Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty 4Q 2019 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 Michael Frenz. Sir, the floor is yours.

Good afternoon and thank you for joining us for the Fourth Quarter 2019 Clipper Realty Inc. Earnings Conference Call. Participating with me in 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 2019 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 March 12, 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 annual report on 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, Michael. Good afternoon, and welcome to the Fourth Quarter 2019 Earnings Call of Clipper Realty. I'm pleased to provide an update on our business, including recent highlights and milestones. I will then turn the call over to J.J., who will discuss property level activity, including leasing performance and capital projects. Finally, Michael will speak about our quarterly financial performance. We will then take your questions. I want to congratulate the entire team for a very strong performance. We are announcing record quarterly and annual revenues, record annual income from operations, record quarterly annual NOI and record annual AFFO all significant achievements considering some of the recent industry headwinds. Our portfolio is 98% leased. Turning to some recent developments. We are extremely proud that our Clover House property has completed its stellar lease-up the building was 98% leased at the end of February. As a reminder, the growth is fully amortized 158 unit stream, market residential building brought online in August of last year. The attractiveness of the property its amenities, its location to one of the most desirable neighborhoods in all of New York City, and its proximity to Manhattan continues to drive resident demand. We are on track with the redevelopment of our recent 1010 Pacific Street acquisition which is located in Prospect Heights Brooklyn about one mile from the Atlantic Terminal and Barclays Center hub. As mentioned previously, we estimate that the project will close to $85 million in totality, take two years to complete and develop to 6.5% stabilized cap rate. J.J. will provide some further details on the project shortly. In our office portfolio, we are steadily approaching important lease rolls at 250 Livingston Street and 141 Livingston properties. A new lease with the city at 250 Livingston Street we expected to initially add…

Thank you. We continue to leverage our strong operating performance, driving ongoing cash flow improvements through efficient leasing, focused expense management and targeted capital investment. We are delighted to complete the lease-up of Clover House being 98% leased and accomplishing it during the generally slow full winter leasing season is a testament to our leasing team's efforts and inherent appeal of the fully renovated property and neighborhood. In-place rents are in the $70-plus per square foot range. We are well-positioned to leverage the strong occupancy and future rent discussions and look forward to Clover House's ongoing contribution to overall portfolio growth. At 1010 Pacific Street, we are moving ahead with development. The existing warehouse structure on-site is in the process of being demolished. We have filed plans to the new building and we are working through the associated regulatory processes. We expect to develop a nine-storey fully amenitized multifamily rental building including indoor parking with approximately 119,000 rentable square feet and 175 total residential units, 70% of which will be free market and 30% affordable. As mentioned previously, the property is eligible for a 35-year, 421(a) tax abatement due to the affordable component. We will continue to provide updates as we proceed and are excited to add this asset to our portfolio. Tribeca House continues to perform very well. We increased residential revenue by 6% in 2019 over 2018, driven by occupancy and rent per square foot gains during the year. The property is 99.8% leased at the end of February maintaining its exceptionally high occupancy trends through the winter. The results confirm yet again that Tribeca House is a go-to destination for young concession of families who want to live in downtown Manhattan, offering a luxury experience and more attractive price point compared to the surrounding neighborhood. Our confidence…

