10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

ý      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2019

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	13-2755856
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

60 Cutter Mill Road, Great Neck, NY	11021
(Address of principal executive offices)	(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	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BRT	NYSE

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 Date File required to be submitted pursuant to Rule 405 of Regulations 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See definition 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 accounting standards provided pursuant to Section 13(a) of the Exchange Act o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No ý

Indicate the number of shares outstanding of each of the issuer’s classes of stock, as of the latest practicable date.

15,900,395 Shares of Common Stock,

par value $0.01 per share, outstanding on May 6, 2019

BRT APARTMENTS CORP. AND SUBSIDIARIES

Table of Contents

Part I - Financial Information		Page No.
Item 1.	Financial Statements
	Consolidated Balance Sheets - March 31, 2019 (unaudited) and December 31, 2018 (unaudited)	2
	Consolidated Statements of Operations – Three months ended March 31, 2019 and 2018 (unaudited)	3
	Consolidated Statements of Comprehensive Income – Three months ended March 31, 2019 and 2018 (unaudited)	4
	Consolidated Statement of Equity – Three months ended March 31, 2019 and 2018 (unaudited)	5
	Consolidated Statements of Cash Flows – Three months ended March 31, 2019 and 2018 (unaudited)	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	26
Item 4.	Controls and Procedures	26
Part II – Other Information
Item 6.	Exhibits	27

1

Part I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

BRT APARTMENTS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in thousands, except per share data)

	March 31, 2019		December 31, 2018
ASSETS
Real estate properties, net of accumulated depreciation and amortization of $101,332 and $91,715	$	1,077,326	$	1,029,239
Real estate loan	4,600		4,750
Cash and cash equivalents	21,062		32,428
Restricted cash	7,813		8,180
Deposits and escrows	14,902		21,268
Investments in unconsolidated joint ventures	19,125		19,758
Other assets	9,087		8,084
Total Assets (a)	$	1,153,915	$	1,123,707
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net of deferred costs of $6,100 and $6,289	$	808,729	$	771,817
Junior subordinated notes, net of deferred costs of $352 and $357	37,048		37,043
Accounts payable and accrued liabilities	22,620		24,487
Total Liabilities (a)	868,397		833,347
Commitments and contingencies
Equity:
BRT Apartments Corp. stockholders' equity:
Preferred shares $.01 par value 2,000 shares authorized, none outstanding	—		—
Common stock, $.01 par value, 300,000 shares authorized;
15,175 and 15,038 shares outstanding	152		150
Additional paid-in capital	217,344		216,981
Accumulated other comprehensive income	1,082		1,688
Accumulated deficit	(27,512)		(20,044)
Total BRT Apartments Corp. stockholders’ equity	191,066		198,775
Non-controlling interests	94,452		91,585
Total Equity	285,518		290,360
Total Liabilities and Equity	$	1,153,915	$	1,123,707

(a) The Company's consolidated balance sheets include the assets and liabilities of consolidated variable interest entities (VIEs). See note 6. The consolidated balance sheets include the following amounts related to the Company's VIEs as of March 31, 2019 and December 31, 2018, respectively: $635,457 and $584,074 of real estate properties, $6,859 and $5,207 of cash and cash equivalents, $7,419 and $11,705 of deposits and escrows, $5,649 and $6,302 of other assets,  $484,232 and $446,779 of mortgages payable, net of deferred costs and $9,482 and $11,816 of accounts payable and accrued liabilities.

See accompanying notes to consolidated financial statements.

2

BRT APARTMENTS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands)

	Three Months Ended March 31,
	2019		2018
Revenues:
Rental revenue	$	30,702	$	29,476
Other income	244		175
Total revenues	30,946		29,651
Expenses:
Real estate operating expenses - including $927 and $836 to related parties	14,814		14,198
Interest expense	8,769		8,657
General and administrative - including $142 and $146 to related parties	2,544		2,453
Depreciation	9,617		9,240
Total expenses	35,744		34,548
Total revenues less total expenses	(4,798)		(4,897)
Equity in loss of unconsolidated joint ventures	(223)		(63)
Gain on sale of real estate	—		51,981
Gain on insurance recoveries	—		3,227
Loss on extinguishment of debt	—		(593)
(Loss) income from continuing operations	(5,021)		49,655
Income tax provision (benefit)	62		(253)
Net (loss) income from continuing operations, net of taxes	(5,083)		49,908
Net loss (income) attributable to non-controlling interests	836		(24,686)
Net (loss) income attributable to common stockholders	$	(4,247)	$	25,222
Weighted average number of shares of common stock outstanding:
Basic	15,886,493		14,242,076
Diluted	15,886,493		14,442,076
Per share amounts attributable to common stockholders:
Basic	$	(0.27)	$	1.77
Diluted	$	(0.27)	$	1.75

See accompanying notes to consolidated financial statements.

3

BRT APARTMENTS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(Dollars in thousands) 

	Three Months Ended March 31,
	2019		2018
Net (loss) income	$	(5,083)	$	49,908
Other comprehensive (loss) income:
Unrealized (loss) gain on derivative instruments	(869)		1,132
Other comprehensive (loss) income	(869)		1,132
Comprehensive (loss) income	(5,952)		51,040
Comprehensive loss (income) attributable to non-controlling interests	1,100		(25,032)
Comprehensive (loss) income attributable to common stockholders	$	(4,852)	$	26,008

See accompanying notes to consolidated financial statements.

4

 BRT APARTMENTS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

 (Unaudited)

(Dollars in thousands, except per share data)

	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Non- Controlling Interest		Total
Balances, December 31, 2017	$	133	$	202,225	$	1,346	$	(33,292)	$	72,935	$	243,347
Distributions - common stock - $0.20 per share	—		—		—		(2,897)		—		(2,897)
Restricted stock vesting	1		(1)		—		—		—		—
Compensation expense - restricted stock and restricted stock units	—		297		—		—		—		297
Consolidation of investment in limited partnership	—		—		—		—		12,370		12,370
Contributions from non-controlling interests	—		—		—		—		18,088		18,088
Distributions to non-controlling interests	—		—		—		—		(32,020)		(32,020)
Purchase of non-controlling interest	—		(82)		—		—		(168)		(250)
Shares issued through equity offering program, net	2		1,399		—		—		—		1,401
Net income	—		—		—		25,222		24,686		49,908
Other comprehensive income	—		—		786		—		346		1,132
Comprehensive income											51,040
Balances, March 31, 2018	$	136	$	203,838	$	2,132	$	(10,967)	$	96,237	$	291,376
Balances, December 31, 2018	$	150	$	216,981	$	1,688	$	(20,044)	$	91,585	$	290,360
Distributions - common stock - $0.20 per share	—		—		—		(3,221)				(3,221)
Restricted stock vesting	2		(2)		—		—		—		—
Compensation expense - restricted stock and restricted stock units	—		365		—		—		—		365
Contributions from non-controlling interests	—		—		—		—		264		264
Consolidation of investment in limited partnership	—		—		—		—		6,047		6,047
Distributions to non-controlling interests	—		—		—		—		(2,345)		(2,345)
Net income	—		—		—		(4,247)		(836)		(5,083)
Other comprehensive income	—		—		(606)		—		(263)		(869)
Comprehensive income											(5,952)
Balances, March 31, 2019	$	152	$	217,344	$	1,082	$	(27,512)	$	94,452	$	285,518

  See accompanying notes to consolidated financial statements.

5

BRT APARTMENTS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in Thousands)

	Three Months Ended March 31,
	2019		2018
Cash flows from operating activities:
Net (loss) income	$	(5,083)	$	49,908
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	9,617		9,240
Amortization of deferred financing costs	379		378
Amortization of restricted stock and restricted stock units	365		298
Equity in loss of unconsolidated joint ventures	223		63
Gain on sale of real estate	—		(51,981)
Gain on insurance recovery	—		(3,227)
Loss on extinguishment of debt	—		593
Increases and decreases from changes in other assets and liabilities:
Decrease in deposits and escrows	7,062		3,536
(Increase) decrease in other assets	(1,757)		6,300
Decrease in accounts payable and accrued liabilities	(2,314)		(3,499)
Net cash provided by operating activities	8,492		11,609
Cash flows from investing activities:
Collections from real estate loan	150		150
Additions to real estate properties	(6,903)		(88,991)
Improvements to real estate properties	(2,177)		(3,637)
Investment in joint venture	(11,231)		(12,370)
Purchase of non-controlling interests	—		(250)
Consolidation of investment in joint venture	1,458		1,279
Net proceeds from the sale of real estate properties	—		146,901
Distributions from unconsolidated joint ventures	484		207
Net cash (used in) provided by investing activities	(18,219)		43,289
Cash flows from financing activities:
Proceeds from mortgages payable	13,880		54,475
Mortgage payoffs	(9,200)		(75,437)
Mortgage principal payments	(1,304)		(1,197)
Increase in deferred financing costs	(120)		(437)
Dividends paid	(3,181)		(2,856)
Contributions from non-controlling interests	264		18,088
Distributions to non-controlling interests	(2,345)		(32,020)
Proceeds from the sale of common stock	—		1,401
Net cash used in financing activities	(2,006)		(37,983)
Net (decrease) increase in cash, cash equivalents and restricted cash	(11,733)		16,915
Cash, cash equivalents and restricted cash at beginning of period	40,608		21,761
Cash, cash equivalents and restricted cash at end of period	$	28,875	$	38,676

6

BRT APARTMENTS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(Unaudited)

(Dollars in Thousands)

	Three Months Ended March 31,
	2019		2018
Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of capitalized interest of $391 and $0, respectively	$	8,769	$	8,254
Taxes paid	$	10	14
Consolidation of investment in joint venture:
Increase in real estate assets	$	(48,624)	$	(72,395)
Increase in deposits and escrows	(696)		(3,561)
Increase in other assets	(189)		(20)
Increase in mortgage payable	33,347		53,060
Increase in deferred financing costs	(65)		(657)
Increase in accounts payable and accrued liabilities	407		112
Increase in non controlling interest	6,047		12,370
Decrease in investment in joint venture	11,231		12,370
Increase in cash upon consolidation of joint venture	$	1,458	$	1,279

See accompanying notes to consolidated financial statements.

7

BRT APARTMENTS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2019

Note 1 – Organization and Background

BRT Apartments Corp. (the "Company"), a Maryland corporation, owns, operates and develops multi-family properties. The Company conducts its operations to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

Generally, the multi-family properties are acquired with joint venture partners in transactions in which the Company contributes a significant portion of the equity. At March 31, 2019, the Company owns: (a) 36 multi-family properties with 10,008 units (including 402 units at a property that commenced leasing activities in the current quarter), located in 12 states with a carrying value of $1,066,988,000; and (b) interests in three unconsolidated multi-family joint ventures with 1,026 units (including 339 units in lease-up) located in two states with a carrying value of $19,125,000.

Note 2 – Basis of Preparation

The accompanying interim unaudited consolidated financial statements as of March 31, 2019, and for the three months ended March 31, 2019 and 2018, reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the results for the full year. The consolidated unaudited balance sheet as of December 31, 2018, has been derived from the unaudited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States ("GAAP").  Accordingly, these unaudited statements should be read in conjunction with the Company's audited financial statements included in its Annual Report on Form 10-K for the year ended September 30, 2018, filed with the Securities and Exchange Commission ("SEC") on December 10, 2018, for complete financial statements. 

The consolidated financial statements include the accounts and operations of the Company, its wholly owned subsidiaries, and its majority owned or controlled real estate entities and its interests in variable interest entities ("VIEs") in which the Company is determined to be 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 in the applicable joint venture entity 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 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 that could potentially be significant to the VIE.

The joint ventures that own properties in Ocoee, FL, Lawrenceville, GA, Dallas, TX, Farmers Branch, TX and Grand Prairie, TX were determined not to be a VIEs 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 has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

The distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro-rata to the percentage equity interest each partner has in the applicable venture.  

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. Actual results could differ from those estimates. 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.

In February 2019, the Board of Directors of the Company authorized a change in the Company’s fiscal year end from September 30 to December 31. The change is intended to better align the Company’s fiscal year with the fiscal year of other multi-family REITs. As a result of the change in fiscal year, (i) the Company’s 2019 fiscal year began on January 1, 2019 and

8

ends on December 31, 2019 and (ii) the Company filed a Transition Report on Form 10-Q (a "Transition Report") covering the transition period from October 1, 2018 to December 31, 2018.

Note 3 - Equity

Equity Distribution Agreements

In January 2018, the Company entered into equity distribution agreements, which were amended in May 2018, with three sales agents to sell up to an aggregate of $30,000,000 of its common stock from time-to-time in an at-the-market offering. During the quarter ended March 31, 2019, the Company did not sell any shares. Since the commencement of the at-the-market offering program through March 31, 2019, the Company sold 1,590,935 shares for an aggregate sales price of $20,913,000.

Common Stock Dividend Distribution

The Company declared a quarterly cash distribution of $0.20 per share, payable on April 5, 2019 to stockholders of record on March 26, 2019.

Stock Based Compensation 

The Company's 2018 Incentive Plan (the "2018 Plan") permits the Company to grant: (i) stock options, restricted stock, restricted stock units, performance share awards and any one or more of the foregoing, up to a maximum of 600,000 shares; and (ii) cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards.

Restricted Stock Units

In June 2016, the Company issued restricted stock units (the "Units") to acquire up to 450,000 shares of common stock pursuant to the 2016 Amended and Restated Incentive Plan (the "2016 Incentive Plan"). The Units entitle the recipients, subject to continued service through the March 31, 2021 vesting date, to receive (i) the underlying shares if and to the extent certain performance and/or market conditions are satisfied at the vesting date, and (ii) an amount equal to the cash dividends paid from the grant date through the vesting date with respect to the shares of common stock underlying the Units if, when, and to the extent, the related Units vest. For financial statement purposes, because the Units are not participating securities, 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. The shares underlying the Units are contingently issuable shares. 

Expense is recognized over the five-year vesting period on the Units which the Company expects to vest. For the three months ended March 31, 2019 and 2018, the Company recorded $35,000 and $73,000, of compensation expense related to the amortization of unearned compensation with respect to the Units. At March 31, 2019, and December 31, 2018, $284,000 and $319,000 of compensation expense, respectively, had been deferred and will be charged to expense over the remaining vesting period.

Restricted Stock

In January 2019, the Company granted 156,399 shares of restricted stock pursuant to the 2018 Incentive Plan. As of March 31, 2019, an aggregate of 725,296 shares of unvested restricted stock are outstanding pursuant to the 2018 Incentive Plan, 2016 Incentive Plan and 2012 Incentive Plan. No additional awards may be granted under the 2016 Incentive Plan and the 2012 Incentive Plan. The 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. 

For the three months ended March 31, 2019 and 2018, the Company recorded $330,000 and $224,000, respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards. At March 31, 2019 and December 31, 2018, $4,348,000 and $2,735,000 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 remaining vesting period of these shares of restricted stock is 2.9 years.

9

Stock Buyback

On September 5, 2017, the Board of Directors approved a repurchase plan authorizing the Company, effective as of October 1, 2017, to repurchase up to $5,000,000 of shares of common stock through September 30, 2019. During the quarters ended March 31, 2019 and March 31, 2018, there were no repurchases of common stock.

Per Share Data

Basic earnings (loss) per share is determined by dividing net income (loss) applicable to common stockholders for the applicable period by the weighted average number of shares of common stock outstanding during such period. The Units are excluded from the basic earnings per share calculation, as they are not participating securities. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue 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 per share is determined by dividing net income applicable to common stockholders for the applicable period by the weighted average number of shares of common stock deemed to be outstanding during such period. In calculating diluted earnings per share, the Company, for the three months ended (i) March 31, 2019, did not include any shares underlying the Units as their effect would have been anti-dilutive and (ii) March 31, 2018, included 200,000 shares of common stock underlying the Units as only the market criteria with respect to the Units had been met at March 31, 2018. 

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts): 

	Three Months Ended March 31,
	2019		2018
Numerator for basic and diluted earnings (loss) per share attributable to common stockholders:
Net (loss) income attributable to common stockholders	$	(4,247)	$	25,222
Denominator:
Denominator for basic earnings per share—weighted average number of shares	15,886,493		14,242,076
Effect of diluted securities	—		200,000
Denominator for diluted earnings per share—adjusted weighted average number of shares and assumed conversions	15,886,493		14,442,076
Basic (loss) earnings per share	$	(0.27)	$	1.77
Diluted (loss) earnings per share	$	(0.27)	$	1.75

Note 4 ‑ Real Estate Properties

Real estate properties consist of the following (dollars in thousands):

	March 31, 2019		December 31, 2018
Land	$	163,003	$	155,573
Building	971,630		924,378
Building improvements	44,025		41,003
Real estate properties	1,178,658		1,120,954
Accumulated depreciation	(101,332)		(91,715)
Total real estate properties, net	$	1,077,326	$	1,029,239

10

A summary of real estate properties owned follows (dollars in thousands):

	December 31, 2018 Balance		Additions		Capitalized Costs and Improvements		Depreciation		March 31, 2019 Balance
Multi-family	$	964,320	$	48,624	$	3,260	$	(9,546)	$	1,006,658
Multi-family lease up - West Nashville, TN	54,555		—		5,820		(45)		60,330
Land - Daytona, FL	8,021		—		—		—		8,021
Shopping centers/Retail - Yonkers, NY	2,343		—		—		(26)		2,317
Total real estate properties	$	1,029,239	$	48,624	$	9,080	$	(9,617)	$	1,077,326

The following table summarizes the allocation of the purchase price with respect to a property purchased during the three months ended March 31, 2019 (dollars in thousands):  

	Allocation of Purchase Price
Land	$	4,266
Building and improvements	43,757
Acquisition-related intangible assets	601
Total consideration	$	48,624

The purchase price of the property acquired, inclusive of acquisition costs, was allocated to the acquired assets based on their estimated relative fair values on the acquisition date.

Note 5 ‑ Acquisitions and Dispositions

Property Acquisitions

The table below provides information regarding the Company's purchase of a multi-family property during the three months ended March 31, 2019 (dollars in thousands):

Location	Purchase Date	No. of Units	Purchase Price		Acquisition Mortgage Debt		Initial BRT Equity		Ownership Percentage	Capitalized Acquisition Costs
Kannapolis, North Carolina	3/12/2019	312	$	48,065	$	33,347	$	11,231	65	$	559

The table below provides information regarding the Company's purchases of multi-family properties during the three months ended March 31, 2018 (dollars in thousands):

Location	Purchase Date	No. of Units	Purchase Price		Acquisition Mortgage Debt		Initial BRT Equity		Ownership Percentage		Capitalized Acquisition Costs
Ocoee, FL	2/7/2018	522	$	71,347	$	53,060	$	12,370	50.0	%	$	1,047
Lawrenceville, GA	2/15/2018	586	77,229		54,447		15,179		50.0	%	767
		1,108	$	148,576	$	107,507	$	27,549			$	1,814

On May 7, 2019, the Company acquired, through a joint venture in which it has an 80% equity interest, a 328-unit multi-family property located in Trussville, AL, for $43,000,000, including $32,250,000 of mortgage debt assumed in connection with the purchase. The mortgage debt matures in June 2029, bears interest at a fixed rate of 4.19%, is interest only for six years, and thereafter amortizes based on a 30 year schedule. The Company contributed $11,625,000 for its ownership interest. 

11

Property Dispositions

The Company did not dispose of any  real estate properties during the three months ended March 31, 2019 

The following table is a summary of the real estate properties disposed of by the Company during the three months ended March 31, 2018 (dollars in thousands):

Location	Sale Date	No. of Units	Sales Price		Gain on Sale		Non-controlling partner's portion of the gain
Palm Beach Gardens, FL	2/5/2018	542	$	97,200	$	41,830	$	20,593
Valley, AL	2/23/2018	618	51,000		9,712		4,547
Fort Washington	1/18/2018	1	470		439		—
		1,161	$	148,670	$	51,981	$	25,140

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 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 three months ended March 31, 2019 and 2018, no impairment charges were recorded.

Note 6 - Variable Interest Entities

The Company conducts a significant portion of its business with joint venture partners. Many of the Company's consolidated joint ventures that own properties were determined to be 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 ventures 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 (dollars in thousands):

	March 31, 2019 (unaudited)		December 31, 2018 (Unaudited)
ASSETS
Real estate properties, net of accumulated depreciation of $58,945 and $53,637	$	635,457	$	584,074
Cash and cash equivalents	6,859		5,207
Deposits and escrows	7,419		11,705
Other assets	5,649		6,302
Total Assets	$	655,384	$	607,288
LIABILITIES
Mortgages payable, net of deferred costs of $3,628 and $3,786	$	484,232	$	446,779
Accounts payable and accrued liabilities	9,482		11,816
Total Liabilities	$	493,714	$	458,595

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Note 7 - Restricted Cash

Restricted cash represents funds held for specific purposes and are therefore not generally available for general corporate purposes. The restricted cash reflected on the consolidated balance sheets represents funds that are held by or on behalf of the Company specifically for capital improvements at certain multi-family properties.

Note 8 – Investment in Unconsolidated Ventures

The Company has interests in unconsolidated joint ventures that own multi-family properties. The table below provides information regarding these joint ventures at March 31, 2019 (dollars in thousands):

Location	Number of Units	Carrying Value of Investment		Mortgage Balance		Percent Ownership
Columbia, SC	374	$	4,535	$	40,034	32	%
Columbia, SC (a)	339	8,098		39,646		46	%
Forney, TX (b)	313	6,492		25,350		50	%
	1,026	$	19,125	$	105,030

________________________

(a) Property is currently in lease up. Construction financing for this project of up to $47,426 has been secured. Such financing bears interest at 4.95% and matures in June 2020.

(b) This interest is held through a tenancy-in-common. 

The net loss from these ventures was $223,000 and $63,000 for the three months ended March 31, 2019 and 2018, respectively.

Note 9 – Debt Obligations

Debt obligations consist of the following (dollars in thousands):

	March 31, 2019		December 31, 2018
Mortgages payable	$	814,829	$	778,106
Junior subordinated notes	37,400		37,400
Deferred mortgage costs	(6,452)		(6,646)
Total debt obligations, net of deferred costs	$	845,777	$	808,860

Mortgages Payable

During the three months ended March 31, 2019, the Company obtained the following mortgage debt in connection with the related property (dollars in thousands):

Location	Closing Date	Acquisition Mortgage Debt		Interest Rate		Maturity Date
Kannapolis, NC	3/12/19	$	33,347	3.52	%	3/01/52

The Company has a construction loan financing a development project. Information regarding this loan at March 31, 2019 is set forth below (dollars in thousand):

Location	Closing Date	Maximum Loan Amount		Amount outstanding		Interest Rate	Maturity Date	Extension Option
Nashville,TN	6/2/2017	$	47,426	$	35,085	30 day LIBOR + 2.85%	6/2/2022	N/A

On February 1, 2019, the Company refinanced  a $9,200,000 adjustable rate mortgage on its Boerne, TX property with a fixed rate loan in the amount of $8,067,000. The mortgage debt bears interest at a fixed rate of 4.74%, matures in

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February 2026, is interest only for three years, amortizes thereafter on a 30 year schedule, with a balloon payment of the unpaid principal and interest due at maturity.

Credit Facility

The Company entered into a credit facility dated April 18, 2019, as subsequently amended, with an affiliate of Valley National Bank. The facility allows the Company to borrow, subject to compliance with borrowing base requirements and other  conditions, up to $10,000,000 to facilitate the acquisition of multi-family properties, and is secured by the cash available in certain cash accounts maintained by the Company at Valley National Bank. The facility matures April 2021 and bears an adjustable interest rate of 50 basis points over the prime rate, with a floor 5%. The interest rate in effect as of May 2, 2019, is 6%. There is an unused facility fee of 0.25% per annum on the difference between the outstanding loan balance and maximum amount then available under the facility. On May 2, 2019, the Company borrowed $9,000,000 on the facility in connection with the acquisition of the Trussville, AL property. 

Junior Subordinated Notes

At March 31, 2019 and December 31, 2018, the Company's junior subordinated notes had an outstanding principal balance of $37,400,000, before deferred financing costs of $352,000 and $357,000, respectively. At March 31, 2019, the interest rate on the outstanding balance is three month LIBOR + 2.00% or 4.75%.

The junior subordinated notes require interest only payments through the maturity date of April 30, 2036, at which time repayment of the outstanding principal and unpaid interest become due. Interest expense for the three months ended March 31, 2019 and 2018, which includes amortization of deferred costs, was $449,000 and $352,000, respectively.

Note 10 – Related Party Transactions

The Company has retained certain of its executive officers and Fredric H. Gould, a director, to provide, among other things, the following services: participating in the Company's multi-family property analysis and approval process (which includes service on the investment committee), providing investment advice, long-term planning and consulting with executives and employees with respect to other business matters, as required. The aggregate fees incurred and paid for these services in the three months ended March 31, 2019 and 2018 were $333,000 and $317,000, respectively.

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 may also provide real estate brokerage and construction supervision services to these properties. These fees amounted to $8,134 and $10,000 for the three months ended March 31, 2019 and 2018, respectively.

The Company shares facilities, personnel and other resources with One Liberty Properties, Inc., Majestic Property, and Gould Investors L.P. Certain of the Company's executive officers and/or directors also serve in management positions, and have ownership interests, in One Liberty, Majestic Property and/or Georgetown Partners Inc., the managing general partner of Gould Investors L.P. The allocation of expenses for the facilities, personnel and other resources shared by the Company, One Liberty, Majestic Property 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. For the three months ended March 31, 2019 and 2018, net allocated general and administrative expenses reimbursed by the Company to Gould Investors L.P. pursuant to the shared services agreement aggregated $142,000 and $147,000, respectively.

Management of many of the Company's multi-family properties (including three multi-family properties owned by two unconsolidated joint ventures) is performed by the Company's joint venture partners or their affiliates. None of these joint venture partners is Gould Investors L.P., Majestic Property or their affiliates. Management fees to these joint venture partners or their affiliates for the three months ended March 31, 2019 and 2018 were $1,023,000 and $908,000, respectively. In addition, the Company may pay an acquisition fee to a joint venture partner in connection with a property purchased by such joint venture. Capitalized acquisition fees paid to these related parties for the three months ended March 31, 2019 and 2018 were $421,000 and $1,300,000, respectively.

