 70% allows us the ability to earn a greater return on our investment than we would otherwise earn. Generally, the mortgage debt obtained in connection with an acquisition matures five to ten years thereafter, is interest only for one to five years after the acquisition, and provides for a fixed interest rate and for the amortization of the principal of such debt over 30 years.
Potential acquisitions are reviewed and approved by our investment committee. Approval requires the assent of not less than five of the eight members of this committee, all of whom are our executive officers. Board of director approval is required for any single multi-family property acquisition in which our equity investment exceeds $20 million.
We are partners in two multi-family development opportunities, including an unconsolidated joint venture, with the same joint venture partner or its affiliates. We pursue these opportunities when we believe the potential higher returns justify the additional risks. The factors considered in pursuing these opportunities generally include the factors considered in evaluating a standard acquisition opportunity, and we place additional emphasis on our joint venture partner's ability to execute a development project. Though we may from time-to-time pursue other development activities, we do not anticipate development properties will constitute a significant part of our portfolio.
Property Acquisitions
Set forth below is information regarding the properties we acquired during 2018 (dollars in thousands):
Location Purchase
Date 		No. of
Units 		Purchase
Price 		Acquisition
Mortgage
Debt 		Initial BRT
Equity 		Ownership Percentage Capitalized Property Acquisition Costs
Madison, AL 12/7/2017 204  $ 18,420  $ 15,000  $ 4,456  80  % $ 247 
Boerne, TX (1) 12/14/2017 120  12,000  9,200  3,780  80  % 244 
Ocoee, FL 2/7/2018 522  71,347  53,060  12,370  50  % 1,047 
Lawrenceville, GA 2/15/2018 586  77,229  54,447  15,179  50  % 767 
Daytona Beach, FL 4/30/2018 208  20,500  13,608  6,900  80  % 386 
Grand Prairie, TX 5/17/2018 281  30,800  18,995  7,300  50  % 413 
1,921  $ 230,296  $ 164,310  $ 49,985  $ 3,104 
_____________________
(1)  Includes $500 for the acquisition of a land parcel adjacent to the property.
The following table summarizes information regarding a property purchased during the period October 1, 2018 to November 30, 2018 (dollars in thousands):
Location Purchase
Date 		No. of
Units 		Contract
Purchase
Price 		Acquisition
Mortgage
Debt 		Initial BRT
Equity 		Ownership Percentage Capitalized Property Acquisition Costs
Greenville, SC 10/30/2018 266  $ 37,750  $ 26,425  $ 12,920  90  % $ 509 


7
Buyouts of Joint Venture Partners
In February 2018, we acquired our joint venture partner's 2.5% equity interest in Avalon Apartments, Pensacola, FL for  $250,000 and in July 2018, we acquired our joint venture partner's 20% interest in Kilburn Crossing, Fredricksburg, VA for $4.9 million. As a result, these properties are wholly-owned by us.
Property Sales  
We monitor our portfolio to identify properties that should be sold. Factors considered in deciding whether to sell a property generally include our evaluation of the current market price of such property compared to its projected economics and changes in the factors considered by us in acquiring such property. We also believe it is important for us to maintain strong relationships with our joint venture partners. Accordingly, we also take into account our partners' desires with respect to property sales. If our partners deem it in their own economic interest to dispose of a property at an earlier date than we would otherwise dispose of a property, we may accommodate such request.
Set forth below is information regarding the properties we sold during 2018 (dollars in thousands):
Location Sale Date No. of Units Sales Price Gain on Sale Non-Controlling Partner's Share of Gain on Sale
Melbourne, FL 10/25/2017 208  $ 22,250  $ 12,519  $ 2,504 
New York, NY (1)  1/18/2018 1  470  439  — 
Valley, AL 2/23/2018 618  51,000  9,712  4,547 
Palm Beach Gardens, FL 2/25/2018 542  97,250  41,831  20,593 
New York, NY (1)  8/15/2018 1  450  424  — 
1,370  $ 171,420  $ 64,925  $ 27,644 
________________________
(1) Reflects the sale of a cooperative apartment unit.

The following table summarizes information regarding a property sold during the period from October 1, 2018 through November 30, 2018 and which was classified as held for sale at September 30, 2018 (dollars in thousands):
Location Sale Date No. of Units Sales Price Estimated Gain on Sale Non-Controlling Partner's Share of Estimated Gain on Sale
North Charleston, SC 11/7/2018 271  $ 51,650  $ 12,000  $ 6,300 
 

Joint Venture Arrangements

The arrangements with our multi-family property joint venture partners are deal specific and vary from transaction to transaction. Generally, these arrangements provide for us and our partner to receive net cash flow available for distribution and/or profits in the following order of priority (in certain cases, we are entitled to these distributions on a senior or preferential basis): (i) a preferred return of 9% to 10% on each party's unreturned capital contributions, until such preferred return has been paid in full; and (ii) the return in full of each party's capital contribution. Thereafter, distributions to, and profit sharing between, joint venture partners, is determined pursuant to the applicable agreement governing the relationship between the parties and may not be  pro rata to the equity ownership percentage each joint venture partner has in the applicable joint venture.

Though, as noted above, each joint venture operating agreement contains different terms, such agreements generally provide for a buy-sell procedure under specified circumstances, including, (i) if the partners are unable to agree on major decisions or (ii) upon a change in control of our subsidiary owning the interest in the joint venture. Further, these arrangements may also allow us, and in some cases, our joint venture partner, to force the sale of the property after it has been owned by the joint venture for a specified period ( e.g ., four to five years after the acquisition).

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Property Management
The day-to-day management of our multi-family properties is overseen by property management companies operating in the market in which the property is located. Many of these management companies are owned by our joint venture partners or their affiliates. These property management companies are paid fees ranging from 3% to 4% of  revenues generated by the applicable property. Generally, we can terminate these management companies upon specified notice or for cause, subject to the approval of the mortgage lender and, in some cases, our joint venture partner. We believe satisfactory replacements for property managers are available, if required.
Mortgage Debt
The following table sets forth scheduled principal (including amortization) mortgage payments due for all our properties as of September 30, 2018 (dollars in thousands):
YEAR 
Principal Payments Due
2019
$34,819 
2020 62,621  (1)
2021 22,622 
2022 59,496 
2023 92,478 
Thereafter  526,769 
Total  $798,805 
____________________
(1) Includes $30,265 related to the mortgage on Factory at Garco Park. This property was sold in November 2018. 
As of September 30, 2018, the weighted average annual interest rate of the mortgage debt on our 36 multi-family properties is 4.18% and the weighted average remaining term to maturity of such debt is approximately 6.9 years. The mortgage debt associated with our multi-family properties is generally non-recourse to (i) the joint venture that owns the property, subject to standard carve-outs and (ii) to us and our subsidiary acquiring the equity interest in such joint venture. We, at the parent entity level ( i.e ., BRT Apartments Corp.), are the standard carve-out guarantor with respect to the Avalon, Silvana Oaks,Woodland Trails, Stonecrossing, Stonecrossing East, Kilburn Crossing and Avondale properties. (The term "standard carve-outs" refers to recourse items to an otherwise non-recourse mortgage and are customary to mortgage financing. While carve-outs vary from lender to lender and transaction to transaction, the carve-outs may include, among other things, a voluntary bankruptcy filing, environmental liabilities, the sale, financing or encumbrance of the property in violation of loan documents, damage to property as a result of intentional misconduct or gross negligence, failure to pay valid taxes and other claims which could create a lien on a property and the conversion of security deposits, insurance proceeds or condemnation awards). At September 30, 2018, the principal amount of mortgage debt outstanding with respect to the properties at which we are the carve-out guarantor is approximately $113.7 million.
Insurance
The multi-family properties are covered by all risk property insurance covering 100% of the replacement cost for each building and business interruption and rental loss insurance (covering up to twelve months of loss). On a case-by-case basis, based on an assessment of the likelihood of the risk, availability of insurance, cost of insurance and in accordance with standard market practice, we obtain earthquake, windstorm, flood, terrorism and boiler and machinery insurance. We carry comprehensive liability insurance and umbrella policies for each of our properties which provide no less than $5 million of coverage per incident. We request certain extension of coverage, valuation clauses, and deductibles in accordance with standard market practice and availability.
Although we may carry insurance for potential losses associated with our multi-family properties, we may still incur losses due to uninsured risks, deductibles, co-payments or losses in excess of applicable insurance coverage and those losses may be material. In addition, a substantial amount of our insurance coverage is provided through blanket policies obtained by our joint venture partners or the property managers for such property. A consequence of obtaining insurance coverage in this manner is that losses on properties in which we have no ownership interest could reduce significantly or eliminate the coverage available on one or more properties in which we have an interest.

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Changes in our Multi-Family Portfolio
Set forth below is a summary of our multi-family property acquisition activities from October 1, 2012 through September 30, 2018:
Year 
Number of Multi-Family Properties Acquired
Number of Units Acquired (2) 
2012 5  1,451 
2013 9  2,334 
2014 13  4,174 
2015 4  1,506 
2016 11  3,336 
2017 (1)
7  1,728 
2018  6  1,921 
Total  55  16,450 
____________________
(1) Includes the purchase of land in West Nashville, TN on which we are developing a 402-unit multi-family complex.
(2) Includes units under development.

Set forth below is a summary of our multi-family property dispositions from October 1, 2015 through September 30, 2018. There were no sales prior to 2015:  
Year 
Number of Multi-Family Properties Sold
Number of Units Sold
2015 3  1,175 
2016 6  2,206 
2017 7  1,580 
2018  3  1,368 
Total  19  6,329 

Our Other Real Estate Assets and Activities
In addition to our multi-family properties, we own other real estate assets with an aggregate carrying value of $15.3 million at September 30, 2018, including a $4.9 million loan receivable, undeveloped land, cooperative apartment units and a leasehold position at a commercial property. See notes 3, 6 and 9 to our consolidated financial statements. 
Corporate Level Financing Arrangement
As of September 30, 2018, $37.4 million (excluding deferred costs of $362,000) in principal amount of our junior subordinated notes is outstanding.  These notes mature in April 2036, contain limited covenants (including covenants prohibiting us from paying dividends or repurchasing capital stock if there is an event of default (as defined therein) on these notes), are redeemable at our option, and from August 1, 2012 through April 30, 2016 bore an interest rate of 4.9%. From May 1, 2016 through maturity, these notes bear an interest rate, which resets and is payable quarterly, of three-month LIBOR plus 200 basis points.  At September 30, 2018 and 2017, the interest rate on these notes is 4.34% and 3.31%, respectively.
Competition
We compete to acquire real estate assets and in particular, multi-family properties, with other owners and operators of such properties including other multi-family REITs, pension and investment funds, real estate developers and private real estate investors. Competition to acquire such properties is based on price and ability to secure financing on a timely basis and complete an acquisition. To the extent that a potential joint venture partner introduces us to a multi-family acquisition opportunity, we compete with other sources of equity capital to participate in such joint venture based on the financial returns we are willing to offer such potential partner and the other terms and conditions of the joint venture arrangement. We also compete for tenants at our multi-family properties—such competition depends upon various factors, including alternative
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housing options available in the applicable sub-market, rent, amenities provided and proximity to employment and quality of life venues.
Many of our competitors possess greater financial and other resources than we possess.

Environmental Regulation
We are subject to regulation at the federal, state and municipal levels and are exposed to potential liability should our properties or actions result in damage to the environment or to other persons or properties. These conditions include the presence or growth of mold, potential leakage of underground storage tanks, breakage or leaks from sewer lines and risks pertaining to waste handling. The potential costs of compliance, property damage restoration and other costs for which we could be liable or which could occur without regard to our fault or knowledge, are unknown and could potentially be material.
In the course of acquiring and owning multi-family properties, an independent environmental consulting firm is engaged to perform a level 1 environmental assessment (and if appropriate, a level 2 assessment) as part of the due diligence process. We believe these assessment reports provide a reasonable basis for discovery of potential hazardous conditions prior to acquisition. Should any potential environmental risks or conditions be discovered during our due diligence process, the potential costs of remediation will be assessed carefully and factored into the cost of acquisition, assuming the identified risks and factors are deemed to be manageable and within reason. Some risks or conditions may be identified that are significant enough to cause us to abandon the possibility of acquiring a given property. As of the date of this report, we have no knowledge of any material claims made or pending against us with regard to environmental damage for which we may be found liable, nor are we aware of any potential hazards to the environment related to any of our properties which could reasonably be expected to result in a material loss.

Our Structure
We share facilities, personnel and other resources with several affiliated entities including, among others, Gould Investors L.P., a master limited partnership involved primarily in the ownership and operation of a diversified portfolio of real estate assets, and One Liberty Properties, Inc., a NYSE listed equity REIT. Eight individuals (including Jeffrey A. Gould, Chief Executive Officer and President, Mitchell Gould, Executive Vice President and George Zweier, Chief Financial Officer), devote substantially all of their business time to our activities, while our other personnel (including several officers) share their services on a part-time basis with us and other affiliated entities that share our executive offices. (Including our full and part-time personnel, we estimate that we have the equivalent of 13 full time employees). The allocation of expenses for the shared facilities, personnel and other resources is computed in accordance with a shared services agreement by and among us and the affiliated entities. The allocation is based on the estimated time devoted by executive, administrative and clerical personnel to the affairs of each entity that is a party to this agreement.
In addition, we retain several related parties to participate in, among other things, the analysis and approval of multi-family property acquisitions and dispositions, develop and maintain banking and financing relationships and provide us investment advice and long-term planning (the “Services”). The aggregate fees paid for the Services in 2018 and 2017 was $1.3 million and $1.2 million, respectively.

Item 1A.    Risk Factors.
        Set forth below is a discussion of certain risks affecting our business. Any adverse effects arising from the realization of any of the risks discussed, including our financial condition and results of operation, may, and likely will, adversely affect many aspects of our business.
We face numerous risks associated with the real estate industry that could adversely affect our results of operations through decreased revenues or increased costs.

As a real estate company, we are subject to various changes in real estate conditions, and any negative trends in such real estate conditions may adversely affect our results of operations through decreased revenues or increased costs. These conditions include:
• changes in national, regional and local economic conditions, which may be negatively impacted by concerns about inflation, deflation, government deficits, unemployment rates and decreased consumer confidence particularly in markets in which we have a high concentration of properties;
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• increases in interest rates, which could adversely affect our ability to obtain financing or to buy or sell properties on favorable terms or at all;  
• the inability of  tenants to pay rent;
• the existence and quality of the competition, such as the attractiveness of our properties as compared to our co mpetitors' properties based on considerations such as convenience of location, rental rates, amenities and safety record;
• increased operating costs, including increased real property taxes, maintenance, insurance and utility costs (including increased prices for fossil fuels);
• weather conditions that may increase or decrease energy costs and other weather-related expenses;
• oversupply of apartments or single-family housing or a reduction in demand for real estate in the markets in which our properties are located;
• a favorable interest rate environment that may result in a significant number of potential residents of our multi-family properties deciding to purchase homes instead of renting;
• changes in, or increased costs of compliance with, laws and/or governmental regulations, including those governing usage, zoning, the environment and taxes; and
•  rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs.

Moreover, other factors may adversely affect our results of operations, including potential liability under environmental and other laws and other unforeseen events, many of which are discussed elsewhere in the following risk factors. Any or all of these factors could materially adversely affect our results of operations through decreased revenues or increased costs. 

If interest rates increase or credit markets tighten, it may be more difficult for us to refinance our mortgage debt at favorable rates as it matures or to secure financing for acquisitions.

The following table sets forth, as of September 30, 2018, scheduled principal (excluding amortization) mortgage payments due at maturity on the mortgages on the properties we own and the weighted average interest rate thereon (dollars in thousands):
Year 
Principal
Payments
Due at Maturity
Weighted
Average Interest
Rate
2019 $ 29,000  4.68  %
2020  
55,744  (1) 3.74  %
2021 
14,001  4.29  %
2022 50,729  4.63  %
2023 83,921  3.95  %
thereafter  489,057  4.17  %
$ 722,452  4.16  %
_______________________

(1) Includes $30,265 related to the mortgage on Factory at Garco Park. This property was sold in November 2018.

