PART I – FINANCIAL INFORMATION [Condensed Financial Statements](index=3&type=section&id=ITEM%201.%20CONDENSED%20FINANCIAL%20STATEMENTS) Clipper Realty Inc. reported increased Q1 2023 revenues but a higher net loss of $7.1 million, primarily due to a debt extinguishment loss, decreasing total equity [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2023, total assets increased to $1.237 billion, but rising liabilities led to total equity declining to $26.4 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,237,398** | **$1,229,631** | | Investment in real estate, net | $1,175,477 | $1,171,109 | | Cash and cash equivalents | $18,801 | $18,152 | | **Total Liabilities** | **$1,211,008** | **$1,192,452** | | Notes payable, net | $1,178,027 | $1,161,588 | | **Total Equity** | **$26,390** | **$37,179** | [Consolidated Statements of Operations](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2023 revenues increased 5.0% to $33.7 million, but a $3.9 million debt extinguishment loss led to a $7.1 million net loss Q1 2023 vs Q1 2022 Statement of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total Revenues | $33,667 | $32,050 | | Income from Operations | $6,914 | $6,509 | | Interest expense, net | ($10,135) | ($9,985) | | Loss on extinguishment of debt | ($3,868) | $0 | | **Net loss** | **($7,089)** | **($3,476)** | | Net loss attributable to common stockholders | ($2,687) | ($1,318) | | **Basic and diluted net loss per share** | **($0.19)** | **($0.09)** | [Consolidated Statements of Changes in Equity](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY) Total equity decreased from $37.2 million to $26.4 million in Q1 2023, primarily due to a net loss and distributions - Total equity fell by **$10.8 million** during Q1 2023, from **$37,179 thousand** to **$26,390 thousand**[15](index=15&type=chunk) - Key drivers of the equity decrease were the net loss of **$7,089 thousand** and dividends/distributions of **$4,348 thousand**[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Q1 2023 net cash from operations increased to $7.4 million, and strong financing activities led to a $7.2 million net cash increase Q1 2023 vs Q1 2022 Cash Flows (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,421 | $6,587 | | Net cash used in investing activities | ($12,494) | ($17,851) | | Net cash provided by financing activities | $12,231 | $2,875 | | **Net increase (decrease) in cash** | **$7,158** | **($8,389)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail the company's property portfolio, $1.19 billion debt, ongoing tenant lawsuits, and residential properties generating 71% of revenue - The company's property portfolio is concentrated in Brooklyn and Manhattan, including notable assets like Flatbush Gardens and Tribeca House[22](index=22&type=chunk)[40](index=40&type=chunk) Total Debt Summary (in thousands) | Description | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total debt | $1,187,267 | $1,171,238 | | Unamortized debt issuance costs | ($9,240) | ($9,650) | | **Total debt, net** | **$1,178,027** | **$1,161,588** | - The company is involved in multiple lawsuits (Kuzmich, Crowe, Horn cases) with tenants at the Tribeca House property over alleged rent overcharges related to tax abatements[101](index=101&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - A charge of **$2.7 million** was recorded in 2021 to cover estimated rent overcharges, interest, and legal costs[101](index=101&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - For Q1 2023, the Residential segment generated **$23.9 million** in revenue and **$2.7 million** in income from operations, while the Commercial segment generated **$9.7 million** in revenue and **$4.3 million** in income from operations[107](index=107&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes Q1 2023 revenue growth to residential portfolio improvements, with net loss widening to $7.1 million from a debt extinguishment loss Q1 2023 vs Q1 2022 Results of Operations Highlights (in thousands) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $33,667 | $32,050 | 5.0% | | Income from operations | $6,914 | $6,509 | 6.2% | | Loss on extinguishment of debt | ($3,868) | $0 | (100.0)% | | Net loss | ($7,089) | ($3,476) | (103.9)% | - Residential rental income grew **11.5%** to **$23.9 million**, driven by higher rental rates and occupancy[141](index=141&type=chunk) - For example, base rent per square foot at Tribeca House increased from **$59.84** to **$74.59** year-over-year[141](index=141&type=chunk) - The company incurred a **$3.9 million** loss on the extinguishment of debt from the early termination of the construction loan at 1010 Pacific Street[146](index=146&type=chunk)[119](index=119&type=chunk) Non-GAAP Financial Measures Reconciliation (in thousands) | Measure | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net loss | ($7,089) | ($3,476) | | FFO | ($264) | $3,229 | | AFFO | $4,476 | $4,420 | | Adjusted EBITDA | $14,493 | $14,141 | [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate fluctuation on its $69.1 million variable rate debt, impacting annual net loss by $0.7 million for a 1% change - The principal market risk is related to interest rate fluctuations on the company's variable rate debt[186](index=186&type=chunk) - As of March 31, 2023, a **1%** change in interest rates on the **$69.1 million** of variable rate debt would affect the annual net loss by about **$0.7 million**[212](index=212&type=chunk) - The estimated fair value of the company's notes payable was **$1,136.7 million** as of March 31, 2023, which is below the carrying amount of **$1,187.3 million** (excluding unamortized costs)[188](index=188&type=chunk)[127](index=127&type=chunk) [Controls and Procedures](index=30&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - Based on an evaluation as of March 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[214](index=214&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[191](index=191&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Legal proceedings, primarily tenant lawsuits concerning rent stabilization, are detailed in Note 8 of the consolidated financial statements - For a discussion of legal proceedings, the report refers to Note 8 of the consolidated financial statements[215](index=215&type=chunk) [Risk Factors](index=30&type=section&id=ITEM%201A.RISK%20FACTORS) Risk factors from the 2022 Form 10-K remain largely unchanged, with a new risk added regarding concentrated credit risk from cash balances exceeding FDIC insurance - No material changes were made to the risk factors from the 2022 Form 10-K, except for one update[221](index=221&type=chunk) - A new risk factor was added concerning the concentration of credit risk, as cash balances held at financial institutions may exceed the **$250,000** FDIC insurance limit, posing a risk of loss if a financial institution fails[193](index=193&type=chunk)[216](index=216&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This item is not applicable for the reporting period - Not applicable[222](index=222&type=chunk) [Mine Safety Disclosure](index=30&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This item is not applicable for the reporting period - Not applicable[194](index=194&type=chunk) [Exhibits](index=31&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the report, including CEO and CFO certifications and XBRL data files - The exhibits filed with this report include certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL documents[223](index=223&type=chunk)

Clipper Realty, Inc. (NYSE:CLPR) Q4 2022 Earnings Conference Call March 16, 2023 5:00 PM ET Company Participants Lawrence Kreider - CFO & Secretary David Bistricer - Co-Chairman & CEO Jacob Bistricer - COO Conference Call Participants Operator Good day, ladies and gentlemen, and welcome to the Clipper Realty Fourth Quarter 2022 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Larry Kreider. The floor is yours. Lawrence Kreider Hi. Good afternoon, and thank y ...