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Note 11 – Fair Value of Financial Instruments

Financial Instruments Not Carried at Fair Value

The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not recorded 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 March 31, 2019 and December 31, 2018, the estimated fair value of the notes is lower than their carrying value by approximately $11,978,000 and $11,974,000, respectively, based on a market interest rate of 7.61% and 7.79%, respectively.

Mortgages payable: At March 31, 2019, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $8,096,000, assuming market interest rates between 3.56% and 5.33% and at December 31, 2018, the estimated fair value of the Company's mortgages payable was lower than their carrying value by approximately $19,334,000 assuming market interest rates between 3.94% and 5.61%. Market interest rates were determined using rates which the Company believes reflects institutional lender yield requirements at the balance sheet dates.

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.

Financial Instruments Carried 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 market 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 March 31, 2019 (dollars in thousands):

	Carrying and Fair Value		Fair Value MeasurementsUsing Fair Value Hierarchy
			Level 1	Level 2
Financial Assets:
Interest rate swaps	$	1,565	—	$	1,565
Interest rate caps	—		—	—
Total Financial Assets	$	1,565	—	$	1,565

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, foreign exchange rates, and implied volatilities. At March 31, 2019, these derivatives are included in other assets 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 them utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. As of March 31, 2019, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative position 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 derivatives valuation is classified in Level 2 of the fair value hierarchy.

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Note 12 – Derivative Financial Instruments

Cash Flow Hedges of Interest Rate Risk

The Company's objective in using interest rate derivatives are to add stability to interest expense and to 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 changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of March 31, 2019, 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	Current Notional Amount		Fixed Rate		Maturity
Interest rate cap on LIBOR	$	29,000	3.00	%	July 10, 2019
Interest rate swap	1,267		5.25	%	April 1, 2022
Interest rate swap	25,933		3.61	%	May 6, 2023
Interest rate swap	27,000		4.05	%	September 19, 2026

Non-designated Derivatives

Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements and other identified risks but do not meet the hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As a result of a mortgage refinancing of an adjustable rate loan to a fixed rate loan, at March 31, 2019, the Company had an interest rate cap with a notional value of $9,200,000 that was not designated as a hedge in a qualifying hedge relationship. At March 31, 2019, this derivative had no value.

The table below presents the fair value of the Company’s derivative financial instruments as well as its classification on the consolidated balance sheets as of the dates indicated (dollars in thousands):

Derivatives as of:
March 31, 2019			December 31, 2018
Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Other Assets	$	1,565	Other Assets	$	2,434

The following table presents the effect of the Company’s interest rate swaps on the consolidated statements of comprehensive (loss) income for the dates indicated (dollars in thousands):

	Three Months Ended March 31,
	2019		2018
Amount of gain (loss) recognized on derivative in Other Comprehensive Income	$	(743)	$	1,132
Amount of gain (loss) reclassified from Accumulated Other Comprehensive Income into Interest expense	$	118	$	—
Total amount of Interest expense presented in the Consoldiated Statement of Operations	$	8,769	$	8,657

The Company estimates an additional $491,000 will be reclassified from other comprehensive loss as a decrease to interest expense over the next twelve months.

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Credit-risk-related Contingent Features

The agreement between the Company and its derivative counterparties 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 obligations.

Note 13 – New Accounting 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 standard 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 adopted this standard effective October 1, 2018, using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. Certain revenues, such as tenant reimbursements, tenant fees, and other property income, are subject to the new guidance. The adoption of the new revenue recognition standard did not have a material impact on the consolidated financial statements and no cumulative effect adjustment was recorded upon adoption as there was no change in the amount or timing of revenue recognized.

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 the following 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 adopted this standard effective January 1, 2019, and its adoption did not have a material effect on the consolidated financial statements. As a lessor, the adoption of ASU 2016-02 (as amended by subsequent ASUs) did not change the timing of revenue recognition of the Company’s rental revenues. As a lessee, the Company is party to a ground lease, and an operating lease with future payment obligations for which the Company recorded 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 Flows (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. The Company adopted this standard effective October 1, 2018, using the “cumulative earnings approach” whereby distributions received from equity method investments are classified as cash flows from operations to the extent of equity earnings and then as cash flows from investing activities thereafter. The adoption of this guidance did not have a material effect on the consolidated financial statements. 

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 Company adopted this standard effective October 1, 2018 using the retrospective approach. The adoption of this update did not have a material effect on the consolidated financial statements. 

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

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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 adopted this standard effective October 1, 2018. The adoption of this guidance did not have a material effect on the 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 adopted this standard effective January 1, 2019, The adoption of this guidance did not have a material effect 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, 2019, 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.

In October 2018, the FASB issued ASU 2018-16, (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) as a Benchmark Interest Rate for Hedging Purposes. The amendments in this update permit the OIS rate based on SOFR as an eligible benchmark interest rate. The amendments in this update are effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019. The Company does not believe this guidance will have a material effect on its consolidated financial statements.

Note 14 – Subsequent Events

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of March 31, 2019, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

With the exception of historical information, this Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. We intend such forward-looking statements to be covered by the safe harbor provision 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, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may", "will", "believe", "expect", "intend", "anticipate", "estimate", "project", or similar expressions or variations thereof. Forward-looking statements involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. Investors are cautioned not to place undue reliance on any forward-looking statements and are urged to read “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018, and in reports we filed with the SEC thereafter.

Overview

General

We are a real estate investment trust, also known as a REIT, that is focused on the ownership, operation and development of multi-family properties. These properties derive revenue 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 balance of the equity contributed by our joint venture partner. At March 31, 2019, we (i) own 36 multi-family properties located in 12 states with an aggregate of 10,008 units (including 402 units at a property (i.e., Bells Bluff - West Nashville, TN)) that commenced leasing activities in the current quarter, with a carrying value of $1.1 billion and (ii) have ownership interests, through unconsolidated entities, in three multi-family properties located in two states with 1,026 units (including 339 units at a property in lease-up) with a carrying value of $19.1 million. Most of our properties are located in the southeast United States and Texas.

As used herein, the term "same store properties" refers to the 27 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, has been excluded from same store properties due to the damage it sustained from Hurricane Harvey in 2017. 

Change in Fiscal Year

In February 2019, we changed our fiscal year end from September 30 to December 31. The change is intended to better align our fiscal year with the fiscal year of other multi-family REITs. As a result of this change, our fiscal year began on January 1, 2019 and will end on December 31, 2019 .

Status of Bells Bluff Project

Leasing on the 120 completed units at the 402-unit Bells Bluff, West Nashville, TN, property commenced in the first quarter of 2019. We anticipate that the balance of the units will be completed in stages during 2019. We capitalized $391,000 of interest expense on the mortgage debt of this property in the quarter ended March 31, 2019.

Acquisition During the Three Months Ended March 31, 2019

On March 12, 2019, we acquired the Vive at Kellswater, a 312-unit multi-family property located in Kannapolis, NC, for $48.1 million, including $33.3 million of mortgage debt obtained in connection with the acquisition. Based on our underwriting, we estimate that on a quarterly basis, this property will generate $1.1 million of rental revenue, $477,000 of real estate operating expense, $293,000 of interest expense and $558,000 of depreciation expense.

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Acquisition Subsequent to March 31, 2019

On May 7, 2019, we acquired, through a joint venture in which we have an 80% equity interest, a 328-unit multi-family property located in Trussville, AL, for $43.0 million, including $32.3 million of mortgage debt assumed in connection with the acquisition. The mortgage debt matures in June 2029, bears interest at a fixed rate of 4.19%, is interest only for six years, and thereafter amortizes based on a 30 year schedule. We contributed $11.6 million for our ownership interest.

Results of Operations – Three months ended March 31, 2019 compared to three months ended March 31, 2018.

Revenues

The following table compares our revenues for the periods indicated:

	Three Months Ended March 31,
(Dollars in thousands):	2019		2018		Increase (Decrease)		% Change
Rental revenue	$	30,702	$	29,476	$	1,226	4.2
Other income	244		175		69		39.4
Total revenues	$	30,946	$	29,651	$	1,295	4.4

Rental revenue 

The increase is due primarily to increases of:

•$2.6 million from four properties acquired during the twelve months ended March 31, 2019, including $222,000 from the property acquired during the current quarter,

•$1.2 million from the inclusion, for the entire three months ended March 31, 2019, of two properties that were only owned for a portion of the corresponding period in the prior year, and 

•$980,000 from same store properties - a significant portion of the increase is due to an increase in rental rates at most of these properties, and the balance of the increase is due to increases in variable lease payments (e.g., utility reimbursements, late fees and other rental related fees charged to tenants) and occupancy rates. Increased occupancy and, to a lesser extent, rental rates, at Avalon Apartments, Pensacola, FL and Mercer Crosser, Farmers Branch, TX  accounted  for approximately 30% of the gross increase in rental revenue.

Offsetting this increase was a decrease of $3.6 million from the four properties sold from January 1, 2018 to March 31, 2019.

Expenses

The following table compares our expenses for the periods indicated:

	Three Months Ended March 31,
(Dollars in thousands)	2019		2018		Increase (Decrease)		% Change
Real estate operating expenses	$	14,814	$	14,198	$	616	4.3
Interest expense	8,769		8,657		112		1.3
General and administrative	2,544		2,453		91		3.7
Depreciation	9,617		9,240		377		4.1
Total expenses	$	35,744	$	34,548	$	1,196	3.5

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Real estate operating expenses.  

The increase is due primarily to increases of:

•$1.4 million from four properties acquired during the twelve months ended March 31, 2019, including $99,000 from a property acquired during the current quarter,

•$621,000 from same store properties - approximately 55% of the increase is due to increased real estate taxes resulting from increased assessments at several properties,

•$542,000 from the inclusion, for the entire three months ended March 31, 2019, of two properties that were only owned for a portion of the corresponding period in the prior year, and

•$257,000 from Bells Bluff, as it is currently in lease up.

Offsetting the increase is $2.2 million of expense related to the four properties sold from January 1, 2018 to March 31, 2019.

Depreciation. 

The increase is due primarily to increases of:

•$1.4 million from four properties acquired during the twelve months ended March 31, 2019, including $125,000 from a property acquired in the current quarter, and

•$309,000 from the inclusion, for the entire three months ended March 31, 2019, of such expense on two properties that were only owned for a portion of the corresponding period of the prior year.

Offsetting the increase is a decrease of (i) $740,000 from properties sold from January 1, 2018 to March 31, 2019, and (ii) $510,000 from same store properties due to the reduction of amortization, in the ordinary course of business, of tenant origination costs at several properties. 

Other Income and Expenses

The following table compares our other income and expenses for the periods indicated:

	Three Months Ended March 31,
(Dollars in thousands)	2019		2018		Increase (Decrease)		% Change
Equity in loss of unconsolidated joint ventures	(223)		$	(63)	$	(160)	254.0
Gain on sale of real estate	—		51,981		(51,981)		(100.0)
Gain on insurance recoveries	—		3,227		(3,227)		(100.0)
Loss on extinguishment of debt	—		(593)		593		(100.0)
Total other income and expenses	$	(223)	$	54,552	$	(54,775)	(100.4)	%

Equity in loss of unconsolidated joint ventures. The increase in the loss is due primarily to the inclusion of depreciation and interest expense at a Columbia, SC property that was in development in the corresponding period in the prior year and is now in lease up.

Gain on sale of real estate. During the three months ended March 31, 2018, we sold three properties and a cooperative apartment unit for a sales price of $148.7 million and recognized a gain of $52.0 million, of which $25.1 million was allocated to the non-controlling partner. 

Gain on insurance recoveries. During the three months ended March 31, 2018, we recognized a $3.2 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. 

Loss on extinguishment of debt. During the three months ended March 31, 2018, we incurred $593,000 of mortgage prepayment charges in connection with the sale of The Fountains Apartments - Palm Beach Gardens, Florida.

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Income tax provision (benefit).

 For the three months ended March 31, 2019, we recognized an income tax provision of $62,000 compared to an income tax benefit of $253,000 in the corresponding period of the prior year. The change is due to the inclusion in the 2018 period, of a state tax refund related to a property sale in a prior year. 

Liquidity and Capital Resources

We require funds to pay operating expenses and debt service obligations, acquire properties, make capital improvements and pay dividends. Generally, our primary sources of capital and liquidity are the operations of our multi-family properties (including distributions from the joint ventures that own such properties), mortgage debt financings, equity contributions from our joint venture partners for acquisitions, our share of the proceeds from the sale of properties, the sale of shares of our common stock pursuant to our at-the-market equity distribution program, our credit facility and our available cash (including restricted cash). Our available liquidity at May 6, 2019, was $23.5 million, including $14.7 million of cash and cash equivalents, $ 7.8 million of restricted cash and, subject to borrowing base requirements, $1.0 million available under our credit facility.  

We anticipate that (i) our operating expenses, dividend payments and $80.0 million of interest expense and mortgage amortization payments over the next two years will be funded from cash generated from the operations of our multi-family properties and, to the extent such sources are insufficient, from mortgage refinancing and/or sales of properties, and (ii) a $29.0 million balloon payment due with respect to a mortgage maturing in July 2019 (no mortgages are scheduled to mature in 2020) will be funded from the refinancing of such mortgage. (The mortgage debt with respect to our properties is generally 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 payment, 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 $7.8 million of restricted cash available at March 31, 2019 and the cash flow from operations at such properties and (ii) other properties will be funded from the cash flow from operations of such properties.

Our ability to acquire additional multi-family properties is limited by our available cash, and our ability to (i) draw on our credit facility and (ii) 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 costs associated with completing the Bells Bluff  project will be funded by the remaining in-place construction financing of up to $12.3 million.

Credit Facility

We entered into a credit facility dated April 18, 2019, as amended, with VNB New York, LLC, an affiliate of Valley National Bank. The facility allows us to borrow, subject to compliance with borrowing base requirements and other conditions, up to $10 million. The facility is available for the acquisition of, and investment in, multi-family properties, is secured by the cash available in certain cash accounts maintained by the Company at VNB, matures April 2021 and bears an annual interest rate of 50 basis points over the prime rate, with a floor 5%. There is an unused facility fee of 0.25% per annum on the difference between the outstanding loan balance and maximum amount then available under the facility.  On May 2, 2019, we borrowed $9 million on the facility at an interest rate of 6.0%.

 The terms of the facility include certain restrictions and covenants which limit, among other things, the incurrence of liens, and which require compliance with financial ratios relating to, among other things, the minimum amount of debt service coverage with respect to the properties (and amounts drawn on the facility) used in calculating the borrowing base, the minimum number of wholly owned properties and the minimum number of properties used in calculating the borrowing base. Net proceeds received from the sale, financing or refinancing of wholly owned properties are generally required to be used to repay amounts outstanding under the facility.

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Cash Distribution Policy

We have elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the “Code”. To qualify as a REIT, accordingly we must meet a number of organizational and operational requirements, including a requirement that we distribute to our stockholders within the time frames prescribed by the Code at least 90% of our ordinary taxable income. Management currently intends to maintain our REIT status. As a REIT, we generally will not be subject to corporate Federal income tax on taxable income we distribute to stockholders in accordance with the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify for Federal taxation as a REIT, we are subject to certain state and local taxes on our income and to Federal income and excise taxes on undistributed taxable income, (i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Code).

We estimate that our net operating loss at December 31, 2018 ranges from $10 million to $14 million; therefore, we are not currently required by Code provisions relating to REITs to pay cash dividends to maintain our status as a REIT. Notwithstanding the foregoing, on each of January 4, 2019 and April 5, 2019, we paid a cash dividend of $0.20 per share. Though we currently intend to continue to pay cash dividends on a quarterly basis, we cannot provide any assurance that we will do so.

Off Balance Sheet Arrangements

None.

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Funds from Operations; Adjusted Funds from Operations

We disclose below 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 (computed in accordance with generally accepting 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 deducting from FFO our straight-line rent accruals, loss on extinguishment of debt, restricted stock and restricted stock unit expense, deferred mortgage costs and gain on insurance recovery. Since the NAREIT White Paper only provides guidelines for computing FFO, 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 assumes 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 and cash flows from operating, investing and financing activities.

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The tables below provides a reconciliation of net loss determined in accordance with Generally Accepted Accounting Principles ("GAAP") to FFO and AFFO on a dollar and per share basis for each of the indicated periods (amounts in thousands):

	Three Months Ended March 31,
	2019		2018
GAAP Net (loss) income attributable to common stockholders	$	(4,247)	$	25,222
Add: depreciation of properties	9,617		9,240
Add: our share of depreciation in unconsolidated joint ventures	467		447
Deduct: gain on sale of real estate	—		(51,981)
Adjustments for non-controlling interests	(2,775)		22,406
NAREIT Funds from operations attributable to common stockholders	3,062		5,334
Adjustments for: straight-line rent accruals	(10)		(10)
Add: loss on extinguishment of debt	—		593
Add: amortization of restricted stock and restricted stock units	365		297
Add: amortization of deferred mortgage costs	379		373
Deduct gain on insurance recovery	—		(3,227)
Adjustments for non-controlling interests	(78)		434
Adjusted funds from operations attributable to common stockholders	$	3,718	$	3,794

	Three Months Ended March 31,
	2019		2018
GAAP Net (loss) income attributable to common stockholders	$	(0.27)	$	1.75
Add: depreciation of properties	0.60		0.64
Add: our share of depreciation in unconsolidated joint ventures	0.03		0.03
Deduct: gain on sale of real estate	—		(3.60)
Adjustment for non-controlling interests	(0.17)		1.55
NAREIT Funds from operations per common stock basic and diluted	0.19		0.37
Adjustments for: straight line rent accruals	—		—
Add: loss on extinguishment of debt	—		0.04
Add: amortization of restricted stock and restricted stock units	0.02		0.01
Add: amortization of deferred mortgage costs	0.02		0.03
Deduct gain on insurance recovery	—		(0.22)
Adjustments for non-controlling interests	—		0.03
Adjusted funds from operations per common stock basic and diluted	$	0.23	$	0.26

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Item 3. Quantitative and Qualitative Disclosures About Market Risks

All of our mortgage debt is fixed rate, other than five mortgages, three of which are subject to interest rate swap agreements that effectively fix the rate at a fixed rate. With respect to those mortgages not subject to interest rate swaps, an increase of 100 basis points in interest rates would reduce annual net income by $641,000 and a decrease of 100 basis points would increase annual net income by $641,000.

As of March 31, 2019, we had three interest rate swap agreements outstanding and an interest rate cap. The fair value of these derivative instruments is dependent upon existing market interest rates and swap spreads, which change over time. At March 31, 2019, if there had been (i) an increase of 100 basis points in forward interest rates, the fair market value of these derivative instruments and the net unrealized gain thereon would have increased by approximately $2.6 million and (ii) if there had been a decrease of 100 basis points in forward interest rates, the fair market value of these derivatives and the net unrealized gain thereon would have decreased by approximately $2.8 million. These changes would not have any impact on our net income or cash.

Our junior subordinated notes bear interest at the rate of three month LIBOR plus 200 basis points. At March 31, 2019, the interest rate on these notes was 4.75%. A 100 basis point increase in the rate would increase our related interest expense by approximately $374,000 annually and a 100 basis point decrease in the rate would decrease our related interest expense by $374,000 annually.

As of March 31, 2019, based on the number of residential units in each state, 31% of our properties are located in Texas, 15% in Georgia, 12% in Florida, 8% in Mississippi, 7% in Tennessee, 7% in South Carolina and the remaining 20% in six other states; we are therefore subject to risks associated with the economies in these areas.

Item 4. Controls and Procedures

As required under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer, Senior Vice President-Finance and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2019. Based upon that evaluation, the Chief Executive Officer, Senior Vice President-Finance and Chief Financial Officer concluded that our disclosure controls and procedures as of March 31, 2019 are effective.

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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Part II - Other Information

Item 6. Exhibits

In reviewing the agreements included as exhibits to this report, please note 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 party to the agreements. The agreements contain representations and warranties by one or more of the parties thereto. These representations and warranties have been made solely for the benefit of the other party to the agreements 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 agreements, which disclosures are not necessarily reflected in the agreements;

•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 such agreement or such other date or dates as may be specified in such 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.

Exhibit No.	Title of Exhibits
10.1	Loan Agreement among BRT Apartments Corp.("BRT") and VNB New York, LLC, dated April 18, 2019 ("the Loan Agreement")
10.2	Amendment to the Loan Agreement as of April 18, 2019
31.1	Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Senior Vice President—Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	Certification of Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Senior Vice President—Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3	Certification of Vice President and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

_____________________

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BRT APARTMENTS CORP.

May 9, 2019	/s/ Jeffrey A. Gould
	Jeffrey A. Gould, President and
	Chief Executive Officer
May 9, 2019	/s/ George Zweier
	George Zweier, Vice President
	and Chief Financial Officer
	(principal financial officer)

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EX-10.1

LOAN AGREEMENT

among

BRT APARTMENTS CORP.,

as Borrower

and

VNB NEW YORK, LLC,

as Lender

Dated: April 18, 2019

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS1

SECTION 1.01Certain Defined Terms1

SECTION 1.02Computation of Time Periods10

SECTION 1.03Accounting Terms10

SECTION 1.04Construction10

ARTICLE II AMOUNT AND TERMS OF THE REVOLVING CREDIT LOANS11

SECTION 2.01Revolving Credit Loans11

SECTION 2.02Revolving Credit Note11

SECTION 2.03Interest11

SECTION 2.04Computation of Interest and Fees11

SECTION 2.05Reimbursement of Expenses11

SECTION 2.06Revolving Credit Loan Requests12

SECTION 2.07Maturity; Maximum Revolving Credit Obligations;

Prepayments12

SECTION 2.08Payments13

SECTION 2.10Mandatory Payments and Deposits.13

SECTION 2.10Use of Proceeds13

SECTION 2.11Unused Facility Fee14

SECTION 2.13Late Charges, Default Interest14

SECTION 2.14Interest Adjustments14

ARTICLE III CONDITIONS OF LENDING15

SECTION 3.01Conditions Precedent to the Making of the Initial Revolving

Credit Loan15

SECTION 3.02Conditions Precedent to All Revolving Credit Loans16

ARTICLE IV REPRESENTATIONS AND WARRANTIES17

SECTION 4.01Representations and Warranties17

ARTICLE V COVENANTS OF BORROWER20

SECTION 5.01Affirmative Covenants20

SECTION 5.02Negative Covenants26

SECTION 5.03Financial Requirements29

SECTION 5.04Intentionally Omitted29

i

ARTICLE VI EVENTS OF DEFAULT29

SECTION 6.01Events of Default29

SECTION 6.02Remedies on Default31

SECTION 6.03Remedies Cumulative32

ARTICLE VII MISCELLANEOUS32

SECTION 7.01Amendments, Etc32

SECTION 7.02Notices, Etc32

SECTION 7.03No Waiver, Remedies33

SECTION 7.04Costs, Expenses and Taxes33

SECTION 7.05Right of Set-off33

SECTION 7.06Binding Effect34

SECTION 7.07Further Assurances34

SECTION 7.08Section Headings, Severability, Entire Agreement34

SECTION 7.09Governing Law34

SECTION 7.10Waiver of Jury Trial34

SECTION 7.11Execution in Counterparts34

SCHEDULE 4.01(a) - Subsidiaries

SCHEDULE 4.01(f) - Material Events

SCHEDULE 4.01(q) - Casualties

SCHEDULE 4.01(r) - Lien Priority

SCHEDULE 4.01(s) - Credit Agreements, etc.

SCHEDULE 5.02(a) - Liens

SCHEDULE 5.02(b) – Debt

SCHEDULE 5.02(g) – Certain Permitted Transactions with Affiliates

SCHEDULE 5.02(i) – Guaranties

EXHIBIT A – Revolving Credit Note

EXHIBIT A-1 – Quarterly 100% Properties Information Report

EXHIBIT A-2 – Quarterly 100% Property Income Statement Reports

EXHIBIT A-2 (i) – 100% Properties with Four Complete Consecutive Quarters

EXHIBIT A-2 (ii) – 100% Properties with Three Complete Consecutive Quarters

EXHIBIT A-2 (iii) – 100% Properties with Two Complete Consecutive Quarters

EXHIBIT A-2 (iv) – 100% Properties with One Complete Consecutive Quarter

EXHIBIT B – Form of Borrowing Notice

EXHIBIT D – Portfolio of Real Estate Investments

EXHIBIT E – Forms of Certificate of No Default and Computation of Covenant Compliance

EXHIBIT F – Form of Borrowing Base Certificate

EXHIBIT G – Designated Deposit Proceeds Report

EXHIBIT H – Quarterly 100% Mortgage Information Report

EXHIBIT I – Monthly U.S. Treasuries Purchase(s) and Redemption(s) Report

ii

THIS LOAN AGREEMENT made as of April 18, 2019 by and among BRT APARTMENTS CORP., a Maryland corporation, having its principal executive offices at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021 (“Borrower”) and VNB NEW YORK, LLC, a New York limited liability company having an office at 1 Penn Plaza, Suite 2923, New York, New York 10119 (“Lender”).

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“100%Property” means real property improved by residential multi-family building or buildings in which Borrower and/or a Wholly Owned Subsidiary owns a 100% fee interest, and which is located in any of the forty-eight (48) contiguous states of the United States.

“100% Property Refinancing” means a Property Refinancing with respect to a 100% Property.

“Affiliate” shall mean, as to any Person: (i) a Person which directly or indirectly controls, or is controlled by, or is under common control with, such Person; (ii) a Person which directly or indirectly beneficially owns or holds ten percent (10%) or more of any class of voting stock of, or ten percent (10%) or more of the equity interest in, such Person, excluding institutional investors that file under section 13(g) of the Securities and Exchange Act of 1934, as amended; or (iii) a Person ten percent (10%) or more of the voting stock of which, or ten percent (10%) or more of the equity interest of which, is directly or indirectly beneficially owned or held by such Person. The term “control” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

“Agreement” shall mean this Loan Agreement, as amended, supplemented or modified from time to time.

“Aggregate Borrowing Base Calculation Result”: shall mean as of any Borrowing Base Determination Date, an amount equal to the sum of each Positive Borrowing Base Calculation Result for each Four Quarter Property and One to Three Quarter Property. If there are no Four Quarter Properties or One to Three Quarter Properties that are calculated to have a Positive Borrowing Base Calculation Result, then the Aggregate Borrowing Base Calculation Result shall be zero.