Though interest rates have been at historically low levels the past several years, they have been increasing recently and may continue to increase.  Increases in interest rates, or reduced access to credit markets due, among other things, to more stringent lending requirements or our high level of leverage, may make it difficult for us to refinance our mortgage debt as it matures or limit the availability of mortgage debt, thereby limiting our acquisition and/or refinancing activities. Even in the event that we are able to secure mortgage debt on, or otherwise refinance our mortgage debt, due to increased costs associated with securing financing and other factors beyond our control, we may be unable to refinance the entire mortgage debt as it matures or be subject to unfavorable terms (such as higher loan fees, interest rates and periodic payments) if we do refinance the mortgage debt. Either of these results could reduce operating cash flow and earnings, which may adversely affect the investment goals of our stockholders.
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If we do not continue to pay cash dividends, the price of our common stock may decline .
REIT's are generally required to distribute annually at least 90% of their ordinary taxable income to qualify as a REIT under the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, which we refer to as the Code. Because we continue to generate operating losses primarily due to the impact of depreciation, we are not currently required, and may not be required in the near future, to pay dividends to maintain our REIT status. Accordingly, we cannot assure you that we will pay dividends in the future. If we do not continue to pay cash dividends, the price of our common stock may decline.
Most of our multi-family properties are located in a limited number of markets, which makes us susceptible to adverse developments in such markets.
In addition to general, national and regional conditions, the operating performance of our multi-family residential properties is impacted by the economic conditions, including economic conditions of the specific markets in which our properties are concentrated. We anticipate that approximately 32%, 16%, 14% and 9% of our estimated 2019 revenues from multi-family properties will be generated by properties located in Texas, Georgia, Florida and Missouri, respectively. Accordingly, adverse developments in such markets, including economic developments or natural or man-made disasters, could adversely impact the operations of these properties and therefore our operating results and cash flow. The concentration of our properties in a limited number of markets exposes us to risks of adverse developments which are greater than the risks of owning properties with a more geographically diverse portfolio.
Risks involved in conducting real estate activity through joint ventures.
We have in the past and intend in the future to continue to acquire properties through joint ventures with other persons or entities when we believe that circumstances warrant the use of such structure. Joint venture investments involve risks not otherwise present when acquiring real estate directly, including the possibility that:
• our joint venture partner might become bankrupt, insolvent or otherwise refuse or be unable to meet their obligations to us or the venture (including their obligation to make capital contributions or property distributions when due);
• we may incur liabilities as a result of action taken by our joint venture partner;
• our joint venture partner may not perform its property oversight responsibilities;
• our joint venture partner may have economic or business interests or goals which are or become inconsistent with our business interests or goals, including inconsistent goals relating to the sale or refinancing of properties held in the joint venture or the timing of the termination or liquidation of the joint venture;
• the more successful a joint venture project, the more likely that any profit generated above a negotiated threshold will be allocated disproportionately in favor of our joint venture partner; 
• our joint venture partners obtain blanket property casualty and business interruption insurance insuring properties we own jointly and other properties in which we have no ownership interest and as as a result, claims or losses with respect to properties owned by our joint venture partners but in which we have no interest could significantly reduce or eliminate the insurance available to properties in which we have an interest;
• our joint venture partner may be in a position to take action or withhold consent contrary to our instructions or requests, including actions that may make it more difficult to maintain our qualification as a REIT;
• our joint venture partner might engage in unlawful or fraudulent conduct with respect to our jointly owned properties or other properties in which they have an ownership interest;
• our joint venture partner may trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner's interest, at a time when we otherwise would not have initiated such a transaction;
• disputes between us and our joint venture partners may result in litigation or arbitration that would increase our expenses and divert management's attention from operating our business;
• disagreements with our joint venture partners with respect to property management (including with respect to whether a property should be sold, refinanced, or improved) could result in an impasse resulting in the inability to operate the property effectively; and
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• our joint venture partners may have other competing real estate interests in the markets in which our properties are located that could influence the partners to take actions favoring their properties to the detriment of the jointly owned properties.
  We own 16 multi-family properties with a carrying value of $523.7 million with three joint venture partners or their affiliates and may be adversely effected if we are unable to maintain a satisfactory working relationship with any one or more of these joint venture partners.
Joint ventures that own seven multi-family properties with a carrying value of $294.0 million are owned with one joint venture partner or its affiliates, joint ventures that own five multi-family properties with a carrying value of $125.2 million are owned with a second joint venture partner or its affiliates and joint ventures that own four multi-family properties with a carrying value of $104.5 million are owned with a third joint venture partner or its affiliates. This concentration of ownership of properties with a limited number of joint venture partners exposes us to risks of adverse developments which are greater than the risks of owning properties with a more diverse group of joint venture partners.
The failure of third party property management companies to properly manage our properties or obtain sufficient insurance coverage could adversely impact our results of operations.
We and our joint venture partners rely on third party property management companies to manage our properties. These management companies are responsible for, among other things, leasing and marketing rental units, selecting tenants (including an evaluation of the creditworthiness of tenants), collecting rent, paying operating expenses, maintaining the property and obtaining insurance coverage for the properties they manage. If these property management companies do not perform their duties properly or we or our joint venture partners do not effectively supervise the activities of these managers, the occupancy rates and rental rates at the properties managed by such property managers may decline and the expenses at such properties may increase. At September 30, 2018, one property manager and its affiliates manage nine properties, a second property manager and its affiliates manage seven properties and eight other property managers manage five or fewer properties. The loss of our property managers, and in particular, the managers that manage multiple properties, could result in a decrease in occupancy rates, rental rates or both or an increase in expenses. Further, property managers are also responsible for obtaining insurance coverage with respect to the properties they manage, which coverage is often obtained pursuant to blanket policies covering many properties in which we have no interest. Losses at properties managed by our property managers but in which we have no interest could reduce significantly the insurance coverage available at our properties managed by these property managers. Finally, some of the management companies are owned by our joint venture partners or their affiliates. The termination of a management company may require the approval of the mortgagee, our joint venture partner or both. If we are unable to terminate an underperforming property manager on a timely basis, our occupancy and rental rates may decrease and our expenses may increase.
We may not be able to compete with competitors, many of which have greater financial and other resources than we possess.
We compete with many third parties engaged in the ownership and operation of multi-family properties, including other REITs, specialty finance companies, public and private investors, investment and pension funds and other entities. Many of these competitors have substantially greater financial and other resources than we do. Larger and more established competitors enjoy significant competitive advantages that result from, among other things, enhanced operating efficiencies and more extensive networks providing greater and more favorable access to capital, financing and tax credit allocations and more favorable acquisition opportunities.
We may incur impairment charges in 2019.
We evaluate on a quarterly basis our real estate portfolio for indicators of impairment. Impairment charges reflect management's judgment of the probability and severity of the decline in the value of real estate assets we own. These charges and provisions may be required in the future as a result of factors beyond our control, including, among other things, changes in the economic environment and market conditions affecting the value of real property assets or natural or man-made disasters. If we are required to take impairment charges, our results of operations will be adversely impacted.
We may need to make significant capital improvements and incur deferred maintenance costs with respect to our multi-family properties and may not have sufficient funds for such purposes.
Our multi-family properties face competition from newer, and updated properties. At September 30, 2018 the weighted average age (based on the number of units) of our multi-family properties is approximately 20 years. To remain competitive and increase occupancy at these properties and/or make them attractive to potential tenants or purchasers, we may have to make significant capital improvements and/or incur deferred maintenance costs with respect to these properties. At September 30, 2018, we have $6.7 million of restricted cash that can only be used for improvements at specific properties. The cost of future improvements and deferred maintenance is unknown and the amounts earmarked for specific properties may be insufficient to
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effectuate needed improvements. Our results of operations and financial conditions may be adversely affected if we are required to expend significant funds (other than funds earmarked for such purposes) to repair or improve our properties.
Our transactions with affiliated entities involve conflicts of interest.
Entities affiliated with us and with certain of our executive officers provide services to us and on our behalf. These transactions raise the possibility that we may not receive terms as favorable as those that we would receive if the transactions were entered into with unaffiliated entities.
Senior management and other key personnel are critical to our business and our future success may depend on our ability to retain them.
We depend on the services of Jeffrey A. Gould, our president and chief executive officer, and other members of senior management to carry out our business and investment strategies. Although Jeffrey A. Gould devotes substantially all of his business time to our affairs, he devotes a limited amount of his business time to entities affiliated with us. In addition to Jeffrey A. Gould, only two other executive officers, Mitchell Gould, our executive vice president, and George Zweier, a vice president and our chief financial officer, devote all or substantially all of their business time to us. Many of our executives (i) provide Services (see Item 1 "Business-Our Structure") to us and/or (ii) share their services on a part-time basis with entities affiliated with us and located in the same executive offices pursuant to a shared services agreement. We rely on part-time executive officers to provide certain services to us, including legal and certain accounting services, since we do not employ full-time executive officers to handle these services. If the shared services agreement is terminated or the executives performing Services are unwilling to continue to do so, we will have to obtain such services from other sources or hire employees to perform them. We may not be able to replace these services or hire such employees in a timely manner or on terms, including cost and level of expertise, that are equivalent to or better than those we receive pursuant to the Services and the shared services agreement.
In addition, in the future we may need to attract and retain qualified senior management and other key personnel, both on a full-time and part-time basis. The loss of the services of any of our senior management or other key personnel or our inability to recruit and retain qualified personnel in the future, could impair our ability to carry out our business and our investment strategies.
We do not carry key man life insurance on members of our senior management.
We could be negatively impacted by changes in our relationship with Fannie Mae or Freddie Mac, changes in the condition of Fannie Mae or Freddie Mac and by changes in government support for multi-family housing.

Fannie Mae and Freddie Mac have been a major source of financing for multi-family real estate in the United States and we have used loan programs sponsored by these agencies to finance many of our acquisitions of multi-family properties. There has been ongoing discussion by the government with regard to the long term structure and viability of Fannie Mae and Freddie Mac, which could result in adjustments to guidelines for their loan products. Should these agencies have their mandates changed or reduced, lose key personnel, be disbanded or reorganized by the government or otherwise discontinue providing liquidity for the multi-family sector, our ability to obtain financing through loan programs sponsored by the agencies could be negatively impacted. In addition, changes in our relationships with Fannie Mae and Freddie Mac, and the lenders that participate in these loan programs, with respect to our existing mortgage financing could impact our ability to obtain comparable financing for new acquisitions or refinancing for our existing multi-family real estate investments. Should our access to financing provided through Fannie Mae and Freddie Mac loan programs be reduced or impaired, it would significantly reduce our access to debt capital and/or increase borrowing costs and could significantly limit our ability to acquire properties on acceptable terms and reduce the values to be realized upon property sales.

Our acquisition, development and value-add activities are limited by the funds available to us.
Our ability to acquire additional multi-family properties, develop new properties and improve the properties in our portfolio is limited by the funds available to us and our ability to obtain, on acceptable terms, equity contributions from joint venture partners and mortgage debt from lenders. At September 30, 2018, we had approximately $27.4 million of cash and cash equivalents and approximately $6.7 million designated as restricted cash for improvements at 17 multi-family properties. Our multi-family acquisition and value-add activities are constrained by funds available to us which will limit growth in our revenues and operating results.
Our revenues are significantly influenced by demand for multi-family properties generally, and a decrease in such demand will likely have a greater adverse effect on our revenues than if we owned a more diversified real estate portfolio.
Our current portfolio is focused predominately on multi-family properties, and we expect that going forward we will continue to focus predominately on the acquisition, disposition and operation of such properties. As a result, we are subject to
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risks inherent in investments in a single industry, and a decrease in the demand for multi-family properties would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio.

Our value-add activities involve greater risks than more conservative investment strategies.

In many cases, we seek to acquire properties at which we believe our investment of additional capital to enhance such properties will result in increased rental rates and higher resale value . These efforts involves greater risks than more conservative investment strategies. The risks related to these value-add activities include risks related to delays in the repositioning or improvement process, higher than expected capital improvement costs, the additional capital needed to execute our value-add program, and the possibility that these value-add activities may not result in the higher rents and occupancy rates anticipated. In addition, properties or units may not produce revenue while undergoing capital improvements. Furthermore, we may also be unable to complete the improvements of these properties and may be forced to hold or sell these properties at a loss. For these and other reasons, we cannot assure you that we will realize growth in the value of our value-add multifamily properties, and as a result, our ability to make distributions to our stockholders could be adversely affected.

We are subject to certain limitations associated with selling multi-family properties, which could limit our operational and financial flexibility.  

Our ability to sell properties and the terms (including sales price and the timing of the sale) at which such properties may be sold may be limited by various factors and conditions, including factors and conditions over which we have limited or no control. These factors and conditions include:

• the agreement of our joint venture partner to sell a property;
• adverse market conditions, including the limited availability of mortgage debt required by a buyer to acquire a property or increased interest rates;
• the need to expend funds to correct defects or to make improvements before a property can be sold; and
• federal tax laws that may limit our ability to profit on the sale of properties that we have owned for less than two years.
The foregoing factors and conditions may limit our ability to dispose of properties, which may have a material adverse effect on our financial condition and the market value of our securities.
Increased competition and increased affordability of residential homes could limit our ability to retain our tenants or increase or maintain rents.
Our multi-family properties compete with numerous housing alternatives, including other multi-family and single-family rental homes, as well as owner occupied single and multi-family homes. Our ability to retain tenants and increase or maintain rents or occupancy levels could be adversely affected by the alternative housing in a particular area and, due to declining housing prices, mortgage interest rates and government programs to promote home ownership, the increasing affordability of owner occupied single and multi-family homes.
Development, redevelopment and construction risks could affect our operating results.

We may continue to develop and redevelop multi-family properties.   These activities may be exposed to   the following risks:
• we may abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring those opportunities;
• occupancy rates and rents at development properties may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing properties ;
• we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of development opportunities;
• we may incur costs that exceed our original estimates due to increased material, labor or other costs;
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• we may be unable to complete construction and lease-up of a development project on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;
• we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a property, which may cause us to delay or abandon a development opportunity; and
• we may be unable to refinance with favorable terms, or at all, any construction or other financing obtained for a development property, which may cause us to sell the property on less favorable terms or surrender the property to the lender.
If we are unable to address effectively these and other risks associated with development projects, our financial condition and results of operations may be adversely effected.
 Compliance with REIT requirements may hinder our ability to maximize profits.
We must continually satisfy tests concerning, among other things, our sources of income, the amounts we distribute to our stockholders and the ownership of our common stock, to qualify as a REIT for Federal income tax purposes. We may also be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Accordingly, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.
To qualify as a REIT, we must also ensure that at the end of each calendar quarter at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investment in securities cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of such issuer. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer, other than a qualified REIT security. If we fail to comply with these requirements, we must dispose of the portion of our assets in excess of such amounts within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences. This requirement could cause us to dispose of assets for consideration of less than their true value and could lead to a material adverse impact on our results of operations and financial condition.
If we are required to make payments under any “bad boy” carve out guarantees that we have provided in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.
In obtaining certain non-recourse loans, we have provided our lenders with standard carve out guarantees. These guarantees are only applicable if and when the borrower directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper (commonly referred to as “bad boy” guarantees). Although we believe that “bad boy” carve out guarantees are not guarantees of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under such guarantees. In the event such a claim were made against us under a “bad boy” carve out guarantee, following foreclosure on mortgages or related loans, and such claim were successful, our business and financial results could be materially adversely affected.
Because real estate investments are illiquid, we may not be able to reconfigure our portfolio on a timely basis..
Real estate investments generally cannot be sold quickly. We may not be able to reconfigure our portfolio promptly in response to economic or other conditions. Further, even if we are able to sell properties, we may be unable to reinvest the proceeds of such sales in opportunities that are as favorable as the properties sold. Our inability to reconfigure our portfolio to profitably reinvest the proceeds of property sales promptly could adversely affect our financial condition and results of operations.
We depend on our subsidiaries for cash flow and will be adversely impacted if these subsidiaries are prohibited from distributing cash to us.

We conduct, and intend to conduct, all our business operations through our subsidiaries. Accordingly, our only source of cash to fund our operations and pay our obligations are distributions from our subsidiaries. We cannot assure you that our subsidiaries will be able to, or be permitted to, make distributions to us that will enable us to fund our operations. Each of our subsidiaries is or will be a distinct legal entity and, under certain circumstances, legal and contractual restrictions, may limit our ability to obtain cash from such entities. In addition, because we operate through our subsidiaries, your claims as stockholders will be structurally subordinated to all existing and future liabilities and obligations of our subsidiaries. Therefore, in the event
17
of our bankruptcy, liquidation or reorganization, our assets and those of our subsidiaries will be able to satisfy your claims as stockholders only after all our and our subsidiaries' liabilities and obligations have been paid in full.
Liabilities relating to environmental matters may impact the value of our properties.
We may be subject to environmental liabilities arising from the ownership of properties. Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.
The presence of hazardous substances on our properties may adversely affect our ability to finance or sell the property and we may incur substantial remediation costs. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition.
Our operating results and assets may be negatively affected if our insurance coverage is insufficient to compensate us for casualty events occurring at our properties.
Our multi-family properties, including the properties owned by the joint ventures in which we are members, carry all risk property insurance covering the property and improvements thereto for the cost of replacement in the event of a casualty. Though we maintain insurance coverage, such coverage may be insufficient to compensate us for losses sustained as a result of a casualty because, among other things:
• the amount of insurance coverage maintained for any property may be insufficient to pay the full replacement cost following a casualty event ;
•  the rent loss coverage under a policy may not extend for the full period of time that a tenant or tenants may be entitled to a rent abatement that is a result of, or that may be required to complete restoration following, a casualty event ;
• certain types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, may be uninsurable or may not be economically feasible to insure ;
• changes in zoning, building codes and ordinances, environmental considerations and other factors may make it impossible or impracticable, to use insurance proceeds to replace damaged or destroyed improvements at a property ;
• insurance coverage is part of blanket insurance policies in which losses on properties in which we have no ownership interest could reduce significantly or eliminate the coverage available on our properties ; and
• the deductibles applicable to one or more buildings at a property may be greater than the losses sustained at such buildings.
If our insurance coverage is insufficient to cover losses sustained as a result of one or more casualty events, our operating results and the value of our portfolio will be adversely affected.

Changes to the U.S. federal income tax laws, including the enactment of certain proposed tax reform measures, could have an adverse impact on our business and financial results.

At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.

Compliance or failure to comply with the Americans with Disabilities Act of 1990 or other safety regulations and requirements could result in substantial costs.

The Americans with Disabilities Act generally requires that public buildings, including our properties, be made accessible to disabled persons. Non-compliance could result in the imposition of fines by the federal government or the award of damages to private litigants. From time-to-time claims may be asserted against us with respect to some of our properties under the Americans with Disabilities Act. If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations.
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Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

Breaches of information technology systems could materially harm our business and reputation.

We, our joint venture partners and the property managers managing our properties, collect and retain, through information technology systems, financial, personal and other sensitive information provided by third parties, including tenants, vendors and employees. Such persons also rely on information technology systems for the collection and distribution of funds. There can be no assurance that we, our joint venture partners or property managers will be able to prevent unauthorized access to sensitive information or the unauthorized distribution of funds. Any loss of this information or unauthorized distribution of funds as a result of a breach of information technology systems may result in loss of funds to which we are entitled, legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business and financial performance.

We could be adversely affected if we or any of our subsidiaries are required to register as an investment company under the Investment Company Act of 1940 as amended (the “1940 Act”).

We conduct our operations so that neither we, nor any of our subsidiaries is required to register as investment companies under the 1940 Act.  If we or any of our subsidiaries is required to register as an investment company but fail to do so, the unregistered entity would be prohibited from engaging in certain business, and criminal and civil actions could be brought against such entity.  In addition, the contracts of such entity would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of the entity and liquidate its business.

Item 1B.    Unresolved Staff Comments.
None.
Item 2.    Properties.
Our executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, New York. We believe that such facilities are satisfactory for our current and projected needs.
The information set forth under "Item 1—Business" is incorporated herein by this reference to the extent responsive to the information called for by this item.
Item 3.    Legal Proceedings.
None.
Item 4.    Mine Safety Disclosures.
Not applicable.
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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information; Holders
Our shares of common stock are listed on the New York Stock Exchange, or the NYSE, under the symbol "BRT."  As of November 30, 2018, there were approximately 848 holders of record of our common stock.
Issuer Purchases of Equity Securities

 On September 12, 2017, our Board of Directors authorized us to repurchase, effective as of October 1, 2017, up to $5.0 million of shares of our common stock through September 30, 2019. The table below provides information regarding our repurchase of shares of common stock pursuant to such authorization during the periods presented.

