Q3 2021 Clipper Realty Inc Earnings Call
Line, it will be right back with you.
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On the line and we'll be back in a moment.
Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty three 221 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.
Now my pleasure to turn the floor over to your host Larry Kreider sort of the floor is yours.
Good afternoon, and thank you for joining us for the third quarter of 2021 Clipper Realty, Inc. Earnings Conference call participating with me in today's call our David <unk> Co Chairman of the Board and Chief Executive Officer at J J, Mr. Sir Chief operating officer.
Please be aware of the statements made during the call that are not historical may be deemed forward looking statements and actual results may differ materially from those indicated by such forward looking statements. These statements are subject to numerous risks and uncertainties, including those disclosed in the company's 2020 annual report.
And Form 10-K, which is accessible at www Dot S. A C dot Gov and our website as a reminder of the forward looking statements speak only as of the date of this call November 9th 2021, and the company takes undertakes no duty to update them during the call management may refer to.
Certain non-GAAP financial measures, including adjusted funds from operations or a F F O adjusted.
Our our earnings before interest taxes, depreciation and amortization or adjusted EBITDA.
And Ah net operating income or NOI. Please see our press release supplemental financial information and Form 10-Q posted today for a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures with that I will now turn the call over to our co chairman and CEO.
This is sir thank you Larry good afternoon, and welcome to the third quarter 2021, any school for flipping Realty I.
I will provide an update on a business performance, including recent island milestones as well as the company's progress as he recovered from COVID-19 pandemic, well then turn the call over to J, J, who will discuss property level of activity, including Lucy performance. Finally, I will speak about a quarterly financial performance.
<unk> will then take your questions.
I begin by once again, extending a thanks and anti Clipper Realty team the ongoing hard work and perseverance as we progress out of the pandemic remained.
We remain grateful for the continuing efforts and we are proud of the continued dedication to our residents our communities and our business.
Properties remained open and operational throughout the pandemic and we see positive trends as we look forward, but essentially the activity continues to improve it goes the city and the economy in general further strengthened for the depths of the pandemic.
We expect rather demand to remain elevated in pricing to improve our New York City continues to reopen people seek to relocate back to the city and employees increasingly returned to their offices at the end of the third quarter of properties with 94% leased and new leases out of properties, reaching or exceeding gripping demick levels, including.
The Tribeca property were newly raised in October approximately 76% $76 boost square foot, which is 9% better than prepossessing.
A balance sheet could do submit to be well positioned from our perspective, we have approximately $88 million of cash consisting of 59 million of unrestricted cash and 29 million of restricted cash refinance up with Julio.
On an acid by acid basis Ah that is non recourse subject to limited 10 is garbo as a non close globalization, we have no debt maturities of any era in any of our operating properties into 2027.
Recent development. So we could do to proceed with the development of a 10 10 Pacific Street acquisition located prospect Heights, Brooklyn about one life Atlantic Tunnel and Barclays Center hub construction is progressing on time and on built on budget as previously discussed we estimate the project costs $85 million.
Take two years to complete a develop at a 6.5% stabilized cap rate, 90% of our construction contracts. Our site, we entered into a 52 and a half million dollar construction loan facilities that will provide us with financing through completion J J will provide for the update on the project. Shortly as you can see in a result.
Our office portfolio has been recording the benefits. This year have no reason to last you with New York City. The December 2020 at least at 141. There is the property any $2.1 million to drop his annual N O Y and the November 2020 at least 250. There is the three property is any 5 million a value N O y.
All of the $7.1 million annually, representing an approximate 10% decrease on a previous run rate.
With regard to a third quarter results. We are reporting quarterly revenue 30.6 million NOI of $16.1 million and a F. F O $4.1 million. All of these measures are in line with the second quarter as valuable further detail I will now turn over the call to JJ, who will provide an update on operations.
Thank you I begin by again, extending I was sent to the company's employees. So they continued inspiring estimates as you can rest out of this unprecedented.
You can normality, yeah, grilled sofa, the ongoing commitment to our tenants and communities.
