price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.

Mr. Rasmussen and other executives added that identifying suitable areas for wind turbines and obtaining permits required for construction take “far too long.” Challenges are based on worries that the vast arrays of turbines will interfere with fishing, obstruct naval exercises and blight views from summer houses.

To Kadri Simson, Europe’s commissioner for energy, renewable energy projects should be treated as an “overriding public interest,” and Europe should consider changing laws to facilitate them.

“We cannot talk about a renewables revolution if getting a permit for a wind farm takes seven years,” Ms. Simson said.

Still, environmental regulations and other rules relating to large infrastructure installations are usually the province of countries rather than European Union officials in Brussels.

And steadfast opposition from communities and industries invested in fossil fuels make it hard for political leaders to fast-track energy transition policies.

In Upper Silesia, Poland’s coal basin, bright yellow buses display signs that boast they run on 100 percent electric, courtesy of a grant from the European Union. But along the road, large billboards mounted before the invasion of Ukraine by state-owned utilities — erroneously — blame Brussels for 60 percent of the rise in energy prices.

Down in the Wujek coal mine, veterans worry if their jobs will last long enough for them to log the 25 years needed to retire with a lifelong pension. Closing mines not only threatens to devastate the economy, several miners said, but also a way of life built on generations of coal mining.

“Pushing through the climate policy forcefully may lead to a drastic decrease in the standard of living here,” said Mr. Kolorz at Solidarity’s headquarters in Katowice. “And when people do not have something to put on the plate, they can turn to extreme populism.”

Climate pressures are pushing at least some governments to consider steps they might not have before.

German officials have determined that it is too costly to keep the country’s last three remaining nuclear power generators online past the end of the year. But the quest for energy with lower emissions is leading to a revival of nuclear energy elsewhere.

Britain and France say they plan to invest in smaller nuclear reactors that can be produced in larger numbers to bring down costs.

Britain might even build a series of small nuclear fusion reactors, a promising but still unproven technology. Ian Chapman, chief executive of the U.K. Atomic Energy Authority, said every route to clean energy must be tried if there is to be any hope of reaching net zero emissions in three decades, the deadline for avoiding catastrophic climate change. “We’ve got to do everything we possibly can,” he said.

In the short term, much of what the European Union is proposing involves switching the source of fossil fuels, and, in particular, natural gas, from Russia to other suppliers like the United States, Qatar and Azerbaijan, and filling up storage facilities as a buffer. The risk is that Europe’s actions will further raise prices, which are already about five times higher than a year ago, in a market where supplies are short in part because companies are wary of investing in a fuel that the world ultimately wants to phase out.

Over the longer term, Europe and Britain seem likely to accelerate their world-leading rollout in renewable energy and other efforts to cut emissions despite the enormous costs and intense disruptions.

“The E.U. will almost certainly throw hundreds of billions of euros at this,” said Henning Gloystein, a director for energy and climate at Eurasia Group, a political risk firm. “Once the trains have left the station, they can’t be reversed.”

Melissa Eddy contributed reporting.

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How Roman Abramovich Used Shell Companies and Wall Street Ties to Invest in the U.S.

In July 2012, a shell company registered in the British Virgin Islands wired $20 million to an investment vehicle in the Cayman Islands that was controlled by a large American hedge fund firm.

The wire transfer was the culmination of months of work by a small army of handlers and enablers in the United States, Europe and the Caribbean. It was a stealth operation intended, at least in part, to mask the source of the funds: Roman Abramovich.

For two decades, the Russian oligarch has relied on this circuitous investment strategy — deploying a string of shell companies, routing money through a small Austrian bank and tapping the connections of leading Wall Street firms — to quietly place billions of dollars with prominent U.S. hedge funds and private equity firms, according to people with knowledge of the transactions.

The key was that every lawyer, corporate director, hedge fund manager and investment adviser involved in the process could honestly say he or she wasn’t working directly for Mr. Abramovich. In some cases, participants weren’t even aware of whose money they were helping to manage.

asked Congress for more resources as it helps to oversee the Biden administration’s sanctions program along with a new Justice Department kleptocracy task force. And on Capitol Hill, lawmakers are pushing a bill, known as the Enablers Act, that would require investment advisers to identify and more carefully vet their customers.

Mr. Abramovich has an estimated fortune of $13 billion, derived in large part from his well-timed purchase of an oil company owned by the Russian government that he sold back to the state at a massive profit. This month, European and Canadian authorities imposed sanctions on him and froze his assets, which include the famed Chelsea Football Club in London. The United States has not placed sanctions on him.

a pair of luxury residences near Aspen, Colo. But he also invested large sums of money with financial institutions. His ties to Mr. Putin and the source of his wealth have long made him a controversial figure.

Many of Mr. Abramovich’s U.S. investments were facilitated by a small firm, Concord Management, which is led by Michael Matlin, according to people with knowledge of the transactions who were not authorized to speak publicly.

Mr. Matlin declined to comment beyond issuing a statement that described Concord as “a consulting firm that provides independent third-party research, due diligence and monitoring of investments.”

A spokeswoman for Mr. Abramovich didn’t respond to emails and text messages requesting comment.

Concord, founded in 1999, didn’t directly manage any of Mr. Abramovich’s money. It acted more like an investment adviser and due diligence firm, making recommendations to the directors of shell companies in Caribbean tax havens about potential investments in marquee American investment firms, according to people briefed on the matter.

Paycheck Protection Program loan worth $265,000 during the pandemic. (Concord repaid the loan, a spokesman said.)

Concord’s secrecy made some on Wall Street wary.

In 2015 and 2016, investigators at State Street, a financial services firm, filed “suspicious activity reports” alerting the U.S. government to transactions that Concord arranged involving some of Mr. Abramovich’s Caribbean shell companies, BuzzFeed News reported. State Street declined to comment.

American financial institutions are required to file such reports to help the U.S. government combat money laundering and other financial crimes, though the reports are not themselves evidence of any wrongdoing having been committed.

But for the most part, American financiers had no inkling about — or interest in discovering — the source of the money that Concord was directing. As long as routine background checks didn’t turn up red flags, it was fine.

Paulson & Company, the hedge fund run by John Paulson, received investments from a company that Concord represented, according to a person with knowledge of the investment. Mr. Paulson said in an email that he had “no knowledge” of Concord’s investors.

Concord also steered tens of millions of dollars from two shell companies to Highland Capital, a Texas hedge fund. Highland hired a unit of JPMorgan Chase, the nation’s largest bank, to ensure that the companies were legitimate and that the investments complied with anti-money-laundering rules, according to federal court records in an unrelated bankruptcy case.

“corporate governance services” to investment managers.

For $15,000 a year, plus other fees, HighWater would provide an employee to sit on the board of the financial vehicle that the fund manager was expected to launch to accept the wealthy family’s money, according to emails between the fund manager and a HighWater executive reviewed by The New York Times.

The fund manager also brought on Boris Onefater, who ran a small U.S. consulting firm, Constellation, as another board member. Mr. Onefater said in an interview that he couldn’t remember whose money the Cayman vehicle was managing. “You’re asking for ancient history,” he said. “I don’t recall Mr. Abramovich’s name coming up.”

The fund manager hired Mourant, an offshore law firm, to get the paperwork for the Cayman vehicle in order. The managing partner of Mourant did not respond to requests for comment.

He also hired GlobeOp Financial Services, which provides administration services to hedge funds, to ensure that the Cayman entity was complying with anti-money-laundering laws and wasn’t doing business with anyone who had been placed under U.S. government sanctions, according to a copy of the contract.

“We abide by all laws in all jurisdictions in which we do business,” said Emma Lowrey, a spokeswoman for SS&C Technologies, a financial technology company based in Windsor, Conn., that now owns GlobeOp.

John Lewis, a HighWater executive, said in an email to The Times that his firm received four referrals from Concord from 2011 to 2014 and hadn’t dealt with the firm since then.

“We were aware of no links to Russian money or Roman Abramovich,” Mr. Lewis said. He added that GlobeOp “did not identify anything unusual, high risk, or that there were any politically exposed persons with respect to any investors.”

The Cayman fund opened for business in July 2012 when $20 million arrived by wire transfer. The expectation was that tens of millions more would follow, although additional funds never showed up. The Cayman fund was run as an independent entity, using the same investment strategy — buying and selling exchange-traded funds — employed by the fund manager’s main U.S. hedge fund.

The $20 million was wired from an entity called Caythorpe Holdings, which was registered in the British Virgin Islands.

Documents accompanying the wire transfer showed that the money originated with Kathrein Privatbank in Vienna. It arrived in Grand Cayman after passing through another Austrian bank, Raiffeisen, and then JPMorgan. (JPMorgan was serving as a correspondent bank, essentially acting as an intermediary for banks with smaller international networks.)

A spokesman for Kathrein declined to comment. A spokeswoman for JPMorgan declined to comment. Representatives for Raiffeisen did not respond to requests for comment.

The fund manager noticed that some of the documentation was signed by a lawyer named Natalia Bychenkova. The Russian-sounding name led him to conclude that he was probably managing money for a Russian oligarch. But the fund manager wasn’t bothered, since GlobeOp had verified that Caythorpe was compliant with know-your-customer and anti-money-laundering rules and laws.

He didn’t know who controlled Caythorpe, and he didn’t ask.

In early 2014, after Russia invaded the Ukrainian region of Crimea, markets tanked. The fund manager made a bearish bet on the direction of the stock market, and his fund got crushed when stocks rallied.

The next year, Caythorpe withdrew its money from the Cayman fund. Caythorpe was liquidated in 2017.

The fund manager said he didn’t realize until this month that he had been investing money for Mr. Abramovich.

Susan C. Beachy and Kitty Bennett contributed research. Maureen Farrell contributed reporting.

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How to Fight Inflation With Lessons From History

Annual spending in the Union reached a staggering 16 times its prewar budget. Despite the need for funds, there was great fear in Congress of increasing taxes because of Americans’ well-known antipathy to taxation.

But Salmon P. Chase, the fiscally conservative Treasury secretary, was mortally afraid of inflation. He recognized that without revenue the government would have to resort to the printing press. After the southern states seceded, interest rates on the country’s debt soared and foreigners refused to lend.

Thaddeus Stevens, the chair of the House Ways and Means Committee, went further than Mr. Chase imagined by inventing an entirely new tax code. Previously, the Union had funded itself with tariffs on foreign trade, which it raised several times. Alongside that it created a system of “internal taxes,” on everything from personal income to leaf tobacco, liquor, slaughtered hogs and fees on auctioneers. Congress also created a new bureau to collect taxes, a forerunner of the Internal Revenue Service, underscoring its commitment to raising revenue this way.

Mr. Stevens had no idea how much revenue the taxes would raise, or if people would even pay them. (“Everything on the earth and under the earth is to be taxed,” one Ohioan groused.) But by 1865, the Treasury netted $300 million from customs and internal taxes — six times its prewar tax revenue.

That revenue helped moderate the inflation created by the issuance of “greenbacks,” notes that circulated as money, to pay for the war. The country’s credit improved and Mr. Chase was able to borrow prodigious sums. Ultimately, inflation in the Union was no greater than during the two World Wars in the following century.

The Confederacy faced similar financial challenges. Christopher Memminger, its German-born Treasury secretary, warned that printing notes was “the most dangerous of all methods of raising money.” But the South was ideologically opposed to taxation, especially by the central government.

The South approved a very modest tax (half a percent on real estate), but collection was left to the states and few tried to collect it. With cotton shipments to Europe pinched by the Union blockade, Mr. Memminger soon found he had little choice but to print notes to cover the cost of the war. These inflated at a catastrophic rate.

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PropertyGuru Successfully Completes Business Combination With Bridgetown 2 Holdings

SINGAPORE & HONG KONG–(BUSINESS WIRE)–PropertyGuru Pte. Ltd. (“PropertyGuru” or “the Company”), Southeast Asia’s leading1 property technology (“PropTech”) company, today completed its previously announced business combination with Bridgetown 2 Holdings Limited (“Bridgetown 2”) (NASDAQ: BTNB), a special purpose acquisition company formed by Pacific Century Group (“Pacific Century”) and Thiel Capital LLC (“Thiel Capital”). The business combination was approved by Bridgetown 2 stockholders in an Extraordinary General Meeting of Company Shareholders held on March 15, 2022.