“Annualization Multiplier” shall mean, (i) four (4) with respect to a Measurement Period of one (1) Fiscal Quarter, (ii) two (2) with respect to a Measurement Period of two (2) Fiscal Quarters, and (iii) the fraction of four (4) divided by three (3) with respect to a Measurement Period of three (3) Fiscal Quarters.

“Annualized Net Operating Income” shall mean the Net Operating Income of a One to Three Quarter Property computed for the greatest number of one (1), two (2) or three (3) complete consecutive Fiscal Quarters during which such Property qualified as a One to Three Quarter Property hereunder, as applicable (each, a “Measurement Period”) multiplied by the applicable Annualization Multiplier to such Measurement Period in order to account for four (4) complete Fiscal Quarters (x) less the annual real property taxes in effect as of the end of the Measurement Period with respect to such One to Three Quarter Property as of the end of the applicable Measurement Period (y) plus the annualized amount of real property taxes deducted from the gross income in computing Net Operating Income during such Measurement Period.

“Anti-Corruption Laws” shall mean the United States Foreign Corrupt Practices Act of 1977, as amended.

“Anti-Terrorism Law” shall mean any U.S. State or Federal law relating to terrorism, money laundering or any related seizure, forfeiture or confiscation of assets, including: (a) Executive Order No. 13224 of September 23, 2001 - Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the Executive Order); (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT Act), Public Law 107-56; and (c) the Money Laundering Control Act of 1986, Public Law 99-570.

“Applicable Margin” shall mean one-half percentage point (0.50%) with respect to the Floating Rate.

“Board of Governors” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

              “Borrowing Base Availability” shall mean as of any Borrowing Base Determination Date, an amount equal to the lesser of (a) $10,000,000 less the outstanding principal amount of the Loan and (b) the Aggregate Borrowing Base Calculation Result less the outstanding principal amount of the Loan. 

“Borrowing Base Certificate” shall have the meaning set forth in Section 5.01(b) of the Agreement.

“Borrowing Base Determination Date” shall mean any of the following dates on which the Borrowing Base Calculation Result is required to be measured by Lender: (i) the last day of each Fiscal Quarter occurring during the Credit Period, (ii) the closing of the sale or other disposition of each 100% Property, (iii) the closing of any 100% Property Refinancing and (iv) upon each borrowing request.

“Borrowing Base Calculation Result” shall mean as of any Borrowing Base Determination Date, the amount calculated for each and every Four Quarter Property and for each and every One to Three Quarter Property, as determined in the succeeding subsections (a) and (b), which result for each shall be a “Borrowing Base Calculation Result”:

2

(a)The Borrowing Base Calculation Result for each Four Quarter Property is determined as follows:

For each Four Quarter Property: (i) Net Operating Income for the most recent four (4) consecutive complete Fiscal Quarters, (ii) divided by 0.065 (a 6.5% cap rate), (iii) multiplied by 0.65 (for maximum 65% loan to value), (iv) less the then outstanding principal balance(s) of all mortgage loan(s) that is/are outstanding for such Four Quarter Property; and

(b)The Borrowing Base Calculation Result for each One to Three Quarter Property is determined as follows:

For each One to Three Quarter Property: (i) Annualized Net Operating Income, (ii) divided by 0.065 (a 6.5% cap rate), (iii) multiplied by 0.65 (for maximum 65% loan to value), (iv) less the then outstanding principal balance(s) of all mortgage loan(s) that is/are outstanding for such One to Three Quarter Property.

“Borrowing Notice” shall have the meaning set forth in Section 2.06 hereof.

“Business Day” shall mean a day of the year on which banks are not required or authorized to close in New York City.

“Capital Lease” shall mean a lease which has been or should be, in accordance with GAAP, capitalized on the books of the lessee.

“Collateral Accounts” shall mean all personal property, including all depository accounts (including but not limited to the Designated Deposit Account) of Borrower maintained at Valley National Bank, in which Lender has been granted a security interest pursuant to the Security Agreement.

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Neither of the following alone will be deemed sufficient to constitute Control: (i) the ownership of the majority of the equitable or legal interests in a Person or (ii) the right to vote on “major decisions” for such Person.

“Commitment” means Lender’s obligation to make Revolving Credit Loans to the Borrower in an outstanding amount not to exceed TEN MILLION AND 00/100 Dollars ($10,000,000.00) pursuant to the terms and subject to the conditions of this Agreement.

“Compliance Certificate Delivery Date” shall have the meaning set forth in Section 5.01(b)(ix) hereof.

“Credit Period” shall have the meaning set forth in Section 2.01 hereof.

“Debt” shall mean, as to any Person: (i) all indebtedness or liability of such Person for borrowed money; (ii) all indebtedness of such Person for the deferred purchase price of property

3

or services (including trade obligations); (iii) all obligations of such Person as a lessee under Capital Leases; (iv) all current liabilities of such Person in respect of unfunded vested benefits under any Plan; (v) all obligations of such Person under letters of credit issued for the account of such Person; (vi) all obligations of such Person arising under acceptance facilities; (vii) all guaranties, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any other Person, or otherwise to assure a creditor against loss; (viii) all obligations secured by any Lien on property owned by such Person whether or not the obligations have been assumed; (ix) liabilities of such Person under interest rate protection and similar agreements; (x) liabilities of such Person under any preferred stock or other preferred equity instrument which, at the option of the holder or upon the occurrence of one or more events, is redeemable by such holder, or which, at the option of such holder is convertible into Debt; (xi) indebtedness of any partnership of which such Person is a general partner; and (xii) all other liabilities recorded as such, or which should be recorded as such, on such Person’s financial statements in accordance with GAAP.

“Debt Service” shall mean, (i) for subsection (a) herein, as of the end of any Fiscal Quarter, the sum of the twelve (12) prior monthly payments of principal and interest for all mortgage loans secured by Positive 100% Properties calculated in accordance with the immediately succeeding subsection (a), to be determined and measured by the financial information required to be delivered to the Lender pursuant to Section 5.01(b) herein plus (ii) the amount specified for the Loan in subsection (b) herein:

(a)with respect to each Positive 100% Property, the greater of (i) the combined regularly scheduled principal and interest payments, consistent with that reported for each Positive 100% Property as a component of Borrower’s 10K and 10Q financial reporting (excluding the principal payment portion amount, if any, that is in excess of the regularly scheduled principal payment, whether at maturity of a mortgage loan or in connection with a prepayment made prior thereto) and as measured for each of the prior twelve (12) consecutive months pursuant to any debt secured by a mortgage, deed of trust or other instrument (“Positive 100% Property Mortgage Debt”) for such Positive 100% Property (for clarity, if such Positive 100% Property is a One to Three Quarter Property, it would have the actual combined regular principal and interest due and payable during the applicable Measurement Period annualized by multiplying such combined amount by the applicable Annualization Multiplier to arrive at a combined regular principal and interest calculation for a consecutive twelve (12) month period); and (ii) the constant monthly combined regular principal and interest payment amount necessary to fully amortize the then outstanding principal balance of such Positive 100% Property Mortgage Debt over a 30 year basis at an interest rate equal to the then current five-year U.S. Treasury rate plus two (2%) percent; plus

(b)the constant combined principal and interest monthly payment amount which would be due on the Loan over a consecutive twelve (12) month period in order to fully amortize the outstanding principal balance of the Loan over a 30 year period at an interest rate equal to the then current five-year U.S. Treasury rate plus two (2%) percent. 

4

“Default” shall mean any of the events specified in Section 6.01 hereof, whether or not any requirement for notice or lapse of time or any other condition has been satisfied.

“Default Rate” means the lesser of (a) the then applicable interest rate plus four percent (4.0%) per annum and (b) the Maximum Legal Rate.

“Deposit Account Control Agreement” shall mean that certain Deposit Account Control Agreement, dated as of the date hereof, concerning all depository accounts of the Borrower maintained at Valley National Bank, as the same may be amended or supplemented from time to time.

“Designated Deposit Account” shall mean depository account number (xxxxx) in the name of the Borrower maintained at Valley National Bank.

“Designated Deposit Proceeds” shall mean, collectively, all funds deposited in the Designated Deposit Account, which funds shall include, without limitation, (a) Net Capital Event Proceeds, (b) Excess Cash Flow, (c) Distributed Reserve Funds, (d) Net Public Stock Proceeds and (e) Redeemed Treasuries.

“Distributed Reserve Funds” shall mean funds previously held back or reserved with respect to a Property to the extent same are actually distributed, remitted or otherwise paid to (i) the Borrower, (ii) a Wholly Owned Subsidiary and/or (iii) a Subsidiary Controlled by Borrower which is also a direct or indirect parent of such Property fee owner (it being acknowledged that for any Subsidiary described in clause (iii), for each such distribution, remittance or payment thereto, Distributed Reserve Funds shall only refer to the portion thereof to which Borrower or a Wholly Owned Subsidiary is entitled pursuant to the organizational documents of such Subsidiary), on a monthly, quarterly, semi-annual or annual basis (for purposes other than to be held back or reserved with respect to a Property).

“Dollars” and the sign “$” mean lawful money of the United States of America.

“Equity Interests” shall mean all securities, shares, units, options, warrants, interests, participations, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company, or similar entity, whether voting or nonvoting, certificated or uncertificated, including general partner partnership interests, limited partner partnership interests, common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934).

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, the regulations promulgated thereunder and the published interpretations thereof as in effect from time to time.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) which together with any other Person would be treated, with such Person, as a single employer under Section 4001 of ERISA.

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“Event of Default” shall mean any of the events specified in Section 6.01 hereof, provided that any requirement for notice or lapse of time or any other condition has been satisfied.

“Excess Cash Flow” shall mean the funds that are actually distributed, remitted or otherwise paid from the funds of a Property fee owner to (i) the Borrower, (ii) a Wholly Owned Subsidiary which is a direct or indirect parent of such Property fee owner, and/or (iii) a Subsidiary Controlled by Borrower which is also a direct or indirect parent of such Property fee owner (it being acknowledged that for any Subsidiary described in clause (iii), for each such distribution, remittance or payment thereto, Excess Cash Flow shall only refer to the portion thereof to which Borrower or a Wholly Owned Subsidiary is entitled pursuant to the organizational documents of such Subsidiary), on a monthly, quarterly, semi-annual or annual basis after having deducted therefrom in each such case, amounts set aside as holdbacks or reserves with respect to the Property in question (which holdback or reserve amounts may be held by Borrower or a Wholly Owned Subsidiary in depository accounts separate from the Designated Deposit Account without constituting Excess Cash Flow hereunder) and/or other amounts due or payable in respect of any Debts or liabilities of the Property or Property fee owner in question.

“Fiscal Quarter” shall mean the periods ending each March 31, June 30, September 30 and December 31.

“Fiscal Year” shall mean the period ending on each December 31^st, effective for the fiscal year to end December 31, 2019 and each December 31st thereafter (representing a change from the prior September 30^th fiscal year end date).

“Floating Rate” shall mean a rate of interest equal to either (i) the Prime Rate plus the Applicable Margin, or (ii) if the Prime Rate is unavailable for any reason, the Lender Prime Rate, as a replacement for the Prime Rate, with no Applicable Margin added. In no event shall the applicable Floating Rate be less than five percent (5%) per annum.

“Four Quarter Property” shall mean a Property that satisfied the conditions for being a 100% Property for the four (4) most recently completed consecutive complete Fiscal Quarters, and which must also have been a 100% Property as of each Borrowing Base Determination Date applicable to such four (4) consecutive complete Fiscal Quarters.

“GAAP” shall mean Generally Accepted Accounting Principles.

“Generally Accepted Accounting Principles” shall mean those generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants acting through the Financial Accounting Standards Board (“FASB”) or through other appropriate boards or committees thereof and which are consistently applied for all periods so as to properly reflect the financial condition, operations and cash flows of a Person, except that any accounting principle or practice required to be changed by the FASB (or other appropriate board or committee of the FASB) in order to continue as a generally accepted accounting principle or practice may be so changed. Any dispute or disagreement

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between Borrower and Lender relating to the determination of Generally Accepted Accounting Principles shall, in the absence of manifest error, be conclusively resolved for all purposes hereof by the written opinion with respect thereto, delivered to Lender, of the independent accountants selected by Borrower and approved by Lender for the purpose of auditing the periodic financial statements of Borrower.

“Hazardous Materials” includes, without limit, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 et. seq.), and in the regulations adopted and publications or interpretations promulgated pursuant thereto, or any other federal, state or local environmental law, ordinance, rule or regulation.

“Interest Payment Date” shall mean the first Business Day of each month.

“Investment” shall mean any stock, evidence of Debt or other security of any Person, any loan, advance, contribution of capital, extension of credit or commitment therefor, including without limitation the guaranty of loans made to others (except for current trade and customer accounts receivable for services rendered in the ordinary course of business and payable in accordance with customary trade terms in the ordinary course of business and except for limited guaranties executed in connection with non-recourse mortgage financing) and (i) any purchase of any security of another Person or (ii) any business or undertaking of any Person or any commitment or option to make any such purchase, or any other investment.

“Lender” shall mean VNB NEW YORK, LLC, a New York limited liability company.

“Lender Prime Rate” means the rate of interest stated by Valley National Bank to be its prime rate, reference rate or base rate in effect from time to time; each change in said rate shall be effective as of the date of such change but in no event less than 5% per annum. The Lender Prime Rate shall apply and be a substitute for the Prime Rate if the Prime Rate is unavailable for any reason.

“Lien” shall mean any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance (other than utility easements, reciprocal easement agreements, party-wall agreements and similar items in the ordinary course of business), lien (statutory or other), or preference, priority, or other security agreement or preferential arrangement, charge, or encumbrance of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction to evidence any of the foregoing.

“Loan” shall mean the aggregate principal amount of all unpaid Revolving Credit Loans, which for clarity is equal to the total outstanding principal amount of all Revolving Credit Loans.

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“Loan Documents” shall mean this Agreement, the Note and any other document executed or delivered pursuant to this Agreement.

“Material Adverse Change” shall mean, as to Borrower, (i) a material adverse change in the financial condition, business, operations, properties, prospects or results of operations of Borrower and its Subsidiaries, taken as a whole, or (ii) any event or occurrence which would be reasonably likely to have a material adverse effect on the ability of Borrower to perform its obligations under the Loan Documents.

“Maturity Date” shall have the meaning assigned to such term in Section 2.07(a) hereof.

“Maximum Legal Rate” means the maximum non-usurious interest rate, if any, that at

any time or from time to time may be contracted for, taken, reserved, charged or received on the Loan and as provided for in this Loan Agreement or in the other Loan Documents, under the laws of the State of New York.

“Multiemployer Plan” shall mean a Plan described in Section 4001(a)(3) of ERISA which covers employees of Borrower or any ERISA Affiliate.

“Negative Borrowing Base Availability” shall refer to a calculated Borrowing Base Availability that results in a negative number.

“Net Capital Event Proceeds” shall mean (a) net proceeds received by a 100% Property fee owner from the disposition of a 100% Property or from a 100% Property Refinancing, and (b) net proceeds received by a Property fee owner of a Property that is not a 100% Property from the disposition of such Property or from a Property Refinancing with respect to such Property to the extent such net proceeds described in clauses (a) or (b) are then distributed, remitted or otherwise paid to (i) the Borrower, (ii) a Wholly Owned Subsidiary which is a direct or indirect parent of such Property fee owner, and/or (iii) a Subsidiary Controlled by Borrower which is also a direct or indirect parent of such Property fee owner (it being acknowledged that for any Subsidiary described in clause (iii), for each such distribution, remittance or payment thereto, Net Capital Event Proceeds shall only refer to the portion thereof to which Borrower or a Wholly Owned Subsidiary is entitled pursuant to the organizational documents of such Subsidiary), and which for both (a) and (b) in this paragraph constitute proceeds after having deducted therefrom in each such case, (i) mortgage loan payoff(s), (ii) broker fees, (iii) third party costs and expenses (including, without limitation, legal fees and closing costs), (iv) disposition and other fees which may be due to a direct or indirect member, partner or shareholder in the Property fee owner that is not Borrower or a Wholly Owned Subsidiary, (v) amounts set aside as holdbacks or reserves with respect to the Property in question (which holdback or reserve amounts may be held by Borrower or a Wholly Owned Subsidiary in depository accounts separate from the Designated Deposit Account without constituting Net Capital Event Proceeds hereunder), (vi) amounts which the Property fee owner is prohibited from distributing by reason of restrictions contained in any documents or instruments evidencing or securing a mortgage financing relating to the Property in question or any regulatory agreements entered into with the Secretary of Housing and

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Urban Development (or similar arrangements) in connection therewith, and (vii) other amounts owed by the Property fee owner on account of its Debts and other liabilities.

“Net Operating Income” shall mean, for all 100% Properties, for each applicable covenant or period being tested, the rental and other income less all expenses of such 100% Properties excluding (i) depreciation, amortization or other non-cash items and (ii) interest or any other sums with respect to any indebtedness, secured by the 100% Properties in question, to be determined by the financial information required to be delivered by the Borrower to the Lender pursuant to Section 5.01(b).

“Net Public Stock Proceeds” shall mean cash and/or other personal property paid or remitted to Borrower from public offerings and/or new issuance of public stock of Borrower, less as applicable, (i) broker fees and (ii) third party costs and expenses (including, without limitation, legal fees and closing costs).

“Note” shall mean the Revolving Credit Note.

“Obligations” as used throughout this instrument shall mean all indebtedness, obligations and liabilities, direct or indirect, absolute or contingent, joint, several, or independent, secured or unsecured, liquidated or unliquidated, contractual or tortious, of Borrower, due or to become due, now existing or hereafter arising or incurred by Borrower, and now or hereafter payable to or held by Lender, in each case in respect of the Loan, whether created directly or acquired by assignment, participation or otherwise, and whether incurred as primary debtor, co-maker, surety, endorser, guarantor or otherwise.

“One to Three Quarter Property” shall mean a Property owned by Borrower and/or a Wholly Owned Subsidiary for the entirety of most recent one (1), two (2) or three (3) consecutive complete Fiscal Quarters (but not for the most recent four (4) consecutive complete Fiscal Quarters), and which must also have been a 100% Property as of each Borrowing Base Determination Date applicable to such one (1), two (2) or three (3) consecutive complete Fiscal Quarters.

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“Permitted Investments” shall mean: (i) direct obligations of the United States of America or any governmental agency thereof, or obligations guaranteed by the United States of America, provided that such obligations mature within one year from the date of acquisition thereof; (ii) time certificates of deposit having a maturity of one year or less issued by any commercial bank organized and existing under the laws of the United States or any state thereof and having aggregate capital and surplus in excess of $1,000,000,000.00 other than such time certificates of deposit with Lender; (iii) money market mutual funds having assets in excess of $2,500,000,000; (iv) commercial paper rated not less than P-1 or A-1 or their equivalent by Moody’s Investor Services, Inc. or Standard & Poor’s Corporation, respectively; (v) tax exempt securities rated Prime 2 or better by Moody’s Investor Services, Inc. or A-1 or better by Standard & Poor’s Corporation; (vi) the fee or leasehold interest in (or a mortgage/deed of trust

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encumbering) retail, office, industrial, land, multi-family residential and other commercial real estate located in the 48 contiguous United States; (vii) investments by Borrower in its subsidiaries, (viii) investments in stock of real estate investment trusts listed on a nationally recognized stock exchange in an aggregate amount not exceeding $10,000,000.00, (ix) [Intentionally Deleted] and (x) time certificates of deposit issued by Lender.

“Person” shall mean an individual, partnership, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a federal, state or local government, or a political subdivision thereof, or any agency of such government or subdivision.

“Plan” shall mean any employee benefit plan established, maintained, or to which contributions have been made by, Borrower or any ERISA Affiliate.

“Positive 100% Property” shall mean a 100% Property which (i) is either a Four Quarter Property or a One to Three Quarter Property, and (ii) that has a Positive Borrowing Base Calculation Result.

“Positive Borrowing Base Calculation Result” shall mean a Borrowing Base Calculation Result that is a positive dollar amount.

“Prime Rate” means, as of the date of determination, the prime rate as set forth in the New York City edition of The Wall Street Journal. Changes in the rate resulting from changes in the Prime Rate shall take place immediately without notice or demand of any kind.

“Prohibited Transaction” shall mean any transaction set forth in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time.

“Property” or “Properties” means real property improved (or intended to be improved) by one or more residential multi-family buildings where Borrower and/or a Subsidiary owns, directly or indirectly, a minimum of one percent (1%) of the ownership interests in the fee owner of such real property. For clarity, the term Property or Properties shall also include all of the Properties that are 100% Properties.

“Property Refinancing” means a transaction in which there is a loan or loan modification (excluding original mortgage financing utilized for the purchase of a Property) secured by a mortgage, deed of trust or other instrument encumbering a Property. For clarity, a Property Refinancing includes the refinancing of an existing mortgage loan on a Property and any additional mortgage loan(s) on a Property.

“Real Estate Acquisition Information” shall mean information relating to any of the Properties for which Borrower is to request a Revolving Credit Loan including but not limited to Property name, location, purchase amount, Borrower or Subsidiary ownership percentage in the contemplated owner thereof, expected Property mortgage amount and any such other information as reasonably requested by Lender to the extent in the possession of Borrower or which is reasonably obtainable by the Borrower.

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“Redeemed Treasuries” shall have the meaning set forth in Section 5.04(c) herein.

“Regulation D” shall mean Regulation D of the Board of Governors, as the same may be amended and in effect from time to time.

“Regulation T” shall mean Regulation T of the Board of Governors, as the same may be amended and in effect from time to time.

“Regulation U” shall mean Regulation U of the Board of Governors, as the same may be amended and in effect from time to time.

“Regulation X” shall mean Regulation X of the Board of Governors, as the same may be amended and in effect from time to time.

“Reportable Event” shall mean any of the events set forth in Section 4043 of ERISA.

“Restricted Party” shall mean any Person: listed in the Annex to the Executive Order or is otherwise subject to the provisions of the Executive Order; listed on the “Specially Designated Nationals and Blocked Persons” list maintained by the Office of Foreign Assets Control (“OFAC”) of the United States Department of the Treasury, as updated or amended from time to time, or any similar list issued by OFAC; or (c) whose property has been blocked, or is subject to seizure, forfeiture or confiscation, by any order relating to terrorism or money laundering issued by the President, Attorney General, Secretary of State, Secretary of Defense, Secretary of the Treasury or any other U.S. State or Federal governmental official or entity.

“Revolving Credit Loan” or “Revolving Credit Loans” shall be deemed a reference to Lender’s Revolving Credit Loans as defined in Section 2.01 hereof.

“Revolving Credit Note” shall be deemed a reference to Lender’s Revolving Credit Note as defined in Section 2.02 hereof, as the same may be supplemented, modified, renewed, substituted or restated from time to time.

“Sanctioned Country” shall mean, at any time, a country or territory which is the subject or target of any Sanctions.

“Sanctioned Person” shall mean, at any time, (a) any Person that is named as a “specially designated national and blocked person” on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

“Sanctions” shall mean comprehensive economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by OFAC or the U.S. Department of State.

“SEC” shall mean The United States Securities and Exchange Commission.

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“Security Agreement” shall mean that certain agreement, dated as of the date hereof, by Borrower granting to Lender a security interest in the Collateral Accounts, as the same may be amended or supplemented from time to time.

“Special Cash Account” shall have the meaning set forth in Section 5.04(b) hereof.

“Subsidiary” shall mean, as to Borrower, any corporation, partnership, limited liability company or joint venture whether now existing or hereafter organized or acquired as follows: (i) in the case of a corporation, of which any percentage equal to or in excess of fifty percent (50%) of the securities are at the time owned, directly or indirectly, by the Borrower, (ii) in the case of a partnership, limited liability company or joint venture, any percentage equal to or in excess of fifty percent (50%) of the partnership, membership or other ownership interests are at the time owned, directly or indirectly, by the Borrower, or (iii) any Person that is otherwise under the Control of the Borrower.

“Subsidiary Controlled by Borrower” shall mean a Subsidiary which is under the sole Control of Borrower.

“Unused Facility Fee” shall have the meaning set forth in Section 2.11 hereof.

“Wholly Owned Subsidiary” shall mean, as to Borrower, any corporation, partnership or limited liability company whether now existing or hereafter organized or acquired as follows: (i) in the case of a corporation, of which one hundred percent (100%) of the securities are at the time owned, directly or indirectly, by the Borrower, or (ii) in the case of a partnership or limited liability company of which one hundred percent (100%) of the membership or other ownership interests are at the time owned, directly or indirectly, by the Borrower.

SECTION 1.02Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”.

SECTION 1.03Accounting Terms. Except as otherwise herein specifically provided, each accounting term used herein shall have the meaning given to it under GAAP.

SECTION 1.04Construction.

(a)All references in this Agreement to “Sections” or “sub-sections” shall be deemed, unless otherwise noted, to be references to the Sections or sub-sections of this Agreement.

(b)All references in this Agreement to an “Exhibit” or “Exhibits” or to a “Schedule” or “Schedules” shall be deemed, unless otherwise noted, to be references to the Exhibits and Schedules annexed to this Agreement.

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(c)All references to a Subsidiary shall be deemed, unless otherwise noted, to be references to a Subsidiary of Borrower.

ARTICLE II

AMOUNT AND TERMS OF THE REVOLVING CREDIT LOANS

SECTION 2.01Revolving Credit Loans. Lender agrees, on and after the date of this Agreement, on the terms and conditions of this Agreement and in reliance upon the representations and warranties set forth in this Agreement, to lend to Borrower and prior to the Maturity Date (the “Credit Period”) such amounts as Borrower may request from time to time (individually, a “Revolving Credit Loan” or collectively, the “Revolving Credit Loans”), which amounts may be borrowed, repaid and reborrowed, provided, however, that the aggregate amount of such Revolving Credit Loans outstanding at any one time shall not exceed the Borrowing Base Availability.

