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 www.sec.gov and 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 COVID-19 pandemic. I will then turn the call over to JJ, 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 was 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. And we expect our properties in the New York City Market to remain viable [ph] to a broad range of tenants and our operations to return to a normal state overtime. 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…

Thank you. I begin by asking - again thanking our colleagues at our properties and corporate office for their tireless efforts throughout this challenging period. Their unwavering commitment to our tenant 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…

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 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 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 are our highest priority. We continue to take the necessary steps to navigate through the current challenges buttressed by 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 as well [ph]. 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 stay 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. [Operator Instructions] 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, Greg, 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 90%. But since the end of the third quarter, between 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 then in here in the fourth quarter, or has there been any rent concessions to get those folks back?

JJ, do you want to talk to that?

Sure. So the rents have pretty much stayed - dropped below what they were prior, simply because we're trying to recapture occupancies. So that we're well positioned, so when the market does come back to start pushing rents again. So for now, we're doing the best we can and making sure that we don't lose any opportunities to rent apartments. So there's a slight down 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 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 numbers, the answer is a significant amount of them are moving out of the cities. And some of them depending on the property are moving to, let's say 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. And 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.

[Operator Instructions] Okay, your next question is coming from Buck Horne. Buck your lines life?

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 JJ said, we're still in the sort of 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 third quarter, we took a proximate $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 were pleasantly surprised and continue to see collections hold up overall.

[Operator Instructions] 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.