And can you spell that one for leasing activity Deborah gang towards the end of last year continues today.
At the end of the third <unk>, all residential properties of the meat and the meat the monkeys to send to drink.
He anticipated last quarter.
<unk> <unk> <unk> hopefully opens no amount of activities Museum and employees can see me quite an office buttons.
No amount of <unk> and that's spelled the other cheek when a team prepandemic levels.
And what was being present Avenue drinks.
Uncle, New leases in October at the Tribeca House property or $76 per square foot at flop is $144 per square foot and has been $48 per square foot.
I'll spell out for both of Us <unk>.
Well since I'm, probably a quota open damage strategy continues to prove itself up.
First go last year.
What's to achieve high occupancy, which we have accomplished here on your at least occupancy has increased in 90, 626% from 81%.
And I can see and can use to 190% Mark you would enable to begin to begin achieving higher <unk> said levels, which I can reach 76, just one thing October 1970.
$76 per square foot in October 9th to some higher than the peak endemic levels.
The goal of reaching high rent levels on average for the whole building hovel, we'll take some time as the lower pandemic leather pieces work through two full time.
Rubbing a slap is balanced complex in Brooklyn.
Well in the third quarter level with the second quarter lots.
Lots of I'm Gonna make the property maintain high occupancy ending Dakota 93 per cent.
Room for school, so it was $25 for a specialist at.
At the end of the <unk>, a new record level.
Yeah, taking steps to increase occupancy to this dolphin typical level above 95%.
And are presently processing numerous applications according to the requirements of no.
<unk> last year will be organized certain operations at the property warmed up I'm gonna make it to manage all expenses, which has resulted in annual cost savings in excess of $800000.
<unk> key element about <unk> and <unk> story.
Uhm collections remains strong despite the challenges of the pandemic.
<unk> made in the third quarter was 96% an uptick versus 95 per cent yeah yeah.
We have consistently worked with our tenants an occasional case.
The notify us.
It doesn't obligations.
If they can if they notify those that they cannot meet the rent obligations due to the bad stomach and soon as when we have partnered with our tenants to file for around release under the New York Emergency rental assistance program <unk> you that too.
To date, we have received $2.2 million under this program.
Yeah, I've also saab over $1 million of applications under the reloaded landlords rental assistance program <unk>.
Relating to tenants, who do not file for assistance on the you up although we understand and New York is focusing their funding on smaller downloads at the current time.
On the development side, where I'm moving well on construction at 10 10 Pacific Street.
And I'm target you have fun.
<unk> approximately 90% of our construction contracts poured concrete floors on eight of the nine floors and execute destruction financings incompletion 52.5 million.
<unk> <unk>.
The development as a non story 119000.
<unk>, Hello, Amenitized multifamily rental building with underground indoor parking.
The topic is expected to have 175 total units.
To send the which will be free market and 30% affordable and the Zip.
Eligible for 35 years 421, a tax abatement.
Looking ahead, we remain focused on optimizing occupancy pricing I'm expenses across the business.
Listen I close immediate cities.
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The best position ourselves as New York City continues at the emergence from independent Nick.
I will now turn the call over to Laurie who will discuss other financial results.
Texas J J for the third quarter, we achieve revenues of 30.6 million virtually level with last quarter and higher than the $30 million for last year's third quarter for the same periods of time, we achieved N O Y a $16.1 million in a F F O four.
$1 million this quarter level with the second quarter of this year and improved from N O Y a 14.5 billion at a F F O $2.9 million in the third quarter last year.
The year over your revenue increase was primarily attributable to hire commercial revenue from the new office lease at the 250 Livingston Street property during the third quarter.
Of 2020, this was partially offset by lower residential revenue at the Flatbush gardens property from lower occupancy and at the clever house property from lower residential rental rates offered last year to maintain occupancy.
Revenue was level at the Tribeca House property as or higher leasing this year successful successfully recovered the lower bargain residential rates we offer.
At this point, we are achieving higher rents are new residential leases that before the pandemic. Although the effect will take the next few quarters, who evidence itself has leases executed at lower prices at lower rates during the pandemic through the first quarter of this year take full term to roll off in October for example that they try.
