Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty First Quarter 2022 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. Sir, the floor is yours.

Thank you very much, Matt. Good afternoon and thank you for joining us for the first quarter 2022 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 JJ 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 2021 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, May 10, 2022 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-K 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, Larry. Our new residential leasing activities began towards the end of last year continues to improve. At the end of the first quarter, all our residential properties were leased to the mid-high 90% range. New rental rates per square foot in April and May are reaching or exceeding pre-pandemic levels and all exceeding present average rates. For example, leases in April at Tribeca House were $83 per square foot; Flatbush Gardens, $35 per square foot; Clover House, $84 per square foot. We are experiencing strong rental demand at our Tribeca House property. Year-on-year lease occupancy has increased to 99% from 89% in December last year with an average occupancy of 98% over the past 12 months. As occupancy increased last year, we achieved higher rent per square foot levels, which now have reached in excess of $83 in April ‘22, a 35% increase over prior rents on the same units. As a result, the average rent per square foot of the whole property has increased to nearly $65 in March, $66 per square foot last week. We expect rent per square foot to continue to grow steadily higher as our one and two-year leases turnover. Revenue at Flatbush Gardens Complex in Brooklyn held up well in the first quarter, increased from the fourth quarter based on new leases. Throughout the pandemic, the property maintained leased occupancy between 92% and 93%, which we increased to 95% leased at the end of March and hope to go higher. Throughout, we have maintained steady rent per square foot at $25 per square foot and near-record levels and began trending up again in the first quarter based on new leases generally in excess of $30 per foot. Lastly, we continue to benefit from the 2020 reorganization of the property operations that created nearly $800,000 in operating savings. Rent collections across our portfolio remain strong, despite the residual challenges of the pandemic. Our overall collection rate in the fourth quarter was 96.5%. This reflected a partial pause in the New York Emergency Rental Assistance Program, or commonly known as ERAP, by which we received $2.5 million in the fourth quarter versus $600,000 this quarter. We are moving well on construction at 1010 Pacific Street and are on target for substantial completion by the fourth quarter. We have completed façade works. Sheetrocking is well underway. Window installation is nearing completion. And we expect to be in finishes in the third quarter of this year. We have finalized approximately 95% of our construction contracts, having bought on most of them last year mitigating the recent inflation concerns. We are financing our construction fully through a $52.5 million construction loan. The development is a nine-story, 119,000 square foot rental space, amenitized multifamily rental building with underground parking. The property is expected to 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. Looking ahead, we remain focused on optimizing occupancy, pricing, and expenses across the business to best position ourselves in New York City’s continued recovery from the pandemic. With that, I’d now turn over the floor to JJ Bistricer.

Thank you. We see positive operational trends as we look forward. Residential leasing activity is rapidly improving, despite the recent headline moves on inflation and interest rate increases. We expect rental demand to remain strong and pricing to improve, now that New York City is largely reopened, and people seek to relocate back to the city while employees increasingly return to their offices. At the end of the first quarter, our properties were 96.5% leased and new leases at our properties are reaching or exceeding pre-pandemic levels, including at the Tribeca House property, where new lease rates in April exceeded $83 per square foot, more than 35% better than the previous rents, and May rents per square foot jumped from $65 at the end of March to $66. With respect to interest rate increases, we believe we are protected by the relatively long duration of our debt, 95% of which is fixed at 3.76% at an average duration of 7.45 years and is non-recourse subject to limited standard carve-outs not cross-collateralized. Regarding inflation, we look to the short duration of our residential leases to allow us to cover increased expenses on a substantial number of our leases and our major existing construction projects. Our contracts were all bought out in 2021. Our balance sheet continues to be well positioned from a liquidity perspective. We have approximately $43.8 million of cash, consisting of $25.3 million of unrestricted cash and $18.5 million of restricted cash. We finance our portfolio on an asset-by-asset basis. Turning to recent developments, the essentially ground-up development of our 1010 Pacific Street acquisition is moving along very well, and we are targeting substantial completion in the fourth quarter. The property is located in Prospect Heights, Brooklyn, about one mile from the Atlantic Terminal and Barclays Center Hub. As previously discussed, we estimate the project to cost $85 million and develop to a 6.5% stabilized cap rate. At the end of the year, we also bought another property in the same area of Brooklyn at 953 Dean Street that we also intend to redevelop from the ground-up. In April, we completed the incremental purchases of land and financing to bring the initial purchase to a total cost of approximately $48 million, with acquisition financing of $37 million. We expect to build a 9-story fully amenitized residential building with 160,000 residential rentable square feet, 240 total units, 70% free market and 30% affordable, along with 8,500 commercial rental square feet. With regard to our first quarter results, we are reporting quarterly revenue of $32.1 million, NOI of $16.5 million, and AFFO of $4.4 million. All these results represent improvements over the first quarter last year as Larry will further detail. I will now turn the call over to Larry, who will provide further information. Thank you.

