Clipper Realty Inc. (NYSE: CLPR) (the “Company”), a leading
owner and operator of multifamily residential and commercial
properties in the New York metropolitan area, today announced
financial and operating results for the three months ended June 30,
2024.
Highlights for the Three Months Ended June 30, 2024
- Record quarterly revenues of $37.3 million for the second
quarter of 2024
- Quarterly income from operations of $10.0 million for the
second quarter of 2024
- Record net operating income (“NOI”)1 of $21.1 million for the
second quarter of 2024
- Quarterly net loss of $1.7 million for the second quarter of
2024
- Record adjusted funds from operations (“AFFO”)1 of $7.1 million
for the second quarter of 2024
- Declared a dividend of $0.095 per share for the second quarter
of 2024
David Bistricer, Co-Chairman, and Chief Executive Officer,
commented,
“The Company continued to grow its revenue, NOI and AFFO in the
second quarter of 2024, producing record results for all these
metrics on the basis of our very strong residential leasing. We
continue to have high occupancy and good renter demand in our
buildings. For all our properties, new leases exceeded previous
rents by nearly 11% and renewals by nearly 7%. At Flatbush Gardens,
as a result of the Article 11 agreement with New York City, we are
beginning to collect meaningful enhanced rental recoveries under
Section 610 as we continue to make the committed capital
improvements and other improvements in the property. At our 250
Livingston Street property, where we previously disclosed New York
City’s notification of its intention to vacate in late August 2025,
we continue to actively seek solutions and pursue opportunities. At
our nearby 141 Livingston Street property, we are in active
discussions for a lease renewal. Our Dean Street new development
continues to progress ahead of schedule, and we are confident of an
on-time completion next year to capture the 2025 leasing season.
Lastly, we have begun thinking about recycling properties in our
portfolio to maximize performance and improve cash flow. As such,
we have begun preliminary marketing activities for some of our
properties, including our 10W 65th Street property, which, while
potentially resulting in some loss compared to book value, would
allow us to achieve better overall returns going forward. We will
announce any definitive arrangements promptly as they arise.”
Financial Results for the Three Months Ended June 30,
2024
For the second quarter of 2024, revenues increased by $2.9
million, or 8.3%, to $37.3 million as compared to revenue of $34.5
million during the second quarter of 2023. Residential revenue
increased by $2.7 million, or 11.8%, driven by higher rental rates
at all our residential properties and higher occupancy. Commercial
income increased by $0.1 million, or 0.9%, in the second quarter of
2024 due to higher escalation income at our office properties
For the second quarter of 2024, net loss was $1.7 million, or
$0.06 per share compared to net loss of $3.3 million, or $0.10 per
share, for the second quarter of 2023. The lower net loss as
compared to last year was primarily due to increased rental revenue
discussed above, the abated real estate taxes at the Flatbush
Gardens property under the Article 11 transaction entered at the
end of the second quarter of 2023, and the absence of Article 11
related transaction costs last year, partially offset by higher
property taxes at the remaining properties and, at the Flatbush
Gardens property under the Article 11 transaction, higher repairs
and maintenance costs, higher payroll costs from “prevailing wage”
requirements, and higher depreciation expense from capital
spending.
For the second quarter of 2024, AFFO was $7.1 million, or $0.17
per share, compared to $5.5 million, or $0.13 per share, for the
second quarter of 2023. As discussed above, the increase was
primarily due to increased rental revenue and the abated real
estate taxes at the Flatbush Gardens property, partially offset by
higher property taxes at the remaining properties, and, at the
Flatbush Gardens property, higher repairs and maintenance expense
and higher payroll costs.
_____________ 1 NOI and AFFO are non-GAAP financial measures.
For a definition of these financial measures and a reconciliation
of such measures to the most comparable GAAP measures, see
“Reconciliation of Non-GAAP Measures” at the end of this
release.
Balance Sheet
At June 30, 2024, notes payable (excluding unamortized loan
costs) was $1,255.3 million, compared to $1,219.0 million at
December 31, 2023. The increase was primarily due to draws made on
Dean Street development construction loan.
