BRT Apartments Corp. (BRT) stock intrinsic value fair value estimate & owner earnings analysis

BRT is a Sunbelt multi-family REIT (CIK 0000014846), 21 wholly-owned properties (5,420 units) plus 10 unconsolidated JVs (2,891 units). This run deliberately DEPARTS from the project convention of equating owner earnings with reported AFFO, and lands materially below the 2026-08-27 analysis (base $24.67). Reason: BRT's self-defined AFFO adds back restricted stock/RSU compensation expense and deducts NO capital expenditure. Rebuilt owner earnings from the Q2-2026 supplemental (8-K ex-99.1, filed 2026-08-10) on a pro-rata basis, annualizing H1-2026: combined NOI $66,792k (consolidated $52,680k + BRT share of JVs $14,112k), plus other income $2,014k, less cash-basis rent adj $428k, less G&A $14,802k (stock comp of ~$3,740k KEPT as a real cost), less cash interest $28,812k (GAAP interest less non-cash deferred-cost and fair-value amortization), less tax/NCI $386k = $24,378k pre-capex. Less recurring capex $7,264k (BRT's own figure: $315/unit/quarter recurring capex plus replacements across 8,311 units, ~$1,260/unit/yr, appropriate for a 23-year-average-age portfolio) = OWNER EARNINGS $17,114k, or $0.91/diluted share on 18,896k shares. Reported AFFO annualizes to $1.50/share; the $0.59 gap is stock comp plus capex. Critically, $0.91 of owner earnings does not cover the $1.00 dividend, and covers it far less after ~$0.20/share of scheduled principal amortization; the gap is being funded by refinancing proceeds (cash fell $27.9M to $22.7M over 18 months while accumulated deficit rose $15.3M in H1-2026 alone). Two variables dominate. (1) DEBT REPRICING: combined debt of $617M carries a 4.18% weighted-average rate with only 5.26 years to maturity; the July 2026 Southaven refi replaced 3.73% money with 5.38%. Repricing the book to 5.75% costs ~$9.7M/yr, roughly 57% of current owner earnings. Phased in using the actual maturity ladder (2026 $45.2M, 2027 $60.8M, 2028 $71.3M, 2029 $54.4M, 2030 $21.3M, thereafter $330.1M due at maturity). (2) OVERHEAD: G&A of $14.8M is 22% of NOI versus 6-10% for peer multifamily REITs; capitalized at 10x that is $148M, or $7.83/share that never reaches the shareholder. METHOD: 10-year explicit forecast of levered owner earnings; NOI +2.0%/yr, G&A +2.5%/yr, capex +2.5%/yr; TERMINAL VALUE from an exit cap rate applied to year-11 NOI less amortized debt plus net non-real-estate assets, NOT a Gordon perpetuity on owner earnings. A levered Gordon terminal at g=2% is internally inconsistent here and gives a spurious ~$10.27 - with debt fixed in nominal terms against growing NOI, post-repricing owner earnings compound at ~5%, not 2%. Discount rate 10%, consistent with ~7% unlevered property returns at the company's stated 71% debt/enterprise value. SCENARIOS: bear $11.58 (NOI +1.0%, refi 6.50%, exit cap 7.50%, 11% discount); base $19.88 (NOI +2.0%, refi 5.75%, exit cap 6.50%, 10% discount); bull $30.68 (NOI +3.0%, refi 5.00%, exit cap 5.75%, 9% discount). Owner earnings barely move across the base forecast ($0.93 in 2027 to $0.99 in 2036) because 2% NOI growth is almost entirely consumed by rising interest and G&A. MAJOR CAVEAT: 71% of base-case present value sits in the terminal, so this is less a DCF than a leveraged bet on exit cap rates - a 100bp cap-rate move swings equity value roughly $5/share. Sensitivity at 10% discount: 5.50% cap $24.62, 6.00% $22.06, 6.50% $19.88, 7.00% $18.02, 7.50% $16.41. CROSS-CHECKS, both consistent with base: (a) NAV at a 6.0% cap on combined NOI is $25.75/share, less capitalized G&A at 10x = $17.92; (b) at $14.35 the market capitalizes property NOI at 7.43% (wide to the 5.5-6.25% private market for Sunbelt garden apartments) but only 5.78% after corporate overhead - i.e. the discount to NAV is almost exactly the overhead, and the market is roughly right. QUALITATIVE: no moat, commodity apartments in competitive submarkets, combined same-store NOI +0.9% YoY in Q2 with Texas same-store NOI down 12.9% in H1. Management discloses that operating cash flow and available cash will not fully fund the balloon payments due through 2028 ($259.1M), with equity issuance or asset sales as the remedy - dilutive at this price; an active $150M S-3 shelf runs to 2029. Not flagged going-concern (no auditor qualification, revolver fully available, WAM 5.26 years), but liquidity is the central risk. Capital allocation is mixed: buybacks below NAV (379k shares for $5.4M in H1-2026) are genuinely accretive, but the pending $80M Ranch Lake (Bradenton FL, 336 units) acquisition needs ~$34M of cash against $22.7M on hand and a $40M revolver - though the assumed 2.91% HUD mortgage maturing 2056 is a real below-market liability worth well over $10M in present value. MARGIN-OF-SAFETY PRICE: anchored near the bear case rather than a percentage off base, because the bear case is where the leverage lives - $12.00, roughly a 40% discount to base and just above bear. At $14.35 the price already reflects the pessimistic scenario, and any gain from that level would depend on cap-rate compression.