Good afternoon, ladies and gentlemen, and welcome to Clipper Realty 3Q 2020 Earnings Call. At this time all participants have been placed on a listen-only mode and we'll 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. Sir, the floor is yours.

Good afternoon, and thank you for joining us for the third quarter 2020 Clipper Realty, Inc. earnings conference call. Participating with me on today's call are David Bistricer, Co-Chairman of the Board and Chief Executive Officer; and J.J. Bistricer, 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 10-Q posted today, the company's quarterly reports on Form 10-Q for the first and second quarters of 2020 and the company's 2019 annual report on Form 10-K, which are all accessible at our website. As a reminder, the forward-looking statements speak only as of the date of this call, November 09, 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, 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 Bistricer.

Thank you, Michael. Good afternoon and welcome to the third quarter 2020 earnings call for Clipper Realty. I will provide an update on our business performance, 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 J.J., who will discuss property-level activity, including leasing performance and measures taken in line with the pandemic. Finally, Michael will speak about our quarterly financial performance. We will then take your questions. I will begin by thanking the entire Clipper team for their continued hard work and perseverance during this challenging period. Their ongoing dedication to our residents, our communities, and our business has been remarkable throughout the course of the pandemic, and we are grateful for the efforts. Our properties have remained open and operational throughout the pandemic. We continue to take necessary steps to keep our tenants safe, in compliance with state and local orders, and are providing typical services to our residents. During the third quarter, we witnessed some pressure on occupancy and rental rates at several of our properties driven by economic activity declines related to COVID-19. At quarter-end, our residential properties were 93% leased compared to 96% at the end of the second quarter. Despite the current headwinds, we are confident in the resiliency of New York City. We expect our properties in the New York City Market to remain viable to a broad range of tenants and our operations to return to a normal state over time. Our balance sheet continues to be well-positioned from a liquidity perspective to manage through the pandemic. We have $105 million of cash, consisting of $83 million of unrestricted cash and $22 million of restricted cash. We finance our portfolio on an asset-by-asset basis and our debt is non-recourse and is not cross-collateralized. We have no debt maturities on any of our operating properties until 2027. During the third quarter, we purchased 45,858 shares of common stock at a weighted average price of $5.90 per share under a $10 million stock repurchase program announced in August. At the end of the quarter, we had $9.7 million remaining in the stock repurchase program. Turning to upcoming developments, we continue to proceed with the redevelopment of our 1010 Pacific Street acquisition located in Prospect Heights, Brooklyn, about one mile from the Atlantic Terminal/Barclays Center Hub. As previously disclosed, we estimate the project will cost approximately $85 million in total, and take two years to complete, and develop a 6.5% stabilized cap rate. J.J. will provide further updates on the project shortly. In our office portfolio, the new lease with the City of New York at 250 Livingston Street commenced in August. This lease is expected to initially add approximately $5.8 million to the property's annual NOI and is a significant milestone for the company. At 141 Livingston Street, the city's rent will increase 25% at the end of December, which will add $2.1 million to the property's annual NOI. Together these roles 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. At our Flatbush Gardens property we continue with the Uniform Land Use Review procedure or ULURP approval process with the city. We anticipate that approval would add significant flow area ratios to the complex, meaningfully expanding the size of the properties, 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'd like to provide an update on the Tribeca House 421-g litigation. As previously discussed, the New York City Court of Appeals ruled in June 2019, that the Department of Buildings receiving 421-g tax benefits is subject to luxury deregulation. On October 29, the Appellate Division applied to the Court of Appeals, ruling the June case only has a base rent determination; rent overcharges are for four years prior to the 2016 filing of the complaint, and overcharges, if any, are to be determined by comparing events actually charged during the four-year period to the rent increases permitted by New York City Rent Guidelines Board. Although this ruling does not eliminate overcharged liability altogether, it is expected to limit our financial exposure in this regard. The Appellate Division affirmed the lower court's award of attorney's fees to the plaintiff's tenants. The case will eventually be remanded back to the lower courts, which will determine the amount of liability for rent overcharge and the attorney's fees. No future court dates have been scheduled as of yet. We do not believe that this litigation will have a material impact on our business as it pertains to the limited substance of previous and existing tenants at the property. The vast majority of current tenants and all future movements are not impacted by litigation, as those units are free markets. Lastly, I would like to comment on our third quarter results. We are reporting quarterly revenues of $29.6 million, NOI of $14.5 million, and FFO of $2.9 million. Results reflect the current headwinds discussed earlier. Michael will provide further details on our financial performance shortly. I will now turn the call over to J.J., who will provide an update on operations and our response to the pandemic, including a targeted overhead reduction to streamline expenses.

