CLPR - Earnings call transcript Q2 2019

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty 2Q 2019 Earnings Call. At this time all participants are placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Michael Frenz, CFO of Clipper Realty. Sir, the floor is yours.

Michael Frenz

Good afternoon and thank you for joining us for the second quarter 2019 Clipper Realty Inc. call. conference earnings on of me J.J. will David be Participating Board today's and Co-Chairman the and Chief Bistricer, with call Executive Officer; Bistricer, Chief Operating Officer. are may differ that the from those deemed aware made such materially statements not forward-looking by that statements. forward-looking results be be historical actual Please and indicated may statements call during company's company's accessible to on Form report subject are uncertainties, at statements annual and risks and including which XXXX is website. those These numerous disclosed www.sec.gov the in the XX-K,

speak duty only call, statements of them. As the and this a forward-looking reminder, of as August the date the company to XXXX, X, undertakes no update

During and this before management refer operating net earnings amortization interest, from funds financial to financial comparable see quarterly measures. certain and reconciliation of call, income, or our and Form including adjusted posted measures, adjusted may or taxes, with supplemental measures EBITDA; GAAP AFFO; adjusted operations, directly depreciation non-GAAP financial release, press the today information XX-Q Please most financial these for on report NOI. non-GAAP or

that, to David our the Co-Chairman call I over CEO, Bistricer. turn and will With now

David Bistricer

welcome I Thank the over provide the our level property Michael. to performance renovation including on leasing who an and and and pleased call to Realty. projects. turn afternoon, Good earnings update second quarter to highlights recent will discuss business, will for Clipper then you, milestones. XXXX I'm J.J., call activity, including

our speak will about financial quarterly performance. Michael Finally,

entire exceptional team We will an the then take for congratulate I your to questions. quarter. want

significant considering headwinds, portfolio our We leased. are today, industry recent announcing some is of accomplishment results meaningful achievement record a XX% and

in some recent developments to quarter. Turning past this

garage. in This XXX two studio amenitized the Clover currently online. residential building XXX parking plus announce and to pleased Brooklyn, that fully are We are we one apartments indoor House bringing Columbia its property an rebranded bedroom has free-market Heights extremely

describe detail about J.J. pre-leased. was As just building shortly, XX% the in will

resident all this amenities, of of it's most desirable anticipate the location week. in The moving attractiveness Manhattan names the and proximity continues City, first We its of one drive as tenants to in demand. strong New are York property, it's to

XXX thrilled to welcome a Columbia milestone, Opening Clover and Heights significant up is tenants the community. House into we are

also XX and This company XX are Street College property the which proud at the report West and we of property at renovation a from re-leasing of extensive well would is our the for scheduled we portfolio the I have completed for to unit units end in future. Touro turnaround operational January. position's significant We moment. XXth the achievement ahead back to to for received that turn office like Manhattan, rapid of

earnings of City As on fully lease we prior for discussed our executed lease commercial call, the York, New Livingston Street. renewal the XXX we at have of with

to closer moving annual a NOI XX% additional effective. of To when XX-year of upcoming has roles NOI. office the XX the million on portfolio will We NOI X.XX% only renewal, at end to connection two million the interest a for very annual we're an commencing City, a At XX-year lease additional approximately end May, at August increase lease with add expect our to property's representing term lease, drawing of potential lease $X.X the add the property million property's to our fixed $X to which years. down on $X.X summarize new the increase leased runway. attractive initially a loan property, add the refinanced we Livingston to $XX rate million XX% rent XXX these neighboring the in to XXXX, the which will an In at XXXX, portfolio,

ahead. them continuing the We are years our and to and in proud look work with to of with relationship City longstanding the productive forward

is to add a of meaningfully have to the is City. Flatbush key or Procedure our expand FAR efforts significant of Review size additional would to months, partnership This process X application ULURP Uniform We demonstrates filed anticipate pleased a approximately The the add which significant in that efforts are value. and office, begin at milestone mutually the of ratio the Use a the which we York planning filing property City. We announce another ULURP beneficial combination will Gardens with we step development. City's to taking with the zoning XX Land complex, point, in New

rule that reduce There be ability limiting affects June, any apartments which now is increases as current will eliminating the to rent the York It would partially rent in way immediately. expenditures. no took application I bonuses, unit associated The assurance, future City. submitted. revenue increase rents-stabilized New approved the in vacancy stabilization fully units, or enacted discuss It revenues. on however, legislation effect like preferential and rent-stabilized by capital limiting with our increase does in to renewals reduce on does not in primarily

have were rent annual tenants at not law. tenants rent legacy the [Indiscernible] trajectory our growth to increases. been affected subject be continue will legal guidelines rent and rarely for to These the by the and renewal maximum rent