Period  (a)



Total Number of Shares Purchased  		(b)



Average Price Paid per Share  		(c)

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs  		(d)

Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs 
July 1 - July 31, 2018  —  —  —  $ 5,000,000 
August 1 - August 31, 2018  —  —  —  5,000,000 
September 1 - September 30, 2018  3,500  $ 11.73  3,500  4,958,962 
Total  3,500  $ 11.73  3,500 


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Item 6.    Selected Financial Data.
The following table, not covered by the report of the independent registered public accounting firm, sets forth selected historical financial data for each of the years indicated. This table should be read in conjunction with the detailed information and consolidated financial statements appearing elsewhere herein, including note 1 to our consolidated financial statements which delineates the manner in which the financial information set forth below and elsewhere herein has been reclassified.
(Dollars in thousands, except per share amounts)  2018 2017 2016 2015 2014
Operating statement data: 
Total revenues (1)  $ 119,635  $ 105,771  $ 98,521  $ 81,098  $ 61,813 
Total expenses (1)  139,768  119,337  107,658  91,379  74,030 
Gain on sale of real estate  64,924  52,601  46,477  15,005  — 
Income (loss) from continuing operations  48,051  37,188  33,179  4,724  (12,217)
Income (loss) from discontinued operations (2)  —  —  12,679  (6,329) (3,949)
(Income) loss attributable to non-controlling interests  (24,228) (22,028) (13,869) (783) 6,712 
Net income (loss) attributable to common stockholders  23,773  13,600  31,289  (2,388) (9,454)
Diluted earnings (loss) per share of common stock: 
Income (loss) from continuing operations  $ 1.61  $ 0.97  $ 1.21  $ (0.02) $ (0.81)
Income (loss) from discontinued operations  —  —  1.02  (0.15) 0.15 
Diluted earnings (loss) per share  $ 1.61  $ 0.97  $ 2.23  $ (0.17) $ (0.66)
Cash distributions declared per share of common stock  $ 0.78  $ 0.18  $ —  $ —  $ — 
Balance sheet data: 
Total assets  $ 1,153,364  $ 993,897  $ 874,899  $ 820,869  $ 734,620 
Real estate properties, net (3)  1,020,874  902,281  759,576  591,727  522,591 
Cash and cash equivalents  27,360  12,383  27,399  15,556  22,639 
Assets related to discontinued operations (4)  —  —  —  173,228  134,188 
Mortgages payable, net of deferred fees (5)  792,432  697,826  588,457  451,159  382,690 
Junior subordinated notes, net of deferred fees  37,038  37,018  36,998  36,978  36,958 
Total BRT Apartments Corp. stockholders' equity  197,987  165,996  151,290  122,655  130,140 
____________________________________________
(1) The increases from 2014 through 2018 are due primarily to the increases in the number of multi-family properties owned.
(2) Primarily reflects the operations of the Newark Joint Venture from 2014 through its sale in 2016.
 See note 5 to our consolidated financial statements.
(3) The increases from 2014 through 2018 are due to our multi-family property acquisitions.
(4) Primarily reflects the assets of the Newark Joint Venture. See note 4 to our consolidated financial statements.
(5) The increase from 2014 to 2018 is due to the mortgage debt incurred in the acquisition of multi-family properties.
Funds from Operations; Adjusted Funds from Operations.
In view of our multi-family property activities, we disclose funds from operations ("FFO") and adjusted funds from operations ("AFFO") because we believe that such metrics are a widely recognized and appropriate measure of the performance of an equity REIT.
We compute FFO in accordance with the "White Paper on Funds From Operations" issued by the National Association of Real Estate Investment Trusts ("NAREIT") and NAREIT's related guidance. FFO is defined in the White Paper as net income (loss), computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property, plus depreciation and amortization, plus impairment write-downs of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. In computing FFO, we do not add back to net income the amortization of costs in connection with our financing activities or depreciation of non-real estate assets. We compute AFFO by adjusting FFO for loss on extinguishment of debt, our straight-line rent accruals, restricted stock expense, restricted stock unit ("RSU") expense, gain on insurance recovery, and deferred mortgage and debt costs (including our share of our unconsolidated joint ventures).
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Since the NAREIT White Paper does not provide guidelines for computing AFFO, the computation of AFFO may vary from one REIT to another.
We believe that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assures that the value of real estate assets diminish predictability over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a performance measure that, when compared year over year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions.
FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.
FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP.
Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our performance, management is careful to examine GAAP measures such as net income (loss) and cash flows from operating, investing and financing activities. Management also reviews the reconciliation of net income (loss) to FFO and AFFO.
The table below provides a reconciliation of net income (loss) determined in accordance with GAAP to FFO and AFFO for each of the indicated years (amounts in thousands):
2018
2017 2016 2015 2014
Net income (loss) attributable to common stockholders $ 23,773  $ 13,600  $ 31,289  $ (2,388) $ (9,454)
Add: depreciation of properties 38,504  30,491  24,329  20,681  15,562 
Add: our share of depreciation in unconsolidated joint ventures 1,587  737  20  20  20 
Add: amortization of deferred leasing costs —  —  15  71  62 
Deduct: gain on sales of real estate and partnership interests (64,924) (52,601) (62,330) (15,005) — 
Adjustment for non-controlling interests 16,249  17,122  13,320  221  (4,012)
Funds from operations 15,189  9,349  6,643  3,600  2,178 
Adjust for: straight-line rent accruals (40) (56) (200) (411) (542)
Add: loss on extinguishment of debt 850  1,463  4,547  —  — 
Add: amortization of restricted stock and RSU expense 988  1,218  1,005  906  805 
Add: amortization of deferred mortgage and debt costs 1,432  1,244  1,645  2,242  1,825 
Deduct: gain on insurance recovery (4,498) —  —  —  — 
Adjustment for non-controlling interests 469  (920) (2,729) (703) (424)
Adjusted funds from operations  $ 14,390  $ 12,298  $ 10,911  $ 5,634  $ 3,842 
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The table below provides a reconciliation of net income (loss) per common share (on a diluted basis) determined in accordance with GAAP to FFO and AFFO.
2018 2017 2016 2015 2014
Net income (loss) attributable to common stockholders $ 1.61  $ 0.97  $ 2.23  $ (0.17) $ (0.66)
Add: depreciation of properties 2.60  2.18  1.74  1.46  1.10 
Add: our share of depreciation in unconsolidated joint ventures 0.11  0.05  —  —  — 
Add: amortization of deferred leasing costs —  —  —  —  — 
Deduct: gain on sales of real estate and partnership interests (4.39) (3.75) (4.45) (1.07) — 
Adjustment for non-controlling interests 1.10  1.22  0.95  0.02  (0.28)
Funds from operations 1.03  0.67  0.47  0.24  0.16 
Adjustment for: straight-line rent accruals —  —  (0.01) (0.04) (0.04)
Add: loss on extinguishment of debt 0.06  0.10  0.32  —  — 
Add: amortization of restricted stock and RSU expense 0.05  0.09  0.07  0.07  0.06 
Add: amortization of deferred mortgage and debt costs 0.10  0.09  0.12  0.16  0.13 
Deduct: gain on insurance recovery (0.30) —  —  —  — 
Adjustment for non-controlling interests 0.03  (0.07) (0.19) (0.07) (0.03)
Adjusted funds from operations $ 0.97  $ 0.88  $ 0.78  $ 0.36  $ 0.28 

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a REIT that is focused primarily on the ownership, operation and development of multi-family properties. These properties derive revenue primarily from tenant rental payments. Generally, these properties are owned by consolidated joint ventures in which we contributed 65% to 80% of the equity, with the remaining equity contributed by our joint venture partner. At September 30, 2018, we: (i) own 36 multi-family properties located in eleven states with an aggregate of 10,121 units (including 402 units at a development property) and a carrying value of $1.0 billion; and (ii) have ownership interests, through unconsolidated entities, in three multi-family properties located in two states with an aggregate of 1,026 units (including 339 units at a development property), and a carrying value of $20.1 million. Most of our properties are located in the Southeast United States and Texas.  
As used herein, the term "same store properties" refers to operating properties that were owned for the entirety of the periods being presented and excludes properties that were in development or lease up during such periods. Retreat at Cinco Ranch-Katy, Texas, is excluded from same store properties due to the damage it sustained from Hurricane Harvey.  For the comparison between 2018 and 2017, there are 21 same store properties and for the comparison between 2017 and 2016, there are 15 same store properties. 
Highlights of 2018 
During 2018, we:
• acquired six multi-family properties with 1,921 units, for a purchase price of $230.3 million, including mortgage debt of $164.3 million and $50 million of our equity - we refer to these six properties as the "2018 Acquisitions" ;
• sold three multi-family properties with an aggregate of 1,368 units, which we refer to as the 2018 Sold Properties, and two cooperative apartment units, for a sales price of $171.4 million and a gain of $64.9 million - $27.6 million of this gain was allocated to our joint venture partners;
• entered into equity distribution agreements , as amended, with three placement agents-pursuant thereto, we raised approximately $20.4 million of equity from the sale of 1.59 million shares of our common stock;
• effected an 11% increase in our dividen d rate and declared dividends of an aggregate of $0.78 per share; and
• bought out the interests of our joint venture partners in two multi-family properties for an aggregate of $5.2 million . 
Hurricane Harvey

In August 2017, Hurricane Harvey caused significant damage to our 268-unit Retreat at Cinco Ranch - Katy, Texas property. As a result of insurance recoveries, in 2018 we recognized a $4.5 million gain on insurance recoveries and $1.1 million of rental income due to recoveries from business interruption insurance. As of September 30, 2018, this property was substantially repaired.

Recent Developments
On October 30, 2018, we acquired Crestmont at Thornblade, a 266-unit multi-family property located in Greensville, SC, for $37.8 million, including $26.4 million of mortgage debt obtained in connection with the acquisition. We contributed $12.9 million for our 90% equity interest. The mortgage debt bears an interest rate of 4.69% per year, is interest only until 2023, amortizes on a 30 year amortization schedule thereafter, and matures in 2028. Based on our underwriting, we estimate that on a quarterly basis, this property will generate $943,000 of rental revenue and will incur $438,000 of real estate operating expense, $316,000 of interest expense and $510,000 of depreciation expense.

On November 7, 2018, we sold Factory at Garco Park, for a sales price of $51.7 million. We anticipate that during the quarter ending December 31, 2018, we will recognize a gain on the sale of the property of approximately $12.0 million, of which approximately $6.3 million will be allocated to the non-controlling partner. In 2018, this property accounted for $3.5 million of revenues, $1.7 million of operating expenses, $1.1 million of interest expense and $1.6 million of depreciation.

We entered into a contract to sell Cedar Lakes-Lake St. Louis, Missouri, for a sales price of $41.3 million. We anticipate that such transaction will close in December 2018 and that if the transaction closes we will recognize, during the quarter ending December 31, 2018, a gain on the sale of the property of approximately $7.5 million, of which approximately $1.9 million will be allocated to the non-controlling partner. In 2018, this property accounted for $4.5 million of revenues, $2.3
24
million of operating expenses, $1.0 million of interest expense and $1.3 million of depreciation. We cannot provide any assurance that this transaction will be completed or if completed, we will recognize such gain.

 
Years Ended September 30, 2018 and 2017
Revenues
The following table compares our revenues for the years indicated:
(Dollars in thousands):  2018 2017 Increase
(Decrease)  		% Change 
Rental and other revenue from real estate properties  $ 118,872  $ 104,477  $ 14,395  13.8  %
Other income  763  1,294  (531) (41.0) %
Total revenues  $ 119,635  $ 105,771  $ 13,864  13.1  %

Rental and other revenue from real estate properties.     The components of the increase are as follows:
• $ 15.2 million from the operations of the 2018 Acquisitions;
• $ 11.6  million from the inclusion, for a full year, of the operations of six properties, excluding a development property, that were acquired in 2017 (the "2017 Acquisitions");
• $2.7 million from Factory at Garco Park which was in lease up during the current year; and
• $ 2.5 million from the operations of same store properties –15 of 21 properties had increases in rental revenue ranging from 3% to 9.6%, with the average increase of 3.7% for all same store properties. Average rents at same store properties increased to $912 per occupied unit in 2018 from $889 per occupied unit in 2017.
These increases were offset by the loss of rental and other revenue of $11.9 million from the sale of the 2018 Sold Properties. The results for 2017 include $5.6 million of rental revenue from seven multi-family properties sold in 2017 (the "2017 Sold Properties").

Other income.

The decrease is due to reduced interest income on our loan to the Newark Joint Venture primarily as a result of the $13.6 million paydown in December 2016. See notes 5 and 6 to our consolidated financial statements. 
Expenses
The following table compares our expenses for the periods indicated:
(Dollars in thousands)  2018 2017 Increase (Decrease)  % Change 
Real estate operating expenses  $ 57,665  $ 51,279  $ 6,386  12.5  %
Interest expense  34,389  28,171  6,218  22.1  %
General and administrative  9,210  9,396  (186) (2.0) %
Depreciation  38,504  30,491  8,013  26.3  %
Total expenses  $ 139,768  $ 119,337  $ 20,431  17.1  %

Real estate operating expenses.    The components of the increase are as follows:
• $7. 0 million from the operations of the 2018 Acquisitions;
• $ 5.8 million from the inclusion, for a full year, of the operations of the 2017 Acquisitions;
• $1.0 million from Factory at Garco Park, which was in development and/or lease up in 2017 ; and
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• $1.1 million from operations of the same store properties - eight of 21 properties of which had increases ranging from 3% to 23.4% in such expenses , with an average increase of 3.4% at all same store properties. The increases were primarily due to increases in utilities, real estate taxes and repairs and maintenance. 

The increase was offset by:
• A decline in operating expenses of $ 5.4 million from the sale of the 2018 Sold Properties; and 
• A decline in operating expenses of $ 3.3 million from the 2017 Sold Properties.
Interest expense.    The components of the increase are as follows:
• $4.5 million from the mortgage debt incurred in the 2018 Acquisitions;
• $ 4.2  million due to the inclusion, for a full year, of the interest expense associated with the mortgage debt incurred in the 2017 Acquisitions;
• $ 729,000 from the cessation of the capitalization of interest from a development property in connection with the commencement of lease up activities  at Factory at Garco Park; and
• $ 307,000 from our junior subordinated notes - the interest rate on these notes increased due to the increase in the three month LIBOR rate.
The increase was offset by decreases of:
• $ 2.3 million from the sale of the 2018 Sold Properties; and
• $ 1.1 million from the sale of the 2017 Sold Properties.
General and administrative expense. These costs decreased primarily due to the inclusion, in 2017, of approximately $321,000 of professional fees and other expenses associated with our conversion to a Maryland corporation and $296,000 of amortization expense relating to restricted stock units. This amortization expense was reversed in 2018 because we do not believe we will satisfy the applicable AFFO metric. This decrease was offset by a $233,000 increase in compensation costs due to higher compensation costs, a $108,000 increase in fees paid for the Services and a $103,000 increase in expenses allocated pursuant to the shared services agreement.
Depreciation.    The components of the increase are as follows:
• $ 7.6 million from the operations of the 2018 Acquisitions;
• $ 5.1 million from the inclusion, for a full year, of the operations of the 2017 Acquisitions; and
• $ 930,000 from the operations of Factory at Garco Park, which was in lease up and/or development in 2017.
The increase was offset by decreases in depreciation of:
• $ 3.0 million from the sales of the 2018 Sold Properties;
• $ 2.0 million from same store properties due to adjustments, effected in 2017, with respect to purchase price allocations; and
• $ 584,000 from the sale of the 2017 Sold Properties.
Other revenue and expense items
Gain on sale of real estate.  The results for 2018 reflect our sale of three multi-family properties and two cooperative apartment units for an aggregate sales price of $171.4 million; we recognized an aggregate gain of $64.9 million, of which $27.6 million was allocated to the non-controlling partners. The results for 2017 reflect the $52.6 million gain from the sale of 2017 Sold Properties, of which $24.8 million was allocated to non-controlling partners.
Gain on insurance recovery.  During 2018, we recognized a $4.5 million gain from the receipt of insurance proceeds related to Retreat at Cinco Ranch - Katy, Texas, representing the proceeds received in excess of the assets written off.

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Loss on extinguishment of debt . During 2018, we incurred $850,000 of mortgage prepayment charges in connection with the sale of The Fountain Apartments and Waverly Place Apartments. In 2017, we incurred $1.5 million of mortgage prepayment charges in connection with the sale of four properties.
Provision for taxes.  The decrease is primarily due to the inclusion, in 2017, of (i) $1.2 million of state taxes due to the unavailability of loss carryforwards at the state level and (ii)  the federal alternative minimum tax we were required to pay as a result of the use of our loss carryforwards. The loss carryforwards were used to offset federal and state taxable income, as applicable.    
Years Ended September 30, 2017 and 2016
Revenues
The following table compares our revenues for the years indicated:
(Dollars in thousands):  2017 2016 Increase (Decrease)  % Change 
Rental and other revenue from real estate properties  $ 104,477  $ 95,202  $ 9,275  9.7  %
Other income  1,294  3,319  (2,025) (61.0) %
Total revenues  $ 105,771  $ 98,521  $ 7,250  7.4  %

Rental and other revenue from real estate properties.     The components of the increase are as follows:
• $ 21.9 million from the inclusion, for a full year, of the operations of ten properties that were acquired in 2016 (the "2016 Acquisitions");
• $ 8.7 million from operations of the 2017 Acquisitions; and
• $2. 1 million due primarily to rental rate increases from the operations of same store properties. Two properties, The Fountains Apartments and The Apartments at Venue, accounted for 50% of the increase at same store properties. Average rents at same store properties increased to $918 per occupied unit in 2017 from $888 per occupied unit in 2016.
These increases were offset by the loss of rental and other revenue of $10.7 million from the sale of the 2017 Sold Properties. The results for 2016 include $13.6 million of rental revenue from six multi-family properties sold in 2016 (the "2016 Sold Properties").

Other income.

The decrease is due to the inclusion in 2016 of $2.5 million of deferred interest on the loan to the Newark Joint Venture that had not been recognized for several years prior thereto due to recoverability concerns. See notes 5 and 6 to our consolidated financial statements.

Expenses
The following table compares our expenses for the periods indicated:
(Dollars in thousands)  2017 2016 Increase
(Decrease)  		% Change 
Real estate operating expenses  $ 51,279  $ 47,519  $ 3,760  7.9  %
Interest expense  28,171  23,878  4,293  18.0  %
Advisor's fees, related party  —  693  (693) (100.0) %
Property acquisition costs  —  3,852  (3,852) (100.0) %
General and administrative  9,396  8,536  860  10.1  %
Depreciation  30,491  23,180  7,311  31.5  %
Total expenses  $ 119,337  $ 107,658  $ 11,679  10.8  %

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Real estate operating expenses.     The components of the increase are as follows:
• $ 11.1 million from the inclusion, for a full year, of the operations of the 2016 Acquisitions;
• $ 3.6 million from the operations of the 2017 Acquisitions;
• $ 1.2 million from operations of the same store properties due to an increase (i) of approximately $701,000 from real estate taxes at five properties primarily as a result of real property tax reassessments and (ii) in repair and maintenance expense at several properties; and
• $606 ,000 from the operations of a property engaged in lease up activities.
The increase was offset by:
• A decline in operating expenses of $5.0 million from the sale of the 2017 Sold Properties ; and 
• A decline in operating expenses of $8.0 million from the sale of the 2016 Sold Properties.
Interest expense.    The components of the increase are as follows: 
• $ 6.1 million due to the inclusion, for a full year, of the interest expense associated with the mortgage debt incurred in the 2016 Acquisitions;
• $3.3  million from the mortgage debt incurred in the 2017 Acquisitions; and
• $ 358,000 from the mortgage debt incurred in the 2017 Acquisitions.
The increase was offset by decreases of:
• $2. 1 million from the sale of the 2017 Sold Properties;
• $3.0 million from the sale of the 2016 Sold Properties; and
• $ 422,000 on our junior subordinated notes due to the reduction in the interest rate thereon. From August 1, 2012 through April 29, 2016, these notes carried an interest rate of 4.9% and commencing May 1, 2016, these notes bear an interest rate of three months LIBOR and 200 basis points. At September 30, 2017 and 2016, the interest rate on these notes was 3.31% and 2.76%, respectively.
Advisor's fee, related party. The decrease is due to the termination of the advisory agreement effective December 31, 2015. See note 13 of our consolidated financial statements.
Property acquisition costs. Due to a change in an accounting standard effective October 1, 2016, these costs are generally capitalized as part of the basis of an asset acquisition. During 2017, we capitalized $3.1 million of such costs.
General and administrative expense. These costs increased primarily as a result of a $331,000 increase in fees paid in connection with the Services, a $237,000 increase in compensation paid to our employees, including $125,000 increase in compensation paid to our chief executive officer, and a $213,000 increase primarily related to amortization of restricted stock units granted in 2016. In 2017 and 2016, general and administrative expense is allocated between our two segments in proportion to the estimated time spent by our full time personnel on such segments.
Depreciation.    The components of the increase are as follows:
• $4. 3 million from the operations of the 2017 Acquisitions;
• $ 8.2 million from the inclusion, for a full year, of the operations of the 2016 Acquisitions; and
• $728,000 from the operations of a property in connection with the commencement of lease up activities.
The increase was offset by decreases in depreciation of:
•  $2.8 million from the sales of the 2017 Sold Properties; and 
•  $2.4 million from the sale of the 2016 Sold Properties.


