Clipper Realty Inc.

Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty 2Q21 earnings call. At this time, all participants have been placed on a listen-only mode, and 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, Larry Kreider, Chief Financial Officer. Sir, the floor is yours.

Good afternoon and thank you for joining us for the second quarter 2021 Clipper Realty Inc. earnings conference call. Participating with me on today's call are David Bistreser, co-chairman of the board and chief executive officer, and JJ Bistreser, chief operating officer. Please be aware that statements made during the call that are not historical may be deemed forward-looking 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 2020 Annual Report on Form 10-K, which is accessible at www.sec.gov and our website. As a reminder, the forward-looking statements speak only as of the date of this call, August 2021, 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, supplemental 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 Bissler, sir.

Thank you, Larry. Good afternoon, and welcome to the second quarter of 2021. I'm Eric Skoll for Clipper Realty. I will provide an update on our business performance, including recent highlights and milestones, as well as how our company continues to respond to the COVID-19 pandemic. I will then turn the call over to JJ, who will discuss property-level activity, including leasing performance. Finally, Larry will speak about our quarterly financial performance. He will then take your questions. I will begin by once again extending our thanks to the entire Clipper Realty team for their ongoing hard work and perseverance during this unprecedented time. We remain grateful for their efforts and over the past 17 months under very challenging circumstances and are proud of their continued dedication to our residents, communities, and our business. Our properties have remained open and operational throughout the pandemic. The increase in New York City residential leasing activity that took hold in the fourth quarter of last year continues today as both the city and the economy in general further strengthen from the depths of the pandemic. We expect rental demand to remain elevated and pricing to improve as New York City continues to reopen and vaccinations proliferate. At the end of the second quarter, our properties were 94% leased, and new leases at our properties are reaching pre-pandemic levels, including our Tribeca property, where new lease rates in July were approximately $78 per square foot. We continue to take the necessary steps to keep our tenants safe, in compliance with state and local orders, and are providing typical services to our residents. We remain confident in the resiliency of New York City and we expect our properties and the city to stay desirable to a broad range of tenants and operations continue to return to a more normal state over time. Our balance sheet continues to be well positioned from a liquidity perspective to manage through the pandemic. We have approximately $98 million of cash consisting of 85 million of unrestricted cash and $13 million of restricted cash. We finance our portfolio on an asset-by-asset basis. Our debt is non-recourse, subject to limited standard carve-outs, and is not cross-cardinalized. We have no debt maturities on any of our operating properties until 2027. Some more recent developments. We continue to proceed with the redevelopment of 1010 Pacific Street in Brooklyn, located in Brunswick Heights, about one mile from the Atlantic Terminal slash Barclays Center Homes. Construction is well underway. As previously discussed, we estimate the project will cost approximately $85 million in total after all construction. It will take two years to complete and develop to a 6.5% stabilized cap rate. At this point, approximately 80% of our construction contracts are completed, bought out, and we are about to enter into a new $52.5 million construction loan facility that will provide us with financing through completion. JJ will provide further update on the project shortly. In our office portfolio, city rent at 141 Livingston Street increased 25% at the end of 2020, adding $2.1 million to the property's annual NOI. Together with the expected additional $5 million of annual NOI resulting from the city's new lease at 250 Livingston Street property that commenced in August of 2020, these increases are expected to add an incremental $7.1 million of annual NOI to our portfolio, representing an approximate 10% increase on a normalized run rate. I would like to comment on our second quarter results. We are reporting quarterly revenue of $30.7 million NOI of $16.1 million, and AFFO of $4.1 million. While revenue is stable this last quarter as we turn the corner on residential rental leasing, NOI and AFFO improved by over $1 million each as a result of reduced utility expenses and improved collections, as Larry will further detail. I will now turn the call over to JJ, who will provide an update on operations.