Part I [SUMMARY OF RISK FACTORS](index=2&type=section&id=SUMMARY%20OF%20RISK%20FACTORS) This section outlines the company's main risks, including New York City economic and regulatory developments, leasing challenges, capital expenditure needs, competition, high debt, REIT qualification difficulties, and related party conflicts. - All company properties are located in New York City, where adverse economic or regulatory developments could negatively impact performance, financial condition, cash flows, and dividend distribution ability[3](index=3&type=chunk)[139](index=139&type=chunk)[44](index=44&type=chunk) - The company may be unable to renew leases or lease vacant spaces on favorable terms, or at all, which could adversely affect its financial condition, operating results, and cash flows[3](index=3&type=chunk)[51](index=51&type=chunk)[140](index=140&type=chunk) - The company has been and may in the future be required to make rent or other concessions and/or significant capital expenditures to improve properties to retain and attract tenants, generate positive cash flow, or make real estate suitable for sale, which could adversely affect the company[3](index=3&type=chunk)[26](index=26&type=chunk)[140](index=140&type=chunk) - Competition may hinder the company's ability to attract or retain tenants or re-lease space, thereby adversely affecting its operating results and cash flows[4](index=4&type=chunk)[65](index=65&type=chunk)[152](index=152&type=chunk) - The company has a substantial amount of debt, which may limit its financial and operating activities and could adversely affect its future financing ability[4](index=4&type=chunk)[264](index=264&type=chunk) - Failure to obtain or maintain REIT qualification would have a material adverse effect on the value of the company's common stock[4](index=4&type=chunk)[274](index=274&type=chunk) [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201.%20BUSINESS) Clipper Realty Inc. is a self-administered and self-managed real estate company focused on acquiring, owning, managing, operating, and repositioning multifamily residential and commercial properties in the New York metropolitan area. - Clipper Realty Inc. is a self-administered and self-managed real estate company, focusing on the acquisition, ownership, management, operation, and repositioning of multifamily residential and commercial properties in the New York metropolitan area (Manhattan and Brooklyn)[144](index=144&type=chunk)[386](index=386&type=chunk) - The company completed a private placement in August 2015 and elected to be treated as a Real Estate Investment Trust (REIT) for tax purposes beginning with the taxable year ended December 31, 2015[154](index=154&type=chunk)[379](index=379&type=chunk) - The company completed its Initial Public Offering (IPO) in February 2017, generating net proceeds of approximately **$78.7 million** for investment in the operating partnership[14](index=14&type=chunk)[380](index=380&type=chunk)[598](index=598&type=chunk) - Company revenue primarily derives from rents from residential, commercial, and retail tenants, with approximately **70%** from residents of apartment rental properties[16](index=16&type=chunk)[400](index=400&type=chunk)[394](index=394&type=chunk) - The company's primary business objectives are to enhance shareholder value through asset redevelopment, increasing existing below-market rents, and prudent acquisition strategies[17](index=17&type=chunk)[156](index=156&type=chunk)[168](index=168&type=chunk)[32](index=32&type=chunk) - As of December 31, 2022, the company employed **147 individuals** providing property management, maintenance, landscaping, construction management, and accounting services, with some employees covered by union collective bargaining agreements[59](index=59&type=chunk) [ITEM 1A. RISK FACTORS](index=8&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section details various risks that could adversely affect the company's business, operating results, and financial condition, covering real estate market, environmental regulations, operations, debt financing, REIT qualification, and common stock ownership. [Risks Related to Real Estate](index=10&type=section&id=Risks%20Related%20to%20Real%20Estate) Real estate risks primarily involve adverse impacts from New York City economic and market conditions, potentially leading to decreased occupancy, rental income, and asset values, with rent control regulations limiting the company's ability to raise rents. - Adverse market and economic conditions in New York City could negatively impact occupancy rates, rental income, rent collection, operating expenses, and the overall market value of assets, also impairing the company's ability to sell, recapitalize, or refinance assets[76](index=76&type=chunk)[77](index=77&type=chunk)[139](index=139&type=chunk) - Multifamily residential properties are subject to rent stabilization regulations, which limit the company's ability to increase rents and may lead to tenant claims of rent overcharges[41](index=41&type=chunk)[42](index=42&type=chunk)[151](index=151&type=chunk) - The company's reliance on a single government tenant in an office building could adversely affect the company (including operating results and cash flows) if New York City experiences fiscal difficulties[47](index=47&type=chunk)[48](index=48&type=chunk)[140](index=140&type=chunk) - The company engages in development and redevelopment activities, which may expose it to various risks, including adverse impacts on financial condition, cash flows, and operating results, such as unprofitable investments, cost overruns, and construction delays[55](index=55&type=chunk)[82](index=82&type=chunk)[151](index=151&type=chunk)[24](index=24&type=chunk) - Real estate investments are relatively illiquid, which may limit the company's ability to respond quickly to economic or market changes[12](index=12&type=chunk)[62](index=62&type=chunk)[312](index=312&type=chunk) [Environmental and Health & Safety Risks](index=8&type=section&id=Environmental%20and%20Health%20%26%20Safety%20Risks) Company properties face compliance risks with federal, state, and local environmental and health and safety laws, including liabilities for hazardous substances, ADA compliance costs, and potential mold or indoor air quality issues. - As a real estate owner or operator, the company may be liable for costs and damages caused by the presence or release of hazardous substances (e.g., lead, asbestos, and PCBs), including investigation or remediation costs, natural resource damages, or third-party personal injury or property damage liability[89](index=89&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[172](index=172&type=chunk) - Company properties must comply with laws such as the Americans with Disabilities Act of 1990 (ADA), and non-compliance could result in fines or damages paid to private litigants, potentially incurring additional compliance costs[21](index=21&type=chunk)[35](index=35&type=chunk)[91](index=91&type=chunk)[121](index=121&type=chunk) - Company properties may contain or foster hazardous mold or other indoor air quality issues, which could lead to liability for adverse health effects or property damage, or incur remediation costs[160](index=160&type=chunk)[120](index=120&type=chunk) [Operational Risks](index=19&type=section&id=Operational%20Risks) Operational risks include potential public scrutiny due to rent increases, litigation costs, the need to maintain effective internal financial reporting controls, and the significant influence of continuing investors and management's external business interests. - As rents increase and properties improve, the company may become a target for public scrutiny and investigations, potentially leading to negative publicity and requiring significant resources for defense, thereby adversely affecting operating results and dividend distribution ability[104](index=104&type=chunk)[92](index=92&type=chunk) - As an accelerated filer, the company must comply with Section 404 of the Sarbanes-Oxley Act, and failure to maintain effective internal controls over financial reporting could lead to a loss of investor confidence in the accuracy and completeness of financial reports[114](index=114&type=chunk)[130](index=130&type=chunk) - The company's continuing investors hold special voting shares, enabling them to significantly influence the board composition, management, and business operations, potentially delaying, deferring, or preventing a change in company control[116](index=116&type=chunk)[132](index=132&type=chunk)[142](index=142&type=chunk)[210](index=210&type=chunk)[219](index=219&type=chunk) - The company's charter explicitly permits its senior officers to compete with the company, and some executives have external business interests, which could lead to conflicts of interest and limit the company's ability to pursue certain investment opportunities[228](index=228&type=chunk)[256](index=256&type=chunk)[259](index=259&type=chunk)[261](index=261&type=chunk)[232](index=232&type=chunk) [Risks Related to Our Indebtedness and Financing](index=28&type=section&id=Risks%20Related%20to%20Our%20Indebtedness%20and%20Financing) The company carries substantial debt, which may restrict its financial and operating activities and increase sensitivity to interest rate changes, with potential for insufficient cash flow or mortgage defaults. - As of December 31, 2022, the company had **$1.1712 billion** in total debt, all of which is property-level debt, potentially limiting its financial and operating activities and affecting its future financing ability[235](index=235&type=chunk)[264](index=264&type=chunk) - Changes in interest rates could increase interest costs, adversely affecting the company's cash flows and the market price of its securities, especially with approximately **$113.8 million** in variable-rate debt[237](index=237&type=chunk)[266](index=266&type=chunk) - The company's tax protection agreements require the operating partnership to maintain certain debt levels, which may lead the company to incur more or different types of debt than necessary for business operations[238](index=238&type=chunk)[267](index=267&type=chunk)[239](index=239&type=chunk) - The company may not have sufficient cash flow to pay debt service or common stock dividends at anticipated levels, which could limit its ability to meet REIT dividend requirements[240](index=240&type=chunk)[269](index=269&type=chunk) - Mortgage debt obligations expose the company to the possibility of foreclosure, potentially leading to a loss of its investment in the mortgaged properties[13](index=13&type=chunk)[241](index=241&type=chunk)[270](index=270&type=chunk)[242](index=242&type=chunk) [Risks Related to Our Status as a REIT](index=31&type=section&id=Risks%20Related%20to%20Our%20Status%20as%20a%20REIT) Failure to obtain or maintain REIT qualification would significantly harm the value of the company's common stock, as REIT status involves complex tax regulations and ongoing compliance tests. - Failure to obtain or maintain REIT qualification would have a material adverse effect on the value of the company's common stock, potentially preventing the company from deducting taxable income distributed to shareholders and subjecting it to corporate income tax[4](index=4&type=chunk)[274](index=274&type=chunk)[247](index=247&type=chunk)[32](index=32&type=chunk) - Compliance with REIT requirements may force the company to forgo otherwise attractive opportunities or liquidate certain investments to satisfy asset and income tests[143](index=143&type=chunk)[248](index=248&type=chunk)[297](index=297&type=chunk) - REIT