BRT Apartments Corp (BRT) 2023 Q4 法說會逐字稿

Good day and welcome to BRT Apartments Corp's fourth-quarter and year-end earnings conference call. Today's conference is being recorded. (Operator Instructions)

美好的一天，歡迎參加 BRT 公寓公司第四季和年終收益電話會議。今天的會議正在錄製中。（操作員說明）

At this time, I would like to turn the floor over to Tripp Sullivan of Investor Relations. Thank you. You may begin.

現在，我想請投資人關係部門的 Tripp Sullivan 發言。謝謝。你可以開始了。

Thank you for joining us today. On the call are Jeffrey Gould, President and Chief Executive Officer; George Zweier, Chief Financial Officer; Ryan Baltimore, Chief Operating Officer; as well as David Kalish, Senior Vice President.

感謝您今天加入我們。總裁兼執行長 Jeffrey Gould 出席了電話會議；喬治‧茲韋爾 (George Zweier)，財務長；瑞安·巴爾的摩，營運長；以及資深副總裁戴維·卡利甚 (David Kalish)。

I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs. Listeners should not place undue reliance on any forward-looking statement and are encouraged to review the company's SEC filings, including its Form 10-K, for a more complete discussion of risk and other factors that could affect these forward-looking statements. Except as required by law, BRT does not undertake any obligation to publicly update or revise any forward-looking statements.

我想提醒大家，本次電話會議包含 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述，這些陳述是基於管理層當前的預期、假設和信念。聽眾不應過度依賴任何前瞻性聲明，並鼓勵聽眾查看公司向 SEC 提交的文件，包括其 10-K 表格，以更完整地討論可能影響這些前瞻性聲明的風險和其他因素。除法律要求外，BRT 不承擔公開更新或修改任何前瞻性聲明的義務。

This call also includes a discussion of non-GAAP measures, including FFO, AFFO, NOI, combined portfolio NOI, and information regarding our prorated share of revenues, expenses, NOI, assets, and liabilities of BRT's unconsolidated subsidiaries. All the non-GAAP information discussed today has certain limitations and should be used with caution and in conjunction with the GAAP data presented in our supplemental earnings release and in our reports filed with the SEC. Please see these reports and filings for the definitions of each non-GAAP measure.

本次電話會議也討論了非 GAAP 指標，包括 FFO、AFFO、NOI、合併投資組合 NOI，以及有關我們按比例分配 BRT 未合併子公司的收入、費用、NOI、資產和負債的資訊。今天討論的所有非 GAAP 資訊都有一定的局限性，應謹慎使用，並與我們的補充收益發布和向 SEC 提交的報告中提供的 GAAP 數據結合。請參閱這些報告和備案文件，以了解每項非公認會計準則衡量標準的定義。

As a reminder, the company's supplemental information and earnings release have been posted on the Investor Relations section of BRT's website at www.brtapartments.com.

謹此提醒，該公司的補充資訊和收益發布已發佈在 BRT 網站 www.brtapartments.com 的投資者關係部分。

I'd now like to turn the call over to President and CEO Jeffrey Gould. Please go ahead, Jeff.

我現在想將電話轉給總裁兼執行長傑弗裡·古爾德。請繼續，傑夫。

Good morning. We're approaching the end of the Q4 earnings cycle, and the commentary we've all heard this quarter has focused on rental rates, transaction activity, expenses, and the impact of new supply in the Sun Belt. We'll be very brief with our commentary today, so we can drill down into those topics in Q&A.

早安.我們即將進入第四季度獲利週期的尾聲，本季我們聽到的評論都集中在租金率、交易活動、費用以及陽光地帶新供應的影響。我們今天的評論將非常簡短，因此我們可以在問答中深入探討這些主題。

To quickly summarize 2023, I want to highlight the ongoing simplification of the business that we started in 2021 by taking full ownership of a majority of our properties, the improvement in our balance sheet, and the disciplined approach to our capital allocation. We do not have any significant mortgage debt maturities until early 2026, and pulling back on acquisitions the past year and investing disposition proceeds to repurchase $16.7 million of shares during the year and to date in 2024 were the right decisions.

