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Clipper Realty Inc. Announces Fourth Quarter and Full-Year 2020 Results

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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 and year ended December 31, 2020.

Highlights for the Three Months and Year Ended December 31, 2020

  • Achieved quarterly revenues of $30.3 million for the fourth quarter of 2020, and record annual revenues of $122.9 million for full-year 2020
  • Achieved quarterly income from operations of $6.5 million for the fourth quarter of 2020
  • Achieved quarterly net operating income (“NOI”)1 of $14.7 million for the fourth quarter of 2020, and record annual NOI of $63.6 million for full-year 2020
  • Recorded quarterly net loss of $3.8 million for the fourth quarter of 2020
  • Achieved quarterly adjusted funds from operations (“AFFO”)1 of $3.0 million for the fourth quarter of 2020
  • Declared a dividend of $0.095 per share for the fourth quarter of 2020

David Bistricer, Co-Chairman and Chief Executive Officer, commented,

“Our operating trends are improving as New York City continues to recover from the depths of the COVID-19 pandemic, highlighted by an increase in leasing activity. We anticipate such rental demand to accelerate, and pricing to improve, as vaccines are broadly administered and urban economic activity continues to strengthen. We continue to focus on efficiently operating our portfolio, with the safety of our tenants and employees our highest priority. Despite the headwinds, our properties are 95% leased and our fourth quarter rent collection rate was over 95%. In addition, we refinanced our 141 Livingston Street property in February with a $100 million, ten-year interest-only loan at 3.21%, which is expected to reduce annual debt service by $1.3 million while adding approximately $22.6 million, before reserves, to our liquidity position. We have no debt maturities on any operating properties until 2027, providing further support in the current environment. We remain committed to executing our strategic initiatives to create long-term value.”

Financial Results

For the fourth quarter of 2020, revenues decreased by $0.3 million, or 1.0%, to $30.3 million, compared to $30.6 million for the fourth quarter of 2019; the change was primarily attributable to a decline in leased occupancy and residential rental rate at the Tribeca House property, partially offset by the commencement of a new office lease at the 250 Livingston Street property during the third quarter of 2020. For full-year 2020, revenues increased by $6.7 million, or 5.8%, to $122.9 million, compared to $116.2 million for full-year 2019; the growth was primarily attributable to bringing the Clover House property online during the third quarter of 2019 and the commencement of the new office lease at the 250 Livingston Street property, partially offset by a decline in leased occupancy and residential rental rate at the Tribeca House property.

For the fourth quarter of 2020, net loss was $3.8 million, or $0.10 per share, compared to net loss of $2.7 million, or $0.06 per share ($2.0 million, or $0.05 per share, excluding a non-recurring $0.7 million loss on extinguishment of debt), for the fourth quarter of 2019; the change, excluding the non-recurring item, was primarily attributable to the revenue change discussed above and higher property operating expenses (including an increase in the provision for bad debt), property taxes, insurance expense, depreciation and amortization expense and interest expense, partially offset by lower general and administrative expenses. For full-year 2020, net loss was $12.2 million, or $0.31 per share ($8.9 million, or $0.23 per share, excluding a non-recurring $0.8 million gain on termination of lease, a non-recurring $4.2 million loss on modification of debt and a non-recurring $0.1 million gain on involuntary conversion), compared to net loss of $4.1 million, or $0.11 per share ($1.7 million, or $0.06 per share, excluding a non-recurring $2.4 million loss on extinguishment of debt), for full-year 2019; the change, excluding the non-recurring items, was primarily attributable to the revenue increase discussed above, offset by higher property operating expenses (including an increase in the provision for bad debt), property taxes, insurance expense, depreciation and amortization expense, and general and administrative expenses (each such expense inclusive of the impact of bringing the Clover House property online), and higher interest expense primarily resulting from the refinancing of the Flatbush Gardens property in May 2020 and the recognition of interest expense in connection with bringing the Clover House property online.

