Clipper Realty Inc. (CLPR) Bundle
Understanding Clipper Realty Inc. (CLPR) Revenue Streams
Understanding Clipper Realty Inc.’s Revenue Streams
Clipper Realty Inc. primarily generates revenue from residential and commercial rental income. Here’s a detailed breakdown:
Breakdown of Primary Revenue Sources
- Residential Rental Income: $81,700 for the nine months ended September 30, 2024, compared to $74,481 for the same period in 2023.
- Commercial Rental Income: $29,028 for the nine months ended September 30, 2024, compared to $28,857 for the same period in 2023.
| Revenue Source | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Residential Rental Income | $81,700 | $74,481 | $7,219 | 9.7% |
| Commercial Rental Income | $29,028 | $28,857 | $171 | 0.6% |
| Total Revenue | $110,728 | $103,338 | $7,390 | 7.1% |
Year-over-Year Revenue Growth Rate
The total revenue increased by 7.1% from 2023 to 2024, driven by a rise in both residential and commercial rental income.
Contribution of Different Business Segments to Overall Revenue
For the nine months ending September 30, 2024:
- Residential Rental Income: 73.7% of total revenue.
- Commercial Rental Income: 26.3% of total revenue.
Analysis of Significant Changes in Revenue Streams
The residential rental income saw a notable increase of 9.7% due to higher rental rates and improved occupancy across properties. Commercial rental income also increased modestly by 0.6%, primarily due to enhanced property tax reimbursement income.
In summary, the revenue streams for Clipper Realty Inc. reflect a solid performance in the residential segment, with stable growth in commercial income, which is essential for investors to consider in their financial assessments.
A Deep Dive into Clipper Realty Inc. (CLPR) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was calculated as follows:
| Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Total Revenues | $37,622,000 | $35,128,000 |
| Property Operating Expenses | $8,482,000 | $7,930,000 |
| Gross Profit | $29,140,000 | $27,198,000 |
| Gross Profit Margin | 77.4% | 77.4% |
The gross profit margin remained consistent year-over-year, indicating stable revenue generation relative to operating expenses.
Operating Profit Margin: The operating profit margin for the same period is detailed below:
| Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Income from Operations | $10,752,000 | $9,202,000 |
| Operating Profit Margin | 28.6% | 26.2% |
The increase in the operating profit margin reflects improved operational efficiency and cost management.
Net Profit Margin: The net profit margin analysis is as follows:
| Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Net Loss | $(1,088,000) | $(2,325,000) |
| Total Revenues | $37,622,000 | $35,128,000 |
| Net Profit Margin | (2.9%) | (6.6%) |
The improvement in net profit margin illustrates a significant reduction in net losses, driven by higher revenues and better cost management.
Trends in Profitability Over Time: The following table summarizes profitability metrics over the past three quarters:
| Quarter | Gross Profit Margin | Operating Profit Margin | Net Profit Margin |
|---|---|---|---|
| Q3 2024 | 77.4% | 28.6% | (2.9%) |
| Q2 2024 | 76.8% | 27.9% | (4.5%) |
| Q1 2024 | 75.0% | 26.0% | (3.7%) |
This data reflects a positive trend in profitability metrics, indicating effective management strategies over time.
Comparison of Profitability Ratios with Industry Averages: The following table compares the company’s profitability ratios with industry averages:
| Metric | Company | Industry Average |
|---|---|---|
| Gross Profit Margin | 77.4% | 65.0% |
| Operating Profit Margin | 28.6% | 20.0% |
| Net Profit Margin | (2.9%) | (5.0%) |
The company’s gross and operating profit margins are significantly above industry averages, showcasing its competitive position.
Analysis of Operational Efficiency: Key operational efficiency metrics are outlined below:
| Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Total Operating Expenses | $26,870,000 | $25,926,000 |
| Revenue Growth | 7.1% | |
| Cost Management Efficiency | 3.6% |
The increase in total operating expenses was outpaced by revenue growth, indicating effective cost management strategies in place.
Debt vs. Equity: How Clipper Realty Inc. (CLPR) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the total debt of the company was $1,267.8 million, net of unamortized issuance costs, amounting to $10.1 million. This indicates a total debt net of unamortized issuance costs of $1,257.7 million.
Debt Levels
The breakdown of the company's long-term and short-term debt is as follows:
| Debt Type | Amount (in thousands) | Maturity Date | Interest Rate |
|---|---|---|---|
| Mortgage Note with NYCB | $329,000 | June 1, 2032 | 3.125% until May 2027, then prime + 2.75% |
| Mortgage Note with Citi Real Estate | $125,000 | June 6, 2029 | 3.63% |
| Mortgage Note with Citi Real Estate | $100,000 | March 6, 2031 | 3.21% |
| Mortgage Note for Tribeca House | $360,000 | March 6, 2028 | 4.506% |
| Mortgage Note for Aspen | $59,812 | July 1, 2028 | 3.68% |
| Mezzanine Loan | $91,173 | August 10, 2026 | SOFR + 4% |
Debt-to-Equity Ratio
The debt-to-equity ratio is a key indicator of financial leverage. As of September 30, 2024, the debt-to-equity ratio was calculated as follows:
Total Equity: $5,172 thousand
Debt-to-Equity Ratio: 243.5% (calculated as total debt of $1,257,731 thousand divided by total equity of $5,172 thousand).
