Clipper Realty Inc. Q2 FY2024 earnings call

• Record operating results: Record quarterly revenue of $37.3 million, NOI of $21.1 million, and AFFO of $7.1 million. Rental demand strong, rents at all-time highs, nearly fully leased. New leases exceeded prior rents by over 7%. - Developments: Pacific House fully stabilized and 100% leased, yielding projected 7% cap rate. 953 Dean Street ground-up construction ahead of schedule. 250 Livingston Street: City notified intention to vacate in Aug 2025, seeking solutions. 141 Livingston Street: Actively negotiating five-year lease extension. - Recycling properties: Preliminary marketing of some properties like 10 West 62 Street to maximize performance. - Interest rates: Higher rates drive tenant demand for rental product. Operating debt: 91% fixed, average rate 3.87%, average duration 4.9 years, non-recourse.

Residential: Second quarter residential revenue increased to $27.7 million, up $2.1 million due to strong leasing, all-time high occupancy and rental rates, and $400,000 from Section 610 rents which are expected to increase steadily. Commercial: Commercial revenue was flat compared to the previous year. Revenue contribution: Residential contributed a significant portion, with commercial being a smaller segment.

• Record second quarter results in revenue, NOI, and AFFO. - Expect Section 610 rents to increase steadily over the next few years. - Focus on optimizing occupancy, pricing, and expenses across the business; expeditiously completing development projects; fully implementing Article 11 transaction for growth.

• Uncertainty around leasing at 250 Livingston Street and the outcome of negotiating lease extension at 141 Livingston Street. - Potential loss compared to book value from recycling some properties. - Refinancing risk for 1010 Pacific's mortgage as it approaches maturity.

Q: Buck Horne asks about the revenue and cash flows from 250 Livingston and if they flow to the company.

A: David Bistricer says yes.

Q: Buck Horne asks about notice of the city's intention to leave 141 Livingston and if there's a formal notice.

A: JJ Bistricer says they're negotiating an extension and the city is looking for an extension, not a formal notice of vacating.

Q: Buck Horne asks about CapEx requirements for extending the lease at 141 Livingston.

A: JJ Bistricer says the extension the city is looking for is not a CapEx type, pretty much as is.

Q: Buck Horne asks about the need to sell 10 West 62 Street and reason for marketing.

A: David Bistricer says there might be better opportunities for value and they're testing the market.

Q: Buck Horne asks about progress or thoughts on refinancing 1010 Pacific's mortgage.

A: David Bistricer says they'll think about refinancing when the mortgage gets closer to maturity, looking at options like Freddie Mac and existing lenders as rental markets fix.