Clipper Realty Inc. (CLPR)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue was $39.0M (+4.5% YoY; -0.9% QoQ), with record NOI of $22.1M and record AFFO of $8.3M; diluted EPS was -$0.07. Management cited strong residential leasing, with new leases ~14% above prior rents and renewals >6% .
• Dividend maintained at $0.095 per share; liquidity supported by $32.0M unrestricted cash and $28.8M restricted cash, 88% of operating debt fixed at 3.87% average rate and 4.1-year duration .
• Dean Street (Prospect House) construction completed; leasing commenced (33% leased at $88/sf), and a $160M bridge loan (SOFR+2.65%) was closed to fund carry and working capital; NYC to vacate 250 Livingston at month-end while a five-year renewal at 141 Livingston is being processed .
• Versus S&P consensus, revenue was essentially in-line, but EBITDA missed: Q2 revenue $39.04M vs $39.10M estimate; EBITDA $18.23M vs $19.90M estimate; with only one covering estimate, adjustments may be limited in scope. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

• Residential leasing strength drove near-record revenue; “new leases exceeded previous rents by nearly 14% and renewals by over 6%,” and occupancy remained high across the portfolio .
• Record NOI ($22.1M) and record AFFO ($8.3M), supported by higher rents and occupancy and lower utilities, despite certain Flatbush costs and modest tax/insurance increases .
• Prospect House completed on time/on budget; leasing underway at $88/sf; the $160M bridge loan lowers interest (SOFR+2.65%), funds operating costs through lease-up, and provides working capital .

What Went Wrong

• Office headwind: NYC vacating 250 Livingston at month-end; historically the property generated ~$4.6M quarterly revenue, ~$1.7M operating expenses, and ~$1.2M interest expense—creating near-term revenue/NOI risk .
• Flatbush Gardens expense pressure: higher payroll/repairs and maintenance and other operating expenses lifted property operating costs YoY; bad debt also rose modestly .
• EBITDA missed S&P consensus by ~$1.7M; despite strong rents/occupancy, higher property-level expenses (notably at Flatbush) and disposal-related costs weighed on profitability. Values retrieved from S&P Global.*

Financial Results

Core P&L and Margin Trends (sequential and vs consensus)

Values retrieved from S&P Global.*

YoY Comparison (Q2 2024 vs Q2 2025)

Segment Revenue Breakdown (sequential)

KPIs (Q2 2025)

Guidance Changes

No formal numerical guidance ranges (revenue, NOI, margins, tax rate, OpEx, OI&E, segment-specific) were provided in Q2 materials .

Earnings Call Themes & Trends

Management Commentary

• “For the quarter, the Company continued to maintain revenue, NOI and AFFO at a very high level based on very strong residential leasing… new leases exceeded previous rents by nearly 14% and renewals by over 6%.” — David Bistricer, CEO .
• “We also look forward to leasing the 953 Dean Street Prospect House development, finalizing the 141 Livingston Street lease, resolving the 250 Livingston Street upcoming vacancy and capitalizing on other possibilities.” — Lawrence Kreider, CFO .
• CFO highlighted operating leverage and constraints: property operating expenses increased $1.5M YoY (largely at Flatbush), while interest expense decreased $262K YoY due to asset sale and slightly lower variable rates .
• Liquidity/interest profile: $32.0M unrestricted cash; 88% fixed operating debt at 3.87% average rate and ~4.1-year duration; nonrecourse, asset-level financing .

Q&A Highlights

• The call ended without audience Q&A; no additional clarifications beyond prepared remarks were provided .

Estimates Context

Values retrieved from S&P Global.*

Given the single-estimate coverage and the modest revenue delta, revisions may be limited; EBITDA consensus may need modest downward adjustment to reflect Flatbush-related OpEx and disposal costs that affected Q2 profitability .

Key Takeaways for Investors

• Residential fundamentals remain robust: double-digit new lease uplift and record rents should support NOI/AFFO into H2, mitigating near-term office vacancy headwinds .
• Near-term risk at 250 Livingston as NYC vacates; historic ~$4.6M quarterly revenue loss is material; watch for lender negotiations and backfill/conversion plans to limit cash flow drag .
• Dean Street (Prospect House) leasing ramp is a critical catalyst; bridge financing reduces carry costs and funds working capital, enabling rapid stabilization if demand persists .
• Liquidity and debt structure are favorable (88% fixed at 3.87% avg; nonrecourse), providing resilience against rate volatility while supporting capex and leasing initiatives .
• Dividend held at $0.095; sustainability hinges on maintaining AFFO trajectory as development stabilizes and office exposure is addressed .
• Watch cost discipline at Flatbush Gardens: higher payroll and operating costs weighed on margins; continued Article 11 recoveries and capital upgrades should help, but expense management remains a focus .
• Minor discrepancy: management references an “impairment charge of ~$0.7M” in Q2 narrative, but statements show a $0.685M loss on disposal and no impairment line item—interpretation likely relates to sale-related costs; rely on GAAP tables for clarity .