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Clipper Realty Inc. (CLPR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 results were resilient but mixed: revenue was flat year over year at $37.7M while NOI declined to $20.8M and AFFO fell to $5.6M, driven by the August termination of the NYC lease at 250 Livingston, initial lease-up costs at Prospect House, and absence of the sold 10 West 65th Street property .
  • Revenue slightly missed S&P Global consensus ($37.9M* vs. $37.7M actual); EPS consensus was not available, while analysts tracked FFO/share at $0.06* and the company reported AFFO/share of $0.13 (not directly comparable) .
  • Residential fundamentals remained strong: new lease rates were ~14% above prior rents, renewals ~5–6% higher, occupancy ~99–100% across stabilized assets, and Prospect House moved from ~33% pre-leased in Q2 to ~60% in Q3 .
  • Dividend was maintained at $0.095 per share; balance sheet liquidity stood at $26.1M unrestricted cash and $30.6M restricted cash; operating debt ~88% fixed at 3.87% with ~3.7-year average duration, and debt remains non-recourse and not cross-collateralized .

What Went Well and What Went Wrong

  • What Went Well

    • Strong residential demand: “new leases exceeded previous rents by nearly 14% and renewals by over 6%,” with stabilized properties ~99–100% leased; management emphasized “rents are generally at all-time highs” .
    • Prospect House lease-up progressing: placed in service August 1; ~60% leased with gross pre-market rents >$88/sq ft; bridge financing completed last quarter to support stabilization .
    • Disciplined capital and liability management: 88% fixed-rate operating debt at 3.87% avg rate, ~3.7-year duration; dividend maintained at $0.095 per share .

  • What Went Wrong

    • Loss of commercial revenue: NYC vacated 250 Livingston on August 23, reducing commercial revenue by ~$1.9M in Q3 and pressuring NOI and AFFO .
    • Initial lease-up drag: Prospect House contributed limited revenue but fully loaded expenses (interest, amortization, depreciation), reducing AFFO by ~$1.8M in Q3 .
    • Higher operating costs and G&A: increased real estate taxes/insurance and G&A (non-cash stock-based compensation amortization) pressured results despite residential strength .

Financial Results

  • Consolidated performance (YoY and sequential context in narrative below)
MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$37.622 $39.036 $37.698
Net Income ($USD Millions)$(0.412)*$(0.516)*$(1.751)*
Diluted EPS ($USD)$(0.05) $(0.07) $(0.14)
NOI ($USD Millions)$21.780 $22.115 $20.756
AFFO ($USD Millions)$7.762 $8.318 $5.615
AFFO per share ($USD)$0.18 $0.20 $0.13
EBITDA ($USD Millions)$18.302*$18.234*$16.986*
EBITDA Margin (%)48.65%*46.71%*45.06%*
Net Income Margin (%)(1.10%)*(1.32%)*(4.64%)*
  • Segment revenue breakdown
Segment Revenue ($USD Millions)Q3 2024Q2 2025Q3 2025
Residential rental income$27.846 $29.054 $29.773
Commercial rental income$9.776 $9.982 $7.925
  • KPIs
KPIQ1 2025Q2 2025Q3 2025
New lease rate vs prior rents+15% +14% +14%
Renewal rate vs prior rents+8% +6% +5%
Residential collections~98% ~97% ~95%
Prospect House lease-upSubstantially complete; leasing to commence in June ~33% leased; >$88/sq ft ~60% leased; >$88/sq ft
  • Narrative analysis
    • Revenue was flat YoY (+$0.1M) as residential revenue rose $1.9–$2.4M across ongoing properties, offset by ~$1.8–$1.9M headwind from 250 Livingston’s NYC lease termination and absence of 10 West 65th Street; sequential decline vs Q2 reflects the same drivers .
    • NOI decreased ~$1.0M YoY on lower commercial revenue and lease-up costs; AFFO fell ~$2.2M YoY, with Prospect House lease-up and 250 Livingston termination together driving ~$3.7M reduction, partly offset by stronger ongoing residential NOI .
    • EPS worsened to $(0.14) vs $(0.05) YoY and $(0.07) Q/Q on reduced commercial contribution and full lease-up expense load at Prospect House .

