Good afternoon and thank you for joining us for the Fourth Quarter 2023 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 considered forward-looking statements, and actual results may vary significantly from those indicated by such forward-looking statements. These statements are subject to various risks and uncertainties, including those noted in the company's 2023 annual report on Form 10-K, which can be accessed at www.sec.gov and on our website. As a reminder, the forward-looking statements are valid only as of the date of this call, March 14, 2024, and the company has no obligation to update them. During this call, management may discuss certain non-GAAP financial measures, such as adjusted funds from operations, adjusted earnings before interest, taxes, depreciation and amortization, and net operating income. Please refer to our press release and supplemental financial information in Form 10-K posted today for a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures. Now, I will turn the call over to our Co-Chairman and CEO, David Bistricer.

Thank you, Larry. Good afternoon and welcome to the fourth quarter 2023 earnings call for Clipper Realty. I will provide a summary of some of our business performance and some existing new developments, after which JJ will discuss property-level activity, including leasing performance and Larry will speak to our quarterly financial performance. We will then take your questions. I'm pleased to report that we have reported record operating income and AFFO, continuing the positive trends from previous quarters. Rental demand continues to be strong at all our properties. In the fourth quarter, Livingston has exceeded the prior rents by 6% across the entire market-based portfolio and our properties were 98% leased. As for Tribeca House property in Manhattan and the Clover House property in Brooklyn, new leases were $88 per square foot and overall rent levels remained at record levels, $78 at Tribeca House, $81 at Clover House, 40% better than the $63 per foot at the end of December 2021. At Flatbush Gardens, since July, as previously announced, we are operating under a 40-year agreement according to Article 11 of the Private Housing Finance Law in New York City Housing Preservation Department. Under this agreement, known as Article 11, the elimination of real estate taxes and enhanced rental recoveries for assisted tenants should allow us to profitably provide for our communities for property improvement, tenant assistance, and higher wages. Of course, we are at the early stages and report our progress as we move forward. Operationally, we are also very pleased with our new ground-up development project of Pacific House at 1010 Pacific in Brooklyn, which came online last quarter on budget and is 100% leased and on target to yield a 7% cap rate. The property is located in Prospect Heights, Brooklyn, about one mile from the Atlantic Terminal Barclays Center hub. The property has 175 units, 70% free market and 30% affordable, and this is tax-abated for 35 years. At the nearby 953 Dean Street ground-up development, which is underway, we are completing the superstructure as scheduled, expected to complete the construction on time for 2025 leasing season, utilizing the $123 million construction loan we closed on last quarter. We purchased the land in 2021 and 2022, of which to build a nine-storey fully-amenitized residential building with 163,000 square feet of rentable square feet, 240 units, 70% free market, 30% affordable, 8,500 commercial rental square feet, and again, this is also tax-abated for 35 years. As the continued high interest rate environment, we believe the higher rates make for high demand for our rental product versus the purchase option and we are buttressed by the relatively long duration of debt at our operating profits. Our debt is 93% fixed at an average rate of 3.8% and average duration of 5.5 years, non-recourse, subject to limited standard carve-outs and is not cross-collateralized by any one of the properties. We finance our portfolio on an asset-by-asset basis. With respect to inflation, we look to short duration and high demand for residential leases to allow us to cover increased operating expenses. With regard to our fourth quarter results, we are reporting quarterly revenue at $34.9 million, record NOI of $20 million, and record AFFO of $6.3 million as a result of the strong leasing and cost reduction I just mentioned. These results represent significant improvements over the fourth quarter last year and as JJ and Larry will further detail. I will now turn the call over to JJ, who will provide an update on operations.

