• Revenue: Record quarterly revenue of $38 million, up from $34.9 million last year, a 9.1% increase.
• Net Operating Income (NOI): Increased to $22.5 million from $20 million last year, a 12.5% increase.
• Adjusted Funds From Operations (AFFO): Increased to $8.1 million from $6.3 million, a 29% increase.
• Residential Revenue: Increased to $28.2 million, up by $2.9 million due to strong leasing.
• Occupancy Rate: Residential properties were 99% leased.
• Rent Collection Rate: Overall collection rate was 97% in the fourth quarter.
• Interest Expense: Decreased by $80,000 due to slightly lower rates on variable rate debt.
• Cash Position: $19.9 million of unrestricted cash and $18.2 million of restricted cash.
• Dividend: Announced a dividend of $0.095 per share for the fourth quarter.

• Warning! GuruFocus has detected 8 Warning Signs with CLPR.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Clipper Realty Inc (NYSE:CLPR) reported record operating results, including record revenue, net operating income, and adjusted funds from operations (AFFO) due to strong residential activity.
• Rental demand remains strong across all properties, with new leases exceeding prior rents by over 7%, particularly in Tribeca House and Clover House.
• The Pacific House development is fully stabilized, 100% leased, and contributing to cash flow with a 7% cap rate.
• The company is benefiting from a full abatement of real estate taxes under the Article 11 agreement, enhancing rental recoveries for assisted tenants.
• Clipper Realty Inc (NYSE:CLPR) achieved record quarterly revenue of $38 million, a 9.1% increase from the previous year, driven by strong leasing performance.

Negative Points

• The Flatbush Gardens property experienced a decrease in rent collection rates, dropping to 88% and 92% in the last two quarters.
• Increased bad debt was noted due to lower collection rates at Flatbush Gardens, partially offsetting revenue gains.
• Property operating expenses increased by $257,000 year over year, primarily due to prevailing wage requirements under the Article 11 agreement.
• Real estate taxes and insurance costs increased by $293,000 year over year, despite the tax abatement at Flatbush Gardens.
• The company faces uncertainty with the upcoming vacancy of the 250 Livingston property as New York City plans to vacate in August 2025.

Q & A Highlights

Q: Can you provide an update on the leasing performance and occupancy rates across your properties? A: JJ Bistricer, Chief Operating Officer, reported that residential leasing is very strong, with properties 99% leased and rents at record levels. New and renewal rental rates in the fourth quarter exceeded previous rents by over 7%. Tribeca House and Clover House properties have leased occupancy of over 98%, with rents per square foot at $82 and $86, respectively.

Q: How are the new development projects progressing, particularly Pacific House and 953 Dean Street? A: David Bistricer, CEO, stated that Pacific House is fully stabilized and contributing to cash flow with a 7% cap rate. The 953 Dean Street development is nearing completion, with leasing expected to begin in line with the 2025 leasing season.

Q: What impact has the Article 11 agreement had on Flatbush Gardens? A: JJ Bistricer explained that the Article 11 agreement has allowed for full abatement of real estate taxes, enabling capital projects and maintenance improvements. The property has seen rent increases, with new leases in Q4 at $35 per square foot, a 13% increase over prior leases.

Q: How is Clipper Realty managing the high interest rate environment? A: David Bistricer noted that the company is well-positioned with 91% of its debt fixed at an average rate of 3.87% and an average duration of 4.3 years. The company believes higher rates increase tenant demand for rental properties.

Q: Can you discuss the financial performance highlights for the fourth quarter? A: Lawrence Sava, Corporate Controller, reported record quarterly revenue of $38 million, a 9.1% increase from last year. NOI increased by 12.5% to $22.5 million, and AFFO rose by 29% to $8.1 million, driven by strong leasing and cost reductions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.