SECTION 2.02Revolving Credit Note. The Revolving Credit Loans shall be evidenced by a promissory note of Borrower in substantially the form of Exhibit A hereto (the “Revolving Credit Note”) dated the date hereof and completed with appropriate insertions. At the time of the making of each Revolving Credit Loan and at the time of each payment of principal thereon, the Lender is hereby authorized by Borrower to make a notation on the schedule annexed to the Revolving Credit Note of the date and amount of the Revolving Credit Loan or payment, as the case may be. Failure to make a notation with respect to any Revolving Credit Loan shall not limit or otherwise affect the obligation of Borrower hereunder or under the Revolving Credit Note with respect to such Revolving Credit Loan, and any payment of principal on the Revolving Credit Note by Borrower shall not be affected by the failure to make a notation thereof on said schedule.

SECTION 2.03Interest. Except as provided herein, all Revolving Credit Loans shall bear interest at the Floating Rate. The rate of interest on Floating Rate Loans shall increase or decrease by an amount equal to any increase or decrease in the Prime Rate (or, if applicable, the Lender Prime Rate) effective as of the opening of business on the day that any such change in the Prime Rate occurs (or, if applicable, the Lender Prime Rate). Changes in the rate resulting from changes in the Prime Rate (or, if applicable, the Lender Prime Rate) shall take place immediately without notice or demand of any kind. Notwithstanding anything herein to the contrary, in no event shall the Floating Rate be less than five percent (5.0%) per annum.

SECTION 2.04Computation of Interest and Fees. Unless otherwise specifically set forth in this Agreement, interest and all fees shall be computed on the actual number of days elapsed over a year of 360 days.

SECTION 2.05Reimbursement of Expenses. If, at any time or times regardless of whether or not an Event of Default then exists, Lender incurs reasonable out-of-pocket accounting expenses, reasonable attorneys fees or any other reasonable out-of-pocket costs or expenses in connection with (a) the negotiation and preparation of this Agreement or any of the other Loan Documents, and any amendment, modification, replacement or termination of this

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Agreement or any of the other Loan Documents that has been requested by Borrower; (b) the administration of this Agreement or any of the other Loan Documents and the transactions contemplated hereby and thereby; (c) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Lender, Borrower or any other Person) in any way relating to Borrower’s obligations under this Agreement or any of the other Loan Documents or Borrower’s affairs (except to the extent any such cost or expense arises from Lender’s gross negligence or willful misconduct); or (d) any attempt to enforce any rights of Lender against Borrower or any other Person which may be obligated to Lender by virtue of this Agreement or any of the other Loan Documents, then all such costs and expenses shall be charged to Borrower. All amounts chargeable to Borrower under this Section shall be payable promptly after written demand by Lender, which demand shall include a reasonably detailed invoice therefore, and shall bear interest from the date that is 10 Business Days after such demand is made until paid in full at the Floating Rate applicable to the Revolving Credit Loans from time to time.

SECTION 2.06Revolving Credit Loan Requests. A request for a Revolving Credit Loan shall be made, or shall be deemed to be made, by Borrower in the following manner: Borrower shall give Lender telephonic notice, to be promptly confirmed in writing on the form attached hereto as Exhibit B, of each borrowing (a “Borrowing Notice”), together with a Borrowing Base Certificate. Each Borrowing Notice shall be irrevocable and shall be effective only if received by Lender no later than 12:00 noon New York City time, on the date which is at least three (3) Business Days, prior to the date of such borrowing designated in the Borrowing Notice. Each such Borrowing Notice shall specify (a) the amount to be borrowed; (b) the date of such borrowing (which shall be a Business Day); and (c) the purpose of the Loan.

SECTION 2.07Maturity; Maximum Revolving Credit Obligations; Prepayments.

(a)The Loan shall be due and payable, if not required to be paid earlier pursuant to this Agreement, on April 18, 2021 (the “Maturity Date”).

(b)At no time shall the aggregate principal amount of the Loan outstanding exceed the Borrowing Base Availability. In the event that for any reason, the aggregate outstanding principal amount of the Loan exceeds such amount, Borrower shall within two (2) Business Days prepay the Loan in an amount sufficient to reduce the sum of the aggregate outstanding principal amount of the Loan to an amount not greater than availability under the Borrowing Base Availability. Any such prepayment shall be made with interest accrued to the date of prepayment, unless interest will be charged on the regular monthly payment date, at the sole discretion of the Lender.

(c)In the event, upon any required Borrowing Base Determination Date, there is a Negative Borrowing Base Availability, Borrower shall within two (2) Business Days of delivering the required Borrowing Base Certificate and required attachments thereto to the Lender, pursuant to Section 5.01(b)(x) of this Agreement, pay down the Loan in an amount equal to the amount of the Negative Borrowing Base Availability such that the outstanding principal balance of the Loan shall not exceed the Borrowing Base Availability.

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(d)Upon one (1) Business Day’s prior written notice specifying the amount of principal prepayment to be made, Borrower shall have the right to prepay the Loan at any time and from time to time in whole or in part without premium or penalty; provided, however, that (x) any such prepayment shall be in an amount not less than such amounts as provided in Section 2.07(e) hereof; and (y) if required by the Lender, any such prepayment of a Loan shall be made with interest accrued on the principal amount being prepaid to the date of prepayment.

(e)Except for borrowings which exhaust the full remaining amount of the Commitment or prepayments which result in 100% prepayment of the Loan, each borrowing and prepayment of the Loan shall be in a minimum amount of $50,000.00 and in increased integral multiples of $10,000.00.

SECTION 2.08Payments.

(a)All payments by Borrower hereunder or under the Revolving Credit Note shall be made in Dollars in immediately available funds by wire transfer or intra-bank credit from accounts of Borrower by 2:00 P.M. Eastern Standard Time on the date on which such payment shall be due. Interest on the Revolving Credit Note shall accrue from and including the date of each Revolving Credit Loan, but interest shall not be charged on the date any interest payment is made.

(b)Except as provided in the following sentence, accrued interest on each Loan shall be payable in arrears on the Interest Payment Date until the maturity of such Loan or the payment or prepayment thereof in full. Interest at the Default Rate shall be payable from time to time on demand of Lender, if applicable, in accordance with the terms hereof.

(c)All items of payment received by Lender by 2:00 P.M. Eastern time, on any Business Day shall be deemed received on that Business Day. All items of payment received after 2:00 P.M. Eastern Standard Time, on any Business Day shall be deemed received on the following Business Day. Until payment in full of all Obligations and termination of this Agreement, Borrower irrevocably waives (except as otherwise expressly provided for by Lender) the right to direct the application of any and all payments and collections at any time or times hereafter received by Lender from or on behalf of Borrower, and Borrower does hereby irrevocably agree that Lender shall have the continuing exclusive right to apply and reapply any and all such payments and collections received at any time or times hereafter by Lender or its agent against the Obligations, in such manner as Lender may reasonably deem advisable, notwithstanding any entry by Lender upon any of its books and records, subject to the terms of this Agreement.

SECTION 2.01Mandatory Payments and Deposits.

(a)Deposits and Mandatory Prepayment of Net Capital Event Proceeds. As soon as practical but in no event later than seven (7) Business Days after the receipt of Net Capital Event Proceeds, Borrower shall, or shall cause its (i) Wholly Owned Subsidiary and/or (ii) Subsidiary Controlled by Borrower (it being acknowledged that for any Subsidiary described in clause (ii), Net Capital Event Proceeds shall only refer to the portion of the funds

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received by such Subsidiary to which Borrower or a Wholly Owned Subsidiary is entitled pursuant to the organizational documents of such Subsidiary), to deposit the Net Capital Event Proceeds received by Borrower or such Wholly Owned Subsidiary or such Subsidiary Controlled by Borrower into the Designated Deposit Account. Upon the occurrence of a 100% Property Refinancing or the disposition of a 100% Property, Borrower shall make a mandatory prepayment of the Loan in an amount equal to the sum of (i) the amount of the Net Capital Event Proceeds from such event, plus (ii) the amount of Distributed Reserve Funds received in connection with such event.

(b)Mandatory Deposits of Net Public Stock Proceeds. As soon as practical but in no event later than seven (7) Business Days after the receipt of Net Public Stock Proceeds, Borrower shall deposit the Net Public Stock Proceeds received by Borrower into the Designated Deposit Account.

(c)Mandatory Deposits of Excess Cash Flow. Borrower shall use commercially reasonable efforts to cause Excess Cash Flow to be distributed, remitted or otherwise paid by Property fee owners in accordance with the general and historical management practices of their respective Properties, or as otherwise determined to be prudent or desirable by such Property fee owners and the Person(s) Controlling such Property fee owners, for such respective Property(ies). As soon as practical but in no event later than seven (7) Business Days after the receipt of Excess Cash Flow, Borrower shall, or shall cause its (i) Wholly Owned Subsidiary and/or (ii) Subsidiary Controlled by Borrower (it being acknowledged that for any Subsidiary described in clause (ii), Excess Cash Flow shall only refer to the portion of the funds received by such Subsidiary to which Borrower or a Wholly Owned Subsidiary is entitled pursuant to the organizational documents of such Subsidiary), to deposit the Excess Cash Flow received by Borrower or such Wholly Owned Subsidiary or such Subsidiary Controlled by Borrower into the Designated Deposit Account.

(a)Mandatory Deposits of Distributed Reserve Funds. As soon as practical but in no event later than seven (7) Business Days after the receipt of Distributed Reserve Funds, Borrower shall, or shall cause its (i) Wholly Owned Subsidiary and/or (ii) Subsidiary Controlled by Borrower (it being acknowledged that for any Subsidiary described in clause (ii), Distributed Reserve Funds shall only refer to the portion of the funds received by such Subsidiary to which Borrower or a Wholly Owned Subsidiary is entitled pursuant to the organizational documents of such Subsidiary), to deposit the Distributed Reserve Funds received by Borrower or such Wholly Owned Subsidiary or such Subsidiary Controlled by Borrower into the Designated Deposit Account.

SECTION 2.10Use of Proceeds. The proceeds of the Revolving Credit Loans shall be used for the acquisition of or investment in a Property. No part of the proceeds of any Revolving Credit Loan may be used for any purpose that directly or indirectly violates or is inconsistent with, the provisions of Regulations T, U or X. Borrower shall not use, and shall take reasonable steps to ensure that none of its Subsidiaries and its or their respective directors, officers, employees and agents shall use, the proceeds of any Revolving Credit Loans (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of

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money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, or (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country.

SECTION 2.11Unused Facility Fee. Borrower agrees to pay to Lender from the date of this Agreement and for so long as the Commitment remains outstanding, on July 1, 2019 and on the first Business Day of each October 1, January 1 and April 1 thereafter, an unused facility fee equal to one quarter of one percent (0.25%) per annum (computed on the basis of the actual number of days elapsed during the three month period in question (or portion thereof) preceding the payment date (each a “Quarterly Calculation Period”), on the basis of a 360 day annual year calculated on the dollar amount of the maximum Borrowing Base Availability during such Quarterly Calculation Period minus the average daily principal balance of the Loan outstanding for such Quarterly Calculation Period (the “Unused Facility Fee”), such Unused Facility Fee being payable quarterly for the three month period, or part thereof, preceding the payment date.

SECTION 2.12Authorization to Debit Borrower’s Account. Lender is hereby authorized to debit Borrower’s account number (xxxxx) maintained at Valley National Bank for (i) all scheduled payments of principal and/or interest under the Revolving Credit Note, and (ii) the Unused Facility Fee, deficiency fee and all other fees and amounts due hereunder; all such debits to be made on the days such payments are due in accordance with the terms hereof.

SECTION 2.13Late Charges, Default Interest.

(a)If the Borrower shall not make any payment of any principal installment or of interest on the Loan or any other amount becoming due hereunder (in each case other than (x) any prepayment (whether voluntary or mandatory) or (y) any payment at maturity, whether by virtue of an acceleration, or otherwise) within fifteen (15) days of the due date of such payment, then the Borrower shall pay a late payment charge equal to four (4%) percent of such late payment.

(b)Upon the occurrence and during the continuation of an Event of Default, Borrower shall pay interest on all amounts owing under the Revolving Credit Note and this Agreement (after as well as before judgment) at the Default Rate, to be applied retroactive to the date of the first occurrence of the Event of Default, computed on the basis of a 360 day year.

SECTION 2.14Interest Adjustments. If the provisions of this Agreement or the Revolving Credit Note would at any time require payment by Borrower to the Lender of any amount of interest in excess of the maximum amount then permitted by applicable law, the interest payments shall be reduced to the extent necessary so that the Lender shall not receive interest in excess of such maximum amount. To the extent that, pursuant to the foregoing sentence, the Lender shall receive interest payments hereunder or under the Revolving Credit Note in an amount less than the amount otherwise provided, such deficit (hereinafter called the “Interest Deficit”) will cumulate and will be carried forward (without interest) until the date of determination by the Lender; thereafter, interest otherwise payable to the Lender hereunder or under the Revolving Credit Note for any subsequent period shall be increased by such maximum

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amount of the Interest Deficit that may be so added without causing the Lender to receive interest in excess of the maximum amount then permitted by applicable law.

SECTION 2.15Participations, Etc.. Lender shall have the right (but not the obligation) at any time, with or without notice to the Borrower, to sell, assign, transfer or negotiate all or any part of the Note or the Commitment or grant participations therein to one or more banks (foreign or domestic, including an affiliate of the Lender) having sufficient capital to honor the Commitment, insurance companies or other regulated financial institutions, pension funds or mutual funds so long as the same does not result in any increased costs to Borrower under Section 2.03 hereof. Lender agrees to furnish written notice to Borrower of any such sale, assignment or transfer of all or any part of the Note or Commitment concurrently with the occurrence thereof. The Borrower agrees and consents to Lender providing financial and other information regarding its and their business and operations to prospective purchasers or participants and further agree that to the extent that Lender should sell, assign, transfer or negotiate all or any part of the Note or the Commitment, Lender shall be forever released and discharged from its obligations under the Note, the Commitment and this Agreement but only to the extent same is sold, assigned, transferred or negotiated to any commercial bank, insurance company or other regulated financial institution, pension fund or mutual fund organized and existing under the laws of the United States or any state thereof and having a net worth in excess of $1,000,000,000.00, and only to the extent that such party assumes in writing all of the Lender’s rights obligations under this Agreement and the other Loan Documents with respect to the obligations so conveyed. Nothing herein shall be read or construed as prohibiting or otherwise limiting the ability or right of Lender to pledge the Note to a Federal Reserve Bank.

ARTICLE III

CONDITIONS OF LENDING

SECTION 3.01Conditions Precedent to the Making of the Initial Revolving Credit Loan. The obligation of Lender to make the initial Revolving Credit Loan contemplated by this Agreement is subject to the following conditions precedent, all of which shall be performed or satisfied in a manner in form and substance reasonably satisfactory to Lender and its counsel, and Lender acknowledges that the following conditions precedent have been performed or satisfied:

(a)Lender shall have received a Revolving Credit Note, duly executed by Borrower.

(b)Lender shall have received certified (as of the date of this Agreement) copies of the resolutions of the board of directors of Borrower authorizing the Loan and authorizing and approving this Agreement and the other Loan Documents and the execution, delivery and performance thereof and certified copies of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and such other Loan Documents.

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(c)Lender shall have received a certificate of the Secretary (attested to by another officer) of Borrower certifying: (i) the names and true signatures of the officer or officers of Borrower authorized to sign this Agreement, the Revolving Credit Note and the other Loan Documents to be delivered hereunder on behalf of Borrower; and (ii) a copy of Borrower’s by-laws as complete and correct on the date of this Agreement.

(d)Lender shall have received a copy of the certificate of incorporation and all amendments thereto of Borrower, certified by the Secretary and a certificate of existence and good standing with respect to Borrower from the Secretary of State (or equivalent officer) of the state of incorporation of Borrower and from the Secretary of State (or equivalent officer) of any state in which Borrower is authorized to do business.

(e)Lender shall have received the opinion of as to certain matters referred to in Article IV hereof and as to such other matters as the Lender or its counsel may reasonably request.

(f)The following statements shall be true and Lender shall have received a certificate signed by the President, an Executive Vice President, a Senior Vice President, the Treasurer or the Chief Financial Officer of Borrower dated the date hereof, stating that:

(i)The representations and warranties contained in Article IV of this Agreement and in the Loan Documents are true and correct in all material respects on and as of such date;

(ii)No Default or Event of Default has occurred and is continuing, or would result from the making of the initial Revolving Credit Loan;

(g)All schedules, documents, certificates and other information provided to the Lender pursuant to or in connection with this Agreement shall be satisfactory to the Lender and its counsel in all material respects;

(h)Borrower shall have established its primary banking and depository relationship with Lender pursuant to Section 5.04 herein;

(i)Borrower shall have established the Designated Deposit Account maintained at Valley National Bank;

(j) The Lender shall have received Borrower’s 10-K financial statement filed with the SEC for the period fiscal year ended December 31, 2018 and Borrower’s then most recent 10-Q financial statement filed with the SEC;

(k) The Lender shall have received a (1) Quarterly Properties Information Report pursuant to Section 5.01 (b) (vi), (2) Quarterly 100% Mortgage Information Report pursuant to Section 5.01(b)(vii), (3) Quarterly 100% Property Income Statement Reports pursuant to Section 5.01 (b) (viii), and (4) a Borrowing Base Certificate pursuant to Section

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5.01(b)(x) evidencing sufficient Borrowing Base Availability in relation to the accompanying borrowing request by the Borrower;

(l) All legal matters incident to this Agreement and the Loan transactions contemplated hereby shall be reasonably satisfactory to Lender’s counsel;

(m) Lender shall have received such other approvals, opinions or documents as Lender or its counsel may reasonably request;

(n) Lender shall have received payment of the reasonable legal fees and expenses of Lender’s counsel; and

(o) Lender shall have received payment of a commitment fee in the amount of Fifty Thousand and 00/100 Dollars ($50,000.00), which Borrower acknowledges was earned by the Lender in connection with the transactions contemplated hereby.

SECTION 3.02Conditions Precedent to All Revolving Credit Loans. The obligation of the Lender to make each Revolving Credit Loan (including the initial Revolving Credit Loan) shall include that Borrower continues to be in compliance with all conditions in Section 3.01, subject to the further condition precedent that on the date of such Revolving Credit Loan:

(a)The following statements shall be true and each request for a Revolving Credit Loan shall be deemed a certification by Borrower that:

(i)The representations and warranties contained in Article IV of this Agreement and in the other Loan Documents are true and correct in all material respects on and as of such date as though made on and as of such date; and

(ii)No Default or Event of Default has occurred and is continuing or would result from such Revolving Credit Loan.

(b)Lender shall have received a covenant compliance certificate prepared by management of Borrower, indicating that, after giving effect to the requested Loan, Borrower shall remain in compliance with all of the financial requirements set forth in Section 5.03 hereof.

(c)Lender shall have received (i) such other approvals, opinions or documents as Lender may reasonably request, to the extent furnished in connection with the initial Revolving Credit Loan hereunder and (ii) all documents, financial information and other information as required pursuant to this Agreement, including but not limited to that required in Sections 2.06, 3.01 and 5.01 hereof.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01Representations and Warranties. On the date hereof and on each date that Borrower requests a Revolving Credit Loan, Borrower represents and warrants to Lender as follows:

(a)Subsidiaries. On the date hereof, the only Subsidiaries of Borrower are set forth on Schedule 4.01(a) annexed hereto. All of the Equity Interests of any such Subsidiaries which are owned directly or indirectly by Borrower are owned free and clear of any mortgage, pledge, lien or encumbrance, except for the transfer and/or lien restrictions contained in the organizational and/or loan documents of such Subsidiaries and/or their subsidiaries. Except as set forth on Schedule 4.01(a), there are not outstanding any warrants, options, contracts or commitments of any kind entitling any Person to purchase or otherwise acquire any securities or other Equity Interests of any Wholly Owned Subsidiary, nor are there outstanding any instruments which are convertible into or exchangeable for any securities or other Equity Interests of any Wholly Owned Subsidiary. The list of Subsidiaries as of the given date is subject to supplementation and modification from time to time as set forth in and as required by Section 5.01(l).

(b)Organization. Borrower is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and Borrower has the power to own its assets and to transact the business in which it is presently engaged. Borrower is duly qualified and is in good standing in all other jurisdictions where the failure to so qualify or be in good standing would result in a Material Adverse Change in Borrower.

(c)Due Execution, etc. The execution, delivery and performance by Borrower of this Agreement and the other Loan Documents are within Borrower’s corporate power, has been duly authorized by all necessary corporate action and does not and will not (i) require any consent or approval of the stockholders of Borrower; (ii) contravene Borrower’s certificate of incorporation or by-laws; (iii) violate any provision of or any law, rule, regulation, contractual restriction, order, writ, judgment, injunction, or decree, determination or award binding on or affecting Borrower; (iv) result in a breach of or constitute a default under any indenture or loan or credit agreement, or any other agreement, lease or instrument to which Borrower is a party or by which it or its properties may be bound or affected; or (v) result in, or require, the creation or imposition of any Lien (other than the Lien of the Loan Documents) upon or with respect to any of the properties now owned or hereafter acquired by Borrower.

(d)No Authorization, etc. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by Borrower of this Agreement or any other Loan Document to which it is a party, except authorizations, approvals, actions, notices or filings which have been obtained, taken or made (or to be made in connection with UCC financing statements executed in connection herewith, if any), as the case may be.

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(e)Validity of Loan Documents. The Loan Documents when delivered hereunder will have been duly executed and delivered on behalf of Borrower and will be the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, subject to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally and general principals of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(f)Financial Statements. The audited consolidated financial statements of Borrower and its Subsidiaries for the fiscal year ended December 31, 2018, copies of each of which have been furnished to Lender, and the consolidated results of operations of Borrower and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP, fairly present in all material respects the consolidated financial condition of Borrower and its Subsidiaries as at such dates. Since such date there has been (i) except as set forth in Schedule 4.01(f) hereto, no material increase in the liabilities of Borrower and its Subsidiaries and (ii) no Material Adverse Change in Borrower.

(g)No Litigation. There is no pending or threatened action, proceeding or investigation against Borrower or any Subsidiary before any court, governmental agency or arbitrator, which either in one case or in the aggregate, is reasonably likely to result in a Material Adverse Change in Borrower.

(h)Tax Returns. Borrower and each Subsidiary Controlled by Borrower has filed all federal, state and local tax returns required to be filed (subject to extensions granted) and has paid all taxes, assessments and governmental charges and levies thereon to be due, including interest and penalties.

(i)Licenses, etc. Borrower and each Subsidiary possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto, to conduct its business substantially as now conducted and as presently proposed to be conducted where the failure to possess such licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto would be reasonably likely to result in a Material Adverse Change in Borrower, and neither Borrower nor any Subsidiary is in violation of any similar rights of others where such violation would be reasonably likely to result in a Material Adverse Change in Borrower.

(j)Anti-Corruption Laws and Sanctions. Borrower represents and warrants that Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by Borrower and its respective directors, officers and employees and their agents that are controlled by Borrower with Anti-Corruption Laws and applicable Sanctions, and Borrower and its respective officers and employees and to the knowledge of Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) Borrower or, to the knowledge of Borrower, any Subsidiary or any of their respective directors, officers, employees or agents that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No use of proceeds or other transactions contemplated hereby will violate Anti-Corruption Laws or applicable Sanctions.

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(k)Margin Credit. Neither Borrower nor any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U or X), and no proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or in any other way which will cause Borrower to violate the provisions of Regulations T, U or X.

(l)Compliance with Law. Borrower and each Subsidiary is in all material respects in compliance with all federal and state laws and regulations in all jurisdictions where the failure to comply with such laws or regulations would be reasonably likely to result in a Material Adverse Change in Borrower.

(m)ERISA. Except where the failure would not be reasonably likely to result in a Material Adverse Change in Borrower, Borrower, each Subsidiary and each ERISA Affiliate of Borrower or a Subsidiary are in compliance in all material respects with all applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred and is continuing with respect to any Plan of Borrower or a Subsidiary; no notice of intent to terminate a Plan of Borrower or a Subsidiary has been filed nor has any Plan been terminated; no circumstances exist which constitute grounds under Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a trustee to administrate, a Plan of Borrower or a Subsidiary, nor has the PBGC instituted any such proceedings; neither Borrower, any Subsidiary nor any ERISA Affiliate of Borrower or any Subsidiary has completely or partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; Borrower, each Subsidiary and each ERISA Affiliate of Borrower or any Subsidiary have met their minimum funding requirements under ERISA with respect to all of their Plans and the present fair market value of all Plan assets exceeds the present value of all vested benefits under each Plan, as determined on the most recent valuation date of the Plan in accordance with the provisions of ERISA for calculating the potential liability of Borrower, any Subsidiary or any ERISA Affiliate of Borrower or any Subsidiary to PBGC or the Plan under Title IV of ERISA; and neither Borrower, any Subsidiary nor any ERISA Affiliate of Borrower, or any Subsidiary has incurred any liability to the PBGC under ERISA.

(n)Hazardous Material. Borrower and each Subsidiary is, in all material respects, in compliance with all federal, state or local laws, ordinances, rules, regulations or policies governing Hazardous Materials where the failure to comply with such laws, ordinances, rules, regulations or policies would be reasonably likely to result in a Material Adverse Change in Borrower; and neither Borrower nor any Subsidiary has used Hazardous Materials on, from, or affecting any property now owned or occupied or hereafter owned or occupied by Borrower or any Subsidiary in any manner which violates federal, state or local laws, ordinances, rules, regulations or policies governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials where such violation would be reasonably likely to result in a Material Adverse Change in Borrower; and to the best of Borrower’s knowledge, no prior owner of any such property or any tenant, subtenant, prior tenant or prior subtenant of any such property have used Hazardous Materials on, from or affecting such property in any manner which violates federal, state or local laws, ordinances,

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rules, regulations, or policies governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials except as set forth in Borrower’s files which have been made available to Lender or where such violation would not be reasonably likely to result in a Material Adverse Change in Borrower.

(o)Use of Proceeds. The proceeds of the Revolving Credit Loans shall be used exclusively for the purposes set forth in Section 2.10 hereof.

(p)Title to Assets. Borrower or the applicable Wholly Owned Subsidiary has good and marketable title to all of the 100% Properties. The 100% Properties and assets of Borrower are not subject to any mortgage, judgment or similar monetary Lien other than those described in Schedule 5.02(a) hereof.

