Clipper Realty(CLPR) - 2024 Q2 - Quarterly Results

Executive Summary & Business Highlights 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 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] CEO Commentary and Strategic Initiatives 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] - 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] - 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] - 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] Financial Performance Overview 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 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] - 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] Non-GAAP Financial Measures Analysis 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][19] - 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][19][20] Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) 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] - 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] Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization (Adjusted EBITDA) 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] Net Operating Income (NOI) 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] - 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] Consolidated Financial Statements 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 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] Consolidated Statements of Operations 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] Consolidated Statements of Cash Flows 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] - 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] Additional Company Information This section provides details on the company's dividend, corporate profile, forward-looking statements, and investor relations contact information Dividend Announcement 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. 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] Forward-Looking Statements 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] - 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] - The company disclaims any obligation to update these statements unless required by law and cautions against undue reliance on them[10] Investor Relations & Contact 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] - 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]