為了快速總結 2023 年，我想強調我們在 2021 年開始的業務的持續簡化，透過完全擁有我們的大部分財產、改善我們的資產負債表以及嚴格的資本配置方法。直到 2026 年初，我們才會有任何重大抵押貸款債務到期，因此，在這一年和 2024 年迄今為止，撤回去年的收購併投資處置收益以回購 1,670 萬美元的股票是正確的決定。

We made it a priority to focus on property operations and look to maximize portfolio performance where possible. It made for a relatively quiet year, but an important one nonetheless.

我們將重點放在房地產營運上，並盡可能提高投資組合績效。這是相對平靜的一年，但仍然是重要的一年。

While we're not providing specific earning targets, the 2024 outlook we provided in our earnings release last night outlines our views on portfolio operations, transactions, and other moving parts of the P&L. The big takeaways are that operational environment we're anticipating this year is much like other operators. New supply is expected to impact the ability to grow rents, there will be continued pressure on occupancy, and the ongoing inflationary headwinds are expected to impact operating margins. We intend to prioritize stabilizing occupancy this year with a view to being more constructive on potential transaction activity later in the year.

雖然我們沒有提供具體的獲利目標，但我們在昨晚的財報中提供的 2024 年展望概述了我們對投資組合營運、交易和損益表其他變動部分的看法。最重要的一點是，我們預計今年的營運環境與其他業者非常相似。新的供應預計將影響租金成長的能力，入住率將持續面臨壓力，而持續的通膨阻力預計將影響營業利潤率。我們打算今年優先考慮穩定入住率，以便對今年稍後的潛在交易活動更具建設性。

Long-term, we're in the right region in the Sun Belt. We will be aggressive in how we manage the portfolio during what we anticipate will be a challenging 2024, but we will remain very patient on asset growth. We believe this strikes the right balance to position us for better growth in 2025 and '26.

從長遠來看，我們正處於陽光地帶的正確區域。在我們預計充滿挑戰的 2024 年，我們將積極管理投資組合，但我們將對資產成長保持非常耐心。我們相信，這達到了適當的平衡，使我們能夠在 2025 年和 26 年實現更好的成長。

Operator, will you please open the call to questions?

接線生，請您打開電話提問好嗎？

(Operator Instructions) Michael Gorman, BTIG.

（操作員說明）Michael Gorman，BTIG。

Jeff, I was wondering if you could just drill down a little bit in terms of, obviously, you spoke about the operating environment in those markets, and we certainly have heard a lot about that. Can you talk about what that's leading to on the investment side, on the transaction side, what you're seeing there, and specifically kind of how you're thinking about balancing additional share repurchases versus the kind of opportunities that may or may not be in the market today?

傑夫，我想知道您是否可以深入了解一下，顯然，您談到了這些市場的營運環境，我們當然已經聽到了很多相關內容。您能否談談這在投資方面、交易方面會導致什麼，您在那裡看到了什麼，特別是您如何考慮平衡額外的股票回購與可能會或可能不會發生的機會。今天在市場上嗎？

Yeah, sure. Good morning. So, as far as the transactional environment, things are, as I've said before, but things are very, very quiet. The reality is that continually with cap rates being somewhere in the mid-5s, call it, and interest rates higher than that, and the negative leverage, it is very difficult for people to get too excited about purchases.

好，當然。早安.因此，就交易環境而言，正如我之前所說，事情是這樣的，但事情非常非常安靜。現實情況是，資本化率一直在 5 左右，利率高於這個水平，加上負槓桿，人們很難對購買感到太興奮。

Even transactional volume, just deals that we're seeing, are extremely, extremely slow. It's really just basically a hold market right now. I think sellers are looking to hopefully have interest rates drop, so cap rates will drop, and they can sell at a better time. There's not a lot of pressure and a lot of issues with defaults right now in multifamily as in other sectors, so volume-wise, it's pretty quiet.

