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
September 30, 2024.
Highlights for the Three Months Ended September 30,
2024
- Record quarterly revenues of $37.6 million for the third
quarter of 2024
- Quarterly income from operations of $10.8 million for the third
quarter of 2024
- Record net operating income (“NOI”)1 of $21.8 million for the
third quarter of 2024
- Quarterly net loss of $1.1 million for the third quarter of
2024
- Record adjusted funds from operations (“AFFO”)1 of $7.8 million
for the third quarter of 2024
- Declared a dividend of $0.095 per share for the third quarter
of 2024
David Bistricer, Co-Chairman, and Chief Executive Officer,
commented,
“The Company continued to grow its revenue, NOI and AFFO in the
third 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 10% and renewals by nearly 6%. At Flatbush Gardens,
as a result of the Article 11 agreement with New York City, we are
continuing to increase 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 are continuing 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 September 30,
2024
For the third quarter of 2024, revenues increased by $2.4
million, or 6.8%, to $37.6 million as compared to revenue of $35.2
million during the third quarter of 2023. Residential revenue
increased by $2.3 million, or 9.2%, driven by higher rental rates
at all our residential properties and higher occupancy partially
offset increased bad debt expense at the Flatbush Gardens property.
Commercial income increased by $0.1 million, or 0.9%, in the third
quarter of 2024 due to higher escalation income at our office
properties.
For the third quarter of 2024, net loss was $1.1 million, or
$0.05 per share compared to net loss of $2.3 million, or $0.09 per
share, for the third quarter of 2023. The lower net loss as
compared to last year was primarily due to increased rental revenue
discussed above, partially offset by higher property taxes at
properties other than Flatbush Gardens and, higher payroll costs
from “prevailing wage” requirements at the Flatbush Gardens
property under the Article 11 transaction, and higher depreciation
expense from capital spending.
For the third quarter of 2024, AFFO was $7.8 million, or $0.18
per share, compared to $6.3 million, or $0.15 per share, for the
third quarter of 2023. As discussed above, the increase was
primarily due to increased rental revenue partially offset by
higher property taxes 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 September 30, 2024, notes payable (excluding unamortized loan
costs) was $1,267.8 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 third quarter dividend of $0.095
per share, the same amount as last quarter, to shareholders of
record on November 13, 2024, payable November 27, 2024.
Conference Call and Supplemental Material
The Company will host a conference call on October 31, 2024, at
5:00 PM Eastern Time to discuss the third 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
308211. A replay of the call will be available from October 31,
2024, following the call, through November 14, 2024, by dialing
(800) 332-6854 or (973) 528-0005, replay conference ID 308211.
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)
September 30, 2024
December 31, 2023
(unaudited)
ASSETS
Investment in real estate
Land and improvements
$
571,988
$
571,988
Building and improvements
735,208
726,273
Tenant improvements
3,366
3,366
Furniture, fixtures and equipment
13,758
13,278
Real estate under development
137,685
87,285
Total investment in real estate
1,462,005
1,402,190
Accumulated depreciation
(235,817
)
(213,606
)
Investment in real estate, net
1,226,188
1,188,584
Cash and cash equivalents
18,622
22,163
Restricted cash
17,472
14,062
Tenant and other receivables, net of
allowance for doubtful accounts of $252 and $234, respectively
6,317
5,181
Deferred rent
2,191
2,359
Deferred costs and intangible assets,
net
5,783
6,127
Prepaid expenses and other assets
10,444
10,854
TOTAL ASSETS
$
1,287,017
$
1,249,330
LIABILITIES AND EQUITY
(DEFICIT)
Liabilities:
Notes payable, net of unamortized loan
costs of $10,115 and $13,405, respectively
$
1,257,731
$
1,205,624
Accounts payable and accrued
liabilities
21,768
20,994
Security deposits
9,044
8,765
Other liabilities
7,937
6,712
TOTAL LIABILITIES
1,296,480
1,242,095
Equity:
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 shares issued and outstanding
160
160
Additional paid-in-capital
89,818
89,483
Accumulated deficit
(93,562
)
(86,899
)
Total stockholders' equity
(3,584
)
2,744
Non-controlling interests
(5,879
)
4,491
TOTAL EQUITY (DEFICIT)
(9,463
)
7,235
TOTAL LIABILITIES AND EQUITY
(DEFICIT)
$
1,287,017
$
1,249,330
Clipper Realty Inc.