PropertyGuru Group Limited’s (“PubCo”) ordinary shares are expected to begin trading on the New York Stock Exchange (“NYSE”) on March 18, 2022 under the ticker symbol “PGRU”.

“We are thrilled to have successfully completed our business combination with Bridgetown 2, which provides additional capital to pursue organic and strategic growth, and will accelerate our ability to access capital markets in pursuit of delivering world-class solutions for our customers,” said Hari V. Krishnan, Chief Executive Officer and Managing Director, PropertyGuru Group. “Over the past 15 years PropertyGuru has helped shape the PropTech industry in Southeast Asia and introduced many first solutions for property seekers, agents, and developers that enabled digitalization of the property industry. As evidenced by the 23% increase in our 2021 revenue – we are entering our next post-Covid phase of growth with significant momentum.

“As we look ahead, we will continue to invest in technology and expand our services and offerings to build on our leading positions in Singapore, Vietnam, Malaysia and Thailand.1 Southeast Asia’s real estate market is beginning to recover from the pandemic and as the region’s increasingly affluent and digitally enabled population moves to urban centers, PropertyGuru is well-positioned to benefit from these long-term trends.”

Southeast Asia is estimated to be the world’s fourth largest economy by 20302, driven by favourable long-term macroeconomic dynamics, creating significant opportunities for PropertyGuru – which has an addressable market of US$8.1 billion according to Frost & Sullivan. Through its continued investments, the Company is positioned to stay ahead of the evolving market demand and extend its leadership position as the region’s property markets recover from the pandemic.

“PropertyGuru is digitally transforming a traditional real estate market in Southeast Asia to create a trusted and transparent online property marketplace,” said Matt Danzeisen, Chairman, Bridgetown 2. “We believe PropertyGuru is just scratching the surface in the world’s most dynamic and fastest growing region, and we are excited to partner with Hari and his talented team to create lasting value for our shareholders, employees, customers and partners.”

Transaction Details

The completion of the business combination values PropertyGuru at an enterprise value of ~US$1.36 billion and an equity value of ~US$1.61 billion.

PropertyGuru received ~US$254 million in gross proceeds through the contribution of US$122 million of cash held in Bridgetown 2’s trust account, a concurrent US$100 million private placement (“PIPE”) of common stock anchored by Baillie Gifford, Naya, REA Group, Akaris Global Partners, and one of Malaysia’s largest asset managers, priced at US$10.00 per share. REA Group also invested an additional US$32 million. In addition, KKR, TPG Group and REA Group rolled 100% of their equity into PropertyGuru, demonstrating their continued commitment to the Company’s growth strategy.

Advisors

Merrill Lynch (Singapore) Pte. Ltd. served as exclusive financial advisor to PropertyGuru. Latham & Watkins LLP and Allen & Gledhill LLP served as legal advisors to PropertyGuru.

Merrill Lynch (Singapore) Pte. Ltd., Citigroup Global Markets Inc., KKR Capital Markets Asia Limited and TPG Capital BD, LLC served as placement agents to Bridgetown 2. Skadden, Arps, Slate, Meagher & Flom LLP and Rajah & Tann Singapore LLP served as legal advisors to Bridgetown 2.

Ringing the Bell at the NYSE

On March 18, PropertyGuru’s Chief Executive Officer and Managing Director Hari V. Krishnan will ring the NYSE opening bell at 9:30 a.m. Eastern Time (9:30 p.m. Singapore Time). He will be joined on stage by PropertyGuru’s Leadership team, Founders, Board and Bridgetown 2’s Chairman and CEO. The bell-ringing ceremony will be livestreamed to its gala listing event in Singapore and available on NYSE’s website here: https://www.nyse.com/bell.

PropertyGuru will commemorate its listing by opening the doors to the Company’s five Southeast Asian markets through live-stream door installations between New York and its home markets, that will be set up at the NYSE’s Experience Square. The event will take place at 10:15a.m. Eastern Time.

About PropertyGuru Group

PropertyGuru Group is Southeast Asia’s leading property technology company1, and the preferred destination for over 50 million property seekers to find their dream home, every month. PropertyGuru and its group companies empower property seekers with more than 3.3 million real estate listings, in-depth insights, and solutions that enable them to make confident property decisions across Singapore, Malaysia, Thailand, Indonesia, and Vietnam.

PropertyGuru.com.sg was launched in 2007 and has helped to drive the Singapore property market online and has made property search transparent for the property seeker. Over the decade, the Group has grown into a high-growth technology company with a robust portfolio of leading property portals across its core markets company; award-winning mobile apps; a high quality developer sales enablement platform, PropertyGuru FastKey (https://www.propertygurugroup.com/fastkey/); mortgage marketplace PropertyGuru Finance (https://www.propertyguru.com.sg/mortgage/home-loan); and a host of other property offerings including Awards (https://www.asiapropertyawards.com/en/), events and publications across Asia.

For more information, please visit: https://www.propertygurugroup.com/; https://www.linkedin.com/company/propertyguru/

Key Performance Metrics

Engagement Market Share is the average monthly engagement for websites owned by PropertyGuru as compared to average monthly engagement for a basket of peers calculated over the relevant period. Engagement is calculated as the number of visits to a website during a period multiplied by the average amount of time spent on that website for the same period, in each case based on data from SimilarWeb.

Number of real estate listings is calculated as the number of listings created during the month for Vietnam and total listings at the end of the previous month for other markets.

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking” statements and information, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to PropertyGuru’s current expectations and views of future events. In some cases, these forward-looking statements can be identified by words or phrases such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements, including statements regarding our future results of operations and financial position, planned products and services, business strategy and plans, objectives of management for future operations, market size and growth opportunities, competitive position and technological and market trends, reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the following: changes in domestic and foreign business, market, financial, political and legal conditions; the ability of PropertyGuru to grow and manage growth profitably and retain its key employees including its chief executive officer and executive team; failure to realize the anticipated benefits of PropertyGuru’s completed business combination; risk relating to the uncertainty of the projected financial information with respect to PropertyGuru; PropertyGuru’s ability to attract new and retain existing customers in a cost effective manner; competitive pressures in and any disruption to the industry in which PropertyGuru and its subsidiaries (the “Group”) operates; the Group’s ability to achieve profitability despite a history of losses; the Group’s ability to implement its growth strategies and manage its growth; customers of the Group continuing to make valuable contributions to its platform, the Group’s ability to meet consumer expectations; the success of the Group’s new product or service offerings; the Group’s ability to produce accurate forecasts of its operating and financial results; the Group’s ability to attract traffic to its websites; the Group’s ability to assess property values accurately; the Group’s internal controls; fluctuations in foreign currency exchange rates; the Group’s ability to raise capital; media coverage of the Group; the Group’s ability to obtain insurance coverage; changes in the regulatory environments (such as anti-trust laws, foreign ownership restrictions and tax regimes) of the countries in which the Group operates, general economic conditions in the countries in which the Group operates, the Group’s ability to attract and retain management and skilled employees, the impact of the COVID-19 pandemic on the business of the Group, the success of the Group’s strategic investments and acquisitions, changes in the Group’s relationship with its current customers, suppliers and service providers, disruptions to information technology systems and networks, the Group’s ability to grow and protect its brand and the Group’s reputation, the Group’s ability to protect its intellectual property; changes in regulation and other contingencies; the Group’s ability to achieve tax efficiencies of its corporate structure and intercompany arrangements; potential and future litigation that the Group may be involved in; unanticipated losses, write-downs or write-offs, restructuring and impairment or other charges, taxes or other liabilities that may be incurred or required subsequent to, or in connection with, the completed business combination and technological advancements in the Group’s industry, as well as and other risk factors set forth in the section titled “Risk Factors” in our Prospectus filed with the Securities and Exchange Commission on February 15, 2022, and other documents filed with or furnished to the SEC.

The forward-looking statements contained in this document are subject to a number of factors, risks and uncertainties, some of which are not currently known to PropertyGuru or Bridgetown 2. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of PubCo’s registration statement on Form F-4, the proxy statement/ prospectus therein, Bridgetown 2’s Quarterly Report on Form 10-Q and other documents filed by PubCo or Bridgetown 2 from time to time with the U.S. Securities and Exchange Commission.

These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. In addition, there may be additional risks that neither Bridgetown 2 nor PropertyGuru presently know, or that Bridgetown 2 or PropertyGuru currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. Forward-looking statements reflect Bridgetown 2’s and PropertyGuru’s expectations, plans, projections or forecasts of future events and view. If any of the risks materialize or Bridgetown 2’s or PropertyGuru’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements.

Forward-looking statements speak only as of the date they are made. Bridgetown 2 and PropertyGuru anticipate that subsequent events and developments may cause their assessments to change. However, while PubCo, Bridgetown 2 and PropertyGuru may elect to update these forward-looking statements at some point in the future, PubCo, Bridgetown 2 and PropertyGuru specifically disclaim any obligation to do so, except as required by law. The inclusion of any statement in this document does not constitute an admission by PropertyGuru nor Bridgetown 2 or any other person that the events or circumstances described in such statement are material. These forward-looking statements should not be relied upon as representing Bridgetown 2’s or PropertyGuru’s assessments as of any date subsequent to the date of this document. Accordingly, undue reliance should not be placed upon the forward-looking statements. In addition, the analyses of PropertyGuru and Bridgetown 2 contained herein are not, and do not purport to be, appraisals of the securities, assets or business of PropertyGuru, Bridgetown 2 or any other entity.

Industry and Market Data

This document contains information, estimates and other statistical data derived from third party sources and/or industry or general publications. Such information involves a number of assumptions and limitations, and you are cautioned not to place undue weight on such estimates. PropertyGuru, PubCo and Bridgetown 2 have not independently verified such third-party information, and make no representation as to the accuracy of such third-party information.

____________________

1 In terms of Engagement Market Share based on SimilarWeb data.

2 According to the Singapore Business Review, ASEAN to become world’s fourth largest economy for 2030: Singapore PM Lee, August 2018

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Clipper Realty Inc. Announces Fourth Quarter 2021 Results

NEW YORK–(BUSINESS WIRE)–Clipper Realty Inc. (NYSE: CLPR) (the “Company”), a leading owner and operator of multifamily residential and commercial properties in the New York metropolitan area, today announced financial and operating results for the three months ended December 31, 2021.

Highlights for the Three Months Ended December 31, 2021

David Bistricer, Co-Chairman and Chief Executive Officer, commented,

“We continue to see improvements in our operations as New York City further recovers from the effects of the COVID-19 pandemic. We are experiencing strong rental demand at all our properties and consistently increasing rental rates as New York City continues to open and employees return to offices. We remain focused on efficiently operating our portfolio, with the safety of our tenants and employees our highest priority. Our properties are 95% leased and our fourth quarter rent collection rate was over 98%. We have a strong liquidity position with $52.2 million of cash on the balance sheet, consisting of $34.5 million of unrestricted cash and $17.7 million of restricted cash, and have no debt maturities on any operating properties until 2027, providing further support in the current environment. We remain committed to executing our strategic initiatives to create long-term value.”

Financial Results

For the fourth quarter of 2021, revenues increased by $0.5 million, or 1.6%, to $30.8 million, compared to $30.3 million for the fourth quarter of 2020; the change was primarily attributable to the commencement of new leases at the Tribeca House, Aspen and Clover House properties partially offset by a decline in occupancy at the Flatbush Gardens property.

For the fourth quarter of 2021, net loss was $6.2 million, or $0.16 per share, or $3.5 million, or $0.09 per share exclusive of a non-recurring charge for a litigation settlement, compared to net loss of $3.8 million, or $0.10 per share, for the fourth quarter of 2020; the change was primarily attributable to the revenue change discussed above and lower property operating expenses (including a decrease in the provision for bad debt), substantially offset by increases in insurance expense, depreciation and amortization expense, general and administrative expense (including LTIP amortization expense) and interest expense (primarily resulting from the refinancing of the 141 Livingston Street property in February 2021). Lastly, as a result of NY court decisions made in March 2022 that established probability and ability to calculate amounts, the Company has recorded a charge of $2.7 million for the settlement of claims of tenant overcharges at the Tribeca House property.

