Q3 2025 Clipper Realty Inc Earnings Call
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Speaker #6: Good day, and welcome to the Clipper Realty Q3 earnings call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation.
Speaker #6: is now my pleasure to turn the floor over to your host, Lawrence Sava. Sir, the floor is It
Speaker #6: yours. Thank you.
Speaker #7: Good afternoon, and thank you for joining us for the third quarter 2025 Clipper Realty Inc. earnings conference call. Participating with me our co-chairman of the board and chief executive on today's call are David Bistricer, officer, JJ Bistricer, chief operating officer, and Larry Kreider, chief financial officer.
Speaker #7: during the call that are not historical may be deemed forward-looking statements, and Please be aware that statements made indicated by such forward-looking risks and uncertainties, including those statements.
Speaker #7: actual results may differ materially from those disclosed in the company's 2024 annual report on form 10-K, and the third quarter 2025 quarterly report These statements are subject to numerous on www.sec.gov and on our website.
Speaker #7: During this call, management statements speak only as of the date of this call. As a reminder, the forward-looking statements may refer to certain non-GAAP financial measures, including Adjusted Funds from Operations (AFFO), Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), and Net Operating Income (NOI), which will be accessible on Form 10-Q.
Speaker #7: Please see our press release supplemental financial information and form 10-Q that will be posted for measures, with the most directly reconciliation on these non-GAAP financial measures.
Speaker #7: With that, I will now turn the call over to our the company undertakes no duty to update taxes, depreciation, amortization,
Speaker #7: Bistricer.
Speaker #8: Thank you, Lawrence. Good
Speaker #8: 2025 earnings call for Clipper Realty. I will provide an update on our afternoon, and welcome to the third quarter business performance and some developments after which JJ will discuss property level
Speaker #8: 2025 earnings call for Clipper Realty. I will provide an update on our afternoon and welcome to the third quarter business performance and some developments, after which JJ will discuss property-level activity, including leasing performance, and Larry will speak to our quarterly financial performance.
Speaker #8: pleased to report that our residential properties then take your questions. continue to perform very well due to I am continued high residential rental demand excellent cash flow overall rents are generally at all-time highs co-chairman and CEO, David and continue to increase and we are nearly fully leased.
Speaker #8: In the third quarter, new leases exceeded prior rents by over will detail. We are 14%. Same as last quarter across the lease up of Prospect House, at 953 Dean August on time, and our budget Street.
Speaker #8: We bought the property online in foot. This project was ground up brought the land in 2021 and with development in Brooklyn where we '22 and built a nine-story fully amenitized building with feet, 240 units, 70% pre-market, 30% 160,000 residential square affordable, 57 parking spaces, and 19,000 commercial square feet.
Speaker #8: having placed a bridge loan last quarter that will provide funds through also in the initial entire portfolio as JJ 60% leased, with three market stabilization.
Speaker #8: We are currently approximately Our other ground up development at Pacific House at 1010 Pacific Street in Brooklyn is stabilized and is contributing to cash flow after over one year of full operation.
Speaker #8: As to the office 141, we previously reported that we are undergoing conversations with those of those properties to bring them back online properties of 250 and to cash flow position.
Speaker #8: With that, I would like to now turn over the phone to JJ.
Speaker #9: report that residential leasing at all our stabilized properties is very Thank you. I am pleased to strong and they are 99% leased overall. Rents are at record levels and continuing to increase over previous levels.
Speaker #9: Overall, new rental rates at residential properties in the third quarter exceeded previous rents by over 14% and renewals by 5%. We expect demand for our residential leasing product to remain strong in the foreseeable future as the overall rental housing supply in New York City remains constrained and new development discouraged.
Speaker #9: All our residential rents are now at record highs in the third quarter Tribeca House had leased occupancy of 99% overall, rent per foot over 88%, over $88 per foot, and new rents at $105 per foot.
Speaker #9: The Clover House property had occupancy of $88 per foot and new leases 100% average overall rents of of $95 per foot. property consisting of a blend of free Our recently completed Pacific House market, a rent stabilized tenant had leased occupancy of 97% and free market rents of $82 per foot on new leases.
Speaker #9: Our other residential properties at Aspen and 250 Livingston Street continue to perform at record levels with average occupancy above 98% and new rents and renewals 12% higher compared to previous leases.
Speaker #9: We have begun leasing at the newly completed Prospect House ground-up development at 953 Dean Street and are now 60% leased, with free market units at $88 per square foot.
Speaker #9: Gross. And at the Flappers Gones property, overall average rents were $31.67 per foot at the end of the quarter and increase of 9% over last year.
Speaker #9: As previously disclosed, we have been operating under the 40-year article 11 agreement made with the housing preservation department of New York City in June 2023.