dividend requirements could adversely affect the company's liquidity and hinder the execution of its business plans, potentially requiring the company to sell assets or borrow when cash flow is insufficient[279](index=279&type=chunk)[300](index=300&type=chunk) - The company's ability to provide certain services to tenants may be limited by REIT rules or must be provided through a taxable REIT subsidiary (TRS), which could increase costs or expose it to greater risks[282](index=282&type=chunk)[302](index=302&type=chunk)[283](index=283&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk) [Risks Related to Ownership of Our Common Stock](index=34&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) The market price and trading volume of the company's common stock may fluctuate, leading to rapid shareholder losses, while charter restrictions on ownership and future stock issuances could impact liquidity and dilute existing ownership. - The market price and trading volume of the company's common stock may fluctuate, potentially leading to rapid and significant losses for shareholders, influenced by company performance, market interest rates, economic conditions, and negative publicity[284](index=284&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - The company's charter generally restricts beneficial ownership by any person or entity to no more than **9.8%** (by value or number of shares, whichever is more restrictive) of any class or series of common stock, which may prevent or delay a change of control[212](index=212&type=chunk)[286](index=286&type=chunk) - Future sales of a substantial number of common shares or other securities convertible into common shares could dilute existing ownership and lead to a significant decrease in the market value of common stock[309](index=309&type=chunk)[310](index=310&type=chunk)[288](index=288&type=chunk) [COVID-19 Pandemic Impact](index=16&type=section&id=COVID-19%20Pandemic%20Impact) The COVID-19 pandemic and containment measures have had a significant adverse impact on the company's business, financial condition, liquidity, and operating results, including reduced tenant ability/willingness to pay rent and decreased housing demand. - The COVID-19 pandemic and its containment measures have had a continuing material adverse effect on the company's business, financial condition, liquidity, and operating results[83](index=83&type=chunk)[84](index=84&type=chunk) - The pandemic led to a decrease in tenants' ability or willingness to pay rent and reduced housing demand in the New York metropolitan area, potentially resulting in further declines in occupancy and rental income[97](index=97&type=chunk)[85](index=85&type=chunk) [Natural Disasters & Terrorism](index=17&type=section&id=Natural%20Disasters%20%26%20Terrorism) Company properties face risks from natural disasters and terrorist attacks, potentially causing significant losses, with some losses possibly uninsured or too costly to insure, and New York City's status as a target could affect income and property values. - The company faces risks from natural disasters (e.g., severe weather, floods, and storms) that could cause significant damage to properties, with some losses potentially uninsured or too costly to insure[87](index=87&type=chunk)[99](index=99&type=chunk)[117](index=117&type=chunk) - New York City has been and may in the future be a target for terrorist attacks, which could lead to tenant relocation or decreased property demand, thereby affecting the company's income and property values[88](index=88&type=chunk)[118](index=118&type=chunk) [CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS](index=31&type=section&id=CAUTIONARY%20NOTE%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) This annual report contains forward-looking statements regarding future events or results, based on current expectations and assumptions, but actual outcomes may differ materially due to various risks and uncertainties. - This annual report contains forward-looking statements concerning beliefs, expectations, or intentions about future events or results, such as project timing and success, future production, revenue, profits, and capital expenditures[328](index=328&type=chunk) - These forward-looking statements are based on current expectations and assumptions but are subject to significant business, economic, competitive, regulatory, and other risks, contingencies, and uncertainties, where actual results may differ materially from those projected[328](index=328&type=chunk) - The company undertakes no obligation to update these statements unless required by law and advises investors not to place undue reliance on them[328](index=328&type=chunk) [ITEM 2. PROPERTIES](index=32&type=section&id=ITEM%202.%20PROPERTIES) As of December 31, 2022, the company's portfolio included nine properties, totaling approximately 3.3 million square feet of leasable area (plus 270,000 square feet under development), with an overall occupancy rate of approximately 99%. - As of December 31, 2022, the company's property portfolio included nine properties, totaling approximately **3.3 million square feet** of leasable area (with an additional **270,000 square feet** under development), with an overall occupancy rate of approximately **99%**[314](index=314&type=chunk) 2022年12月31日物业组合概览 | Property Type | Submarket | Year Built | Area (Square Feet) | Units | Occupancy Rate | Annualized Rental Income (Million USD) | Net Effective Rent per Square Foot | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Multifamily Residential** | | | | | | | | | 50 Murray Street | Manhattan | 1964 | 396,224 | 390 | 99.2% | 27.7 | 71.21 | | 53 Park Place | Manhattan | 1921 | 86,288 | 116 | 99.1% | 6.3 | 76.29 | | Flatbush Gardens complex | Brooklyn | 1950 | 1,748,671 | 2,494 | 98.8% | 44.4 | 25.97 | | 250 Livingston Street | Brooklyn | 1920 | 26,819 | 36 | 94.4% | 1.4 | 54.63 | | Aspen | Manhattan | 2004 | 165,542 | 232 | 98.3% | 5.8 | 36.78 | | 10 West 65th Street | Manhattan | 1939 | 75,678 | 82 | 100.0% | 3.7 | 51.21 | | Clover House | Brooklyn | 1959 | 102,131 | 158 | 94.9% | 7.0 | 73.31 | | **Commercial** | | | | | | | | | 141 Livingston Street | Brooklyn | 1959 | 206,084 | 1 | 100.0% | 10.3 | 50.00 | | 250 Livingston Street | Brooklyn | 1920 | 342,496 | 1 | 100.0% | 15.4 | 44.93 | | **Retail** | | | | | | | | | 50 Murray Street (retail) | Manhattan | | 44,583 | 8 | 100.0% | 2.4 | 54.71 | | 50 Murray Street (parking) | Manhattan | | 24,200 | 1 | 100.0% | 1.4 | 57.85 | | 141 Livingston Street (parking/other) | Brooklyn | | 14,853 | 1 | 100.0% | 0.4 | 27.17 | | 250 Livingston Street (retail) | Brooklyn | | 990 | 1 | 100.0% | 0.1 | 125.83 | | 250 Livingston Street (parking) | Brooklyn | | — | — | — | 0.2 | — | | Aspen (retail) | Manhattan | | 12,429 | 5 | 100.0% | 0.6 | 49.97 | | **Properties Under Development** | | | | | | | | | 1010 Pacific Street | Brooklyn | | 115,444 | 175 | | | | | Dean Street | Brooklyn | | 154,468 | 242 | | | | 商业和零售租赁到期概览（2023年及以后） | Year | Number of Tenants | Total Area (Square Feet) | Annualized Rental Income (USD) | Percentage of Annualized Rental Income | | :--- | :--- | :--- | :--- | :--- | | 2023 | 2 | 10,839 | 762,500 | 2.5% | | 2024 | 1 | 1,597 | 76,800 | 0.3% | | 2025 | 3 | 550,275 | 25,756,016 | 84.1% | | 2026 | 1 | 510 | 18,360 | 0.1% | | 2027 | 3 | 42,068 | 1,686,672 | 5.5% | | 2028 | 1 | — | 55,200 | 0.2% | | 2029 | — | — | — | 0.0% | | 2030 | 1 | 990 | 93,043 | 0.3% | | 2031 | 1 | 540 | 160,680 | 0.5% | | 2032 | 2 | 4,606 | 306,996 | 1.0% | | Thereafter | 2 | 26,925 | 1,697,300 | 5.5% | | **Total** | **17** | **638,350** | **30,613,567** | **100.0%** | [ITEM 3. LEGAL PROCEEDINGS](index=38&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company faces legal proceedings related to rent stabilization laws, particularly tenant claims at the Tribeca House property, and a settled investigation by the New York State Attorney General's Office. - The New York State Supreme Court ruled that **41 tenants** at the Tribeca House property were entitled to rent overcharges due to tax abatements under rent stabilization laws, ordering the company to pay **$1.2 million** in overcharges and **$0.4 million** in attorney fees[682](index=682&type=chunk)[715](index=715&type=chunk) - An investigation by the New York State Attorney General's Office into tenant applicant screening practices of Clipper Equity and its affiliates was settled in April 2022, with no impact on the company's financial condition or operating results[678](index=678&type=chunk)[92](index=92&type=chunk) - Management believes, based on consultations with legal counsel, that the ultimate resolution of all legal proceedings and claims will not have a material adverse effect on the company's consolidated operating results, financial condition, or cash flows[677](index=677&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURE](index=38&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This section states that mine safety disclosure is not applicable to the company's business. - Mine safety disclosure is not applicable to the company[367](index=367&type=chunk) Part II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=39&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on the NYSE, with **5,629** registered shareholders as of February 17, 2023, and its dividend policy is influenced by REIT tax regulations and operating performance. - The company's common stock trades on the New York Stock Exchange (NYSE) under the symbol "CLPR," with trading commencing on February 10, 2017[368](index=368&type=chunk) - As of February 17, 2023, the company had **5,629** registered shareholders of its common stock[369](index=369&type=chunk) - The company does not guarantee quarterly cash dividends to common stockholders, and its dividend policy may change at any time, subject to operating results, liquidity, cash flows, financial condition, economic conditions, and debt repayment requirements[370](index=370&type=chunk)[376](index=376&type=chunk) - U.S. federal income tax law requires REITs to distribute at least **90%** of their taxable income annually, so the company expects to distribute most available cash, which may result in slower growth compared to companies that reinvest available cash to expand operations[375](index=375&type=chunk) - The company had no unregistered sales of equity securities or issuer purchases of equity securities during the reporting period[377](index=377&type=chunk)[384](index=384&type=chunk) [ITEM 6. RESERVED](index=41&type=section&id=ITEM%206.