For the fourth quarter of 2021, AFFO was $4.4 million, or $0.10 per share, compared to $3.0 million, or $0.07 per share, for the fourth quarter of 2020; the change was primarily attributable to the revenue change discussed above, and lower property operating expenses (including decreases in staffing, repairs and maintenance and the provision for bad debt), partially offset by increases in insurance expense, interest expense, and cash general and administrative expenses.

Balance Sheet

At December 31, 2021, notes payable (excluding unamortized loan costs) was $1,144.1 million, compared to $1,089.7 million at December 31, 2020; the increase primarily reflected the refinancing of the 141 Livingston Street property in February 2021, partially offset by scheduled principal amortization.

Dividend

The Company today declared a fourth quarter dividend of $0.095 per share, the same amount as last quarter, to shareholders of record on March 25, 2022, payable March 31, 2022.

Conference Call and Supplemental Material

The Company will host a conference call on March 15, 2022, at 5:00 PM Eastern Time to discuss the fourth quarter 2021 results and provide a business update. The conference call can be accessed by dialing (800) 346-7359 or (973) 528-0008, conference entry code 826656. A replay of the call will be available from March 15, 2022, following the call, through March 29, 2022, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 826656. Supplemental data to this press release can be found under the “Quarterly Earnings” navigation tab on the “Investors” page of our website at www.clipperrealty.com. The Company’s filings with the Securities and Exchange Commission (the “SEC”) are filed at www.sec.gov under Clipper Realty Inc.

About Clipper Realty Inc.

Clipper Realty Inc. (NYSE: CLPR) is a self-administered and self-managed real estate company that acquires, owns, manages, operates and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn. For more information on the Company, please visit www.clipperrealty.com.

Forward-Looking Statements

Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include estimates concerning capital projects and the success of specific properties. Our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “plan” or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this press release speak only as of the date of this press release.

We disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties (including uncertainties regarding the ongoing impact of the COVID-19 pandemic, and measures intended to curb its spread, on our business, our tenants and the economy generally), most of which are difficult to predict and many of which are beyond our control and which may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a discussion of these and other important factors that could affect our actual results, please refer to our filings with the SEC, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2021, and other reports filed from time to time with the SEC.

_____________________________________

1 NOI and AFFO are non-GAAP financial measures. For a definition of these financial measures and a reconciliation of such measures to the most comparable GAAP measures, see “Reconciliation of Non-GAAP Measures” at the end of this release.

 
Clipper Realty Inc.
Consolidated Balance Sheets
(In thousands, except for share and per share data)
 
December 31,
2021
December 31,
2020
 
ASSETS
Investment in real estate
Land and improvements

$

540,859

 

$

540,859

 

Building and improvements

 

649,686

 

 

630,662

 

Tenant improvements

 

3,406

 

 

3,121

 

Furniture, fixtures and equipment

 

12,500

 

 

12,217

 

Real estate under development

 

97,301

 

 

36,118

 

Total investment in real estate

 

1,303,752

 

 

1,222,977

 

Accumulated depreciation

 

(158,002

)

 

(132,479

)

Investment in real estate, net

 

1,145,750

 

 

1,090,498

 

 
Cash and cash equivalents

 

34,524

 

 

72,058

 

Restricted cash

 

17,700

 

 

16,974

 

Tenant and other receivables, net of allowance for doubtful accounts

 

10,260

 

 

7,002

 

of $7,905 and $5,993, respectively
Deferred rent

 

2,656

 

 

2,454

 

Deferred costs and intangible assets, net

 

7,126

 

 

7,720

 

Prepaid expenses and other assets

 

15,641

 

 

11,160

 

TOTAL ASSETS

$

1,233,657

 

$

1,207,866

 

 
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized loan costs

$

1,131,154

 

$

1,079,458

 

of $12,898 and $10,262, respectively
Accounts payable and accrued liabilities

 

19,558

 

 

11,725

 

Security deposits

 

7,110

 

 

6,983

 

Below-market leases, net

 

53

 

 

157

 

Other liabilities

 

5,833

 

 

5,429

 

TOTAL LIABILITIES

 

1,163,708

 

 

1,103,752

 

 
Equity:
Preferred stock, $0.01 par value; 100,000 shares authorized (including 140 shares

 

 

 

 

of 12.5% Series A cumulative non-voting preferred stock),
zero shares issued and outstanding
Common stock, $0.01 par value; 500,000,000 shares authorized,

 

160

 

 

160

 

16,063,228 shares issued and outstanding
Additional paid-in-capital

 

88,089

 

 

87,347

 

Accumulated deficit

 

(61,736

)

 

(48,045

)

Total stockholders’ equity

 

26,513

 

 

39,462

 

 
Non-controlling interests

 

43,436

 

 

64,652

 

TOTAL EQUITY

 

69,949

 

 

104,114

 

 
TOTAL LIABILITIES AND EQUITY

$

1,233,657

 

$

1,207,866

 

 
 
 
Clipper Realty Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
 

Three Months Ended December 31,

 

Year Ended December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

(unaudited)
REVENUES
Residential rental income

$

21,253

 

$

21,198

 

$

85,771

 

$

90,543

 

Commercial rental income

 

9,523

 

 

9,139

 

 

36,958

 

 

32,307

 

TOTAL REVENUES

 

30,776

 

 

30,337

 

 

122,729

 

 

122,850

 

 
OPERATING EXPENSES
Property operating expenses

 

6,450

 

 

8,008

 

 

28,997

 

 

29,902

 

Real estate taxes and insurance

 

7,921

 

 

7,181

 

 

30,449

 

 

28,286

 

General and administrative

 

2,791

 

 

2,404

 

 

10,570

 

 

9,728

 

Transaction pursuit costs

 

 

 

 

 

60

 

 

 

Depreciation and amortization

 

6,794

 

 

6,266

 

 

25,762

 

 

23,630

 

TOTAL OPERATING EXPENSES

 

23,956

 

 

23,859

 

 

95,838

 

 

91,546

 

 
Gain on termination of lease

 

 

 

 

 

 

 

838

 

Litigation settlement and other

 

(2,730

)

 

 

 

(2,730

)

 

 

 
INCOME FROM OPERATIONS

 

4,090

 

 

6,478

 

 

24,161

 

 

32,142

 

 
Interest expense, net

 

(10,326

)

 

(10,254

)

 

(41,284

)

 

(40,228

)

Loss on extinguishment of debt

 

 

 

 

 

(3,034

)

 

(4,228

)

Gain on involuntary conversion

 

 

 

 

 

139

 

 

85

 

 
Net loss

 

(6,236

)

 

(3,776

)

 

(20,018

)

 

(12,229

)

 
Net loss attributable to non-controlling interests

 

3,873

 

 

2,283

 

 

12,431

 

 

7,323

 

Net loss attributable to common stockholders

$

(2,363

)

$

(1,493

)

$

(7,587

)

$

(4,906

)

 
Basic and diluted net loss per share

$

(0.16

)

$

(0.10

)

$

(0.51

)

$

(0.31

)

 
Weighted average common shares / OP units
Common shares outstanding

 

16,063

 

 

17,080

 

 

16,063

 

 

17,629

 

OP units outstanding

 

26,317

 

 

26,317

 

 

26,317

 

 

26,317

 

Diluted shares outstanding

 

42,380

 

 

43,397

 

 

42,380

 

 

43,946

 

 
 
 
Clipper Realty Inc.
Consolidated Statements of Cash Flows
(In thousands)
 
Year Ended December 31,
.

 

2021

 

 

2020

 

 
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss

$

(20,018

)

$

(12,229

)

 
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation

 

25,536

 

 

23,148

 

Amortization of deferred financing costs

 

1,247

 

 

1,212

 

Amortization of deferred costs and intangible assets

 

707

 

 

963

 

Amortization of above- and below-market leases

 

(104

)

 

(390

)

Loss on extinguishment of debt

 

3,034

 

 

4,228

 

Gain on involuntary conversion

 

(139

)

 

(85

)

Gain on termination of lease

 

 

 

(838

)

Deferred rent

 

(202

)

 

(1,180

)

Stock-based compensation

 

2,611

 

 

1,805

 

Bad debt expense

 

1,850

 

 

2,543

 

Transaction pursuit costs

 

60

 

 

 

Changes in operating assets and liabilities:
Tenant and other receivables

 

(5,108

)

 

(5,358

)

Prepaid expenses, other assets and deferred costs

 

(2,639

)

 

3,228

 

Accounts payable and accrued liabilities

 

3,456

 

 

(1,602

)

Security deposits

 

127

 

 

(587

)

Other liabilities

 

404

 

 

1,132

 

Net cash provided by operating activities

 

10,822

 

 

15,990

 

 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and improvements

 

(35,531

)

 

(31,811

)

Insurance proceeds from involuntary conversion

 

150

 

 

111

 

Sale and purchase of interest rate caps, net

 

 

 

(14

)

Acquisition deposit

 

(2,015

)

 

 

Cash paid in connection with acquisition of real estate

 

(40,548

)

 

 

Net cash used in investing activities

 

(77,944

)

 

(31,714

)

 
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock

 

 

 

(10,002

)

Payments of mortgage notes

 

(97,432

)

 

(249,630

)

Proceeds from mortgage notes

 

151,764

 

 

329,919

 

Dividends and distributions

 

(16,758

)

 

(17,243

)

Loan issuance and extinguishment costs

 

(7,260

)

 

(5,220

)

Net cash provided by financing activities

 

30,314

 

 

47,824

 

 
Net (decrease) increase in cash and cash equivalents and restricted cash

 

(36,808

)

 

32,100

 

Cash and cash equivalents and restricted cash – beginning of period

 

89,032

 

 

56,932

 

Cash and cash equivalents and restricted cash – end of period

$

52,224

 

$

89,032

 

 
Cash and cash equivalents and restricted cash – beginning of period:
Cash and cash equivalents

$

72,058

 

$

42,500

 

Restricted cash

 

16,974

 

 

14,432

 

Total cash and cash equivalents and restricted cash – beginning of period

$

89,032

 

$

56,932

 

 
Cash and cash equivalents and restricted cash – end of period:
Cash and cash equivalents

$

34,524

 

$

72,058

 

Restricted cash

 

17,700

 

 

16,974

 

Total cash and cash equivalents and restricted cash – end of period

$

52,224

 

$

89,032

 

 
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $1,740 and $1,456 in 2021 and 2020, respectively

$

40,227

 

$

39,592

 

Non-cash interest capitalized to real estate under development

 

343

 

 

1,060

 

Additions to investment in real estate included in accounts payable and accrued liabilities

 

8,566

 

 

4,189

 

 
 

Non-GAAP Financial Measures

We disclose and discuss funds from operations (“FFO”), adjusted funds from operations (“AFFO”), adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) and net operating income (“NOI”), all of which meet the definition of “non-GAAP financial measures” set forth in Item 10(e) of Regulation S-K promulgated by the SEC.

While management and the investment community in general believe that presentation of these measures provides useful information to investors, neither FFO, AFFO, Adjusted EBITDA, nor NOI should be considered as an alternative to net income (loss) or income from operations as an indication of our performance. We believe that to understand our performance further, FFO, AFFO, Adjusted EBITDA, and NOI should be compared with our reported net income (loss) or income from operations and considered in addition to cash flows computed in accordance with GAAP, as presented in our consolidated financial statements.

Funds From Operations and Adjusted Funds From Operations

FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and impairment adjustments, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our calculation of FFO is consistent with FFO as defined by NAREIT.