(q)Casualty. Except as set forth on Schedule 4.01(q), neither the business nor the properties of Borrower or any Subsidiary are affected by any fire, explosion, accident, strike, hail, earthquake, embargo, act of God or of the public enemy, or other casualty (whether or not covered by insurance), which would be reasonably likely to result in a Material Adverse Change in Borrower.

(r)Lien Priority. Except as disclosed on Schedule 4.01(r), the Lien(s) on the Collateral Accounts created by the Security Agreement constitutes valid first priority perfected security interests in favor of Lender.

(s)Credit Agreements. Schedule 4.01(s) is a complete and correct list of all Debt of Borrower (it being acknowledged for the avoidance of doubt that Schedule 4.01(s) does not list any Debts of any subsidiary of Borrower).

(t)OFAC and Patriot Act. Neither Borrower nor, to Borrower’s knowledge, any of its Affiliates:

(i)is a Restricted Party, is an affiliate of a Restricted Party or conducts any business with or receives any funds from a Restricted Party;

(ii)has violated any Anti-Terrorism Law;

(iii)has been or is being investigated by any governmental authority for violating any Anti-Terrorism Law or has received notice of any such investigation or any other action under any Anti-Terrorism Law in respect of it or any Affiliate or any of their respective assets; or

(iv)has been assessed any civil or criminal penalty or had any funds or assets frozen, seized or forfeited under any Anti-Terrorism Law; and

(v)has taken reasonable measures to ensure that the source of its funds and property is derived from legal sources and is not subject to seizure, forfeiture or confiscation under any Anti-Terrorism Law.

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ARTICLE V

COVENANTS OF BORROWER

SECTION 5.01Affirmative Covenants. So long as any amount shall remain outstanding under the Revolving Credit Note or so long as the Commitment shall remain in effect, Borrower will, and will cause each Subsidiary Controlled by Borrower to, unless Lender shall otherwise consent in writing:

(a)Compliance with Laws, Etc. Comply in all material respects with all applicable laws, rules, regulations and orders, where the failure to so comply would be reasonably likely to result in a Material Adverse Change in Borrower;

(b)Reporting Requirements. Furnish to Lender:

(i)Annual Financial Statements. As soon as available and in any event not later than the earlier of (x) the date required to be filed with the SEC, or (y) ninety (90) days after the end of each Fiscal Year, a copy of the 10-K report of Borrower and its Subsidiaries for each Fiscal Year, including audited consolidated financial statements with balance sheets with related statements of income and retained earnings and statements of cash flows, all in reasonable detail and setting forth in comparative form the figures for the previous Fiscal Year, together with an unqualified opinion, prepared by management of Borrower and certified by independent certified public accountants selected by Borrower and reasonably satisfactory to Lender, all such financial statements to be prepared in accordance with GAAP, consistently applied;

(ii)Quarterly Financial Statements. As soon as available and in any event not later than the earlier of (x) the date required to be filed with the SEC, or (y) sixty (60) days after the end of each of Borrower’s first three Fiscal Quarters, a copy of the 10-Q report of Borrower and its Subsidiaries for each Fiscal Quarter, including consolidated financial statements for such quarter and for year to date, including a balance sheet with related statements of income and retained earnings and a statement of cash flows, all in reasonable detail and setting forth in comparative form the figures for the comparable quarter and comparable year to date period for the previous fiscal year, all such financial statements to be prepared by management of Borrower in accordance with GAAP, consistently applied;

(iii)Management Letters. Promptly upon receipt thereof by Borrower or any Subsidiary Controlled by Borrower, copies of any reports submitted to Borrower or any Subsidiary by independent certified public accountants in connection with the examination of the financial statements of Borrower or any Subsidiary made by such accountants;

(iv)Accountant’s Report. Simultaneously with the delivery of the annual financial statements referred to in Section 5.01(b)(i) hereof, a certificate of the independent certified public accountants who audited such statements to the effect that, in

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making the examination necessary for the audit of such statements, they have obtained no knowledge of any condition or event which constitutes a Default or Event of Default, or if such accountants shall have obtained knowledge of any such condition or event, they shall specify in such certificate each such condition or event of which they have knowledge and the nature and status thereof;

(v)Designated Deposit Proceeds Report. Not later than fifteen (15) days after the end of each month, and in form and substance with Exhibit “G”, attached hereto: (A) a report of all cash receipts and cash deposits by Borrower during such most recent prior full month, including separate detail for each Property in which the Borrower or a Subsidiary has ownership or an investment in a Property and/or Properties and (B) a report of cash receipts and cash deposits by Borrower from Net Public Stock Proceeds in a form reasonably acceptable to Lender, which report shall indicate any and all Designated Deposit Proceeds and be certified (including certification that all Designated Deposit Proceeds which have been received by the Borrower have been deposited into the Designated Deposit Account maintained at Valley National Bank during such one month period being certified thereto) by any two (2) of the following officers of Borrower: President, an Executive Vice President, a Senior Vice President, the Treasurer, and the Chief Financial Officer;

(vi)Quarterly Properties Information Report. As soon as available and in any event not later than forty (40) days after the end of each Fiscal Quarter, a complete portfolio of Properties of Borrower and its Subsidiaries substantially in the form as attached Exhibit “A-1” and separately identifying, to Lender’s reasonable satisfaction, each Property name, address and Borrower’s direct or indirect ownership percentage in the entity that owns the applicable Property, and separately identifying in bold print each 100% Property;

(vii)Quarterly 100% Mortgage Information Report. As soon as available and in any event not later than forty (40) days after the end of each Fiscal Quarter, a complete portfolio of Properties outstanding mortgage report for each of the Properties of Borrower and its Subsidiaries substantially in the form and substance attached hereto as Exhibit “H” and separately identifying in bold print each 100% Property;

(viii)Quarterly 100% Property Income Statement Reports. Not later than forty (40) days after the end of each Fiscal Quarter, a detailed income statement for each 100% Property substantially in the forms attached as Exhibit “A-2”, which must include the greatest number of most recent complete consecutive Fiscal Quarters income statement information for complete consecutive Fiscal Quarters for each Fiscal Quarter which such Property qualified as a 100% Property, to a maximum of the four (4) most recent complete consecutive Fiscal Quarters income statement information;

(ix)Certificate of No Default. (A) No later than forty (40) days following the end of each Fiscal Quarter (with respect to each Fiscal Quarter, a “Compliance Certificate Delivery Date”), a certificate of the President, an Executive Vice President, a Senior Vice President, the Treasurer or the Chief Financial Officer of Borrower, (1)

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certifying that to the best of their knowledge after due inquiry no Default or Event of Default has occurred and is continuing, or if a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which is proposed to be taken with respect thereto; and (2) with computations demonstrating compliance with the covenants contained in Section 5.03 in form and substance similar to Exhibit E; and (B) simultaneous with the delivery of the financial statements referred to in Section 5.01(b)(i) hereof and (ii), a certificate of the President, an Executive Vice President, a Senior Vice President, the Treasurer or the Chief Financial Officer of Borrower, either (1) certifying that there are no changes to the most recent certificate delivered in accordance with clause (A) of this Section 5.01(b)(ix) or (2) if any changes have occurred, a new certificate (x) setting forth the changes to the most recent certificate delivered in accordance with clause (A) of this Section 5.01(b)(ix) and (y) certifying that there are no other changes to such prior certificate other than those specified in such new certificate;

(x)Borrowing Base Certificate. As soon as available, and in any event not later than (i) forty (40) days following the end of each Fiscal Quarter; (ii) within seven (7) Business Days after the occurrence of a 100% Property Refinancing or the sale or disposition of a 100% Property; and (iii) on the same day of any borrowing request made by Borrower, a Borrowing Base Certificate in the form attached as Exhibit F;

(xi)Notice of Litigation. Promptly after the commencement thereof, notice of all actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, whether or not covered by insurance, affecting Borrower or any Subsidiary which, if determined adversely to Borrower or such Subsidiary would be reasonably likely to result in a Material Adverse Change in Borrower;

(xii)Notice of Defaults and Events of Default. As soon as possible and in any event within five (5) days after the occurrence of each Default or Event of Default, a written notice setting forth the details of such Default or Event of Default and the action which is proposed to be taken by Borrower with respect thereto;

(xiii)ERISA Reports. Promptly after the filing or receiving thereof, copies of all reports, including annual reports, and notices which Borrower or any Subsidiary files with or receives under ERISA from the PBGC, the Internal Revenue Service or the U.S. Department of Labor; and as soon as possible after Borrower knows or has reason to know that any Reportable Event or Prohibited Transaction has occurred with respect to any Plan of Borrower or any Subsidiary or that the PBGC or Borrower or any Subsidiary has instituted or will institute proceedings under Title IV of ERISA to terminate any Plan, Borrower will deliver to Lender a certificate of the President, an Executive Vice President, a Senior Vice President, the Treasurer or the Chief Financial Officer of Borrower setting forth details as to such Reportable Event, Prohibited Transaction or Plan termination and the action Borrower proposes to take with respect thereto;

(xiv)Proxy Statements, Etc. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports which Borrower sends to

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its public stockholders, if any, and copies of all regular, periodic, and special reports, all registration statements which Borrower files with the SEC or any governmental authority which may be substituted therefor, or with any national securities exchange and any press releases or other notices or information publicly disseminated; it being acknowledged that the publication and continued availability of any of the foregoing on Borrower’s website shall be deemed to constitute delivery thereof to Lender;

(xv)U.S. Treasuries Information. As soon as available and no later than fifteen (15) days after the end of each month, a U.S. Treasuries Purchase(s) and Redemption(s) Report in form and substance attached hereto as Exhibit “I”;

(xvi)Mortgage Financing. As soon as available and in no event later than fifteen (15) days prior to the closing of any 100% Property Refinancing where new or additional funds will be borrowed, a certificate prepared by management of Borrower (i) advising Lender of the proposed 100% Property Refinancing and anticipated closing date, (ii) detailing the Property or Properties involved, (iii) setting forth the source and material economic terms of such financing, and (iv) providing a copy of the appraisal, if any, to Lender if in the possession or control of Borrower;

(xvii)Real Estate Acquisition Information. As soon as possible, but in no event less than forty-eight (48) hours prior to submitting a Borrowing Notice attached as Exhibit B hereto in connection with a Property acquisition, such Real Estate Acquisition Information as reasonably requested by Lender;

(xviii)Real Estate Dispositions. As soon as possible, but in no event later than fifteen (15) days prior to the closing of the sale or other disposition of a 100% Property, a certificate prepared by management of Borrower (i) advising Lender of the proposed disposition and anticipated closing date, (ii) identifying the 100% Property or 100% Properties involved and (iii) setting forth the material economic terms of such disposition.

(xix)Public Offering Notice. As soon as practical, but in no event later than five (5) Business Days following the end of each calendar month during the Credit Period, notice of the receipt of any Net Public Stock Proceeds by Borrower during the immediately preceding monthly period;

(xx)General Information. As soon as practical, but in no event later than twenty-one (21) days upon request by Lender, such other information respecting the condition or operations, financial or otherwise, of Borrower or any Subsidiary as Lender may from time to time reasonably request.

(c)Taxes. Pay and discharge all taxes, assessments and governmental charges upon Borrower, any Subsidiary, its or their income and its or their properties prior to the dates on which penalties are attached thereto, unless and only to the extent that (i) such taxes shall be contested in good faith and by appropriate proceedings by Borrower or such Subsidiary, (ii) there be adequate reserves therefor in accordance with GAAP entered on the books of Borrower or

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such Subsidiary and (iii) no enforcement proceedings against Borrower or such Subsidiary have been commenced.

(d)Existence. Preserve and maintain the existence and good standing of Borrower and each Subsidiary Controlled by Borrower in the jurisdiction of its formation and the rights, privileges and franchises of Borrower and each such Subsidiary in each case where failure to so preserve or maintain would be reasonably likely to result in a Material Adverse Change in Borrower.

(e)Maintenance of Properties and Insurance. Except where the failure to do so would not be reasonably likely to result in a Material Adverse Change in Borrower, (i) keep the respective material properties and assets (tangible or intangible) that are useful and necessary in Borrower’s and each Subsidiary’s business, in good working order and condition, reasonable wear and tear excepted; and (ii) maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in similar businesses and owning properties doing business in the same general areas in which Borrower and each Subsidiary operates. Notwithstanding the foregoing, Positive 100% Properties shall at all times maintain insurance pursuant to subsection (ii), herein.

(f)Books of Record and Account. Keep adequate records and proper books of record and account in which complete entries will be made in a manner to enable the preparation of financial statements in accordance with GAAP, reflecting all financial transactions of Borrower and each Subsidiary.

(g)Visitation. At any reasonable time, and from time to time, permit Lender or any agents or representatives thereof, to examine and make copies of and abstracts from the books and records of, and, subject to the requirements of all applicable leases, visit the properties of, Borrower and each Subsidiary and to discuss the affairs, finances and accounts of Borrower and each Subsidiary with any of Borrower’s officers, directors or independent accountants.

(h)Performance and Compliance with Other Agreements. Perform and comply with each of the provisions of each and every agreement the failure to perform or comply with which would be reasonably likely result in a Material Adverse Change in Borrower;

(i)Continued Perfection of Liens and Security Interest. At Lender’s request, record or file or rerecord or refile any of the Loan Documents or a financing statement or any other filing or recording or refiling or rerecording in each and every office where and when necessary to preserve, perfect and continue the security interests of the Loan Documents;

(j)Pension Funding. Comply with the following and cause each ERISA Affiliate of Borrower and each Subsidiary to comply with the following:

(i)engage solely in transactions which would not subject any of such entities to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by

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Section 4975 of the Internal Revenue Code in either case in an amount in excess of $25,000.00;

(ii)make full payment when due of all amounts which, under the provisions of any Plan or ERISA, Borrower, each Subsidiary or any ERISA Affiliate of any of same is required to pay as contributions thereto;

(iii)all applicable provisions of the Internal Revenue Code and the regulations promulgated thereunder, including but not limited to Section 412 thereof, and all applicable rules, regulations and interpretations of the Accounting Principles Board and the Financial Accounting Standards Board;

(iv)not fail to make any payments in an aggregate amount greater than $25,000.00 to any Multiemployer Plan that Borrower, any Subsidiary or any ERISA Affiliate of Borrower may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; or

(v)not take any action regarding any Plan which could result in the occurrence of a Prohibited Transaction.

(k)Licenses. Maintain at all times all licenses or permits necessary to the conduct of the business of Borrower and each Subsidiary or as may be required by any governmental agency or instrumentality thereof, where the failure to maintain such licenses or permits would be reasonably likely to result in a Material Adverse Change in Borrower;

(l)Subsidiaries. On the fifth (5th) calendar day of each month, furnish to Lender a complete schedule of all existing Subsidiaries as of the first (1st) day of such month with an asterisk next to any new Subsidiaries formed in the month prior and a double asterisk for each of Borrower’s Subsidiaries which own 100% Property(ies);

(m)Anti-Corruption Laws and Sanctions. Borrower and each Subsidiary Controlled by Borrower shall each maintain in effect and enforce policies and procedures designed to ensure compliance by Borrower and such Subsidiaries and their respective directors, officers and employees and their agents with Anti-Corruption Laws and applicable Sanctions.

(n)Maintenance of Real Estate Investment Trust Status. Borrower shall maintain at all times its existence as a real estate investment trust;

(o)Maintenance of Listing on National Stock Exchange. Borrower shall maintain at all times its listing on the New York Stock Exchange or another nationally recognized stock exchange;

(p)Maintenance of Principal Banking Relationship. The Borrower shall maintain its primary operating account at Valley National Bank, which account is the Designated Deposit Account; and

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(q)OFAC and Patriot Act. (i) Immediately notify Lender if it obtains knowledge that it or any of its Affiliates has become or has been listed as a Restricted Party or has been charged with or has engaged in any violation of any Anti-Terrorism Law; (ii) not receive any funds from a Restricted Party and, in any case, exclude any funds derived from any Restricted Party or from any Person involved in the violation of any Anti-Terrorism Law from being used to pay debt service or any other amounts owing under the Loan Documents; (iii) not transfer or consent to the transfer of any legal or beneficial ownership interest of any kind in Borrower or any Affiliate to a Restricted Party or any Person involved in the violation of any Anti-Terrorism Law; (iv) not acquire, directly or indirectly, ownership interest of any kind in any Restricted Party or any Person involved in the violation of any Anti-Terrorism Law; (v) not form any partnership or joint venture or conduct any business with any Restricted Party or any Person involved in the violation of any Anti-Terrorism Law, and not to act, directly or indirectly, as the agent or representative of any Restricted Party or any Person in the violation of any Anti-Terrorism Law; and (vi) indemnify Lender for any costs incurred by any of them as a result of any violation of an Anti-Terrorism Law by Borrower or any Affiliate of Borrower.

(r)Until all Obligations under this Agreement are fully satisfied, Borrower shall make or shall cause to be made all payments required under Section 2.09 herein in accordance with the terms of such Section, and shall adhere to all terms and conditions of this Agreement.

SECTION 5.02Negative Covenants. So long as any amount shall remain outstanding under the Revolving Credit Note, or so long as the Commitment shall remain in effect, Borrower will, not without the written consent of Lender:

(a)Liens, Etc. Create, incur, assume or suffer to exist, any Lien, upon or with respect to the Borrower or any of its Subsidiaries, now owned or hereafter acquired, except:

(i)Liens in favor of Lender;

(ii)Liens for taxes or assessments or other government charges or levies if not yet due and payable or if due and payable if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained in accordance with GAAP;

(iii)Liens imposed by law, such as mechanics’, materialmen’s, landlords’, warehousemen’s, and carriers’ Liens, and other similar Liens, securing obligations incurred in the ordinary course of business which are not past due or which are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained in accordance with GAAP, provided however, that Borrower shall send notice to Lender of filing of any such Lien in excess of $250,000 within fifteen (15) days after receiving notice thereof together with Borrower’s statement indicating the action it proposes to cause such Lien to be satisfied, dismissed and/or discharged;

(iv)Liens under workers’ compensation, unemployment insurance, Social Security, or similar legislation;

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(v)Liens, deposits, or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), leases (permitted under the terms of this Agreement), public or statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds, or other similar obligations arising in the ordinary course of business;

(vi)Liens described in Schedule 5.02(a) annexed hereto, provided that no such Liens or the Debt secured thereby shall be renewed, extended or refinanced (other than Liens from mortgages on the Properties or pursuant to other Liens or Debt permitted hereunder);

(vii) Judgment and other similar Liens arising in connection with court proceedings (other than those described in Section 6.01(k) hereof), provided that the execution or other enforcement of such judgment or Lien is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;

(viii)Easements, rights-of-way, restrictions, and other similar encumbrances with respect to real property which, either in one case or in the aggregate, do not materially interfere with Borrower’s use and enjoyment of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto;

(ix)Mortgage Liens on Properties and/or other real estate assets of Borrower or any of its Subsidiaries;

(x)Liens on equipment and/or other personal property of Subsidiaries;

(xi)Liens not in excess of the aggregate dollar amount of $500,000; or

(xii)Liens encumbering assets of Subsidiaries which would not be reasonably likely to result in a Material Adverse Change in Borrower.

(b)Debt. Create, incur, assume, or suffer to exist, any Debt, except:

(i)Debt of Borrower under this Agreement or the Debt described on Schedule 5.02(b) annexed hereto;

(ii)Accounts payable to trade creditors for goods or services and current operating liabilities (other than for borrowed money) in each case incurred in the ordinary course of business and paid within the specified time, unless contested in good faith and by appropriate proceedings;

(iii)Debt secured by Liens permitted by Section 5.02(a) hereof; or

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(iv)Any other Debt which would not be reasonably likely to result in a Material Adverse Change in Borrower (which shall in no way circumvent or limit the prohibition in 5.02(c) hereof).

(c)Other than in connection with any Debt permitted under Section 5.02(b) or guaranties permitted under Section 5.02(i), enter into any loan and/or credit facilities with any other lender or financial institution other than the Lender (for clarity, that certain currently existing junior subordinated debenture due in 2036 in the current amount of $37,400,000 is excluded from this prohibition and the prohibitions in Section 5.02(b) and Section 5.02(i), subject to the dollar amount of this junior subordinated debenture not being increased);

(d)Merger. Merge into, or consolidate with or into, or have merged into it, any Person;

(e)Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise dispose of all or substantially all of its assets;

(f)Investments, Etc. Make any Investment other than Permitted Investments (it being acknowledged for the avoidance of doubt that Borrower’s subsidiaries shall not be restricted from making Investments by virtue of this Section 5.02(f));

(g)Transactions With Affiliates. Except for the transactions listed on Schedule 5.02(g) hereto, or otherwise in the ordinary course of business and pursuant to the reasonable requirements of Borrower’s or its Subsidiary’s business and upon fair and reasonable terms no less favorable to Borrower or such Subsidiary than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of Borrower, enter into any transaction, including, without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any Affiliate of Borrower;

(h)Intentionally Omitted;

(i)Guarantees. Guaranty, or in any other way become directly or contingently obligated for any Debt of any other Person (including but not limited to any agreements relating to working capital maintenance, take or pay contracts or similar arrangements) other than (i) the endorsement of negotiable instruments for deposit in the ordinary course of business; or (ii) guarantees existing on the date hereof and set forth in Schedule 5.02(i) annexed hereto; or (iii) hazardous material indemnities; or (iv) customary guaranties and/or indemnities in connection with mortgage loans and relating to non-recourse carve-out items such as bankruptcy filings, breaches of transfer restrictions, fraud or intentional misrepresentation, misappropriation of funds, waste, abandonment of any property, misapplication of rents and other similar items; (v) Debt owing to Lender under this Agreement; (vi) guaranties and/or indemnities associated with breaches of representations and warranties in purchase and sale agreements; (vii) guaranties and/or indemnities in favor of members or partners of a Subsidiary (or their affiliates) relating to items described in clause (iv) above (whether due to actions or omissions of Borrower or its affiliates, as a method of sharing

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responsibility for non-recourse carve-out obligations of such members or partners (or their affiliates), or otherwise; or (viii) Debt permitted under Section 5.02(b) hereof;

(j)Change of Business. Materially alter the nature of its business;

(k)Fiscal Year. Change the ending date of its fiscal year from December 31;

(l)Accounting Policies. Change any accounting policies, except as permitted by GAAP;

(m)Management. Fail to retain at least five (5) of Jeffrey Gould, Mitchell Gould, Matthew Gould, David Kalish, Isaac Kalish, Israel Rosenzweig, Steven Rosenzweig, Mark Lundy and George Zweier in the management of Borrower;

(n)Ownership. Transfer, sell or assign ownership interests in Borrower so that the current management group of the Borrower together with its executive officers and each of their respective (i) family members and (ii) Affiliated Persons, as of the date hereof, fail to maintain at least an aggregate twenty percent (20%) ownership interest in the Borrower;

(o)Hazardous Material. Cause or permit any property owned or occupied by Borrower or a Subsidiary to be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials, except in compliance with all applicable federal, state and local laws or regulations or where such non-compliance would not be reasonably likely to result in a Material Adverse Change in Borrower; nor cause or permit, as a result of any intentional or unintentional act or omission on the part of Borrower, a Subsidiary or any tenant or subtenant, a release of Hazardous Materials onto any property owned or occupied by Borrower or a Subsidiary or onto any other property, except in compliance with all applicable federal, state and local laws or regulations, except where such release would not be reasonably likely to result in a Material Adverse Change in Borrower; fail to comply with all applicable federal, state and local laws, ordinances, rules and regulations, whenever and by whomever triggered, except where such failure would not be reasonably likely to result in a Material Adverse Change in Borrower; nor fail to obtain and comply with, any and all approvals, registrations or permits required thereunder, except where such failure would not be reasonably likely to result in a Material Adverse Change in Borrower. Borrower shall execute any documentation reasonably required by Lender in connection with the representations, warranties and covenants contained in this sub-section and Section 4.01(n) hereof; and

(p)Dividends, Etc. Upon the occurrence and during the continuance of an Event of Default, in the event any amount is then outstanding under the Revolving Credit Note, Borrower shall not make distributions in excess of the sum necessary to permit Borrower to maintain its status as a real estate investment trust.

SECTION 5.03Financial Requirements. So long as any amount shall remain outstanding under the Revolving Credit Note:

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(a)Debt Service Coverage Ratio. Permit the ratio of the sum of the Net Operating Income and Annualized Net Operating Income for all Positive 100% Properties, calculated on a consolidated basis, to Debt Service, to become less than 1.25 to 1.00, such ratio to be tested at each Fiscal Quarter based on financial reports proved by Borrower under Section 5.01(b).

(b)Number of 100% Properties. Borrower shall own, directly or indirectly, not less than three (3) 100% Properties, of which a minimum of two (2) must be Positive 100% Properties, of which a minimum of one (1) must be a Four Quarter Property.

SECTION 5.04Accounts.

(a)Borrower shall maintain all depository accounts with Valley National Bank; provided, however, (i) amounts set aside as holdbacks or reserves with respect to a Property may be held by Borrower in accounts maintained at other financial institutions without same resulting in a breach or violation of this Section 5.04(a), (ii) Net Capital Event Proceeds, Excess Cash Flow, Distributed Reserve Funds and Net Public Stock Proceeds may be held in accounts maintained at other financial institutions pending the deposit thereof in the Designated Deposit Account in accordance with the time frames set forth in Section 2.09 of this Agreement without same resulting in a breach or violation of this Section 5.04(a), and (iii) other deposits in the combined aggregate amount not to exceed $350,000 for the twelve (12) months immediately following the date of this Agreement, and thereafter the combined aggregate amount not to exceed $250,000, may be maintained at other financial institutions without same resulting in a breach or violation of this Section 5.04(a).

(b)Borrower shall maintain account no. (xxxxx) with Valley National Bank (the “Special Cash Account”), consisting of certain capital improvement reserves and/or other holdback reserves for certain Properties. The Special Cash Account shall not be deemed a Collateral Account and is not subject to the Security Agreement or Deposit Account Control Agreement.