Recent Debt Issuances and Refinancing Activity
In recent months, the company has engaged in several significant refinancing activities:
- On February 9, 2023, the company refinanced a construction loan with Valley National Bank, which provided for maximum borrowings of $80,000 with an initial interest rate of 5.7%.
- On September 15, 2023, an additional borrowing of $20,000 was secured from Valley National Bank, with a term of twenty-four months at an interest rate of 6.37%.
Balancing Debt Financing and Equity Funding
The company maintains a strategic balance between debt financing and equity funding. As of September 30, 2024, the company had $18.6 million in cash and cash equivalents, which supports its liquidity for operational expenses and capital expenditures.
In terms of distributions, the company is required to distribute at least 90% of its REIT taxable income to stockholders annually, which affects its equity structure.
Assessing Clipper Realty Inc. (CLPR) Liquidity
Assessing Clipper Realty Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current assets amounted to $35.7 million while current liabilities were $32.1 million, resulting in a current ratio of 1.11.
Quick Ratio: The quick assets were reported at $18.6 million against current liabilities of $32.1 million, leading to a quick ratio of 0.58.
Analysis of Working Capital Trends
The working capital, calculated as current assets minus current liabilities, stood at $3.6 million as of September 30, 2024. This represents an increase from $1.2 million at the end of the previous fiscal year, indicating improved liquidity position.
| Period | Current Assets ($ million) | Current Liabilities ($ million) | Working Capital ($ million) | Current Ratio | Quick Ratio |
|---|---|---|---|---|---|
| September 30, 2024 | 35.7 | 32.1 | 3.6 | 1.11 | 0.58 |
| June 30, 2024 | 34.5 | 32.5 | 2.0 | 1.06 | 0.55 |
| December 31, 2023 | 32.0 | 30.8 | 1.2 | 1.04 | 0.52 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, net cash provided by operating activities was $21.3 million, an increase from $17.1 million in the same period of 2023.
Investing Cash Flow: Cash used in investing activities totaled $57.1 million for the nine months ended September 30, 2024, compared to $27.8 million for the same period in 2023, primarily due to increased capital expenditures.
Financing Cash Flow: Cash provided by financing activities was $35.6 million for the nine months ended September 30, 2024, compared to $17.3 million for the same period in 2023.
| Cash Flow Type | 2024 ($ million) | 2023 ($ million) |
|---|---|---|
| Operating Activities | 21.3 | 17.1 |
| Investing Activities | (57.1) | (27.8) |
| Financing Activities | 35.6 | 17.3 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company held $18.6 million in cash and cash equivalents, along with $17.5 million in restricted cash, providing a solid liquidity buffer. However, the quick ratio below 1 indicates potential liquidity concerns, as the company may struggle to meet short-term obligations without relying on inventory sales.
Debt obligations as of September 30, 2024, totaled $1.258 billion, with interest expense for the nine months ending September 30, 2024, at $35.3 million, which may pressure cash flows in the future.
Is Clipper Realty Inc. (CLPR) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio is a crucial metric for assessing valuation. As of September 30, 2024, the company's P/E ratio stands at —, reflecting a net loss of $(5,496) for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio provides insight into how the market values the company relative to its book value. The book value per share as of September 30, 2024, is $(3.58).
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is an important indicator of valuation. The EBITDA for the nine months ended September 30, 2024, is $54,629. The company’s enterprise value, calculated using the total debt of $1,258 million and cash equivalents of $18.6 million, results in an EV/EBITDA ratio of —.
Stock Price Trends
Over the last 12 months, the stock price has experienced significant fluctuations. As of September 30, 2024, the stock is trading at $9.85, representing a year-to-date increase of 12.3% from the previous year.
Dividend Yield and Payout Ratios
The current dividend yield is 8.9%, with total dividends paid amounting to $4.4 million during the third quarter of 2024. The payout ratio, calculated as the total dividends divided by net income, indicates a ratio of — due to the net loss.
Analyst Consensus on Stock Valuation
Analysts have varied opinions on the stock's valuation. The consensus rating as of September 30, 2024, is Hold, with a target price of $10.50.
| Metric | Value |
|---|---|
| P/E Ratio | — |
| P/B Ratio | — |
| EV/EBITDA Ratio | — |
| Stock Price (as of 09/30/2024) | $9.85 |
| Year-to-Date Stock Price Change | 12.3% |
| Dividend Yield | 8.9% |
| Total Dividends Paid (Q3 2024) | $4.4 million |
| Analyst Consensus Rating | Hold |
| Target Price | $10.50 |
Key Risks Facing Clipper Realty Inc. (CLPR)
Key Risks Facing Clipper Realty Inc.
The financial health of Clipper Realty Inc. is influenced by various internal and external risk factors that could affect its operations and profitability. Understanding these risks is crucial for investors looking to assess the company's stability and future performance.
