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BRT Apartments (BRT) Completes Buyout, Divests Property

BRT Apartments Corp. BRT recently announced that it had acquired 20% of the remaining interest held by its joint venture (JV) partner in the entity that owns Grove at River Place located in Macon, GA. The transaction was sealed at $7.5 million. The move comes as part of the company’s effort to boost its wholly owned portfolio in thriving Sunbelt markets.

Shares of this residential real estate investment trust (REIT) appreciated 2.37% in the Jul 1 trading session following the announcement.

As a result, BRT will add roughly $10.4 million of the property’s current mortgage debt to its consolidated balance sheet. The interest rate on this mortgage debt is 4.39%, with a remaining term to maturity of 3.6 years.

In addition, the unconsolidated JV, in which BRT Apartments holds 65% equity interest, has closed in on the earlier announced sale of The Vive, which is a multi-family property located in Kannapolis, NC. The transaction was completed for $91.3 million.

The sale of this property generated net proceeds of around $30.2 million for BRT. It is estimated that the company will lock in a gain on the sale of this property of approximately $21.5 million after considering $745,000 toward the mortgage prepayment charge by the end of the second quarter of 2022.

Moreover, the mortgage debt for this property as of Mar 31, 2022, was $31.6 million and the remaining term to maturity for the same was 30 years. It bore an interest rate of 3.52%.

Management anticipates that the net proceeds will be utilized for buyouts of partners’ interests in certain joint venture properties, repaying debt and general corporate and working capital purposes.

Per Jeffrey A. Gould, CEO and president of BRT Apartments, “We are very pleased with our purchase of the remaining 20% in Grove at River Place, furthering our strategic efforts to grow our wholly owned portfolio of high quality assets in vibrant sunbelt markets. Additionally, the closing of the sale of The Vive demonstrates our continued ability to extract significant value from our portfolio, enhance the flexibility of our capital structure, and put us in a position to grow our portfolio over the long term.”

BRT witnessed strong first-quarter performance aided by job growth and a lower supply of quality housing across many of its markets amid the economic recovery. It recorded same-store property net operating income of 15.9% across its portfolio.

Additionally, to optimize and expand its portfolio, it engages in various buyouts of partners’ interests and disposes of older properties to unlock their value. From the beginning of the year through March 2022, it has either closed or announced acquisitions of its partners’ interests in 11 properties for roughly $102.1 million and has sold or announced plans to dispose of three joint venture properties for $214.3 million.

Analysts seem bullish on this Zacks Rank #1 (Strong Buy) stock. The estimate revisions trend for 2022 funds from operations (FFO) per share indicates a favorable outlook for the company as it has increased 18.5% over the past two months to $1.54.

Shares of BRT have lost 7.7% in the past three months compared with the industry’s decline of 17.9%.

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Zacks Investment Research

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Other Stocks to Consider

Some other top-ranked stocks from the REIT sector are MidAmerica Apartment Communities MAA, Camden Property Trust CPT and Independence Realty Trust IRT, each sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MidAmerica Apartment Communities’ 2022 FFO per share has moved 1.9% upward in the past two months to $8.22.

The Zacks Consensus Estimate for Camden Property Trust’s current-year FFO per share has moved approximately 1% northward in the past two months to $6.52.

The Zacks Consensus Estimate for Independence Realty Trust’s ongoing year’s FFO per share has been raised 2.9% over the past two months to $1.07.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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