Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen, and welcome to the Clipper Realty First Quarter 2023 Earnings Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Larry Kreider. The floor is yours.

Larry Kreider

Thank you, and good afternoon. us first joining Clipper of for Inc. Realty, you for quarter the XXXX Thank call. conference earnings me with of Executive and Co-Chairman call the Chief J.J. and Participating Officer; today’s Board on are David Bistricer, Operating Chief Officer. Bistricer,

statements disclosed Please be are materially subject These may statements, from made be indicated in numerous forward-looking aware during Form call in XXXX such uncertainties, risks those not the on deemed on updated including may that annual results actual statements and by our to report are the XX-K XXXX and quarter website. and those which accessible the www.sec.gov historical company’s are differ first statements. that report XX-Q, forward-looking and Form at

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

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

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

David Bistricer

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

performance. financial our Finally, Larry speak about will quarterly

We will take then questions. your

to New activity properties city their improve and increasingly positive to rental on to City relocate people fully return employees Our operating reopened, as is demand back based offices. to continues seek at continued their Residential the strong trends. leasing our York results

pre-pandemic overall the $XX foot, levels. the $XX new better the all end for And House, averaged properties At properties this than rent exceed example, complex, levels first at at than December quarter And Flatbush better were in at rents. rent the leases previous leases quarter were quarter, foot, and our a per leased. exceeded continue leases the XX% And the the Gardens foot. new to to Tribeca our per of end in At XX% the XXXX. $XX rose new $XX.XX overall XX% levels of $XX record per first

which with we relatively With and years believe our duration are subject standard debt respect duration an XX% of nonrecourse is X.XX% not is average interest, rate of to a limited at long to interest increases, on is of carve-outs of we by fixed operating and X.XX properties, buttressed average cross-collateralized. our an

inflation, to to we for increased our development on and expenses us properties. our look on properties operating the high in at residential allow to respect demand short With leases higher our duration and cover cost construction

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

and cash restricted have total finance million our basis. an on cash. We of in portfolio consisting We million million $XX a of cash of unrestricted of asset-by-asset $XX $XX

today, branded is of Center mile operation full anticipation X on Pacific development, the as refinanced Heights units. comprises ground-up we Street from Pacific quarter. in that schedule and announce to XXX Terminal/Barclays The second now in about in of the have debt pleased permanent are We leasing begun with property Hub Brooklyn, Prospect completed and House, XXXX located Atlantic

excellent full of leasing another cost construction lease-up. available drawn Due an progress at $XX It to schedule leasing million in about upon rate million of February, by we initial X.X%, loan ahead loan, the above $XX and certain It and a came closing, a $XX on replaced basis million is of rate of has of with cap points interest financial to reduced a budget in five-year the achievement X%. already total upon million $XX is targets. XX construction

in at we begun the parcels land and XXXX develop XXXX we Dean to Street. Also, have bought

residential We units, along residential rental balance of feet. market fund intend also construction for feet, partially intend with XXX,XXX now, We million of amenitized from to the paid XXX loan. square develop is from affordable, the development $XX.X free rentable XX% the ground parcels, story and which commercial nine are up total and X,XXX with we funded million financing acquisition to with building square a the $XX the fully

of a quarter These With as results, record team, $XX.X over $XX.X of executive NOI and regard of significant pre-pandemic million; of above. mentioned $X.X testament and we both AFFO J.J. detail. a are first and quarterly of I further improved revenue levels; reporting to results million, result last our million of improvements to represent will Larry the and management quarter leasing year progress the first the exceeding

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

J.J. Bistricer

continues you. rates our the to improve. XX% new renewal levels residential all at over At all the rate first occupancy properties Overall, I’m quarter, report in first the end exceeding Thank properties exceeded and and performance rent to by rental pleased over lease rents of are our quarter X%. by our levels. residential that pre-pandemic leasing previous

demand experiencing our are We strong Tribeca particularly House property. rental at

last the Our leased averaged occupancy months. has XX% XX over

period. $XX square over We $XX per foot increased from have steadily same that average rent to

square per And foot, quarter, rents. $XX previous per leases increase a renewals previous rents. on foot, a over the square increase first rents XX% over were XX% rents In were on new $XX