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Other revenue and expense items
Gain on sale of unconsolidated joint ventures.  The results for 2017 reflects a $384,000 loss associated with investments in two unconsolidated joint ventures, including the loss of $293,000 attributable to depreciation expense associated with our ownership interest in Canalside Lofts.

Gain on sale of real estate.  The results for 2017 reflect the $52.6 million gain from the sale of 2017 Sold Properties, of which $24.8 million was allocated to non-controlling interests. The results for 2016 reflect the $46.5 million gain from the sale of 2016 Sold Properties and two cooperative apartments, of which $18.8 million was allocated to non-continuing interests.

Gain on sale of partnership interest. In 2016, we sold our interest in a joint venture that owned Village Green, Little Rock, AK multi-family property and recognized a $386,000 gain on the sale. There was no corresponding gain in 2017.

Loss on extinguishment of debt . In 2017, we incurred $1.5 million of mortgage prepayment charges in connection with the sale of four properties. In 2016 we incurred $4.5 million of mortgage prepayment charges in connection with the sale of two properties.
Provision for taxes.  For 2017 and 2016, these amounts reflect the federal alternative minimum tax we are required to pay as a result of the use of our loss carryforwards to offset taxable income; 2017 also includes the payment of $1.2 million of state taxes due to the unavailability of loss carryforwards at the state level.   
Discontinued operations
In 2016, we sold our interest in the Newark Joint Venture and reclassified the operations of the venture to discontinued operations for all comparative periods. The $12.7 million of income from discontinued operations reflects the $15.5 million gain on the sale of our interest in the venture, net of the venture's operating losses of $2.8 million incurred during 2016.
Disclosure of Contractual Obligations
The following table sets forth as of September 30, 2018 our known contractual obligations (dollars in thousands):
Payment Due by Period 
(Dollars in thousands)  Less than
1 Year  		1 - 3
Years  		3 - 5
Years  		More than
5 Years  		Total 
Long-Term Debt Obligations (1)  $ 68,902  $ 146,523  $ 204,767  $ 661,190  $ 1,081,382 
Operating Lease Obligation  216  447  158  58  879 
Purchase Obligations (2)(3)  6,182  12,364  12,364  —  30,910 
Total  $ 75,300  $ 159,334  $ 217,289  $ 661,248  $ 1,113,171 
_________________________
(1) Reflects payments of principal (including amortization payments) and interest and excludes deferred costs. Also includes $30.3 million in "1-3 Years" relating to Factory at Garco Park which was sold subsequent to September 30, 2018. Assumes that the interest rate on the junior subordinated notes will be 4.34% per annum.
(2) Assumes that $823,000 will be paid annually for the next five years pursuant to the shared services agreement ( i.e., the same amount paid in 2018 pursuant to this agreement) and $1.3 will be paid annually through September 30, 2022, for the Services. See "Item 1. Business—Our Structure."
(3) Assumes that approximately $4.1 million of property management fees will be paid annually to the managers of our multi-family properties Such sum reflects the amount we anticipate paying in 2019 on the multi-family properties we own at September 30, 2018. These fees are typically charges based on a percentage of rental revenues from a property. No amount has been reflected as payable pursuant thereto after five years as such amount is not determinable.


29
The following table sets forth as of September 30, 2018 information regarding the components of our long-term debt obligations:
Payment due by Period 
(Dollars in thousands)  Less than
1 Year  		1 - 3
Years  		3 - 5
Years  		More than
5 Years  		Total 
Mortgages on multi-family properties (1)  $ 67,086  $ 142,891  $ 200,565  $ 604,989  $ 1,015,531 
Junior subordinated notes (2)  1,623  3,246  3,246  56,201  64,316 
Other  193  386  956  —  1,535 
Total  $ 68,902  $ 146,523  $ 204,767  $ 661,190  $ 1,081,382 
___________________________
(1)  Includes payments of principal (including amortization payments) and interest and excludes deferred costs. Also includes $30.3 million in "1-3 Years", relating to Factory at Garco Park which was sold subsequent to September 30, 2018.

(2)  Assumes that the interest rate on the junior subordinated notes will be 4.34% per annum

Liquidity and Capital Resources
We require funds to pay operating expenses and debt service obligations, acquire properties, make capital improvements and pay dividends. In 2018, our primary sources of capital and liquidity were the operations of our multi-family properties (including distributions from the joint ventures that own such properties), mortgage debt financings (an aggregate of $183.6 million, of which $164.3 million was used to acquire six multi-family properties and the balance was used to fund our West Nashville, TN development property), $44.9 million in equity contributions from our joint venture partners for acquisitions, $49.6 million from our share of the proceeds from the sale of the 2018 Properties Sold, $20.5 million from the sale of our common stock, $1.2 million from the repayment of principal and interest on the loan to the Newark Joint Venture, and our available cash (including restricted cash). At September 30, 2018 and November 30, 2018, our available cash (excluding restricted cash) is approximately $27.4 million and $21.6 million, respectively.
We anticipate that (i) our operating expenses, dividend payments and $77.7 million of mortgage amortization and interest expense payments in 2019 and 2020 will be funded from cash generated from the operations of our multi-family properties and, to the extent such sources are insufficient, from mortgage refinancings and/or sales of properties, and (ii) the $84.7 million of balloon payments due with respect to mortgages maturing from 2019 through 2020 will be funded from the refinancing of such mortgages. (The mortgage debt with respect to these properties generally is non-recourse to us and our subsidiary holding our interest in the applicable joint venture). Our operating cash flow and available cash are insufficient to fully fund such balloon payments, and if we are unable to refinance such debt, we may need to issue additional equity or dispose of properties on potentially less favorable terms.

Capital improvements at (i) 17 multi-family properties will be funded by approximately $6.7 million of restricted cash available at September 30, 2018 and (ii) other properties will be funded from the operations of such properties.

Our ability to acquire additional multi-family properties is limited by our available cash and our ability to obtain on acceptable terms, equity contributions from joint venture partners and mortgage debt from lenders. Further, if and to the extent we generate ordinary taxable income, we will be required to make distributions to stockholders to maintain our REIT status and as a result, will be limited in our ability to use gains, if any, from property sales, as a source of funds for operating expenses, debt service and property acquisitions.

We anticipate that the construction and other costs associated with the West Nashville, TN development project will be funded by capital previously contributed by our joint venture partners and us and remaining in-place construction financing of up to $47.4 million.
Off Balance Sheet Arrangements
Not applicable.
Significant Accounting Estimates and Critical Accounting Policies
Our significant accounting policies are more fully described in note 1 to our consolidated financial statements. The preparation of financial statements and related disclosure in conformity with accounting principles generally accepted in the United States requires management to make certain judgments and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Certain of our accounting policies are particularly important to understand our financial position and results of operations and require the application of significant judgments and estimates
30
by our management; as a result they are subject to a degree of uncertainty. These significant accounting policies include the following:
Principles of Consolidation
We have entered into, and may continue to enter into, various joint venture agreements with unrelated third parties to hold or develop real estate assets. We must determine for each of these joint ventures whether to consolidate the entity or account for our investment under the equity or cost method of accounting. Investments acquired or created are continually evaluated based on the accounting guidance relating to variable interest entities ("VIEs"), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation (primarily using a voting interest model) under the remaining consolidation guidance relating to real estate entities. If we are the manager of a limited liability company, we also consider the consolidation guidance relating to the rights of non-managing members to assess whether any rights held by such members are participating rights and the level of control such members may have over the entity. We evaluate our accounting for investments on a quarterly basis or when a reconsideration event (as defined in GAAP) with respect to our investments occurs. The analysis required to identify VIEs and primary beneficiaries is complex and requires substantial management judgment.
Carrying Value of Real Estate Portfolio
We conduct a quarterly review of each real estate asset owned by us and through our joint ventures. This review is conducted in order to determine if indicators of impairment are present on the real estate.
In reviewing the value of the real estate assets owned, whether by us or our joint ventures, if there is an indicator of impairment and the carrying value of the real estate asset is determined to be unrecoverable, we seek to arrive at the fair value of each real estate asset by using one or more valuation techniques, such as comparable sales, discounted cash flow analysis or replacement cost analysis. A real estate asset is considered to be unrecoverable when an analysis suggests that the undiscounted cash flows to be generated by the property will be insufficient to recover our investment.  Any impairment taken with respect to our real estate assets reduces our net income, assets and stockholders' equity to the extent of the amount of the allowance, but it will not affect our cash flow until such time as the property is sold. No such charges were taken in the past three years.
Revenue Recognition
Rental revenue from residential properties is recorded when due from residents and is recognized monthly as it is earned. Rental payments are due in advance. Leases on residential properties are generally for terms that do not exceed one year.
Rental revenue from commercial properties, including the base rent that each tenant is required to pay in accordance with the terms of their respective leases, net of any rent concessions and lease incentives, is reported on a straight-line basis over the non-cancellable term of the lease.
Purchase Price Allocations
We allocate the purchase price of properties, including acquisition costs when appropriate, to the tangible and identified intangible assets acquired based on their relative fair values. In making estimates of fair values for purposes of allocating purchase price, we use a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. We also consider information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.
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Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.
Our junior subordinated notes bear interest at the rate of three --month LIBOR plus 200 basis points. A 100 basis point increase in the rate would result in an increase in interest expense in 2019 of $374,000 and a 100 basis point decrease in the rate would result in a $374,000 decrease in interest expense in 2019.
With the exception of seven mortgages (three of which are subject to interest rate swap agreements), all of our mortgage debt is fixed rate. For the variable rate debt not subject to interest rate swaps, an increase of 100 basis points in the interest rate would increase interest expense by approximately $871,000 and a decrease of 100 basis points in the interest rate would decrease interest expense by approximately $871,000.
As of September 30, 2018, we had three interest rate swaps and two interest rate caps outstanding. The fair value of our interest rate swaps and caps is dependent upon existing market interest rates and swap spreads, which change over time. At September 30, 2018, if there had been an increase of 100 basis points in forward interest rates, the fair market value of the interest rate swaps and caps would have increased by $2.8 million. If there had been a decrease of 100 basis points in forward interest rates, the fair market value of the interest rate swaps would decrease by $2.9 million. These changes would not have any material impact on our net income or cash.
Item 8.    Financial Statements and Supplementary Data.
The information required by this item appears in a separate section of this Report following Part IV.
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A.    Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, the CEO and CFO have concluded that our disclosure controls and procedures, as designed and implemented as of September 30, 2018, were effective.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal controls over financial reporting, as defined in in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, that occurred during the three months ended September 30, 2018 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and directors of a company; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial transactions.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
32
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of September 30, 2018. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).
Based on its assessment, our management concluded that, as of September 30, 2018, our internal control over financial reporting was effective based on those criteria.
Our independent auditors, BDO USA, LLP, have issued an audit report on the effectiveness of internal control over financial reporting. This report appears on page F-3 of this Annual Report on Form 10-K.
Item 9B.    Other Information.
During the first quarter of 2019, our board of directors or committees thereof approved the payment of the following fees to these related parties for the performance of Services in calendar 2019: Israel Rosenzweig, $57,900; Fredric H. Gould, $210,000; Matthew J. Gould, $231,525; David W. Kalish, $220,500; Mark H. Lundy, $110,250; Isaac Kalish, $260,500; and Steven Rosenzweig, $240,650.
In December 2018, our Board adopted amendments to our Code of Business Conduct and Ethics, among other things, to clarify and/or amend provisions relating to conflicts of interest, use of our assets, the receipt and/or provision of loans, gifts and entertainment, insider trading and related party transactions. This summary of the amendments to the code is qualified in its entirety by reference to the full text of the code, which, as amended and restated (the "Code"), is filed as Exhibit 14.1 to this report and is incorporated by reference herein. A copy of the Code is also available within the "Corporate Governance" section of our website at www.brtapartments.com .
See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments" for information regarding other developments in the first quarter of 2019.
33
PART III
Item 10.    Directors, Executive Officers and Corporate Governance.
Apart from certain information concerning our executive officers which is set forth below in Part I of this report, the other information required by Item 10 is incorporated herein by reference to the applicable information to be in the proxy statement to be filed by January 28, 2019 for our 2019 Annual Meeting of Stockholders.
Executive Officers of Registrant
Set forth below is a list of our executive officers whose terms will expire at our 2019 annual Board of Directors' meeting. The business history of officers who are also directors will be provided in our proxy statement to be filed not later than January 28, 2019. References to a particular year for these biographies refer to the calendar year. 
Name 
Age
Office
Israel Rosenzweig (1)
71 Chairman of the Board of Directors 
Jeffrey A. Gould (2)
53 President and Chief Executive Officer; Director 
Mitchell K. Gould (3)
46 Executive Vice President 
Matthew J. Gould (2)
59 Senior Vice President; Director 
David W. Kalish (4)
71 Senior Vice President, Finance 
Mark H. Lundy  56 Senior Vice President and Counsel 
George E. Zweier  54 Vice President and Chief Financial Officer 
Isaac Kalish (4)
43 Vice President and Treasurer 
Steven Rosenzweig (1)
43 Vice President 
___________________________________________________________________________
(1) Steven Rosenzweig is the son of Israel Rosenzweig. 
(2) Jeffrey A. Gould and Matthew J. Gould are sons of Fredric H. Gould, the former chairman of our board of directors and currently, a director.
(3) Mitchell K. Gould is a cousin of Fredric H. Gould.
(4) Isaac Kalish is the son of David W. Kalish.
Mitchell K. Gould, has been employed by us since 1998, and has served as a Vice President since 1999 and Executive Vice President since 2007.
David W. Kalish, a certified public accountant, has been our Senior Vice President, Finance since 1998. Mr. Kalish was our Vice President and Chief Financial Officer from 1990 until 1998. He has been Chief Financial Officer of One Liberty Properties, Inc. and Georgetown Partners, Inc. since 1990. Georgetown Partners is the managing general partner of Gould Investors, a related party.
Mark H. Lundy, has been our Counsel and/or General Counsel since 2007, Senior Vice President since 2005 and Vice President from 1993 to 2005. He served as a Vice President of One Liberty Properties from 2000 to 2006 and has been its Secretary and Senior Vice President since June 1993 and 2006, respectively. Since 2013, Mr. Lundy has served as President and Chief Operating Officer, and from 1990 through 2013 as a Vice President (including Senior Vice President), of Georgetown Partners, Inc. He is licensed to practice law in New York and Washington, D.C.
George E. Zweier, a certified public accountant, has served as our Chief Financial Officer and a Vice President since 1998.
Isaac Kalish, a certified public accountant, has been associated with us since 2004, served as Assistant Treasurer from 2007 through 2014 and as Vice President and Treasurer since 2013 and 2014, respectively. Mr. Kalish has served as Vice President and Assistant Treasurer of One Liberty Properties since 2013 and 2007, respectively, as Assistant Treasurer of Georgetown Partners, Inc. from 2012 through 2013, and as its Treasurer since 2013.
Steven Rosenzweig, has served as a Vice President since March 2015 and has been associated with us since 2013. For more than five years prior thereto, he was affiliated with Willkie Farr & Gallagher LLP. He is licensed to practice law in New York.
34
Item 11.    Executive Compensation.
The information concerning our executive compensation required by Item 11 will be included in the proxy statement to be filed by January 28, 2019 with respect to our 2019 Annual Meeting of Stockholders, and is incorporated herein by reference.
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Except as set forth below, the information required by Item 12 will be included in the proxy statement to be filed by January 28, 2019 with respect to to our 2019 Annual Meeting of Stockholders, and is incorporated herein by reference.
Equity Compensation Plan Information
The table below provides information as of September 30, 2018 with respect to our shares of common stock that may be issued upon exercise of outstanding options, warrants and rights:
Number of securities to be
issued upon exercise (or vesting) of outstanding options, restricted stock units, warrants and rights
(a)
Weighted-average
exercise
price of outstanding
options,
warrants and rights
(b)
Number of securities
remaining available-for
future issuance under
equity compensation
plans—excluding
securities reflected in column(a) (c)
Equity compensation plans approved by security holders  450,000  (1)  —  455,303  (2)
Equity compensation plans not approved by security holders  —  —  — 
Total  450,000  —  455,303 
_______________________________________________________________________________
(1) Reflects the number of shares of common stock underlying RSUs granted pursuant to our 2016 Amended and Restated Incentive Plan(the "2016 Plan").  Such units vest in 2021 subject to the satisfaction of time, market and performance based vesting conditions. There is no exercise price associated with  such units. No further awards may be granted under the 2016 Plan. See note 12 of our consolidated financial statements. 
(2) Represents the number of shares of common stock available for issuance pursuant to our 2018 Incentive Plan
Item 13.    Certain Relationships and Related Transactions, and Director Independence.
The information concerning relationships and certain transactions required by Item 13 will be included in the proxy statement to be filed by January 28, 2019 with respect to our 2019 Annual Meeting of Stockholders, and is incorporated herein by reference.
Item 14.    Principal Accounting Fees and Services.
The information concerning our principal accounting fees required by Item 14 will be included in the proxy statement to be filed by January 28, 2019 with respect to our 2019 Annual Meeting of Stockholders, and is incorporated herein by reference.
35
PART IV
Item 15.    Exhibits, Financial Statement Schedules.
(a)
1. All Financial Statements.
The response is submitted in a separate section of this report following Part IV.
2. Financial Statement Schedules.
The response is submitted in a separate section of this report following Part IV.
3. Exhibits:
In reviewing the agreements included as exhibits to this Annual Report on Form10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. Certain agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
• have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
• may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.


36
Exhibit No.
Title of Exhibits
Plan of Conversion dated December 8, 2016 (incorporated by reference to Annex B of Amendment No. 1 to our Registration Statement on Form S-4 filed January 12, 2017 (the "S-4 Registration") (Reg. No. 333-215221). 
Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed March 20, 2017). 
By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed March 20, 2017). 
Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to our Form 8-K filed March 18, 2011). 
*  Shared Services Agreement, dated as of January 1, 2002, by and among Gould Investors L.P., us, One Liberty Properties, Inc., Majestic Property Management Corp., Majestic Property Affiliates, Inc. and REIT Management Corp. (incorporated by reference to Exhibit 10.2 to our Form 10-K filed December 11, 2008). 
*  Form of Indemnification Agreement between the Registrant on the one hand, and its executive officers and directors, on the other hand (incorporated by reference to Exhibit 10.5 to our Annual Report of Form 10-K filed December 14,2017). 
*  Form of Restricted Shares Agreement for the 2012 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 10-Q for the period ended December 31, 2013). 
*  2012 Incentive Plan (incorporated by reference to exhibit 99.1 to our Registration Statement on Form S-8 filed on June 11, 2012 (File No. 333-182044)). 
*  Amended and Restated 2016 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Quarterly  Report on Form 10-Q for the period ended March 31, 2016) 
Membership Interest Purchase Agreement dated as of February 23, 2016 entered into between TRB Newark Assemblage, LLC ("TRB") and TRB Newark TRS, LLC ("TRB REIT" and together with TRB, collectively, the "Seller") and RBH Partners III, LLC, and joined by RBH-TRB Newark Holdings, LLC and GS-RBH Newark Holdings, LLC (incorporated by reference to exhibit 10.2 to our Quarterly  Report on Form 10-Q for the period ended March 31, 2016). 
*
Form of Performance Awards Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 10, 2016). 
*  Form of Restricted Shares Agreement for the Amended and Restated 2016 Incentive Plan (incorporated by reference to Exhibit 10.40 to our S-4/A Registration). 
*
2018 Incentive Plan (incorporated by reference to exhibit 10.1 to our Current Report on Form 8-K filed on March 13, 2018).

