Clipper Realty Inc. Announces Fourth Quarter 2024 Results

NEW YORK--(BUSINESS WIRE)--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 December 31, 2024. Highlights for the Three Months Ended December 31, 2024 Record quarterly revenues of $38.0 million for the fourth quarter of 2024 Quarterly income from operations of $10.7 million for the fourth quarter of 2024 Record net operating income (“NOI”)1 of $22.5 million for the fourth quarter of 2024 Quarterly net loss of $1.1 million for the fourth quarter of 2024 Record adjusted funds from operations (“AFFO”)1 of $8.1 million for the fourth quarter of 2024 Declared a dividend of $0.095 per share for the fourth quarter of 2024 David Bistricer, Co-Chairman, and Chief Executive Officer, commented, “The Company continued to grow its revenue, NOI and AFFO in the fourth 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 early this year to capture the 2025 leasing season. Lastly, we continue to consider 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 December 31, 2024 For the fourth quarter of 2024, revenues increased by $3.2 million, or 9.1%, to $38.0 million as compared to revenue of $34.9 million during the fourth quarter of 2023. Residential revenue increased by $2.9 million, or 11.6%, driven by higher rental rates and occupancy at all our residential properties partially offset increased bad debt expense at the Flatbush Gardens property. Commercial income increased by $0.2 million, or 2.5%, in the fourth quarter of 2024 due to higher escalation income at our 250 Livingston office property. For the fourth quarter of 2024, net loss was $1.1 million, or $0.05 per share compared to net loss of $2.9 million, or $0.09 per share, for the fourth 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, at Flatbush Gardens, higher payroll costs from “prevailing wage” requirements under the Article 11 transaction, an increase in repairs and maintenance workers, and higher depreciation expense from capital spending. For the fourth quarter of 2024, AFFO was $8.1 million, or $0.19 per share, compared to $6.3 million, or $0.15 per share, for the fourth 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 December 31, 2024, notes payable (excluding unamortized loan costs) was $1,275.4 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 fourth quarter dividend of $0.095 per share, the same amount as last quarter, to shareholders of record on March 19, 2025, payable April 3, 2025. Conference Call and Supplemental Material The Company will host a conference call on February 18, 2025, at 5:00 PM Eastern Time to discuss the fourth 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 225351. A replay of the call will be available from February 18, 2025, following the call, through March 4, 2025, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 225351. 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, 2024, 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) December 31, 2024 December 31, 2023 ASSETS Investment in real estate Land and improvements $ 571,988 $ 571,988 Building and improvements 736,420 726,273 Tenant improvements 3,366 3,366 Furniture, fixtures and equipment 13,897 13,278 Real estate under development 146,249 87,285 Total investment in real estate 1,471,920 1,402,190 Accumulated depreciation (243,392 ) (213,606 ) Investment in real estate, net 1,228,528 1,188,584 Cash and cash equivalents 19,896 22,163 Restricted cash 18,156 14,062 Tenant and other receivables, net of allowance for doubtful accounts of $258 and $234, respectively 6,365 5,181 Deferred rent 2,108 2,359 Deferred costs and intangible assets, net 5,676 6,127 Prepaid expenses and other assets 6,236 10,854 TOTAL ASSETS $ 1,286,965 $ 1,249,330 LIABILITIES AND EQUITY (DEFICIT) Liabilities: Notes payable, net of unamortized loan costs of $9,019 and $13,405, respectively 1,266,340 1,205,624 Accounts payable and accrued liabilities 18,731 20,994 Security deposits 9,067 8,765 Other liabilities 7,057 6,712 TOTAL LIABILITIES 1,301,195 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, 16,146,546 shares issued and outstanding 160 160 Additional paid-in-capital 89,938 89,483 Accumulated deficit (95,507 ) (86,899 ) Total stockholders' equity (5,409 ) 2,744 Non-controlling interests (8,821 ) 4,491 TOTAL EQUITY (DEFICIT) (14,230 ) 7,235 TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 1,286,965 $ 1,249,330 Clipper Realty Inc. Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 (unaudited) (unaudited) REVENUES Residential rental income $ 28,173 $ 25,235 $ 109,873 $ 99,716 Commercial rental income 9,874 9,632 38,902 38,489 TOTAL REVENUES 38,047 34,867 148,775 138,205 OPERATING EXPENSES Property operating expenses 8,065 7,808 34,163 30,619 Real estate taxes and insurance 7,633 7,341 29,770 31,951 General and administrative 3,772 3,140 14,152 13,169 Transaction pursuit costs - - - 357 Depreciation and amortization 7,603 7,563 29,892 28,939 TOTAL OPERATING EXPENSES 27,073 25,852 107,977 105,035 Litigation settlement and other (269 ) - (269 ) - INCOME FROM OPERATIONS 10,705 9,015 40,529 33,170 Interest expense, net (11,791 ) (11,871 ) (47,111 ) (44,867 ) Loss on extinguishment of debt - - - (3,868 ) Net loss (1,086 ) (2,856 ) (6,582 ) (15,565 ) Net loss attributable to non-controlling interests 668 1,773 4,082 9,665 Net loss attributable to common stockholders $ (418 ) $ (1,083 ) $ (2,500 ) $ (5,900 ) Basic and diluted net loss per share $ (0.05 ) $ (0.09 ) $ (0.25 ) $ (0.45 ) Weighted average common shares / OP units Common shares outstanding 16,089 16,063 16,120 16,063 OP units outstanding 26,317 26,317 26,317 26,317 Diluted shares outstanding 42,406 42,380 42,437 42,380 Clipper Realty Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, . 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (6,582 ) $ (15,565 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 29,786 28,825 Amortization of deferred financing costs 2,122 1,705 Amortization of deferred costs and intangible assets 587 595 Amortization of above- and below-market leases - (18 ) Loss on extinguishment of debt - 3,868 Deferred rent 251 214 Stock-based compensation 2,701 3,015 Bad debt expense 30 (87 ) Changes in operating assets and liabilities: Tenant and other receivables (1,215 ) (86 ) Prepaid expenses, other assets and deferred costs 4,483 2,701 Accounts payable and accrued liabilities (948 ) (707 ) Security deposits 302 825 Other liabilities 345 900 Net cash provided by operating activities 31,862 26,185 CASH FLOWS FROM INVESTING ACTIVITIES Additions to land, buildings and improvements (68,781 ) (41,357 ) Net cash used in investing activities (68,781 ) (41,357 ) CASH FLOWS FROM FINANCING ACTIVITIES Payments of mortgage notes (2,000 ) (84,728 ) Proceeds from mortgage notes 58,330 132,519 Dividends and distributions (17,584 ) (17,394 ) Loan issuance and extinguishment costs - (9,666 ) Net cash provided by financing activities 38,746 20,731 Net increase in cash and cash equivalents and restricted cash 1,827 5,559 Cash and cash equivalents and restricted cash - beginning of period 36,225 30,666 Cash and cash equivalents and restricted cash - end of period $ 38,052 $ 36,225 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 $ 19,896 $ 22,163 Restricted cash 18,156 14,062 Total cash and cash equivalents and restricted cash - end of period $ 38,052 $ 36,225 Supplemental cash flow information: Cash paid for interest, net of capitalized interest of $9,417 and $5,508 in 2024 and 2023, respectively $ 43,995 $ 45,323 Non-cash interest capitalized to real estate under development 2,264 339 Additions to investment in real estate included in accounts payable and accrued liabilities 8,169 9,484 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 December 31, Year Ended December 31, 2024 2023 2024 2023 FFO Net loss $ (1,086 ) $ (2,856 ) $ (6,582 ) $ (15,565 ) Real estate depreciation and amortization 7,603 7,563 29,892 28,939 FFO $ 6,517 $ 4,707 $ 23,310 $ 13,374 AFFO FFO $ 6,517 $ 4,707 $ 23,310 $ 13,374 Amortization of real estate tax intangible 120 120 481 481 Amortization of above- and below-market leases - - - (18 ) Straight-line rent adjustments 84 148 251 214 Amortization of debt origination costs 532 607 2,122 1,705 Amortization of LTIP awards 714 801 2,701 3,015 Transaction pursuit costs - - - 357 Loss on extinguishment of debt - - - 3,868 Litigation settlement and other 269 - 269 - Certain litigation-related expenses - - - (10 ) Recurring capital spending (140 ) (61 ) (324 ) (436 ) AFFO $ 8,097 $ 6,322 $ 28,810 $ 22,550 AFFO Per Share/Unit $ 0.19 $ 0.15 $ 0.68 $ 0.53 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 December 31, Year Ended December 31, 2024 2023 2024 2023 Adjusted EBITDA Net loss $ (1,086 ) $ (2,856 ) $ (6,582 ) $ (15,565 ) Real estate depreciation and amortization 7,604 7,563 29,892 28,939 Amortization of real estate tax intangible 121 120 481 481 Amortization of above- and below-market leases - - - (18 ) Straight-line rent adjustments 84 148 251 214 Amortization of LTIP awards 714 801 2,701 3,015 Interest expense, net 11,791 11,871 47,111 44,867 Transaction pursuit costs - - - 357 Loss on extinguishment of debt - - - 3,868 Litigation settlement and other 269 - 269 - Certain litigation-related expenses - - - (10 ) Adjusted EBITDA $ 19,497 $ 17,647 $ 74,123 $ 66,148 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 December 31, Year Ended December 31, 2024 2023 2024 2023 NOI Income from operations $ 10,705 $ 9,015 $ 40,529 $ 33,170 Real estate depreciation and amortization 7,603 7,563 29,892 28,939 General and administrative expenses 3,772 3,140 14,152 13,169 Amortization of real estate tax intangible 120 120 481 481 Amortization of above- and below-market leases - - - (18 ) Litigation settlement and other 269 - 269 - Straight-line rent adjustments 84 148 251 214 NOI $ 22,553 $ 19,986 $ 85,574 $ 76,312

Clipper Realty Inc. Announces Fourth Quarter 2024 Results

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