(c)In the event Borrower purchases U.S. Treasuries (the “Treasuries”) in conformity with its standard business practices, Borrower shall first pursue the purchase of the Treasuries in the Borrower’s name through the Valley National Bank (in a manner consistent with the customary procedures of the Valley National Bank Trust Department or other designated Valley National Bank department). If for any reason Valley National Bank is unable to effectuate Borrower’s request for the purchase of Treasuries in Borrower’s name, Borrower may then pursue such requested purchase of Treasuries through a different financial institution). When the Borrower redeems the Treasuries, any and all proceeds/funds from Treasuries in Borrower’s name, whether purchased or maintained at Valley National Bank, an Affiliate of Valley National Bank or a third party financial institution, shall be deposited into the Designated Deposit Account no later than seven (7) days upon receipt (such proceeds referred to as the “Redeemed Treasuries”).

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ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01Events of Default. If any of the following events (each, an “Event of Default”) shall occur and be continuing:

(a)Borrower shall fail to pay any installment of principal of, or interest on, the Revolving Credit Note when due, or Borrower shall fail to pay any fees or other amounts owed in connection with this Agreement when due;

(b)Any representation or warranty made by Borrower in this Agreement or in any other Loan Document or which is contained in any certificate, document, opinion, or financial or other statement furnished at any time under or in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect when made; or

(c)Borrower shall fail to perform any covenant contained in Section 5.01(b), Section 5.01(c), Section 5.01(d), Section 5.01(n), Section 5.01(o) and Section 5.01(p) hereof on its part to be performed or observed; provided however, Borrower shall have seven (7) days following such failure to cure any default under Sections 5.01(b)(v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xvi), (xviii) or Section 5.01(d), and Borrower shall have thirty (30) days following the initial receipt of notice by Borrower, a Wholly Owned Subsidiary or a Subsidiary Controlled by Borrower of the failure to pay taxes due to cure any default under Section 5.01(c);

(d)Borrower shall fail to perform any term, covenant or agreement contained in Section 5.02(o) hereof; provided, however, that upon Borrower ’s failure to perform under Section 5.02(o) hereof, Borrower shall be granted such longer period as shall be reasonably necessary to cause compliance with said Section, provided that Borrower or a Subsidiary shall deliver to Lender within ninety (90) days thereafter, a written proposal regarding the curative process, certified by an environmental company acceptable to Lender, and such plan must be approved by Lender’s environmental consultants;

(e)Borrower shall fail to perform any term, covenant or agreement contained in Section 5.03 hereof;

(f)the making or filing of any lien, levy, or execution on, or seizure, attachment or garnishment of, any of the “Collateral” as such term is defined in the Security Agreement;

(g)the termination or purported termination of the Deposit Account Control Agreement (or any other control agreement that has been entered into with respect to the Collateral Account), without Lender’s written consent;

(h)Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or in any other Loan Document (other than the Revolving

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Credit Note) on its part to be performed or observed following notice and an opportunity to cure within the time frames otherwise set forth in this Agreement, or if a cure timeframe is not indicated in this Agreement, an opportunity to cure within thirty (30) days following notice thereof from Lender; provided that the foregoing clause shall not be deemed to add a notice and cure period to breaches set forth in this Section 6.01 (other than this subsection (h)) which do not have a specified notice and cure period;

(i)Borrower shall fail to pay any Debt or Debts of Borrower, in the singular or aggregate principal amount of $500,000.00 or more (excluding Debt evidenced by the Revolving Credit Note and excluding Debt of any subsidiary of Borrower), or any installment, interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreements or instruments relating to such Debt or Debts; or any other default under any agreements or instruments relating to any such Debt or Debts, or any other event shall occur and shall continue after the applicable grace period, if any, specified in such agreements or instruments, if the effect of such default or event, in any of the foregoing instances is to accelerate the maturity of such Debt or Debts; or any such Debt or Debts shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof and is not then so paid within thirty (30) Business Days of the date same shall have been declared due and payable;

(j)Borrower shall generally not pay its Debts as such Debts become due, or shall admit in writing its inability to pay its Debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its Debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and if instituted against Borrower shall remain undismissed for a period of 60 days; or Borrower shall take any action to authorize any of the actions set forth above in this subsection (j);

(k)Any judgment or order or combination of judgments or orders for the payment of money, in the amount of $500,000.00 or more, singularly or in the aggregate, which sum shall not be subject to full, complete and effective insurance coverage, shall be rendered against Borrower and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

(l)Any of the following events occur or exist with respect to Borrower, any Subsidiary or any ERISA Affiliate of Borrower : (i) any Prohibited Transaction involving any Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iv) any event or circumstance that might constitute grounds entitling the PBGC to institute proceedings under

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Section 4042 of ERISA for the termination of, or for the appointment of a trustee to administer, any Plan, or the institution of the PBGC of any such proceedings; (v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization insolvency, or termination of any Multiemployer Plan; and in each case above, such event or condition, together with all other events or conditions, if any, could in the opinion of Lender subject Borrower, any Subsidiary or any such ERISA Affiliate to any tax, penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which is either singularly or in the aggregate $50,000.00 or more; or

(m)This Agreement or any other Loan Document, at any time after its execution and delivery and for any reason, ceases to be in full force and effect or shall be declared to be null and void, or the validity or enforceability of any document or instrument delivered pursuant to this Agreement shall be contested by Borrower or any other party to such document or instrument or Borrower or any other party to such document or instrument shall deny that it has any or further liability or obligation under any such document or instrument.

SECTION 6.02Remedies on Default. Upon the occurrence and continuance of an Event of Default Lender may, upon five (5) Business Days notice to Borrower, (i) terminate the Commitment, (ii) declare the Revolving Credit Note, all interest thereon and all other amounts payable under this Agreement to be due and payable, whereupon the Commitment shall be terminated, the Revolving Credit Note, all such interest and all such amounts shall become and be due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Borrower, (iii) proceed to enforce its rights whether by suit in equity or by action at law, whether for specific performance of any covenant or agreement contained in this Agreement or any other Loan Document, or in aid of the exercise of any power granted in either this Agreement or any other Loan Document, or (iv) proceed to obtain judgment or any other relief whatsoever appropriate to the enforcement of its rights, or proceed to enforce any other legal or equitable right which Lender may have by reason of the occurrence of any Event of Default hereunder or under any other Loan Document, provided, however, upon the occurrence of an Event of Default referred to in Section 6.01(j) hereof, the Commitment shall be immediately terminated, the Revolving Credit Note, all interest thereon and all other amounts payable under this Agreement shall be immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Borrower. Any amounts collected pursuant to action taken under this Section 6.02 shall be applied to the payment of any costs incurred by Lender in taking such action, including, but without limitation, reasonable attorney fees and expenses, to payment of the accrued interest on the Revolving Credit Note, and to payment of the unpaid principal of the Revolving Credit Note, in such order as is determined by Lender.

SECTION 6.03Remedies Cumulative. No remedy conferred upon or reserved to Lender hereunder or in any other Loan Document is intended to be exclusive of any other available remedy, but each and every such remedy shall be cumulative and in addition to every other remedy given under this Agreement or any other Loan Document or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver

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thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Lender to exercise any remedy reserved to it in this Article VI, it shall not be necessary to give any notice, other than such notice as may be herein expressly required in this Agreement or in any other Loan Document.

ARTICLE VII

MISCELLANEOUS

SECTION 7.01Amendments, Etc. No amendment, modification, termination or waiver of any provision of any Loan Document to which Borrower is a party, nor consent to any departure by Borrower from any provision of any Loan Document to which it is a party, shall in any event be effective unless the same shall be in writing and signed by Lender and Borrower, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 7.02Notices, Etc. All notices and other communications provided for in this Agreement shall be in writing (including telegraphic communication) and mailed, sent by nationally recognized overnight mail delivery service, or delivered, if to Borrower at the address of Borrower set forth at the beginning of this Agreement to the attention of David Kalish (with a copy to Steven Rosenzweig, Esq.) and if to Lender, at the address of Lender as set forth at the beginning of this Agreement or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 7.02. All such notices and communications shall be effective as to Borrower (i) three (3) Business Days after being mailed by registered or certified mail, postage prepaid, (ii) upon delivery if by personal messenger or hand delivery service or (iii) the next Business Day after depositing with an agent or reputable overnight carrier service. All such notices and communications shall be effective as to Lender when actually received by Lender.

SECTION 7.03No Waiver, Remedies. No failure on the part of Lender to exercise, and no delay in exercising, any right, power or remedy under any Loan Document, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.

SECTION 7.04Costs, Expenses and Taxes. Borrower agrees to pay on demand all out-of-pocket costs and expenses of Lender, including reasonably attorneys fees, in connection with the preparation, execution, delivery and administration of this Agreement, the Revolving Credit Note and any other Loan Documents, including without limitation, the reasonable fees and expenses of counsel for Lender with respect thereto, and all costs and expenses, if any (including reasonable counsel fees and expenses), in connection with the enforcement of this Agreement, the Revolving Credit Note and any other Loan Documents. Other than for the willful misconduct or gross negligence of Lender, or the default of Lender hereunder, Borrower shall at all times protect, indemnify, defend and save harmless Lender from and against any and all claims, actions, suits and other legal proceedings, and liabilities,

39

obligations, losses, damages, penalties, judgments, costs, expenses or disbursements which Lender may, at any time, sustain or incur by reason of or in consequence of or arising out of the execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby. Borrower acknowledges that it is the intention of the parties hereto that this Agreement shall be construed and applied to protect and indemnify Lender against any and all risks involved in the execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby, all of which risks are hereby assumed by Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority, provided that Borrower shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Lender’s gross negligence or willful misconduct. The provisions of this Section 7.04 shall survive the payment of the Revolving Credit Note and the termination of this Agreement.

SECTION 7.05Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits at Valley National Bank (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Lenders or any affiliate, parent or subsidiary of the Lender to or for the credit or the account of Borrower against any and all of the obligations of Borrower now or hereafter existing under this Agreement, the Revolving Credit Note and the other Loan Documents, irrespective of whether or not Lender shall have made any demand under this Agreement, the Revolving Credit Note or such other Loan Documents and although such obligations may be unmatured. The rights of Lender under this Section 7.05 are in addition to all other rights and remedies (including, without limitation, other rights of set-off) which Lender may have. For avoidance of doubt, Borrower has granted Lender and its parent, Valley National Bank, a right of set-off and security interest in any accounts of Borrower held at Valley National Bank, all which rights are subject to the terms of this Agreement and any other Loan Documents. Notwithstanding anything to the contrary set forth herein, or in any other Loan Document, or in any other instrument or agreement relating to the Special Cash Account, neither Lender, nor its parent, Valley National Bank, nor any of their respective affiliates, parents or subsidiaries, shall have a Lien on, or right of offset or set-off against, the Special Cash Account or any funds therein.

SECTION 7.06Binding Effect. This Agreement shall become effective when it shall have been executed by Borrower and Lender and thereafter it shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns, except that Borrower shall not have any right to assign its or their rights hereunder or any interest herein without the prior written consent of Lender.

SECTION 7.07Further Assurances. Borrower agrees at any time and from time to time at its expense, upon request of Lender or its counsel, to promptly execute, deliver, or obtain or cause to be executed, delivered or obtained any and all further instruments and

40

documents and to take or cause to be taken all such other action Lender may reasonably deem appropriate in obtaining the full benefits of, this Agreement or any other Loan Document.

SECTION 7.08Section Headings, Severability, Entire Agreement. Section and subsection headings have been inserted herein for convenience only and shall not be construed as part of this Agreement. Every provision of this Agreement and each other Loan Document is intended to be severable; if any term or provision of this Agreement, any other Loan Document, or any other document delivered in connection herewith shall be invalid, illegal or unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining provisions hereof or thereof shall not in any way be affected or impaired thereby. All exhibits and schedules annexed to this Agreement shall be deemed to be part of this Agreement. This Agreement, the other Loan Documents and the exhibits and schedules annexed hereto and thereto embody the entire agreement and understanding among Borrower and Lender with respect to the transactions contemplated hereby and supersede all prior agreements and understandings relating to the subject matter hereof.

SECTION 7.09Governing Law. This Agreement, the Revolving Credit Note and all other Loan Documents shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 7.10Waiver of Jury Trial.

(a)Borrower and Lender waive all rights to trial by jury in any action or proceeding involving, directly or indirectly any matter (whether sounding in tort, contract or otherwise) in any way, arising out of, relating to, or connected with this Agreement, any other Loan Document or the transactions contemplated hereby.

(b)In an action commenced in the Commercial Division, New York State Supreme Court, the parties hereby agree, subject to the requirements for a case to be heard in the Commercial Division, to apply the Court’s accelerated adjudication procedures set forth in Rule 9 of the Rules of Practice for the Commercial Division, in connection with any dispute, claim or controversy arising out of or relating to this Agreement, or the breach, termination, enforcement or validity thereof.

SECTION 7.11Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

41

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

Borrower:BRT APARTMENTS CORP.

By: /s/ David W. Kalish

Print Name: David W. Kalish

Print Title: Senior Vice President-Finance

Lender:

VNB NEW YORK, LLC

By: /s/ Andrew Baron

Name: Andrew Baron

Title: First Vice President

Exhibit I

EX-10.2

As of April 18, 2019

BRT Apartments Corp.

60 Cutter Mill Road, Suite 303

Great Neck, NY 11021

Attention: Mr. David Kalish, SVP-Finance

Re:BRT Apartments Corp. with VNB New York, LLC.

Dear Mr. Kalish:

Reference is hereby made to that certain $10,000,000 credit facility (the “Loan”) made available by VNB New York, LLC (the “Lender”) to BRT Apartments Corp., a Maryland corporation (the “Borrower”), evidenced by a Revolving Credit Note made by Borrower in favor of the Lender, in the original principal amount of $10,000,000 dated April 18, 2019 (the “Note”) and subject to the terms of a certain Loan Agreement executed by Borrower and the Lender dated April 18, 2019 (the “Loan Agreement”) together with all other instruments and documents executed in connection therewith, collectively, the “Loan Documents”). Capitalized terms not otherwise defined herein shall have the meaning set forth in the Loan Documents.

Specific reference is made to Section 5.03 of the Loan Agreement which provides, inter alia, that the Borrower shall remain in compliance with the covenants contained therein so long as any amount shall remain outstanding under the Note. Borrower has agreed to modify Section 5.03, subject to the terms of this letter agreement (this “Amendment”), by requiring compliance with the covenants contained therein so long as any amount shall remain outstanding under the Note and so long as the Commitment shall remain in effect.

A.Amendment to Sections 5.03. The Borrower and the Lender agree that Section 5.03 of the Loan Agreement is deleted in its entirety and replaced with the following:

Section 5.03Financial Requirements: So long as any amount shall remain outstanding under the Revolving Credit Note, or so long as the Commitment shall remain in effect, without the written consent of Lender:

(a)Debt Service Coverage Ratio. Borrower will not permit the ratio of the sum of (i) the Net Operating Income for the most recent four fiscal quarters for each Four Quarter Property which is a Positive 100% Property and (ii) the Annualized Net Operating Income for each One To Three Quarter Property which is a Positive 100% Property, calculated on a combined aggregated basis, to Debt Service, to become less than 1.25 to 1.00, such ratio to be tested for each Fiscal Quarter based on financial reports provided by Borrower under Section 5.01(b).

(b)Number of 100% Properties. Borrower shall own, directly or indirectly, not less than three (3) 100% Properties, of which a minimum of two (2) must be Positive 100% Properties, of which a minimum of one (1) must be a Four Quarter Property.

B.Amendment to Section 6.01(e). The Borrower and the Lender agree that Section 6.01(e) is hereby deleted in its entirety and replaced with the following:

(e)Borrower shall fail to perform any term, covenant or agreement contained in Section 5.03 hereof, except that

(1) with respect to Section 5.03(a) Borrower shall have thirty (30) days to cure such failure from the earlier to occur of the date Borrower delivers any required compliance report to Lender or the Compliance Certificate Delivery Date (the “Cure Period”), provided, (i) that there be zero dollars outstanding under the Revolving Credit Note, no later than by 3PM U.S. Eastern Time, on the commencement date of the Cure Period; (ii) that there shall be no advances under the Revolving Credit Note unless and until such failure(s) are cured on or before the expiration of the Cure Period; and (iii) the Borrower meets all of the requirements of this Agreement including those contained in Section 3.02 hereof;

(2) with respect to Section 5.03(b) Borrower shall have thirty (30) days to cure such failure from the occurrence date of the event causing such failure (the “5.03(b) Cure Period”), provided, (i) that there be zero dollars outstanding under the Revolving Credit Note, no later than by 3PM U.S. Eastern Time, on the commencement date of the 5.03(b) Cure Period; (ii) that there shall be no advances under the Revolving Credit Note unless and until such failure(s) are cured on or before the expiration of the 5.03(b) Cure Period; and (iii) the Borrower meets all of the requirements of this Agreement including those contained in Section 3.02 hereof.

The determination as to whether a cure has been effected hereunder shall be made by Lender in its sole and commercially reasonable discretion based on new compliance certificate(s) together with such supporting information and documentation reasonably requested by Lender to be delivered to Lender on or before each of the above respective Cure Period expiration dates in Sections 6.01(e)(1) and 6.01(e)(2) above.

E.Conditions. The effectiveness of this Amendment shall be expressly subject to receipt by the Lender of a fully executed copy of this Amendment.

F.Miscellaneous. All terms and conditions of the Loan Documents, except as modified by this Amendment are hereby affirmed and ratified.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGE FOLLOWS]

	Very truly yours, VNB NEW YORK, LLC By: /s/ Andrew Baron Name: Andrew Baron Title: First Vice President
Acknowledged and agreed: BORROWER: BRT Apartments Corp. By: /s/ David W. Kalish Name: David Kalish Title: Senior Vice President-Finance

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jeffrey A. Gould, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 of BRT Apartments Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

Date:	May 9, 2019	/s/ Jeffrey A. GOuld
		Jeffrey A. Gould
		President and
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David W. Kalish, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 of BRT Apartments Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

Date:	May __, 2019
		David W. Kalish
		Senior Vice President - Finance

EX-31.3

EXHIBIT 31.3

CERTIFICATION

I, George Zweier, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 of BRT Apartments Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

Date:	May __, 2019
		George Zweier
		Vice President and
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

I, Jeffrey A. Gould, do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 of BRT Apartments Corp. (“the Registrant”), as filed with the Securities and Exchange Commission on the date hereof (the "Report"):

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

Date:	May 9, 2019	/s/ Jeffrey A. Gould
		Jeffrey A. Gould
		President and
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF SENIOR VICE PRESIDENT-FINANCE

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

I, David W. Kalish, do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 of BRT Apartments Corp. (“the Registrant”), as filed with the Securities and Exchange Commission on the date hereof (the "Report"):

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

Date:	May __, 2019
		David W. Kalish
		Senior Vice President - Finance

EX-32.3

EXHIBIT 32.3

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

I, George Zweier, do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 of BRT Apartments Corp. (“the Registrant”), as filed with the Securities and Exchange Commission on the date hereof (the "Report"):

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

Date:	May 9, 2019	/s/ George Zweier
		George Zweier
		Vice President and
		Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 06, 2019
Document and Entity Information
Entity Registrant Name	BRT APARTMENTS CORP.
Entity Central Index Key	0000014846
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding (in shares)		15,900,395

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands		Mar. 31, 2019	Dec. 31, 2018
ASSETS
Real estate properties, net of accumulated depreciation and amortization of $101,332 and $91,715		$ 1,077,326	$ 1,029,239
Real estate loan		4,600	4,750
Cash and cash equivalents		21,062	32,428
Restricted cash		7,813	8,180
Deposits and escrows		14,902	21,268
Investments in unconsolidated joint ventures		19,125	19,758
Other assets		9,087	8,084
Total Assets	[1]	1,153,915	1,123,707
Liabilities:
Mortgages payable, net of deferred costs of $6,100 and $6,289		808,729	771,817
Junior subordinated notes, net of deferred costs of $352 and $357		37,048	37,043
Accounts payable and accrued liabilities		22,620	24,487
Total Liabilities	[1]	868,397	833,347
Commitments and contingencies
BRT Apartments Corp. stockholders' equity:
Preferred shares $.01 par value 2,000 shares authorized, none outstanding		0	0
Common stock, $.01 par value, 300,000 shares authorized; 15,175 and 15,038 shares outstanding		152	150
Additional paid-in capital		217,344	216,981
Accumulated other comprehensive income		1,082	1,688
Accumulated deficit		(27,512)	(20,044)
Total BRT Apartments Corp. stockholders’ equity		191,066	198,775
Non-controlling interests		94,452	91,585
Total Equity		285,518	290,360
Total Liabilities and Equity		$ 1,153,915	$ 1,123,707

[1] The Company's consolidated balance sheets include the assets and liabilities of consolidated variable interest entities (VIEs). See note 6. The consolidated balance sheets include the following amounts related to the Company's VIEs as of March 31, 2019 and December 31, 2018, respectively: $635,457 and $584,074 of real estate properties, $6,859 and $5,207 of cash and cash equivalents, $7,419 and $11,705 of deposits and escrows, $5,649 and $6,302 of other assets,  $484,232 and $446,779 of mortgages payable, net of deferred costs and $9,482 and $11,816 of accounts payable and accrued liabilities.

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Real estate accumulated depreciation	$ 101,332	$ 91,715
Mortgage payable and junior subordinated notes, deferred costs	$ 6,452	$ 6,646
Preferred shares, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred shares, authorized (in shares)	2,000,000	2,000,000
Preferred shares, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	300,000,000	300,000,000
Common stock, outstanding (in shares)	15,175,000	15,038,000
Mortgages payable
Debt Instrument [Line Items]
Mortgage payable and junior subordinated notes, deferred costs	$ 6,100	$ 6,289
Junior subordinated notes
Debt Instrument [Line Items]
Mortgage payable and junior subordinated notes, deferred costs	$ 352	$ 357

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Rental revenue	$ 30,702	$ 29,476
Other income	244	175
Total revenues	30,946	29,651
Expenses:
Real estate operating expenses - including $927 and $836 to related parties	14,814	14,198
Interest expense	8,769	8,657
General and administrative - including $142 and $146 to related parties	2,544	2,453
Depreciation	9,617	9,240
Total expenses	35,744	34,548
Total revenues less total expenses	(4,798)	(4,897)
Equity in loss of unconsolidated joint ventures	(223)	(63)
Gain on sale of real estate	0	51,981
Gain on insurance recoveries	0	3,227
Loss on extinguishment of debt	0	(593)
(Loss) income from continuing operations	(5,021)	49,655
Income tax provision (benefit)	62	(253)
Net (loss) income from continuing operations, net of taxes	(5,083)	49,908
Net loss (income) attributable to non-controlling interests	836	(24,686)
Net (loss) income attributable to common stockholders	$ (4,247)	$ 25,222
Weighted average number of shares of common stock outstanding:
Basic (in shares)	15,886,493	14,242,076
Diluted (in shares)	15,886,493	14,442,076
Per share amounts attributable to common stockholders:
Basic (in dollars per share)	$ (0.27)	$ 1.77
Diluted (in dollars per share)	$ (0.27)	$ 1.75

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Related party - real estate operating expenses	$ 927	$ 836
Related party - general and administrative	$ 142	$ 146

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (5,083)	$ 49,908
Other comprehensive (loss) income:
Unrealized (loss) gain on derivative instruments	(869)	1,132
Other comprehensive (loss) income	(869)	1,132
Comprehensive (loss) income	(5,952)	51,040
Comprehensive loss (income) attributable to non-controlling interests	1,100	(25,032)
Comprehensive (loss) income attributable to common stockholders	$ (4,852)	$ 26,008

XML

CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive (Loss) Income	Accumulated Deficit	Non- Controlling Interest
Beginning balance at Dec. 31, 2017	$ 243,347	$ 133	$ 202,225	$ 1,346	$ (33,292)	$ 72,935
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions - common stock - $0.20 per share	(2,897)				(2,897)
Restricted stock vesting	0	1	(1)
Compensation expense - restricted stock and restricted stock units	297		297
Contributions from non-controlling interests	18,088					18,088
Consolidation of investment in limited partnership	12,370					12,370
Distributions to non-controlling interests	(32,020)					(32,020)
Purchase of non-controlling interest	(250)		(82)			(168)
Shares issued through equity offering program, net	1,401	2	1,399
Net (loss) income	49,908				25,222	24,686
Other comprehensive income	1,132			786		346
Comprehensive income	51,040
Ending balance at Mar. 31, 2018	291,376	136	203,838	2,132	(10,967)	96,237
Beginning balance at Dec. 31, 2018	290,360	150	216,981	1,688	(20,044)	91,585
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions - common stock - $0.20 per share	(3,221)				(3,221)
Restricted stock vesting	0	2	(2)
Compensation expense - restricted stock and restricted stock units	365		365
Contributions from non-controlling interests	264					264
Consolidation of investment in limited partnership	6,047					6,047
Distributions to non-controlling interests	(2,345)					(2,345)
Net (loss) income	(5,083)				(4,247)	(836)
Other comprehensive income	(869)			(606)		(263)
Comprehensive income	(5,952)
Ending balance at Mar. 31, 2019	$ 285,518	$ 152	$ 217,344	$ 1,082	$ (27,512)	$ 94,452

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CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Stockholders' Equity [Abstract]
Dividends paid (in dollars per share)	$ 0.20	$ 0.20

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net (loss) income	$ (5,083)	$ 49,908
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	9,617	9,240
Amortization of deferred financing costs	379	378
Amortization of restricted stock and restricted stock units	365	298
Equity in loss of unconsolidated joint ventures	223	63
Gain on sale of real estate	0	(51,981)
Gain on insurance recovery	0	(3,227)
Loss on extinguishment of debt	0	593
Increases and decreases from changes in other assets and liabilities:
Decrease in deposits and escrows	7,062	3,536
(Increase) decrease in other assets	(1,757)	6,300
Decrease in accounts payable and accrued liabilities	(2,314)	(3,499)
Net cash provided by operating activities	8,492	11,609
Cash flows from investing activities:
Collections from real estate loan	150	150
Additions to real estate properties	(6,903)	(88,991)
Improvements to real estate properties	(2,177)	(3,637)
Investment in joint venture	(11,231)	(12,370)
Purchase of non-controlling interests	0	(250)
Consolidation of investment in joint venture	1,458	1,279
Net proceeds from the sale of real estate properties	0	146,901
Distributions from unconsolidated joint ventures	484	207
Net cash (used in) provided by investing activities	(18,219)	43,289
Cash flows from financing activities:
Proceeds from mortgages payable	13,880	54,475
Mortgage payoffs	(9,200)	(75,437)
Mortgage principal payments	(1,304)	(1,197)
Increase in deferred financing costs	(120)	(437)
Dividends paid	(3,181)	(2,856)
Contributions from non-controlling interests	264	18,088
Distributions to non-controlling interests	(2,345)	(32,020)
Proceeds from the sale of common stock	0	1,401
Net cash used in financing activities	(2,006)	(37,983)
Net (decrease) increase in cash, cash equivalents and restricted cash	(11,733)	16,915
Cash, cash equivalents and restricted cash at beginning of period	40,608	21,761
Cash, cash equivalents and restricted cash at end of period	28,875	38,676
Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of capitalized interest of $391 and $0, respectively	8,769	8,254
Taxes paid	10	14
Consolidation of investment in joint venture:
Increase in other assets	(1,757)	6,300
Decrease in accounts payable and accrued liabilities	(2,314)	(3,499)
Increase in cash upon consolidation of joint venture	1,458	1,279
Partnership Interest
Increases and decreases from changes in other assets and liabilities:
(Increase) decrease in other assets	(189)	(20)
Decrease in accounts payable and accrued liabilities	407	112
Cash flows from investing activities:
Consolidation of investment in joint venture	1,458	1,279
Consolidation of investment in joint venture:
Increase in real estate assets	(48,624)	(72,395)
Increase in deposits and escrows	(696)	(3,561)
Increase in other assets	(189)	(20)
Increase in mortgage payable	33,347	53,060
Increase in deferred financing costs	(65)	(657)
Decrease in accounts payable and accrued liabilities	407	112
Increase in non controlling interest	6,047	12,370
Decrease in investment in joint venture	11,231	12,370
Increase in cash upon consolidation of joint venture	$ 1,458	$ 1,279

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Cash Flows [Abstract]
Capitalized interest	$ 391,000	$ 0

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Organization and Background

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Background

Organization and Background

BRT Apartments Corp. (the "Company"), a Maryland corporation, owns, operates and develops multi-family properties. The Company conducts its operations to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

Generally, the multi-family properties are acquired with joint venture partners in transactions in which the Company contributes a significant portion of the equity. At March 31, 2019, the Company owns: (a) 36 multi-family properties with 10,008 units (including 402 units at a property that commenced leasing activities in the current quarter), located in 12 states with a carrying value of $1,066,988,000; and (b) interests in three unconsolidated multi-family joint ventures with 1,026 units (including 339 units in lease-up) located in two states with a carrying value of $19,125,000.

