- Earnings call transcript Q3 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty Third Quarter 2022 Earnings Call. At this time, all participants have been 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 Larry Kreider. Sir, the floor is yours.

Lawrence Kreider

Good afternoon, and thank you for joining us for the third quarter 2022 Clipper Realty Inc. Call. Conference Earnings on the me are Bistricer, David Participating and today's Chief of Board J.J. Executive Co-Chairman with call Officer; and Operating Officer. Chief Bistricer, are may differ Please the from those deemed statements that such materially statements, not forward-looking by that statements. forward-looking results be be historical actual made and indicated may aware call during website. company's accessible to on Form report subject are uncertainties at statements annual and risks and including which XXXX is those These numerous disclosed www.sec.gov our in the XX-K,

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

supplemental During measures. XX-Q net financial operations a certain non-GAAP comparable or operating our David Please Bistricer. these see non-GAAP income today this most or that, measures release, taxes, the and financial reconciliation from CEO, over With earnings GAAP turn I of refer adjusted amortization for funds interest, directly or before NOI. adjusted information with call, now management call press AFFO; depreciation the Form our may financial and financial measures, EBITDA; Co-Chairman to and including posted and to will adjusted

David Bistricer

property-level the provide business over call milestones, Good Thank quarter update earnings to including I call who as and our performance. for activity, well discuss as performance, leasing will our an will turn Clipper to I the afternoon, XXXX on then including recent Realty. and third welcome you, Larry. highlights will progress. company's J.J.,

financial Finally, speak Larry quarterly will our performance. about performance,

At seek return despite all properties headline new their third City has our as increase on rate demand the $XX Tribeca to better property, average more been quarter, our the increasingly operational levels. properties the leasing properties At rents in were than are to continues House previous look quarter on causing New people new Residential exceeded our pre-pandemic very the previous the the year, interest city to end take per in quarter, square leases then $XX of and with activity leases where recent of exceeding foot $XX consistent leases and than the increases. XX% trends see offices. trend per to at to square at XX% foot, the all your third foot of a and all foot news employees of improve foot as rapidly our will questions. June, we December. and from March Rental has the $XX relocate end positive at the We We strong inflation reopened, largely square back per record to at forward. square per per York end $XX of the square end the leased

and is the higher increased fixed our to look properties. expenses X.XX duration respect cost of cross-collateralized. limited us non-recourse we carve-outs our to not leases is to of X.XX% cover and at on to subject operating average development standard yet With on Flatbush rate believe September. is we at are overall Gardens, which new of buttressed our $XX.XX the by legal versus properties, limit units interest at increases, of leases As foot lease per relatively to of on respect XX% an debt With duration properties an residential inflation, to operating on and strong our allow years $XX with duration of end short the rate averaged not the we construction

Although before Pacific XXXX newly contracts XXXX on I out in construction completed all our note the that inflation projects increase. bought should the we

perspective. balance positioned from a continues to Our well sheet liquidity be

an consisting million of $XX.X $XX and asset-by-asset our of million cash million approximately of We $XX.X cash, finance unrestricted have on of cash. We restricted portfolio basis.

our is XXXX ground-up The developments. moving along ongoing development to well. essentially of very acquisition Pacific Turning

Barclay's of shortly. we the project end At Terminal, that a in financing first further of million. XXX total the up rate increase budget August, in to stabilized cost completion the million, purchase $XX to and million substantial the estimate to of long-term and quarter Brooklyn, is cap Heights, on area Prospect the In also and on same acquisition in cost of about another we financing April. the the the completion Dean ground developed approximately bought provide Brooklyn, to J.J. we X.X% land fourth initial update Atlantic of year, will completed $XX which the incremental from properties project improved in Center Street, Hub, financing leasing located the also bring intend and targeting to we environment. $XX.X quarter mile in one The in the are from of We purchases XXXX. property develop with

quarterly amenitized building, With $XX.X operating provide operations. AFFO as improvements expect income represent million, X,XXX These million, detail. revenue units, residential I market feet, further over will and of as fully Larry results, third J.J. reporting the of quarter XXX,XXX feet. result significant build XXX J.J., to of million and XX% quarter mentioned free improved pre-pandemic a to of an exceeding record the a we to turn above. third I net square $X rentable both levels affordable over update $XX.X – results leasing regard will who call on last residential XX will now XX% year, with the commercial square are of free nine-story and market rental our along We