For the fourth quarter of 2020, AFFO was $3.0 million, or $0.07 per share, compared to $5.3 million, or $0.12 per share, for the fourth quarter of 2019; the change was primarily attributable to the revenue change discussed above and higher property operating expenses (including an increase in the provision for bad debt), property taxes, insurance expense and interest expense. For full-year 2020, AFFO was $16.8 million, or $0.38 per share, compared to $22.0 million, or $0.50 per share, for full-year 2019; the change was primarily attributable to the revenue increase discussed above, offset by higher property operating expenses (including an increase in the provision for bad debt), property taxes, insurance expense, recurring cash general and administrative expenses, and interest expense.

Balance Sheet

At December 31, 2020, notes payable (excluding unamortized loan costs) was $1,089.7 million, compared to $1,009.4 million at December 31, 2019; the increase primarily reflected the refinancing of the Flatbush Gardens property in May 2020, partially offset by scheduled principal amortization.

The Company repurchased approximately 1.71 million shares of common stock during the fourth quarter at a weighted average price of $5.70 per share, including approximately 1.67 million shares from Indaba Capital Management, L.P., under its $10.0 million stock repurchase program announced in August 2020. The Company completed the stock repurchase program in November 2020.

141 Livingston Street Refinancing

On February 18, 2021, the Company refinanced the debt on its 141 Livingston Street property with a $100 million, ten-year secured first mortgage loan with Citi Real Estate Funding Inc. The loan bears interest at 3.21% and requires interest-only payments for the entire term, which is expected to reduce annual debt service by $1.3 million. With the proceeds, the Company repaid the $74 million amortizing loan on the property due June 2028, which bore interest at 3.875% through May 2023. Net remaining proceeds of $22.6 million, before reserves, increased the Company’s cash position.

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 26, 2021, payable March 31, 2021.

Restatement

As previously disclosed, the Company concluded that the previously issued unaudited consolidated financial statements covering each of the Company’s first three quarters of 2020 (collectively, the “Restated Periods”), require restatement and should no longer be relied upon. For additional information, please see Note 14 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020. The Company will file amended Quarterly Reports on Form 10-Q for each of the Restated Periods.

Conference Call and Supplemental Material

The Company will host a conference call on March 17, 2021, at 11:00 AM Eastern Time to discuss the fourth quarter 2020 results and provide a business update. The conference call can be accessed by dialing (800) 346-7359 or (973) 528-0008, conference entry code 972054. A replay of the call will be available from March 17, 2021, following the call, through March 31, 2021, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 972054. 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 (including uncertainties regarding the ongoing impact of the COVID-19 pandemic, and measures intended to curb its spread, on our business, our tenants and the economy generally), 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, 2020, and other reports filed from time to time with the SEC.

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.

 

Clipper Realty Inc.

Consolidated Balance Sheets

(In thousands, except for share and per share data)

 
December 31,
2020		 December 31,
2019
 
ASSETS
Investment in real estate
Land and improvements

$

540,859

 

$

540,859

 

Building and improvements

 

630,662

 

 

602,547

 

Tenant improvements

 

3,121

 

 

3,051

 

Furniture, fixtures and equipment

 

12,217

 

 

11,707

 

Real estate under development

 

36,118

 

 

31,787

 

Total investment in real estate

 

1,222,977

 

 

1,189,951

 

Accumulated depreciation

 

(132,479

)

 

(109,418

)

Investment in real estate, net

 

1,090,498

 

 

1,080,533

 

 
Cash and cash equivalents

 

72,058

 

 

42,500

 

Restricted cash

 

16,974

 

 

14,432

 

Tenant and other receivables, net of allowance for doubtful accounts

 

7,002

 

 

4,187

 

of $5,993 and $3,361, respectively
Deferred rent

 

2,454

 

 

1,274

 

Deferred costs and intangible assets, net

 

7,720

 

 

8,782

 

Prepaid expenses and other assets

 

11,160

 

 

14,499

 

TOTAL ASSETS

$

1,207,866

 

$

1,166,207

 

 
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized loan costs

$

1,079,458

 

$

997,903

 

of $10,262 and $11,528, respectively
Accounts payable and accrued liabilities

 

11,725

 

 

13,029

 

Security deposits

 

6,983

 

 

7,570

 

Below-market leases, net

 

157

 

 

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