Clipper Realty Inc.

What they do

The company owns a New York metropolitan area portfolio including Tribeca House and Aspen in Manhattan and Flatbush Gardens, 141 and 250 Livingston Street, Clover House, 1010 Pacific Street and the Dean Street property in Brooklyn. It derives most revenue from apartment rentals, with the remainder from commercial and retail tenants. It was formed from predecessor entities controlled by management, completed a $130.2 million private offering in 2015, elected REIT status for 2015 and raised about $78.7 million net in a February 2017 IPO.

Revenue drivers

• Residential rental income — Apartment rents across the portfolio generated approximately 78% of 2025 revenues; second quarter 2026 residential revenues were $32.2 million versus $29.1 million a year earlier.
• Commercial and retail rental income — Office and retail space, principally 141 and 250 Livingston Street in Brooklyn, produced second quarter 2026 commercial revenues of $6.4 million, down from $10.0 million a year earlier after the NYC lease termination.
• Flatbush Gardens — A 59-building Brooklyn complex with 2,494 rentable units and about 1,749,000 square feet of residential GLA, operated under rent stabilization plus a 40-year Article 11 regulatory agreement with NYC HPD.
• Lease-up properties — The Dean Street Prospect House property, placed in service in August 2025, contributed $2.3 million of revenue in the second quarter of 2026 and was fully leased at June 30, 2026.

Recent performance

Second quarter 2026 revenues were $38.6 million versus $39.0 million in the second quarter of 2025. Residential revenues rose $3.1 million to $32.2 million, while commercial revenues fell $3.6 million to $6.4 million due to the August 2025 NYC lease termination at 250 Livingston Street, partly offset by new commercial leases. Income from operations was $9.3 million versus $10.8 million, NOI was $21.6 million versus $22.8 million and the net loss widened to $6.3 million from $1.4 million. AFFO declined to $3.8 million from $8.3 million. The company declared a $0.095 per share second quarter 2026 dividend. Full-year 2025 net loss was $52.3 million, including a $33.8 million impairment and $0.9 million loss on the sale of 10 West 65th Street.

Strategy

Management is focused on leasing up and operating its residential portfolio, where new free-market leases signed in the quarter exceeded prior rents by 13% and renewals by over 5%. It is jointly marketing the 250 Livingston Street loan for sale with the lender under a June 2026 Consent and Cooperation Agreement, and retains the right to bid for the loan at the end of the marketing period. The company sold 10 West 65th Street in May 2025 for $45.5 million gross and repaid the $31.2 million Flagstar mortgage. Growth is expected to come from continued multifamily leasing rather than new acquisitions, given no new development or acquisition program is described in the excerpts.

Risks

• 250 Livingston Street default and foreclosure — The company stopped funding the property's operating and debt service shortfall in November 2025 and the lender can foreclose or take the deed in lieu of foreclosure at the end of the marketing period under the June 2026 Consent and Cooperation Agreement.
• Loss of the NYC office tenant — Two leases with New York City agencies provided the office tenant base, one terminated effective August 23, 2025 and the other expired December 27, 2025, and the company may be unable to replace the City.
• Rent stabilization limits — Rents at Flatbush Gardens, Aspen and part of Tribeca House are capped under HSTP, with one-year renewals limited to 3.00% and two-year renewals to 4.50% effective October 1, 2025.
• Leverage and negative equity — At June 30, 2026 total liabilities of $1.33 billion exceeded total assets of $1.22 billion, leaving shareholders' equity of negative $40.1 million, and long-term debt was $1.27 billion at March 31, 2025.

Outlook

Management highlights record residential leasing and occupancy, with new free-market leases 13% above prior rents and the Dean Street property fully leased at June 30, 2026. The 250 Livingston Street outcome remains unresolved; the lender has not foreclosed as of the August 6, 2026 release, and the company may bid for the loan. No specific earnings or acquisition guidance is provided in the excerpts.