Dividend
The Company today declared a second quarter dividend of $0.095
per share, the same amount as last quarter, to shareholders of
record on August 15, 2024, payable August 22, 2024.
Conference Call and Supplemental Material
The Company will host a conference call on August 1, 2024, at
5:00 PM Eastern Time to discuss the second quarter 2024 results and
provide a business update. The conference call can be accessed by
dialing (800) 346-7359 or (973) 528-0008, conference entry code
151415. A replay of the call will be available from August 1, 2024,
following the call, through August 15, 2024, by dialing (800)
332-6854 or (973) 528-0005, replay conference ID 151415.
Supplemental data to this press release can be found under the
“Quarterly Earnings” navigation tab on the “Investors” page of our
website at www.clipperrealty.com. The Company’s filings with the
Securities and Exchange Commission (the “SEC”) are filed at
www.sec.gov under Clipper Realty Inc.
About Clipper Realty Inc.
Clipper Realty Inc. (NYSE: CLPR) is a self-administered and
self-managed real estate company that acquires, owns, manages,
operates, and repositions multifamily residential and commercial
properties in the New York metropolitan area, with a portfolio in
Manhattan and Brooklyn. For more information on the Company, please
visit www.clipperrealty.com.
Forward-Looking Statements
Various statements contained in this press release, including
those that express a belief, expectation or intention, as well as
those that are not statements of historical fact, are
forward-looking statements. These forward-looking statements may
include estimates concerning capital projects and the success of
specific properties. Our forward-looking statements are generally
accompanied by words such as "estimate," "project," "predict,"
"believe," "expect," "intend," "anticipate," "potential," "plan" or
other words that convey the uncertainty of future events or
outcomes. The forward-looking statements in this press release
speak only as of the date of this press release.
We disclaim any obligation to update these statements unless
required by law, and we caution you not to rely on them unduly. We
have based these forward-looking statements on our current
expectations and assumptions about future events. While our
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties), most of which are difficult to predict and many
of which are beyond our control and which may cause our actual
results, performance or achievements to differ materially from any
future results, performance or achievements expressed or implied by
these forward-looking statements. For a discussion of these and
other important factors that could affect our actual results,
please refer to our filings with the SEC, including the "Risk
Factors" section of our Annual Report on Form 10-K for the year
ended December 31, 2023, and other reports filed from time to time
with the SEC.
Clipper Realty Inc.
Consolidated Balance
Sheets
(In thousands, except for
share and per share data)
June 30, 2024
December 31, 2023
(unaudited)
ASSETS
Investment in real estate
Land and improvements
$
571,988
$
571,988
Building and improvements
732,917
726,273
Tenant improvements
3,366
3,366
Furniture, fixtures and equipment
13,616
13,278
Real estate under development
124,071
87,285
Total investment in real estate
1,445,958
1,402,190
Accumulated depreciation
(228,387
)
(213,606
)
Investment in real estate, net
1,217,571
1,188,584
Cash and cash equivalents
20,254
22,163
Restricted cash
16,490
14,062
Tenant and other receivables, net of
allowance for doubtful accounts of $250 and $234, respectively
5,836
5,181
Deferred rent
2,273
2,359
Deferred costs and intangible assets,
net
5,903
6,127
Prepaid expenses and other assets
6,275
10,854
TOTAL ASSETS
$
1,274,602
$
1,249,330
LIABILITIES AND EQUITY(DEFICIT)
Liabilities:
Notes payable, net of unamortized loan
costs of $11,212 and $13,405, respectively
$
1,244,136
$
1,205,624
Accounts payable and accrued
liabilities
19,802
20,994
Security deposits
9,109
8,765
Other liabilities
6,247
6,712
TOTAL LIABILITIES
1,279,294
1,242,095
Equity(Deficit):
Preferred stock, $0.01 par value; 100,000
shares authorized (including 140 shares of 12.5% Series A
cumulative non-voting preferred stock), zero shares issued and
outstanding
-
-
Common stock, $0.01 par value; 500,000,000
shares authorized, 16,077,290 and 16,063,228 shares issued and
outstanding, at June 30, 2024 and December 31, 2023,
respectively
160
160
Additional paid-in-capital
89,685
89,483
Accumulated deficit
(91,623
)
(86,899
)
Total stockholders' equity
(1,778
)
2,744
Non-controlling interests
(2,914
)
4,491
TOTAL EQUITY(DEFICIT)
(4,692
)
7,235
TOTAL LIABILITIES AND
EQUITY(DEFICIT)
$
1,274,602
$
1,249,330
Clipper Realty Inc.