Speaker #9: Since the beginning of the agreement, we have spent nearly $17 million towards filling our capital improvement commitment in the agreement funded principally by a full abatement of real estate taxes and other rent supplements.
Speaker #9: Rent collections across our portfolio remain strong. The overall collection rate in the third quarter for all residential properties was approximately 95%, including Flappers Gones at 92%.
Speaker #9: We are steadily working through the legal system to minimize arrears. Looking ahead, we remain focused on optimizing occupancy, pricing, and expenses across the business to best position ourselves for growth.
Speaker #9: I will now turn the call over to Larry, who will discuss our financial
Speaker #9: results. Thank you,
Speaker #1: JJ. Our results this quarter versus last year reflect three unusual items, namely the termination of the New York City lease at the 250 Livingston Street property on August 23rd, 2025, the initial lease up results at Prospect House placed in service August 1, reflecting an excess of expenses over revenue, and the absence of results from the 10 West 65th Street property sold in May 2025.
Speaker #1: I will refer here and after to these remaining properties as the ongoing properties. For the third quarter, we achieved flat revenues of $37.7 million versus $37.6 million last year.
Speaker #1: NOI of 20.8 million dollars this quarter versus 21.8 million dollars last year; a decrease of $1 million dollars. And AFFO of 5.6 million dollars this quarter versus 7.8 million dollars last year; a decrease of 2.2 million dollars.
Speaker #1: The following details these results. For revenue, the flat revenues reflect a 2.4 million dollar or 7% increase from ongoing residential properties due to excellent residential leasing.
Speaker #1: Also, a $1 million decrease from the absence of the 10 West 65th Street property sold in May; a $1.9 million decrease from the New York City lease termination at 250 Livingston Street; and a 0.5 million dollar increase from the initial lease up at the Prospect House property placed in service in August.
Speaker #1: For NOI, the $1 million NOI decrease reflects a 1.5 million dollar or 8% increase from ongoing properties; a 0.7 million dollar decrease from the absence of the 10 West 65th Street property sold in May; a 1.8 million dollar decrease from the New York City lease termination at 250 Livingston Street; and a nominal decrease from the inclusion of Prospect House in this quarter.
Speaker #1: The 1.5 million dollar NOI increase from ongoing properties reflects the 2.4 million dollar revenue increase partially offset by 0.7 million dollars higher collection and payroll expenses and 0.2 million dollars from routine annual real estate taxes and insurance increases.
Speaker #1: The payroll expenses primarily relate to staff focused on repairs and maintenance and CapEx. The 0.7 million dollar NOI decrease from the absence of the 10 West 65th Street property reflects the absence of $1 million revenue less real estate taxes.
Speaker #1: And finally, for AFFO, the $2.2 million AFFO decrease reflects a $1.5 million, or 19%, increase from ongoing properties; a nominal decrease from the absence of the 10 West 65th Street property sold in May; a $1.9 million decrease from the termination of the New York City lease at 250 Livingston Street; and a $1.8 million decrease from the inclusion of Prospect House in this quarter.
Speaker #1: The 1.5 million dollar AFFO increase from ongoing properties matches the increase in NOI. The nominal AFFO decrease from the 10 West 65th Street property reflects the absence of the 0.7 million dollar NOI offset by interest expense and the 1.8 million dollar decrease from the inclusion of Prospect House reflects the nominal NOI offset by interest expense for two months.
Speaker #1: Lastly, for AFFO, the increase in G&A was entirely offset by non-cash increase in amortization of stock-based executive compensation. With regard to our balance sheet, we have 26.1 million dollars unrestricted cash and 30.6 million dollar restricted cash at the end of the quarter.
Speaker #1: As of the end of the quarter, our operating debt is 88% fixed. At an average rate of 3.87%, an average duration of 3.7 years.
Speaker #1: Our debt instruments are non-recourse subject to limited standard carve-outs. And are not cross-collateralized. We finance our portfolio on an asset-by-asset basis. Today, we are announcing a dividend of 9.5 cents per share for the third quarter; the same amount as last quarter.
Speaker #1: The dividend will be paid on December 4, 2025, to shareholders of record on November 26, 2025. Let me now turn the call back to David for concluding remarks.
Speaker #2: Thank you, Lawrence. We remain focused on efficiently operating at the portfolio. We look forward to full lease up of Prospect House. Finalization of the 141 and 250 Livingston negotiations.
Speaker #2: And capitalizing on our other possibilities that may present themselves. I would now like to open the line for questions.
Speaker #3: Thank you. At this time, we'll be conducting a question and answer session. If you have any questions or comments, please press *1 on your phone at this time.
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Speaker #2: Thank
Speaker #2: you. For joining us today, we look forward to speaking with you again next quarter.