AFFO is defined by us as FFO excluding amortization of identifiable intangibles incurred in property acquisitions, straight-line rent adjustments to revenue from long-term leases, amortization costs incurred in originating debt, interest rate cap mark-to-market adjustments, amortization of non-cash equity compensation, acquisition and other costs, transaction pursuit costs, loss on modification/extinguishment of debt, gain on involuntary conversion, gain on termination of lease and non-recurring litigation-related expenses, less recurring capital spending.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values have historically risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO useful in evaluating potential property acquisitions and measuring operating performance. We further consider AFFO useful in determining funds available for payment of distributions. Neither FFO nor AFFO represent net income or cash flows from operations computed in accordance with GAAP. You should not consider FFO and AFFO to be alternatives to net income (loss) as reliable measures of our operating performance; nor should you consider FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (computed in accordance with GAAP) as measures of liquidity.

Neither FFO nor AFFO measure whether cash flow is sufficient to fund all of our cash needs, including loan principal amortization, capital improvements and distributions to stockholders. FFO and AFFO do not represent cash flows from operating, investing or financing activities computed in accordance with GAAP. Further, FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO and AFFO.

The following table sets forth a reconciliation of FFO and AFFO for the periods presented to net loss, computed in accordance with GAAP (amounts in thousands):

 
 
Three Months Ended December 31, Year Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

FFO
Net loss

$

(6,236

)

$

(3,776

)

$

(20,018

)

$

(12,229

)

Real estate depreciation and amortization

 

6,794

 

 

6,266

 

 

25,762

 

 

23,630

 

FFO

$

558

 

$

2,490

 

$

5,744

 

$

11,401

 

 
 
AFFO
FFO

$

558

 

$

2,490

 

$

5,744

 

$

11,401

 

Amortization of real estate tax intangible

 

120

 

 

121

 

 

481

 

 

481

 

Amortization of above- and below-market leases

 

(8

)

 

(32

)

 

(104

)

 

(390

)

Straight-line rent adjustments

 

(77

)

 

(494

)

 

(202

)

 

(1,180

)

Amortization of debt origination costs

 

313

 

 

302

 

 

1,247

 

 

1,212

 

Amortization of LTIP awards

 

665

 

 

556

 

 

2,611

 

 

1,805

 

Transaction pursuit costs

 

 

 

 

 

60

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

3,034

 

 

4,228

 

Gain on involuntary conversion

 

 

 

 

 

(139

)

 

(85

)

Gain on termination of lease

 

 

 

 

 

 

 

(838

)

Litigation settlement and other

 

2,730

 

 

 

 

2,730

 

 

 

Non-recurring litigation-related expenses

 

100

 

 

114

 

 

299

 

 

724

 

Recurring capital spending

 

(46

)

 

(72

)

 

(205

)

 

(514

)

AFFO

$

4,355

 

$

2,985

 

$

15,556

 

$

16,844

 

AFFO Per Share/Unit

$

0.10

 

$

0.07

 

$

0.37

 

$

0.38

 

 
 

Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization

We believe that Adjusted EBITDA is a useful measure of our operating performance. We define Adjusted EBITDA as net income (loss) before allocation to non-controlling interests, plus real estate depreciation and amortization, amortization of identifiable intangibles, straight-line rent adjustments to revenue from long-term leases, amortization of non-cash equity compensation, interest expense (net), acquisition and other costs, transaction pursuit costs, loss on modification/extinguishment of debt and non-recurring litigation-related expenses, less gain on involuntary conversion and gain on termination of lease.

We believe that this measure provides an operating perspective not immediately apparent from GAAP income from operations or net income (loss). We consider Adjusted EBITDA to be a meaningful financial measure of our core operating performance.

However, Adjusted EBITDA should only be used as an alternative measure of our financial performance. Further, other REITs may use different methodologies for calculating Adjusted EBITDA, and accordingly, our Adjusted EBITDA may not be comparable to that of other REITs.

The following table sets forth a reconciliation of Adjusted EBITDA for the periods presented to net loss, computed in accordance with GAAP (amounts in thousands):

 
 
Three Months Ended December 31, Year Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Adjusted EBITDA
Net loss

$

(6,236

)

$

(3,776

)

$

(20,018

)

$

(12,229

)

Real estate depreciation and amortization

 

6,794

 

 

6,266

 

 

25,762

 

 

23,630

 

Amortization of real estate tax intangible

 

120

 

 

121

 

 

481

 

 

481

 

Amortization of above- and below-market leases

 

(8

)

 

(32

)

 

(104

)

 

(390

)

Straight-line rent adjustments

 

(77

)

 

(494

)

 

(202

)

 

(1,180

)

Amortization of LTIP awards

 

665

 

 

556

 

 

2,611

 

 

1,805

 

Interest expense, net

 

10,326

 

 

10,254

 

 

41,284

 

 

40,228

 

Transaction pursuit costs

 

 

 

 

 

60

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

3,034

 

 

4,228

 

Gain on involuntary conversion

 

 

 

 

 

(139

)

 

(85

)

Gain on termination of lease

 

 

 

 

 

 

 

(838

)

Litigation settlement and other

 

2,730

 

 

 

 

2,730

 

 

 

Non-recurring litigation-related expenses

 

100

 

 

114

 

 

299

 

 

724

 

Adjusted EBITDA

$

14,414

 

$

13,009

 

$

55,798

 

$

56,374

 

 
 

Net Operating Income

We believe that NOI is a useful measure of our operating performance. We define NOI as income from operations plus real estate depreciation and amortization, general and administrative expenses, acquisition and other costs, transaction pursuit costs, amortization of identifiable intangibles and straight-line rent adjustments to revenue from long-term leases, less gain on termination of lease. We believe that this measure is widely recognized and provides an operating perspective not immediately apparent from GAAP income from operations or net income (loss). We use NOI to evaluate our performance because NOI allows us to evaluate the operating performance of our company by measuring the core operations of property performance and capturing trends in rental housing and property operating expenses. NOI is also a widely used metric in valuation of properties.

However, NOI should only be used as an alternative measure of our financial performance. Further, other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to that of other REITs.

The following table sets forth a reconciliation of NOI for the periods presented to income from operations, computed in accordance with GAAP (amounts in thousands):

 
 
Three Months Ended December 31, Year Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

NOI
Income from operations

$

4,090

 

$

6,478

 

$

24,161

 

$

32,142

 

Real estate depreciation and amortization

 

6,794

 

 

6,266

 

 

25,762

 

 

23,630

 

General and administrative expenses

 

2,791

 

 

2,404

 

 

10,570

 

 

9,728

 

Transaction pursuit costs

 

 

 

 

 

60

 

 

 

Amortization of real estate tax intangible

 

120

 

 

121

 

 

481

 

 

481

 

Amortization of above- and below-market leases

 

(8

)

 

(32

)

 

(104

)

 

(390

)

Straight-line rent adjustments

 

(77

)

 

(494

)

 

(202

)

 

(1,180

)

Gain on termination of lease

 

 

 

 

 

 

 

(838

)

Litigation settlement and other

 

2,730

 

 

 

 

2,730

 

 

 

NOI

$

16,440

 

$

14,743

 

$

63,458

 

$

63,573

 

 
 

 

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Ukrainian Minister Has Turned Digital Tools Into Modern Weapons of War

After war began last month, President Volodymyr Zelensky of Ukraine turned to Mykhailo Fedorov, a vice prime minister, for a key role.

Mr. Fedorov, 31, the youngest member of Mr. Zelensky’s cabinet, immediately took charge of a parallel prong of Ukraine’s defense against Russia. He began a campaign to rally support from multinational businesses to sunder Russia from the world economy and to cut off the country from the global internet, taking aim at everything from access to new iPhones and PlayStations to Western Union money transfers and PayPal.

To achieve Russia’s isolation, Mr. Fedorov, a former tech entrepreneur, used a mix of social media, cryptocurrencies and other digital tools. On Twitter and other social media, he pressured Apple, Google, Netflix, Intel, PayPal and others to stop doing business in Russia. He helped form a group of volunteer hackers to wreak havoc on Russian websites and online services. His ministry also set up a cryptocurrency fund that has raised more than $60 million for the Ukrainian military.

The work has made Mr. Fedorov one of Mr. Zelensky’s most visible lieutenants, deploying technology and finance as modern weapons of war. In effect, Mr. Fedorov is creating a new playbook for military conflicts that shows how an outgunned country can use the internet, crypto, digital activism and frequent posts on Twitter to help undercut a foreign aggressor.

McDonald’s have withdrawn from Russia, with the war’s human toll provoking horror and outrage. Economic sanctions by the United States, European Union and others have played a central role in isolating Russia.

Mr. Zelensky was elected in 2019, he appointed Mr. Fedorov, then 28, to be minister of digital transformation, putting him in charge of digitizing Ukrainian social services. Through a government app, people could pay speeding tickets or manage their taxes. Last year, Mr. Fedorov visited Silicon Valley to meet with leaders including Tim Cook, the chief executive of Apple.

Russia invaded Ukraine, Mr. Fedorov immediately pressured tech companies to pull out of Russia. He made the decision with Mr. Zelensky’s backing, he said, and the two men speak every day.

“I think this choice is as black and white as it ever gets,” Mr. Fedorov said. “It is time to take a side, either to take the side of peace or to take the side of terror and murder.”

On Feb. 25, he sent letters to Apple, Google and Netflix, asking them to restrict access to their services in Russia. Less than a week later, Apple stopped selling new iPhones and other products in Russia.

Russia damaged the country’s main telecommunications infrastructure. Two days after contacting Mr. Musk, a shipment of Starlink equipment arrived in Ukraine.

Since then, Mr. Fedorov said he has periodically exchanged text messages with Mr. Musk.

were put on pause following the invasion. Russia, a signatory to the accord, has tried to use final approval of the deal as leverage to soften sanctions imposed because of the war.

But while many companies have halted business in Russia, more could be done, he said. Apple and Google should pull their app stores from Russia and software made by companies like SAP was also being used by scores of Russian businesses, he has noted.

In many instances, the Russian government is cutting itself off from the world, including blocking access to Twitter and Facebook. On Friday, Russian regulators said they would also restrict access to Instagram and called Meta an “extremist” organization.

Some civil society groups have questioned whether Mr. Fedorov’s tactics could have unintended consequences. “Shutdowns can be used in tyranny, not in democracy,” the Internet Protection Society, an internet freedom group in Russia, said in a statement earlier this week. “Any sanctions that disrupt access of Russian people to information only strengthen Putin’s regime.”

Mr. Fedorov said it was the only way to jolt the Russian people into action. He praised the work of Ukraine-supporting hackers who have been coordinating loosely with Ukrainian government to hit Russian targets.

“After cruise missiles started flying over my house and over houses of many other Ukrainians, and also things started exploding, we decided to go into counter attack,” he said.

Mr. Fedorov’s work is an example of Ukraine’s whatever-it-takes attitude against a larger Russian army, said Max Chernikov, a software engineer who is supporting the volunteer group known as the IT Army of Ukraine.

“He acts like every Ukrainian — doing beyond his best,” he said.

Mr. Fedorov, who has a wife and young daughter, said he remained hopeful about the war’s outcome.

“The truth is on our side,” he added. “I’m sure we’re going to win.”

Daisuke Wakabayashi and Mike Isaac contributed reporting.

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Service Properties Trust Announces Fourth Quarter 2021 Results

NEWTON, Mass.–(BUSINESS WIRE)–Service Properties Trust (Nasdaq: SVC) today announced its financial results for the quarter ended December 31, 2021.

John Murray, President and Chief Executive Officer of SVC, made the following statement:

The fourth quarter marked a period of stability in the overall recovery for SVC’s hotel portfolio, as normal seasonality and the impact of the Omicron variant late in the quarter were offset by solid extended stay occupancy and continued leisure demand. SVC’s comparable RevPAR for the 2021 fourth quarter came in ahead of our expectations at 72.1% of the pre-COVID-19 comparable RevPAR for the 2019 fourth quarter. With weekly COVID-19 cases again on the decline, we expect to benefit from a rebound in business travel in the coming quarters, particularly at our full service hotels as urban centers re-open. Our net lease portfolio continues to provide steady cash flows driven by our diverse mix of tenants and industries.

