Good day, ladies and gentlemen, and welcome to the Clipper Realty Fourth Quarter 2022 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Larry Kreider. The floor is yours.

Hi. Good afternoon, and thank you for joining us for the Fourth 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 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 2022 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 16, 2023, 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. David?

Thank you, Larry. Good afternoon, and welcome to the fourth quarter 2022 earnings call for Clipper Realty. I will provide an update to our business performance, including recent highlights and milestones as well as our company's progress. I will then turn over the call to J.J., who will discuss property-level activity, including recent performance. Finally, Larry will speak about our quarterly financial performance. We will then take your questions. Our operating results continued their positive trends. Residential leasing activity continues to improve despite the recent headline those on inflation, interest rate increases and banking risks. Rental demand in our property has been very strong all year as New York City is largely reopened, people seek to relocate back to the city and employees increasingly returned to their offices. At the end of the fourth quarter, a seasonally slow leasing period, our properties were 99% leased and new leases at all our properties continues to exceed pre-pandemic levels. At the Tribeca House property, new leases in the fourth quarter exceeded $80 per square foot, nearly 20% better than the previous rents, continuing the trends we have seen all year, causing the average of all leases increased to a record $73 per foot from $63 per foot at the end of December '21. At the Flatbush Gardens property, new leases on units not yet at the legal limit averaged $38 per foot versus an overall lease rate of $25 at the end of September. With respect to interest rate increases, we believe we have buttressed by the relatively long duration of our debt on our operating properties, of which 94% is fixed at 3.72%, with an average duration of 6.61 years and is nonrecourse subject to limited standard carve-outs and is noncross-collateralized. With respect to inflation, we look to the short duration…

Thank you. I am pleased to report that the improved residential leasing performance and all our properties that we've experienced this year has continued into the fourth quarter. At the end of the fourth quarter, all our residential properties, occupancy and rent levels per square foot are exceeding pre-pandemic level and new lease rental rates in the fourth quarter exceeded previous rents by over 16% and renewal rental rates by over 9%. We're experiencing particularly strong rental demand at our Tribeca House property, while leased occupancy has averaged 98% over the last 12 months. We have steadily increased average rent per square foot to $73 per square foot from $63 over that same period. Over the last year, rents on new leases have risen to over $80 per square foot, representing an increase of 26% over previous rents and rents on renewals have increased 15% over previous rents. Further, we expect rent per square foot to continue to grow steadily through the next year as a result of turnover of our 1- and 2-year leases entered into last year in response to pandemic conditions. We also continue to make progress on new leases and retail properties at the Tribeca House property. We have entered into 4 new smaller leases during the year at substantially higher rates, renewed our garage lease, firmed up our gym lease and are nearing a deal to lease up the last remaining retail space vacated in the pandemic. At the Flatbush Gardens complex in Brooklyn, in the fourth quarter, we are focused on keeping high occupancy and keeping up with the maintenance activities. Since the beginning of the year, we have increased leased occupancy to nearly 99% from 92% at the beginning of the year, and new leases have averaged nearly $36 per square foot, approximately…

Thank you, J.J. For the fourth quarter, reported revenues increased by $2.2 million to a record $33 million from $30.8 million last year fourth quarter. On a more comparable basis, revenue from actual billings increased by $3.4 million as opposed to the $2.2 million to $34.2 million, excluding the bad debt expense, which is now deducted directly from revenue this year due to our adoption of the ASC 842 leasing accounting standards for 2022. NOI this quarter increased $700,000 to $17.1 million from $16.4 million last year fourth quarter. AFFO increased by $200,000 to $4.7 million this quarter from $4.5 million last year fourth quarter. The revenue increase was due to the higher residential rental rates as mentioned by J.J., higher occupancy at the Flatbush Gardens property, new commercial tenants at the Tribeca House property and increased escalation billings at the 141 Livingston Street property. Bad debt expense reduced revenue in the fourth quarter this year by $1.2 million, but actually reduced expense in the fourth quarter last year due to the large amount of ERAP payments received, as J.J. mentioned above for a net swing of $1.6 million. On the expense side, key year-over-year changes were as follows: Property operating expenses were $700,000 higher than last year, excluding the $400,000 charge for bad debt expense in last year's fourth quarter. This was due primarily to increased utility costs from higher rates and higher repairs and maintenance and supplies cost at the Flatbush Gardens from our increased focus there. Real estate taxes and insurance increased by approximately $600,000 in the fourth quarter year-on-year due to increased real estate taxes of $500,000 and insurance costs of $100,000. General and administrative costs increased by $600,000 in the fourth quarter year-on-year due to higher LTIP amortization costs from prior year awards, higher executive…

Thank you, Larry. We remain focused on efficiently operating our portfolio. We look for current operating improvements to continue to accelerate to the next quarter and into 2023. We look forward to capitalizing on a myriad of growth opportunities included 1010 Pacific and 953 Dean Street developments and other possibilities that may present themselves in the future. I would now like to open the line for questions.

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

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.