Heck has property residential rental rates were at the 76 per foot $76 per foot Ah level with similar increases at our other properties as well.
On the expense side key year over year changes were as follows property operating expenses declined by $1.2 million in the third quarter year on year, primarily driven by a decrease in apartment make ready expenses, resulting from leasing efforts last year at the Tribeca House property.
A decrease in the provision for bad debts result, resulting primarily from the portion of the 2.2 million Iraq funds applicable the past due amounts and a decrease in property level of staffing costs, resulting from realignment of operating activities last year, So I pushed carts.
Real estate taxes, and insurance increased by point $5 million in the third quarter year on year and compared to the second quarter due to increased insurance costs of cross the portfolio.
Interest expense increased by 169000.
Dollars in the third quarter, you're on your primarily due to the refinancing at the 141 Livingston Street property in February this year.
With regard to the balance sheet as David mentioned earlier, we are well positioned for the liquidity perspective, we have $88 million of cash consisting of $59 million unrestricted cash and $29 million a restricted cash refinance our portfolio on an asset by acid basis or that is non recourse subject to learn.
Standard carve outs and does not cross collateralized, we have no debt maturities on any operating properties until 2027 today.
Today, we are announcing a dividend of nine nine and a half cents per share for the third quarter. The same amount as last quarter. The dividend will pay be paid on November 24th to shareholders of record on November 16, Let me now turn the call back over to David for concluding remarks. Thank you Larry remained folk.
Physically upgrading our portfolio with the safety of tenants in employees.
Highest priority within you to take the necessary steps to navigate through the current challenges buttressed by strong balance sheet, We expect New York city's recovery from the the networks do you too.
To accelerate through 2021 and beyond we look forward to capitalizing on the movies of growth opportunities, including the 10th and passivity development and other possibilities that may present themselves well now I'd like to open up the line for questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please indicate so now by pressing star one on your Touchtone phone pressing start to remove you from the queue should your question be answered and lastly, while pushing your questions. Please pick up your handset pushing on speakerphone to provide optimum sound quality. Please hold while we poll for questions.
And we have a question coming from Craig's Sarah from be Riley Securities. Your line is life.
Yeah. Good evening, guys, David with with the city opening back up is that enhanced your ability to start making progress again on expanding your F. A R. A plaque Busch gardens.
A little bit too early to tell this new administration as you know coming into the city of New York. So you know when that gets a little bit more flushed out well again, you know investigate what the appetite of the city is to work with us on the opportunity.
Got it and I I appreciate that and an understanding that you've been able to cut out I believe about $800000 of operating expenses of Flatbush gardens were there any other items or or events occurred. Your your operating expenses quarter was down considerably year over year in and year to date and I'm just curious as to if there's any.
Anything else, that's that's driving that.
That was basically you know taking a a strong to look at the various different expenses and you know and driving as soon as possible and that's something that we continue to do on a continual basis.
Yeah. One other thing you know we had a we had a reorganization, but also as we got further least or make ready repairs and maintenance costs have declined somewhat.
Got it that's that's helpful.
One more for me I'm, just want to make sure I understand you you mentioned that you're seeing new leases at or above prepandemic levels and gave <unk> a number of different ranch or are those rents are just newly accident executed leases that they could space or was that inclusive of people that renewed.
Cause those are the new rats.
On a new a new spaces.
New space. So do you have a sense of what the increases on renewables at this point.
Yes, we do I pay a renewal so are generally a little lower increase but they're always that an increase we we keep them fairly modest to avoid vacancy.
Okay fair enough. Thanks, a lot.
You're welcome.
Once again, if there are any remaining questions or comments. Please indicate so by pressing star one on your Touchtone phone.
I'd now like to turn the floor back to David Mister Sir for closing remarks.
[noise]. Thank you for joining us today, we look forward to speaking with you again soon they will have a good evening.
Thank you ladies and gentlemen, this does conclude today's conference call.
Disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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