We have either closed or are under contract for $430 million of our previously announced hotel sales at pricing that has been in line with our expectations. We expect these and the balance of the announced sales to close over the next few months. Approximately 72.1% of the sale hotels will be sold encumbered by Sonesta branding, maintaining Sonesta’s distribution and jump starting franchising of the Sonesta brands, which we believe will benefit SVC. With expected proceeds from our hotel sales of over $560 million, over $940 million of cash on our balance sheet and positive cash flow from our hotel portfolio before capital expenditures, we believe we have sufficient liquidity and financial flexibility to address our upcoming debt maturities, as well as an improved hotel portfolio that is well positioned to benefit SVC as lodging trends continue to rebound.”

 

Results for the Quarter Ended December 31, 2021:

 

 

Three Months Ended December 31,

 

 

2021

 

 

 

2020

 

 

($ in thousands, except per share data)

Net loss

$

(198,793

)

 

$

(137,740

)

Net loss per common share

$

(1.21

)

 

$

(0.84

)

Normalized FFO (1)

$

27,936

 

 

$

(22,474

)

Normalized FFO per common share (1)

$

0.17

 

 

$

(0.14

)

Adjusted EBITDAre (1)

$

118,997

 

 

$

64,953

 

(1) Additional information and reconciliations of net loss determined in accordance with U.S. generally accepted accounting principles, or GAAP, to certain non-GAAP measures, including FFO, Normalized FFO, EBITDA, EBITDAre and Adjusted EBITDAre for the quarters ended December 31, 2021 and 2020 appear later in this press release.

 

Hotel Portfolio:

As of December 31, 2021, SVC’s 303 hotels were operated by subsidiaries of Sonesta Holdco Corporation, or Sonesta (261 hotels), Hyatt Hotels Corporation, or Hyatt (17 hotels), Radisson Hospitality, Inc., or Radisson (eight hotels), Marriott International, Inc., or Marriott (16 hotels), and InterContinental Hotels Group, plc, or IHG (one hotel).

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

Change

 

 

2021

 

 

 

2020

 

 

Change

 

 

($ in thousands, except hotel statistics)

Comparable Hotels

 

 

 

 

 

 

 

 

 

 

 

 

No. of hotels

 

 

298

 

 

 

298

 

 

 

 

 

280

 

 

 

280

 

 

 

No. of rooms or suites

 

 

46,920

 

 

 

46,920

 

 

 

 

 

42,101

 

 

 

42,101

 

 

 

Occupancy

 

 

55.9

%

 

 

39.9

%

 

16.0 pts

 

 

54.2

%

 

 

44.1

%

 

10.1 pts

ADR

 

$

110.26

 

 

$

87.30

 

 

26.3

%

 

$

98.07

 

 

$

96.84

 

 

1.3

%

Hotel RevPAR

 

$

61.64

 

 

$

34.83

 

 

77.0

%

 

$

53.15

 

 

$

42.71

 

 

24.4

%

Hotel operating revenues (1)

 

$

303,507

 

 

$

166,843

 

 

81.9

%

 

$

884,460

 

 

$

726,757

 

 

21.7

%

Hotel operating expenses (1)

 

$

267,182

 

 

$

193,329

 

 

38.2

%

 

$

822,470

 

 

$

727,724

 

 

13.0

%

Hotel EBITDA (1)

 

$

36,325

 

 

$

(26,486

)

 

n/m

 

 

$

61,990

 

 

$

(967

)

 

n/m

 

Adjusted Hotel EBITDA (1)

 

$

36,325

 

 

$

(26,817

)

 

n/m

 

 

$

61,990

 

 

$

(1,298

)

 

n/m

 

Hotel EBITDA margin

 

 

12.0

%

 

 

(16.1

) %

 

n/m

 

 

 

7.0

%

 

 

(0.2

) %

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Hotels (2)

 

 

 

 

 

 

 

 

 

 

 

 

No. of hotels

 

 

303

 

 

 

310

 

 

(7

)

 

 

303

 

 

 

310

 

 

(7

)

No. of rooms or suites

 

 

48,346

 

 

 

49,014

 

 

(668

)

 

 

48,346

 

 

 

49,014

 

 

(668

)

Occupancy

 

 

55.2

%

 

 

39.8

%

 

15.4 pts

 

 

53.0

%

 

 

42.0

%

 

11.0 pts

ADR

 

$

112.30

 

 

$

87.53

 

 

28.3

%

 

$

105.36

 

 

$

100.77

 

 

4.6

%

Hotel RevPAR

 

$

61.99

 

 

$

34.84

 

 

77.9

%

 

$

55.84

 

 

$

42.32

 

 

31.9

%

Hotel operating revenues (1)

 

$

317,215

 

 

$

176,418

 

 

79.8

%

 

$

1,104,678

 

 

$

888,741

 

 

24.3

%

Hotel operating expenses (1)

 

$

288,825

 

 

$

206,521

 

 

39.9

%

 

$

1,033,463

 

 

$

943,064

 

 

9.6

%

Hotel EBITDA (1)

 

$

28,390

 

 

$

(30,103

)

 

n/m

 

 

$

71,215

 

 

$

(54,323

)

 

n/m

 

Adjusted Hotel EBITDA (1)

 

$

28,390

 

 

$

(26,141

)

 

n/m

 

 

$

71,215

 

 

$

(50,361

)

 

n/m

 

Hotel EBITDA margin

 

 

8.9

%

 

 

(3.1

) %

 

n/m

 

 

 

6.4

%

 

 

(5.7

) %

 

n/m

 

(1) Reconciliations of hotel operating revenues and hotel operating expenses used to determine Hotel EBITDA and Adjusted Hotel EBITDA from hotel operating revenues and hotel operating expenses determined in accordance with GAAP for the quarters ended December 31, 2021 and 2020 appear later in this press release.

(2) Results of all hotels as owned during the periods presented, including the results of hotels sold by SVC for the period owned by SVC.

 

Recent operating statistics for SVC’s hotels are as follows:

 

Comparable Hotels

 

 

 

298 Hotels, 46,919 rooms

 

2021 vs 2019

 

 

Occupancy

 

Average Daily Rate

 

RevPAR

 

Occupancy

 

Average Daily Rate

 

RevPAR

October

 

61.3 %

 

$114.35

 

$70.10

 

(16.6) pts

 

(13.3) %

 

(31.7) %

November

 

56.1 %

 

$107.95

 

$60.56

 

(13.4) pts

 

(12.2) %

 

(29.1) %

December

 

50.6 %

 

$107.95

 

$54.62

 

(9.1) pts

 

(6.0) %

 

(20.3) %

 
 

All Hotels

 

 

 

303 Hotels, 48,346 rooms

 

2021 vs 2019

 

 

Occupancy

 

Average Daily Rate

 

RevPAR

 

Occupancy

 

Average Daily Rate

 

RevPAR

October

 

60.5 %

 

$116.18

 

$70.29

 

(17.0) pts

 

(13.2) %

 

(32.3) %

November

 

55.4 %

 

$109.59

 

$60.71

 

(13.7) pts

 

(12.0) %

 

(29.5) %

December

 

50.1 %

 

$110.64

 

$55.43

 

(9.4) pts

 

(5.8) %

 

(20.7) %

 

For SVC’s 302 hotels owned as of February 24, 2022, January 2022 occupancy, ADR and RevPAR were 45.6%, $105.11 and $47.93, respectively.

Hotel Agreements:

As previously announced, on January 7, 2022, SVC and Sonesta amended and restated their management agreements effective January 1, 2022. The amendments to the agreements are substantially the same as those made earlier in 2021 to the agreements for SVC’s Hyatt and Radisson portfolios and the amendments made to SVC’s agreements with Sonesta in 2020 for certain Sonesta hotels. As of January 1, 2022, SVC owned 261 hotels managed by Sonesta and 67 of these hotels are expected to be sold, or the sale hotels. Among other things, the amendments to the agreements between SVC and Sonesta for 194 hotels, or the retained hotels, are as follows:

For the sale hotels, the term was extended to the earlier of December 31, 2022 or until the hotels are sold and the FF&E reserve funding requirement was removed. SVC’s owner’s priority return will be reduced by the current owner’s priority return for a sale hotel once sold. The total owner’s priority for all the sale hotels is $84.7 million.

Net Lease Retail Portfolio:

SVC’s net lease retail portfolio is summarized as follows:

 

 

 

As of December 31, 2021

Number of properties

 

788

Industries

 

21

Tenants

 

174

Brands

 

134

Square feet

 

13.5 million

Occupancy

 

98.1%

Weighted average lease term (by annual minimum rent)

 

10.2 years

Rent Coverage

 

2.58x

 

During the quarter ended December 31, 2021, SVC reduced its reserve for uncollectible revenues by $0.6 million for certain of its net lease tenants. During the quarter ended December 31, 2020, SVC recorded reserves for uncollectible revenues of $4.5 million for certain of its net lease tenants.

Recent Investment Activities:

During the quarter ended December 31, 2021, SVC sold one hotel with 93 keys for a sales price of $8.5 million, excluding closing costs, and six net lease properties with an aggregate of 52,596 rentable square feet for an aggregate sales price of $9.1 million, excluding closing costs. In January 2022, SVC sold 1 hotel with 295 keys for a sales price of $19.0 million, excluding closing costs.

SVC has entered into agreements to sell 45 Sonesta branded hotels (35 extended stay hotels with 4,185 keys, 9 select service hotels with 1,114 keys and one full service hotels with 381 keys) located in 21 states with an aggregate net carrying value of $352.5 million as of December 31, 2021 for an aggregate sales price of $402.4 million. SVC expects to enter agreements to sell 19 additional Sonesta branded hotels with 2,420 keys with an aggregate carrying value of $125.6 million as of December 31, 2021 for an aggregate sales price of $131.9 million. SVC expects these sales to be completed by the end of the second quarter of 2022. SVC continues to market two additional hotels with 272 keys for sale. SVC currently expects that approximately 72.1% of the sale hotels will be sold encumbered by Sonesta branding, maintaining Sonesta’s distribution and jump-starting franchising of the Sonesta brands, which SVC believes it will benefit from through its 34% ownership of Sonesta.

Capital expenditures made at certain of SVC’s properties for the quarter ended December 31, 2021 were $30.4 million.

Liquidity and Financing Activities:

As of December 31, 2021, SVC had $944.0 million of cash and cash equivalents.

SVC’s $1 billion revolving credit facility matures on July 15, 2022 and SVC is currently in discussions with its lenders regarding an extension of the maturity date of the facility and additional covenant waivers. There is no assurance SVC will come to terms with its lenders or that it will be granted such additional covenant relief.

Conference Call:

On February 25, 2022 at 10:00 a.m. Eastern Time, John Murray, Chief Executive Officer, Brian Donley, Chief Financial Officer, and Todd Hargreaves, Chief Investment Officer, will host a conference call to discuss SVC’s fourth quarter 2021 financial results. The conference call telephone number is (877) 329-3720. Participants calling from outside the United States and Canada should dial (412) 317-5434. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through Friday, March 4, 2022. To access the replay, dial (412) 317-0088. The replay pass code is 8820658.

A live audio webcast of the conference call will also be available in a listen-only mode on SVC’s website, www.svcreit.com. Participants wanting to access the webcast should visit SVC’s website about five minutes before the call. The archived webcast will be available for replay on SVC’s website for about one week after the call. The transcription, recording and retransmission in any way of SVC’s fourth quarter conference call is strictly prohibited without the prior written consent of SVC.

Supplemental Data:

A copy of SVC’s Fourth Quarter 2021 Supplemental Operating and Financial Data is available for download at SVC’s website, www.svcreit.com. SVC’s website is not incorporated as part of this press release.

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust, or REIT, with more than $12 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2021, SVC owned 303 hotels with over 48,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2021, SVC also owned 788 retail service-focused net lease properties totaling over 13 million square feet throughout United States. SVC is managed by The RMR Group (Nasdaq: RMR), an alternative asset management company with more than $33 billion in assets under management as of December 31, 2021 and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA. For more information, visit www.svcreit.com.

