Announces Stock Repurchase Program
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 June 30,
2020.
Highlights for the Three Months Ended June 30, 2020
- Achieved quarterly revenues of $30.7 million for the second
quarter of 2020, representing an increase of 8.0% compared to the
same period in 2019
- Achieved quarterly income from operations of $8.6 million for
the second quarter of 2020
- Achieved record quarterly net operating income (“NOI”)1 of
$17.3 million for the second quarter of 2020, representing an
increase of 8.7% compared to the same period in 2019
- Recorded quarterly net loss of $5.5 million for the second
quarter of 2020, or $1.4 million excluding a non-recurring $4.2
million loss on modification of debt and a non-recurring $0.1
million gain on involuntary conversion
- Achieved quarterly adjusted funds from operations (“AFFO”)1 of
$5.5 million for the second quarter of 2020
- Declared a dividend of $0.095 per share for the second quarter
of 2020
The Company also announced today a new stock repurchase program,
whereby it may repurchase up to $10 million of its common
stock.
David Bistricer, Co-Chairman and Chief Executive Officer,
commented,
“We are very pleased with our second quarter 2020 results,
especially in light of the challenges posed by the ongoing COVID-19
pandemic. The safety of our tenants and employees remains our
highest priority. Our properties remain operational and are
currently 96% leased, with essential staff and key procedures in
place to manage through the pandemic. Our second quarter rent
collection rate was equal to 94% of our first quarter rent
collection rate, and our July rent collection rate improved to 98%.
We have $116.3 million of cash on our balance sheet, consisting of
$88.3 million of unrestricted cash and $28.0 million of restricted
cash, and have no debt maturities on any operating properties until
2027, providing further support in the current environment. In
addition, our new lease with the City of New York at the 250
Livingston Street property will commence later this month. We
remain focused on executing our strategic initiatives to create
long-term value.”
Financial Results
For the second quarter of 2020, revenues increased by $2.3
million, or 8.0%, to $30.7 million, compared to $28.4 million for
the second quarter of 2019. The growth was primarily attributable
to bringing the Clover House property online during the third
quarter of 2019, and completing renovation and re-leasing of
approximately 50% of the units at the 10 West 65th Street property
during the second quarter of 2019.
For the second quarter of 2020, net loss was $5.5 million, or
$0.13 per share ($1.4 million, or $0.04 per share, excluding 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 $1.2 million, or $0.03 per share (net
income of $0.6 million, or $0.01 per share, excluding a
non-recurring $1.8 million loss on extinguishment of debt), for the
second quarter of 2019. The change was primarily attributable to
the revenue increases discussed above, offset by higher property
operating expenses, property taxes, insurance expense, and
depreciation and amortization expense (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 second quarter of 2020, AFFO was $5.5 million, or $0.12
per share, compared to $6.1 million, or $0.14 per share, for the
second quarter of 2019. The change was primarily attributable to
the revenue increases discussed above, offset by higher property
operating expenses, property taxes, insurance expense and interest
expense.
Balance Sheet
At June 30, 2020, notes payable (excluding unamortized loan
costs) was $1,091.1 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.
Dividend
The Company today declared a second quarter dividend of $0.095
per share, the same amount as last quarter, to shareholders of
record on August 21, 2020, payable August 28, 2020.
Stock Repurchase Program
The Company today announced that its Board of Directors has
adopted a stock repurchase program. Under the repurchase program,
the Company may repurchase its common stock at any time, or from
time to time, for an aggregate total purchase price not to exceed
$10 million. The Company anticipates funding for the program to
come from available sources of liquidity, including cash on hand
and future cash flow.
The repurchase program permits shares to be repurchased in open
market or private transactions, through block trades or otherwise.
The number of shares repurchased and the timing, manner, price and
amount of any repurchases will be determined at the Company’s
discretion, subject to the availability of stock, general market
conditions, the trading price of the stock, alternative uses of
capital and the Company’s financial performance.
The repurchase program may be suspended, terminated or modified
at any time for any reason, including market conditions, the cost
of repurchasing shares, the availability of alternative investment
opportunities, liquidity and other factors deemed appropriate by
the Company. These factors may also affect the timing and amount of
share repurchases. The repurchase program does not obligate the
Company to repurchase any particular number of shares.
