Clipper Realty Inc (NYSE:CLPR) Q2 2024 Earnings Conference Call August 1, 2024 5:00 PM ET Company Participants Larry Kreider - Chief Financial Officer David Bistricer - Co-Chairman of the Board and Chief Executive Officer JJ Bistricer - Chief Operating Officer Conference Call Participants John Rodis - Janney Montgomery Scott LLC Ross Haberman - RLH Investments Operator Good day, and welcome to the Clipper Realty Quarterly Earnings Call. At this time, all participants have been placed on a listen-only mode a ...

Clipper Realty Inc. (CLPR) came out with quarterly funds from operations (FFO) of $0.17 per share, beating the Zacks Consensus Estimate of $0.10 per share. This compares to FFO of $0.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of 70%. A quarter ago, it was expected that this company would post FFO of $0.08 per share when it actually produced FFO of $0.14, delivering a surprise of 75%. Over the last four quarters, the company h ...

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) This section provides an overview of the company's strong Q2 2024 financial performance and strategic initiatives, including record revenues and residential leasing growth [Second Quarter 2024 Highlights](index=1&type=section&id=Highlights%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202024) Clipper Realty Inc. achieved record quarterly revenues, income from operations, NOI, and AFFO in Q2 2024, driven by robust residential leasing and declared a dividend Q2 2024 Key Financial Highlights | Metric | Q2 2024 Amount (Millions) | | :---------------------- | :------------------------ | | Revenues | $37.3 | | Income from Operations | $10.0 | | Net Operating Income (NOI)| $21.1 | | Net Loss | $(1.7) | | Adjusted FFO (AFFO) | $7.1 | - Declared a dividend of **$0.095 per share** for the second quarter of 2024[2](index=2&type=chunk) [CEO Commentary and Strategic Initiatives](index=1&type=section&id=CEO%20Commentary) CEO David Bistricer highlighted strong residential leasing, progress on new developments, and the initiation of property recycling to optimize portfolio performance - Residential leasing showed strong performance, with new leases exceeding previous rents by nearly **11%** and renewals by nearly **7%**[2](index=2&type=chunk) - At Flatbush Gardens, the company is beginning to collect meaningful enhanced rental recoveries under Section 610 due to the Article 11 agreement with New York City[2](index=2&type=chunk) - The Dean Street new development is progressing ahead of schedule, with an on-time completion expected next year to capture the 2025 leasing season[2](index=2&type=chunk) - Preliminary marketing activities have begun for some properties, including 10W 65th Street, as part of a strategy to recycle properties to maximize performance and improve cash flow[2](index=2&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) This section details the company's consolidated financial results and non-GAAP measures, showcasing revenue growth and improved profitability in Q2 2024 [Consolidated Financial Results](index=1&type=section&id=Financial%20Results%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202024) Total revenues increased by 8.3% year-over-year in Q2 2024, driven by higher residential rental rates and occupancy, significantly reducing the net loss Q2 2024 Consolidated Financial Results (YoY) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | Change (Millions) | % Change | | :------------ | :----------------- | :----------------- | :---------------- | :------- | | Revenues | $37.3 | $34.5 | $2.9 | 8.3% | | Net Loss | $(1.7) | $(3.3) | $1.6 | (48.5%) | | Net Loss/Share| $(0.06) | $(0.10) | $0.04 | (40.0%) | - Residential revenue increased by **$2.7 million (11.8%)** due to higher rental rates and occupancy, while commercial income increased by **$0.1 million (0.9%)** from higher escalation income[3](index=3&type=chunk) - The lower net loss was primarily due to increased rental revenue, abated real estate taxes at Flatbush Gardens under the Article 11 transaction, and the absence of prior year's Article 11 related transaction costs[3](index=3&type=chunk) [Non-GAAP Financial Measures Analysis](index=1&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like FFO, AFFO, Adjusted EBITDA, and NOI to provide additional insights into operating performance, complementing GAAP figures - FFO, AFFO, Adjusted EBITDA, and NOI are non-GAAP financial measures used by management and the investment community to provide useful information to investors, but should not be considered alternatives to net income (loss) or income from operations[17](index=17&type=chunk)[19](index=19&type=chunk) - These non-GAAP measures do not represent net income or cash flows from operations computed in accordance with GAAP and may not be comparable to calculations by other REITs[17](index=17&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) [Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO)](index=1&type=section&id=Funds%20From%20Operations%20and%20Adjusted%20Funds%20From%20Operations) Adjusted Funds From Operations (AFFO) significantly increased in Q2 2024, driven by higher rental revenue and abated real estate taxes, serving as a key performance indicator Q2 2024 FFO and AFFO Performance (YoY) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | Change (Millions) | % Change | | :------------ | :----------------- | :----------------- | :---------------- | :------- | | FFO | $5.712 | $3.974 | $1.738 | 43.7% | | AFFO | $7.052 | $5.492 | $1.560 | 28.4% | | AFFO Per Share/Unit | $0.17 | $0.13 | $0.04 | 30.8% | - The increase in AFFO was primarily due to increased rental revenue and abated real estate taxes at the Flatbush Gardens property, partially offset by higher property taxes at other properties, and increased repairs, maintenance, and payroll costs at Flatbush Gardens[4](index=4&type=chunk) - FFO is defined by NAREIT as net income excluding gains/losses from property sales and impairment, plus depreciation and amortization. AFFO is defined by the company as FFO excluding amortization of identifiable intangibles, straight-line rent adjustments, debt origination costs, non-cash equity compensation, and other specific items, less recurring capital spending[18](index=18&type=chunk) [Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization (Adjusted EBITDA)](index=7&type=section&id=Adjusted%20Earnings%20Before%20Interest%2C%20Income%20Taxes%2C%20Depreciation%20and%20Amortization) Adjusted EBITDA for Q2 2024 increased, reflecting core operating performance before interest, taxes, depreciation, amortization, and other specific adjustments Q2 2024 Adjusted EBITDA Performance (YoY) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | Change (Millions) | % Change | | :-------------- | :----------------- | :----------------- | :---------------- | :------- | | Adjusted