37
Exhibit
No.
Title of Exhibits
Form of Restricted Shares Agreement for the 2018 Incentive Plan.
Amended and Restated Code of Business Conduct and Ethics of the Company, adopted December 5, 2018. 
Subsidiaries of the Registrant.
Consent of BDO USA LLP.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Act").
Certification of Senior Vice President—Finance pursuant to Section 302 of the Act.
Certification of Chief Financial Officer pursuant to Section 302 of the Act.
Certification of Chief Executive Officer pursuant to Section 906 of the Act.
Certification of Senior Vice President—Finance pursuant to Section 906 of the Act.
Certification of Chief Financial Officer pursuant to Section 906 of the Act.
101.INS
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. 
_______________________________________________________________________________
* Indicates management contract or compensatory plan or arrangement.
(b)    Exhibits.
See Item 15(a)(3) above. Except as otherwise indicated with respect to a specific exhibit, the file number for all of the exhibits incorporated by reference is: 001-07172.
(c)    Financial Statements.
See Item 15(a)(2) above.
Item 16.  Form 10-K Summary
Not applicable.

38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BRT APARTMENTS CORP.
Date: December 10, 2018 
By:
/s/ JEFFREY A. GOULD
Jeffrey A. Gould
  Chief Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated.
Signature
Title
Date
/s/ ISRAEL ROSENZWEIG
Chairman of the Board 
December 10, 2018
Israel Rosenzweig
/s/ JEFFREY A. GOULD
Chief Executive Officer, President and Director (Principal Executive Officer) 
December 10, 2018
Jeffrey A. Gould
/s/ ALAN GINSBURG
Director 
December 10, 2018
Alan Ginsburg
/s/ FREDRIC H. GOULD
Director 
December 10, 2018
Fredric H. Gould
/s/ MATTHEW J. GOULD
Director 
December 10, 2018
Matthew J. Gould
/s/ LOUIS C. GRASSI
Director 
December 10, 2018
Louis C. Grassi
/s/ GARY HURAND
Director 
December 10, 2018
Gary Hurand
/s/ JEFFREY RUBIN
Director 
December 10, 2018
Jeffrey Rubin
/s/ JONATHAN SIMON
Director 
December 10, 2018
Jonathan Simon
/s/ ELIE WEISS
Director 
December 10, 2018
Elie Weiss
/s/ GEORGE E. ZWEIER
Chief Financial Officer and Vice President (Principal Financial and Accounting Officer) 
December 10, 2018
George E. Zweier



39
Item 8, Item 15(a)(1) and (2)
Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto.


F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and Board of Directors
BRT Apartments Corp. and Subsidiaries
Great Neck, New York

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of BRT Apartments Corp. and subsidiaries (the “Company”) as of September 30, 2018 and 2017, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2018, and the related notes and schedule (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2018 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of September 30, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated December 10, 2018, expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ BDO USA LLP
We have served as the Company's auditor since 2011
New York, New York
December 10, 2018 



F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and Board of Directors
BRT Apartments Corp. and Subsidiaries
Great Neck, New York

Opinion on Internal Control over Financial Reporting

We have audited BRT Apartments Corp. and Subsidiaries’ (the “Company”) internal control over financial reporting as of September 30, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2018, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of September 30, 2018 and 2017, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2018, and the related notes and schedule and our report dated December 10, 2018, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ BDO USA LLP
New York, New York
December 10, 2018 

F-3
BRT APARTMENTS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
September 30, 
2018 2017
ASSETS 
Real estate properties, net of accumulated depreciation of $85,724 and $64,290  $ 1,020,874  $ 902,281 
Real estate loan  4,900  5,500 
Cash and cash equivalents  27,360  12,383 
Restricted cash  6,686  6,151 
Deposits and escrows  24,458  27,839 
Investment in unconsolidated joint ventures  20,078  21,415 
Other assets  10,080  9,359 
Real estate properties held for sale  38,928  8,969 
Total Assets (a)  $ 1,153,364  $ 993,897 
LIABILITIES AND EQUITY 
Liabilities: 
Mortgages payable, net of deferred costs of $6,373 and $6,345  $ 792,432  $ 697,826 
Junior subordinated notes, net of deferred costs of $362 and $382  37,038  37,018 
Accounts payable and accrued liabilities  27,409  22,348 
Total Liabilities (a)  856,879  757,192 
Commitments and contingencies 
Equity: 
BRT Apartments Corp. stockholders' equity: 
Preferred shares, $.01 par value: 
Authorized 2,000 shares, none issued  —  — 
Common stock, $.01 par value, 300,000 shares authorized, 
15,048 and 13,333 shares issued at September 30, 2018 and 2017  150  133 
Additional paid-in capital  220,135  201,910 
Accumulated other comprehensive income   2,629  1,000 
Accumulated deficit  (24,927) (37,047)
Total BRT Apartments Corp. stockholders' equity  197,987  165,996 
Non-controlling interests  98,498  70,709 
Total Equity  296,485  236,705 
Total Liabilities and Equity  $ 1,153,364  $ 993,897 

(a) The Company's consolidated balance sheets include the assets and liabilities of consolidated variable interest entities (VIEs). See note 4. The consolidated balance sheets include the following amounts related to the Company's VIEs as of September 30, 2018 and 2017, respectively: $586,623 and $707,546 of real estate properties, $6,699 and $8,626 of cash and cash equivalents, $11,837 and $13,873 of deposits and escrows, $6,781 and $8,148 of other assets, $38,852 and $8,969 of real estate properties held for sale, $481,569 and $558,568 of mortgages payable, $12,841 and $14,419 of accounts payable and accrued liabilities. 
See accompanying notes to consolidated financial statements.
F-4
BRT APARTMENTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
Year Ended September 30, 
2018 2017 2016
Revenues: 
Rental and other revenue from real estate properties  $ 118,872  $ 104,477  $ 95,202 
Other income  763  1,294  3,319 
Total revenues  119,635  105,771  98,521 
Expenses: 
Real estate operating expenses—including $3,368, $2,725 and $1,950 to related parties  57,665  51,279  47,519 
Interest expense  34,389  28,171  23,878 
Advisor's fees, related party  —  —  693 
Property acquisition costs—including $0, $0 and $2,221 to related parties  —  —  3,852 
General and administrative—including $497, $346 and $157 to related party  9,210  9,396  8,536 
Depreciation  38,504  30,491  23,180 
Total expenses  139,768  119,337  107,658 
Total revenues less total expenses  (20,133) (13,566) (9,137)
Equity in loss of unconsolidated joint ventures  (388) (384) — 
Gain on sale of real estate  64,924  52,601  46,477 
Gain on insurance recovery 4,498  —  — 
Gain on sale of partnership interest  —  —  386 
Loss on extinguishment of debt  (850) (1,463) (4,547)
Income from continuing operations  48,051  37,188  33,179 
Provision for taxes  50  1,560  700 
Income from continuing operations, net of taxes  48,001  35,628  32,479 
Discontinued operations: 
Loss from discontinued operations  —  —  (2,788)
Gain on sale of partnership interest  —  —  15,467 
Income from discontinued operations  —  —  12,679 
Net income   48,001  35,628  45,158 
(Income) attributable to non-controlling interests  (24,228) (22,028) (13,869)
Net income attributable to common stockholders  $ 23,773  $ 13,600  $ 31,289 
Basic per share amounts attributable to common stockholders: 
Income from continuing operations  $ 1.63  $ 0.97  $ 1.21 
Income from discontinued operations  —  —  1.02 
Basic earnings per share  $ 1.63  $ 0.97  $ 2.23 
Diluted per share amounts attributable to common stockholders:
Income from continuing operations $ 1.61  $ 0.97  $ 1.21 
Income from discontinued operations —  —  1.02 
Diluted earnings per share $ 1.61  $ 0.97  $ 2.23 
Amounts attributable to BRT Apartments Corp.: 
Income from continuing operations  $ 23,773  $ 13,600  $ 16,950 
Income from discontinued operations  —  —  14,339 
Net income attributable to common stockholders  $ 23,773  $ 13,600  $ 31,289 
Weighted average number of shares of common stock outstanding: 
Basic  14,580,398  13,993,638  14,017,279 
Diluted  14,780,398  14,018,843  14,017,279 
See accompanying notes to consolidated financial statements.
F-5
 
BRT REALTY TRUST AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)  
(Dollars in thousands) 
Year Ended September 30, 
2018 2017 2016
Net income   $ 48,001  $ 35,628  $ 45,158 
Other comprehensive income (loss): 
Unrealized gain (loss) on derivative instruments  2,346  3,047  (1,544)
Other comprehensive income (loss)  2,346  3,047  (1,544)
Comprehensive income   50,347  38,675  43,614 
Comprehensive (income) attributable to non-controlling interests  (24,945) (22,473) (13,392)
Comprehensive income attributable to common stockholders  $ 25,402  $ 16,202  $ 30,222 
See accompanying notes to consolidated financial statements.

F-6
BRT APARTMENTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended September 30, 2018, 2017 and 2016
(Dollars in thousands, except share data)
Shares of Beneficial Interest  Shares of Common Stock  Additional Paid-In Capital  Accumulated Other Comprehensive Income (Loss)  (Accumulated Deficit)  Non Controlling Interests  Total 
Balances, September 30, 2015 $ 40,285  $ —  $ 161,842  $ (58) $ (79,414) $ 37,519  $ 160,174 
Restricted stock vesting  390  —  (390) —  —  —  — 
Compensation expense—restricted stock  —  —  1,005  —  —  —  1,005 
Contributions from non-controlling interests  —  —  —  —  —  33,613  33,613 
Distributions to non-controlling interests  —  —  —  —  —  (32,825) (32,825)
Deconsolidation of joint venture upon sale  —  —  —  —  —  —  (1,790) (1,790)
Shares repurchased - 326,421 shares  (979) —  (1,136) —  —  —  (2,115)
Net income  —  —  —  —  31,289  13,869  45,158 
Other comprehensive loss  —  —  —  (1,544) —  —  (1,544)
Comprehensive income  —  —  —  —  —  —  43,614 
Balances, September 30, 2016  $ 39,696  $ —  $ 161,321  $ (1,602) $ (48,125) $ 50,386  $ 201,676 
Distributions - Common Stock - .18 per share —  —  —  —  (2,522) —  (2,522)
Restricted stock vesting  375  —  (375) —  —  —  — 
Compensation expense—restricted stock and restricted stock units  —  —  1,219  —  —  —  1,219 
Contributions from non-controlling interests  —  —  —  —  —  31,606  31,606 
Distributions to non-controlling interests  —  —  —  —  —  (33,756) (33,756)
Shares repurchased - 23,897 shares  (17) (1) (175) —  —  (193)
Conversion to a Maryland corporation at $.01 par value (40,054) 134  39,920  —  —  —  — 
Net income  —  —  —  —  13,600  22,028  35,628 
Other comprehensive loss  —  —  —  2,602  —  445  3,047 
Comprehensive income  —  —  —  —  —  —  38,675 
Balances, September 30, 2017  $ —  $ 133  $ 201,910  $ 1,000  $ (37,047) $ 70,709  $ 236,705 
Distributions - Common Stock - $0.78 per share  —  —  —  —  —  (11,653) —  (11,653)
Restricted stock vesting  —  1  (1) —  —  —  — 
Compensation expense—restricted stock and restricted stock units  —  —  988  —  —  —  988 
Contributions from non-controlling interests  —  —  —  —  —  32,553  32,553 
Consolidation of investment in limited partnership —  —  —  —  —  12,370  12,370 
Distributions to non-controlling interests  —  —  —  —  —  (40,023) (40,023)
Purchase of non-controlling interest —  —  (3,116) —  —  (2,056) (5,172)
Shares issued through equity offering program, net —  16  20,395  —  —  —  20,411 
Shares repurchased - 3,500 shares  —  —  (41) —  —  —  (41)
Net income  —  —  —  —  23,773  24,228  48,001 
Other comprehensive income  —  —  —  1,629  —  717  2,346 
Comprehensive income  —  —  —  —  —  —  50,347 
Balances, September 30, 2018  $ —  $ 150  $ 220,135  $ 2,629  $ (24,927) $ 98,498  $ 296,485 
See accompanying notes to consolidated financial statements

F-7
BRT APARTMENTS CORP. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Dollars in Thousands) 
Year Ended September 30, 
2018 2017 2016
Cash flows from operating activities: 
Net income   $ 48,001  $ 35,628  $ 45,158 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation   38,504  30,491  23,180 
Amortization of deferred financing fees  1,432  1,263  2,814 
Amortization of restricted stock  988  1,219  1,005 
Equity in loss of unconsolidated subsidiaries  388  384  — 
Gain on sale of partnership interests  —  —  (15,853)
Gain on sale of real estate   (64,924) (52,601) (46,477)
Gain on insurance recovery (4,498) —  — 
Loss on extinguishment of debt  850  1,463  4,547 
Effect of deconsolidation of non-controlling interest  —  —  (1,692)
Increases and decreases from changes in other assets and liabilities: 
Decrease (increase) in deposits and escrows  6,941  (8,867) (6,190)
Increase in accounts payable and accrued liabilities  4,757  698  4,897 
Decrease (increase) in other assets  6,149  3,413  (1,309)
Net cash provided by operating activities  38,588  13,091  10,080 
Cash flows from investing activities: 
Collections from real estate loans  600  14,000  — 
Additions to real estate properties  (187,940) (228,354) (302,628)
Net costs capitalized to real estate owned  (16,769) (9,298) (46,844)
Net change in restricted cash-Newark  —  —  (1,952)
Net change in restricted cash-multi-family  (535) 1,232  (865)
Investment in limited partnership (12,370) —  — 
Purchase of non-controlling interest  (5,172) —  — 
Consolidation of investment in limited partnership 1,279  —  — 
Proceeds from the sale of real estate owned  169,115  167,013  197,264 
Distributions from unconsolidated joint ventures  948  424  — 
Contributions to unconsolidated joint ventures  —  (21,894) — 
Proceeds from the sale of joint venture interests  —  —  19,242 
Net cash used in investing activities  (50,844) (76,877) (135,783)
Cash flows from financing activities: 
Proceeds from mortgages payable  116,972  155,172  267,788 
Increase in other borrowed funds  —  —  6,001 
F-8
BRT APARTMENTS CORP. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Dollars in Thousands) 
Year Ended September 30, 
2018 2017 2016
Mortgage payoffs  (84,726) (96,322) (130,090)
Mortgage principal payments  (5,130) (5,163) (5,081)
Increase in deferred financing costs  (1,320) (2,574) (2,491)
Dividends paid (11,463) —  — 
Contributions from non-controlling interests  32,553  31,606  33,613 
Distributions to non-controlling interests  (40,023) (33,756) (32,825)
Proceeds from sale of New Markets Tax Credits  —  —  2,746 
Proceeds from the sale of common stock 20,411  —  — 
Repurchase of shares of common stock  (41) (193) (2,115)
Net cash provided by financing activities  27,233  48,770  137,546 
Net increase (decrease) in cash and cash equivalents  14,977  (15,016) 11,843 
Cash and cash equivalents at beginning of year  12,383  27,399  15,556 
Cash and cash equivalents at end of year  $ 27,360  $ 12,383  $ 27,399 
Supplemental disclosures of cash flow information: 
Cash paid during the year for interest expense, including capitalized interest of $174, $263 and $1,568 in 2018, 2017 and 2016  $ 33,063  $ 27,135  $ 27,680 
Cash paid during the year for income and excise taxes  $ 241  $ 1,884  $ 1,264 
Acquisition of real estate through assumption of debt  $ 13,608  $ 27,638  $ 16,051 
Assets removed due to casualty loss  $ 742  $ 3,571  $ — 

See accompanying notes to consolidated financial statements.

F-9
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Background
BRT Apartments Corp. (“BRT” or the “Company”) is the successor to BRT Realty Trust pursuant to the conversion of BRT Realty Trust from a Massachusetts business trust to a Maryland corporation on March 18, 2017. BRT owns, operates and develops multi-family properties. Generally, the multi-family properties are acquired with joint venture partners in transactions in which the Company contributes 65% to 80% of the equity. At September 30, 2018, the Company owns 36 multi-family properties with 10,121  (including 402 units at a property under development) located in 11 states. At September 30, 2018, the carrying value of the multi-family assets (including a real estate asset held for sale), was $1,049,408,000.
The Company also owns and operates various other real estate assets. At September 30, 2018, the carrying value of the other real estate assets was $15,293,000, including a real estate loan of $4,900,000.
BRT conducts its operations to qualify as a real estate investment trust, or REIT, for Federal income tax purposes.
Principles of Consolidation
The consolidated financial statements include the accounts and operations of BRT Apartments Corp. , its wholly owned subsidiaries, and its majority owned or controlled entities and its interests in variable interest entities ("VIEs") in which the Company has determined it is the primary beneficiary. Material intercompany balances and transactions have been eliminated.
The Company's consolidated joint ventures that own multi-family properties were determined to be VIEs because the voting rights of some equity investors are not proportional to their obligations to absorb the expected losses of the entity and their right to receive the expected residual returns. It was determined that the Company is the primary beneficiary of these joint ventures because it has a controlling financial interest in that it has the power to direct the activities of the VIE that most significantly impact the entity's economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.
The joint ventures that own properties in Ocee, FL, Lawrenceville, GA, Dallas, TX, Farmers Branch, TX and Grand Prairie, TX were determined not to be VIE's but are consolidated because the Company has controlling rights in such entities.
With respect to its unconsolidated joint ventures, as (i) the Company is generally the managing member but does not exercise substantial operating control over these entities or the Company is not the managing member and (ii) such entities are not VIEs, the Company determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.
Certain items on the consolidated financial statements for the prior years have been reclassified to conform with the current year's presentation, including the reclassification (i) of the operations and related assets of the Newark Joint Venture to discontinued operations, (ii) of deferred loan costs on the consolidated balance sheets from assets to a reduction of the carrying amount of mortgage payable and (iii) tenant utility reimbursements from real estate operating expenses to rental and other revenues from real estate properties. The reclassification of tenant utility reimbursements increased total revenues and expenses by $4,066,000 in 2016, and had no effect on the Company's financial position, results of operation or cash flows.
Income Tax Status
The Company qualifies as a real estate investment trust under sections 856-860 of the Internal Revenue Code of 1986, as amended. The board of directors may, at its option, elect to revoke or terminate the Company's election to qualify as a real estate investment trust.
The Company will not be subject to federal, and generally state and local taxes on amounts it distributes to stockholders, provided it distributes 90% of its ordinary taxable income and meets other conditions. The Company currently has net operating loss carryforwards which it can use to reduce taxable income. Use of the net operating loss carryforward was subject to an alternative minimum tax in 2016 and 2017. The Federal alternative minimum tax was repealed effective January 1, 2018.