即使是交易量，只是我們看到的交易，也非常非常緩慢。現在基本上只是一個持有市場。我認為賣家希望利率下降，這樣資本化率就會下降，他們可以在更好的時機出售。與其他行業一樣，目前多戶住宅並沒有太大的壓力和許多違約問題，因此從數量上看，它相當安靜。

On the share repurchase side, we were pretty active. We always have to check our cash balances and see where we are in our borrowing base and see if it makes sense at the right time based on the right price and our cost of capital to see if we want to buy shares back, but we were pleased that we did and were able to do that, even though the stock dropped a little bit since then. We're very comfortable with those purchases.

在股票回購方面，我們非常活躍。我們總是必須檢查我們的現金餘額，看看我們的借貸基礎處於什麼位置，並根據正確的價格和我們的資本成本，在正確的時間看看是否有意義，看看我們是否想回購股票，但我們很高興我們做到了並且能夠做到這一點，儘管此後股價略有下跌。我們對這些購買感到非常滿意。

But generally, what's happening in the market is it's very simple. There's some overbuilding in some of our markets, fortunately not many of our markets, but some of our markets, leading to a fight for occupancy and push on rents. The conversation that we've seen about 2024 being a rough year on growth I think is accurate. I think once these units get absorbed, I think 25, '26 are much brighter days because there's very little in the permitting process. It's going to be a sticky '24 and a difficult '24, but we have our heads down and we're working hard to keep occupancy and keep our rents, both through leases and renewals.

但總的來說，市場上發生的事情非常簡單。我們的一些市場存在過度建設的情況，幸運的是，不是我們的許多市場，而是我們的一些市場，導致了爭奪入住和推高租金的情況。我們所看到的關於 2024 年是增長艱難的一年的說法我認為是準確的。我認為一旦這些單位被吸收，我認為 25、26 年是光明得多的日子，因為許可過程中幾乎沒有什麼。這將是一個棘手且困難的 24 年，但我們會低著頭，努力透過租賃和續約來保持入住率和租金。

That's helpful, thanks. On the share repurchases, as you think about it, obviously you touched on a couple of issues there. Do you give any consideration to the liquidity in the stock and how do you think about that in terms of the shareholder base when you think about share repurchases and the scale of share repurchases over time?

這很有幫助，謝謝。關於股票回購，正如您所思考的那樣，顯然您提到了幾個問題。您是否考慮過股票的流動性？當您考慮股票回購以及一段時間內股票回購的規模時，您如何看待股東基礎？

Yeah, it's a fair question. We have a significant percentage owned by what you call insiders and also the reality is the float, whether we buy or not, is pretty minimal. Most investors are in this for the longer haul with us and obviously management has their money where their mouth is and we have quite a large interest in this stock.

是的，這是一個公平的問題。我們有很大一部分股份由所謂的內部人士持有，而且現實是，無論我們是否購買，流通量都非常小。大多數投資者都與我們一起長期投資，顯然管理層有他們的錢，我們對這隻股票有很大的興趣。

We don't think it makes a tremendous difference on liquidity one way or the other. We're not talking about a huge amount of share repurchase, but at the same time, we understand it doesn't help it, but we still think the investment is probably the best investment we can make as compared to other alternatives and long-term, we think it's something that's going to be smart for us just based on our valuations and where we see the future of the company.

我們認為這不會對流動性產生巨大影響。我們並不是談論大量的股票回購，但同時，我們知道這並沒有幫助，但我們仍然認為，與其他替代方案和長期投資相比，這項投資可能是我們能做出的最佳投資。從長遠來看，我們認為，根據我們的估值和我們對公司未來的看法，這對我們來說是明智之舉。

That's great. And then just last one for me on Stono Oaks, can you maybe just get a little bit of color there on the lease up, how you see that trending and maybe how that maybe varies from where you initially underwrote it, obviously long-term, probably still a great asset, but just a little bit more color on how that kind of plays out over '24 and '25.