EBITDA | $18.324 | $16.592 | $1.732 | 10.4% | - Adjusted EBITDA is defined as net loss before allocation to non-controlling interests, plus real estate depreciation and amortization, amortization of identifiable intangibles, straight-line rent adjustments, non-cash equity compensation, interest expense (net), and other specific costs[21](index=21&type=chunk) [Net Operating Income (NOI)](index=1&type=section&id=Net%20Operating%20Income) The company achieved record Net Operating Income (NOI) in Q2 2024, a key metric for evaluating property-level operating performance by focusing on core rental and property expenses Q2 2024 Net Operating Income (NOI) Performance (YoY) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | Change (Millions) | % Change | | :----- | :----------------- | :----------------- | :---------------- | :------- | | NOI | $21.071 | $19.206 | $1.865 | 9.7% | - NOI is defined 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[23](index=23&type=chunk) - NOI is considered a useful measure for evaluating the operating performance of the company by measuring core property performance and capturing trends in rental housing and property operating expenses[23](index=23&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's balance sheets, statements of operations, and cash flows, detailing asset growth, revenue increases, and cash movements [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets increased due to real estate investments, notes payable rose from development loans, while total stockholders' equity decreased Consolidated Balance Sheet Highlights (June 30, 2024 vs. Dec 31, 2023) | Metric | June 30, 2024 (Thousands) | Dec 31, 2023 (Thousands) | Change (Thousands) | | :---------------------- | :------------------------ | :----------------------- | :----------------- | | Total Assets | $1,274,602 | $1,249,330 | $25,272 | | Notes Payable, net | $1,244,136 | $1,205,624 | $38,512 | | Total Liabilities | $1,279,294 | $1,242,095 | $37,199 | | Total Stockholders' Equity| $(1,778) | $2,744 | $(4,522) | - Notes payable (excluding unamortized loan costs) increased to **$1,255.3 million** at June 30, 2024, from **$1,219.0 million** at December 31, 2023, primarily due to draws on the Dean Street development construction loan[5](index=5&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2024 statements show increased total revenues, primarily from residential rentals, and improved income from operations, leading to a reduced net loss year-over-year Consolidated Statements of Operations Highlights (Q2 2024 vs. Q2 2023) | Metric | Q2 2024 (Thousands) | Q2 2023 (Thousands) | Change (Thousands) | | :---------------------- | :------------------ | :------------------ | :----------------- | | Total Revenues | $37,346 | $34,543 | $2,803 | | Total Operating Expenses| $27,348 | $26,504 | $844 | | Income from Operations | $9,998 | $8,039 | $1,959 | | Net Loss | $(1,743) | $(3,295) | $1,552 | - Residential rental income increased by **$2.7 million (11.8%)** and commercial rental income increased by **$0.1 million (0.9%)** in Q2 2024 compared to Q2 2023[3](index=3&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2024, cash from operating activities slightly decreased, investing activities significantly increased, and financing activities provided substantial inflow Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2024 (Thousands) | 2023 (Thousands) | | :---------------------- | :--------------- | :--------------- | | Net cash from Operating | $15,044 | $17,221 | | Net cash used in Investing| $(42,051) | $(18,915) |\ | Net cash from Financing | $27,526 | $2,101 | | Net increase in cash | $519 | $407 | - Net cash used in investing activities significantly increased to **$42.051 million** in 2024 from **$18.915 million** in 2023, primarily due to higher additions to land, buildings, and improvements[15](index=15&type=chunk) - Net cash provided by financing activities saw a substantial increase to **$27.526 million** in 2024, driven by proceeds from mortgage notes (**$37.303 million**)[15](index=15&type=chunk) [Additional Company Information](index=2&type=section&id=Additional%20Company%20Information) This section provides details on the company's dividend, corporate profile, forward-looking statements, and investor relations contact information [Dividend Announcement](index=2&type=section&id=Dividend) Clipper Realty Inc. declared a Q2 2024 dividend of $0.095 per share, consistent with the prior quarter, payable on August 22, 2024 Q2 2024 Dividend Details | Metric | Value | | :------------ | :-------- | | Dividend/Share| $0.095 | | Record Date | August 15, 2024 | | Payable Date | August 22, 2024 | [About Clipper Realty Inc.](index=2&type=section&id=About%20Clipper%20Realty%20Inc.) Clipper Realty Inc. is a self-administered and self-managed real estate company focused on acquiring, owning, and managing multifamily and commercial properties in the New York metropolitan area - Clipper Realty Inc. 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[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report includes forward-looking statements subject to various risks and uncertainties, with the company disclaiming any obligation to update them unless legally required - Various statements in the press release, including those expressing belief, expectation, or intention, are forward-looking statements, which may include estimates concerning capital projects and property success[9](index=9&type=chunk) - These statements are based on current expectations and assumptions but are subject to significant business, economic, competitive, regulatory, and other risks and uncertainties that may cause actual results to differ materially[10](index=10&type=chunk) - The company disclaims any obligation to update these statements unless required by law and cautions against undue reliance on them[10](index=10&type=chunk) [Investor Relations & Contact](index=2&type=section&id=Conference%20Call%20and%20Supplemental%20Material) The company will host a conference call on August 1, 2024, to discuss Q2 2024 results, with details provided for access, supplemental data, and investor inquiries - A conference call to discuss Q2 2024 results and provide a business update will be held on **August 1, 2024, at 5:00 PM Eastern Time**, with replay available until **August 15, 2024**[7](index=7&type=chunk) - Supplemental data is available on the company's website under the 'Quarterly Earnings' tab, and SEC filings can be found at www.sec.gov[7](index=7&type=chunk) - Contact information for the Chief Financial Officer, Lawrence Kreider, is provided for investor inquiries[11](index=11&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38010 CLIPPER REALTY INC. (Exact name of Registrant as specified in its charter) Maryland 47-4579660 (State or other jurisdiction of incorp ...