Jacob Bistricer

Thank you.

year third New are square exceeding and per to residential residential that improve. occupancy levels levels. the our leasing began pre-pandemic properties, activity quarter, end all foot rent the At of towards continues last

in exceeded over X%. rental renewal the As I and by previous rent all detail properties, XX% over exceeded rent will combined by quarter rate rental for shortly, previous lease new third rates

House strong lease our demand averaged We has are XX%. property, occupancy experiencing while rental Tribeca at

of two to increase XX% an square expect have continue we to XX last last one nine square period. months, leases foot rents to last $XX the same Further, steadily Over year In over and one rents to conditions. entered previous previous into risen and in increased increased per on through $XX that of rent over on have from result leases foot, average of square months, grow to a foot per over year renewals have foot as pandemic rents response square – XX% next rent $XX we per rents. over new year our per the representing turnover

make to new progress continue the retail also leases and We on property. properties House at Tribeca

entered smaller substantially leases this lease. our We four our have up renewed into rates, new year garage and gym higher firmed lease at

since spaces ahead $XX square increased XX%, moving nearly than leasing focused previous the new foot Brooklyn, X% nearly vacated higher the units year, to rents. not of last up units Since occupancy beginning the also in on the legal remaining rented the leases the the we per approximately square are pandemics have We vacated in at Gardens during we foot, complex leased are retail Flatbush lease units At pandemic. third quarter, to previously the the XX% in mid-XXXX. averaged while $XX and yet to range, per which higher than the were

average of property As a rising at the again, last square rents overall increase to the foot $XX.XX the per begun to year. result, the at end $XX.XX has quarter of for versus end

in one and allow Board, two X.XX% leases forth the should October benefit we which will which – increases forward, will have beginning Rent from the amounted for leases. property, help years. These Looking Such new continued X% for increases to investment which our by increases X% on last for limited million couple and $X the year year guidelines put nearly Stabilization offset units been from to this rent-stabilized X, of has the year. also of X%

that property's the benefit to reorganization from continue operations savings. the XXXX we created of $XXX,XXX in Lastly, nearly

Livingston XXX has year. exception these other rental the increased House, Aspen XX% Aspen continued well. properties of Our perform occupancy XX with the and properties, since residential XXth and beginning Leased Clover XX% average Street overall Street, to averaged of the West for rate

Aspen, which up turnover September has is X% to June now alone. little up in

exceeded increases the pandemic. for new renewals overall and increases third XX%. group, For remains the rate the our our of despite across quarter on XX%. year residual collection collection portfolio in over average challenges exceeded whole The Rent the average XX% leases was on strong the

received New Rental million $X.X in York $X.X the Program of fourth quarter million the Emergency from $XXX,XXX and the We in have Rental or Assistance to we the ERAP under third Assistance or quarter, in continued quarter the and million which first $X.X benefit quarter, remittances second XXXX. Landlord by Program LRAP, in the

Street On the XXXX are development on the side, Pacific for we and target fourth substantial at completion by are moving on well construction quarter.

our We on out installation Costs have nearly window and last in virtually we contracts sheetrocking year bought and construction have completed costs. work, recent before spike finishes. facade all budget, installing begun and the are

construction affordable market abatement. story, to expected is rentable will development million our have property through The units, and to basis of parking. foot We soon expect for single fully on of free nine long-term XX-year our fully XXX refinance and square underground a foot, amenitized loan with construction XX% XXX,XXX XX% financed after The it’s be completion. a tax the XXXa which building rental eligible multi-family have total and $XX.X

who optimizing now we call will ahead, turn growth. to focused the ourselves to Looking and our pricing occupancy, discuss remain the results. for I expenses across financial will on best position over business Larry,