Thank you. I am pleased to report that our residential leasing performance at all our properties continues to improve. At the end of the fourth quarter, all our residential properties had very high occupancy averaging 98% and rents are continuing at record levels, while still recording increases over previous levels. Overall, new lease and renewal rental rates in the fourth quarter exceeded previous rents by over 6% at our free market properties. We expect leasing to remain very strong in the foreseeable future as demand remains high and overall rental housing supply remains constrained in the absence of significant new developments as widely publicized. At Tribeca House and Clover House, we have maintained leased occupancy between 96% to 99% and increased average rent per square foot to $78 from $71 over the last 12 months and $63 near the end of the pandemic. Our new development property, Pacific House, is almost fully stabilized. The 70% free market and 30% affordable property came online at the beginning of the second quarter and was 100% leased at the end of this quarter. We expect the property to achieve a cap rate over 7% in 2024 in line with original underwriting. At the Flatbush Gardens property, we are pleased to be operating under the new Article 11 agreement made with the Housing Preservation Department of New York City that was completed on June 29, 2023. We received the full abatement of real estate taxes beginning July 1, have begun completing the capital projects we committed, have begun placing formerly owned residents and have begun obtaining the enhanced reimbursement under Section 610 of the Private Housing Finance Law for tenants receiving assistance. The benefits we receive will allow us to profitably improve the property. We are also getting increases from non-assisted tenants where increases have been permitted on the rent guideline board for the last couple of years at the 3% level per annum. As a result, overall average rents for the property are increasing, rising to $26.69 per square foot at the end of the quarter versus $25.97 at the end of last year. Operationally, our other residential properties at 10 West 65th Street, Aspen, and 250 Livingston Street continue to perform well. Average lease occupancy for these properties has been above 96% and average incremental rates have increased 11% from a year ago. Rent collections across our portfolio remain as expected at seasonally high levels. The overall collection rate in the fourth quarter was over 95% despite the lingering challenges of the pandemic. Looking ahead, we remain focused on optimizing occupancy, pricing, and expenses across the business, expeditiously completing our development projects and fully implementing the Article 11 transaction to best position ourselves for growth. I will now turn the call over to Larry, who will discuss our financial results.

Thank you, JJ. For the fourth quarter, revenues reached a record $3.9 million, up from $33 million in the same quarter last year, reflecting an increase of $1.9 million. Excluding the impact of Pacific House, which became operational in the second quarter, revenues increased by $0.7 million. This quarter, NOI was $20 million, an increase of $2.8 million from last year, or $2 million when excluding the impact of Pacific House. AFFO for the year was $6.3 million, up by $1.6 million compared to last year, or $1.9 million when excluding Pacific House, which has incurred full interest expenses since its launch but is still in the process of initial lease-up. For the fourth quarter, residential revenue increased to $25.1 million by $2.1 million, or $1 million when excluding the Pacific House impact. This 4% increase was mainly driven by higher residential rental rates across all properties due to strong leasing activity. Bad debt expense remained largely unchanged from last year, indicating stable collections. A decline of $300,000 in commercial rental income was attributed to a few leases at the Aspen property that are currently being replaced. On the expenses side, property operating expenses were flat year-over-year, excluding the impact of Pacific House, mainly due to lower utility costs, which were largely balanced by higher repair, maintenance, and payroll costs at the Flatbush Gardens property needed for essential repairs and to meet wage requirements under the Article 11 transaction. Real estate taxes and insurance decreased by about $1.3 million year-over-year in the fourth quarter, also excluding the impact of Pacific House, including a $1.8 million reduction from the elimination of real estate taxes at Flatbush Gardens, partially offset by $200,000 for routine increases in real estate taxes at other properties and $300,000 for rising insurance costs. General and administrative costs decreased by $300,000 year-over-year in the fourth quarter, primarily due to lower audit and compensation-related expenses. Interest expense rose by $300,000 year-over-year in the fourth quarter, excluding the impact of Pacific House, as a result of converting the debt at the 10 West 65th property to a variable rate according to its terms and removing capitalized interest for Pacific House. Looking at our balance sheet, we hold $22.2 million in unrestricted cash and $14.1 million in restricted cash. In the fourth quarter, there were no new debt activities apart from draws from the construction loan that was closed last quarter for our Dean Street property development. We finance our portfolio on a property-by-property basis, and our operating debt is non-recourse with limited standard carve-outs and is not cross-collateralized. The average duration of our operating properties' debt is 5.5 years, and 93% of our debt is fixed rate at an average of 3.87%. Today, we are declaring a dividend of $0.095 per share for the fourth quarter, consistent with the previous quarter. The dividend will be paid on April 4, 2024, to shareholders of record on March 27, 2024. I will now hand the call back to David for final remarks.