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Basis of Preparation

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Preparation

Basis of Preparation

The accompanying interim unaudited consolidated financial statements as of March 31, 2019, and for the three months ended March 31, 2019 and 2018, reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the results for the full year. The consolidated unaudited balance sheet as of December 31, 2018, has been derived from the unaudited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States ("GAAP").  Accordingly, these unaudited statements should be read in conjunction with the Company's audited financial statements included in its Annual Report on Form 10-K for the year ended September 30, 2018, filed with the Securities and Exchange Commission ("SEC") on December 10, 2018, for complete financial statements. 

The consolidated financial statements include the accounts and operations of the Company, its wholly owned subsidiaries, and its majority owned or controlled real estate entities and its interests in variable interest entities ("VIEs") in which the Company is determined to be 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 in the applicable joint venture entity 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 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 that could potentially be significant to the VIE.

The joint ventures that own properties in Ocoee, FL, Lawrenceville, GA, Dallas, TX, Farmers Branch, TX and Grand Prairie, TX were determined not to be a VIEs 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 has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

The distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro-rata to the percentage equity interest each partner has in the applicable venture.  

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. Actual results could differ from those estimates. 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.

In February 2019, the Board of Directors of the Company authorized a change in the Company’s fiscal year end from September 30 to December 31. The change is intended to better align the Company’s fiscal year with the fiscal year of other multi-family REITs. As a result of the change in fiscal year, (i) the Company’s 2019 fiscal year began on January 1, 2019 and

ends on December 31, 2019 and (ii) the Company filed a Transition Report on Form 10-Q (a "Transition Report") covering the transition period from October 1, 2018 to December 31, 2018.

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Equity

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Equity

Equity

Equity Distribution Agreements

In January 2018, the Company entered into equity distribution agreements, which were amended in May 2018, with three sales agents to sell up to an aggregate of $30,000,000 of its common stock from time-to-time in an at-the-market offering. During the quarter ended March 31, 2019, the Company did not sell any shares. Since the commencement of the at-the-market offering program through March 31, 2019, the Company sold 1,590,935 shares for an aggregate sales price of $20,913,000.

Common Stock Dividend Distribution

The Company declared a quarterly cash distribution of $0.20 per share, payable on April 5, 2019 to stockholders of record on March 26, 2019.

Stock Based Compensation 

The Company's 2018 Incentive Plan (the "2018 Plan") permits the Company to grant: (i) stock options, restricted stock, restricted stock units, performance share awards and any one or more of the foregoing, up to a maximum of 600,000 shares; and (ii) cash settled dividend equivalent rights in tandem with the grant of restricted stock units and certain performance based awards.

Restricted Stock Units

In June 2016, the Company issued restricted stock units (the "Units") to acquire up to 450,000 shares of common stock pursuant to the 2016 Amended and Restated Incentive Plan (the "2016 Incentive Plan"). The Units entitle the recipients, subject to continued service through the March 31, 2021 vesting date, to receive (i) the underlying shares if and to the extent certain performance and/or market conditions are satisfied at the vesting date, and (ii) an amount equal to the cash dividends paid from the grant date through the vesting date with respect to the shares of common stock underlying the Units if, when, and to the extent, the related Units vest. For financial statement purposes, because the Units are not participating securities, 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. The shares underlying the Units are contingently issuable shares. 

Expense is recognized over the five-year vesting period on the Units which the Company expects to vest. For the three months ended March 31, 2019 and 2018, the Company recorded $35,000 and $73,000, of compensation expense related to the amortization of unearned compensation with respect to the Units. At March 31, 2019, and December 31, 2018, $284,000 and $319,000 of compensation expense, respectively, had been deferred and will be charged to expense over the remaining vesting period.

Restricted Stock

In January 2019, the Company granted 156,399 shares of restricted stock pursuant to the 2018 Incentive Plan. As of March 31, 2019, an aggregate of 725,296 shares of unvested restricted stock are outstanding pursuant to the 2018 Incentive Plan, 2016 Incentive Plan and 2012 Incentive Plan. No additional awards may be granted under the 2016 Incentive Plan and the 2012 Incentive Plan. The 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. 

For the three months ended March 31, 2019 and 2018, the Company recorded $330,000 and $224,000, respectively, of compensation expense related to the amortization of unearned compensation with respect to the restricted stock awards. At March 31, 2019 and December 31, 2018, $4,348,000 and $2,735,000 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 remaining vesting period of these shares of restricted stock is 2.9 years.

Stock Buyback

On September 5, 2017, the Board of Directors approved a repurchase plan authorizing the Company, effective as of October 1, 2017, to repurchase up to $5,000,000 of shares of common stock through September 30, 2019. During the quarters ended March 31, 2019 and March 31, 2018, there were no repurchases of common stock.

Per Share Data

Basic earnings (loss) per share is determined by dividing net income (loss) applicable to common stockholders for the applicable period by the weighted average number of shares of common stock outstanding during such period. The Units are excluded from the basic earnings per share calculation, as they are not participating securities. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue 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 per share is determined by dividing net income applicable to common stockholders for the applicable period by the weighted average number of shares of common stock deemed to be outstanding during such period. In calculating diluted earnings per share, the Company, for the three months ended (i) March 31, 2019, did not include any shares underlying the Units as their effect would have been anti-dilutive and (ii) March 31, 2018, included 200,000 shares of common stock underlying the Units as only the market criteria with respect to the Units had been met at March 31, 2018. 

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts): 

	Three Months Ended March 31,
	2019		2018
Numerator for basic and diluted earnings (loss) per share attributable to common stockholders:
Net (loss) income attributable to common stockholders	$	(4,247)	$	25,222
Denominator:
Denominator for basic earnings per share—weighted average number of shares	15,886,493		14,242,076
Effect of diluted securities	—		200,000
Denominator for diluted earnings per share—adjusted weighted average number of shares and assumed conversions	15,886,493		14,442,076
Basic (loss) earnings per share	$	(0.27)	$	1.77
Diluted (loss) earnings per share	$	(0.27)	$	1.75

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Real Estate Properties

3 Months Ended

Mar. 31, 2019

Real Estate [Abstract]

Real Estate Properties

Real Estate Properties

Real estate properties consist of the following (dollars in thousands):

	March 31, 2019		December 31, 2018
Land	$	163,003	$	155,573
Building	971,630		924,378
Building improvements	44,025		41,003
Real estate properties	1,178,658		1,120,954
Accumulated depreciation	(101,332)		(91,715)
Total real estate properties, net	$	1,077,326	$	1,029,239

A summary of real estate properties owned follows (dollars in thousands):

	December 31, 2018 Balance		Additions		Capitalized Costs and Improvements		Depreciation		March 31, 2019 Balance
Multi-family	$	964,320	$	48,624	$	3,260	$	(9,546)	$	1,006,658
Multi-family lease up - West Nashville, TN	54,555		—		5,820		(45)		60,330
Land - Daytona, FL	8,021		—		—		—		8,021
Shopping centers/Retail - Yonkers, NY	2,343		—		—		(26)		2,317
Total real estate properties	$	1,029,239	$	48,624	$	9,080	$	(9,617)	$	1,077,326

The following table summarizes the allocation of the purchase price with respect to a property purchased during the three months ended March 31, 2019 (dollars in thousands):  

	Allocation of Purchase Price
Land	$	4,266
Building and improvements	43,757
Acquisition-related intangible assets	601
Total consideration	$	48,624

The purchase price of the property acquired, inclusive of acquisition costs, was allocated to the acquired assets based on their estimated relative fair values on the acquisition date.

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Acquisitions and Dispositions

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

Property Acquisitions

The table below provides information regarding the Company's purchase of a multi-family property during the three months ended March 31, 2019 (dollars in thousands):

Location	Purchase Date	No. of Units	Purchase Price		Acquisition Mortgage Debt		Initial BRT Equity		Ownership Percentage	Capitalized Acquisition Costs
Kannapolis, North Carolina	3/12/2019	312	$	48,065	$	33,347	$	11,231	65	$	559

The table below provides information regarding the Company's purchases of multi-family properties during the three months ended March 31, 2018 (dollars in thousands):

Location	Purchase Date	No. of Units	Purchase Price		Acquisition Mortgage Debt		Initial BRT Equity		Ownership Percentage		Capitalized Acquisition Costs
Ocoee, FL	2/7/2018	522	$	71,347	$	53,060	$	12,370	50.0	%	$	1,047
Lawrenceville, GA	2/15/2018	586	77,229		54,447		15,179		50.0	%	767
		1,108	$	148,576	$	107,507	$	27,549			$	1,814

On May 7, 2019, the Company acquired, through a joint venture in which it has an 80% equity interest, a 328-unit multi-family property located in Trussville, AL, for $43,000,000, including $32,250,000 of mortgage debt assumed in connection with the purchase. The mortgage debt matures in June 2029, bears interest at a fixed rate of 4.19%, is interest only for six years, and thereafter amortizes based on a 30 year schedule. The Company contributed $11,625,000 for its ownership interest. 

Property Dispositions

The Company did not dispose of any  real estate properties during the three months ended March 31, 2019 

The following table is a summary of the real estate properties disposed of by the Company during the three months ended March 31, 2018 (dollars in thousands):

Location	Sale Date	No. of Units	Sales Price		Gain on Sale		Non-controlling partner's portion of the gain
Palm Beach Gardens, FL	2/5/2018	542	$	97,200	$	41,830	$	20,593
Valley, AL	2/23/2018	618	51,000		9,712		4,547
Fort Washington	1/18/2018	1	470		439		—
		1,161	$	148,670	$	51,981	$	25,140

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 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 three months ended March 31, 2019 and 2018, no impairment charges were recorded.

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Variable Interest Entities

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Variable Interest Entities

The Company conducts a significant portion of its business with joint venture partners. Many of the Company's consolidated joint ventures that own properties were determined to be 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 ventures 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 (dollars in thousands):

	March 31, 2019 (unaudited)		December 31, 2018 (Unaudited)
ASSETS
Real estate properties, net of accumulated depreciation of $58,945 and $53,637	$	635,457	$	584,074
Cash and cash equivalents	6,859		5,207
Deposits and escrows	7,419		11,705
Other assets	5,649		6,302
Total Assets	$	655,384	$	607,288
LIABILITIES
Mortgages payable, net of deferred costs of $3,628 and $3,786	$	484,232	$	446,779
Accounts payable and accrued liabilities	9,482		11,816
Total Liabilities	$	493,714	$	458,595

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Restricted Cash	3 Months Ended
	Mar. 31, 2019
Cash and Cash Equivalents [Abstract]
Restricted Cash	Restricted CashRestricted cash represents funds held for specific purposes and are therefore not generally available for general corporate purposes. The restricted cash reflected on the consolidated balance sheets represents funds that are held by or on behalf of the Company specifically for capital improvements at certain multi-family properties.

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Investment in Unconsolidated Ventures

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Ventures

Investment in Unconsolidated Ventures

The Company has interests in unconsolidated joint ventures that own multi-family properties. The table below provides information regarding these joint ventures at March 31, 2019 (dollars in thousands):

Location	Number of Units	Carrying Value of Investment		Mortgage Balance		Percent Ownership
Columbia, SC	374	$	4,535	$	40,034	32	%
Columbia, SC (a)	339	8,098		39,646		46	%
Forney, TX (b)	313	6,492		25,350		50	%
	1,026	$	19,125	$	105,030

________________________

(a) Property is currently in lease up. Construction financing for this project of up to $47,426 has been secured. Such financing bears interest at 4.95% and matures in June 2020.

(b) This interest is held through a tenancy-in-common. 

The net loss from these ventures was $223,000 and $63,000 for the three months ended March 31, 2019 and 2018, respectively.

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Debt Obligations

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt Obligations

Debt Obligations

Debt obligations consist of the following (dollars in thousands):

	March 31, 2019		December 31, 2018
Mortgages payable	$	814,829	$	778,106
Junior subordinated notes	37,400		37,400
Deferred mortgage costs	(6,452)		(6,646)
Total debt obligations, net of deferred costs	$	845,777	$	808,860

Mortgages Payable

During the three months ended March 31, 2019, the Company obtained the following mortgage debt in connection with the related property (dollars in thousands):

Location	Closing Date	Acquisition Mortgage Debt		Interest Rate		Maturity Date
Kannapolis, NC	3/12/19	$	33,347	3.52	%	3/01/52

The Company has a construction loan financing a development project. Information regarding this loan at March 31, 2019 is set forth below (dollars in thousand):

Location	Closing Date	Maximum Loan Amount		Amount outstanding		Interest Rate	Maturity Date	Extension Option
Nashville,TN	6/2/2017	$	47,426	$	35,085	30 day LIBOR + 2.85%	6/2/2022	N/A

On February 1, 2019, the Company refinanced  a $9,200,000 adjustable rate mortgage on its Boerne, TX property with a fixed rate loan in the amount of $8,067,000. The mortgage debt bears interest at a fixed rate of 4.74%, matures in

February 2026, is interest only for three years, amortizes thereafter on a 30 year schedule, with a balloon payment of the unpaid principal and interest due at maturity.

Credit Facility

The Company entered into a credit facility dated April 18, 2019, as subsequently amended, with an affiliate of Valley National Bank. The facility allows the Company to borrow, subject to compliance with borrowing base requirements and other  conditions, up to $10,000,000 to facilitate the acquisition of multi-family properties, and is secured by the cash available in certain cash accounts maintained by the Company at Valley National Bank. The facility matures April 2021 and bears an adjustable interest rate of 50 basis points over the prime rate, with a floor 5%. The interest rate in effect as of May 2, 2019, is 6%. There is an unused facility fee of 0.25% per annum on the difference between the outstanding loan balance and maximum amount then available under the facility. On May 2, 2019, the Company borrowed $9,000,000 on the facility in connection with the acquisition of the Trussville, AL property. 

Junior Subordinated Notes

At March 31, 2019 and December 31, 2018, the Company's junior subordinated notes had an outstanding principal balance of $37,400,000, before deferred financing costs of $352,000 and $357,000, respectively. At March 31, 2019, the interest rate on the outstanding balance is three month LIBOR + 2.00% or 4.75%.

The junior subordinated notes require interest only payments through the maturity date of April 30, 2036, at which time repayment of the outstanding principal and unpaid interest become due. Interest expense for the three months ended March 31, 2019 and 2018, which includes amortization of deferred costs, was $449,000 and $352,000, respectively.

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Related Party Transactions

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company has retained certain of its executive officers and Fredric H. Gould, a director, to provide, among other things, the following services: participating in the Company's multi-family property analysis and approval process (which includes service on the investment committee), providing investment advice, long-term planning and consulting with executives and employees with respect to other business matters, as required. The aggregate fees incurred and paid for these services in the three months ended March 31, 2019 and 2018 were $333,000 and $317,000, respectively.

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 may also provide real estate brokerage and construction supervision services to these properties. These fees amounted to $8,134 and $10,000 for the three months ended March 31, 2019 and 2018, respectively.

The Company shares facilities, personnel and other resources with One Liberty Properties, Inc., Majestic Property, and Gould Investors L.P. Certain of the Company's executive officers and/or directors also serve in management positions, and have ownership interests, in One Liberty, Majestic Property and/or Georgetown Partners Inc., the managing general partner of Gould Investors L.P. The allocation of expenses for the facilities, personnel and other resources shared by the Company, One Liberty, Majestic Property 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. For the three months ended March 31, 2019 and 2018, net allocated general and administrative expenses reimbursed by the Company to Gould Investors L.P. pursuant to the shared services agreement aggregated $142,000 and $147,000, respectively.

Management of many of the Company's multi-family properties (including three multi-family properties owned by two unconsolidated joint ventures) is performed by the Company's joint venture partners or their affiliates. None of these joint venture partners is Gould Investors L.P., Majestic Property or their affiliates. Management fees to these joint venture partners or their affiliates for the three months ended March 31, 2019 and 2018 were $1,023,000 and $908,000, respectively. In addition, the Company may pay an acquisition fee to a joint venture partner in connection with a property purchased by such joint venture. Capitalized acquisition fees paid to these related parties for the three months ended March 31, 2019 and 2018 were $421,000 and $1,300,000, respectively.

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Financial Instruments Not Carried at Fair Value

The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not recorded 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 March 31, 2019 and December 31, 2018, the estimated fair value of the notes is lower than their carrying value by approximately $11,978,000 and $11,974,000, respectively, based on a market interest rate of 7.61% and 7.79%, respectively.

Mortgages payable: At March 31, 2019, the estimated fair value of the Company’s mortgages payable is lower than their carrying value by approximately $8,096,000, assuming market interest rates between 3.56% and 5.33% and at December 31, 2018, the estimated fair value of the Company's mortgages payable was lower than their carrying value by approximately $19,334,000 assuming market interest rates between 3.94% and 5.61%. Market interest rates were determined using rates which the Company believes reflects institutional lender yield requirements at the balance sheet dates.

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.

Financial Instruments Carried 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 market 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 March 31, 2019 (dollars in thousands):

	Carrying and Fair Value		Fair Value MeasurementsUsing Fair Value Hierarchy
			Level 1	Level 2
Financial Assets:
Interest rate swaps	$	1,565	—	$	1,565
Interest rate caps	—		—	—
Total Financial Assets	$	1,565	—	$	1,565

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, foreign exchange rates, and implied volatilities. At March 31, 2019, these derivatives are included in other assets 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 them utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. As of March 31, 2019, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative position 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 derivatives valuation is classified in Level 2 of the fair value hierarchy.

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Cash Flow Hedges of Interest Rate Risk

The Company's objective in using interest rate derivatives are to add stability to interest expense and to 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 changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of March 31, 2019, 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	Current Notional Amount		Fixed Rate		Maturity
Interest rate cap on LIBOR	$	29,000	3.00	%	July 10, 2019
Interest rate swap	1,267		5.25	%	April 1, 2022
Interest rate swap	25,933		3.61	%	May 6, 2023
Interest rate swap	27,000		4.05	%	September 19, 2026

Non-designated Derivatives

Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements and other identified risks but do not meet the hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As a result of a mortgage refinancing of an adjustable rate loan to a fixed rate loan, at March 31, 2019, the Company had an interest rate cap with a notional value of $9,200,000 that was not designated as a hedge in a qualifying hedge relationship. At March 31, 2019, this derivative had no value.

The table below presents the fair value of the Company’s derivative financial instruments as well as its classification on the consolidated balance sheets as of the dates indicated (dollars in thousands):

Derivatives as of:
March 31, 2019			December 31, 2018
Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Other Assets	$	1,565	Other Assets	$	2,434

The following table presents the effect of the Company’s interest rate swaps on the consolidated statements of comprehensive (loss) income for the dates indicated (dollars in thousands):

	Three Months Ended March 31,
	2019		2018
Amount of gain (loss) recognized on derivative in Other Comprehensive Income	$	(743)	$	1,132
Amount of gain (loss) reclassified from Accumulated Other Comprehensive Income into Interest expense	$	118	$	—
Total amount of Interest expense presented in the Consoldiated Statement of Operations	$	8,769	$	8,657

The Company estimates an additional $491,000 will be reclassified from other comprehensive loss as a decrease to interest expense over the next twelve months.

Credit-risk-related Contingent Features

The agreement between the Company and its derivative counterparties 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 obligations.

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New Accounting Pronouncements

New Accounting 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 standard 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 adopted this standard effective October 1, 2018, using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. Certain revenues, such as tenant reimbursements, tenant fees, and other property income, are subject to the new guidance. The adoption of the new revenue recognition standard did not have a material impact on the consolidated financial statements and no cumulative effect adjustment was recorded upon adoption as there was no change in the amount or timing of revenue recognized.

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 the following 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 adopted this standard effective January 1, 2019, and its adoption did not have a material effect on the consolidated financial statements. As a lessor, the adoption of ASU 2016-02 (as amended by subsequent ASUs) did not change the timing of revenue recognition of the Company’s rental revenues. As a lessee, the Company is party to a ground lease, and an operating lease with future payment obligations for which the Company recorded 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 Flows (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. The Company adopted this standard effective October 1, 2018, using the “cumulative earnings approach” whereby distributions received from equity method investments are classified as cash flows from operations to the extent of equity earnings and then as cash flows from investing activities thereafter. The adoption of this guidance did not have a material effect on the consolidated financial statements. 

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 Company adopted this standard effective October 1, 2018 using the retrospective approach. The adoption of this update did not have a material effect on the consolidated financial statements. 

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 adopted this standard effective October 1, 2018. The adoption of this guidance did not have a material effect on the 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 adopted this standard effective January 1, 2019, The adoption of this guidance did not have a material effect 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, 2019, 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.

In October 2018, the FASB issued ASU 2018-16, (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) as a Benchmark Interest Rate for Hedging Purposes. The amendments in this update permit the OIS rate based on SOFR as an eligible benchmark interest rate. The amendments in this update are effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019. The Company does not believe this guidance will have a material effect on its consolidated financial statements.

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Subsequent Events	3 Months Ended
	Mar. 31, 2019
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsSubsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of March 31, 2019, that warrant additional disclosure, have been included in the notes to the consolidated financial statements.

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Basis of Preparation (Policies)

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Preparation

The accompanying interim unaudited consolidated financial statements as of March 31, 2019, and for the three months ended March 31, 2019 and 2018, reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the results for the full year. The consolidated unaudited balance sheet as of December 31, 2018, has been derived from the unaudited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States ("GAAP").  Accordingly, these unaudited statements should be read in conjunction with the Company's audited financial statements included in its Annual Report on Form 10-K for the year ended September 30, 2018, filed with the Securities and Exchange Commission ("SEC") on December 10, 2018, for complete financial statements.

Consolidated Financial Statements and Variable Interest Entities

The consolidated financial statements include the accounts and operations of the Company, its wholly owned subsidiaries, and its majority owned or controlled real estate entities and its interests in variable interest entities ("VIEs") in which the Company is determined to be 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 in the applicable joint venture entity 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 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 that could potentially be significant to the VIE.

The joint ventures that own properties in Ocoee, FL, Lawrenceville, GA, Dallas, TX, Farmers Branch, TX and Grand Prairie, TX were determined not to be a VIEs 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 has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

The distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro-rata to the percentage equity interest each partner has in the applicable venture.

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. Actual results could differ from those estimates. 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.

Financial Instruments Carried at Fair Value

Financial Instruments Carried 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 market 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.

New Accounting Pronouncements

New Accounting 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 standard 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 adopted this standard effective October 1, 2018, using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. Certain revenues, such as tenant reimbursements, tenant fees, and other property income, are subject to the new guidance. The adoption of the new revenue recognition standard did not have a material impact on the consolidated financial statements and no cumulative effect adjustment was recorded upon adoption as there was no change in the amount or timing of revenue recognized.

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 the following 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 adopted this standard effective January 1, 2019, and its adoption did not have a material effect on the consolidated financial statements. As a lessor, the adoption of ASU 2016-02 (as amended by subsequent ASUs) did not change the timing of revenue recognition of the Company’s rental revenues. As a lessee, the Company is party to a ground lease, and an operating lease with future payment obligations for which the Company recorded 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 Flows (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. The Company adopted this standard effective October 1, 2018, using the “cumulative earnings approach” whereby distributions received from equity method investments are classified as cash flows from operations to the extent of equity earnings and then as cash flows from investing activities thereafter. The adoption of this guidance did not have a material effect on the consolidated financial statements. 

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 Company adopted this standard effective October 1, 2018 using the retrospective approach. The adoption of this update did not have a material effect on the consolidated financial statements. 

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 adopted this standard effective October 1, 2018. The adoption of this guidance did not have a material effect on the 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 adopted this standard effective January 1, 2019, The adoption of this guidance did not have a material effect 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, 2019, 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.

In October 2018, the FASB issued ASU 2018-16, (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) as a Benchmark Interest Rate for Hedging Purposes. The amendments in this update permit the OIS rate based on SOFR as an eligible benchmark interest rate. The amendments in this update are effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019. The Company does not believe this guidance will have a material effect on its consolidated financial statements.