Consolidated Statements of
Operations
(In thousands, except per
share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
REVENUES
Residential rental income
$
27,748
$
25,040
$
53,854
$
48,980
Commercial rental income
9,598
9,503
19,252
19,230
TOTAL REVENUES
37,346
34,543
73,106
68,210
OPERATING EXPENSES
Property operating expenses
8,996
6,782
17,618
14,881
Real estate taxes and insurance
7,438
8,700
14,574
17,236
General and administrative
3,459
3,396
7,010
6,689
Transaction pursuit costs
-
357
-
357
Depreciation and amortization
7,455
7,269
14,834
14,094
TOTAL OPERATING EXPENSES
27,348
26,504
54,036
53,257
INCOME FROM OPERATIONS
9,998
8,039
19,070
14,953
Interest expense, net
(11,741
)
(11,334
)
(23,480
)
(21,469
)
Loss on extinguishment of debt
-
-
-
(3,868
)
Net loss
(1,743
)
(3,295
)
(4,410
)
(10,384
)
Net loss attributable to non-controlling
interests
1,083
2,046
2,737
6,448
Net loss attributable to common
stockholders
$
(660
)
$
(1,249
)
$
(1,673
)
$
(3,936
)
Basic and diluted net loss per share
$
(0.06
)
$
(0.10
)
$
(0.15
)
$
(0.29
)
Weighted average common shares / OP
units
Common shares outstanding
16,077
16,063
16,077
16,063
OP units outstanding
26,317
26,317
26,317
26,317
Diluted shares outstanding
42,394
42,380
42,394
42,380
Clipper Realty Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June
30,
.
2024
2023
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(4,410
)
$
(10,384
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation
14,781
14,044
Amortization of deferred financing
costs
1,061
675
Amortization of deferred costs and
intangible assets
294
292
Amortization of above- and below-market
leases
-
(17
)
Loss on extinguishment of debt
-
3,868
Deferred rent
87
27
Stock-based compensation
1,274
1,431
Bad debt expense
16
(142
)
Changes in operating assets and
liabilities:
Tenant and other receivables
(671
)
(18
)
Prepaid expenses, other assets and
deferred costs
4,511
7,608
Accounts payable and accrued
liabilities
(1,777
)
(424
)
Security deposits
345
720
Other liabilities
(467
)
(459
)
Net cash provided by operating
activities
15,044
17,221
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to land, buildings and
improvements
(42,051
)
(18,915
)
Net cash used in investing
activities
(42,051
)
(18,915
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Payments of mortgage notes
(985
)
(46,810
)
Proceeds from mortgage notes
37,303
62,330
Dividends and distributions
(8,792
)
(8,696
)
Loan issuance and extinguishment costs
-
(4,723
)
Net cash provided by financing
activities
27,526
2,101
Net increase in cash and cash equivalents
and restricted cash
519
407
Cash and cash equivalents and restricted
cash - beginning of period
36,225
30,666
Cash and cash equivalents and
restricted cash - end of period
$
36,744
$
31,073
Cash and cash equivalents and restricted
cash - beginning of period:
Cash and cash equivalents
$
22,163
$
18,152
Restricted cash
14,062
12,514
Total cash and cash equivalents and
restricted cash - beginning of period
$
36,225
$
30,666
Cash and cash equivalents and restricted
cash - end of period:
Cash and cash equivalents
$
20,254
$
16,342
Restricted cash
16,490
14,731
Total cash and cash equivalents and
restricted cash - end of period
$
36,744
$
31,073
Supplemental cash flow information:
Cash paid for interest, net of capitalized
interest of $2,097 and $2,382 in 2024 and 2023, respectively
$
21,232
$
21,099
Non-cash interest capitalized to real
estate under development
1,132
27
Additions to investment in real estate
included in accounts payable and accrued liabilities
10,070
3,527
Clipper Realty Inc.