Non-GAAP Financial Measures and Certain Definitions:

SVC presents certain “non-GAAP financial measures” within the meaning of the applicable Securities and Exchange Commission, or SEC, rules, including funds from operations, or FFO, Normalized FFO, earnings before interest, taxes, depreciation and amortization, or EBITDA, Hotel EBITDA, Adjusted Hotel EBITDA, EBITDA for real estate, or EBITDAre, and Adjusted EBITDAre. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) as indicators of SVC’s operating performance or as measures of SVC’s liquidity. These measures should be considered in conjunction with net income (loss) as presented in SVC’s consolidated statements of income (loss). SVC considers these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss). SVC believes these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of SVC’s operating performance between periods and with other REITs and, in the case of Hotel EBITDA, reflecting only those income and expense items that are generated and incurred at the hotel level may help both investors and management to understand the operations of SVC’s hotels.

Please see the pages attached hereto for a more detailed statement of SVC’s operating results and financial condition and for an explanation of SVC’s calculation of FFO and Normalized FFO, EBITDA, Hotel EBITDA, Adjusted Hotel EBITDA, EBITDAre and Adjusted EBITDAre and a reconciliation of those amounts to amounts determined in accordance with GAAP.

Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Occupancy is an important measure of the utilization rate and demand of SVC’s hotels.

Average Daily Rate, or ADR, represents rooms revenue divided by the total number of room nights sold in a given period. ADR provides useful insight on pricing at SVC’s hotels and is a measure widely used in the hotel industry.

Revenue per Available Room, or RevPAR, represents rooms revenue divided by the total number of room nights available to guests for a given period. RevPAR is an industry metric correlated to occupancy and ADR and helps measure revenue performance over comparable periods.

Hotel EBITDA and Adjusted Hotel EBITDA: Hotel EBITDA is calculated as hotel operating revenues less hotel operating expenses of all managed and leased hotels, prior to any adjustments required for presentation in SVC’s consolidated statements of income (loss) in accordance with GAAP. In calculating Adjusted EBITDAre, SVC adjusts for the items shown on page 12.

Hotel EBITDA Margin and Adjusted Hotel EBITDA Margin: Hotel EBITDA Margin is Hotel EBITDA as a percentage of hotel operating revenues. Adjusted Hotel EBITDA Margin is Adjusted Hotel EBITDA as a percentage of hotel operating expenses.

Comparable Hotels Data: SVC presents RevPAR, ADR, and occupancy for the periods presented on a comparable basis to facilitate comparisons between periods. SVC generally defines comparable hotels as those that were owned by it on December 31, 2021 and were open and operating for the entire periods being compared. For the three months ended December 31, 2021 and 2020, SVC’s comparable results excluded five hotels that had suspended operations during part of the periods presented. For the year ended December 31, 2021 and 2020, SVC’s comparable results excluded 23 hotels that had suspended operations during part of the periods presented.

Rent Coverage: SVC defines Rent Coverage as earnings before interest, taxes, depreciation, amortization and rent, or EBITDAR, divided by the annual minimum rent due to SVC weighted by the minimum rent of the property to total minimum rents of the net lease portfolio. EBITDAR amounts used to determine rent coverage are generally for the latest twelve-month period reported based on the most recent operating information, if any, furnished by the tenant. Operating statements furnished by the tenant often are unaudited and, in certain cases, may not have been prepared in accordance with GAAP and are not independently verified by SVC. Tenants that do not report operating information are excluded from the rent coverage calculations. In instances where SVC does not have financial information for the most recent quarter from its tenants, it has calculated an implied EBITDAR for the 2021 fourth quarter using industry benchmark data to reflect current operating trends. SVC believes using this industry benchmark data provides a reasonable estimate of recent operating results and rent coverage for those tenants.

 

SERVICE PROPERTIES TRUST

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)

(unaudited)

 

 

 

As of December 31,

 

 

 

2021

 

 

 

2020

 

ASSETS

 

 

 

 

Real estate properties:

 

 

 

 

Land

 

$

1,918,385

 

 

$

2,030,440

 

Buildings, improvements and equipment

 

 

8,307,248

 

 

 

9,131,832

 

Total real estate properties, gross

 

 

10,225,633

 

 

 

11,162,272

 

Accumulated depreciation

 

 

(3,281,659

)

 

 

(3,280,110

)

Total real estate properties, net

 

 

6,943,974

 

 

 

7,882,162

 

Acquired real estate leases and other intangibles, net

 

 

283,241

 

 

 

325,845

 

Assets held for sale

 

 

515,518

 

 

 

13,543

 

Cash and cash equivalents

 

 

944,043

 

 

 

73,332

 

Restricted cash

 

 

3,375

 

 

 

18,124

 

Due from related persons

 

 

48,168

 

 

 

55,530

 

Other assets, net

 

 

414,996

 

 

 

318,783

 

Total assets

 

$

9,153,315

 

 

$

8,687,319

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Revolving credit facility

 

$

1,000,000

 

 

$

78,424

 

Senior unsecured notes, net

 

 

6,143,022

 

 

 

6,130,166

 

Accounts payable and other liabilities

 

 

433,448

 

 

 

345,373

 

Due to related persons

 

 

21,539

 

 

 

30,566

 

Total liabilities

 

 

7,598,009

 

 

 

6,584,529

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 165,092,333 and 164,823,833 shares issued and outstanding, respectively

 

 

1,651

 

 

 

1,648

 

Additional paid in capital

 

 

4,552,558

 

 

 

4,550,385

 

Cumulative other comprehensive income (loss)

 

 

779

 

 

 

(760

)

Cumulative net income available for common shareholders

 

 

2,635,660

 

 

 

3,180,263

 

Cumulative common distributions

 

 

(5,635,342

)

 

 

(5,628,746

)

Total shareholders’ equity

 

 

1,555,306

 

 

 

2,102,790

 

Total liabilities and shareholders’ equity

 

$

9,153,315

 

 

$

8,687,319

 

 
 

SERVICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(amounts in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Year Ended

December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

Hotel operating revenues (1)

 

$

317,215

 

 

$

174,520

 

 

$

1,104,678

 

 

$

875,098

 

Rental income (2)

 

 

104,160

 

 

 

95,523

 

 

 

390,902

 

 

 

390,156

 

Total revenues

 

 

421,375

 

 

 

270,043

 

 

 

1,495,580

 

 

 

1,265,254

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Hotel operating expenses (1)(3)

 

 

286,968

 

 

 

189,898

 

 

 

1,010,737

 

 

 

682,804

 

Other operating expenses

 

 

3,900

 

 

 

4,179

 

 

 

15,658

 

 

 

15,208

 

Depreciation and amortization

 

 

115,757

 

 

 

121,351

 

 

 

485,965

 

 

 

498,908

 

General and administrative

 

 

12,601

 

 

 

13,046

 

 

 

53,439

 

 

 

50,668

 

Transaction related costs (4)

 

 

35,830

 

 

 

15,100

 

 

 

64,764

 

 

 

15,100

 

Loss on asset impairment (5)

 

 

76,510

 

 

 

254

 

 

 

78,620

 

 

 

55,756

 

Total expenses

 

 

531,566

 

 

 

343,828

 

 

 

1,709,183

 

 

 

1,318,444

 

 

 

 

 

 

 

 

 

 

Gain on sale of real estate, net (6)

 

 

588

 

 

 

11,916

 

 

 

11,522

 

 

 

2,261

 

Unrealized gain on equity securities, net (7)

 

 

2,168

 

 

 

15,473

 

 

 

22,535

 

 

 

19,882

 

Gain on insurance settlement (8)

 

 

 

 

 

 

 

 

 

 

 

62,386

 

Interest income

 

 

177

 

 

 

1

 

 

 

664

 

 

 

284

 

Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $5,913, $4,220, $21,036 and $14,870, respectively)

 

 

(92,494

)

 

 

(82,811

)

 

 

(365,721

)

 

 

(306,490

)

Loss on early extinguishment of debt (9)

 

 

 

 

 

(2,424

)

 

 

 

 

 

(9,394

)

Loss before income taxes and equity in losses of an investee

 

 

(199,752

)

 

 

(131,630

)

 

 

(544,603

)

 

 

(284,261

)

Income tax benefit (expense) (8)

 

 

1,950

 

 

 

(505

)

 

 

941

 

 

 

(17,211

)

Equity in losses of an investee (10)

 

 

(991

)

 

 

(5,605

)

 

 

(941

)

 

 

(9,910

)

Net loss

 

$

(198,793

)

 

$

(137,740

)

 

$

(544,603

)

 

$

(311,382

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and diluted)

 

 

164,667

 

 

 

164,498

 

 

 

164,566

 

 

 

164,422

 

 

 

 

 

 

 

 

 

 

Net loss per common share (basic and diluted)

 

$

(1.21

)

 

$

(0.84

)

 

$

(3.31

)

 

$

(1.89

)

 
See Notes  
 

SERVICE PROPERTIES TRUST

RECONCILIATIONS OF FUNDS FROM OPERATIONS, NORMALIZED FUNDS

FROM OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

 

 

Three Months Ended
December 31,

 

Year Ended

December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Calculation of FFO and Normalized FFO: (11)

 

 

 

 

 

 

 

Net loss

$

(198,793

)

 

$

(137,740

)

 

$

(544,603

)

 

$

(311,382

)

Add (Less): Depreciation and amortization

 

115,757

 

 

 

121,351

 

 

 

485,965

 

 

 

498,908

 

Loss on asset impairment (5)

 

76,510

 

 

 

254

 

 

 

78,620

 

 

 

55,756

 

Gain on sale of real estate, net (6)

 

(588

)

 

 

(11,916

)

 

 

(11,522

)

 

 

(2,261

)

Unrealized gain on equity securities, net (7)

 

(2,168

)

 

 

(15,473

)

 

 

(22,535

)

 

 

(19,882

)

Adjustments to reflect SVC’s share of FFO attributable to an investee (10)

 

737

 

 

 

400

 

 

 

2,605

 

 

 

(61

)

FFO

 

(8,545

)

 

 

(43,124

)

 

 

(11,470

)

 

 

221,078

 

 

 

 

 

 

 

 

 

Add (Less): Transaction related costs (4)

 

35,830

 

 

 

15,100

 

 

 

64,764

 

 

 

15,100

 

Loss contingency (13)

 

 

 

 

3,962

 

 

 

 

 

 

3,962

 

Gain on insurance settlement, net of tax (8)

 

 

 

 

(1,800

)

 

 

 

 

 

(48,536

)

Loss on early extinguishment of debt (9)

 

 

 

 

2,424

 

 

 

 

 

 

9,394

 

Adjustments to reflect SVC’s share of Normalized FFO attributable to an investee (10)

 

651

 

 

 

964

 

 

 

2,270

 

 

 

964

 

Normalized FFO

$

27,936

 

 

$

(22,474

)

 

$

55,564

 

 

$

201,962

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and diluted)

 

164,667

 

 

 

164,498

 

 

 

164,566

 

 

 

164,422

 

 

 

 

 

 

 

 

 

Basic and diluted per common share amounts:

 

 

 

 

 

 

 

Net loss per share

$

(1.21

)

 

$

(0.84

)

 

$

(3.31

)

 

$

(1.89

)

FFO

$

(0.05

)

 

$

(0.26

)

 

$

(0.07

)

 

$

1.34

 

Normalized FFO

$

0.17

 

 

$

(0.14

)

 

$

0.34

 

 

$

1.23

 

Distributions declared per share

$

0.01

 

 

$

0.01

 

 

$

0.04

 

 

$

0.57

 

 
See Notes  
 

SERVICE PROPERTIES TRUST

RECONCILIATIONS OF EBITDA, EBITDAre AND ADJUSTED EBITDAre

(amounts in thousands, except per share data)

(unaudited)

 

 

Three Months Ended
December 31,

 

Year Ended

December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Calculation of EBITDA, EBITDAre and Adjusted EBITDAre:(12)

 

 

 

 

 

 

 

Net loss

$

(198,793

)

 

$

(137,740

)

 

$

(544,603

)

 

$

(311,382

)

Add (Less): Interest expense

 