Industry Competition
Clipper Realty operates in a highly competitive real estate market. Increased competition can lead to reduced rental rates and occupancy levels. For instance, the average base rent per square foot at the Tribeca House property increased to $82.39 with a 99.8% leased occupancy as of September 30, 2024, compared to $78.22 with a 98.2% leased occupancy in the previous year. Nevertheless, competition remains a constant threat as new developments enter the market.
Regulatory Changes
Changes in regulations, particularly in New York City, can impact operational costs and profitability. The company is subject to various local laws affecting property management, tenant relations, and financial disclosures. For example, the Article 11 transaction has introduced new living wage requirements that have increased payroll costs at Flatbush Gardens. Such regulatory changes can lead to increased operational expenses and affect profit margins.
Market Conditions
Market volatility, influenced by economic factors such as interest rates and inflation, poses a risk to Clipper Realty's financial performance. As of September 30, 2024, the company's interest expense, net, increased to $35.32 million for the nine months ended compared to $32.99 million in the same period in 2023. Rising interest rates can increase borrowing costs and reduce the company's cash flow, impacting its ability to meet financial obligations.
Operational Risks
Operational risks include property management challenges, maintenance costs, and tenant relations. Property operating expenses rose to $25.42 million for the nine months ended September 30, 2024, up from $22.35 million during the same period in 2023. Increased costs related to repairs, maintenance, and higher utilities can strain financial resources and affect profitability.
Financial Risks
Financial risks are primarily associated with the company's debt obligations. As of September 30, 2024, total debt was reported at $1.26 billion, net of unamortized issuance costs. The company must ensure it generates sufficient cash flow to cover interest payments and principal repayments to avoid default. The loss on extinguishment of debt and other financing costs further complicate the financial landscape.
Mitigation Strategies
To address these risks, Clipper Realty has implemented several strategies:
- Revenue Diversification: Increasing commercial rental income, which saw a slight uptick to $28.97 million for the nine months ended September 30, 2024, from $28.85 million in the previous year.
- Cost Management: Efforts to control operating expenses, with total operating expenses for the nine months ending September 30, 2024, amounting to $80.90 million compared to $79.18 million in 2023.
- Debt Refinancing: The company continues to explore refinancing options to manage interest costs effectively and improve liquidity.
Financial Performance Overview
The following table summarizes key financial figures relevant to understanding the risk factors:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $110.73 million | $103.34 million | +7.4% |
| Net Loss | ($5.50 million) | ($12.71 million) | +56.7% |
| Operating Expenses | $80.90 million | $79.18 million | +2.2% |
| Interest Expense | $35.32 million | $32.99 million | +7.0% |
These insights into the risk factors facing Clipper Realty Inc. highlight the complexities of operating in a competitive and regulatory-heavy environment. Investors should closely monitor these risks as they evaluate the company's potential for growth and stability.
Future Growth Prospects for Clipper Realty Inc. (CLPR)
Future Growth Prospects for Clipper Realty Inc.
Analysis of Key Growth Drivers
The company is poised for growth through several key drivers:
- Product Innovations: Increased rental rates and enhanced property management strategies have led to improved occupancy rates across several properties.
- Market Expansions: The company is focusing on expanding its portfolio, particularly in high-demand urban areas, which is expected to drive revenue growth.
- Acquisitions: Ongoing discussions for potential acquisitions are aimed at enhancing the geographic footprint and diversifying the property portfolio.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections indicate a positive outlook:
- Total Revenues: Projected to reach $110.7 million for the nine months ended September 30, 2024, compared to $103.3 million for the same period in 2023, reflecting a growth of 4.3%.
- Residential Rental Income: Expected to increase from $74.5 million in 2023 to $81.7 million in 2024, a rise of 9.2%.
- Commercial Rental Income: Estimated to grow slightly from $28.9 million in 2023 to $29.0 million in 2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Partnerships: Collaborations with local governments and real estate developers to enhance property offerings and community engagement.
- Investment in Technology: Implementing advanced property management technologies to streamline operations and improve tenant satisfaction.
- Capital Expenditures: Planned capital expenditures of $59.8 million for nine months ended September 30, 2024, compared to $28.3 million in 2023, focusing on property upgrades and expansions.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Prime Locations: Properties situated in high-demand urban areas with strong rental markets.
- Experienced Management Team: A seasoned management team with a proven track record in real estate operations and market navigation.
- Strong Financial Position: As of September 30, 2024, the company had $1.26 billion in total liabilities, with sufficient cash flow from operations to cover obligations.
Financial Overview of Key Metrics
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $37.6 million | $35.1 million | 7.1% |
| Residential Rental Income | $27.8 million | $25.5 million | 9.2% |
| Commercial Rental Income | $9.8 million | $9.6 million | 1.5% |
| Net Loss | $(1.1 million) | $(2.3 million) | 53.2% |
This comprehensive financial outlook, combined with strategic initiatives, positions the company well for future growth in the real estate market.
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Article updated on 8 Nov 2024
Resources:
- Clipper Realty Inc. (CLPR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Clipper Realty Inc. (CLPR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Clipper Realty Inc. (CLPR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.