I n December 2017, the Tax Cuts and Jobs Act (the “TCJA”) of 2017 was passed. The TCJA includes a number of changes to the corporate income tax system, including a reduction in the statutory federal corporate income tax rate from 35% to 21%, changes to deductions for certain pass-through business income (including certain REIT dividends), and potential limitations on interest expense, depreciation, and the deductibility of executive compensation. As a REIT, we are generally not

F-10
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
subject to federal income tax on our taxable income at the corporate level and do not believe that any of the changes from the TCJA will have a material impact on our consolidated financial statements.
In accordance with Accounting Standards Codification ("ASC") Topic 740 - "Income Taxes", the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on the Company's financial position or results of operations. The Company's income tax returns for the previous six years are subject to review by the Internal Revenue Service.
Revenue Recognition
Rental revenue from multi-family properties is recorded when due from residents and is recognized monthly as it is earned. Rental payments are due in advance.  Leases on residential properties are generally for terms that do not exceed one year.
Rental revenue from commercial properties, including the base rent that each tenant is required to pay in accordance with the terms of their respective leases, net of any rent concessions and lease incentives, is reported on a straight-line basis over the non-cancellable term of the lease.
Real Estate Properties
Real estate properties are stated at cost, net of accumulated depreciation, and includes  properties acquired through acquisition, development or foreclosure.
The Company assesses the fair value of real estate acquired (including land, buildings and improvements, and identified intangibles such as acquired in-place leases) and acquired liabilities and allocates the acquisition price, including transaction costs, based on these assessments. Depreciation for multi-family properties is computed on a straight-line basis over an estimated useful life of 30 years. Intangible assets (and liabilities) are amortized over the remaining life of the related leases at the time of acquisition and is usually less than one year. Expenditures for maintenance and repairs are charged to operations as incurred.
Real estate is classified as held for sale when management has determined that the applicable criteria have been met.  Real estate assets that are expected to be disposed of are valued at the lower of their carrying amount or their fair value less costs to sell on an individual asset basis. Real estate classified as held for sale is not depreciated.
The Company accounts for the sale of real estate when title passes to the buyer, sufficient equity payments have been received, there is no continuing involvement by the Company and there is reasonable assurance that the remaining receivable, if any, will be collected.
Real Estate Asset Impairments
The Company reviews each real estate asset owned, including investments in real estate ventures, to determine if there are indicators of impairment. If such indicators are present, the Company determines whether the carrying amount of the asset can be recovered. Recognition of impairment is required if the undiscounted cash flows estimated to be generated by the asset are less than the asset's carrying amount and that carrying amount exceeds the estimated fair value of the asset. The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property.  The analysis includes an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition.  These cash flows consider factors such as expected future operating income, trends, the effects of leasing demands, and other factors. In evaluating a property for impairment, various factors are considered, including estimated current and expected operating cash flow from the property during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of such real estate in the ordinary course of business. Valuation adjustments may be necessary in the event that effective interest rates, rent-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property.  If future evaluations result in a decrease in the value of the property below its carrying value, the reduction will be recognized as an impairment charge. The fair values related to the impaired real estate assets are considered to be a level 3 valuation within the fair value hierarchy.


F-11
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fixed Asset Capitalization
Various costs may be incurred in the development of the Company's properties. After a determination is made to capitalize a cost, it is allocated to the specific project that is benefited. The costs of land and building under development include specifically identifiable costs. These capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes and other costs incurred during the period of development. A construction project is considered substantially completed when it is available for occupancy, but no later than one year from cessation of major construction activity.  The Company ceases capitalizing costs when the project is available for occupancy.
Equity Based Compensation
Compensation expense for grants of restricted stock and restricted stock units ("RSUs") are amortized over the vesting period of such awards, based upon the estimated fair value of such award at the grant date. The deferred compensation related to the RSUs to be recognized as expense is net of certain and performance assumptions which are re-evaluated quarterly. For accounting purposes, the restricted shares and the RSUs are not included in the outstanding shares shown on the consolidated balance sheets until they vest; however, the restricted shares are included in the calculation of both basic and diluted earnings per share as they participate in the earnings of the Company. 
Derivatives and Hedging Activities
The Company's objective in using derivative financial instruments is to manage interest rate risk related to variable rate debt. The Company does not use derivatives for trading or speculative purposes. The Company records all derivatives on its consolidated balance sheets at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.  Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges.  For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in accumulated other comprehensive income (loss) and subsequently reclassified to earnings in the period in which the hedge transaction affects earnings.  The ineffective portion of changes in the fair value of the derivative is recognized directly in earnings.  For derivatives not designated as cash flow hedges, changes in the fair value of the derivative are recognized directly in earnings in the period in which they occur.
Per Share Data
Basic earnings (loss) per share is determined by dividing net income (loss) applicable to holders of common stock for the applicable year by the weighted average number of shares of common stock outstanding during such year.  Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock that share in the earnings of the Company.  Diluted earnings (loss) per share is determined by dividing net income (loss) applicable to the holders of common stock for the applicable year by the sum of the weighted average number of shares of common stock outstanding plus the dilutive effect of the Company's unvested RSUs using the treasury stock method.
Cash Equivalents
Cash equivalents consist of highly liquid investments; primarily, direct United States treasury obligations with maturities of three months or less when purchased.
Restricted Cash
Restricted cash consists of cash held for construction costs and property improvements for specific properties as may be required by contractual arrangements.



F-12
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Costs
Fees and costs incurred in connection with multi-family property financings are deferred and amortized over the term of the related debt obligations. Fees and costs paid related to the successful negotiation of commercial leases are deferred and amortized on a straight-line basis over the terms of the respective leases.
Use of Estimates
The preparation of the financial statements 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 consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
New Pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which prescribes a single, common revenue standards that supersedes nearly all existing revenue recognition guidance under U.S. GAAP, including most industry-specific requirements. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 outlines a five step model to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein. The Company’s revenues are primarily derived from rental income, which is scoped out from this standard and is currently accounted for in accordance with ASC Topic 840, Leases. The Company will adopt this standard effective October 1, 2018, using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. The adoption of this standard is not expected to have a material impact on the timing or amounts of the Company’s revenues. However, the recognition of gains on dispositions of properties may be impacted prospectively in circumstances under which collectability of the sales price may not be reasonably assured or if the Company has continuing involvement with a sold property.

In February 2016, the FASB issued ASU 2016-02 , Leases. ASU 2016-02 supersedes the current accounting for leases and while retaining two distinct types of leases, finance and operating, and requires lessees to recognize most leases on their balance sheets and makes targeted changes to lessor accounting. Further, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. This amendment provides a new practical expedient that allows lessors, by class of underlying asset, to avoid separating lease and associated non-lease components within a contract if certain criteria are met: (i) the timing and pattern of transfer for the non-lease component and the associated lease component are the same and (ii) the stand-alone lease component would be classified as an operating lease if accounted for separately.  ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company will adopt this standard effective October 1, 2019, and is currently evaluating the impact of adoption on the consolidated financial statements.  As lessor, the Company expects that the adoption of ASU 2016-02 (as amended by subsequent ASUs) will not change the timing of revenue recognition of the Company’s rental revenues. As a lessee, the Company is party to certain equipment, ground, and office leases with future payment obligations for which the Company expects to record right-of-use assets and lease liabilities at the present value of the remaining minimum rental payments upon adoption of this standard. 

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flow s (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides specific guidance on eight cash flow classification issues and how to reduce diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The effective date of the standard will be fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted.  The Company will adopt this standard effect October 1, 2018, and will elect the “cumulative earnings approach” whereby distributions received from equity method investments would be classified as cash flows from operations to the extent of equity earnings and then as cash flows from investing activities thereafter. Upon the adoption of ASU 2016-15, the Company expects to reclassify $146,000 and $134,000 of its cash inflows from investing activities to cash flows from operating activities in its historical presentation of cash flows related to its equity method investments for the years ended September 30, 2018 and 2017, respectively.
 



F-13
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
In November 2016, the FASB issued ASU Update No. 2016-018, Statement of Cash Flows (Topic 230): Restricted
Cash. The new standard requires that the statement of cash flows explain the change during the period in the combined total of cash, cash equivalents, and amounts generally described as restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose relevant information about the nature of the restrictions on the basis of their individual facts and circumstances. The effective date of the standard will be fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The new standard requires a retrospective approach. The Company will adopt this standard effective October 1, 2018, and expects to reclassify $535,000  and $1,200,000. of its cash outflows from operating activities to change in cash and restricted cash in its historical presentation of cash flows for the years ended September 30, 2018 and 2017, respectively .

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which amends the guidance on nonfinancial assets in ASC 610-20. The amendments clarify that (i) a financial asset is within the scope of ASC 610-20 if it meets the definition of an in substance nonfinancial asset and may include

nonfinancial assets transferred within a legal entity to a counter-party, (ii) an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counter-party and de-recognize each asset when a counter-party obtains

control of it, and (iii) an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations. Further, ASU 2017-05 provides guidance on accounting for partial sales of nonfinancial assets. The amendments are effective at the same time as the amendments in ASU 2014-09. The Company will adopt this standard effective October 1, 2018, and does expect the adoption to have a material impact on the Company's consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities . The update better aligns a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company will adopt this standard effective October 1, 2019, and is currently evaluating the impact of adoption on the consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This update provides specific guidance for transactions for acquiring goods and services from nonemployees and specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC Topic 606, Revenue from Contracts with Customers. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods beginning after December 15, 2020. Early adoption is permitted but not earlier than the adoption of ASC Topic 606. The Company does not believe that this guidance will have a material effect on its consolidated financial statements as it has not historically issued share-based payments in exchange for goods or services to be consumed within its operations.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework —   Changes to the Disclosure Requirements for Fair Value Measurement , which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC Topic 820. This guidance is effective for public companies in fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.


F-14
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 2—REAL ESTATE PROPERTIES
Real estate properties (including real estate properties held for sale), consist of the following (dollars in thousands):
September 30, 
2018 2017
Land  $ 163,862  $ 138,094 
Building  943,775  808,366 
Building improvements  40,274  31,411 
Real estate properties  1,147,911  977,871 
Accumulated depreciation  (88,109) (66,621)
Total real estate properties, net  $ 1,059,802  $ 911,250 

A summary of activity in real estate properties (including properties held for sale), for the year ended September 30, 2018, follows (dollars in thousands):
September 30, 2017 Balance  Property Acquisitions 
Capitalized Costs and Improvements  		Depreciation   Sales and Other Dispositions  September 30, 2018 Balance 
Multi-family  $ 890,300  $ 233,400  $ 24,443  $ (38,394) $ (104,396) $ 1,005,353 
Multi-family development - West Nashville, TN 10,448  —  33,609  —  —  44,057 
Land - Daytona, FL  8,021  —  —  —  —  8,021 
Retail shopping center - Yonkers, NY  2,481  —  —  (110) —  2,371 
Total real estate properties  $ 911,250  $ 233,400  $ 58,052  $ (38,504) $ (104,396) $ 1,059,802 

As a result of the damage caused by Hurricane Harvey in 2017, the Company reduced the carrying value of Retreat at Cinco Ranch, located in Katy, TX, by $3,571,000 and, because the Company believed it would recover such sum from its insurance coverage, recorded a receivable for the same amount.  Through September 30, 2018, the Company recognized $9,150,000 in insurance recoveries related to Hurricane Harvey, of which $4,498,000, is recorded as a gain on insurance recovery and $1,180,000 of recoveries from business interruption insurance has been recognized as rental income.
The acquisitions completed in the year ended September 30, 2018 and described in note 3 - Acquisitions, Dispositions and Impairment Charges, have been accounted for as asset acquisitions. The purchase prices were allocated to the acquired assets and assumed liabilities based on management's estimate of the relative fair value of these acquired assets and assumed liabilities at the dates of acquisition.
The following table summarizes the preliminary allocations of the purchase price of six properties purchased between October 1, 2017 and September 30, 2018 , and the finalized allocation of the purchase price, as adjusted, as of September 30, 2018 (dollars in thousands):
Preliminary
Purchase Price
Allocation  		Adjustments  Finalized
Purchase Price
Allocation 
Land  $ 47,653  $ (3,614) $ 44,039 
Buildings and improvements  180,381  3,622  184,003 
Acquisition-related intangible assets (in acquired lease intangibles, net)  5,366  (8) 5,358 
Total consideration  $ 233,400  $ —  $ 233,400 


F-15
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018

NOTE 2—REAL ESTATE PROPERTIES (Continued)
A summary of the Company's multi-family properties by state as and for the year ended September 30, 2018, is as follows (dollars in thousands):
Location  Number of Properties at September 30, 2018  Number of Units at September 30, 2018  2018 Revenues (a)  % of 2018 Revenues 
Texas  11  3,096  $ 36,358  31.0  %
Georgia 5  1,545  16,761  14.3  %
Florida 4  1,248  15,832  13.5  %
Missouri 4  775  10,622  9.1  %
South Carolina (b) 3  683  8,717  7.4  %
Tennessee 2  702  4,215  3.6  %
Alabama 2  412  6,135  5.2  %
Mississippi 2  776  8,617  7.3  %
Indiana 1  400  3,689  3.1  %
Ohio 1  264  2,804  2.4  %
Virginia  1  220  3,589  3.1  %
36  10,121  $ 117,339  100  %
________________________
(a) Includes Waverly Place, Melbourne FL, sold on October 25, 2017, Valley Venue, Valley, AL, sold on February 23, 2018 and Garden Square, Palm Beach Gardens, FL sold on February 25, 2018. These properties in total had 1,368 units and accounted for $5,815 of 2018 revenues.
(b) Includes Factory at Garco, N. Charleston, SC which was sold in November 2018.

Future minimum rentals to be received pursuant to non-cancellable operating leases with terms in excess of one year, from a commercial property owned by the Company at September 30, 2018, are as follows (dollars in thousands):
Year Ending September 30,  Amount 
2019 $ 1,119 
2020 1,119 
2021 1,132 
2022 1,185 
2023 1,234 
Thereafter  3,266 
Total  $ 9,055 
Leases at the Company's multi-family properties are generally for a term of one year or less and are not reflected in the above table.


F-16
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 3—ACQUISITIONS, DISPOSITIONS AND IMPAIRMENT CHARGES
Property Acquisitions  
The tables below provides information regarding the Company's purchases of multi-family properties during the years ended September 30, (dollars in thousands):

2018
Location Purchase
Date 		No. of
Units 		Purchase
Price 		Acquisition
Mortgage
Debt 		Initial BRT
Equity 		Ownership Percentage Capitalized Property Acquisition Costs
Madison, AL 12/7/2017 204  $ 18,420  $ 15,000  $ 4,456  80  % $ 247 
Boerne, TX (a) 12/14/2017 120  12,000  9,200  3,780  80  % 244 
Ocoee, FL 2/7/2018 522  71,347  53,060  12,370  50  % 1047 
Lawrenceville, GA 2/15/2018 586  77,229  54,447  15,179  50  % 767 
Daytona Beach, FL 4/30/2018 208  20,500  13,608  6,900  80  % 386 
Grand Prairie, TX 5/17/2018 281  30,800  18,995  7,300  50  % 413 
1,921  $ 230,296  $ 164,310  $ 49,985  $ 3,104 
(a) Includes $500 for the acquisition of a land parcel adjacent to the property.

2017
Location  Purchase
Date  		No. of
Units 
Purchase
Price  		Acquisition
Mortgage
Debt  		Initial BRT
Equity  		Ownership Percentage  Capitalized Property
Acquisition Costs
Fredricksburg, VA  11/4/2016 220  $ 38,490  $ 29,900  $ 8,720  80  % $ 643 
St. Louis, MO  2/28/2017 128  27,000  20,000  6,001  76  % 423 
St. Louis, MO  2/28/2017 53  8,000  6,200  2,002  76  % 134 
Creve Coeur, MO  4/4/2017 174  39,600  29,000  9,408  78  % 569 
West Nashville, TN (a)  6/2/2017 402  5,228  —  4,800  58  % 226 
Farmers Branch, TX  6/29/2017 509  85,698  55,200  16,200  50  % 992 
Tallahassee, FL  8/30/2017 242  27,588  21,524  7,015  80  % 377 
1,728  $ 231,604  $ 161,824  $ 54,146  $ 3,364 
______________________
(a) A development property.


In the year ended September 30, 2018, the Company purchased its partner's 2.5% interest in Avalon Apartments, located in Pensacola, FL., for $250,000 and its partner's 20% interest in Kilburn Crossing located in Fredricksburg, VA., for $4,909,000.    

The table below provides information regarding the real estate property acquired by the Company subsequent to September 30, 2018 (dollars in thousands):
Location Purchase
Date 		No. of
Units 		Contract
Purchase
Price 		Acquisition
Mortgage
Debt 		Initial BRT
Equity 		Ownership Percentage Capitalized Property Acquisition Costs
Greenville, SC 10/30/2018 266  $ 37,750  $ 26,425  $ 12,920  90  % $ 509 


F-17
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 3—ACQUISITIONS, DISPOSITIONS AND IMPAIRMENT CHARGES (Continued)
Property Dispositions
The tables below provide information regarding the Company's disposition of real estate properties during the years ended September 30, (dollars in thousands):
2018
Location  Sale Date  No. of Units  Sales Price  Gain on Sale  Non-Controlling Partner's Share of Gain on Sale 
Melbourne, FL  10/25/2017 208  $ 22,250  $ 12,519  $ 2,504 
New York, NY (1)  1/18/2018 1  470  439  — 
Valley, AL  2/23/2018 618  51,000  9,712  4,547 
Palm Beach Gardens, FL  2/25/2018 542  97,250  41,831  20,593 
New York, NY (1)  8/15/2018 1  450  424  — 
1,370  $ 171,420  $ 64,925  $ 27,644 
(a) Reflects the sale of a cooperative apartment unit. 
2017  
Location  Sale Date  No. of Units  Sales Price  Gain on Sale  Non-Controlling Partner's Share of Gain 
Greenville, NC  10/19/2016 350  $ 68,000  $ 18,483  $ 9,329 
Panama City, FL  10/26/2016 160  14,720  7,393  3,478 
Atlanta, GA  11/21/2016 350  36,750  8,905  4,166 
Hixson, TN  11/30/2016 156  10,775  608  152 
New York, NY (a)  12/21/2016 1  465  449  — 
Humble, TX  7/27/2017 260  18,000  7,707  3,143 
Humble, TX  7/27/2017 160  11,300  4,767  1,943 
Pasadena, TX 7/27/2017 144  9,750  4,289  2,629 
1,581  $ 169,760  $ 52,601  $ 24,840 
(a) Reflects the sale of a cooperative apartment unit.
The table below provides information regarding the real estate property disposed of by the Company subsequent to September 30, 2018 (dollars in thousands):
Location  Sale Date  No. of Units  Sales Price  Estimated Gain on Sale  Non-Controlling Partner's Share of Estimated Gain on Sale 
North Charleston, SC  11/7/2018 271  $ 51,650  $ 12,000  $ 6,300 

Impairment Charges
The Company reviews each real estate asset owned, including those held through investments in unconsolidated joint ventures, for impairment when there is an event or a change in circumstances indicating that the carrying amount may not be recoverable. The Company measures and records impairment losses, and reduces the carrying value of properties, when indicators of impairment are present and the expected undiscounted cash flows related to those properties are less than their carrying amounts. In cases where the Company does not expect to recover its carrying costs on properties held for use, the

F-18
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 3—ACQUISITIONS, DISPOSITIONS AND IMPAIRMENT CHARGES (Continued)
Company reduces its carrying costs to fair value, and for properties held for sale, the Company reduces its carrying value to the fair value less costs to sell.  During the years ended September 30, 2018, 2017, and 2016, no impairment charges were recorded. 