那太棒了。然後是我在斯托諾橡樹 (Stono Oaks) 上的最後一個，你能不能在租約上了解一下，你如何看待這種趨勢，也許它與你最初承保的地方有什麼不同，顯然是長期的，可能仍然是一項偉大的資產，但只是對這種情況在24 年和25 年的表現有更多的了解。

Yeah, going well is the general answer, a partner that we've done many development transactions with before. We had a slight hiccup that one of the buildings was actually -- there was an arson of one of the buildings, but basically that was resolved and it slowed us down on one building for about three or four months, but property units are online now, renting has already started, it's on time on budget as we expected, and it's a great market still. So there is some supply there, but not a huge oversupply, and I think we'll do well with the rent up and the lease up, and I think it'll be a good long-term project for us.

是的，進展順利是普遍的答案，我們之前與該合作夥伴進行過許多開發交易。我們遇到了一個小問題，其中一棟建築實際上是——其中一棟建築被縱火了，但基本上這個問題已經解決了，這讓我們在一棟建築上的進度慢了大約三四個月，但房產單位現在已經上線了，租賃已經開始，正如我們預期的那樣按時完成預算，而且這仍然是一個很大的市場。因此，那裡有一些供應，但不會出現巨大的供應過剩，我認為我們會在租金和租賃方面做得很好，我認為這對我們來說將是一個很好的長期項目。

Great. Thanks for your time.

偉大的。謝謝你的時間。

Barry Oxford, Colliers.

巴里牛津，高力國際。

Just to kind of build on the acquisition question, Jeff, given your cost of capital, where would cap rates sort of need to kind of level out to kind of get you interested to come back into the market? Obviously, at 5.5%, you could arguably say sellers probably are a little unrealistic at that level, but at what level would you say, okay, Barry, at this level, I feel good about coming back into the market where cap rates?

傑夫，在收購問題的基礎上，考慮到你的資本成本，資本化率需要在哪裡趨於平穩，才能讓你有興趣重返市場？顯然，在5.5% 的水平上，你可以說賣家在這個水平上可能有點不切實際，但你會說在什麼水平上，好吧，巴里，在這個水平上，我對回到上限利率市場感覺良好？

Well, Barry, it's sort of twofold. It's the cap rates, but it's also the interest rates. So where we're seeing neutral, let's call it neutral leverage, I think that's about where we play the game. So if you're talking about an interest rate market of 5.5% and cap rates of 5.5%, that might be something more interesting to us.

嗯，巴里，這是雙重的。這是上限利率，但也是利率。因此，我們看到中性的，讓我們稱之為中性槓桿，我認為這就是我們玩遊戲的地方。因此，如果您談論的是 5.5% 的利率市場和 5.5% 的上限利率，這對我們來說可能會更有趣。

We've been very patient in the last couple of years. It's been frustrating, and we think it's been prudent and smart to be patient. And looking back, I'm glad we didn't buy anything over the last year or two. A lot of investors were targeting and projecting some pretty substantial rent growth, and it's not there at all. As a matter of fact, it's not even close to what they anticipated.

過去幾年我們一直非常有耐心。這令人沮喪，但我們認為保持耐心是謹慎和明智的做法。回想起來，我很高興我們在過去的一兩年裡沒有買任何東西。許多投資者的目標和預測是租金大幅成長，但實際情況根本不存在。事實上，這與他們的預期相差甚遠。

But I think realistically, I think when it gets to about a neutral and when things calm down and the 10-year is not jumping all over the place as it is week-to-week now, I think we'll be in a much better place to consider acquisitions for value-added properties as well as even more stabilized situations.

但我認為現實的是，我認為當事情達到中性時，當事情平靜下來並且10年期不會像現在每週那樣跳躍時，我認為我們將處於一個非常好的境地。更好的地方來考慮收購加值財產以及更穩定的情況。

Now, that makes sense. And then on the unconsolidated partners, are there any partners that are looking to monetize their position and can buy them out? Or no, not right now. Nobody's really thrown their hand up.

現在，這是有道理的。那麼對於未合併的合作夥伴，是否有任何合作夥伴希望將其頭寸貨幣化並可以收購它們？或者不，不是現在。沒有人真正舉手。

Yeah. Things have been pretty quiet. As we said to you guys, maybe to everyone, about a year or two ago, we took care of the ones that were sort of the lower-hanging fruit, if you will, and the partners that we have now. I think there'll be an event when the maturities take place, and the maturities on those partnership deals are typically happening between, like, '27 and '29, somewhere in that range.