%20RESERVED) This section is reserved. - This section is reserved[385](index=385&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=41&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section discusses the company's financial condition and operating results as of December 31, 2022, highlighting post-pandemic recovery, revenue sources, market trends, key accounting policies, 2022 vs. 2021 performance, liquidity, capital resources, and non-GAAP financial measures. [Overview of Our Company](index=46&type=section&id=Overview%20of%20Our%20Company) Clipper Realty Inc. is a self-administered and self-managed real estate company focused on acquiring, owning, managing, and repositioning multifamily residential and commercial properties in the New York metropolitan area. - Clipper Realty Inc. is a self-administered and self-managed real estate company, focusing on the acquisition, ownership, management, and repositioning of multifamily residential and commercial properties in the New York metropolitan area (Manhattan and Brooklyn)[386](index=386&type=chunk) - The company was formed in 2015 and elected to be treated as a Real Estate Investment Trust (REIT) for tax purposes beginning with the taxable year ended December 31, 2015[378](index=378&type=chunk)[379](index=379&type=chunk) - As of December 31, 2022, the company's property portfolio included Tribeca House, Flatbush Gardens, Livingston Street properties, Aspen, Clover House, 10 West 65th Street, and properties under development at 1010 Pacific Street and Dean Street[382](index=382&type=chunk)[388](index=388&type=chunk)[397](index=397&type=chunk)[398](index=398&type=chunk) [COVID-19 Pandemic](index=47&type=section&id=COVID-19%20Pandemic) The company significantly recovered from the COVID-19 pandemic's impact in 2022, with quarterly revenue continuously growing to record highs, and residential property occupancy and rents exceeding pre-pandemic levels. - The company made substantial progress in 2022 recovering from the COVID-19 pandemic's impact, with fourth-quarter revenue reaching a record **$33 million**, up from **$30.6 million** in the fourth quarter of 2019[399](index=399&type=chunk) - As of December 31, 2022, residential property leased occupancy was **98.7%**, and weighted average rent was **$38.41 per square foot**, both exceeding pre-pandemic levels from the fourth quarter of 2019 (**97.7%** and **$36.47**)[399](index=399&type=chunk) - For the full year 2022, residential rents for new tenants increased by over **20.7%** compared to previous rents, and renewal rents increased by over **9.8%**[399](index=399&type=chunk) [How We Derive Our Revenue](index=47&type=section&id=How%20We%20Derive%20Our%20Revenue) The company's revenue primarily comes from residential, commercial, and retail tenant rents, with approximately **70%** from apartment rental properties, and profit growth is achieved by increasing rents and occupancy in existing properties and acquiring new ones. - Approximately **70%** of the company's revenue is derived from residential rents from apartment rental properties, with the remainder from commercial and retail tenants[394](index=394&type=chunk) - The company primarily achieves profitable growth by increasing rents and occupancy in existing properties and acquiring new apartment communities[402](index=402&type=chunk) - Rent growth for Flatbush Gardens, Aspen, and parts of 10 West 65th Street properties is limited by New York City rent stabilization regulations, while Tribeca House, 250 Livingston Street, and Clover House properties are not subject to these restrictions[395](index=395&type=chunk) [Trends](index=48&type=section&id=Trends) In 2022, the New York metropolitan area rental market was strong, with increased demand and rental rates for the company's residential properties, while office property rental income remained unaffected by COVID-19. - In 2022, the New York metropolitan area rental market was strong, with increased demand and rental rates for the company's residential properties (e.g., Tribeca House, Aspen, Clover House), showing significant year-over-year average rent increases[189](index=189&type=chunk) - The company's office property rental income was unaffected by the COVID-19 pandemic, benefiting from long-term leases with New York City, such as the **25%** rent increase at 141 Livingston Street at the end of 2020[189](index=189&type=chunk) - As of December 31, 2022, the company's weighted average interest rate was approximately **4.1%**, which, despite recent increases, remains historically low[401](index=401&type=chunk) - The company's properties are concentrated in six neighborhoods across Manhattan and Brooklyn, New York City, making it susceptible to adverse local economic conditions such as changes in supply and demand, government regulations, and environmental risks[402](index=402&type=chunk) [Significant Accounting Policies](index=49&type=section&id=Significant%20Accounting%20Policies) This section outlines the company's GAAP accounting policies, including valuation and depreciation of real estate investments, definitions of cash and restricted cash, allowance for doubtful accounts, amortization of deferred costs, revenue recognition principles, equity incentive accounting, REIT tax treatment, derivative financial instruments, and loss per share calculation. - The company values real estate investments at historical cost and assesses whether acquired real estate meets the definition of a business to determine if it should be accounted for as a business combination[191](index=191&type=chunk)[412](index=412&type=chunk)[617](index=617&type=chunk)[630](index=630&type=chunk) - The company uses the straight-line method for asset depreciation and periodically reviews long-lived assets for impairment indicators[422](index=422&type=chunk)[183](index=183&type=chunk)[622](index=622&type=chunk)[419](index=419&type=chunk)[620](index=620&type=chunk) - Effective the first quarter of 2022, the company adopted ASC 842 "Leases," assessing rent revenue recognition and the collectibility of accounts receivable, and writing off uncollectible receivables[432](index=432&type=chunk)[465](index=465&type=chunk)[469](index=469&type=chunk)[634](index=634&type=chunk) - The company has elected to be taxed as a REIT, generally not subject to federal corporate income tax on income distributed to shareholders, provided it meets various REIT qualification requirements[427](index=427&type=chunk)[433](index=433&type=chunk)[491](index=491&type=chunk) - The company recognizes all equity incentive awards as compensation expense over their vesting period based on their grant-date fair value[426](index=426&type=chunk)[636](index=636&type=chunk) [Results of Operations](index=54&type=section&id=Results%20of%20Operations) In 2022, total revenue increased by **5.7%** to **$129.7 million**, driven by higher residential and commercial rents, while net loss decreased by **37.2%** to **$12.6 million**, reflecting improved operating income and reduced non-recurring expenses. 2022年与2021年经营业绩对比（单位：千美元） | Metric | 2022 | 2021 | Change Amount | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | | | | | | Residential Rental Revenue | 90,262 | 85,771 | 4,491 | 5.2% | | Commercial Rental Revenue | 39,484 | 36,958 | 2,526 | 6.8% | | **Total Revenue** | **129,746** | **122,729** | **7,017** | **5.7%** | | **Operating Expenses** | | | | | | Property Operating Expenses | 29,306 | 28,997 | 309 | 1.1% | | Real Estate Taxes and Insurance | 32,561 | 30,449 | 2,112 | 6.9% | | General and Administrative Expenses | 12,752 | 10,570 | 2,182 | 20.6% | | Transaction Pursuit Costs | 506 | 60 | 446 | 743.3% | | Depreciation and Amortization | 26,985 | 25,762 | 1,223 | 4.7% | | **Total Operating Expenses** | **102,110** | **95,838** | **6,272** | **6.5%** | | Litigation Settlement and Other | — | (2,730) | 2,730 | 100.0% | | **Operating Income** | **27,636** | **24,161** | **3,475** | **14.4%** | | Interest Expense, Net | (40,207) | (41,284) | 1,077 | 2.6% | | Loss on Debt Modification/Extinguishment | — | (3,034) | 3,034 | 100.0% | | Gain on Involuntary Conversion | — | 139 | (139) | (100.0)% | | **Net Loss** | **(12,571)** | **(20,018)** | **7,447** | **37.2%** | - Residential rental revenue increased by **5.2%**, primarily due to higher rental rates at Tribeca House and increased occupancy at Flatbush Gardens, partially offset by **$3.25 million** in bad debt expense under ASC 842[443](index=443&type=chunk) - Commercial rental revenue increased by **6.8%**, mainly due to the recovery of tenant income at Tribeca House, new lease commencements, and rent escalations at the 141 Livingston Street property[444](index=444&type=chunk) - General and administrative expenses increased by **20.6%**, primarily due to higher executive compensation expenses[176](index=176&type=chunk) - Net loss decreased by **37.2%**, primarily benefiting from increased operating income and reduced non-recurring litigation and debt-related losses in 2021[455](index=455&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company's short-term liquidity needs are met by operating cash flow and cash on hand, while long-term needs for acquisitions, renovations, and debt repayment are funded through equity issuance and long-term debt financing. - The company's short-term liquidity needs for operating expenses, recurring capital expenditures, property taxes and insurance, interest and scheduled debt principal payments, general and administrative expenses, and dividends to shareholders and unit holders are expected to be met by net cash flow from operations and cash on hand[451](index=451&type=chunk) - The company's long-term liquidity needs for funding additional property acquisitions, major renovation and upgrade projects, and repayment of maturing debt are expected to be met through public and private equity offerings and long-term secured and unsecured debt issuances[184](index=184&type=chunk) 2022年12月31日物业层面债务（单位：千美元） | Property | Maturity Date | Interest Rate | Balance as of December 31, 2022 | | :--- | :--- | :--- | :--- | | Flatbush Gardens, Brooklyn, NY | 2032/6/1 | 3.125% | 329,000 | | 250 Livingston Street, Brooklyn, NY | 2029/6/6 | 3.63% | 125,000 | | 141 Livingston Street, Brooklyn, NY | 2031/3/6 | 3.21% | 100,000 | | Tribeca House, Manhattan, NY | 2028/3/6 | 4.506% | 360,000 | | Aspen, Manhattan, NY | 2028/7/1 | 3.68% | 62,554 | | Clover House, Brooklyn, NY | 2029/12/1 | 3.53% | 82,000 | | 10 West 65th Street, Manhattan, NY | 2027/11/1 | SOFR + 2.50% | 32,222 | | 1010 Pacific Street, Brooklyn, NY | 2024/9/1 | LIBOR + 3.60% | 43,477 | | 953 Dean Street, Brooklyn, NY | 2023/6/22 | Prime + 1.60% | 36,985 | | **Total** | | | **1,171,238** | 2022年和2021年现金流量（单位：千美元） | Activity Type | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 20,139 | 10,822 | | Net Cash Used in Investing Activities | (51,476) | (77,944) | | Net Cash Provided by Financing Activities | 9,779 | 30,314 | - Net cash provided by operating activities in 2022 was **$20.139 million**, an increase from **$10.822 million** in 2021, primarily reflecting increased cash flows from operating assets and liabilities and improved operating performance[202](index=202&type=chunk) - Net cash used in investing activities in 2022 was **$51.476 million**, a decrease from **$77.944 million** in 2021, mainly due to reduced capital project expenditures and funding for the Dean Street property acquisition[203](index=203&type=chunk) - Net cash provided by financing activities in 2022 was **$9.779 million**, a significant decrease from **$30.314 million** in 2021, primarily due to increased loan draws for 1010 Pacific Street and the Dean Street acquisition, partially offset by amortization payments on operating properties[204](index=204&type=chunk) [Inflation](index=59&type=section&id=Inflation) The U.S. economy is experiencing high inflation, increasing operating and interest expenses, and while short-term residential leases allow for rent increases, inflation may still outpace rent growth and increase development costs. - The U.S. economy is currently experiencing high inflation, leading to increased operating expenses (e.g., third-party vendor costs) and interest expenses on variable-rate debt[127](index=127&type=chunk)[494](index=494&type=chunk) - Although the short-term nature of residential leases generally allows the company to offset inflationary impacts through rent increases, inflation may still outpace rent growth, adversely affecting the company[127](index=127&type=chunk)[494](index=494&type=chunk) - Inflation could also increase construction costs for development projects, including materials, labor, and third-party contractor