Breaking Down BRT Apartments Corp. (BRT) Financial Health: Key Insights for Investors

You're looking at BRT Apartments Corp. (BRT) and seeing a high-yield real estate investment trust (REIT) with a clear debt challenge, so the question is whether the Sunbelt growth story can defintely overcome rising interest costs. The latest Q3 2025 filings show a mixed picture: for the nine months ended September 30, 2025, the company pulled in a solid $72.74 million in revenue, but still posted a net loss of $7.63 million, reflecting the pressure on net operating income (NOI), which saw a 3.4% decline in Q2 2025. Still, this REIT remains an income play, offering a juicy $0.25 quarterly dividend that translates to an annualized yield of about 6.9%, and you can't ignore the significant insider buying, including the CEO's recent purchase of over 118,000 shares. We need to map the risk from their 69% debt-to-enterprise value ratio against the opportunity in their 31-property, 8,311-unit portfolio, especially since analysts have an average 12-month price target of $19.83, suggesting a nearly 39% upside from current levels.

Revenue Analysis

You need to know where BRT Apartments Corp. (BRT)'s money is coming from, and the quick takeaway is simple: this is a pure-play multi-family real estate investment trust (REIT) with a strong reliance on rental income, but growth is slowing. For the trailing twelve months (TTM) ending September 30, 2025, BRT's total revenue stood at approximately $96.71 million.

The year-over-year revenue growth for that same TTM period was a modest 1.62%, which is defintely a slowdown from the high growth rates seen in prior years. This figure is also lower than the US REIT - Residential industry's average growth rate of 3.69%, so the company is currently underperforming its peer group on top-line expansion. The Q3 2025 revenue of $24.43 million showed an even tighter year-over-year increase of just 0.16%, signaling near-term pressure on rental pricing power.

Primary Revenue Streams: The 98% Rule

BRT's revenue structure is uncomplicated, which is a good thing for clarity. Their business model is overwhelmingly focused on collecting rent from their multi-family properties, which are primarily located in the Southeast United States and Texas.

Here's the quick math based on the first six months of 2025. Total revenue is split into two main buckets: rental income and loan interest/other income. The rental component is the engine, accounting for nearly all the revenue.

• Rental and other revenue from real estate properties: ~98.0%
• Loan interest and other income: ~2.0%

This breakdown confirms that BRT's financial health is almost entirely dependent on occupancy and rent growth across its portfolio of 31 properties, which total 8,311 units across 11 states as of November 2025.

Geographic and Segment Contributions

While the company doesn't break out revenue by state in every quarterly report, the concentration of rental revenue is clear. Based on the most recent full-year data, three states drive a significant portion of the rental and other revenue:

This geographic concentration in the Southeast and Texas is a strategic choice, aiming for markets with strong population and job growth. However, it also means any regional economic slowdown or oversupply in those specific markets will hit BRT harder than a more diversified REIT.

Key Changes and Actionable Insights

The most significant change to watch is the performance of their joint venture (JV) investments. BRT uses JVs to expand its portfolio with less exposure to single-property risk. However, the equity in earnings from these partnerships has been declining, falling from $389,000 in Q2 2024 to $299,000 in Q2 2025. This 23.2% drop in JV earnings is a drag on overall profitability, even as total revenue inches up.

The action item here is to monitor the success of their value-add renovation program. In Q2 2025, renovations on 26 units achieved an average monthly rent increase of $121 per unit, yielding an estimated annualized return on investment of 23%. This value-add activity is what will drive internal growth and offset the broader market's muted pricing power. You can dive deeper into the investor base and strategy by Exploring BRT Apartments Corp. (BRT) Investor Profile: Who's Buying and Why?

Profitability Metrics

BRT Apartments Corp. (BRT) shows a solid foundation in property-level performance but faces significant headwinds from financing costs, resulting in a net loss. The key takeaway for investors is that while the Gross Profit Margin remains strong, the Operating and Net Profit Margins reveal a capital structure under pressure in the current high-interest-rate environment.