Conference Call and Supplemental Material
The Company will host a conference call on August 10, 2020, at
5:00 PM Eastern Time to discuss the second quarter 2020 results and
provide a business update pertaining to the COVID-19 pandemic. The
conference call can be accessed by dialing (800) 346-7359 or (973)
528-0008, conference entry code 452581. A replay of the call will
be available from August 10, 2020, following the call, through
August 24, 2020, by dialing (800) 332-6854 or (973) 528-0005,
replay conference ID 452581. 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 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 Quarterly
Report on Form 10-Q for the quarter ended June 30, 2020, our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020,
our Annual Report on Form 10-K for the year ended December 31,
2019, 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)
June 30, 2020 December 31,2019
(unaudited)
ASSETS Investment in real estate
Land and improvements
$
540,859
$
540,859
Building and improvements
613,983
602,547
Tenant improvements
3,051
3,051
Furniture, fixtures and equipment
12,001
11,707
Real estate under development
34,331
31,787
Total investment in real estate
1,204,225
1,189,951
Accumulated depreciation
(120,474
)
(109,418
)
Investment in real estate, net
1,083,751
1,080,533
Cash and cash equivalents
88,253
42,500
Restricted cash
28,047
14,432
Tenant and other receivables, net of allowance for doubtful
accounts
7,847
4,187
of $4,309 and $3,361, respectively Deferred rent
881
1,274
Deferred costs and intangible assets, net
8,199
8,782
Prepaid expenses and other assets
13,471
14,499
TOTAL ASSETS
$
1,230,449
$
1,166,207
LIABILITIES AND EQUITY Liabilities:
Notes payable, net of unamortized loan costs
$
1,079,677
$
997,903
of $11,380 and $11,528, respectively Accounts payable and
accrued liabilities
10,699
13,029
Security deposits
7,576
7,570
Below-market leases, net
1,367
1,625
Other liabilities
3,560
4,297
TOTAL LIABILITIES
1,102,879
1,024,424
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,
178
178
17,814,672 shares issued and outstanding Additional
paid-in-capital
93,626
93,431
Accumulated deficit
(42,307
)
(36,375
)
Total stockholders' equity
51,497
57,234
Non-controlling interests
76,073
84,549
TOTAL EQUITY
127,570
141,783
TOTAL LIABILITIES AND EQUITY
$
1,230,449
$
1,166,207
Clipper Realty Inc. Consolidated Statements of
Operations (In thousands, except per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
REVENUES Residential rental income
$
23,679
$
21,146
$
47,397
$
41,918
Commercial rental income
7,050
7,300
14,218
14,180
TOTAL REVENUES
30,729
28,446
61,615
56,098
OPERATING EXPENSES Property operating expenses
6,868
6,747
14,027
14,310
Real estate taxes and insurance
6,778
5,707
13,642
11,438
General and administrative
2,594
2,579
4,917
4,247
Depreciation and amortization
5,872
4,590
11,430
9,139
TOTAL OPERATING EXPENSES
22,112
19,623
44,016
39,134
INCOME FROM OPERATIONS
8,617
8,823
17,599
16,964
Interest expense, net
(9,979
)
(8,210
)
(19,767
)
(16,484
)
Loss on modification/extinguishment of debt
(4,228
)
(1,771
)
(4,228
)
(1,771
)
Gain on involuntary conversion
85
-
85
-
Net loss
(5,505
)
(1,158
)
(6,311
)
(1,291
)
Net loss attributable to non-controlling interests
3,283
691
3,763
770
Net loss attributable to common stockholders
$
(2,222
)
$
(467
)
$
(2,548
)
$
(521
)
Basic and diluted net loss per share
$
(0.13
)
$
(0.03
)
$
(0.15
)
$
(0.04
)
Weighted average common shares / OP units Common shares
outstanding
17,815
17,815
17,815
17,814
OP units outstanding
26,317
26,317
26,317
26,317
Diluted shares outstanding
44,132
44,132
44,132
44,131
Clipper Realty Inc. Consolidated Statements of Cash
Flows (In thousands) (Unaudited)
Six Months Ended June
30,
.