Our turns allowed the shrinking are charge although limited of overall the portion amount renovation that rent legal of restricted represents in-place we plus to a property. legacy CapEx, unit note now the such turnover

addition, In prior growth will our somewhat rent quarters. slow renewal preferential from

believe rent should we However, rent rent. history and legal vacant, the our go new unit Overall, on increases growth rent-stabilized laws profile when to the may a new mitigate preferential that units. of becomes our impact measured portfolio rent help of the higher

Tribeca House I'd like litigations. the XXXG address to Secondly,

overturned motion buildings of disclosed, impact that benefits and now the issuing tax in Appeals for business. material reargument do Court We deregulation, ruled previously apartments We York a the the decision. the New last the order Division the in Appeals. subject of Appellate filed our previous order to week luxury on As June, are receiving XXX-g Court will have an believe that not unanimous

quarter would I on to Lastly, results. like second comment

management. performance proud record million, million of strong are expense of of to continued of $XX.X record and We all AFFO $X.X NOI report reflect and $XX.X record revenue million, which revenue

portfolio. Heights cshortly. performance, our excited have detail XXX are Michael operating on to provide We financial to further our Columbia will

call provide the turn who J.J., properties. will now will operations to over for an update the I

J.J. Bistricer

you. Thank

management continue to to flows week. this a House This will strong by We targeted well focused property XX% just or of in business. investment. efforts, apartments ongoing $XX with The XX% seeing square currently our year-end. rents open about renovated before moving and testament the We property expense Initial to that leased capital are first the neighborhood. foot. to efficiently of started building the driving fully approach expect now tenant Clover perform pre-leasing XX% occupancy enjoyed operationally, cash is is team per the leasing inherited building XX averaging below team's and an to

building. Manhattan. its property the go-to live House completed continues that unit fully is XX% XX renovation full back leased. and XX leased a professionals outperformed Touro occupancy full Since initial lease to just we is XXth representing significantly online, over perform have want in received Separately, apartments brought we families, the XX House units XX% from up and of over young saw our property West �� very well. of continuing a to destination total Downtown Tribeca timeline, who excited the extensive we January. having the are remains last We The have of Tribeca units in College now for trend The beginning the to Street. perform project quarter. year,

bought to has surrounding and per Out occupancy neighborhood. With building remained upside square foot also foot full we rents. neighborhood a rent over have as amenities dictated blended square more $XX few $XX point last relative to the the steady a the the attractive quarters per full significant and price potential comparable

in at the projects closing property to major capital the to numerous We rent and have future completed further standard market it the up as the catalyst gap. bringing serve

we providing reduced have additional weeks, this us leverage to apartment and Importantly, three three exceptional helping occupancy in rent downtime less turnover the maintain months from than discussions.

a Gardens at in to with upgrade property complex cash the Brooklyn, Gardens and on a The Flatbush turns satisfying create a increases limiting to preferential company's continues has growth multiyear slow in last to by It rent efforts that unit the with been rate renewals. quarters rate high curtailing benefit company wide rent a Flatbush new overall growth. unit sustainable Turning primarily housing future will of stabilization increases residents. property, – community of rent spectrum few the methodical running on and option accompanying at XX% strong positioned as the incredibly collections, the rule with attractive the legacy with has an demand lease rent feel the

the preferential I rent renewals to the not increases like vacancy, reiterate as of law, board law. renewal subject to relates temper increase rents Two, impacted up renewal these we legal the legacy However, in-place the were to and increases. renewals, units would to have four it by apply current One, a not rent key to limitation still ability to rent the growth maximum guideline growth. impacted. limit, to slow the help preferential is upon only negatively the our the points growth are our on rents Three, already as preferential

four, our and at And re-regulating Flatbush deregulation prior of vacancy repeal the really tenant income levels given high law's impact history decontrol decontrolling does rent Gardens, the not and not on profile or neighborhood of our property.

over In our expansion of incremental story, with and capital value I CapEx limitations accordingly. and the trajectory, a and result will remain summary, now rent growth turn rate new while new Michael, results. significant opportunity. of discuss a of the are slow future the will call with to currently who our budget our we the very growth Gardens will As entire part will law still Flatbush expenditures, reviewing rent our FAR portfolio on associated the project financial increases

Michael Frenz

J.J. you, Thank

by J.J. the reflect highlighted results second Our quarter leasing clearly and operational David trends and efficiencies, strong

a of quarter, to compared record an million period in second of X.X% the same we $XX.X increase million, revenues NOI of XXXX. period compared the same increase XXXX. achieved in $XX.X We $X.X or For achieved to record the X.X% million,

of total Gardens increase year. an to also last over attributable record We improvements Flatbush The $X.XX at AFFO Tribeca or House. year-over-year primarily XX.X% per was $X.X and million achieved increase share, revenue

X.X% Flatbush plus offset Both These that X.X% and decrease XX partially at and now residential project year-over-year, grew nonrecurring currently connection unit revenues Street year-on-year, both are discussed rental increases complete. respectively, revenue West increases with in XXth in renovation XX% and is occupancy. a in $XXX,XXX Tribeca were the earlier, XX properties leased. by rates reflecting

leasing. basis Heights for record and will third as we online expenses sections bring XXX become quarter, we during the Columbia phase revenue As on available a as earned

the a provide further quarter next the as update progress we of will stabilization We property.