Thank you, JJ. For the first quarter, revenues increased by $1.4 million to $32.1 million from $30.7 million last year in the first quarter. NOI this quarter increased by $1.7 million to $16.5 million from $14.7 million last year in the first quarter. And AFFO increased by $1.3 million to $4.4 million this quarter from $3.1 million last year in the first quarter. In reviewing the results, it is important to note our adoption of a new accounting standard known as ASC 842 that impacted our results, particularly in the geography of bad debt expense in our income statements and timing of amounts. Under the new standard in the first quarter, we began recording bad debt expense against revenue without restating or recasting last year, where we recorded bad debt expense against operating expense. Additionally, as prescribed by the new pronouncement, we fully wrote off any receivable not expected to be fully collected, even if expected to be partially collected without consideration of future collection prospects. The pronouncement then requires restoration of the receivable if those prospects turnaround essentially using cash basis accounting. As a consequence of this, you will see the effects of bad debt expense not only in different lines on the income statement, but also with higher levels of variability of amount. Plus, you will see a so-called cumulative effect adjustment in the statement of stockholders’ equity of $6 million. This bridges the old to the new accounting standards. To simplify the following discussion, if possible, I will focus on business results first, then note the impact of the new accounting standard. Excluding the impact of the new accounting standard, revenue increased by $1 million from $31.7 million to $30.7 million, primarily due to increased occupancy and/or residential rental rates at Tribeca House, Aspen, and Clover House properties. Also, new commercial tenants at the Tribeca House property and increased CAM collections at the 141 Livingston Street property contributed to this increase. As a result of the new accounting standard in the first quarter of 2022, residential revenue includes a charge of $700,000 for bad debt expense and commercial revenue includes a benefit of $1.1 million for the restoration of a receivable from a tenant previously deemed probable for only a partial payment at the end of last year. As last quarter, we are moving residential rents to pre-pandemic levels at an accelerating pace. Although, we expect the effect to take the next few quarters to evidence itself fully. In April 2022, as David and JJ articulated, for example at the Tribeca House property, new residential rental rates were above $83 per square foot, well above the leases that are replaced with similar increases at our other properties as well. On the expense side, key year-over-year changes were as follows. Excluding the effect of the new accounting standard, property operating expenses were level this quarter versus last year. Note that both quarters include seasonally higher levels of gas and electric utility expenses than any other quarter. As a result of the new accounting standard, we have no bad debt expense in operating expenses in the first quarter this year versus a charge of $1.1 million in the first quarter last year, thus causing the apparent variance in the financials. Real estate taxes and insurance increased by approximately $600,000 in the first quarter year-on-year due to increased insurance costs across the portfolio and to a lesser extent, annual real estate tax increases. Interest expense decreased slightly in the first quarter this year, year-on-year primarily due to the capitalization of interest associated with the 1010 Pacific Street and 953 Dean Street development projects. With regard to our balance sheet, as David mentioned earlier, we have $25.3 million of unrestricted cash, $18.5 million of restricted cash. We are funding our development of the 1010 Pacific Street and Dean Street property acquisitions substantially with construction financing. We finance our portfolio on an asset-by-asset basis. Our debt is non-recourse subject to limited carve-outs standard and is not cross-collateralized. We have no debt maturities on any operating properties until 2027 with an average overall debt duration of 7.45 years. Today, we are announcing a dividend of $0.095 per share for the first quarter, the same amount as last quarter. The dividend will be paid on May 27 to shareholders of record on May 20. Let me now turn the call back to David for concluding remarks.

Thank you, Larry. We remain focused on efficiently operating our portfolio. We look for our current operating improvements to continue to accelerate through 2022 and beyond. We look forward to capitalizing on a myriad of growth opportunities, including the 1010 Pacific Street and 953 Dean Street developments and other possibilities that may present themselves. I would like now to open up the line for questions.

Certainly. The floor is now open for questions. Your first question is coming from Buck Horne from Raymond James. Your line is live.

Hey. Good afternoon, gentlemen. Appreciate the call. I guess, I'd like to start with just the recent news on the New York City rent control board and the panel's decision to raise the level of rent, approved rent increases for rent-regulated properties, just any color or thoughts on what that means for Flatbush or other properties in terms of how quickly you can start to implement a higher rate of rent increases on new and renewal leases?

We could do it as soon as they get finally approved. I don’t think it’s yet finally approved, but obviously, we're glad to see that finally they’re starting to raise a bit the level of renewal rates. So that was a nice surprise.

Any idea like what kind of the rate that they've preliminarily discussed or approved, what kind of NOI lift that might mean for the properties?

Yeah. It’s too early for us to speculate on that as I know, it’s 2% and a 4% increase for two-year leases.

But that's not necessarily, this is JJ. That doesn’t necessarily mean that was going to wash out to typically it starts off higher, then as it actually gets approved, which is in June. It usually is 2% and 4%, no, 4% and 8% for one year and a two-year. Usually, it comes down quite a bit. So we are not yet counting the eggs before they hatch. And also, just to clarify the timeline, the actual increases don't go into effect, I believe until October or November. Let me double-check which month, but it's not immediate; it only kicks in the renewals that happened in October of ’22.

But it was a good growth trend, 4% and 8%. We haven't seen that in ages. They’re talking about it as a good sign.

Okay. And also on the commercial bad debt reversal, which building was that involved with?

Tribeca House.

Tribeca, okay. Perfect. And my last one is, it looks like there were some transaction pursuit costs you guys wrote off in the quarter. Just wondering what that's related to?

Yeah. There was a transaction that didn't pan out. We decided not to move forward with some legal costs that were involved in the negotiations of that contract.

All right. Thank you, guys. That'll do it for me.

Thank you. Okay.

Thank you. That concludes our Q&A session. I will now hand the conference back to David Bistricer for closing remarks. Please go ahead.

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

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.