Thank you J.J. Our fourth quarter and full year results demonstrate the robust leasing trends and operational efficiencies highlighted by David and J.J. For the fourth quarter we achieved record revenues of $30.6 million, an increase of $2.7 million or 9.8% compared to the same period in 2018. We achieved record NOI of $16.9 million, a 9.4% increase compared to the same period in 2018 and AFFO of $5.3 million or $0.12 per share. For full year 2019, we achieved record revenues of $116.2 million, an increase of $6.2 million or 5.6% compared to 2018. We achieved record annual NOI of $62.8 million, a 4.7% increase compared to 2018 and record annual AFFO of $22 million or $0.50 per share, an 11.2% increase compared to 2018. Focusing on the fourth quarter, the year-over-year total revenue increase was primarily attributable to improvements at Flatbush Gardens and Tribeca House and a fully online Clover House. Flatbush and Tribeca residential revenues grew 4% and 7.9% year-on-year respectively, both properties were approximately 98% leased at the end of the year. Clover House generated $1.4 million of revenue during the quarter and as mentioned earlier the property was 98% leased at the end of February. On the expense side, key fourth quarter year-over-year changes were as follows: real estate taxes and insurance increased by approximately $1 million in the fourth quarter year-over-year due to property tax increases across the portfolio and general insurance industry cost increases. Cash, general and administrative expenses increased by $691,000 in the fourth quarter primarily due to bringing Clover House online and nonrecurring litigation-related expenses. Excluding these expenses cash G&A decreased by $188,000 year-over-year. Interest expense increased by $1.8 million in the fourth quarter due to the recognition of interest expense in connection with bringing Clover House online and higher interest costs resulting from recent refinancings of the 250 Livingston Street property. Turning to CapEx, we incurred $5.7 million of capital expenditures in the fourth quarter, a 56% decrease from recent quarters. The drop primarily resulted from the completion of the Clover House renovation. Lastly, today we are announcing a dividend $0.095 per share for the fourth quarter. The dividend will be paid on March 31 to shareholders of record on March 24. Let me now turn the call back over to David for concluding remarks.

Thank you, Michael. We are very pleased with our results for the fourth quarter and full year 2019. Our portfolio continues to perform well. We enthusiastically look forward to a myriad of growth opportunities including Clover House, the upcoming office lease rolls and 1010 Pacific Street redevelopment. We remain well positioned to execute on our strategic initiatives and drive value for our shareholders. With that, I would like to open up the line for questions.

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] And it looks like your first question is coming from Craig Kucera. Craig, your line is live.

Yes. Thanks. Hey, guys. So let's talk about your G&A expense, nice to see it trending down. Obviously, you had the litigation cost, but sort of on a normalized basis. Can you talk about your expectations for 2020? Are they going to be reasonably flat? Or how are you thinking about that?

Sure. I think it's a good question. As you know, Craig, over the last couple of years our cash G&A is sort of -- it's been between kind of $6 million to $6.5 million to $7 million. As we sit here today, I think, we will continue that trend for full year. In 2019, our cash G&A was roughly $7 million. So, again, I think, it's pretty flat. We're focused on it obviously and expect that to continue.

Okay, great. And as far as the litigation, kind of, are there next steps there? Or kind of how should we think about how that's going to play out going forward?

Are you talking about the 421-a litigation?

Yes. Yes.

Basically, the heavy lifting of that litigation is over. I mean, again, as we said -- I said in my remarks and we said this on all the previous calls, we were like 40-some-odd plaintiffs in that case. Half of them or more than half on don't live in the building anymore. Nobody else has joined the case. And our analysis of the cases and impacts the company, I would say, not material at all. I think the next thing that's going to happen is, the judge's opinion -- decision that was upheld recently is very, very poor and unclear as far as how it gets decided or calculated. That's going back now for some more motion practice on that and that's going to get flushed out, I guess, in the next several months.

Okay. I appreciate the color. I guess one more for me. Now that the Clover House has stabilized, do you anticipate being able to push rents pretty aggressively at that property as leases turn out over the next year or so?

I think, again, we need to thank the leasing team and the management team in an excellent job in bringing very quickly up to 97% occupancy. They did that, obviously, they didn't want to raise the rents to the max-max and it was like in the low to mid-70s. Now, as the leases roll, I think, we'll see some increases more closer to -- as we said in our comments, up to 70s low-80s.

Okay, great. Thanks guys.

Thanks.

[Operator Instructions] Okay. We appear to have no further questions in queue at the moment.

Great. I would like to thank everybody for joining us today and we look forward to speaking to you at the end of the first quarter.

Thank you for coming. And talk to you next time. Bye-bye.

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.