Lawrence Kreider

J.J. you, Thank

Tribeca this million third the third at $X.X a a rates third Gardens million, The to $X.X For to $X to Livingston which revenue added was Bad from million standard rental from new this year as year to revenue in against increased our record was higher billings commercial deducted all a is properties, in debt especially million and last XX-Q. due all netted the NOI where year increase higher quarter. last this new to expense, at comparable revenue AFFO million was House $XX Flatbush quarter million million versus quarter. this On excluding year it the revenues increased primarily now quarter, explained accounting included last quarter properties, record increased to $XX.X bad basis, by at million occupancy expenses. $X third the year million $X.X by tenants escalation debt actual increased directly year increased from operating billings Street $XX.X at property, $XXX,XXX and due our from million XXX expense $XXX,XXX from million by last another quarter. property to $XX.X property. revenue the adoption leasing residential $XX.X $X.X of

increased cost third quarter. as primarily were repairs supplies higher third increased was $XXX,XXX to $XXX,XXX in cash by unrestricted the the regard and cost partially last than Street side, sheet, additional reduced XXX the of in $XX On operating restricted and taxes $XX were Interest of expense by Dean Gardens expense capitalization due year-over-year and taxes expenses This $XXX,XXX, Street the Real associated balance increased properties. debt year-on-year decreased year's third property bad offset million year, last David have changes property. to for insurance year-on-year with $XXX,XXX $XXX,XXX to real quarter the of charge Flatbush the quarter of follows: interest estate Pacific key estate $XXX,XXX. excluding mentioned development XXXX we as due With in and cash. due insurance to earlier, approximately at utility, million of expense the

our finance our funding substantially is of and to development Dean is Street portfolio are subject our basis on XXXX with We carve-outs We not non-recourse, and cross-collateralized. Pacific debt acquisitions financing. and limited asset-by-asset our construction standard Street an

with dividend We XXXX average we to announcing until The per November have November share dividend of no last debt years. are Today, X.XX same duration third of amount quarter. maturities shareholders the record XX. be a on on for on quarter, overall of XX the paid any $X.XXX properties operating will as an

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

David Bistricer

opportunities, you, operating Pacific XXXX. Larry. will a improvements developments to and next other Dean our efficiently capitalizing look to that present Street, may to on focused and myriad our to XXX questions. open Thank operating the the look now to We including current line quarter into accelerate continue themselves. We I forward growth remain portfolio. We possibilities for XXXX of and on

Operator

coming question Securities. Instructions] Craig line [Operator Riley B. your And is with is from Kucera the Craig, first live.

Craig Kucera

opening my Thanks in were Yeah. commentary. Most guys. of covered questions your

that there? that see I your Gardens thank listed And and use Can kind you on your news for true, of you sale. that's you story Flatbush what So did that. be? of up that follow want expectations a But for had proceeds to would do expected I if comment

David Bistricer

really can not comment it. We It's early on too to tell.

in of as see attempt property that it that the is news And us newer there believe posted developments. We we there's about think that's environment. keep really have experience nothing will to our and we're a no do that talents better said the report that effort yet. more can now, into. nothing market to what segueing the And we market now other on than listed focus now, is to Right what there. there's that report, and we've in develops. We We as

Craig Kucera

that? of are any Fair to looking or just dispose potentially other assets enough. you And

David Bistricer

at that to That's the trade looking we're the one moment.

Craig Kucera

your time. Appreciate Thanks. Okay.

David Bistricer

Sure.

Operator

[Operator in questions Instructions] Okay. no currently We queue. have

David Bistricer

look you Thank pleasant with you to well. We evening, speaking good Stay forward for us a joining today. again Have evening. soon.

Operator

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

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

Clipper Realty (CLPR) 11 Nov 222022 Q3 Earnings call transcript