last leasing conditions. response quarter result continued a to continue of strong another of year year result overall grow rent two to square least per pandemic expect We our in as entered of for to and and one at turnover as conditions a foot leases into

cash on actively last to during The at also vacated four last retail House properties leases or entered and Tribeca benefit rates higher have lease flowing, property. we from remaining into to retail pandemic. the new We continue are the seeking leases new the substantially the we space year

activities. and maintaining the occupancy on level are Brooklyn, we focused at maintenance Flatbush Gardens high XX% the At with up complex in keeping

quarter higher $XX approximately nearly in foot, XX% averaged per leases the the have than previously units New rented. first

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

now put guidelines X% from on which allows rent stabilized of two the year board of These so spending and supplies. XXXX, forth Such for offset continued year to capital on and to are zero will last have aggressive October far help continued increases and X% the X.XX% in property, the investment by which for our rent the has benefiting couple $XXX,XXX and units maintenance stabilization years. in amounted year percent increases our this We one leases leases. been limited for increases

other despite these collection in portfolio XXX a was XXXX Program, and Assistance XXXX Rental Clover continued Surprisingly, amount continued XX%, average XXth to has New to Livingston Our across perform Street, quarter from the rates occupancy collection but lower for versus million. quarter House, We XX%. pandemic. Program, residential rental West average average The properties, have while strong ago. quarterly York at ERAP, XX% maintained Emergency our challenges leased this properties XX have rate Assistance the quarter increased a of Rent remains Landlord the benefit from Aspen the of year well, and rate residual a received Street and overall or fourth remittances at of LRAP. Rental or remittances of first we $XXX,XXX over amount $X.X $XXX,XXX under the

first market development the Pacific the began area with We of the certificate is On by New already quarter Heights XX% department. of of Prospect as construction of XXX leases building the today. side, completed, fee in leasing issued have leased of in City the a the Brookline occupancy House York and

the with The expect be tax XX-year units, has We and affordable underground square indoor and parking. multifamily XXX(a) development quarter. has property XXX substantially to nine-story total building third rentable is free leased a XXX,XXX The amenitized rental fully XX% foot abatement. market in XX% a

across focused best remain on business to and occupancy, pricing we ahead, optimizing expenses growth. for ourselves position Looking the

turn will discuss results. our call Larry, I will over now financial the to who

Larry Kreider

Thank J.J. you,

million revenues an one-time basis, first representing standard quarter, million last $XX.X a $X.X last more after first or X%. of increase the a On million, year record million year a comparable new was million year, increased our of revenue by receivables $XX.X recovery of written-off the accounting $X.X from eliminating quarter. under million $XX to $X.X previously last For implemented reported

or for $X.X million the this adjusting million better better was items. this one-time adjusting Similarly, last $X.X quarter after last one-time better recovery than of or $XX.X million the year $X.X increase year year after revenue million, AFFO $X.X for million million an NOI recovery. million reported from $X.X and as the reported was $X.X

the high and expense also Gardens level to rates by The stabilized residential higher discussed. as property. substantially collections, revenue occupancy mentioned leasing, increase the debt strong year, higher from as with last reflecting continued due was J.J., the Flatbush at was Bad J.J. and revenue

as to increased midyear increased regular increases. Flatbush the focus from higher in insurance in to first to side, quarter were insurance to follows. primarily were by operating due costs $XXX,XXX Property utility heating our repair on real prices higher increase than key year-on-year, On The $XXX,XXX taxes taxes compared and maintenance. approximately year estate the due and cost and gas at expense year-over-year expenses increased Gardens estate the due $XXX,XXX last real last last changes year $XXX,XXX year

with Interest of after and higher increased by increased expense due the first quarter by primarily $XXX,XXX issued the and first last to costs quarter year-on-year, extra variable first Dean projects. in partially the interest quarter year. General XXX $XXX,XXX year-on-year additional associated transition administrative to at costs to cost auditor in due Street XX Pacific capitalization amortization LTIP its property development West conversion rate to offset by debt according the House the terms, of Street and of the