NOTE 4 - VARIABLE INTEREST ENTITIES

The Company conducts a large portion of its business with joint venture partners. Many of the Company's consolidated joint ventures that own properties were determined to be variable interest entities ("VIEs") because the voting rights of some equity partners are not proportional to their obligations to absorb the expected loses of the entity and their rights to receive expected residual returns. It was determined that the Company is the primary beneficiary of these joint venture because it has a controlling financial interest in that it has the power to direct the activities of the VIE that most significantly impacts the entity's economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.

The following is a summary of the carrying amounts with respect to the consolidated VIEs and their classification on the Company's consolidated balance sheets (amounts in thousands):
September 30, 
2018  2017 
ASSETS 
Real estate properties, net of depreciation of $52,873 and $35,525  $ 586,623  $ 707,546 
Cash and cash equivalents  6,699  8,626 
Deposits and escrows  11,837  13,873 
Other assets  6,781  8,148 
Real estate properties held for sale  38,852  8,969 
Total Assets  $ 650,792  $ 747,162 
LIABILITIES 
Mortgages payable, net of deferred costs of $3,786 and $5,170  $ 481,569  $ 558,568 
Accounts payable and accrued liabilities  12,841  14,419 
Mortgage payable held for sale  —  — 
Total Liabilities  $ 494,410  $ 572,987 


NOTE 5–DISCONTINUED OPERATIONS

On February 23, 2016, the Company sold, through subsidiaries which owned such interests, its equity interests in RBH - TRB Newark Holdings, LLC (the "Newark Joint Venture"), to RBH Partners III, LLC, for $16,900,000 (the "NJV Sale"). The Company recognized a gain of $15,467,000 in connection with this sale.
Other than the agreement of the Company's subsidiary to provide an indemnity with respect to up to $2,800,000 of obligations related to the venture, neither the Company nor its subsidiaries have any guaranty, indemnity or similar obligations with respect to the Newark Joint Venture.  

F-19
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 5–DISCONTINUED OPERATIONS (Continued)

The discontinued operations of the Newark Joint Venture and the statement of operations for the years ended September 30, 2016, are summarized as follows (dollars in thousands):
Statement of Operations
Year Ended
September 30,
2016 
Revenues: 
Rental and other revenue from real estate properties  $ 2,437 
Other income  444 
Total revenues  2,881 
Expenses: 
Real estate operating expenses  2,277 
Interest expense  2,242 
Depreciation  1,150 
Total expense  5,669 
Loss from discontinued operations  (2,788)
Gain on sale of partnership interest  15,467 
Discontinued operations  $ 12,679 


NOTE 6—REAL ESTATE LOAN

As a result of the NJV Sale in February 2016, the mortgage loan owed to the Company by the Newark Joint Venture (the "NJV Loan Receivable"), which, prior to the sale, was eliminated in consolidation, is reflected as a real estate loan on the consolidated balance sheets. At September 30, 2018, the principal balance of the NJV Loan Receivable is $4,900,000. This receivable bears interest, payable monthly, at a rate of 11% per year, is secured by several properties in Newark, NJ, and matures in January 2019. 


NOTE 7 —REAL ESTATE PROPERTY HELD FOR SALE

At September 30, 2018, Factory at Garco Park, North Charleston, SC, with a carrying value of $38,852,000, was held for sale. This property was sold on November 7, 2018. The Company estimates it will recognize a gain on the sale of this property of approximately $12,000,000, of which approximately $6,300,000 will be allocated to the non-controlling partner. At September 30, 2017, Waverly Place Apartments, Melbourne, FL, with a carrying value of  $8,969,000, was held for sale. This property was sold on October 25, 2017.

NOTE 8—RESTRICTED CASH
Restricted cash represents funds for specific purposes and therefore are not generally available for general corporate purposes. As reflected on the consolidated balance sheets, restricted cash represents funds held by or on behalf of the Company specifically allocated for capital improvements at multi-family properties.

F-20
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 9—INVESTMENT IN UNCONSOLIDATED VENTURES
At September 30, 2018, the Company owns interests in three unconsolidated joint ventures owning multi-family properties. The table below provides information regarding these joint ventures (dollars in thousands):
Location
Number of Units
Carrying Value of Investment  Property Purchase Price  Mortgage Balance 
Percent Ownership
Columbia, SC  374  $ 4,670  $ 58,300  $ 40,402  32  %
Columbia, SC (a)
339  8,581  5,915  34,439  46  %
Forney, TX (b)
313  6,706  39,000  25,350  50  %
Other (c)  —  121  —  — 
1,026  $ 20,078  $ 103,215  $ 100,191 
__________________________
(a ) Reflects land purchased for a development project at which construction of 339 units is planned. Construction financing for this project of up to
 $47,246 has been secured. Such financing bears interest at 4.08% and matures in June 2020.
(b) This interest is held through a tenancy-in-common. 
(c) Represents interest in cooperative units in Lawrence, NY.

NOTE 10—DEBT OBLIGATIONS
Debt obligations consist of the following (dollars in thousands):
September 30, 
2018 2017
Mortgages payable  $ 798,805  $ 704,171 
Junior subordinated notes  37,400  37,400 
Deferred mortgage costs  (6,735) (6,727)
Total debt obligations  $ 829,470  $ 734,844 

Mortgage Payable
At September 30, 2018, $798,805,000 of mortgage debt is outstanding on the Company's 36 multi-family properties and one commercial property with a weighted average interest rate of 4.18% and a weighted average remaining term to maturity of 6.9 years. Scheduled principal repayments for the next five years and thereafter are as follows (dollars in thousands):
Year Ending September 30,  Scheduled Principal Payments 
2019 $ 34,819 
2020 62,621  (a) 
2021 22,622 
2022 59,496 
2023 92,478 
Thereafter  526,769 
$ 798,805 
_____________________
(a) Includes $30,265 in 2020 related to Factory at Garco Park, North Charleston, SC, which was sold subsequent to September 30, 2018.

F-21
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 10—DEBT OBLIGATIONS (Continued)
The Company incurred the following mortgage debt in connection with these acquisitions in the years ended September 30, (dollars in thousands):
2018
Location  Closing Date  Acquisition Mortgage Debt  Interest Rate  Interest only period  Maturity Date 
Madison, AL  12/7/2017 $ 15,000  4.08  % 60 months January 2028 
Boerne, TX   12/14/2017 9,200  LIBOR +2.39%    36 months January 2028  (a) 
Ocoee, FL  2/7/2018 53,060  3.90  % 84 months January 2028 
Lawrenceville, GA  2/15/2018 54,447  3.97  % 120 months March 2028 
Daytona Beach, FL  4/30/2018 13,608  3.94  % 24 months May 2025 
Grand Prairie, TX  5/17/2018 18,995  4.37  % 60 months June 2028 
$ 164,310 
____________________
(a) The Company entered into an agreement related to this loan to cap LIBOR at 3.86%.
2017
Location  Closing Date  Acquisition Mortgage Debt  Interest Rate  Interest only period  Maturity Date 
Fredricksburg, VA  11/4/2016 $ 27,638  3.68%    N/A  February 2027 
Saint Louis, MO  2/28/2017 20,000  4.79%    72 months March 2027 
Saint Louis, MO  2/28/2017 6,197  4.84%    72 months March 2027 
Creve Coeur, MO  4/4/2017 29,000  LIBOR +2.50%    N/A July 2019 
Farmers Branch, TX  6/29/2017 55,200  4.22%    60 months July 2028 
Tallahassee, FL  8/30/2017 21,524  4.19%    60 months September 2027 
$ 159,559 

During the year ended September 30, 2017, the Company obtained supplemental fixed rate financing as set forth in the table below (dollars in thousands):
Location  Closing Date  Supplemental Mortgage Debt  Interest Rate  Maturity Date 
Fredricksburg, VA  11/4/2016 $ 2,261  4.84%    February 2027 
Decatur, GA  5/31/2017 4,941  5.32%    December 2022 
$ 7,202 

Junior Subordinated Notes
At September 30, 2018 and 2017, the outstanding principal balance of the Company's junior subordinated notes was$37,400,000. The interest rate on the outstanding balance resets quarterly and is based on three month LIBOR +2.00% The rate in effect at September 30, 2018 is 4.34%. The notes mature April 30, 2036.
The notes require interest only payments through the maturity date, at which time repayment of all outstanding principal and unpaid interest is due. Interest expense for the years ended September 30, 2018, 2017 and 2016, which includes amortization of deferred costs, was $1,489,000, $1,175,000 and $1,510,000, respectively.

F-22
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018

NOTE 11—INCOME TAXES
The Company elected to be taxed as a real estate investment trust ("REIT") pursuant to the Code. As a REIT, the Company will generally not be subject to Federal income taxes at the corporate level if it distributes 100% of its REIT taxable income, as defined, to its stockholders. To maintain its REIT status, the Company must distribute at least 90% of its ordinary taxable income; however, if it does not distribute 100% of its taxable income, it will be taxed on undistributed income. There are a number of organizational and operational requirements the Company must meet to remain a REIT. If the Company fails to qualify as a REIT in any taxable year, its taxable income will be subject to Federal income tax at regular corporate tax rates and it may not be able to qualify as a REIT for four subsequent tax years. Even if it is qualified as a REIT, the Company is subject to certain state and local income taxes and to Federal income and excise taxes on undistributed taxable income. For income tax purposes, the Company reports on a calendar year basis.
During the years ended September 30, 2018, 2017 and 2016, the Company recorded $50,000, $1,560,000 and $689,000, respectively, of Federal alternative minimum tax and state franchise tax expense, net of refunds, relating to the 2018, 2017 and 2016 calendar years. The Federal alternative minimum tax is no longer effective in 2018.
Earnings and profits, which determine the taxability of dividends to stockholders, differs from net income reported for financial statement purposes due to various items, including timing differences related to loan loss provisions, impairment charges, depreciation methods and carrying values.
At December 31, 2017, the Company had a net operating loss carry forward of $16,816,000. These net operating losses may be available in future years to reduce taxable income when it is generated. These tax loss carry forwards no longer expire and are available to offset 100% of taxable income. Net operating losses generated in 2018 and after will be available to offset 80% of taxable income.

NOTE 12—STOCKHOLDERS' EQUITY
Common Stock Dividend Distribution
During the years ended September 30, 2018 and 2017, the Company declared an aggregate of $0.78 and $0.18 per share in cash dividends. The Company did not declare or pay any dividends during the year ended September 30, 2016.
Stock Based Compensation

Each of the Company's 2018 Incentive Plan (the "2018 Plan") and Amended and Restated 2016 Incentive Plan (the "2016 Plan") authorized the Company to grant: (i) up to 600,000 shares of common stock pursuant to stock options, restricted stock, restricted stock units, and performance shares awards; and (ii) cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards. The Company's 2012 Incentive Plan (the "2012 Plan") authorized the Company to grant up to 600,000 shares of common stock pursuant to stock options, restricted stock, restricted stock units and performance share awards. No further awards may be granted pursuant to the 2016 Plan and the 2012 Plan, which are referred to collectively as the "Prior Plans".
Restricted Stock Units
 In June 2016, pursuant to the 2016 Plan, the Company issued restricted stock units (the "Units") to acquire up to 450,000 shares of common stock. The Units entitle the recipients, subject to continued service through March 31, 2021 (the “Performance Period”), to receive in the aggregate, (i) up to 200,000 shares (the “TSR Award”) of common stock based on achieving, during the Performance Period, specified levels in compounded annual growth rate (“CAGR”) in total stockholder return (“TSR”), and (ii) up to 200,000 shares of common stock based on achieving, during the Performance Period, specified levels in CAGR in adjusted funds from operations, as determined pursuant to the performance agreement (the "AFFO Award"). In addition, up to 50,000 shares (the "Adjustment Awared")may be added to or subtracted from the TSR Award, based on attaining or failing to attain, as the case may be, during the Performance Period, of CAGR in TSR relative to the CAGR in TSR

F-23
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 12—STOCKHOLDERS' EQUITY (Continued)
for the REITs that comprise, with specified exceptions, the FTSE NAREIT Equity Apartment  Index. The recipients also received dividend equivalent rights entitling them to receive cash dividends with respect to the shares of common stock underlying their Units as if the underlying shares were outstanding during the Performance Period, if, when, and to the extent, the related Units vest. The Units were determined not to be participating securities and accordingly, for financial statement purposes, the shares underlying the Units are excluded in the outstanding shares reflected on the consolidated balance sheet and from the calculation of basic earnings per share. Though the 450,000 shares underlying the units are contingently issuable shares, 250,000 of such shares have not been included in the calculation of diluted earnings per share as the criteria with respect to the AFFO Award and the Adjustment Award were not met at September 30, 2018. The Company included 200,000 shares of common stock underlying the TSR Awards in the calculation of diluted earnings per share as the market criteria with respect to the TSR award have been met at September 30, 2018.
For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to assist management in determining fair value. For the AFFO Awards, fair value is based on the market value on the date of grant. Expense is not recognized on the Units which the Company does not expect to vest as a result of conditions the Company does not expect to be satisfied. The total amount recorded at the grant date as deferred compensation with respect to the Units was $2,117,000. As of September 30, 2018, $1,432,000 of deferred compensation allocated to the AFFO Award has been reversed, as it is not anticipated that the performance goals will be met. The remaining $685,000 allocated to the TSR Award is being charged to general and administrative expense over the Performance Period. The deferred compensation expense to be recognized is net of certain forfeiture and performance assumptions. The Company recorded $(56,000), $240,000 and $146,000 of compensation expense related to the amortization of unearned compensation with respect to the Units in the years ended September 30, 2018, 2017 and 2016, respectively. At September 30, 2018 and 2017,  $354,000  and $1,015,000 respectively, has been deferred as unearned compensation and will be charged to expense over the balance of the Performance Period.
Restricted Stock
In March 2018, the Company granted 144,797 shares of restricted stock pursuant to the 2018 Plan. As of September 30, 2018, an aggregate of 705,847 shares of unvested restricted stock are outstanding pursuant to the Plan and the Prior Plans. All shares of restricted stock vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. For financial statement purposes, the restricted stock is not included in the outstanding shares shown on the consolidated balance sheets until they vest, but are included in the earnings per share computation. During the years ended September 30, 2018, 2017 and 2016, the Company recorded $1,044,000 and $978,000, and $859,000 respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards. At September 30, 2018 and 2017, $3,023,000 and $2,356,000, respectively, has been deferred as unearned compensation and will be charged to expense over the remaining vesting periods of these restricted stock awards. The weighted average vesting period of these restricted shares is 2.3 years.
Changes in the number of restricted shares outstanding under the Company's equity incentive plans are shown below:
Year Ended September 30, 
2018 2017 2016
Outstanding at beginning of the year  689,375  666,775  672,875 
Issued  144,797  147,500  141,050 
Cancelled  (400) —  (16,850)
Vested  (127,925) (124,900) (130,300)
Outstanding at the end of the year  705,847  689,375  666,775 

F-24
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 12—STOCKHOLDERS' EQUITY (Continued)
The following table reflects the compensation expense recorded for all incentive plans (dollars in thousands):
Year Ended September 30, 
2018 2017 2016
Restricted stock grants  $ 1,044  $ 978  $ 859 
Restricted stock units  (56) 240  146 
Total compensation  $ 988  $ 1,218  $ 1,005 

Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands):
Year Ended September 30, 
2018 2017 2016
Numerator for basic and diluted earnings per share attributable to common stockholders: 
Net income attributable to common stockholders  $ 23,773  $ 13,600  $ 31,289 
Denominator: 
Denominator for basic earnings per share—weighted average number of shares  14,580,398  13,993,638  14,017,279 
Effect of dilutive securities  200,000  25,205  — 
Denominator for diluted earnings per share—adjusted weighted average number of shares and assumed conversions  14,780,398  14,018,843  14,017,279 
Basic earnings per share  $ 1.63  $ 0.97  $ 2.23 
Diluted earnings per share  $ 1.61  $ 0.97  $ 2.23 

Equity Distribution Agreements
In January 2018, the Company entered into equity distribution agreements, as amended in May 2018, with three sales agents to sell an aggregate of $30,000 of its common stock from time-to-time in an at-the-market offering. Since the commencement of the at-the-market offering program through September 30, 2018, the Company sold 1,590,935 shares of common stock for net proceeds of $20,411 after giving effect to related fees, commissions and offering related expenses of $502,000.
Share Buyback
On March 11, 2016, the Board of Directors authorized the Company to repurchase up to $5,000,000 of shares of common stock through September 30, 2017. Pursuant to this authorization, the Company, from such date through September 30, 2017, repurchased 98,318 shares of common stock at an average market price of $7.37 per share, for an aggregate purchase price, including commissions, of $724,000.
On September 12, 2017, the Board of Directors authorized the Company, effective as of October 1, 2017, to purchase up to $5.0 million of its shares of common stock through September 30, 2019. Pursuant to this authorization, the Company from such date through September 30, 2018, repurchased 3,500 shares of common stock at an average price of $11.73 per share, for an aggregate purchase price, including commissions, of $41,000.
.


F-25
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 13—RELATED PARTY TRANSACTIONS
The Company paid REIT Management Corp., a company wholly owned by Fredric H. Gould, a director of the Company, advisory fees pursuant to its Advisory Agreement of  $0, $0 and $693,000 for the years ended September 30, 2018, 2017 and 2016, respectively. The Advisory Agreement terminated effective December 31, 2015. Effective as of January 1, 2016, the Company retained certain of its executive officers and Fredric H. Gould to provide services previously provided pursuant to such agreement. The aggregate fees paid in 2018 and 2017 for these services were $1,253,000 and $1,193,000.
Management of certain properties owned by the Company and certain joint venture properties is provided by Majestic Property Management Corp. ("Majestic Property"), a company wholly owned by Fredric H. Gould, under renewable year-to-year agreements. Certain of the Company's officers and directors are also officers and directors of Majestic Property. Majestic Property provides real property management, real estate brokerage and construction supervision services to these properties. For the years ended September 30, 2018, 2017 and 2016, fees for these services were $33,000, $32,000, and $34,000, respectively.
Fredric H. Gould is the vice chairman of the board of directors of One Liberty Properties, Inc., and certain of the Company's officers and directors are also officers and, or directors of One Liberty Properties, Inc. In addition, Mr. Gould is an executive officer and sole stockholder of Georgetown Partners, Inc., the managing general partner of Gould Investors L.P.("Gould Investors"). Certain of the Company's officers and directors are also officers and/or directors of Georgetown Partners, Inc. The allocation of expenses for the facilities, personnel and other resources shared by the Company, One Liberty and Gould Investors is computed in accordance with a shared services agreement by and among the Company and these entities and is included in general and administrative expense on the consolidated statements of operations. During the years ended September 30, 2018, 2017 and 2016, allocated general and administrative expenses reimbursed by the Company to Gould Investors L.P. pursuant to the shared services agreement aggregated $823,000, $723,000 and $549,000, respectively.