For the trailing twelve months (TTM) ended September 30, 2025, BRT reported a TTM Revenue of approximately $95.76 million. Here's the quick math on the core profitability ratios, which are essential for understanding where the money is being made and where it is being lost.

Gross Profit and Operational Efficiency

The Gross Profit Margin, which is revenue minus the cost of revenue (like property operating expenses), stood at a healthy 54.10% for the TTM ended September 30, 2025. This ratio is a clean measure of operational efficiency at the property level. To be fair, this margin is slightly below the broader Real Estate Sector average of approximately 56.7%, suggesting there is still room for cost management or rent optimization across BRT's portfolio of 31 multi-family properties.

The trend in Gross Profit Margin has been remarkably stable, hovering between 54% and 57% over the last five years, which is a defintely positive sign of consistent property management. This stability confirms the value-add strategy is working to maintain high margins, even as operating costs rise.

Operating and Net Profit Margin Trends

The story shifts when we move down the income statement. The Operating Margin (or Operating Income Margin) for the TTM ended September 30, 2025, was 10.13%, with Operating Income at $9.70 million. This is a massive improvement from the negative operating margins seen just a few years ago, indicating that the company's core business is now generating a solid profit before interest and taxes.

But still, the Net Profit Margin is the number that matters most for the bottom line. It was -9.95% for the TTM ended September 30, 2025, translating to a net loss of -$9.23 million. The gap between the 10.13% Operating Margin and the -9.95% Net Profit Margin is the clear signal of high interest expenses eroding all operating profit and pushing the company into a loss. This is a common challenge for real estate investment trusts (REITs) right now, which carry high debt loads (mortgages payable were $559.9 million as of June 30, 2025).

• Monitor the interest coverage ratio closely.
• Focus on refinancing opportunities as interest rates ease.
• Review Exploring BRT Apartments Corp. (BRT) Investor Profile: Who's Buying and Why? for context on investor sentiment.

The trend here is stark: Net Profit Margin has moved from a deep loss in 2020 (-70.22%) to a positive 4.29% in 2023, and now back to a loss of -9.95% in the TTM 2025 period, directly reflecting the impact of higher rates on the cost of debt. Your action is clear: track the Federal Reserve's rate decisions, as they directly impact BRT's profitability more than the underlying rental market does right now.

Debt vs. Equity Structure

You need to know if BRT Apartments Corp. (BRT) is using too much debt to fuel its growth, and the quick answer is that its leverage is high, but that's common for a Real Estate Investment Trust (REIT). The real risk is the near-term refinancing schedule, which is substantial in a high-rate environment.

As of the second quarter of 2025, BRT Apartments Corp. (BRT) carries significant total consolidated liabilities of approximately $507.5 million, according to its June 30, 2025, financial statements. Most of this is long-term, property-level mortgage debt. Short-term liabilities, like accounts payable and accrued expenses, were around $24.9 million, but the bulk of the financing is tied up in mortgages and junior subordinated notes.

Here's the quick math on how the company is financed:

• Total Liabilities (Debt): Approximately $507.5 million
• Total Equity: Approximately $204.9 million

The Debt-to-Equity Ratio: A High-Leverage Model

The Debt-to-Equity (D/E) ratio is what tells the story of financial leverage-how much of the company's assets are financed by debt versus shareholder funds. For the quarter ending June 30, 2025, BRT Apartments Corp. (BRT)'s D/E ratio was approximately 2.51 (or 251%). To be fair, REITs often run high D/E ratios because their assets (real estate) are stable and can support significant mortgage debt, but a ratio above 2.0 is generally considered high-risk in most corporate sectors.

This high leverage means that while the company can boost returns in good times, it amplifies risk when property values or rental income decline, or when interest rates rise. The company relies heavily on debt financing, primarily through property-specific mortgages, which is typical for a REIT, but it makes the cost of capital a critical factor.