side, the $XXX,XXX were expenses Property second essentially second in by were collection driven legal quarter, portfolio taxes the insurance at by the the the expenses at property. by year, cash operating quarter, across XXX-g key loss expenses changes for receivables legal provision higher insurance higher the primarily increased expenses by Cash, costs executive year-over-year a flat and to year-over-year, lower over increase from the as of in the due increases follows: offset estate second $XXX,XXX and Tribeca prior increased in by public Real and lower an resulting expense tax general to utility offset primarily quarter, On litigation fees, related bonus House. company and property with increases cost and experience. in Flatbush, administrative professional

increased Separately, connection quarter development. at with related interest expense debt May. capitalization refinancing marginally interest loss Interest loan refinancings, of amortization higher of expense XXX second $X.X to Street Livingston we incurred quarter offset million the cost XXX costs in in on the includes a the noncash in increased second were on end Street noncash property Livingston the partially the which as by extinguishment

second included which at Columbia elevator City XXth the CapEx, in to of local related upgrades XXX incurred Tribeca various majority and and Other at New comply the to with million York the Street, laws. XX capital apartment renovation. of we House, Tribeca Turning upgrades House projects quarter, West expenditures expenditures were Heights $XX.X to capital

on quarter. $X.XXX paid Finally, for be are to dividend the a August will August today, XX announcing of we shareholders record on The second dividend of XX. per share

turn now back concluding call for the to over remarks. David me Let

David Bistricer

Thank with our We're pleased you, Michael. results. extremely current

Heights perform Our bringing well is online portfolio continues to significant. and very Columbia

drive initiatives Looking forward, to our we are and on shareholders. strategic our to value positioned execute to continue

would I for that, line to the open up With like questions.

Operator

[Operator questions. Inc]. The is ladies Craig Riley is for FBR, and coming gentlemen. you, question Kucera [B. now Your first Thank Instructions] floor open from

Craig Kucera

guys. circle back afternoon I good Hey, wanted to Touro. to

it I on us you think I the it sense on units be before a that? generating Or rents off-line, about you're you what give current would getting, about improvement $XX. the Based $X.X might you was that mentioned had on annual be basis? think, NOI. rate a of NOI million the Can cap what to taken alternatively in might

J.J. Bistricer

you we're key this is the numbers. know, broader college units Look appeal used when that, we've I A to or here that about were couple apartments of dorm-style like situation building a slightly effectively Number the prior to would over took is say based with things. the to on into from rental right? is for one, talking will done of the that What these we units, here as situation, building time increase purchased Touro, full-scale folks. units these turn a range renovation initially

So which done similar is the what I again, apartments rents, to are to to we to up we've initial sets us the key had growth. we But point think well what and building, given the forward, – the have start generate before. location this accelerate rent really to moving

good to so good quickly, start we can it done be we're the renovation, So for happy us a to forward. it's start ball moving and get

Craig Kucera

right. All

Or that that? the you quarter. the portfolio? capital? for loan million took identified You to grow working looking $XX to continue Is second for use you Have are general in the proceeds of just the

David Bistricer

to it's fund that good you suggestions. for funds obviously, at considerable specific the for a good look Looking portfolio, time. to general And a was grow we time no it, loan rate. different was It looking to from do and know that with company

Craig Kucera

I the that with at you with that ULURP going down change Got guess, if so, one does FAR the filed legislation? Flatbush for And path it Gardens? the was of more filed, way potentially ahead it. And the about think expanding me, was

David Bistricer

the that the unit As and is any will XX% an toward things. the the are to to probably City XXXX portion ULURP units. affordable affordable really rent-stabilized This X will and this it are Because legislation legislation that component to ULURP have it, have. FAR is different

– regulated will of not by AMI's, obviously rest obviously, because on it with by it new. done, still all to those the different themselves we is, be a when be actually on the to City it's brand-new the have project. the be with going lot various of So it will My be will take And But will levels income buildings subject it. a stabilized gets negotiated negotiations it's the units be City.

a have place first nicer done. but get it'll So the lot been and wood much cooperative process, to to and – right more being is chop yet This of much now. larger heretofore, lot is still going the we City of step it discussions a be, be very in have much a the to on

Craig Kucera

you. thank Okay,

David Bistricer

You’re welcome.

Operator

queue time. at have further no in You questions this

David Bistricer

again to us soon. forward you Thank Thanks. joining look for today. We speaking with you

Operator

Thank This does call. and conference you, conclude gentlemen. ladies today's

your phone lines this disconnect may wonderful you and for time, a have at Thank You day. your participation.

Clipper Realty (CLPR) 2 Aug 192019 Q2 Earnings call transcript