Clipper Realty Inc.

Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty 2Q 2020 earnings call. At this time, all participants have been placed on a listen-only mode. We will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Michael Frenz, Chief Financial Officer. Sir, the floor is yours.

Good afternoon, and thank you for joining us for the second quarter 2020 Clipper Realty Inc. earnings conference call. Participating with me on today's call are David Bistresser, Co-Chairman of the Board and Chief Executive Officer, and JJ Bistresser, Chief Operating Officer. Please be aware that statements made during the call that are not historical may be deemed forward-looking statements, and actual results may differ materially from those indicated by such forward-looking statements. These statements are subject to numerous risks and uncertainties, including those disclosed in the company's quarterly report on Form 10Q posted today, the company's quarterly report on Form 10-Q for the first quarter of 2020, and the company's 2019 annual report on Form 10-K, which are all available at www.sec.gov and our website. As a reminder, the forward-looking statements speak only as of the date of this call, August 10th, 2020, and the company undertakes no duty to update them. During this call, Management may refer to certain non-GAAP financial measures, including adjusted funds from operations, or AFFO, adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, and net operating income, or NOI. Please see our press release, financial information, and Form 10-Q posted today for a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures. With that, I will now turn the call over to our co-chairman and CEO, David Bischusser.

Thank you, Michael. Good afternoon, and welcome to the second quarter 2020 earnings call for Clipper Realty. I will provide an update on our business, including recent highlights and milestones, as well as how our company is responding to the COVID-19 pandemic. I will then turn the call over to JJ, who will discuss property-level activity, including leasing performance, capital projects, and measures taken in light of the pandemic. Finally, Michael will speak about our quarterly financial performance. We will then take your questions. Let me begin by saying how grateful we are to the entire Clipper team for the continued hard work and perseverance during these challenging times. Their dedication to our residents, our communities, and our business have been inspiring during this time of unprecedented upheaval, and we thank them for their ongoing efforts. JJ will address the initiatives we are taking to help our colleagues work through the crisis. Our properties have remained open and operational throughout the pandemic. We continue to take the necessary steps to keep our tenants safe and compliant with state and local orders and are providing typical services to our residents. We saw a slight downtick in occupancy during the second quarter driven by COVID-19. But at quarter end, our residential properties were still over 96% leased and have stabilized at that level through July. Under difficult circumstances, our business has remained strong. We expect our properties and the New York City market to remain desirable to a broad range of tenants and our operations to return to a more normal state over time. Our balance sheet is well positioned from a liquidity perspective to manage through the pandemic. We have an excess of $116 million of cash consisting of approximately $88 million of unrestricted cash and $28 million of restricted cash. We finance our portfolio on an asset-by-asset basis and our debt is non-recourse and is non-cross-collateralized. Importantly, we have no debt maturities on any of our operating properties until 2027. We are announcing today a new stock repurchase program whereby we may repurchase up to $10 million of our common stock. We may repurchase the shares in the 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 our discretion, subject to availability of stock, general market conditions, and trading price of the stock, alternative uses of capital, and our financial performance. The repurchase program may be suspended, terminated, or modified at any time for any reason. and does not obligate us to repurchase any particular number of shares. Turning to upcoming developments, we are proceeding with the redevelopment of 1010 Pacific Street acquisition located in Prospect Heights, Brooklyn, about one mile from the Atlantic Terminal Barclays Center Hub. As previously discussed, we estimate the project will cost approximately $85 million in total, take two years to complete, and develop it to a 6.5% stabilized cap rate. JJ will provide further updates on the project shortly. In our office portfolio, the new lease with the city at 250 Livingston Street property begins after this month and is expected to initially add approximately $5 million to the property's NOI. At the 141 Livingston Street property, the city's rent will increase 25% at the end of 2020, which will add $2.1 million to the property's total NOI. Together, these roles are expected to add an incremental $7.1 million annual NOI to our portfolio. representing a 10% increase on our portfolio run rate. At our Flappage Gardens property, we continue to progress on the Uniform Land Use Review Procedure, or ULIP, approval process for the city. We anticipate that approval will add significant floor area ratios to the complex, meaningfully expanding the size of the property, adding significant value, and allowing us to begin development. There is no assurance, however, that the application will be fully or partially approved as submitted. I would like to provide an update to Tribeca House 241 litigation. As previously disclosed, the New York Court of Appeals ruled in 2019 that apartments and buildings receiving 421G tax benefits are not subject to luxury deregulation, issuing an order that overturned the previous unanimous appellate division decision. On January 7th of this year, the appellate division granted a full stay of the special referee's hearing regarding the calculation of potential rent overcharges in the Kumsich case pending appeal, which is currently expected to be argued during the October 2020 term. We do not believe that the order will have a material impact on our business. Lastly, I'd like to comment on our second quarter results. We are reporting quarterly revenue of $30.7 million, record quarterly NOI of $17.3 million, and AFFO of $5.5 million. a testament to the strength and durability of our business during the pandemic. Michael will provide further details on our financial performance shortly. I will now turn the call over to JJ, who will provide an update on operations and our response to the pandemic.