Land and improvements Given the size of the company and the amount of leverage it employs there is elevated risk with CLPR, however, investors are well compensated for the risk with a AFFO yield of 13.02% and a dividend yield of 9.34%. 89,483 CLPR - IR The company's debt metrics are concerning to me, with a 2023 net debt to EBITDA of 18.84x and an EBITDA to interest expense ratio of 1.40x. While these metrics indicate a high level of debt compared to the company's carnings, it appears that CLPR has been ope ...

Since going public in 2017, Clipper Realty (NYSE:CLPR) currently trades at an all-time low. CLPR Full Price History (Seeking Alpha) With its dividend yield almost a full 10%, it's worth investigating whether this presents an attractive buying opportunity or a yield trap. While NYC property seems like the best real estate to own, I'll argue this is just a Hold, given some of its near-term challenges and the incentives of management. Dividend History As a REIT, Clipper is primarily graded by its ability to di ...

Financial Data and Key Metrics - The company reported record revenue of $35.8 million in Q1 2024, up from $33.7 million in Q1 2023, an increase of $2.1 million or 6.2% [17] - Net Operating Income (NOI) for Q1 2024 was $20.2 million, an increase of $3.1 million from the previous year [17] - Adjusted Funds From Operations (AFFO) for Q1 2024 was $5.9 million, up $1.4 million from the previous year [17] - The company has $21.9 million in unrestricted cash and $18.3 million in restricted cash [1] - Interest expense increased by $1.6 million year-on-year in Q1 2024, primarily due to the elimination of capitalized interest for Pacific House [14] Business Line Performance - Residential revenue increased to $26.1 million in Q1 2024, up $2.1 million from the previous year, driven by higher rental rates across all properties [17] - Commercial rental income saw a slight decline due to lease issues at the Aspen property, one of which has been replaced [13] - Bad debt expense improved by $0.2 million year-on-year, reflecting better collections across all properties [13] Market Performance - Residential properties achieved an average occupancy rate of 98%, with new leases exceeding prior rents by 6% [8][22] - At Tribeca House, average rent per square foot increased to $78 from $63 at the end of the pandemic [29] - Clover House achieved average rents of nearly $83 per square foot with over 97% occupancy [29] - Pacific House is 100% leased, with free market rents above $78 per square foot and operating cash flows achieving a projected 7% cap rate [16][29] Strategic Direction and Industry Competition - The company is focused on optimizing occupancy, pricing, and expenses, as well as completing development projects and implementing the Article 11 transaction to position for growth [6] - The company is leveraging the high demand for rental properties due to the higher interest rate environment, which increases tenant demand for rentals over purchases [3] - The company is also benefiting from long-duration, fixed-rate debt at its operating properties, with 92% of operating debt fixed at an average interest rate of 3.87% and an average duration of 5.2 years [3] Management Commentary on Operating Environment and Future Outlook - Management highlighted strong renter demand across all properties, with rents stabilizing as COVID-era rents are replaced with current market rates [8][22] - The company expects leasing to remain strong due to high demand and constrained rental housing supply [22] - Management is optimistic about the benefits of the Article 11 agreement at Flatbush Gardens, which has eliminated real estate taxes and provided enhanced rental recoveries for assisted tenants [20][23] Other Important Information - The company announced a dividend of $0.095 per share for Q1 2024, consistent with the previous quarter [1] - The company is proceeding ahead of schedule with the construction of the 923 Dean Street development, which is expected to be completed in time for the 2025 leasing season [16] - The company is addressing the potential vacancy at 250 Livingston Street, where New York City plans to vacate the premises in August 2025, by seeking solutions supported by cash flows from other properties [3] Q&A Session - No questions were asked during the Q&A session [24]