Reconciliation of Non-GAAP
Measures
(In thousands, except per
share data)
(Unaudited)
Non-GAAP Financial Measures
We disclose and discuss funds from operations (“FFO”), adjusted
funds from operations (“AFFO”), adjusted earnings before interest,
income taxes, depreciation and amortization (“Adjusted EBITDA”) and
net operating income (“NOI”), all of which meet the definition of
“non-GAAP financial measures” set forth in Item 10(e) of Regulation
S-K promulgated by the SEC.
While management and the investment community in general believe
that presentation of these measures provides useful information to
investors, neither FFO, AFFO, Adjusted EBITDA, nor NOI should be
considered as an alternative to net income (loss) or income from
operations as an indication of our performance. We believe that to
understand our performance further, FFO, AFFO, Adjusted EBITDA, and
NOI should be compared with our reported net income (loss) or
income from operations and considered in addition to cash flows
computed in accordance with GAAP, as presented in our consolidated
financial statements.
Funds From Operations and Adjusted Funds From
Operations
FFO is defined by the National Association of Real Estate
Investment Trusts (“NAREIT”) as net income (computed in accordance
with GAAP), excluding gains (or losses) from sales of property and
impairment adjustments, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint
ventures. Our calculation of FFO is consistent with FFO as defined
by NAREIT.
AFFO is defined by us as FFO excluding amortization of
identifiable intangibles incurred in property acquisitions,
straight-line rent adjustments to revenue from long-term leases,
amortization costs incurred in originating debt, interest rate cap
mark-to-market adjustments, amortization of non-cash equity
compensation, acquisition and other costs, transaction pursuit
costs, loss on modification/extinguishment of debt, gain on
involuntary conversion, gain on termination of lease and
non-recurring litigation-related expenses, less recurring capital
spending.
Historical cost accounting for real estate assets implicitly
assumes that the value of real estate assets diminishes predictably
over time. In fact, real estate values have historically risen or
fallen with market conditions. FFO is intended to be a standard
supplemental measure of operating performance that excludes
historical cost depreciation and valuation adjustments from net
income. We consider FFO useful in evaluating potential property
acquisitions and measuring operating performance. We further
consider AFFO useful in determining funds available for payment of
distributions. Neither FFO nor AFFO represent net income or cash
flows from operations computed in accordance with GAAP. You should
not consider FFO and AFFO to be alternatives to net income (loss)
as reliable measures of our operating performance; nor should you
consider FFO and AFFO to be alternatives to cash flows from
operating, investing or financing activities (computed in
accordance with GAAP) as measures of liquidity.
Neither FFO nor AFFO measure whether cash flow is sufficient to
fund all of our cash needs, including loan principal amortization,
capital improvements and distributions to stockholders. FFO and
AFFO do not represent cash flows from operating, investing or
financing activities computed in accordance with GAAP. Further, FFO
and AFFO as disclosed by other REITs might not be comparable to our
calculations of FFO and AFFO.