Thank you. I begin by again thanking our colleagues at our properties and corporate office for their tireless efforts throughout this challenging period. Their unwavering commitment to our tenants and communities has been inspiring. We faced certain revenue challenges in the third quarter as a result of declines in economic activity related to COVID-19. Third quarter total revenue was 3.6% lower than second quarter total revenue driven by declines in occupancy and rental rates at several of our properties due to the ongoing pandemic. Rent per square foot at Tribeca was $66 at the end of the third quarter. We are working diligently to manage revenue at the property and note that occupancy has recently increased to 83%. Longer term, we believe that occupancy or rental rates at the property will return to pre-COVID levels given Tribeca House's attractiveness from a pricing standpoint compared to other luxury buildings in the surrounding neighborhood. The Flatbush Gardens complex in Brooklyn held up well in the third quarter from a revenue standpoint, as it has throughout the pandemic. The property maintained high occupancy ending the quarter over 96% leased. Rent per square foot was a record $25.10 at the end of the quarter. We continue to proactively streamline the business and manage our expense base and have organized certain operations at the property, which is expected to result in annual cost savings in excess of $800,000. Flatbush Gardens is a key element of our portfolio and growth story with the FAR expansion project an incremental value opportunity. The Clover House and the 10 West 65th Street properties experienced some occupancy and pricing pressures due to COVID-19, each ending the third quarter approximately 90% leased compared to mid-90 levels at the end of the second quarter. We have however seen a recent uptick in activity at these properties with occupancy gains ranging from 3.8% to 6.1% since the end of the quarter. Collections have remained strong during the pandemic. Our rent collection rate during the third quarter was 97%. We continue to work with tenants on a case-by-case basis when they notify us that they cannot meet their rent obligations as a result of the pandemic, including reviewing potential alternative payment arrangements. On the development side, we are completing the necessary regulatory process at 1010 Pacific Street to construct a nine-story, 119,000 rentable square foot fully-amenitized multifamily rental building with underground indoor parking. The property will have 175 total units, 70% of which will be free market and 30% affordable and is eligible for a 35-year 421-a tax abatement. We are in the process of negotiating a construction loan for the project. Looking ahead, we are focused on optimizing occupancy, pricing, and expenses across the business against the backdrop of ongoing pandemic-driven headwinds that continue to pressure both our portfolio and the New York City Market in general. The near-term environment will remain challenging, but we are committed to strongly positioning ourselves to emerge from the pandemic. I will now turn over the call to Michael, who will discuss our financial results.

Just one moment gentlemen, Michael's line has disconnected, we're reconnecting him now.

Hello.

Yes, this is the operator. We're trying to connect. Michael Frenz's line has dropped.

That's me. I am back.

Oh, you're back. Okay, perfect.

Thanks.

Michael, you're on.

Hi. Thanks, guys. Apologies for that; I had a connection problem. Okay, for the third quarter, we achieved revenues of $29.6 million, an increase of $0.2 million, or 0.6% compared to the same period in 2019. We achieved NOI of $14.5 million, and AFFO of $2.9 million, or $0.06 per share. The year-over-year total revenue increase was primarily attributable to the commencement of the new office lease at the 250 Livingston Street property and bringing the Clover House property online during the third quarter of 2019, partially offset by a decline in leased occupancy and residential rental rates to Tribeca House property. On the expense side, key year-over-year changes were as follows: Property operating expenses increased by $0.5 million in the third quarter year-on-year, primarily driven by an increase in the provision for bad debt due to the impact of COVID-19. Real estate taxes and insurance increased by $0.7 million in the third quarter due to property tax increases across their portfolio and general insurance industry cost increases. Interest expense increased by $1.5 million in the third quarter year-on-year, primarily due to the recognition of interest expense in connection with bringing Clover House online and the refinancing of the Flatbush Gardens property in May. As David mentioned earlier, we are well-positioned from a liquidity perspective. As of September 30, we have $105 million of cash, consisting of $83 million of unrestricted cash and $22 million of restricted cash. We finance our portfolio on an asset-by-asset basis. Our debt is non-recourse and is not cross-collateralized. We have no debt maturities on any operating properties until 2027. Lastly, today, we are announcing a dividend of $0.095 per share for the third quarter, the same amount as last quarter. The dividend will be paid on November 27, to shareholders of record on November 20. Let me now turn the call back over to David for concluding remarks.