Refinancing Risk and Near-Term Debt Maturity

The most pressing issue for BRT Apartments Corp. (BRT) right now is the upcoming wave of debt maturities. The company's strategy is to grow through acquisitions and finance that growth with debt, but the market has shifted. The weighted average interest rate on its entire portfolio was 4.26% as of June 30, 2025, with a weighted average term to maturity of only 3.4 years.

Management is actively managing this, with plans to pay off a $15 million revolving credit facility balance through a refinancing in December 2025. Still, a significant portion of its debt is rolling over soon:

The company has acknowledged that its operating cash flow is defintely insufficient to fully fund the total $211.7 million in balloon payments due through the end of 2027. This means they are forced to refinance in a higher-rate environment. For example, a new mortgage assumed in July 2025 was at 5.38%, a full percentage point higher than the portfolio average. This higher refinancing cost will erode future Funds From Operations (FFO) and Adjusted FFO (AFFO) by an estimated $0.03 to $0.06 per share annually.

This is a debt-heavy growth engine facing a headwind of higher interest expense. For a deeper dive into the shareholder base backing this strategy, check out Exploring BRT Apartments Corp. (BRT) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

Your first step in assessing BRT Apartments Corp. (BRT) is always to look at its near-term financial flexibility-its liquidity. The good news is that the company's liquidity position, based on the most recent quarter (MRQ) ending September 2025, appears stable, but it hides a reliance on non-cash current assets.

The core metrics show BRT can cover its short-term debts, which is defintely a strength for a Real Estate Investment Trust (REIT). The current ratio, which measures current assets against current liabilities, stands at a healthy 1.62. However, the quick ratio (or acid-test ratio), which strips out less-liquid assets like inventory, is lower at 0.78.

Here's the quick math on what that gap tells you. A quick ratio below 1.0 means the company cannot cover its immediate, short-term obligations with just its most liquid assets (cash and receivables). This suggests that a significant portion of the current assets are tied up in items like prepaid expenses or other non-cash current assets, which is typical for a REIT but still a point of caution.

• Current Ratio (MRQ): 1.62. Good coverage of short-term debt.
• Quick Ratio (MRQ): 0.78. Reliance on non-cash current assets.
• Working Capital Trend: Positive, implied by the Current Ratio being above 1.0.

The cash flow statement for the trailing twelve months (TTM) ending September 30, 2025, shows a clear pattern. Cash Flow from Operating Activities (CFO) was a positive $25.36 million, which is the lifeblood of any business, especially a REIT. This cash generation is solid and covers the ongoing dividend payments.

But, this cash is being aggressively reinvested. The Cash Flow from Investing Activities (CFI) for the same TTM period was a net outflow of -$39.02 million. This negative figure is primarily due to new real estate acquisitions, which is a necessary part of a growth strategy for a REIT like BRT. You want to see that investment fueling future revenue, not just treading water.

Looking at the financing side, the Cash Flow from Financing Activities (CFF) for the 2024 fiscal year was a net inflow of $3.57 million. This small net positive reflects a delicate balance: new debt issuance and common equity raises are largely offset by significant cash outflows for dividend payments and debt repayments. The dividend payout remains a key commitment, which you can explore further in Exploring BRT Apartments Corp. (BRT) Investor Profile: Who's Buying and Why?.

The key takeaway here is that while operations are generating enough cash (CFO: $25.36 million) to fund the dividend and some growth, the big property acquisitions (CFI: -$39.02 million) require external funding, keeping the financing activities active. Your risk is not immediate insolvency, but rather the sensitivity of that 0.78 quick ratio to any sudden disruption in cash collection.

Valuation Analysis

You're looking at BRT Apartments Corp. (BRT) right now and asking the core question: Is this stock a bargain, or is the market right to discount it? The direct takeaway is that, based on analyst targets and a high dividend yield, the stock appears undervalued, but you must acknowledge the underlying profitability risks.