The following table sets forth a reconciliation of FFO and AFFO
for the periods presented to net loss, computed in accordance with
GAAP (amounts in thousands):
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
FFO
Net loss
$
(1,743
)
$
(3,295
)
$
(4,410
)
$
(10,384
)
Real estate depreciation and
amortization
7,455
7,269
14,834
14,094
FFO
$
5,712
$
3,974
$
10,424
$
3,710
AFFO
FFO
$
5,712
$
3,974
$
10,424
$
3,710
Amortization of real estate tax
intangible
120
121
241
241
Amortization of above- and below-market
leases
-
(8
)
-
(17
)
Straight-line rent adjustments
38
32
87
27
Amortization of debt origination costs
530
362
1,061
675
Amortization of LTIP awards
713
783
1,274
1,431
Transaction pursuit costs
-
357
-
357
Loss on extinguishment of debt
-
-
-
3,868
Recurring capital spending
(61
)
(129
)
(134
)
(324
)
AFFO
$
7,052
$
5,492
$
12,953
$
9,968
AFFO Per Share/Unit
$
0.17
$
0.13
$
0.31
$
0.24
Adjusted Earnings Before Interest, Income Taxes, Depreciation
and Amortization
We believe that Adjusted EBITDA is a useful measure of our
operating performance. We define Adjusted EBITDA as net income
(loss) before allocation to non-controlling interests, plus real
estate depreciation and amortization, amortization of identifiable
intangibles, straight-line rent adjustments to revenue from
long-term leases, amortization of non-cash equity compensation,
interest expense (net), acquisition and other costs, transaction
pursuit costs, loss on modification/extinguishment of debt and
non-recurring litigation-related expenses, less gain on involuntary
conversion and gain on termination of lease.
We believe that this measure provides an operating perspective
not immediately apparent from GAAP income from operations or net
income (loss). We consider Adjusted EBITDA to be a meaningful
financial measure of our core operating performance.
However, Adjusted EBITDA should only be used as an alternative
measure of our financial performance. Further, other REITs may use
different methodologies for calculating Adjusted EBITDA, and
accordingly, our Adjusted EBITDA may not be comparable to that of
other REITs.
The following table sets forth a reconciliation of Adjusted
EBITDA for the periods presented to net loss, computed in
accordance with GAAP (amounts in thousands):
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Adjusted EBITDA
Net loss
$
(1,743
)
$
(3,295
)
$
(4,410
)
$
(10,384
)
Real estate depreciation and
amortization
7,455
7,269
14,834
14,094
Amortization of real estate tax
intangible
120
121
241
241
Amortization of above- and below-market
leases
-
(8
)
-
(17
)
Straight-line rent adjustments
38
32
87
27
Amortization of LTIP awards
713
783
1,274
1,431
Interest expense, net
11,741
11,334
23,480
21,469
Transaction pursuit costs
-
357
-
357
Loss on extinguishment of debt
-
-
-
3,868
Adjusted EBITDA
$
18,324
$
16,592
$
35,506
$
31,085
Net Operating Income
We believe that NOI is a useful measure of our operating
performance. We define NOI as income from operations plus real
estate depreciation and amortization, general and administrative
expenses, acquisition and other costs, transaction pursuit costs,
amortization of identifiable intangibles and straight-line rent
adjustments to revenue from long-term leases, less gain on
termination of lease. We believe that this measure is widely
recognized and provides an operating perspective not immediately
apparent from GAAP income from operations or net income (loss). We
use NOI to evaluate our performance because NOI allows us to
evaluate the operating performance of our company by measuring the
core operations of property performance and capturing trends in
rental housing and property operating expenses. NOI is also a
widely used metric in valuation of properties.
However, NOI should only be used as an alternative measure of
our financial performance. Further, other REITs may use different
methodologies for calculating NOI, and accordingly, our NOI may not
be comparable to that of other REITs.
The following table sets forth a reconciliation of NOI for the
periods presented to income from operations, computed in accordance
with GAAP (amounts in thousands):
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
NOI
Income from operations
$
9,998
$
8,039
$
19,070
$
14,953
Real estate depreciation and
amortization
7,455
7,269
14,834
14,094
General and administrative expenses
3,459
3,396
7,010
6,689
Transaction pursuit costs
-
357
-
357
Amortization of real estate tax
intangible
121
121
241
241
Amortization of above- and below-market
leases
-
(8
)
-
(17
)
Straight-line rent adjustments
38
33
87
27
NOI
$
21,071
$
19,206
$
41,242
$
36,344
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801180804/en/
Lawrence Kreider Chief Financial Officer (718) 438-2804 x2231
larry@clipperrealty.com
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