Thank you, Michael. We remain focused on efficiently operating our portfolio throughout the pandemic. The safety of our tenants and employees is our highest priority. We continue to take the necessary steps to navigate through the current challenges supported by a strong balance sheet. New York City has survived and thrived through challenging circumstances over time, and we have every confidence that the city will emerge from the pandemic strong. We actively look forward to capitalizing on a myriad of growth opportunities, including the 1010 Pacific Street redevelopment and the potential expansion of Flatbush Gardens. We hope everyone stays safe and healthy. With that, I'd like to open up the line for questions.

Thank you, ladies and gentlemen, the floor is open for questions. And your first question is coming from Craig Kucera. Craig, your line is live?

Yeah. Hi. I just wanted to confirm. Guys, did you say that outside of Tribeca, where you gave the update that that occupancy had improved to 83%, you mentioned Flatbush that all the other properties had seen anywhere from a 380 to 610 basis point in occupancy since the third quarter?

Hi, Craig, how are you? At the end of the second quarter, some of the properties, as we said The Aspen, 10 West, the Clover House, they were all in the mid-90% occupancy range, 95% to 97%. By the end of the third quarter, they had dipped a bit to about 90%. But since the end of the third quarter, between the end of September and today, we see a bump back up on those properties anywhere from 3% to 4% to 5%. So the Aspen, 10 West, and Clover House properties currently are leased ranging from 92% to 95%.

Okay, great. And I just wanted to follow up on - have rents trended basically flat in here in the fourth quarter, or has there been any rent concessions to get those folks back?

J.J., do you want to talk to that?

Sure. So the rents have pretty much stayed down below what they were prior, simply because we're trying to recapture occupancies. So we're well positioned, so when the market does come back, we can start pushing rents again. So for now, we're doing the best we can, making sure that we don't lose any opportunities to rent apartments. So there's a slight downtick in rent per square foot because of that.

Got it. And just one more for me. Are you tracking or able to track whether as the folks moved out from the second to third quarter, are they staying in market or are these people that are basically just exiting the markets, maybe they'll come back at some point in the future but are no longer in the greater New York MSA?

To answer that, again, without exact details or numbers, the answer is a significant amount of them are moving out of the cities. Some of them, depending on the property, are moving to second homes that they have in the suburbs. Many of them tell us when on the way out they say, we wish this didn't come to this. We hope to be back soon. We really like the property. We're looking forward to when things get back to normal so we can return to the city.

Okay, well, that's encouraging. That's it for me. Thanks, guys.

Okay, your next question is coming from Buck Horne. Buck, your line is live?

Yeah. Hey, thanks. Hey, Mike, can you just quantify what the bad debt expense was in the quarter? I don't know - did you break that, the operating expenses?

Absolutely. As a refresher, in the second quarter, as you know, we took about a $600,000 bad debt expense, and now into the third quarter here, again, given the high collections rate, as J.J. said, we're still in the high 90s. So what we've seen is actually today, pretty good and strong performance, even as the pandemic lingers. All-in-all in the third quarter, we took approximately a $660,000 charge for bad debt, so that a 10% increase over the second quarter. But again, given everything that's been going on with the pandemic, I think we're pleasantly surprised and continue to see collections hold up overall.

Okay, we have no remaining questions in queue.

Thank you for joining us today. We look forward to speaking with you again soon. Stay safe.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time. And have a wonderful day. Thank you for your participation.

Thank you.