services[127](index=127&type=chunk) [Non-GAAP Financial Measures](index=59&type=section&id=Non-GAAP%20Financial%20Measures) The company discloses non-GAAP financial measures such as FFO, AFFO, Adjusted EBITDA, and NOI, which are considered useful supplementary information for evaluating core operating performance but are not substitutes for GAAP net income or operating income. - The company discloses and discusses non-GAAP financial measures such as FFO, AFFO, Adjusted EBITDA, and NOI, which are considered useful supplementary information by management and the investment community for evaluating the company's core operating performance[495](index=495&type=chunk)[496](index=496&type=chunk)[501](index=501&type=chunk)[503](index=503&type=chunk) - FFO is defined as GAAP net income, excluding gains and losses from property sales and impairment adjustments, plus depreciation and amortization, and adjusted for unconsolidated partnerships and joint ventures[497](index=497&type=chunk) - AFFO is defined as FFO, excluding amortization of identifiable intangible assets incurred in property acquisitions, straight-line rent adjustments for long-term leases, amortization of debt issuance costs, interest rate cap mark-to-market adjustments, amortization of non-cash equity compensation, acquisition and other costs, loss on debt modification/extinguishment, gain on involuntary conversion, lease termination gains, and certain litigation-related expenses, minus recurring capital expenditures[498](index=498&type=chunk) FFO和AFFO与净亏损的调节表（单位：千美元） | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **FFO** | | | | Net Loss | (12,571) | (20,018) | | Real Estate Depreciation and Amortization | 26,985 | 25,762 | | **FFO** | **14,414** | **5,744** | | **AFFO** | | | | FFO | 14,414 | 5,744 | | Real Estate Tax Intangible Amortization | 481 | 481 | | Above and Below Market Lease Amortization | (35) | (104) | | Straight-Line Rent Adjustment | (163) | (202) | | Amortization of Debt Issuance Costs | 1,252 | 1,247 | | Amortization of LTIP Awards | 2,920 | 2,611 | | Transaction Pursuit Costs | 506 | 60 | | Loss on Debt Modification/Extinguishment | — | 3,034 | | Gain on Involuntary Conversion | — | (139) | | Litigation Settlement and Other | — | 2,730 | | Certain Litigation-Related Expenses | 188 | 299 | | Recurring Capital Expenditures | (326) | (205) | | **AFFO** | **19,237** | **15,556** | Adjusted EBITDA与净亏损的调节表（单位：千美元） | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Loss | (12,571) | (20,018) | | Real Estate Depreciation and Amortization | 26,985 | 25,762 | | Real Estate Tax Intangible Amortization | 481 | 481 | | Above and Below Market Lease Amortization | (35) | (104) | | Straight-Line Rent Adjustment | (163) | (202) | | Amortization of LTIP Awards | 2,920 | 2,611 | | Interest Expense, Net | 40,207 | 41,284 | | Transaction Pursuit Costs | 506 | 60 | | Loss on Debt Modification/Extinguishment | — | 3,034 | | Gain on Involuntary Conversion | — | (139) | | Litigation Settlement and Other | — | 2,730 | | Certain Litigation-Related Expenses | 188 | 299 | | **Adjusted EBITDA** | **58,518** | **55,798** | NOI与经营收入的调节表（单位：千美元） | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Operating Income | 27,636 | 24,161 | | Real Estate Depreciation and Amortization | 26,985 | 25,762 | | General and Administrative Expenses | 12,752 | 10,570 | | Transaction Pursuit Costs | 506 | 60 | | Real Estate Tax Intangible Amortization | 481 | 481 | | Above and Below Market Lease Amortization | (35) | (104) | | Straight-Line Rent Adjustment | (163) | (202) | | Litigation Settlement and Other | — | 2,730 | | **NOI** | **68,162** | **63,458** | [Recent Accounting Pronouncements](index=61&type=section&id=Recent%20Accounting%20Pronouncements) The company adopted ASU 2016-13 (Financial Instruments—Credit Losses) on January 1, 2022, with no material impact, and will apply temporary optional practical expedients for LIBOR transition under ASUs 2020-04 and 2021-01, also expecting no material impact. - The company adopted ASU 2016-13 (Financial Instruments—Credit Losses) on January 1, 2022, determining its adoption had no material impact on the consolidated financial statements[471](index=471&type=chunk) - The company will apply temporary optional practical expedients for transactions and derivative instruments affected by the LIBOR transition under the guidance of ASU 2020-04 and ASU 2021-01 (Reference Rate Reform), expecting no material impact on the consolidated financial statements[475](index=475&type=chunk)[482](index=482&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=57&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company primarily faces interest rate fluctuation risk, with **$112.7 million** in variable-rate debt as of December 31, 2022, where a **1%** change in interest rates would impact annual net income by approximately **$1.1 million**. - The company's primary market risk is interest rate fluctuation risk, influenced by government monetary policy, economic, and political factors[518](index=518&type=chunk) - As of December 31, 2022, the company had **$112.7 million** in variable-rate debt, where a **1%** change in interest rates would impact annual net income by approximately **$1.1 million**[519](index=519&type=chunk) - As of December 31, 2022, the company had no interest rate caps on its outstanding debt[520](index=520&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=57&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section incorporates financial statements and supplementary data starting from page F-1 of this annual report. - Financial statements and supplementary data are incorporated starting from page F-1 of this annual report[521](index=521&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=57&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) This section states that there were no changes in or disagreements with accountants on accounting and financial disclosure. - There were no changes in or disagreements with accountants on accounting and financial disclosure[521](index=521&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=57&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) As of December 31, 2022, company management assessed and determined its disclosure controls and procedures and internal controls over financial reporting to be effective, with an unqualified opinion from PKF O'Connor Davies, LLP. - As of December 31, 2022, company management (including the Chief Executive Officer and Chief Financial Officer) assessed and determined its disclosure controls and procedures to be effective[513](index=513&type=chunk) - Company management determined that its internal controls over financial reporting were effective as of December 31, 2022, and this was audited and received an unqualified opinion from independent registered public accounting firm PKF O'Connor Davies, LLP[523](index=523&type=chunk)[524](index=524&type=chunk) - No material changes in the company's internal controls over financial reporting occurred during the reporting period[530](index=530&type=chunk) [ITEM 9B. OTHER INFORMATION](index=63&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) This section states that no other information needs to be disclosed. - This section states that no other information needs to be disclosed[531](index=531&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=63&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This section states that disclosure regarding foreign jurisdictions that prevent inspections is not applicable to the company. - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable to the company[532](index=532&type=chunk) Part III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=64&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within 120 days after the fiscal year-end. - The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within **120 days** after the fiscal year-end[529](index=529&type=chunk)[537](index=537&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=64&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within 120 days after the fiscal year-end. - The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within **120 days** after the fiscal year-end[533](index=533&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=64&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) As of December 31, 2022, the company had **2,949,820 shares** of common stock reserved for future issuance under the 2015 Omnibus Plan and 2015 Director Plan, with other required information in the 2023 proxy statement. 股权激励计划下授权发行的证券（截至2022年12月31日） | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | | | | | 2015 Omnibus Plan | 2,175,295 | — | 1,124,705 | | 2015 Director Plan | 774,525 | — | 425,475 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **2,949,820** | **—** | **1,550,180** | - Other required information will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within **120 days** after the fiscal year-end[539](index=539&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=64&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within 120 days after the fiscal year-end. - The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within **120 days** after the fiscal year-end[540](index=540&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=64&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within 120 days after the fiscal year-end. - The information required for this section will be included in the company's proxy statement for the 2023 Annual Meeting of Shareholders, to be filed within **120 days** after the fiscal year-end[534](index=534&type=chunk) Part IV [ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES](index=64&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the exhibits and financial statement schedules filed as part of this annual report, including corporate governance documents, employment agreements, incentive plans, and financial disclosures. - This annual report includes financial statements, financial statement schedules, and exhibits[536](index=536&type=chunk)[551](index=551&type=chunk) - Exhibits include the company's certificate of incorporation, employment agreements, incentive plans, tax protection agreements, loan agreements, subsidiary list, auditor consent, and XBRL documents[542](index=542&type=chunk)[543](index=543&type=chunk)[553](index=553&type=chunk)

Clipper Realty, Inc. (NYSE:CLPR) Q3 2022 Earnings Conference Call November 11, 2022 5:00 PM ET Company Participants Lawrence Kreider - CFO & Secretary David Bistricer - Co-Chairman & Chief Executive Officer Jacob Bistricer - Chief Operating Officer Conference Call Participants Craig Kucera - B. Riley Securities Operator Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty Third Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will op ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38010 CLIPPER REALTY INC. (Exact name of Registrant as specified in its charter) Maryland 47-4579660 (State or other jurisdiction of in ...

Clipper Realty, Inc. (NYSE:CLPR) Q2 2022 Earnings Conference Call August 9, 2022 5:00 PM ET Company Participants Lawrence Kreider - CFO & Secretary David Bistricer - Co-Chairman & CEO Jacob Bistricer - COO Conference Call Participants Buck Horne - Raymond James & Associates Operator Good afternoon, ladies and gentlemen, and welcome to today's Clipper Realty Second Quarter 2022 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Lawrence Kreider. Lawrence, the f ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38010 CLIPPER REALTY INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or Maryland 47- ...