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES Net loss
$
(6,311
)
$
(1,291
)
Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation
11,078
8,755
Amortization of deferred financing costs
608
928
Amortization of deferred costs and intangible assets
592
623
Amortization of above- and below-market leases
(228
)
(830
)
Loss on modification/extinguishment of debt
4,228
1,771
Gain on involuntary conversion
(85
)
-
Deferred rent
393
816
Stock-based compensation
693
860
Bad debt expense
899
-
Changes in operating assets and liabilities: Tenant and other
receivables
(4,559
)
222
Prepaid expenses, other assets and deferred costs
989
70
Accounts payable and accrued liabilities
(2,484
)
(1,781
)
Security deposits
6
398
Other liabilities
(737
)
(98
)
Net cash provided by operating activities
5,082
10,443
CASH FLOWS FROM INVESTING ACTIVITIES Additions to
land, buildings and improvements
(13,622
)
(21,383
)
Insurance proceeds from involuntary conversion
111
-
Sale and purchase of interest rate caps, net
(14
)
-
Net cash used in investing activities
(13,525
)
(21,383
)
CASH FLOWS FROM FINANCING ACTIVITIES Payments of
mortgage notes
(247,798
)
(76,416
)
Proceeds from mortgage notes
329,424
125,000
Dividends and distributions
(8,595
)
(8,538
)
Loan issuance and extinguishment costs
(5,220
)
(2,166
)
Net cash provided by financing activities
67,811
37,880
Net increase in cash and cash equivalents and restricted
cash
59,368
26,940
Cash and cash equivalents and restricted cash - beginning of period
56,932
45,864
Cash and cash equivalents and restricted cash - end of
period
$
116,300
$
72,804
Cash and cash equivalents and restricted cash - beginning of
period: Cash and cash equivalents
$
42,500
$
37,028
Restricted cash
14,432
8,836
Total cash and cash equivalents and restricted cash - beginning of
period
$
56,932
$
45,864
Cash and cash equivalents and restricted cash - end of
period: Cash and cash equivalents
$
88,253
$
56,349
Restricted cash
28,047
16,455
Total cash and cash equivalents and restricted cash - end of period
$
116,300
$
72,804
Supplemental cash flow information: Cash paid for interest,
net of capitalized interest of $679 and $3,761 in 2020 and 2019,
respectively
$
19,482
$
17,193
Non-cash interest capitalized to real estate under development
546
678
Additions to investment in real estate included in accounts payable
and accrued liabilities
4,045
7,940
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 measure” 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 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, loss on
modification/extinguishment of debt, gain on involuntary conversion
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 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 June
30,
Six Months Ended June
30,
2020
2019
2020
2019
FFO Net loss
$
(5,505
)
$
(1,158
)
$
(6,311
)
$
(1,291
)
Real estate depreciation and amortization
5,872
4,590
11,430
9,139
FFO
$
367
$
3,432
$
5,119
$
7,848
AFFO FFO
$
367
$
3,432
$
5,119
$
7,848
Amortization of real estate tax intangible
121
120
240
239
Amortization of above- and below-market leases
(129
)
(406
)
(228
)
(830
)
Straight-line rent adjustments
192
182
393
816
Amortization of debt origination costs
304
424
608
928
Amortization of LTIP awards
536
704
693
860
Loss on modification/extinguishment of debt
4,228
1,771
4,228
1,771
Gain on involuntary conversion
(85
)
-
(85
)
-
Non-recurring litigation-related expenses
160
-
424
-
Recurring capital spending
(238
)
(127
)
(383
)
(280
)
AFFO
$
5,456
$
6,100
$
11,009
$
11,352
AFFO Per Share/Unit
$
0.12
$
0.14
$
0.25
$
0.26
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, loss on
modification/extinguishment of debt and non-recurring
litigation-related expenses, less gain on involuntary
conversion.
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 June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Adjusted EBITDA Net loss
$
(5,505
)
$
(1,158
)
$
(6,311
)
$
(1,291
)
Real estate depreciation and amortization
5,872
4,590
11,430
9,139
Amortization of real estate tax intangible
121
120
240
239
Amortization of above- and below-market leases
(129
)
(406
)
(228
)
(830
)
Straight-line rent adjustments
192
182
393
816
Amortization of LTIP awards
536
704
693
860
Interest expense, net
9,979
8,210
19,767
16,484
Loss on modification/extinguishment of debt
4,228
1,771
4,228
1,771
Gain on involuntary conversion
(85
)
-
(85
)
-
Non-recurring litigation-related expenses
160
-
424
-
Adjusted EBITDA
$
15,369
$
14,013
$
30,551
$
27,188
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, amortization of identifiable
intangibles and straight-line rent adjustments to revenue from
long-term leases. 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 June
30,
Six Months Ended June
30
2020
2019
2020
2019
NOI Income from operations
$
8,617
$
8,823
$
17,599
$
16,964
Real estate depreciation and amortization
5,872
4,590
11,430
9,139
General and administrative expenses
2,594
2,579
4,917
4,247
Amortization of real estate tax intangible
121
120
240
239
Amortization of above- and below-market leases
(129
)
(406
)
(228
)
(830
)
Straight-line rent adjustments
192
182
393
816
NOI
$
17,267
$
15,888
$
34,351
$
30,575
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200810005593/en/
Michael Frenz Chief Financial Officer (718) 438-2804 x2274 M:
(917) 576-7750 mfrenz@clipperrealty.com
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