Consolidated Statements of
Operations
(In thousands, except per
share data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
REVENUES
Residential rental income
$
27,846
$
25,501
$
81,700
$
74,481
Commercial rental income
9,776
9,627
29,028
28,857
TOTAL REVENUES
37,622
35,128
110,728
103,338
OPERATING EXPENSES
Property operating expenses
8,482
7,930
26,098
22,811
Real estate taxes and insurance
7,562
7,374
22,137
24,610
General and administrative
3,370
3,340
10,380
10,029
Transaction pursuit costs
-
-
-
357
Depreciation and amortization
7,456
7,282
22,289
21,376
TOTAL OPERATING EXPENSES
26,870
25,926
80,904
79,183
INCOME FROM OPERATIONS
10,752
9,202
29,824
24,155
Interest expense, net
(11,840
)
(11,527
)
(35,320
)
(32,996
)
Loss on extinguishment of debt
-
-
-
(3,868
)
Net loss
(1,088
)
(2,325
)
(5,496
)
(12,709
)
Net loss attributable to non-controlling
interests
676
1,444
3,414
7,892
Net loss attributable to common
stockholders
$
(412
)
$
(881
)
$
(2,082
)
$
(4,817
)
Basic and diluted net loss per share
$
(0.05
)
$
(0.09
)
$
(0.20
)
$
(0.36
)
Weighted average common shares / OP
units
Common shares outstanding
16,077
16,063
16,072
16,063
OP units outstanding
26,317
26,317
26,317
26,317
Diluted shares outstanding
42,394
42,380
42,389
42,380
Clipper Realty Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2024
2023
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(5,496
)
$
(12,709
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation
22,211
21,296
Amortization of deferred financing
costs
1,591
1,098
Amortization of deferred costs and
intangible assets
440
441
Amortization of above- and below-market
leases
-
(18
)
Loss on extinguishment of debt
-
3,868
Deferred rent
168
66
Stock-based compensation
1,987
2,214
Bad debt expense
24
(120
)
Changes in operating assets and
liabilities:
Tenant and other receivables
(1,160
)
(103
)
Prepaid expenses, other assets and
deferred costs
315
3,328
Accounts payable and accrued
liabilities
(247
)
(4,366
)
Security deposits
279
713
Other liabilities
1,225
1,422
Net cash provided by operating
activities
21,337
17,130
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to land, buildings and
improvements
(57,097
)
(27,783
)
Net cash used in investing
activities
(57,097
)
(27,783
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Payments of mortgage notes
(1,483
)
(84,241
)
Proceeds from mortgage notes
50,300
124,858
Dividends and distributions
(13,188
)
(13,044
)
Loan issuance and extinguishment costs
-
(10,232
)
Net cash provided by financing
activities
35,629
17,341
Net (decrease) increase in cash and cash
equivalents and restricted cash
(131
)
6,688
Cash and cash equivalents and restricted
cash - beginning of period
36,225
30,666
Cash and cash equivalents and
restricted cash - end of period
$
36,094
$
37,354
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
$
18,622
$
22,450
Restricted cash
17,472
14,904
Total cash and cash equivalents and
restricted cash - end of period
$
36,094
$
37,354
Supplemental cash flow information:
Cash paid for interest, net of capitalized
interest of $2,343 and $2,382 in 2024 and 2023, respectively
$
32,672
$
32,924
Non-cash interest capitalized to real
estate under development
1,698
339
Additions to investment in real estate
included in accounts payable and accrued liabilities
10,504
5,102
Clipper Realty Inc. Reconciliation of
Non-GAAP Measures (In thousands, except per share
data)
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.
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
FFO
Net loss
$
(1,088
)
$
(2,325
)
$
(5,496
)
$
(12,709
)
Real estate depreciation and
amortization
7,456
7,282
22,289
21,376
FFO
$
6,368
$
4,957
$
16,793
$
8,667
AFFO
FFO
$
6,368
$
4,957
$
16,793
$
8,667
Amortization of real estate tax
intangible
120
120
361
361
Amortization of above- and below-market
leases
-
(1
)
-
(18
)
Straight-line rent adjustments
81
39
168
66
Amortization of debt origination costs
530
423
1,591
1,098
Amortization of LTIP awards
713
783
1,987
2,214
Transaction pursuit costs
-
-
-
357
Loss on extinguishment of debt
-
-
-
3,868
Certain litigation-related expenses
(10
)
-
(10
)
Recurring capital spending
(50
)
(51
)
(184
)
(375
)
AFFO
$
7,762
$
6,260
$
20,716
$
16,228
AFFO Per Share/Unit
$
0.18
$
0.15
$
0.49
$
0.38
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 September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Adjusted EBITDA
Net loss
$
(1,088
)
$
(2,325
)
$
(5,496
)
$
(12,709
)
Real estate depreciation and
amortization
7,456
7,282
22,289
21,376
Amortization of real estate tax
intangible
120
120
361
361
Amortization of above- and below-market
leases
-
(1
)
-
(18
)
Straight-line rent adjustments
81
39
168
66
Amortization of LTIP awards
713
783
1,987
2,214
Interest expense, net
11,840
11,527
35,320
32,996
Transaction pursuit costs
-
-
-
357
Loss on extinguishment of
debt/modification of debt
-
-
-
3,868
Certain litigation-related expenses
-
(10
)
-
(10
)
Adjusted EBITDA
$
19,122
$
17,415
$
54,629
$
48,501
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 September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
NOI
Income from operations
$
10,752
$
9,202
$
29,824
$
24,155
Real estate depreciation and
amortization
7,456
7,282
22,289
21,376
General and administrative expenses
3,370
3,340
10,380
10,029
Transaction pursuit costs
-
-
-
357
Amortization of real estate tax
intangible
121
120
361
361
Amortization of above- and below-market
leases
-
(1
)
-
(18
)
Straight-line rent adjustments
81
39
168
66
NOI
$
21,780
$
19,982
$
63,022
$
56,326
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241031488407/en/
Lawrence Kreider Chief Financial Officer (718) 438-2804 x2231
larry@clipperrealty.com
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