是的。事情一直很平靜。正如我們對你們（也許對每個人）所說的那樣，大約一兩年前，我們照顧了那些比較容易實現的目標（如果你願意的話）以及我們現在擁有的合作夥伴。我認為到期日將會發生，而這些合作夥伴交易的到期日通常發生在 27 年和 29 年之間，在這個範圍內的某個時間。

It may happen sooner, but I think the maturity event will cause a discussion and an outcome, whether it's we buy them, we sell, they buy us. I'm not sure what the outcome will be. But it's probably more targeted towards the maturities, and you have that information. So I expect it'll be quiet for the next year or two, and then things will ramp up on most of the rest of the partnership deals. So there will be an event that will take place at that time.

它可能會發生得更早，但我認為成熟事件將引起討論和結果，無論是我們買他們，我們賣，他們買我們。我不確定結果會是什麼。但它可能更針對到期日，而且您已經掌握了這些資訊。因此，我預計未來一兩年內會很平靜，然後其餘大部分合作夥伴交易的情況將會增加。所以到時候會有一個事件發生。

Great. Thanks for the color on that. The last question, you indicated there's definitely some supply coming on. Is there demand for that supply? What I'm driving at is, is there brisk net absorption to say, hey, look, as we get towards the end of '24, most of the supply should be leased up, or, Jeff, are you of the mind that, like, Barry, this could be more kind of, you know, a more longer process in lease up that could bleed into '25?

偉大的。謝謝你的顏色。最後一個問題，您表示肯定會有一些供應。對該供應有需求嗎？我的意思是，是否有活躍的淨吸收說，嘿，看，當我們接近 24 年底時，大部分供應應該被出租，或者，傑夫，你認為，就像，巴里，這可能是一個更長的租賃過程，可能持續到25 年？

Combination answer. We went into some markets that, in your wildest dreams, you probably wouldn't imagine to oversupply, and now we're seeing it. Huntsville, Alabama, example, Pensacola, Florida. I mean, the typical markets, Nashville, Dallas, you might have expected it. We're comfortable in all these markets, and again, fortunately, a larger part of our portfolio does not have oversupply issues, but where we do, we're comfortable that the in-migration and the absorption will be good.

組合答案。我們進入了一些市場，在你最瘋狂的夢想中，你可能不會想像供應過剩，現在我們看到了。例如，阿拉巴馬州亨茨維爾和佛羅裡達州彭薩科拉。我的意思是，典型的市場，納許維爾，達拉斯，你可能已經預料到了。我們對所有這些市場都很滿意，幸運的是，我們的投資組合的很大一部分沒有出現供應過剩問題，但在我們遇到供應過剩問題的地方，我們感到滿意的是，流入和吸收都會很好。

I do think it may go on past '24, and I think it may take longer than just, you know, the calendar '25 -- into '25, but I do think there's net absorption, and these will get filled up, and I think we'll see much better days early in '25, I'm not sure right away, but early towards the first, second quarter of '25.

我確實認為它可能會持續到 24 年後，而且我認為這可能需要比日曆 25 更長的時間 - 進入 25，但我確實認為有淨吸收，這些將被填滿，並且我認為我們會在25年初看到更好的日子，我不確定立即，但在25 年第一、第二季早期。

Great. Thanks. Thanks a lot, Jeff.

偉大的。謝謝。非常感謝，傑夫。

This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Gould for any closing remarks.

我們的問答環節到此結束。我想將會議轉回傑夫古爾德發表閉幕詞。

Well, thank you all for your continued confidence in BRT, and have a good day. If you have any questions that you need to talk with us about, please feel free to call Ryan Baltimore or myself. Thank you.

好的，感謝大家對 BRT 的持續信任，祝您有美好的一天。如果您有任何問題需要與我們討論，請隨時致電 Ryan Baltimore 或我本人。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。