As a seasoned financial analyst, I see a clear disconnect between the current price and the consensus target. The stock closed recently around $14.59 as of mid-November 2025. Over the last 12 months, the price has fallen by a significant 23.83%, reflecting broader market concerns around interest rates and the residential real estate sector. The 52-week range of $14.05 to $20.22 tells you the stock is currently trading near its annual low.

Is BRT Apartments Corp. (BRT) Overvalued or Undervalued?

The consensus from the analysts covering BRT Apartments Corp. is a clear 'Outperform' or 'Buy,' suggesting they see an opportunity here. The average one-year price target sits around $19.83, which implies a substantial upside of over 36% from the current trading price. This is a strong signal that Wall Street believes the stock is defintely undervalued right now.

Here's the quick math on the key valuation multiples, using trailing twelve-month (TTM) data as of November 2025:

• Price-to-Earnings (P/E) Ratio: This metric is less useful here, as BRT has negative TTM earnings per share (EPS) of around -$0.51, resulting in a negative P/E ratio of -28.61. This points to a current lack of GAAP profitability.
• Price-to-Book (P/B) Ratio: At approximately 1.48, this suggests the stock is trading at a modest premium to its net asset value (NAV). For a real estate investment trust (REIT), this is often a reasonable, if not cheap, valuation, but you need to check the quality of those book assets.
• Enterprise Value-to-EBITDA (EV/EBITDA): The ratio stands at roughly 20.16. This is a higher multiple, indicating that the market is placing a significant value on the company's operating cash flow relative to its total debt and equity value. For a REIT, however, the Price/FFO (Funds From Operations) ratio of 12.81 is a more meaningful, and more favorable, metric.

Dividend Strength and Payout Risk

The dividend story is a major part of the investment thesis for BRT Apartments Corp. The company offers an annualized dividend of $1.00 per share, translating to an attractive dividend yield of approximately 6.85% as of November 2025.

But, you need to look past the yield. The dividend payout ratio based on GAAP earnings is unsustainable due to the negative EPS. What this estimate hides is the reliance on non-GAAP metrics. Based on adjusted earnings or free cash flow (FCF), the payout ratio is high, sitting at around 68% to 81.4%. This means nearly all of the company's adjusted cash flow is going to the dividend, leaving little room for error or reinvestment. If onboarding takes 14+ days, churn risk rises, and that cash flow tightens.

The core risk is that the high payout ratio, coupled with a negative P/E, signals a reliance on asset sales or debt to cover the distribution if core operations don't improve. You can dive deeper into the ownership structure and institutional confidence by Exploring BRT Apartments Corp. (BRT) Investor Profile: Who's Buying and Why?

Next Step: Finance: Model a stress-test scenario where Core FFO drops by 10% to assess dividend coverage by Friday.

Risk Factors

You're looking at BRT Apartments Corp. (BRT) and seeing a strong focus on the Sunbelt multi-family market, but honestly, the near-term financial health shows some clear headwinds. The core risks right now are less about their strategy and more about the macro environment colliding with their financial structure. You need to map these risks to see if the potential reward justifies the current volatility.

The biggest external risk is the one hitting every real estate investment trust (REIT): the cost of money. BRT's financial leverage is rising, with the debt-to-enterprise value ratio hitting 69% as of June 30, 2025. Plus, the general economic risks of inflation, higher interest rates, and a potential economic slowdown are all watch points management has flagged. The internal risk is that their operational performance isn't outpacing these rising costs.

Operational and Financial Headwinds

The Q3 2025 results clearly show the pressure. The company is not profitable over the last twelve months, posting a diluted earnings per share (EPS) of -$0.51. This operational squeeze is why the dividend payout ratio is an alarming -196.1%-because they are paying dividends out of a net loss, not earnings.

Here's the quick math on the operational decline in the first half of 2025:

• Net Operating Income (NOI) declined by 3.4% to $15.1 million in Q2 2025.
• Core Funds From Operations (FFO) per share was $0.28 in Q3 2025, missing analyst estimates due to lower NOI and higher interest and general and administrative (G&A) expenses.
• For the nine months ended September 30, 2025, the company reported a net loss of $7.6 million.

