Clipper Realty Inc. (CLPR) - 10-Q Summary for Period Ended June 30, 2026
Business Context and Reporting Period
This is a Quarterly Report on Form 10-Q for Clipper Realty Inc., a self-administered REIT focused on multifamily residential and commercial properties in New York City. The reporting period covers the three and six months ended June 30, 2026. The Company operates two reportable segments: Residential Rental Properties and Commercial Rental Properties. As of June 30, 2026, the Company owned 16,157,566 shares of Common Stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Total Revenues | $38.6 million | $76.7 million |
| Net Loss (GAAP) | $(6.3) million | $(17.4) million |
| Net Loss Attributable to Common Stockholders | $(2.4) million | $(6.6) million |
| Net Loss Per Share (Basic & Diluted) | $(0.19) | $(0.49) |
| Net Cash Provided by Operating Activities | N/A | $18.0 million |
| Total Debt (Notes Payable, net) | $1.28 billion | $1.28 billion |
| Cash and Cash Equivalents | $37.7 million | $37.7 million |
| Restricted Cash | $24.9 million | $24.9 million |
| Total Stockholders' Equity (Deficit) | $(40.1) million | $(40.1) million |
| Adjusted EBITDA | $18.6 million | $35.5 million |
| Funds From Operations (FFO) | $1.8 million | $(1.4) million |
Material Changes vs. Prior Comparable Period
- Revenue Decline in Commercial Segment: Commercial rental income decreased significantly (down 36.6% for the quarter and 37.9% for the six months) primarily due to the City of New York vacating the 250 Livingston Street property in August 2025. This property previously generated approximately $15.4 million in annual rent.
- Resilient Residential Segment: Residential rental income increased (up 10.9% for the quarter and 10.1% for the six months) driven by higher rental rates and occupancy levels at properties like Tribeca House and Flatbush Gardens.
- Increased Net Loss: Net loss attributable to common stockholders widened to $(6.6) million for the six months ended June 30, 2026, compared to $(13.9) million in the prior year period. However, the prior year included a one-time $33.8 million impairment loss on the sale of 10 West 65th Street. Excluding that impairment, the current period loss is higher due to increased interest expense from default interest on the 250 Livingston loan and litigation settlements.
- Interest Expense: Interest expense increased to $31.2 million for the six months ended June 30, 2026, from $23.0 million in the prior year, largely due to accrued default interest on the 250 Livingston Street loan.
Guidance, Outlook, Risks, and Contingencies
- 250 Livingston Street Default and Receivership: The Company is in default on the $125 million mortgage loan secured by 250 Livingston Street. A temporary receiver was appointed by the court in April 2026. A "Consent and Cooperation Agreement" entered into in June 2026 allows for a 45-day marketing period to sell the loan. If no sale occurs, the lender has the right to foreclose or take a deed in lieu of foreclosure. The Company estimates a loss of approximately $16 million annually in rental income and reimbursements until a new tenant is found.
- 141 Livingston Street Lease Expiration: The lease with the City of New York at 141 Livingston Street expired on December 27, 2025. The tenant remains in possession paying holdover rent. Negotiations for a five-year extension are ongoing, but there is no assurance of an agreement. Failure to renew could materially impact financial results.
- Rent Stabilization Risk: The NYC Rent Guidelines Board adopted a 0% rent adjustment for rent-stabilized units for renewals between October 1, 2026, and September 30, 2027. This may compress operating margins as the Company cannot increase rents to offset rising costs.
- Litigation: The Company reached a settlement in the Sanchez class action lawsuit, reserving $3.8 million for the six months ended June 30, 2026.
- Liquidity: Management believes current cash flows and cash on hand are sufficient to meet obligations for the next 12 months, though access to capital markets remains a key uncertainty given the defaults.
Investor Verification Checklist
- 250 Livingston Street Status: Verify the outcome of the 45-day marketing period for the loan sale and the likelihood of foreclosure or deed-in-lieu.
- 141 Livingston Street Lease: Confirm the status of lease extension negotiations with the City of New York and the terms of the holdover rent.
- Default Interest Accrual: Review the specific amount of default interest accrued on the 250 Livingston loan and its impact on future cash flow requirements.
- Residential Rent Growth: Assess the sustainability of the reported rental rate increases in the residential segment amidst the 0% rent stabilization cap.
- Debt Maturities: Review the debt maturity schedule, noting significant principal payments due in 2027 and 2028, and the Company's ability to refinance given current credit conditions.