Thank you, Larry. We remain focused on efficiently operating our portfolio. We look for our current operating improvements to continue through 2024 into 2025. We look forward to capitalizing on a myriad of growth opportunities, including optimizing the Flatbush Gardens Article 11 transaction, the Pacific House, 953 Dean Street developments, and capitalizing on other possibilities that may present themselves. We look forward to the transition of the 250 Livingston tenant, and the VCAS lease, which is coming up at the end of 2025. Thank you. We look forward to seeing you in the next quarter.

Thank you. The floor is now open for questions. The first question comes from Buck Horne with Raymond James. Please proceed.

Good afternoon everyone. I wanted to start by discussing 250 Livingston and the current situation with the lease and the City's intention to vacate. Could you explain the next steps regarding either finding a new tenant for the building or what alternatives you have if re-leasing doesn't seem feasible? Additionally, with a $125 million mortgage on the property, have you considered the possibility of just returning the keys?

We believe that discussion is premature. The city, through VCAS, organizes all the leases and is exploring the market for around 300 thousand square feet of new building occupation by one of the affiliated agencies. We have been informed that the building at 250 and our other building at 141 are strong candidates for this. There’s no guarantee that we will secure that opportunity, but we are diligently working to attract that tenant to our building, which would improve our current situation. We are ready to renovate the building if necessary to accommodate a new tenant. We have maintained a strong relationship with VCAS over the years, and given the cost basis we have in the building, we believe we are well-positioned to compete aggressively in the marketplace for the rent that the tenant is seeking. This is just one option, and it is our primary focus at the moment.

Okay, appreciate that. Do you have any idea realistically what the cost to put in the tenant improvements or additional CapEx in the 250 Livingston, any range investment on what that would cost to get that ready for a new tenant?

We’re not quite sure yet because we haven’t delved deeply into this discussion. Typically, the approach is that any investment we make in the building would be balanced by the expected revenue, as we are earning $50 a foot for that particular tenancy. While this isn't a high rent in the market, it is reasonable given the building's condition and the tenant. Any capital we invest in the property will always be evaluated based on the return on equity to match our lease with our investment. Our goal is to invest in the building in order to achieve a fair return. This will involve a long-term lease with an accredited tenant, as all VCAS leases are with tenants of good credit. This will need to align with both the creditworthiness and the investment amount. Generally, most commercial tenants tend to request a lot of upscale improvements, but this situation seems quite manageable from the perspective of what the agencies are looking for. We will provide more details when we have them, and we’ll report back as things progress.

Got it. For now, any income and revenue from the building goes into an escrow account. Is that how this works until the requirements are satisfied before you can start booking revenue from the building again?

The revenue is the revenue. Nothing can stop the revenue. So that at least the revenues will be reported by the company and it's taxable by the company, whatever tax it is. It's our revenue. Whether there's going to be an escrow account, yes, that has not been determined yet.

Got it. My last question is just a broader perspective on where shares are trading compared to our estimates of the company's net asset value. Is there any consideration or long-term thinking about whether it would be wise to explore a potential property sale to either reduce debt on the balance sheet or possibly use some of the proceeds for stock repurchases?

We haven't yet discussed that yet with the property. The value of the stock, the price of the stock has been where it is for quite some time. Obviously, we cannot think indicative where the overall market is. That discussion has not yet been considered yet that you're referencing.

Got it. All right guys. Thanks.

Thank you.

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.