92,494

 

 

 

82,811

 

 

 

365,721

 

 

 

306,490

 

Income tax (benefit) expense (8)

 

(1,950

)

 

 

505

 

 

 

(941

)

 

 

17,211

 

Depreciation and amortization

 

115,757

 

 

 

121,351

 

 

 

485,965

 

 

 

498,908

 

EBITDA

 

7,508

 

 

 

66,927

 

 

 

306,142

 

 

 

511,227

 

Add (Less): Loss on asset impairment (5)

 

76,510

 

 

 

254

 

 

 

78,620

 

 

 

55,756

 

Gain on sale of real estate, net (6)

 

(588

)

 

 

(11,916

)

 

 

(11,522

)

 

 

(2,261

)

Adjustments to reflect SVC’s share of EBITDAre attributable to an investee (10)

 

781

 

 

 

 

 

 

2,904

 

 

 

 

EBITDAre

 

84,211

 

 

 

55,265

 

 

 

376,144

 

 

 

564,722

 

Add (Less): Transaction related costs (4)

 

35,830

 

 

 

15,100

 

 

 

64,764

 

 

 

15,100

 

Unrealized gain on equity securities, net (7)

 

(2,168

)

 

 

(15,473

)

 

 

(22,535

)

 

 

(19,882

)

Gain on insurance settlement (8)

 

 

 

 

 

 

 

 

 

 

(62,386

)

Loss on early extinguishment of debt (9)

 

 

 

 

2,424

 

 

 

 

 

 

9,394

 

Adjustments to reflect SVC’s share of Adjusted EBITDAre attributable to an investee (10)

 

651

 

 

 

2,755

 

 

 

2,270

 

 

 

1,751

 

General and administrative expense paid in common shares (14)

 

473

 

 

 

920

 

 

 

2,963

 

 

 

3,206

 

Loss contingency (13)

 

 

 

 

3,962

 

 

 

 

 

 

3,962

 

Adjusted EBITDAre

$

118,997

 

 

$

64,953

 

 

$

423,606

 

 

$

515,867

 

 

 

 

 

 

 

 

 

See Notes  
 

SERVICE PROPERTIES TRUST

CALCULATION AND RECONCILIATION OF HOTEL EBITDA AND ADJUSTED HOTEL EBITDA

Comparable Hotels

(amounts in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Year Ended

December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Number of hotels

 

298

 

 

 

298

 

 

 

280

 

 

 

280

 

Room revenues

$

263,312

 

 

$

150,226

 

 

$

812,506

 

 

$

656,990

 

Food and beverage revenues

 

28,700

 

 

 

7,707

 

 

 

44,517

 

 

 

41,787

 

Other revenues

 

11,495

 

 

 

8,910

 

 

 

27,437

 

 

 

27,980

 

Hotel operating revenues – comparable hotels

 

303,507

 

 

 

166,843

 

 

 

884,460

 

 

 

726,757

 

Rooms expenses

 

85,800

 

 

 

56,857

 

 

 

267,010

 

 

 

223,641

 

Food and beverage expenses

 

23,458

 

 

 

9,598

 

 

 

38,393

 

 

 

43,535

 

Other direct and indirect expenses

 

119,706

 

 

 

96,576

 

 

 

385,088

 

 

 

350,702

 

Management fees

 

12,139

 

 

 

2,131

 

 

 

34,590

 

 

 

5,580

 

Real estate taxes, insurance and other

 

24,843

 

 

 

27,777

 

 

 

93,343

 

 

 

94,088

 

FF&E reserves (15)

 

1,236

 

 

 

390

 

 

 

4,046

 

 

 

10,178

 

Hotel operating expenses – comparable hotels

 

267,182

 

 

 

193,329

 

 

 

822,470

 

 

 

727,724

 

 

 

 

 

 

 

 

 

Hotel EBITDA – comparable hotels

$

36,325

 

 

$

(26,486

)

 

$

61,990

 

 

$

(967

)

Loss contingency (13)

 

 

 

 

(331

)

 

 

 

 

 

(331

)

Adjusted Hotel EBITDA

$

36,325

 

 

$

(26,817

)

 

$

61,990

 

 

$

(1,298

)

Adjusted Hotel EBITDA Margin

 

12.0

%

 

 

(16.1

) %

 

 

7.0

%

 

 

(0.2

) %

 

 

 

 

 

 

 

 

Hotel operating revenues (GAAP) (1)

$

317,215

 

 

$

174,520

 

 

$

1,104,678

 

 

$

875,098

 

Add (Less):

 

 

 

 

 

 

 

Hotel operating revenues from leased hotels

 

 

 

 

1,898

 

 

 

 

 

 

13,643

 

Hotel operating revenues from non-comparable hotels

 

(13,708

)

 

 

(9,575

)

 

 

(220,218

)

 

 

(161,984

)

Hotel operating revenues – comparable hotels

$

303,507

 

 

$

166,843

 

 

$

884,460

 

 

$

726,757

 

 

 

 

 

 

 

 

 

Hotel operating expenses (GAAP) (1)

$

286,968

 

 

$

189,898

 

 

$

1,010,737

 

 

$

682,804

 

Add (Less):

 

 

 

 

 

 

 

Hotel operating expenses from non-comparable hotels

 

(21,643

)

 

 

(13,192

)

 

 

(210,993

)

 

 

(215,340

)

Reduction for security deposit and guaranty fundings, net (3)

 

 

 

 

13,387

 

 

 

15,696

 

 

 

235,522

 

Hotel operating expenses of leased hotels

 

 

 

 

2,225

 

 

 

 

 

 

11,074

 

FF&E reserves from managed hotel operations (15)

 

1,236

 

 

 

390

 

 

 

4,546

 

 

 

11,594

 

Other (16)

 

621

 

 

 

621

 

 

 

2,484

 

 

 

2,070

 

Hotel operating expenses – comparable hotels

$

267,182

 

 

$

193,329

 

 

$

822,470

 

 

$

727,724

 

 
See Notes  
 

SERVICE PROPERTIES TRUST

CALCULATION AND RECONCILIATION OF HOTEL EBITDA AND ADJUSTED HOTEL EBITDA

All Hotels

(amounts in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

Room revenues

$

272,458

 

 

$

159,022

 

 

$

972,411

 

 

$

773,572

 

Food and beverage revenues

 

31,503

 

 

 

7,911

 

 

 

84,430

 

 

 

66,830

 

Other revenues

 

13,254

 

 

 

9,485

 

 

 

47,837

 

 

 

48,339

 

Hotel operating revenues

 

317,215

 

 

 

176,418

 

 

 

1,104,678

 

 

 

888,741

 

Rooms expenses

 

90,705

 

 

 

59,784

 

 

 

321,228

 

 

 

270,828

 

Food and beverage expenses

 

26,768

 

 

 

9,928

 

 

 

72,884

 

 

 

75,718

 

Other direct and indirect expenses

 

126,208

 

 

 

97,328

 

 

 

458,586

 

 

 

422,819

 

Management fees

 

11,869

 

 

 

2,436

 

 

 

40,478

 

 

 

8,050

 

Real estate taxes, insurance and other

 

32,039

 

 

 

36,655

 

 

 

135,741

 

 

 

154,375

 

FF&E reserves (15)

 

1,236

 

 

 

390

 

 

 

4,546

 

 

 

11,274

 

Hotel operating expenses

 

288,825

 

 

 

206,521

 

 

 

1,033,463

 

 

 

943,064

 

 

 

 

 

 

 

 

 

Hotel EBITDA

$

28,390

 

 

$

(30,103

)

 

$

71,215

 

 

$

(54,323

)

Loss contingency (13)

 

 

 

 

3,962

 

 

 

 

 

 

3,962

 

Adjusted Hotel EBITDA

$

28,390

 

 

$

(26,141

)

 

$

71,215

 

 

$

(50,361

)

Adjusted Hotel EBITDA Margin

 

8.9

%

 

 

(14.8

) %

 

 

6.4

%

 

 

(5.7

) %

 

 

 

 

 

 

 

 

Hotel operating revenues (GAAP) (1)

$

317,215

 

 

$

174,520

 

 

$

1,104,678

 

 

$

875,098

 

Add: hotel revenues of leased hotels (1)

 

 

 

 

1,898

 

 

 

 

 

 

13,643

 

Hotel operating revenues

$

317,215

 

 

$

176,418

 

 

$

1,104,678

 

 

$

888,741

 

 

 

 

 

 

 

 

 

Hotel operating expenses (GAAP) (1)

$

286,968

 

 

$

189,898

 

 

$

1,010,737

 

 

$

682,804

 

Add (Less):

 

 

 

 

 

 

 

Reduction for security deposit and guaranty fundings, net (3)

 

 

 

 

13,387

 

 

 

15,696

 

 

 

235,522

 

Hotel operating expenses of leased hotels

 

 

 

 

2,225

 

 

 

 

 

 

11,074

 

FF&E reserves from managed hotels operations (15)

 

1,236

 

 

 

390

 

 

 

4,546

 

 

 

11,594

 

Other (16)

 

621

 

 

 

621

 

 

 

2,484

 

 

 

2,070

 

Hotel operating expenses

$

288,825

 

 

$

206,521

 

 

$

1,033,463

 

 

$

943,064

 