The leasing fundamentals in the Sunbelt haven't accelerated as fast as anticipated for 2025, which translates to muted pricing power; average rent per occupied unit only rose 0.9% in Q2 2025. That's a tough spot when your borrowing costs are climbing. The market is absorbing existing supply, but it's taking longer than expected.

Mitigation and Strategic Focus

To be fair, management is taking clear actions to manage this environment. Their mitigation strategy centers on active portfolio and financial management. They're not just sitting still; they're focusing on value-add projects, which means renovating units to push rents higher, and they are strategically refinancing existing debt. This is a smart move to create value in a slower growth environment.

They are also continuing to expand, which is a bet on the long-term strength of their target markets. In 2025, they acquired two properties in their joint venture portfolio, including one in Auburn, Alabama, and another in Savannah, Georgia. This strategic growth, funded partially through their credit facility, shows a commitment to expanding their unit count of 8,311 across 31 multi-family properties as of November 2025.

You can see the current financial pressure points clearly in the table below, which compares key profitability metrics:

For a deeper dive into the company's full financial picture, you should read the full analysis in Breaking Down BRT Apartments Corp. (BRT) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path forward for BRT Apartments Corp. (BRT), and the data for the 2025 fiscal year suggests a strategy built on surgical expansion and property-level value creation, not massive, rapid growth. The company is defintely a trend-aware realist in the multifamily space, focusing on what they can control: the asset quality and the balance sheet.

Their future revenue growth is projected to be modest but stable. Analysts forecast BRT's full-year 2025 revenue to land around $95.80 million, with a tight range between $94.79 million and $97.42 million. This isn't a high-flyer growth story, but it reflects steady execution in a challenging interest rate environment. The consensus estimate for Funds From Operations (FFO) per share for FY 2025 is $1.17, which is the key metric for a Real Estate Investment Trust (REIT).

Here's the quick math on their core growth drivers, which are less about sheer volume and more about margin improvement:

• Product Innovations (Value-Add): They're not building new skyscrapers; they're upgrading existing units. In Q2 2025, renovations on 26 units delivered an average monthly rent increase of $121, achieving an estimated annualized return on investment (ROI) of 23%. That's a phenomenal return on capital, and they still have an estimated 98 units available for renovation over the next two years.
• Market Expansions: Growth is targeted geographically. Their portfolio is heavily concentrated in the high-growth markets of the Southeastern United States and Texas. This focus capitalizes on favorable demographics and job migration, which is a structural tailwind for the multifamily sector.
• Acquisitions: BRT is pursuing selective expansion, evidenced by strategic acquisitions in Auburn, Alabama, and Savannah, Georgia, in 2025, which were partially funded by their credit facility. They prefer to use joint ventures (JV) for new deals, which allows them to manage capital exposure while still expanding their unit count.

Strategic Initiatives and Competitive Edge

The strategic initiatives are centered on financial stability and operational efficiency. BRT is actively managing its capital structure, including refinancing existing debt and utilizing its credit facility to support new acquisitions. This financial maneuvering is crucial, especially since the company reported a net loss of $7.6 million for the nine months ended September 30, 2025, largely due to increased expenses, including higher interest costs.

Their competitive advantages aren't flashy, but they are foundational for a REIT:

The real competitive edge is their focus on Class B properties. In a market where high homeownership costs are pushing more people into renting-an affordability gap that is widening-these well-located, slightly older properties are seeing strong demand and higher renewal conversion rates. This positions BRT Apartments Corp. (BRT) to capture a larger share of the renter population that is priced out of Class A apartments and homeownership. For a deeper dive into the numbers, check out Breaking Down BRT Apartments Corp. (BRT) Financial Health: Key Insights for Investors.

Finance: Monitor the debt refinancing schedule and the interest rate on new borrowings closely, as that's the biggest near-term risk to their bottom line.