On December 11, 2015, the Company borrowed $8,000,000 from Gould Investors at an interest rate of 5.24%. This loan was satisfied on February 24, 2016. Interest expense for the year ended September 30, 2016 was $86,000.
Management of many of the Company's multi-family properties is performed by its joint venture partners or their affiliates, none of which are related to the Company. These management fees amounted to $3,670,000, $2,834,000 and $1,919,000 in the years ended September 30, 2018, 2017 and 2016, respectively. In addition, the Company may pay an acquisition fee to its joint venture partner upon the purchase of a property. These acquisition fees amounted to $2,043,000, $2,571,000 and $2,221,000 for the years ended September 30, 2018, 2017 and 2016, respectively.
The Company obtains certain insurance in conjunction with Gould Investors and reimburses Gould Investors for the Company's share of the insurance cost. Insurance reimbursements to Gould Investors for the years ended September 30, 2018, 2017 and 2016 were $26,000, $24,000 and $41,000 respectively.
See note 5 - Discontinued Operations for information regarding the Company's sale of its interest in the Newark Joint Venture to affiliates of its former partner in such venture.

F-26
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 14—SEGMENT REPORTING
Substantially all of the Company's assets are comprised of multi-family real estate assets generally leased to tenants on a one year basis. Therefore, the Company aggregates real estate assets for reporting purposes and operates in one reportable segment. Prior to October 1, 2017, the Company operated in two reportable segments: a multi-family real estate segment which includes the ownership, operation and development of its multi-family properties; and another real estate segment, which includes the ownership and operation and development of its other real estate assets.
The following table summarizes the Company's segment reporting for the year ended September 30, 2017 (dollars in thousands):
Multi-Family Real Estate  Other Real Estate  Total 
Revenues: 
Rental and other revenues from real estate properties  $ 102,938  $ 1,539  $ 104,477 
Other income  (9) 1,303  1,294 
Total revenues  102,929  2,842  105,771 
Expenses: 
Real estate operating expenses  50,733  546  51,279 
Interest expense  26,782  1,389  28,171 
General and administrative  9,208  188  9,396 
Depreciation  30,381  110  30,491 
Total expenses  117,104  2,233  $ 119,337 
Total revenue less total expenses  (14,175) 609  (13,566)
Equity in (loss) earnings of unconsolidated joint ventures  (417) 33  (384)
Gain on sale of real estate  52,152  449  52,601 
Loss on extinguishment of debt  (1,463) —  (1,463)
Income from continuing operations  36,097  1,091  37,188 
Provision for taxes  1,529  31  1,560 
Net income  34,568  1,060  35,628 
Net (income) attributable to non-controlling interests  (21,896) (132) (22,028)
Net income attributable to common stockholders  $ 12,672  $ 928  $ 13,600 
Segment Assets at September 30, 2017  $ 976,806  $ 17,091  $ 993,897 


F-27
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 14—SEGMENT REPORTING (Continued)
The following table summarizes the Company's segment reporting for the year ended September 30, 2016 (dollars in thousands):
Multi-Family Real Estate  Other Real Estate  Total 
Revenues: 
Rental and other revenues from real estate properties  $ 93,795  $ 1,407  $ 95,202 
Other income  —  3,319  $ 3,319 
Total revenues  93,795  4,726  98,521 
Expenses: 
Real estate operating expenses  46,936  583  47,519 
Interest expense  23,739  139  23,878 
Advisor's fee, related party  593  100  693 
Property acquisition costs  3,852  —  3,852 
General and administrative  8,313  223  8,536 
Depreciation  22,251  929  23,180 
Total expenses  105,684  1,974  107,658 
Total revenues less total expenses  (11,889) 2,752  (9,137)
Gain on sale of real estate  45,206  1,271  46,477 
Gain on sale of partnership interest  386  —  386 
Loss on extinguishment of debt  (4,547) —  (4,547)
Income from continuing operations  29,156  4,023  33,179 
Provision for taxes  686  14  700 
Income from continuing operations, net of taxes  28,470  4,009  32,479 
Net (income) attributable to non-controlling interests  (15,420) (108) (15,528)
Net income attributable to common stockholders before reconciling items  $ 13,050  $ 3,901  $ 16,951 
Reconciling adjustment: 
Discontinued operations, net of non-controlling interests  14,338 
Net income attributable to common stockholders  $ 31,289 
Segment assets at September 30, 2016  $ 843,898  $ 31,001  $ 874,899 

NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Instruments Not Measured at Fair Value
The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not reported at fair value on the consolidated balance sheets:
Cash and cash equivalents, restricted cash, accounts receivable (included in other assets), accounts payable and accrued liabilities:     The carrying amounts reported in the balance sheets for these instruments approximate their fair value due to the short term nature of these accounts.
Junior subordinated notes:     At September 30, 2018 and 2017, the estimated fair value of the Company's junior subordinated notes is less than their carrying value by approximately $12,451,486, and $15,705,000, respectively, based on market interest rates of 7.35% and 6.82%, respectively.


F-28
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Mortgages payable:    At September 30, 2018, the estimated fair value of the Company's mortgages payable is lower than their carrying value by approximately $34,039,000  assuming market interest rates between 4.30% and 6.04%. At September 30, 2018, the estimated fair value was lower than the carrying value by $11,400,000, assuming market interest rates between 3.78% and 5.02%. Market interest rates were determined using current financing transaction information provided by third party institutions.
Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value assumptions. The fair values of the real estate loans and debt obligations are considered to be Level 2 valuations within the fair value hierarchy.
Financial Instruments Measured at Fair Value
The Company's fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, there is a fair value hierarchy that distinguishes between markets participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions. Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other "observable" market inputs and Level 3 assets/liabilities are valued based significantly on "unobservable" market inputs. The Company does not currently own any financial instruments that are classified as Level 3.
Set forth below is information regarding the Company's financial assets and liabilities measured at fair value as of September 30, 2018 (dollars in thousands):
Carrying and
Fair Value
Fair Value Measurements
Using Fair Value Hierarchy
Level 1
Level 2
Financial Assets: 
Interest rate swaps
$ 3,787  —  $ 3,787 
Interest rate caps  6  6 
Total Financial Assets  $ 3,793  $ —  $ 3,793 
Financial Liabilities: 
Interest rate swap
$ —  —  $ — 

Derivative financial instruments:    Fair values are approximated using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, and implied volatilities. At September 30, 2018, these derivatives are included in other assets a on the consolidated balance sheet.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with it utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparty. As of September 30, 2018, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuation is classified in Level 2 of the fair value hierarchy.


F-29
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 16—COMMITMENT AND CONTINGENCIES
The Company maintains a non-contributory defined contribution pension plan covering eligible employees and officers. Contributions by the Company are made through a money purchase plan, based upon a percent of qualified employees' total salary as defined therein. Pension expense approximated $350,000, $342,000 and $324,000 during the years ended
September 30, 2018, 2017 and 2016, respectively. At September 30, 2018 and 2017,  $18,000 and  $162,000, respectively, remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheets.
At September 30, 2018, the Company is the carve-out guarantor with respect to mortgage debt in principal amount of $113,730,000 at seven multi-family properties.

NOTE 17—DERIVATIVE FINANCIAL INSTRUMENTS
Cash Flow Hedges of Interest Rate Risk
The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The effective portion of changes in the fair value of derivatives, designated and that qualify as cash flow hedges, is recorded in accumulated other comprehensive income (loss) on our consolidated balance sheets and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt.
As of September 30, 2018, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):
Interest Rate Derivative  Notional Amount  Rate  Maturity 
Interest rate cap on LIBOR $ 9,200  3.86  % January 1, 2021
Interest rate cap on LIBOR $ 29,000  3.00  % July 10, 2019
Interest Rate Swap  $ 1,446  5.25  % April 1, 2022 
Interest Rate Swap  $ 26,400  3.61  % May 6, 2023
Interest Rate Swap  $ 27,000  4.05  % September 19, 2026

Derivatives as of: 
September 30, 2018  September 30, 2017
Balance Sheet Location  Fair Value  Balance Sheet Location  Fair Value 
Other Assets  $ 3,793  Other assets  $ 1,460 
Accounts payable and accrued liabilities  $ —  Accounts payable and accrued liabilities  $ 14 



F-30
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 17—DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
The following table presents the effect of the Company's derivative financial instrument on the consolidated statements of comprehensive income (loss) for the years ended September 30, 2018, 2017 and 2016 (dollars in thousands):
Year Ended September 30, 
2018 2017 2016
Amount of gain (loss) recognized on derivative in Other Comprehensive Income  $ 2,396  $ 2,660  $ (1,695)
Less: amount of gain (loss) reclassified from Accumulated Other Comprehensive (loss) income into Interest Expense  $ 71  $ (387) $ (33)

No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Trust's cash flow hedges during the years ended September 30, 2018, 2017 or 2016. During the twelve months ending September 30, 2019, the Company estimates an additional $533,000 will be reclassified from other comprehensive income as an increase to interest expense.
Credit-risk-related Contingent Features
The agreement between the Company and its derivatives counterparty provides that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, the Company could be declared in default on its derivative obligation.

NOTE 18—QUARTERLY FINANCIAL DATA (Unaudited)

2018
1st Quarter
Oct. - Dec  		2nd Quarter
Jan. - March  		3rd Quarter
April - June  		4th Quarter
July - Sept.  		Total
For Year 
Revenues  $ 28,349  $ 29,651  $ 30,154  $ 31,481  $ 119,635 
Expenses  32,278  34,548  35,897  37,045  139,768 
Total revenues less total expenses  (3,929) (4,897) (5,743) (5,564) (20,133)
Equity in loss of unconsolidated joint ventures  (25) (63) (127) (173) (388)
Gain on sale of real estate  12,519  51,981  —  424  64,924 
Gain on insurance recovery —  3,227  —  1,271  4,498 
Loss on extinguishment of debt  (257) (593) —  —  (850)
Income (loss) income from continuing operations  8,308  49,655  (5,870) (4,042) 48,051 
Provision for taxes  106  (253) 101  96  50 
Net income (loss)  8,202  49,908  (5,971) (4,138) 48,001 
Net (income) loss attributable to non-controlling interests  (1,851) (24,686) 1,282  1,027  (24,228)
Net income (loss) attributable to common stockholders  $ 6,351  $ 25,222  $ (4,689) $ (3,111) $ 23,773 
Basic and diluted per share amounts attributable to common stockholders 
Basic income (loss) per share $ 0.45  $ 1.77  $ (0.33) $ (0.20) $ 1.63 
Diluted income (loss) per share $ 0.45  $ 1.75  $ (0.33) $ (0.20) $ 1.61 






F-31
BRT APARTMENTS CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2018
NOTE 18—QUARTERLY FINANCIAL DATA (Unaudited) (Continued)

2017
1st Quarter
Oct. - Dec  		2nd Quarter
Jan. - March  		3rd Quarter
April - June  		4th Quarter
July - Sept.  		Total
For Year 
Revenues  $ 25,640  $ 24,883  $ 26,861  $ 28,387  $ 105,771 
Expenses  28,027  28,473  30,333  32,504  119,337 
Total revenues less total expenses  (2,387) (3,590) (3,472) (4,117) (13,566)
Equity in loss of unconsolidated joint ventures —  —  (307) (77) (384)
Gain on sale of real estate  35,838  —  —  16,763  52,601 
Loss on extinguishment of debt  (799) —  —  (664) (1,463)
(Loss) income from continuing operations  32,652  (3,590) (3,779) 11,905  37,188 
Provision for taxes  350  1,108  41  61  1,560 
Net income (loss)  32,302  (4,698) (3,820) 11,844  35,628 
Net loss (income) attributable to non-controlling interests  (16,532) 469  418  (6,383) (22,028)
Net (loss) income attributable to common stockholders  $ 15,770  $ (4,229) $ (3,402) $ 5,461  $ 13,600 
Basic and diluted per share amounts attributable to common stockholders 
Basic and diluted (loss) income per share  $ 1.13  $ (0.30) $ (0.24) $ 0.39  $ 0.97 

NOTE 19—SUBSEQUENT EVENTS
Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of September 30, 2018 that warrant additional disclosure have been included in the notes to the consolidated financial statements.
F-32
BRT APARTMENTS CORP. AND SUBSIDIARIES
SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
(Including Real Estate Property Held for Sale)
SEPTEMBER 30, 2018
(Dollars in thousands)
Initial Cost to Company  Costs Capitalized Subsequent to
Acquisition  		Gross Amount At Which Carried at September 30, 2018  Depreciation Life  
Description  Encumbrances  Land  Buildings and Improvements  Land  Improvements  Carrying
Costs  		Land  Buildings and
Improvements  		Total  Accumulated
Depreciation  		Date of
Construction  		Date
Acquired 
Commercial 
Yonkers, NY.  $ 1,329  —  $ 4,000  —  $ 320  —  —  $ 4,320  $ 4,320  $ 1,948  (c) Aug-2000 39 years
South Daytona, FL.  —  $ 10,437  —  $ 49  —  —  $ 8,021  —  8,021  —  N/A Feb-2008 N/A
Multi-Family Residential
North Charleston, SC 16,443  2,436  18,970  —  1,185  —  2,436  20,155  22,591  4,295  2010 Oct-2012 30 years
Decatur, GA 14,837  1,698  8,676  —  1,683  —  1,698  10,359  12,057  2,245  1954 Nov-2012 30 years
Houston, TX (Stonecrossing) 12,410  5,143  11,524  —  493  —  5,143  12,017  17,160  2,397  1978 Apr-2013 30 years
Houston, TX (Stonecrossing East) 7,137  3,044  5,463  —  1,031  —  3,044  6,494  9,538  1,256  1979 Apr-2013 30 years
Huntsville, AL 11,886  1,047  10,942  —  873  —  1,047  11,815  12,862  2,167  1985 Oct-2013 30 years
Columbus, OH 9,741  1,372  12,678  —  493  —  1,372  13,171  14,543  2,463  1999 Nov-2013 30 years
Indianapolis, IN 14,156  4,477  14,240  —  2,749  —  4,477  16,989  21,466  2,966  2007 Jan-2014 30 years
Nashville, TN 22,721  4,565  22,054  —  3,107  —  4,565  25,161  29,726  3,850  1985 Apr-2014 30 years
Houston, TX (Kendall Manor) 14,989  1,849  13,346  —  2,143  —  1,849  15,489  17,338  2,495  1981 July-2014 30 years
Pensacola, FL 18,931  2,758  25,192  —  611  —  2,758  25,803  28,561  3,606  2008 Dec-2014 30 years
San Marcos, TX 17,158  2,163  19,562  —  238  —  2,163  19,800  21,963  2,515  2014 Sept-2015 30 years
Lake St. Louis, MO 26,210  2,752  33,248  —  1,164  —  2,752  34,412  37,164  3,925  1986 Sept-2015 30 years
North Charleston, SC 30,266  5,538  —  —  35,457  318  5,538  35,775  41,313  2,385  2016 Oct-15 30 years
LaGrange, GA 15,103  832  21,968  —  512  —  832  22,480  23,312  2,379  2009 Nov-15 30 years
Katy, TX 30,750  4,194  36,056  —  4,054  —  4,194  40,110  44,304  3,556  2008 Jan-16 30 years
Macon, GA 11,096  1,876  12,649  —  550  —  1,876  13,199  15,075  1,470  1988 Feb-16 30 years
Southaven, MS (Civic Center I) 28,000  2,090  32,910  —  2,224  —  2,090  35,134  37,224  3,472  2002 Feb-16 30 years
San Antonio, TX 26,189  5,540  29,610  —  739  —  5,540  30,349  35,889  3,528  2013 May-16 30 years
Dallas, TX 27,823  13,073  23,927  —  2,758  —  13,073  26,685  39,758  2,594  1986 May-16 30 years
Columbia, SC 12,934  2,233  14,767  —  846  —  2,233  15,613  17,846  1,614  1996 May-16 30 years
Atlanta, GA 27,375  10,347  28,777  —  1,096  —  10,347  29,873  40,220  3,075  1989 Aug-16 30 years
F-33
Initial Cost to Company  Costs Capitalized Subsequent to
Acquisition  		Gross Amount At Which Carried at September 30, 2018  Depreciation Life  
Description  Encumbrances  Land  Buildings and Improvements  Land  Improvements  Carrying
Costs  		Land  Buildings and
Improvements  		Total  Accumulated
Depreciation  		Date of
Construction  		Date
Acquired 
Commercial 
Southaven, MS (Civic Center II) 30,564  2,077  36,128  —  1,208  —  2,077  37,336  39,413  3,473  2005 Sep-16 30 years
San Antonio, TX 27,000  4,620  31,380  —  736  —  4,620  32,116  36,736  3,073  2015 Sep-16 30 years
Fredericksburg, VA 28,869  6,985  32,148  —  1,012  —  6,985  33,160  40,145  2,677  2005 Nov-16 30 years
St. Louis, MO (Tower at OPOP) 20,000  192  27,231  —  133  —  192  27,364  27,556  1,776  2014 Feb-17 30 years
St. Louis, MO (Lofts at OPOP) 6,197  329  7,805  —  102  —  329  7,907  8,236  656  2014 Feb-17 30 years
Creve Coeur, MO 29,000  2,270  37,899  —  123  —  2,270  38,022  40,292  2352  2016 Apr-17 30 years
West Nashville, TN 18,657  5,228  5,220  179  33,430  —  5,407  38,650  44,057  —  2017 June-17 30 years
Farmers Branch, TX 55,200  7,343  79,347  —  80  —  7,343  79,427  86,770  4,834  2016 June-17 30 years
Tallahassee, FL 21,524  3,553  24,372  —  1,608  —  3,553  25,980  29,533  1,461  1996 Aug-17 30 years
Madison, AL 15,000  1,936  16,731  —  1,076  —  1,936  17,807  19,743  811  1991 Dec-17 30 years
Boerne, TX 9,200  1,393  10,851  —  319  —  1,393  11,170  12,563  631  2007 Dec-17 30 years
Ocoee, FL 53,060  16,754  55,641  —  3,197  —  16,754  58,838  75,592  2,494  1996 Feb-18 30 years
Lawrenceville, GA 54,447  17,199  60,797  —  4,437  —  17,199  65,234  82,433  2,578  1997 Feb-18 30 years
Daytona Beach, FL 13,608  3,501  17,385  —  480  —  3,501  17,865  21,366  498  1996 Apr-18 30 years
Grand Prairie, TX 18,995  3,255  27,954  —  16  —  3,255  27,970  31,225  594  2001 May-18 30 years
Total $ 798,805  $ 166,099  $ 871,448  $ 228  $ 112,283  $ 318  $ 163,862  $ 984,049  $ 1,147,911  $ 88,109 

F-34
BRT REALTY TRUST AND SUBSIDIARIES
SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
(Including Real Estate Property Held for Sale)
SEPTEMBER 30, 2018 
(Dollars in thousands)
Notes to the schedule:
(a)  Total real estate properties  $ 1,147,911 
Less: Accumulated depreciation and amortization
(88,109)
Net real estate properties  $ 1,059,802 
(b)  Amortization of the Company's leasehold interests is over the shorter of estimated useful life or the term of the respective land lease. 
(c)  Information not readily obtainable. 
A reconciliation of real estate properties is as follows:
2018 2017 2016
Balance at beginning of year  $ 911,250  $ 793,572  $ 757,027 
Additions: 
Acquisitions  233,400  239,923  318,680 
Capital improvements  24,443  9,298  19,649 
Capitalized development expenses and carrying costs  33,609  16,069  27,194 
291,452  265,290  365,523 
Deductions: 
Sales  103,654  113,552  150,786 
Depreciation/amortization/paydowns  38,504  30,489  24,328 
Other dispositions  742  3,571  — 
Reconciliation of partnership interest  —  —  153,864 
142,900  147,612  328,978 
Balance at end of year  $ 1,059,802  $ 911,250  $ 793,572 

F-35
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