Clipper Realty Inc. (NYSE:CLPR) Q1 2022 Earnings Conference Call May 10, 2022 5:30 PM ET Company Participants Lawrence Kreider - CFO David Bistricer - Co-Chairman & CEO JJ Bistricer - Chief Operating Officer Conference Call Participants Buck Horne - Raymond James Operator Good afternoon, ladies and gentlemen, and welcome to the Clipper Realty First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments afte ...

PART I – FINANCIAL INFORMATION [CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=CAUTIONARY%20NOTE%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) This section identifies forward-looking statements and outlines key risks and uncertainties that could materially impact actual results - Forward-looking statements are identified by specific words like **"may," "will," "expect,"** and **"anticipate"**[6](index=6&type=chunk) - Key risks include the **COVID-19 pandemic's impact** on tenant payments and housing demand, market conditions, regulatory changes, and the financial stability of a single government tenant[6](index=6&type=chunk) - Additional risks encompass rent stabilization, operating cost control, property damage, financing, competition, unknown liabilities, key personnel departure, conflicts of interest, transfer taxes, and internal control weaknesses[6](index=6&type=chunk)[7](index=7&type=chunk) [ITEM 1. CONDENSED FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20CONDENSED%20FINANCIAL%20STATEMENTS) This section presents unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20AS%20OF%20MARCH%2031%2C%202022%20%28UNAUDITED%29%20AND%20DECEMBER%2031%2C%202021) This section presents the unaudited consolidated balance sheets, detailing assets, liabilities, and equity for the specified periods Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 (Unaudited) | December 31, 2021 | | :-------------------------- | :------------------------- | :------------------ | | Total Assets | $1,226,779 | $1,233,657 | | Total Liabilities | $1,170,045 | $1,163,708 | | Total Equity | $56,734 | $69,949 | | Investment in Real Estate, net | $1,155,538 | $1,145,750 | | Cash and Cash Equivalents | $25,342 | $34,524 | | Notes Payable, net | $1,139,038 | $1,131,154 | - Total assets decreased by **$6,878 thousand** from December 31, 2021, to March 31, 2022[10](index=10&type=chunk) - Total equity decreased by **$13,215 thousand**, primarily due to a decrease in non-controlling interests and accumulated deficit[10](index=10&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202022%20AND%202021%20%28UNAUDITED%29) This section presents unaudited consolidated statements of operations, detailing revenues, expenses, and net loss for the specified periods Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Total Revenues | $32,050 | $30,651 | | Total Operating Expenses | $25,541 | $24,534 | | Income From Operations | $6,509 | $6,117 | | Interest Expense, net | $(9,985) | $(10,217) | | Net Loss | $(3,476) | $(7,134) | | Net Loss Attributable to Common Stockholders | $(1,318) | $(2,704) | | Basic and Diluted Net Loss Per Share | $(0.09) | $(0.18) | - Total revenues increased by **$1,399 thousand (4.6%)** year-over-year[12](index=12&type=chunk) - Net loss decreased by **$3,658 thousand (51.3%)** year-over-year, primarily due to the absence of a loss on extinguishment of debt in 2022 and lower interest expense[12](index=12&type=chunk) [Consolidated Statements of Changes in Equity](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202022%20AND%202021%20%28UNAUDITED%29) This section presents unaudited consolidated statements of changes in equity, detailing shifts in stockholders' equity and non-controlling interests Consolidated Statements of Changes in Equity Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Total Stockholders' Equity | $21,504 | $26,513 | | Non-controlling Interests | $35,230 | $43,436 | | Total Equity | $56,734 | $69,949 | | Accumulated Deficit (March 31, 2022) | $(66,871) | $(61,736) | | Net Loss (March 31, 2022) | $(1,318) | $(2,704) | - Total equity decreased from **$69,949 thousand** at December 31, 2021, to **$56,734 thousand** at March 31, 2022, primarily due to cumulative-effect adjustment, dividends, and net loss[15](index=15&type=chunk) - A cumulative-effect adjustment of **$(2,291) thousand** was recorded for stockholders' equity and **$(3,755) thousand** for non-controlling interests as of January 1, 2022[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202022%20AND%202021%20%28UNAUDITED%29) This section presents unaudited consolidated statements of cash flows, detailing cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Provided by Operating Activities | $6,587 | $7,437 | | Net Cash Used in Investing Activities | $(17,851) | $(7,745) | | Net Cash Provided by Financing Activities | $2,875 | $17,472 | | Net Increase (Decrease) in Cash and Restricted Cash | $(8,389) | $17,164 | | Cash and Restricted Cash - End of Period | $43,835 | $106,196 | - Net cash provided by operating activities decreased by **$850 thousand** year-over-year[19](index=19&type=chunk) - Net cash used in investing activities significantly increased by **$10,106 thousand**, primarily due to additions to land, buildings, and improvements, and cash paid for real estate acquisition[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section provides detailed notes explaining the company's organization, significant accounting policies, and specific financial line items [Introduction to the Condensed Consolidated Financial Statements](index=10&type=section&id=INTRODUCTION%20TO%20THE%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section introduces the unaudited condensed consolidated financial statements, prepared under SEC rules and GAAP - The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and GAAP, with certain information condensed or omitted[21](index=21&type=chunk) - The financial information includes normal recurring adjustments and is not necessarily indicative of full year results[22](index=22&type=chunk) [1. Organization](index=10&type=section&id=1.%20Organization) This section details the Company's organizational structure, property portfolio, and REIT tax election - As of March 31, 2022, the Company owns several properties in Manhattan and Brooklyn, including Tribeca House, Flatbush Gardens, and properties under redevelopment[23](index=23&type=chunk) - The Company has elected to be taxed as a **Real Estate Investment Trust (REIT)** and is the sole general partner of the Operating Partnership[26](index=26&type=chunk) - The Company's interest, through the Operating Partnership, in the LLCs that own the properties generally entitles it to **37.9% of aggregate cash distributions, profits, and losses**[27](index=27&type=chunk) [2. Significant Accounting Policies](index=11&type=section&id=2.%20Significant%20Accounting%20Policies) This section outlines the Company's significant accounting policies, including segment reporting, lease accounting, and REIT taxation - The Company has two reportable operating segments: Residential Rental Properties and Commercial Rental Properties[28](index=28&type=chunk) - Effective Q1 2022, the Company adopted ASC 842 "Leases," resulting in a cumulative-effect adjustment of **$6.0 million** in retained earnings as of January 1, 2022[49](index=49&type=chunk) - Stock-based compensation for LTIP units is recognized as an expense over the vesting period, with **$2.4 million** of unrecognized cost as of March 31, 2022[53](index=53&type=chunk) - The Company operates as a REIT, generally not subject to U.S. federal corporate-level income tax on distributed earnings, provided it meets specific requirements[56](index=56&type=chunk) Basic and Diluted Net Loss Per Share (in thousands, except per share amounts) | Metric | 2022 | 2021 | | :------------------------------------------- | :------ | :------ | | Net loss attributable to common stockholders | $(1,318) | $(2,704) | | Less: income attributable to participating securities | $(162) | $(165) | | Subtotal | $(1,480) | $(2,869) | | Weighted-average common shares outstanding | 16,063 | 16,063 | | Basic and diluted net loss per share | $(0.09) | $(0.18) | [3. Deferred Costs and Intangible Assets](index=17&type=section&id=3.%20Deferred%20Costs%20and%20Intangible%20Assets) This section details the Company's deferred costs and intangible assets, net, including amortization expenses for the reported periods Deferred Costs and Intangible Assets, Net (in thousands) | Category | March 31, 2022 (Unaudited) | December 31, 2021 | | :-------------------------------------- | :------------------------- | :------------------ | | Total deferred costs and intangible assets | $11,128 | $11,109 | | Less accumulated amortization | $(4,162) | $(3,983) | | Total deferred costs and intangible assets, net | $6,966 | $7,126 | - Amortization of deferred costs, lease origination costs, and in-place lease intangible assets was **$59 thousand** for Q1 2022, compared to **$56 thousand** for Q1 2021[69](index=69&type=chunk) - Amortization of real estate tax abatements was **$120 thousand** for both Q1 2022 and Q1 2021[69](index=69&type=chunk) [4. Below-Market Leases, Net](index=17&type=section&id=4.%20Below-Market%20Leases%2C%20Net) This section details the Company's below-market leases, net, including accumulated amortization and future amortization schedules Below-Market Leases, Net (in thousands) | Category | March 31, 2022 (Unaudited) | December 31, 2021 | | :---------------------------- | :------------------------- | :------------------ | | Below-market leases | $297 | $297 | | Less accumulated amortization | $(253) | $(244) | | Below-market leases, net | $44 | $53 | - Rental income included amortization of below-market leases of **$9 thousand** for Q1 2022, a decrease from **$31 thousand** for Q1 2021[71](index=71&type=chunk) Below-Market Leases Amortization Schedule (in thousands) | Year | Amount | | :--------------- | :----- | | 2022 (Remainder) | $26 | | 2023 | $18 | | Total | $44 | [5. Notes Payable](index=19&type=section&id=5.