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Equity (Tables)

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Schedule of computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts): 

	Three Months Ended March 31,
	2019		2018
Numerator for basic and diluted earnings (loss) per share attributable to common stockholders:
Net (loss) income attributable to common stockholders	$	(4,247)	$	25,222
Denominator:
Denominator for basic earnings per share—weighted average number of shares	15,886,493		14,242,076
Effect of diluted securities	—		200,000
Denominator for diluted earnings per share—adjusted weighted average number of shares and assumed conversions	15,886,493		14,442,076
Basic (loss) earnings per share	$	(0.27)	$	1.77
Diluted (loss) earnings per share	$	(0.27)	$	1.75

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Real Estate Properties (Tables)

3 Months Ended

Mar. 31, 2019

Real Estate [Abstract]

Summary of real estate properties owned

Real estate properties consist of the following (dollars in thousands):

	March 31, 2019		December 31, 2018
Land	$	163,003	$	155,573
Building	971,630		924,378
Building improvements	44,025		41,003
Real estate properties	1,178,658		1,120,954
Accumulated depreciation	(101,332)		(91,715)
Total real estate properties, net	$	1,077,326	$	1,029,239

A summary of real estate properties owned follows (dollars in thousands):

	December 31, 2018 Balance		Additions		Capitalized Costs and Improvements		Depreciation		March 31, 2019 Balance
Multi-family	$	964,320	$	48,624	$	3,260	$	(9,546)	$	1,006,658
Multi-family lease up - West Nashville, TN	54,555		—		5,820		(45)		60,330
Land - Daytona, FL	8,021		—		—		—		8,021
Shopping centers/Retail - Yonkers, NY	2,343		—		—		(26)		2,317
Total real estate properties	$	1,029,239	$	48,624	$	9,080	$	(9,617)	$	1,077,326

Summary of the allocation of purchase price

The following table summarizes the allocation of the purchase price with respect to a property purchased during the three months ended March 31, 2019 (dollars in thousands):  

	Allocation of Purchase Price
Land	$	4,266
Building and improvements	43,757
Acquisition-related intangible assets	601
Total consideration	$	48,624

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Acquisitions and Dispositions (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Schedule of real estate acquisitions

The table below provides information regarding the Company's purchase of a multi-family property during the three months ended March 31, 2019 (dollars in thousands):

Location	Purchase Date	No. of Units	Purchase Price		Acquisition Mortgage Debt		Initial BRT Equity		Ownership Percentage	Capitalized Acquisition Costs
Kannapolis, North Carolina	3/12/2019	312	$	48,065	$	33,347	$	11,231	65	$	559

The table below provides information regarding the Company's purchases of multi-family properties during the three months ended March 31, 2018 (dollars in thousands):

Location	Purchase Date	No. of Units	Purchase Price		Acquisition Mortgage Debt		Initial BRT Equity		Ownership Percentage		Capitalized Acquisition Costs
Ocoee, FL	2/7/2018	522	$	71,347	$	53,060	$	12,370	50.0	%	$	1,047
Lawrenceville, GA	2/15/2018	586	77,229		54,447		15,179		50.0	%	767
		1,108	$	148,576	$	107,507	$	27,549			$	1,814

Schedule of property dispositions

The Company did not dispose of any  real estate properties during the three months ended March 31, 2019 

The following table is a summary of the real estate properties disposed of by the Company during the three months ended March 31, 2018 (dollars in thousands):

Location	Sale Date	No. of Units	Sales Price		Gain on Sale		Non-controlling partner's portion of the gain
Palm Beach Gardens, FL	2/5/2018	542	$	97,200	$	41,830	$	20,593
Valley, AL	2/23/2018	618	51,000		9,712		4,547
Fort Washington	1/18/2018	1	470		439		—
		1,161	$	148,670	$	51,981	$	25,140

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Variable Interest Entities (Tables)

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of the Consolidated VIEs Carrying Amounts

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 (dollars in thousands):

	March 31, 2019 (unaudited)		December 31, 2018 (Unaudited)
ASSETS
Real estate properties, net of accumulated depreciation of $58,945 and $53,637	$	635,457	$	584,074
Cash and cash equivalents	6,859		5,207
Deposits and escrows	7,419		11,705
Other assets	5,649		6,302
Total Assets	$	655,384	$	607,288
LIABILITIES
Mortgages payable, net of deferred costs of $3,628 and $3,786	$	484,232	$	446,779
Accounts payable and accrued liabilities	9,482		11,816
Total Liabilities	$	493,714	$	458,595

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Investment in Unconsolidated Ventures (Tables)

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

The table below provides information regarding these joint ventures at March 31, 2019 (dollars in thousands):

Location	Number of Units	Carrying Value of Investment		Mortgage Balance		Percent Ownership
Columbia, SC	374	$	4,535	$	40,034	32	%
Columbia, SC (a)	339	8,098		39,646		46	%
Forney, TX (b)	313	6,492		25,350		50	%
	1,026	$	19,125	$	105,030

________________________

(a) Property is currently in lease up. Construction financing for this project of up to $47,426 has been secured. Such financing bears interest at 4.95% and matures in June 2020.

(b) This interest is held through a tenancy-in-common.

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Debt Obligations (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of debt obligations

Debt obligations consist of the following (dollars in thousands):

	March 31, 2019		December 31, 2018
Mortgages payable	$	814,829	$	778,106
Junior subordinated notes	37,400		37,400
Deferred mortgage costs	(6,452)		(6,646)
Total debt obligations, net of deferred costs	$	845,777	$	808,860

Schedule of debt information

During the three months ended March 31, 2019, the Company obtained the following mortgage debt in connection with the related property (dollars in thousands):

Location	Closing Date	Acquisition Mortgage Debt		Interest Rate		Maturity Date
Kannapolis, NC	3/12/19	$	33,347	3.52	%	3/01/52

The Company has a construction loan financing a development project. Information regarding this loan at March 31, 2019 is set forth below (dollars in thousand):

Location	Closing Date	Maximum Loan Amount		Amount outstanding		Interest Rate	Maturity Date	Extension Option
Nashville,TN	6/2/2017	$	47,426	$	35,085	30 day LIBOR + 2.85%	6/2/2022	N/A

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of financial assets measured at fair value

Set forth below is information regarding the Company’s financial assets and liabilities measured at fair value as of March 31, 2019 (dollars in thousands):

	Carrying and Fair Value		Fair Value MeasurementsUsing Fair Value Hierarchy
			Level 1	Level 2
Financial Assets:
Interest rate swaps	$	1,565	—	$	1,565
Interest rate caps	—		—	—
Total Financial Assets	$	1,565	—	$	1,565

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of outstanding interest rate derivatives

As of March 31, 2019, 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	Current Notional Amount		Fixed Rate		Maturity
Interest rate cap on LIBOR	$	29,000	3.00	%	July 10, 2019
Interest rate swap	1,267		5.25	%	April 1, 2022
Interest rate swap	25,933		3.61	%	May 6, 2023
Interest rate swap	27,000		4.05	%	September 19, 2026

Schedule of fair value of derivative financial instruments and classification on consolidated balance sheets

The table below presents the fair value of the Company’s derivative financial instruments as well as its classification on the consolidated balance sheets as of the dates indicated (dollars in thousands):

Derivatives as of:
March 31, 2019			December 31, 2018
Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Other Assets	$	1,565	Other Assets	$	2,434

Schedule of effect of derivative financial instrument on consolidated statements of comprehensive (loss) income

The following table presents the effect of the Company’s interest rate swaps on the consolidated statements of comprehensive (loss) income for the dates indicated (dollars in thousands):

	Three Months Ended March 31,
	2019		2018
Amount of gain (loss) recognized on derivative in Other Comprehensive Income	$	(743)	$	1,132
Amount of gain (loss) reclassified from Accumulated Other Comprehensive Income into Interest expense	$	118	$	—
Total amount of Interest expense presented in the Consoldiated Statement of Operations	$	8,769	$	8,657

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Organization and Background - Narrative (Details) $ in Thousands	Mar. 31, 2019 USD ($) property_Unit state investment property	Dec. 31, 2018 USD ($)
Real Estate Properties [Line Items]
Number of properties | property	36
Number of units | property_Unit	10,008
Number of units under development | property_Unit	402
Number of states | state	12
Real estate properties | $	$ 1,077,326	$ 1,029,239
Investments in unconsolidated joint ventures | $	$ 19,125	$ 19,758
Unconsolidated joint ventures
Real Estate Properties [Line Items]
Number of properties | property	1,026
Number of units | property_Unit	1,026
Number of states | state	2
Number of investments | investment	3
Number of units in properties in lease up stage | property_Unit	339
Investments in unconsolidated joint ventures | $	$ 19,125
Apartment Building
Real Estate Properties [Line Items]
Real estate properties | $	$ 1,066,988

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Equity - Narrative (Details) - USD ($)		1 Months Ended		3 Months Ended		12 Months Ended
	Apr. 05, 2019	Jan. 31, 2019	Jun. 30, 2016	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Jan. 31, 2018	Sep. 05, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Effect of diluted securities (in shares)				0	200,000
New Share Repurchase Program
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beneficial interest purchased authorized amount								$ 5,000,000
Repurchases of common stock				$ 0	$ 0
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense				35,000	73,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense				330,000	$ 224,000
Deferred unearned compensation				$ 4,348,000		$ 2,735,000
Remaining weighted average vesting period				2 years 10 months 24 days
Incentive Plan 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)				600,000
Incentive Plan 2018 | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issued (in shares)		156,399
Shares outstanding (in shares)				725,296
Incentive Plan 2016 | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issued (in shares)			450,000
Vesting period for shares issued				5 years
Deferred unearned compensation				$ 284,000		319,000
Incentive Plan 2016 | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for shares issued		5 years
Prior Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional awards available for grant (in shares)				0
Private placement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock issued in offering							$ 30,000,000
Aggregate sales price						$ 20,913,000
At-the-market
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares sold in offering (in shares)				0		1,590,935
Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividends declared per share (in dollars per share)	$ 0.20

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Equity - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Numerator for basic and diluted earnings (loss) per share attributable to common stockholders:
Net (loss) income attributable to common stockholders	$ (4,247)	$ 25,222
Denominator:
Denominator for basic earnings per share—weighted average number of shares (in shares)	15,886,493	14,242,076
Effect of diluted securities (in shares)	0	200,000
Denominator for diluted earnings per share—adjusted weighted average number of shares and assumed conversions (in shares)	15,886,493	14,442,076
Basic (loss) earnings per share (in dollars per share)	$ (0.27)	$ 1.77
Diluted (loss) earnings per share (in dollars per share)	$ (0.27)	$ 1.75

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Real Estate Properties - Schedule of Real Estate Properties (Including Properties Held For Sale) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Real Estate [Abstract]
Land	$ 163,003	$ 155,573
Building	971,630	924,378
Building improvements	44,025	41,003
Real estate properties	1,178,658	1,120,954
Accumulated depreciation	(101,332)	(91,715)
Total real estate properties, net	$ 1,077,326	$ 1,029,239

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Real Estate Properties - Summary of Real Estate Properties Owned (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward]
Real estate properties, beginning balance	$ 1,029,239
Additions	48,624
Capitalized Costs and Improvements	9,080
Depreciation	(9,617)
Real estate properties, ending balance	1,077,326
Apartment Building
Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward]
Real estate properties, beginning balance	964,320
Additions	48,624
Capitalized Costs and Improvements	3,260
Depreciation	(9,546)
Real estate properties, ending balance	1,006,658
Apartment Building | West Nashville, TN
Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward]
Real estate properties, beginning balance	54,555
Additions	0
Capitalized Costs and Improvements	5,820
Depreciation	(45)
Real estate properties, ending balance	60,330
Land - Daytona, FL | Daytona, FL
Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward]
Real estate properties, beginning balance	8,021
Additions	0
Capitalized Costs and Improvements	0
Depreciation	0
Real estate properties, ending balance	8,021
Shopping centers/Retail - Yonkers, NY | RBHTRB Newark Holdings LLC | Yonkers, NY | VIE
Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward]
Real estate properties, beginning balance	2,343
Additions	0
Capitalized Costs and Improvements	0
Depreciation	(26)
Real estate properties, ending balance	$ 2,317

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Real Estate Properties - Allocation of Purchase Price (Details) - Property Purchased During Period $ in Thousands	Mar. 31, 2019 USD ($)
Business Acquisition [Line Items]
Acquisition-related intangibles	$ 601
Total consideration	48,624
Land
Business Acquisition [Line Items]
Real estate property	4,266
Buildings and Improvements
Business Acquisition [Line Items]
Real estate property	$ 43,757

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Acquisitions and Dispositions - Property Acquisitions (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) property property_Unit	Mar. 31, 2018 USD ($) property
Real Estate Properties [Line Items]
No. of Units | property_Unit	10,008
Initial BRT Equity	$ 11,231,000	$ 12,370,000
Corporate Joint Venture | VIE | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
No. of Units | property		1,108
Purchase Price		$ 148,576,000
Initial BRT Equity		27,549,000
Capitalized Acquisition Costs		$ 1,814,000
Corporate Joint Venture | VIE | Kannapolis, North Carolina | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
No. of Units | property	312
Purchase Price	$ 48,065,000
Initial BRT Equity	$ 11,231,000
Ownership Percentage	65.00%
Capitalized Acquisition Costs	$ 559,000
Corporate Joint Venture | VIE | Ocoee, FL | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
No. of Units | property		522
Purchase Price		$ 71,347,000
Initial BRT Equity		$ 12,370,000
Ownership Percentage		50.00%
Capitalized Acquisition Costs		$ 1,047,000
Corporate Joint Venture | VIE | Lawrenceville, GA | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
No. of Units | property		586
Purchase Price		$ 77,229,000
Initial BRT Equity		$ 15,179,000
Ownership Percentage		50.00%
Capitalized Acquisition Costs		$ 767,000
Acquisition Mortgages Debt | Corporate Joint Venture | VIE | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
Acquisition Mortgage Debt		107,507,000
Acquisition Mortgages Debt | Corporate Joint Venture | VIE | Kannapolis, North Carolina | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
Acquisition Mortgage Debt	$ 33,347,000
Acquisition Mortgages Debt | Corporate Joint Venture | VIE | Ocoee, FL | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
Acquisition Mortgage Debt		53,060,000
Acquisition Mortgages Debt | Corporate Joint Venture | VIE | Lawrenceville, GA | Apartment Building | Property Acquisition
Real Estate Properties [Line Items]
Acquisition Mortgage Debt		$ 54,447,000

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Acquisitions and Dispositions - Additional Information (Details)		3 Months Ended
	May 07, 2019 USD ($) property	Mar. 31, 2019 USD ($) property_Unit	Mar. 31, 2018 USD ($) property
Real Estate Properties [Line Items]
Number of units | property_Unit		10,008
Contributions for ownership interest		$ 11,231,000	$ 12,370,000
Impairment charges		$ 0	$ 0
Property Acquisition | VIE | Corporate Joint Venture | Apartment Building
Real Estate Properties [Line Items]
Number of units | property			1,108
Purchase price			$ 148,576,000
Contributions for ownership interest			27,549,000
Property Acquisition | VIE | Corporate Joint Venture | Apartment Building | Mortgages
Real Estate Properties [Line Items]
Debt assumed, face value			$ 107,507,000
Trussville, AL | Property Acquisition | VIE | Corporate Joint Venture | Apartment Building | Subsequent Event
Real Estate Properties [Line Items]
Equity interest	8000.00%
Number of units | property	328
Purchase price	$ 43,000,000
Contributions for ownership interest	11,625,000
Trussville, AL | Property Acquisition | VIE | Corporate Joint Venture | Apartment Building | Subsequent Event | Mortgages
Real Estate Properties [Line Items]
Debt assumed, face value	$ 32,250,000
Interest rate	4.19%
Interest only period	6 years
Debt amortization period	30 years

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Acquisitions and Dispositions - Property Dispositions (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) property	Mar. 31, 2019 property_Unit
Business Acquisition [Line Items]
No. of Units | property_Unit		10,008
Property dispositions
Business Acquisition [Line Items]
No. of Units | property	1,161
Sales Price	$ 148,670
Gain on Sale	51,981
Non-controlling partner's portion of the gain	$ 25,140
Property dispositions | Palm Beach Gardens, FL
Business Acquisition [Line Items]
No. of Units | property	542
Sales Price	$ 97,200
Gain on Sale	41,830
Non-controlling partner's portion of the gain	$ 20,593
Property dispositions | Valley, AL
Business Acquisition [Line Items]
No. of Units | property	618
Sales Price	$ 51,000
Gain on Sale	9,712
Non-controlling partner's portion of the gain	$ 4,547
Property dispositions | Fort Washington
Business Acquisition [Line Items]
No. of Units | property	1
Sales Price	$ 470
Gain on Sale	439
Non-controlling partner's portion of the gain	$ 0

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Variable Interest Entities (Details) - USD ($) $ in Thousands		Mar. 31, 2019	Dec. 31, 2018
ASSETS
Real estate properties, net of accumulated depreciation of $58,945 and $53,637		$ 1,077,326	$ 1,029,239
Cash and cash equivalents		21,062	32,428
Deposits and escrows		14,902	21,268
Other assets		9,087	8,084
Total Assets	[1]	1,153,915	1,123,707
Liabilities:
Mortgages payable, net of deferred costs of $3,628 and $3,786		808,729	771,817
Accounts payable and accrued liabilities		22,620	24,487
Total Liabilities	[1]	868,397	833,347
Real estate accumulated depreciation		101,332	91,715
Deferred mortgage costs		6,452	6,646
Variable interest entity
ASSETS
Real estate properties, net of accumulated depreciation of $58,945 and $53,637		635,457	584,074
Cash and cash equivalents		6,859	5,207
Deposits and escrows		7,419	11,705
Other assets		5,649	6,302
Total Assets		655,384	607,288
Liabilities:
Mortgages payable, net of deferred costs of $3,628 and $3,786		484,232	446,779
Accounts payable and accrued liabilities		9,482	11,816
Total Liabilities		493,714	458,595
Real estate accumulated depreciation		58,945	53,637
Mortgages
Liabilities:
Deferred mortgage costs		6,100	6,289
Mortgages | Variable interest entity
Liabilities:
Deferred mortgage costs		$ 3,628	$ 3,786

[1] The Company's consolidated balance sheets include the assets and liabilities of consolidated variable interest entities (VIEs). See note 6. The consolidated balance sheets include the following amounts related to the Company's VIEs as of March 31, 2019 and December 31, 2018, respectively: $635,457 and $584,074 of real estate properties, $6,859 and $5,207 of cash and cash equivalents, $7,419 and $11,705 of deposits and escrows, $5,649 and $6,302 of other assets,  $484,232 and $446,779 of mortgages payable, net of deferred costs and $9,482 and $11,816 of accounts payable and accrued liabilities.

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Investment in Unconsolidated Ventures (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) property	Mar. 31, 2018 USD ($)
Schedule of Equity Method Investments [Line Items]
Number of Units | property	36
Equity in loss of unconsolidated joint ventures	$ 223	$ 63
Unconsolidated joint ventures
Schedule of Equity Method Investments [Line Items]
Number of Units | property	1,026
Carrying Value of Investment	$ 19,125
Mortgage Balance	$ 105,030
Columbia, SC | Joint venture, thirty two percent ownership
Schedule of Equity Method Investments [Line Items]
Number of Units | property	374
Carrying Value of Investment	$ 4,535
Mortgage Balance	$ 40,034
Percent Ownership	32.00%
Columbia, SC (Location 2) | Joint venture, forty six percent ownership
Schedule of Equity Method Investments [Line Items]
Number of Units | property	339
Carrying Value of Investment	$ 8,098
Mortgage Balance	$ 39,646
Percent Ownership	46.00%
Forney, TX | Joint venture, fifty percent ownership
Schedule of Equity Method Investments [Line Items]
Number of Units | property	313
Carrying Value of Investment	$ 6,492
Mortgage Balance	$ 25,350
Percent Ownership	50.00%
Secured Debt | Joint venture, forty six percent ownership
Schedule of Equity Method Investments [Line Items]
Construction financing	$ 47,426
Interest Rate	4.95%

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Debt Obligations - Schedule of Debt Obligations (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Obligations
Deferred mortgage costs	$ (6,452)	$ (6,646)
Total debt obligations, net of deferred costs	845,777	808,860
Mortgages payable
Debt Obligations
Total debt obligations, net of deferred costs	814,829	778,106
Deferred mortgage costs	(6,100)	(6,289)
Junior subordinated notes
Debt Obligations
Total debt obligations, net of deferred costs	37,400	37,400
Deferred mortgage costs	$ (352)	$ (357)

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Debt Obligations - Mortgage Payable (Details) - Mortgages - Mortgages maturing in March 2052 - Kannapolis, NC	Mar. 31, 2019 USD ($)
Debt Obligations
Acquisition Mortgage Debt	$ 33,347,000
Interest Rate	3.52%

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Debt Obligations - Construction Loans (Details) - Construction Loans - Nashville, TN $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Debt Instrument [Line Items]
Amount outstanding	$ 35,085
Maximum Loan Amount	$ 47,426
London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate	2.85%

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Debt Obligations - Mortgage Payable and Construction Loan Narrative (Details) - Mortgages Maturing In February 2026 - Mortgages - Boerne, TX	Feb. 01, 2019 USD ($)
Debt Instrument [Line Items]
Repurchased face amount	$ 9,200,000
Debt assumed, face value	$ 8,067,000
Interest rate	4.74%
Interest only period	3 years
London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Debt amortization period	30 years

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Debt Obligations - Credit Facility (Details) - Line of Credit - Valley National Bank - Credit Facility, Maturing April 2021 - Secured Debt - Subsequent Event - USD ($)	Apr. 18, 2019	May 02, 2019
Debt Instrument [Line Items]
Debt assumed, face value	$ 10,000,000
Effective interest rate		6.00%
Unused borrowing capacity fee, percentage	0.25%
Trussville, AL
Debt Instrument [Line Items]
Facility amount drawn		$ 9,000,000
Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	0.50%
Floor
Debt Instrument [Line Items]
Basis spread on variable rate	5.00%

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Debt Obligations - Junior Subordinated Notes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Debt Instrument [Line Items]
Deferred financing costs	$ 6,452		$ 6,646
Junior subordinated notes
Debt Instrument [Line Items]
Total debt obligations	37,400		37,400
Deferred financing costs	352		$ 357
Interest expense	$ 449	$ 352
London Interbank Offered Rate (LIBOR) | Junior subordinated notes
Debt Instrument [Line Items]
Basis spread on variable rate	2.00%
Interest rate	4.75%

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Related Party Transactions - Narrative (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) property	Mar. 31, 2018 USD ($)
Related Party Transaction [Line Items]
Related party expense	$ 333,000	$ 317,000
Related party - general and administrative	142,000	146,000
Real Property Management Real Estate Brokerage And Construction Supervision Services | Majestic Property Management Corporation
Related Party Transaction [Line Items]
Related party expense	8,134	10,000
Shared Services Agreement | Gould Investors Limited Partnership
Related Party Transaction [Line Items]
Related party - general and administrative	142,000	147,000
Affiliated Entity
Related Party Transaction [Line Items]
Related party expense	$ 1,023,000	908,000
Number of investments | property	3
Affiliated Entity | Payment of Acquisition Fee
Related Party Transaction [Line Items]
Related party expense	$ 421,000	$ 1,300,000

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Fair Value of Financial Instruments - Narrative (Details) - Level 2 - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Market Approach Valuation Technique | Junior subordinated notes
Financial Instruments Not Measured at Fair Value
Market interest rate (as a percent)	7.61%	7.79%
Market Approach Valuation Technique | Mortgages | Minimum
Financial Instruments Not Measured at Fair Value
Market interest rate (as a percent)	3.56%	3.94%
Market Approach Valuation Technique | Mortgages | Maximum
Financial Instruments Not Measured at Fair Value
Market interest rate (as a percent)	5.33%	5.61%
Carrying and Fair Value | Junior subordinated notes
Financial Instruments Not Measured at Fair Value
Estimated fair value (lower) higher than carrying value	$ 11,978	$ 11,974
Carrying and Fair Value | Mortgages
Financial Instruments Not Measured at Fair Value
Estimated fair value (lower) higher than carrying value	$ 8,096	$ 19,334

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Fair Value of Financial Instruments - Financial Instruments Measured at Fair Value (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	$ 1,565
Interest rate swaps
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	1,565
Interest rate caps
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	0
Level 1
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	0
Level 1 | Interest rate swaps
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	0
Level 1 | Interest rate caps
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	0
Level 2
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	1,565
Level 2 | Interest rate swaps
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	1,565
Level 2 | Interest rate caps
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Total Financial Assets	$ 0

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Derivative Financial Instruments (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Derivative [Line Items]
Estimated amount to be reclassified from Accumulated other comprehensive income (loss) as an increase to interest expense	$ 491,000
Interest Expense
Derivative [Line Items]
Amount of gain (loss) recognized on derivative in Other Comprehensive Income	(743,000)	$ 1,132,000
Amount of gain (loss) reclassified from Accumulated Other Comprehensive Income into Interest expense	118,000	0
Total amount of Interest expense presented in the Consoldiated Statement of Operations	8,769,000	$ 8,657,000
Other Assets
Derivative [Line Items]
Fair value of derivative financial instrument asset	2,434,000		$ 1,565,000
Hedging instrument | Interest Rate Swap, Maturity Date April 1, 2022
Derivative [Line Items]
Current Notional Amount	$ 1,267,000
Fixed Rate	5.25%
Hedging instrument | Interest Rate Swap, Maturity Date May 6, 2023
Derivative [Line Items]
Current Notional Amount	$ 25,933,000
Fixed Rate	3.61%
Hedging instrument | Interest Rate Swap, Maturity Date September 19, 2026
Derivative [Line Items]
Current Notional Amount	$ 27,000,000
Fixed Rate	4.05%
Not Designated as Hedging Instrument | Interest rate caps
Derivative [Line Items]
Current Notional Amount	$ 9,200,000
Value of derivative	0
London Interbank Offered Rate (LIBOR) | Hedging instrument | Interest Rate Swap, Maturity Date July 1, 2019
Derivative [Line Items]
Current Notional Amount	$ 29,000,000
Fixed Rate	3.00%