Bistricer’s Clipper Realty debuts on NYSE

REIT eyes $68M from sale of shares

TRD New York /
Feb.February 10, 2017 04:00 PM

Clockwise from left: Flatbush Gardens, 50 Murray St. and 53 Park Pl., 141 Livingston, 1955 First Ave. and David Bistricer

David Bistricer’s Clipper Realty debuted on the New York Stock Exchange on Friday, looking to raise $68.1 million through the sale of its common stock.

The Brooklyn-based real estate investment trust — which controls more than 3,000 residential units in Manhattan and Brooklyn — priced its initial public offering at $13.50 a share. The company saw its stock price rise to $15 a share just after the market opened, before settling in around its target price.

Clipper — which trades under the ticker CLPR — offered 5.6 million shares of the company’s stock and said in a regulatory filing that net proceeds from the IPO could top $78.8 million if underwriters exercise their option to buy 855,000 additional shares of common stock.

David Bistricer, whose father Moric started Clipper Equity in the 1950s, laid the groundwork for the IPO in 2015, as The Real Deal first reported. Clipper Realty will focus on “strategic, value-add” investments, he said at the time. Clipper raised $130.2 million in a private offering that closed in August of that year, according to its prospectus.

Reached on Friday, Bistricer declined to comment.

According to its prospectus, Clipper’s portfolio is comprised of 3,539 residential units, 474,193 square feet of commercial space and 102,675 square feet of retail space.

Properties include Flatbush Gardens, a 59-building rent-controlled apartment complex in Brooklyn, as well as two neighboring residential and retail properties at 50 Murray Street and 53 Park Place in Tribeca; two mixed-use buildings at 141 and 150 Livingston Street in Downtown Brooklyn; and the Aspen, a 232-unit rental at 1955 First Avenue that Clipper bought for $103 million in January 2016.

Excluding the Aspen, the properties generated rental revenue of $80 million in 2016, according to Clipper’s prospectus.

In addition to acquisitions, the company said in regulatory documents that it intends to grow its income by upgrading and renovating current holdings. Clipper set aside $31 million from the 2015 private offering for this purpose, hoping to drive “substantial rent growth.”

For example, Clipper said it hopes to generate an additional $7.1 million in revenue a year at its Tribeca properties after it improves the properties and raises rents. Currently, rents at 50 Murray and 53 Park Place average $68 per square foot — below the neighborhood average of $80 per square foot, according to regulatory filings. At the Aspen, Clipper plans to raise rents from $38 per square foot to $50 per square foot over several years.

Sam Levinson, co-chairman and head of the company’s investment committee, will have 20 percent of the voting power and shares worth $118.5 million; Bistricer, who is Clipper’s co-chairman and CEO, will have just 11.2 percent of the voting power and own shares worth $67.9 million, the filings show. Jacob Schwimmer, chief property management officer, will hold 5.7 percent of the voting power and shares worth $34.2 million; and Moric Bistricer will have 10.5 percent voting power and shares worth $61.1 million. All four executives agreed to purchase 250,000 shares of Clipper’s common stock at the IPO price, the filing stated.

The REIT has three independent directors: Robert Ivanhoe, chair of the global real estate practice at Greenberg Traurig and co-chair of the firm’s REIT group; Howard Lorber, chair of Douglas Elliman and CEO of its publicly-traded parent company, Vector Group, and Robert Verrone, founder of real estate finance advisory Iron Hound Management and a former co-head of Wachovia Bank’s real estate group.

Outside of the properties folded into the REIT, Bistricer and Clipper Equity has partnered on several notable projects with the Chetrit Group, which is not involved in Clipper Realty.

These projects include the residential conversion of the former Cabrini Medical Center in Gramercy Park. The partners also paid $1.1 billion for the former Sony headquarters at 550 Madison Avenue with the intention of converting it to condos. Instead, they sold the building for $1.4 billion in April 2016 to Olayan America, a division of Saudi conglomerate Olayan Group.

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