 
See Notes  
  1. As of December 31, 2021, SVC owned 303 hotels. SVC’s consolidated statements of income (loss) include hotel operating revenues and expenses of managed hotels and rental income from leased hotels.
  2. SVC increased  rental income by $466 and reduced rental income by $416 for the three months ended December 31, 2021 and 2020, respectively, and reduced rental income by $2,621 and $714 for the years ended December 31, 2021 and 2020, respectively, to record scheduled rent changes under certain of SVC’s leases, the deferred rent obligations under SVC’s leases with TA and the estimated future payments to SVC under its leases with TA for the cost of removing underground storage tanks on a straight-line basis.
  3. When managers of SVC’s hotels are required to fund the shortfalls of minimum returns under the terms of SVC’s management agreements or their guarantees, SVC reflects such fundings (including security deposit applications) in its consolidated statements of income (loss) as a reduction of hotel operating expenses. The net reduction to hotel operating expenses was $13,387 for the three months ended December 31, 2020 and $15,697 and $235,522 for the years ended December 31, 2021 and 2020, respectively. There was no net reduction to hotel operating expenses during the three months ended December 31, 2021.
  4. Transaction related costs for the three months ended December 31, 2021 of $35,830 primarily consists of working capital advances SVC previously funded under its agreements with Marriott and IHG as a result of the amounts no longer expected to be recoverable. Transaction related costs for the year ended December 31, 2021 include $38,446 of working capital advances SVC previously funded under its agreements with Marriott, IHG and Hyatt as a result of the amounts no longer expected to be recoverable, $19,920 of hotel manager transition related costs resulting from the rebranding of 94 hotels during the period, and $6,398 of legal costs related to SVC’s arbitration proceeding with Marriott. Transaction costs for the three months and year ended December 31, 2020 primarily consisted of transition related costs resulting from the rebranding of 115 hotels previously managed by IHG, Marriott and Wyndham Hotels & Resorts, Inc. to Sonesta.
  5. SVC recorded a $76,510 loss on asset impairment during the three months ended December 31, 2021 to reduce the carrying value of 35 hotel properties and 21 net lease properties to their estimated fair value less costs to sell and a $254 loss on asset impairment during the three months ended December 31, 2020, to reduce the carrying value of five net lease properties to their estimated fair value less costs to sell. SVC recorded a $78,620 loss on asset impairment during the year ended December 31, 2021 to reduce the carrying value of 35 hotels and 26 net lease properties to their estimated fair value less costs to sell and a $55,756 loss on asset impairment during the year ended December 31, 2020 to reduce the carrying value of 18 hotel properties and 13 net lease properties to their estimated fair value less costs to sell.
  6. SVC recorded a $588 net gain on sale of real estate during the three months ended December 31, 2021 in connection with the sale of one hotel and six net lease properties and recorded a $11,916 net gain on sale of real estate during the three months ended December 31, 2020 in connection with the sale of 18 hotels and six net lease properties. SVC recorded a $11,522 net gain on sale of real estate during the year ended December 31, 2021 in connection with the sale of seven hotels and eleven net lease properties and recorded a net gain on sale of real estate of $2,261 during the year ended December 31, 2020 in connection with the sale of 18 hotels and 21 net lease properties.
  7. Unrealized gain on equity securities, net represents the adjustment required to adjust the carrying value of SVC’s investment in shares of TA common stock to its fair value.
  8. SVC recorded a $62,386 gain on insurance settlement during the year ended December 31, 2020 for insurance proceeds received for its then leased hotel in San Juan, PR related to Hurricane Maria. Under GAAP, SVC was required to increase the building basis of this hotel for the amount of the insurance proceeds. SVC also recorded a $13,850 deferred tax liability as a result of the book value to tax basis difference related to this accounting during the year ended December 31, 2020.
  9. SVC recorded a loss on extinguishment of debt of $2,424 and $9,394 during the three months and year ended December 31, 2020, respectively, relating to its repayment of its $400 million term loan and certain unsecured senior notes.
  10. Represents SVC’s proportionate share from its equity investment in Sonesta.
  11. SVC calculates FFO and Normalized FFO as shown above. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or Nareit, which is net income (loss), calculated in accordance with GAAP, excluding any gain or loss on sale of properties and loss on impairment of real estate assets, if any, plus real estate depreciation and amortization, less any unrealized gains and losses on equity securities, as well as adjustments to reflect SVC’s share of FFO attributable to an investee and certain other adjustments currently not applicable to SVC. In calculating Normalized FFO, SVC adjusts for the items shown above. FFO and Normalized FFO are among the factors considered by SVC’s Board of Trustees when determining the amount of distributions to its shareholders. Other factors include, but are not limited to, requirements to satisfy SVC’s REIT distribution requirements, limitations in its credit agreement and public debt covenants, the availability to SVC of debt and equity capital, SVC’s distribution rate as a percentage of the trading price of its common shares, or dividend yield, and to the dividend yield of other REITs, SVC’s expectation of its future capital requirements and operating performance and SVC’s expected needs for and availability of cash to pay its obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than SVC does.
  12. SVC calculates EBITDA, EBITDAre, and Adjusted EBITDAre as shown above. EBITDAre is calculated on the basis defined by Nareit which is EBITDA, excluding gains and losses on the sale of real estate, loss on impairment of real estate assets, if any, and adjustments to reflect SVC’s share of EBITDAre attributable to an investee. In calculating Adjusted EBITDAre, SVC adjusts for the items shown above. Other real estate companies and REITs may calculate EBITDA, EBITDAre and Adjusted EBITDAre differently than SVC does.
  13. Hotel operating expenses for the three months ended December 31, 2020 includes a $3,962 loss contingency related to a litigation matter relating to certain of SVC’s hotels.
  14. Amounts represent the equity compensation for SVC’s Trustees, officers and certain other employees of SVC’s manager.
  15. Various percentages of total sales at certain of SVC’s hotels are escrowed as reserves for future renovations or refurbishments, or FF&E reserve escrows. SVC owns all the FF&E reserve escrows for its hotels.
  16. SVC is amortizing a liability it recorded for the fair value of its initial investment in Sonesta as a reduction to hotel operating expenses in its consolidated statements of income (loss). SVC reduced hotel operating expenses by $621 for each of the three months ended December 31, 2021 and 2020, and $2,483 and $2,070 for the years ended December 31, 2021 and 2020, respectively, for this liability.

Warning Concerning Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever SVC uses words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may” and negatives or derivatives of these or similar expressions, SVC is making forward-looking statements. These forward-looking statements are based upon SVC’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by SVC’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond SVC’s control. For example:

The information contained in SVC’s filings with the SEC, including under the caption “Risk Factors” in SVC’s periodic reports, or incorporated therein, identifies other important factors that could cause differences from SVC’s forward-looking statements. SVC’s filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon forward-looking statements.

Except as required by law, SVC does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

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How Europeans Are Responding to Exorbitant Gas and Power Bills

A German retiree facing sky-high energy bills is turning to a wood-burning stove. The owner of a dry cleaning business in Spain adjusted her employees’ work shifts to cut electric bills and installed solar panels. A mayor in France said he ordered a hiring freeze because rising electrical bills threaten a financial “catastrophe.”

Europeans have long paid some of the world’s highest prices for energy, but no one can remember a winter like this one. Lives and livelihoods across the continent are being upended by a series of factors, including pandemic-induced supply shortages and now geopolitical tensions that are driving some energy prices up fivefold.

Matters could get worse if tensions between Russia and Ukraine escalate further, potentially interrupting the flow of gas. Russia provides more than a third of Europe’s natural gas, which heats homes, generates electricity and powers factories. Even as politicians and leaders in capitals across Europe are freezing prices, slashing taxes on energy and issuing checks to households hardest hit by the price increases, concerns are growing about what the persistently high prices could mean for people’s jobs and their ability to pay their bills.

“People are very upset and very distressed,” said Stefanie Siegert, who counsels consumers in the eastern German state of Saxony who find themselves struggling to pay their gas and power bills.

rocked France in 2018. But Ms. Siegert, whose agency counseled more than 300 customers in January — three times its monthly average — said she wouldn’t be surprised if the anger currently directed at the prospect of a vaccine mandate shifted its sights to energy prices.

“When you talk with people, you feel their anger,” she said. “It is very depressing.”

price cap on energy bills was recently raised 54 percent, increasing annual charges to 1,971 pounds. That increase will affect 22 million households beginning in April, contributing to broadening worries in Britain about the rising cost of living.

Similar concerns can be found throughout the continent.

Athina Sirogianni, 46, a freelance translator in Athens, said she remembered fondly the day about a decade ago when her building switched from oil to natural gas. The move cut her utility bill in half.

Nyrstar, the world’s second-largest zinc processor, produces nearly 500 tons of the metal each day at a sprawling factory in Auby, in northern France, a complex that consumes as much energy as the French city of Lyon.

When its electrical rates surged from €35 to €50 per megawatt-hour to €400 last December, it made no sense to keep the factory running, said Xavier Constant, Nyrstar France’s general manager. At that rate, he said, “the more we produce the more we lose,” and so the plant shut down last month for three weeks.

Nyrstar temporarily halved production at its other European plants in October when the energy crisis set in, prompting a brief spike in the global price of zinc.

Last fall, fertilizer plants in Britain were forced to close because of gas prices. And several German companies that produce glass, steel and fertilizer have also scaled back production in recent months.

To ease the burden of the high prices, the government in Berlin reduced by half an energy surcharge on bills aimed at funding the country’s transition to renewable sources of power, and plans to phase it out by the end of next year.

on Twitter. He said the facility’s electricity prices had increased 100 percent.

He and other hospital directors have appealed to the government in Warsaw to intervene, saying the recent cuts to taxes on energy and gasoline were not enough.

In Germany, there is rising tension in municipally owned utilities that must accept customers, like Mr. Backhaus in Saxony, whose relatively low-cost contracts have been dropped by private energy companies because the companies can’t pay ballooning energy rates.

The municipal utilities are forced to increase the rates for these new customers, often almost astronomically high, to cover the cost of buying extra energy on the spot market at record prices. That leads to tensions in communities, and can threaten municipal finances.

“Anyone who wants to will be supplied with energy by the municipal utilities,” said Markus Lewe, president of the German Association of Cities and Towns. “But it must not lead to the municipal utilities and their loyal customers being asked to pay for questionable business models of other providers and having to answer for their shortsighted financing.”

He called on the federal government to intervene, to protect cities from the price instability.

In France, local leaders are also looking to the federal government to help ease the sting of skyrocketing energy bills.

Boris Ravignon, the mayor of Charleville-Mézières, said his city is facing “a catastrophe” after its January energy bill more than tripled, wiping out the region’s budget surplus for infrastructure and public services in a single month. The city is trying to cut costs by switching streetlights to LED bulbs, which use less electricity, and has proposed a new hydroelectric project.

The mayor has already frozen planned hirings and said the city may have no choice but to raise the cost of public services like water, transportation, fees to use sports halls like the city’s public pool, and cultural events.

“We really want to protect citizens from these increases,” Mr. Ravignon said. “But when prices reach such crazy heights, it’s impossible.”

Reporting contributed by Adèle Cordonnier in France, Raphael Minder in Spain and Niki Kitsantonis in Greece.

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London is top global finance centre but lags in key areas, says study

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St Paul’s Cathedral and areas of the financial district of the City of London are seen at dusk October 9, 2008. REUTERS/Toby Melville

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LONDON, Jan 27 (Reuters) – London remains the top global financial centre, according to a study from its own financial district, but is outgunned by New York and Singapore in access to talent, while Paris is adding competition from the European Union.

The study from the City of London Corporation selected seven centres that feature in other research on financial hubs, such as Z/Yen, which consistently puts New York in the top spot and London second.

The study, which added Paris this year, looked at five areas like digital skills, regulation and talent. While London remains top overall from last year, New York is only slightly behind and closing the gap, followed by Singapore, Frankfurt, Paris, Hong Kong and Tokyo.

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City of London Graphic

New York remains by far the biggest financial centre, while London lags Singapore in resilient business infrastructure, access to talent and skills, and a friendly regulatory and legal environment.

“UK policymakers need to guarantee that its businesses continue to enjoy unrivalled access to the best of global talent,” the study said.

“Withdrawal from the EU, the end of freedom of movement and the introduction of a new immigration system have damaged perceptions of the UK as an attractive business environment for international talent in recent years.”

Total tax for UK-based financial services firms, in particular banks, is also relatively high, it said. The finance ministry is reviewing some of the taxes.

Britain’s finance ministry has proposed that the Bank of England has a formal remit to “facilitate” London’s competitiveness.

A year since Britain left the EU’s orbit, leaving the financial sector largely cut off from the bloc, there are no signs of a “Brexit dividend” in looser regulation, though listing rules have been eased to help London catch up with New York in IPOs.

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Reporting by Huw Jones;
Editing by Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

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Essex Reports Characteristics of 2021 Dividends

SAN MATEO, Calif.–(BUSINESS WIRE)–Essex Property Trust, Inc. (NYSE:ESS) announced today the income tax treatment for its 2021 distributions to shareholders. The 2021 distribution characteristics are as follows:

Common Stock – CUSIP Number 297178105:

Record

Payment

Cash

Distribution

Ordinary

Taxable

Return of

Capital

Gain

Unrecaptured

Section 1250

Capital Gain

 

Section

199A

Sec. 897

Capital

Date

Date

Per Share

Dividend

Capital

(20% rate)

(25% rate)

Dividend

Gains

1/4/2021

1/15/2021

$2.07750

$1.47343

$0.00000

$0.45854

$0.14553

$1.47343

$0.60407

3/31/2021

4/15/2021

$2.09000

$1.48229

$0.00000

$0.46130

$0.14641

$1.48229

$0.60771

6/30/2021

7/15/2021

$2.09000

$1.48229

$0.00000

$0.46130

$0.14641

$1.48229

$0.60771

9/30/2021

10/15/2021

$2.09000

$1.48229

$0.00000

$0.46130

$0.14641

$1.48229

$0.60771

 

Totals:

$8.34750

$5.92030

$0.00000

$1.84244

$0.58476

$5.92030

$2.42720

 

Percentages:

100%

70.923%

0.000%

22.072%

7.005%

 

 

For purposes of calculating alternative minimum taxable income under Sec. 55 of the Internal Revenue Code of 1986, the Company apportions $0.17 per common share attributable to depreciation assuming a full year of ownership.

The Company did not incur any foreign taxes during 2021.

Shareholders are encouraged to consult with their tax advisors as to their specific tax treatment of Essex Property Trust, Inc. dividends.

About Essex Property Trust, Inc.

Essex Property Trust, Inc., an S&P 500 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. Essex currently has ownership interests in 247 apartment communities comprising approximately 60,000 apartment homes with an additional 3 properties in various stages of active development. Additional information about the Company can be found on the Company’s website at www.essex.com.

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