Clipper Realty Inc. (CLPR) came out with quarterly funds from operations (FFO) of $0.14 per share, beating the Zacks Consensus Estimate of $0.08 per share. This compares to FFO of $0.11 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 75%. A quarter ago, it was expected that this company would post FFO of $0.16 per share when it actually produced FFO of $0.15, delivering a surprise of -6.25%.Over the last four quarters, the company ...

Financial Performance - Record quarterly revenues of $35.8 million for Q1 2024, an increase of $2.1 million or 6.2% compared to Q1 2023[12] - Quarterly net operating income (NOI) reached $20.2 million for Q1 2024, up from $17.1 million in Q1 2023, representing a 17.8% increase[12] - Adjusted funds from operations (AFFO) for Q1 2024 were $5.9 million, or $0.14 per share, compared to $4.5 million, or $0.11 per share, for Q1 2023, marking a 31.1% increase[25] - The company reported a net loss of $2.7 million for Q1 2024, significantly improved from a net loss of $7.1 million in Q1 2023[13] - The company achieved an adjusted EBITDA of $17.2 million for Q1 2024, compared to $14.5 million in Q1 2023, reflecting a 18.7% increase[37] - FFO for Q1 2024 was reported at $4,713, compared to a negative FFO of $264 in Q1 2023[49] - AFFO for Q1 2024 was $5,899, an increase from $4,476 in Q1 2023, with an AFFO per share of $0.14[49] Revenue Sources - Residential rental income increased by $2.2 million, or 9.0%, to $26.1 million in Q1 2024, driven by higher rental rates[28] - The company experienced a decrease in commercial rental income by $0.1 million, or 0.9%, in Q1 2024 due to expired leases[28] - The company reported record revenue and NOI for Q1 2024, with new leases renting at over 7% above previous rents and renewals over 6%[40] Expenses and Investments - Total operating expenses for Q1 2024 were $26.7 million, slightly down from $26.8 million in Q1 2023[32] - Total investment in real estate increased to $1,423,127, up from $1,402,190 as of December 31, 2023[44] Dividends and Cash Flow - The company declared a dividend of $0.095 per share for Q1 2024, consistent with the previous quarter[26] - Cash and cash equivalents at the end of the period were $21,882, down from $22,163 at the beginning of the period[46] Property Developments - The company is actively seeking solutions for its 250 Livingston Street property, which is set to vacate in late August 2025[40] - The Dean Street new development is progressing ahead of schedule, with completion expected next year[40] Assets and Liabilities - As of March 31, 2024, notes payable increased to $1,239.0 million from $1,219.0 million at the end of 2023, primarily due to development draws[29] - The company reported a total of $1,263,943 in total assets as of March 31, 2024, compared to $1,249,330 as of December 31, 2023[44] NOI Definition and Importance - NOI is defined as income from operations plus various costs and adjustments, providing a clearer view of operating performance[51] - NOI is used to evaluate the core operations of property performance and trends in rental housing and operating expenses[51] - NOI is a widely recognized metric in property valuation, indicating its importance in assessing company performance[51]

23 We believe that our current cash flows from operations and cash on hand coupled with sales of certain properties, long-term secured or unsecured debt offerings and/or funds from public or private equity offerings, will be sufficient to allow us to continue operations, satisfy our contractual obligations and make distributions to our stockholders and the members of our LLC subsidiaries for at least the next twelve months. However, no assurance can be given that we will be able to refinance any of our outs ...