%20Notes%20Payable) This section details the Company's notes payable by property, including maturity dates, interest rates, and principal payment requirements Notes Payable by Property (in thousands) | Property | Maturity | Interest Rate | March 31, 2022 | December 31, 2021 | | :----------------------- | :--------- | :---------------- | :------------- | :---------------- | | Flatbush Gardens | 6/1/2032 | 3.125% | $329,000 | $329,000 | | 250 Livingston Street | 6/6/2029 | 3.63% | $125,000 | $125,000 | | 141 Livingston Street | 3/6/2031 | 3.21% | $100,000 | $100,000 | | Tribeca House | 3/6/2028 | 4.506% | $360,000 | $360,000 | | Aspen | 7/1/2028 | 3.68% | $63,670 | $64,047 | | Clover House | 12/1/2029 | 3.53% | $82,000 | $82,000 | | 10 West 65th Street | 11/1/2027 | 3.375% | $32,743 | $32,921 | | 1010 Pacific Street | 9/1/2024 | LIBOR + 3.60% | $28,702 | $21,084 | | Dean Street | 12/22/2022 | Prime + 1.60% | $30,000 | $30,000 | | Total Debt | | | $1,151,115 | $1,144,052 | | Unamortized debt issuance costs | | | $(12,077) | $(12,898) | | Total Debt, net | | | $1,139,038 | $1,131,154 | - Total debt, net of unamortized debt issuance costs, increased by **$7,884 thousand** from December 31, 2021, to March 31, 2022[74](index=74&type=chunk) - The Company borrowed an additional **$7,617 thousand** for 1010 Pacific Street development costs and **$6,985 thousand** for Dean Street property acquisition in Q1 2022 and April 2022, respectively[83](index=83&type=chunk)[84](index=84&type=chunk) Principal Payment Requirements (in thousands) | Year | Amount | | :--------------- | :----- | | 2022 (Remainder) | $31,661| | 2023 | $2,296 | | 2024 | $31,076| | 2025 | $2,468 | | 2026 | $4,549 | | Thereafter | $1,079,065 | | Total | $1,151,115 | [6. Rental Income under Operating Leases](index=21&type=section&id=6.%20Rental%20Income%20under%20Operating%20Leases) This section details minimum future cash rents receivable under operating leases and the breakdown of commercial vs residential revenue Minimum Future Cash Rents Receivable (in thousands) | Year | Amount | | :--------------- | :----- | | 2022 (Remainder) | $29,066| | 2023 | $28,813| | 2024 | $23,139| | 2025 | $2,820 | | 2026 | $2,149 | | Thereafter | $38,505| | Total | $124,492 | - Commercial leases with the City of New York comprised approximately **24% of total revenues** for Q1 2022, down from **25%** in Q1 2021[87](index=87&type=chunk) [7. Fair Value of Financial Instruments](index=22&type=section&id=7.%20Fair%20Value%20of%20Financial%20Instruments) This section discusses fair value measurements of financial instruments, classifying them by input levels and comparing carrying to fair values - Fair value measurements are classified into three levels: Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar instruments or model-derived valuations with observable inputs), and Level 3 (unobservable inputs)[89](index=89&type=chunk) - The carrying amount of cash, restricted cash, receivables, prepaid expenses, accounts payable, and security deposits approximates fair value due to their short-term nature[92](index=92&type=chunk) Notes Payable Carrying Amount and Estimated Fair Value (in thousands) | Metric | March 31, 2022 (Unaudited) | December 31, 2021 | | :----------------------- | :------------------------- | :------------------ | | Carrying amount | $1,151,115 | $1,144,052 | | Estimated fair value | $1,138,150 | $1,199,409 | [8. Commitments and Contingencies](index=23&type=section&id=8.%20Commitments%20and%20Contingencies) This section details ongoing legal proceedings, the impact of the COVID-19 pandemic, and property concentration risks in New York City - The Company is involved in ongoing legal proceedings (Kuzmich, Crowe, Horn cases) regarding rent overcharges at Tribeca House properties, and recorded a **$2.7 million charge** for litigation settlement in Q4 2021[94](index=94&type=chunk)[97](index=97&type=chunk) - The COVID-19 pandemic continues to present uncertainty, potentially affecting tenant's ability to pay rent and housing demand, despite a **96.5% rent collection rate** in Q1 2022[101](index=101&type=chunk)[124](index=124&type=chunk) - The Company's properties are concentrated in Manhattan and Brooklyn, exposing it to greater economic risks specific to New York City[103](index=103&type=chunk) Commercial vs. Residential Revenue Breakdown | Period | Commercial | Residential | | :-------------------------- | :--------- | :---------- | | Three months ended March 31, 2022 | 33% | 67% | | Three months ended March 31, 2021 | 30% | 70% | [9. Related-Party Transactions](index=25&type=section&id=9.%20Related-Party%20Transactions) This section details transactions with related parties, including office and overhead expenses, payroll expense credits, and legal and advisory fees - Office and overhead expenses from a related company were **$64 thousand** in Q1 2022, slightly down from **$66 thousand** in Q1 2021[106](index=106&type=chunk) - Reimbursable payroll expense credit from a related company decreased significantly to **$8 thousand** in Q1 2022 from **$41 thousand** in Q1 2021[106](index=106&type=chunk) - Legal and advisory fees paid to firms where directors were principals decreased to **$0** in Q1 2022 from **$404 thousand** in Q1 2021[107](index=107&type=chunk) [10. Segment Reporting](index=25&type=section&id=10.%20Segment%20Reporting) This section provides detailed segment performance data for commercial and residential properties, including rental income and capital expenditures Segment Performance (in thousands) | Metric / Segment | Commercial (Q1 2022) | Residential (Q1 2022) | Total (Q1 2022) | Commercial (Q1 2021) | Residential (Q1 2021) | Total (Q1 2021) | | :--------------- | :------------------- | :-------------------- | :-------------- | :------------------- | :-------------------- | :-------------- | | Rental Income | $10,588 | $21,462 | $32,050 | $9,047 | $21,604 | $30,651 | | Total Revenues | $10,588 | $21,462 | $32,050 | $9,047 | $21,604 | $30,651 | | Income from Operations | $5,466 | $1,043 | $6,509 | $4,430 | $1,687 | $6,117 | | Total Assets | $310,782 | $915,997 | $1,226,779 | $310,423 | $923,324 | $1,233,657 | | Interest Expense | $2,494 | $7,491 | $9,985 | $2,076 | $8,141 | $10,217 | | Capital Expenditures | $790 | $15,644 | $16,434 | $2,370 | $3,172 | $5,542 | - Commercial rental income increased by **$1,541 thousand (17.0%)** year-over-year, while residential rental income slightly decreased by **$142 thousand (0.7%)**[110](index=110&type=chunk) - Residential segment capital expenditures significantly increased to **$15,644 thousand** in Q1 2022 from **$3,172 thousand** in Q1 2021, reflecting development activities[112](index=112&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on financial performance, covering revenues, expenses, liquidity, cash flows, and non-GAAP measures [Overview of Our Company](index=26&type=section&id=Overview%20of%20Our%20Company) This section provides an overview of Clipper Realty Inc. as a REIT, its property portfolio, and ownership structure - Clipper Realty Inc. is a self-administered and self-managed REIT focused on acquiring, owning, managing, operating, and repositioning multifamily residential and commercial properties in the New York metropolitan area[114](index=114&type=chunk) - The Company's portfolio includes properties in Manhattan (Tribeca House, Aspen, 10 West 65th Street) and Brooklyn (Flatbush Gardens, 141 Livingston Street, 250 Livingston Street, Clover House, 1010 Pacific Street, Dean Street)[119](index=119&type=chunk)[120](index=120&type=chunk) - The Operating Partnership's interest in LLC subsidiaries generally entitles it to **37.9% of aggregate distributions**, with continuing investors holding **62.1% of common stock** on a fully diluted basis[121](index=121&type=chunk) [COVID-19 Pandemic](index=27&type=section&id=COVID-19%20Pandemic) This section discusses the COVID-19 pandemic's impact on tenant payments and housing demand, noting resilient rent collection - The COVID-19 pandemic continues to adversely impact global economic activity, affecting tenant's ability to pay rent and reducing demand for housing in New York[122](index=122&type=chunk) - Despite challenges, the Company's business remained durable, with properties open and operational, achieving a **96.5% rent collection rate** in Q1 2022 and **96% leased** at March 31, 2022[124](index=124&type=chunk) - Certain commercial tenants received partial rent deferrals, totaling **$0.6 million** at March 31, 2022[122](index=122&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes revenues, operating expenses, and net loss for the reported periods, highlighting key changes and drivers Key Financial Performance (in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :--------------------------- | :------ | :------- | :--------- | :--------- | | Residential rental income | $21,462 | $21,604 | $(142) | (0.7)% | | Commercial rental income | $10,588 | $9,047 | $1,541 | 17.0% | | Total revenues | $32,050 | $30,651 | $1,399 | 4.6% | | Property operating expenses | $7,539 | $8,642 | $(1,103) | (12.8)% | | Real estate taxes and insurance | $7,931 | $7,312 | $619 | 8.5% | | General and administrative | $2,942 | $2,293 | $649 | 28.3% | | Transaction pursuit costs | $424 | $60 | $364 | NM | | Depreciation and amortization | $6,705 | $6,227 | $478 | 7.7% | | Total operating expenses | $25,541 | $24,534 | $1,007 | 4.1% | | Income from operations | $6,509 | $6,117 | $392 | 6.4% | | Interest expense, net | $(9,985)| $(10,217)| $232 | 2.3% | | Loss on extinguishment of debt | — | $(3,034) | $3,034 | NM | | Net loss | $(3,476)| $(7,134) | $3,658 | 51.3% | - Residential rental income decreased due to ASC 842 reserves and write-offs (**$700 thousand**), partially offset by increased rental rates and leased occupancy at Tribeca House, Clover House, and Aspen[126](index=126&type=chunk) - Commercial rental income increased due to revenue restoration from a tenant at Tribeca House (**$1,100 thousand**) and new lease commencements[127](index=127&type=chunk) - Net loss improved significantly by **51.3%** primarily due to the absence of a **$3,034 thousand** loss on extinguishment of debt in 2022 and lower net interest expense[126](index=126&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's liquidity position and plans for meeting short-term and long-term capital needs Liquidity Position (in millions) | Metric | March 31, 2022 | | :---------------------- | :------------- | | Indebtedness, net | $1,139 | | Cash and cash equivalents | $25.3 | | Restricted cash | $18.5 | - Short-term liquidity needs are expected to be met by cash from operations and on hand[136](index=136&type=chunk) - Long-term liquidity needs are anticipated to be funded by public/private equity offerings and long-term secured/unsecured debt, as operating cash flow alone will not be sufficient[137](index=137&type=chunk) [Distributions](index=30&type=section&id=Distributions) This section outlines the Company's REIT distribution requirements and the total dividends and distributions paid for the reported periods - To qualify as a REIT, the Company must distribute at least **90% of its taxable income** to shareholders annually[141](index=141&type=chunk) - Dividends and distributions totaled **$4.2 million** for both Q1 2022 and Q1 2021[141](index=141&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202022%20and%202021%20%28in%20thousands%29) This section summarizes cash flows from operating, investing, and financing activities, detailing changes and primary drivers Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--------------------- | :-------- | :-------- | | Operating activities | $6,587 | $7,437 | | Investing activities | $(17,851) | $(7,745) | | Financing activities | $2,875 | $17,472 | - Net cash provided by operating activities decreased by **$850 thousand**, primarily due to a **$667 thousand** decrease from operating results[142](index=142&type=chunk) - Net cash used in investing activities increased by **$10,106 thousand**, driven by capital spending on developing 1010 Pacific Street and the Dean Street property, including land acquisitions[143](index=143&type=chunk) - Net cash provided by financing activities decreased by **$14,597 thousand**, mainly due to lower proceeds from mortgage notes and the absence of a large refinancing event seen in 2021[144](index=144&type=chunk) [Income Taxes](index=30&type=section&id=Income%20Taxes) This section explains the Company's income tax position, noting its REIT election generally exempts it from federal income tax on distributed income - No provision for income taxes has been made as the Company's operations are held in pass-through entities, and it has elected to be treated as a REIT, generally exempting it from federal income tax on distributed income[145](index=145&type=chunk)[146](index=146&type=chunk) [Inflation](index=30&type=section&id=Inflation) This section assesses the impact of inflation on operations, noting its limited effect and the Company's ability to adjust rental rates - Inflation did not significantly impact operations in the reported periods and is not currently considered a material risk[147](index=147&type=chunk) - Short-term residential leases (**67% of revenue**) allow for quick adjustments to rental rates, and longer-term commercial leases generally permit recovery of increased operating costs[147](index=147&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like FFO, AFFO, Adjusted EBITDA, and NOI - The report discusses non-GAAP financial measures: 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)[150](index=150&type=chunk) - These measures are provided to offer useful information to investors but should not be considered alternatives to GAAP net income (loss) or cash flows[151](index=151&type=chunk)[154](index=154&type=chunk)[158](index=158&type=chunk)[162](index=162&type=chunk) FFO and AFFO Reconciliation to Net Loss (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(3,476) | $(7,134) | | Real estate depreciation and amortization | $6,705 | $6,227 | | **FFO** | **$3,229** | **$(907)** | | Amortization of real estate tax intangible | $120 | $120 | | Amortization of above- and below-market leases | $(9) | $(31) | | Straight-line rent adjustments | $(189) | $(1) | | Amortization of debt origination costs | $313 | $308 | | Amortization of LTIP awards | $495 | $486 | | Transaction pursuit costs | $424 | $60 | | Loss on extinguishment of debt | — | $3,034 | | Certain litigation-related expenses | $86 | $59 | | Recurring capital spending | $(49) | $(50) | | **AFFO** | **$4,420** | **$3,078** | Adjusted EBITDA Reconciliation to Net Loss (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(3,476) | $(7,134) | | Real estate depreciation and amortization | $6,705 | $6,227 | | Amortization of real estate tax intangible | $120 | $120 | | Amortization of above- and below-market leases | $(9) | $(31) | | Straight-line rent adjustments | $(189) | $(1) | | Amortization of LTIP awards | $495 | $486 | | Interest expense, net | $9,985 | $10,217 | | Transaction pursuit costs | $424 | $60 | | Loss on extinguishment of debt | — | $3,034 | | Certain litigation-related expenses | $86 | $59 | | **Adjusted EBITDA** | **$14,141** | **$13,037** | NOI Reconciliation to Income from Operations (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Income from operations | $6,509 | $6,117 | | Real estate depreciation and amortization | $6,705 | $6,227 | | General and administrative expenses | $2,942 | $2,293 | | Transaction pursuit costs | $424 | $60 | | Amortization of real estate tax intangible | $120 | $120 | | Amortization of above- and below-market leases | $(9) | $(31) | | Straight-line rent adjustments | $(189) | $(1) | | **NOI** | **$16,502** | **$14,785** | [Critical Accounting Policies](index=33&type=section&id=Critical%20Accounting%20Policies) This section highlights critical accounting policies, noting reliance on GAAP estimates and the adoption of ASC 842 - Management's discussion relies on consolidated financial statements prepared in accordance with GAAP, requiring estimates and judgments[162](index=162&type=chunk) - No material changes to critical accounting policies were identified, except for the adoption of ASC 842 in Q1 2022[162](index=162&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2, "Significant Accounting Policies," for a discussion of recent accounting pronouncements - Refer to Note 2, "Significant Accounting Policies" for a discussion of recent accounting pronouncements[163](index=163&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=33&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section discusses the Company's exposure to market risks, primarily interest rate fluctuations and their financial impact - The principal market risk is related to interest rate fluctuations, influenced by governmental monetary policies and economic conditions[164](index=164&type=chunk) - A **one percent change in interest rates** on the **$58.7 million** of variable rate debt as of March 31, 2022, would impact annual net loss by approximately **$0.6 million**[165](index=165&type=chunk) Fair Value of Notes Payable (in millions) | Metric | March 31, 2022 | December 31, 2021 | | :----------------------- | :------------- | :---------------- | | Fair value of notes payable | $1,138.2 | $1,199.4 | [ITEM 4. CONTROLS AND PROCEDURES](index=34&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the evaluation of disclosure controls and internal control over financial reporting, concluding their effectiveness - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2022[167](index=167&type=chunk) - No material changes in internal control over financial reporting were identified during the period covered by the report[168](index=168&type=chunk) - Management concluded that internal control over financial reporting was effective as of March 31, 2022, based on the COSO framework[169](index=169&type=chunk) PART II – OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 8, "Commitments and Contingencies," for details on legal proceedings - Legal proceedings are discussed in Note 8, "Commitments and Contingencies," of the consolidated financial statements[170](index=170&type=chunk) [ITEM 1A. RISK FACTORS](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section states that prior risk factors remain relevant, with no material changes, and may be exacerbated by COVID-19 - Risk factors from the Annual Report on Form 10-K for December 31, 2021, remain relevant, with no material changes for the three months ended March 31, 2022[171](index=171&type=chunk) - The COVID-19 pandemic may increase the likelihood of many of the previously disclosed risks impacting the Company[171](index=171&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=35&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section indicates no applicable disclosures for unregistered sales of equity securities and use of proceeds - This item is not applicable for the reporting period[173](index=173&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURE](index=35&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This section states that there are no applicable disclosures regarding mine safety for the reporting period - This item is not applicable for the reporting period[173](index=173&type=chunk) [ITEM 6. EXHIBITS](index=35&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with Form 10-Q, including executive officer certifications and Inline XBRL documents - Exhibits include Rule 13a-14(a)/15d-14(a) Certifications from the Principal Executive Officer and Principal Financial Officer[174](index=174&type=chunk) - Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, are filed by the Chief Executive Officer and Chief Financial Officer[174](index=174&type=chunk) - Various Inline XBRL documents (Instance, Schema, Calculation, Label, Presentation, Definition Linkbase Documents) and the Cover Page Interactive Data File are submitted electronically[174](index=174&type=chunk) SIGNATURES - The report was signed on May 10, 2022, by David Bistricer, Co-Chairman and Chief Executive Officer of Clipper Realty Inc[178](index=178&type=chunk)

Clipper Realty Inc. (NYSE:CLPR) Q4 2021 Earnings Conference Call March 15, 2022 5:00 PM ET Company Participants Lawrence Kreider – Chief Financial Officer David Bistricer – Co-Chairman and Chief Executive Officer JJ Bistricer – Chief Operating Officer Conference Call Participants Craig Kucera – B. Riley Buck Horne – Raymond James Operator Good day, ladies and gentlemen, and welcome to the Clipper Realty Fourth Quarter Earnings Call. At this time all participants are in a listen-only mode and the floor will ...