Clipper Realty(CLPR) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial and Operating Results Financial Highlights For the second quarter of 2025, Clipper Realty reported strong top-line growth, with revenues increasing 4.5% to $39.0 million and Net Operating Income (NOI) rising 5% to a record $22.1 million. Adjusted Funds From Operations (AFFO) saw a significant 18% increase to $8.3 million. However, the company recorded a net loss of $1.4 million, or $0.7 million when excluding an impairment charge related to a property sale Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $39.0 million | $37.3 million | +4.5% | | Net Operating Income (NOI) | $22.1 million | $21.1 million | +5.0% | | Adjusted FFO (AFFO) | $8.3 million | $7.1 million | +18.0% | | AFFO per Share | $0.20 | $0.17 | +17.6% | | Net Loss | ($1.4 million) | ($1.7 million) | N/A | | Net Loss (ex-impairment) | ($0.7 million) | ($1.7 million) | N/A | - Revenue growth was driven by a $1.3 million (5.0%) increase in residential rental income due to higher rental rates and occupancy, and a $0.4 million (4.2%) increase in commercial income[3] - The net loss of $1.4 million included a $0.7 million impairment charge related to the sale of the 10 West 65th Street property[4] Operational and Strategic Updates The company maintained strong operational performance with high occupancy and renter demand, achieving significant rent increases on new and renewal leases. Key strategic activities included completing the Dean Street development and its bridge financing, selling the 10W 65th Street property to generate cash, and actively managing its commercial portfolio, including the upcoming vacancy at 250 Livingston Street - Residential leasing remains very strong, with new leases achieving rent increases of nearly 14% and renewals over 6%[2] - The Dean Street ground-up development construction is complete, leasing has begun, and a new bridge financing was secured to reduce interest costs and provide working capital[2] - The 10W 65th Street property was sold, generating nearly $13 million in cash[2] - The company is actively seeking solutions for the 250 Livingston Street property, which New York City will vacate in August 2025, while a lease renewal with the city has been agreed upon for the 141 Livingston Street property[2] Balance Sheet and Financing Activities As of June 30, 2025, notes payable stood at $1.28 billion. Key financing activities during the quarter included securing a new $160 million, two-year bridge loan for the Dean Street property at a lower interest rate, which was used to repay the existing construction loan. Additionally, the company retired $31.2 million of debt following the sale of the 10 West 65th Street property - Notes payable increased slightly to $1,277.3 million at June 30, 2025, from $1,275.4 million at December 31, 2024[8] - A new $160 million bridge loan was secured for the Dean Street property, featuring a lower interest rate (2.65% over SOFR) and providing funds for lease-up and working capital[8] - The sale of the 10 West 65th Street property for $43.6 million (net) allowed the company to retire $31.2 million of the property's debt[8] Dividend Declaration The company has declared a second-quarter dividend of $0.095 per share, consistent with the previous quarter. The dividend is payable on September 5, 2025, to shareholders of record on August 21, 2025 Q2 2025 Dividend Information | Metric | Value | | :--- | :--- | | Dividend per Share | $0.095 | | Record Date | August 21, 2025 | | Payment Date | September 5, 2025 | Consolidated Financial Statements Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $1.24 billion from $1.29 billion at year-end 2024, primarily due to a reduction in net investment in real estate following a property sale. Total liabilities remained stable at approximately $1.30 billion, leading to an increased total equity deficit of $57.7 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,241,323 | $1,286,965 | | Investment in real estate, net | $1,157,464 | $1,228,528 | | Cash and cash equivalents | $32,029 | $19,896 | | Total Liabilities | $1,299,019 | $1,301,195 | | Notes payable, net | $1,268,171 | $1,266,340 | | Total Equity (Deficit) | ($57,696) | ($14,230) | Consolidated Statements of Operations For the three months ended June 30, 2025, total revenues grew to $39.0 million from $37.3 million in the prior year. Despite higher income from operations, the company reported a net loss of $1.4 million, compared to a $1.7 million net loss in Q2 2024, influenced by a loss on disposal of assets Q2 Statement of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $39,036 | $37,346 | | Total Operating Expenses | $28,202 | $27,348 | | Income from Operations | $10,808 | $9,998 | | Interest Expense, net | ($11,479) | ($11,741) | | Net Loss | ($1,356) | ($1,743) | | Net Loss per Share | ($0.07) | ($0.06) | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $15.0 million. Investing activities provided $18.0 million in cash, primarily from the $43.5 million proceeds from a real estate sale, offset by capital expenditures. Financing activities used $10.2 million, mainly for dividends and net debt activities. This resulted in a significant increase in total cash and restricted cash to $60.8 million Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $15,044 | $15,044 | | Net Cash from Investing Activities | $17,967 | ($42,051) | | Net Cash from Financing Activities | ($10,225) | $27,526 | | Net Increase in Cash | $22,786 | $519 | | Cash and Restricted Cash (End of Period) | $60,838 | $36,744 | Reconciliation of Non-GAAP Financial Measures Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) In Q2 2025, FFO increased to $6.0 million from $5.7 million in Q2 2024. After adjustments for items like amortization and non-cash compensation, AFFO grew more substantially by 18% to $8.3 million, or $0.20 per share, up from $7.1 million, or $0.17 per share, in the prior-year period FFO and AFFO Reconciliation Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Loss | ($1,356) | ($1,743) | | Real estate depreciation & amortization | $7,314 | $7,455 | | FFO | $5,958 | $5,712 | | Adjustments | $2,360 | $1,341 | | AFFO | $8,318 | $7,053 | | AFFO Per Share/Unit | $0.20 | $0.17 | Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $19.4 million, an increase from $18.3 million in Q2 2024. The reconciliation from net loss primarily involves adding back interest expense, depreciation, and amortization Adjusted EBITDA Reconciliation Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Loss | ($1,356) | ($1,743) | | Interest expense, net | $11,479 | $11,741 | | Real estate depreciation & amortization | $7,314 | $7,455 | | Other Adjustments | $1,937 | $872 | | Adjusted EBITDA | $19,374 | $18,325 | Net Operating Income (NOI) Net Operating Income (NOI) for Q2 2025 reached a record $22.1 million, a 5% increase from $21.1 million in the same period last year. This non-GAAP measure is derived by adjusting income from operations for depreciation, general and administrative expenses, and other items NOI Reconciliation Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Income from operations | $10,808 | $9,998 | | Real estate depreciation & amortization | $7,314 | $7,455 | | General and administrative expenses | $3,819 | $3,459 | | Other Adjustments | $174 | $159 | | NOI | $22,115 | $21,071 |