The our subject achievement term restricted is we a funding to unrestricted mentioned and mortgage XX and balance and of the and certain interest of with loan XX-year a Street million of million cash on substantially interest up to only with loan thereafter of loan certain our The five-year provided financial objectives. initial David House an to and $XX reduction amortization $XX X.X%, $XX Dean a based further we two rate refinanced earlier, principal targets. points Pacific and million House construction million initially February, and financing. an We In Pacific initial have achievement by construction to regard of the With as years $XX million has acquisitions interest a of development $XX.X an cash. funded schedule. first sheet, upon basis subject financial for of

our subject and asset-by-asset limited to carve-outs our non-recourse, And basis. debt portfolio standard We is an is cross-collateralized. not finance on

paid operating debt We rate XXXX, debt maturities X.XX at currently fixed of properties XXXX At the be no for shareholders on May dividend average amount X.X% announcing as is have we per on of our a the with quarter. duration XX. years. quarter, dividend until $X.XXX of of same are May X.XX%. average at overall Today, on share will operating properties to last end record XX the any of of The an first

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

David Bistricer

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

will I for questions. the your open now line

Operator

Thank you. [Operator Thank Instructions] you.

question from please Buck James. proceed. Horne with first The Buck, comes Raymond

Buck Horne

a congrats just last was Thanks, there just transaction property Flatbush if update? were market? Flatbush? see a And you least guys potential a the it we to or year, on if at going taking market late to you that can guys. progress or give might if for afternoon buyer of I’m still be the on Flatbush. is Or and the potentially wondering like in possible interest the revisit Wondering Good sounded marketing some progress. back indications could

David Bistricer

moment. longer other cannot property. market. is market, at the Flatbush have But off quarter, of in no about plans on what But sale better at a for next property, it considering we’re position should we talk which be a we we’re to discuss not the took hopefully, some direction moment, the the going. We the and we the

Buck Horne

proposals I guess, Okay. the update. All sounds increases there’s units. discussions it and new like from about for this Board new potential appreciate the – for Rent Guidelines right. And year, rent-stabilized I

Just that to X% read talking the increases the two-year on to than X% leases. the articles one-year and higher about on up leases

terms – in I’m So like related think you properties, rent may Flatbush what you would to those guess don’t be in. additional of – of going on and be I types wondering some coming do of likelihood know there of being question you’re I those increases opine pushed think do it the what through if progress would to the increases just be? sounds

David Bistricer

there is, usually is be guide the history If will some which increase.

there to will If be the anything else. conducted there you than about possibility that an be, circus reports read a more the how good I It’s But tell think, what a it’s news an they meeting, increase. tuned. of will week indication. is And a will coming, to be of, so. we know think. That early in too couple stay the be a results I until seems There something it, or

J.J. Bistricer

Yes. the property, coming we’ve permitted also And And to year. reasonably noted, gradually. Buck, It’s turnover is as last effective started a October from already it’s I were that large increases benefit slow. of

Buck Horne

Okay. Appreciate one And just for that. last me.

fund the Just to kind relative the have the smaller guys either these where levels? materially thoughts repayment – to, company potentially you do higher of strategic NAV – you these or with at one price a of level repurchases you the levels. guys at until stock any thinking guys higher debt of monetizing or in terms obviously, to other property Do properties is stock consider of than transactions you potentially

David Bistricer

It’s climate considered time. something which at we the not is have right. present not The

I this to at with suggesting. a think comes interest think interest the after of you’re way particular back are, be that’s a to rate, come that interest other with rate, there’s interest around, pause and that, seemingly the in explore I rates pause in where sort what time better probably moment

Buck Horne

appreciate the and good And Got Well, thanks it. right, for time the update. All guys. luck.

David Bistricer

Thank you. talking Thank you. to you. Nice

Operator

are Do any in comments no have There you’d you Instructions] questions [Operator further to queue. finish like with? closing

David Bistricer

look healthy. forward a soon, you speaking good us joining Have with again stay night. for you please Thank and We today. to

Operator

you. Ladies conference gentlemen, Thank call. does this today’s conclude and

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

Larry Kreider

Thanks, John

David Bistricer

Thank you.

Operator

gentlemen. Take you, Thank care.

Clipper Realty (CLPR) 4 May 232023 Q1 Earnings call transcript