BRT Apartments: A Contrarian’s Gem Amid Regulatory Crosscurrents

Amid a landscape of regulatory uncertainty and market skepticism, BRT Apartments Corp. (BRT) presents a compelling contrarian opportunity. While its recent revocation of municipal advisor registration has spooked investors, the $75k insider buying spree by Gould Investors L P—a 10% stakeholder—signals confidence in BRT’s underlying fundamentals. This article dissects the case for BRT as a misunderstood REIT, where strategic asset quality, disciplined capital allocation, and insider fortitude outweigh near-term risks.

The Contrarian’s Playbook: Why Insiders Are Buying

Gould Investors L P’s recent purchases—20,238 shares over two days in early May . . . [calculated from the 10,119 shares each on May 12 and 13]—are not an isolated act. This firm has been steadily accumulating BRT shares since 2022, now holding 3,929,183 shares (10% of the company). Such concentrated ownership is rare, and it speaks to a deep conviction in BRT’s valuation.

At current prices (~$15.86), BRT trades at a 25% discount to its net asset value (NAV), according to sector benchmarks. This disconnect is puzzling given its robust portfolio metrics: 93.7% occupancy, 2.2% NOI growth in Q1 2025, and a Sunbelt-focused asset base primed for demographic tailwinds.

Portfolio Forte: A Sunbelt Bulwark

BRT’s 29-property portfolio spans 11 states, anchored in Sunbelt markets like Texas, Tennessee, and Florida. These regions boast population growth, job migration, and pro-business policies—all critical for multifamily demand.

• Geographic Diversification: 7,947 units across Texas (1,700+), Tennessee (702), and Virginia (220).
• Value Creation: Average rent per unit rose to $1,403 in Q1 2025, with Virginia properties commanding $1,757—proof of premium pricing in high-demand areas.

The portfolio’s 93.7% occupancy, despite new supply pressures, underscores BRT’s operational discipline. While 2025’s rental growth may lag due to inventory overhang, BRT expects a rebound by 2026. This patience aligns with its strategy of “disciplined capital allocation,” prioritizing long-term NOI over short-term gains.

Dividend Reinforcement: A 3% Discount to Value

BRT’s dividend reinvestment plan (DRIP) offers a tactical edge. Enrolled shareholders receive shares at a 3% discount to the trading price, sidestepping brokerage fees. With $0.25/quarter dividends (1.1% yield), the DRIP effectively lowers cost bases while compounding returns.

Gould Investors’ use of this program to acquire shares (including 5,000 on May 14) highlights its value. The DRIP’s 350,000-share cap—far below current utilization—ensures liquidity, while BRT’s $8.75 million remaining buyback authority (post-April purchases) reinforces its commitment to shareholder returns.

Regulatory Risks: Overblown or Overlooked?

The revocation of BRT’s municipal advisor registration—a niche service—has sparked fears of broader regulatory fallout. However, this issue appears isolated. The SEC’s action likely stems from compliance oversights in an ancillary business line, not core multifamily operations.

Crucially, BRT’s debt profile remains sturdy: no maturities until Q3 2025, and a $40 million revolving credit facility with zero drawn. This liquidity buffer allows it to weather regulatory headwinds while focusing on its primary asset class.

Conclusion: The Contrarian’s Calculus

BRT’s stock is a paradox. On one hand, regulatory clouds and near-term rental headwinds justify skepticism. On the other, insider buying, portfolio resilience, and a sub-NAV price tag suggest a margin of safety.

For investors willing to look past short-term noise, BRT offers a rare trifecta: undervalued assets in high-growth markets, a dividend-supported reinvestment engine, and a 10% stakeholder with skin in the game. The question is: Will the market’s fear of regulatory unknowns persist, or will BRT’s fundamentals—proven over decades—reassert dominance?

The answer lies in the Sunbelt’s enduring appeal and the contrarian’s creed: buy when others fear, and fear when others buy. BRT’s time has come.

Act now before the crowd catches on.