Notes: Asterisked values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ3 2025$0.095 (Q2 2025 dividend) $0.095 Maintained
Formal financial guidance (revenue, margins, tax rate)Q3 2025None disclosedNone disclosedN/A
Segment-specific guidanceQ3 2025None disclosedNone disclosedN/A

Management did not issue formal quantitative revenue/margin or tax guidance; commentary focused on Prospect House lease-up, resolving 250/141 Livingston, and maintaining operating discipline .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Residential leasing strengthRecord rents; ~99% occupied; new leases +15%, renewals +8%; collections ~98% (Q1) ; Q2 held strong with +14% new lease spreads; property occupancies 96–100%; collections ~97% .New leases +14%; renewals +5%; stabilized properties ~99–100% leased; collections ~95% .Stable to slightly moderating renewals; occupancy strong.
Prospect House (953 Dean)Construction complete; leasing to commence June; bridge loan up to $160M .~33% leased in Q2 at >$88/sq ft .~60% leased in Q3; pre-market rents >$88/sq ft; full expense load impacting AFFO .
250 Livingston (NYC tenant)NYC vacating end of Aug; property historically ~$4.6M quarterly revenue; lender discussions (Q2) .NYC vacated Aug 23; ~$1.8–$1.9M revenue reduction in Q3; actively seeking solutions .Deteriorated contribution; remediation in progress.
141 Livingston (NYC)Five-year renewal agreed; lender consent pending .Renewal affirmed; working with lender to get consent .Stable; execution pending.
Flatbush Gardens (Article 11)Tax abatement; improved collections; capex commitments; rents +11% YoY; collections ~95% (Q2) .Continued strong recovery; capex ongoing; noted higher payroll and collection costs .Improving operations with elevated costs.
Balance sheet & debt89% fixed, 3.87% avg rate, 4.1-year duration (Q1) ; significant liquidity from sale and bridge loan (Q2) .88% fixed, 3.87% avg rate, ~3.7-year duration; non-recourse, not cross-collateralized .Stable, conservative profile.

Management Commentary

  • CEO: “new leases exceeded previous rents by nearly 14% and renewals by over 6%… Prospect House… is now in its initial lease up phase… At… 250 Livingston Street… our New York City tenant vacated… and we continue to actively seek solutions… [and] agreed to a five-year lease renewal with New York City [at] 141 Livingston Street” .
  • COO: “residential leasing at all our stabilized properties is very strong… 99% leased overall… new rental rates… exceeded previous rents by over 14% and renewals by 5%… Prospect House… now 60% leased with pre-market units at $88 per sq ft gross” .
  • CFO: “flat revenues of $37.7M versus $37.6M last year… NOI of $20.8M versus $21.8M… AFFO of $5.6M versus $7.8M… decrease driven by 250 Livingston termination and Prospect House lease-up…”; operating debt “88% fixed at… 3.87%… duration of 3.7 years… non-recourse… not cross-collateralized” .

Q&A Highlights

  • Q3: No analyst questions; call concluded without Q&A, limiting external estimate/guidance clarification .
  • Q1: One question on 141 Livingston renewal; management indicated no tenant improvements expected and aimed to finalize soon .

Estimates Context

  • Revenue: Q3 consensus $37.9M* vs. actual $37.7M (miss ~0.5%); forward revenue estimates: Q4 2025 $36.2M*, Q1 2026 $37.0M* .
  • EPS: Primary EPS consensus not available; company reported diluted EPS $(0.14) .
  • FFO/share (REIT): Q3 consensus $0.06*; company reported AFFO/share $0.13 (different metric), so direct comparison is not appropriate .

Notes: Asterisked values retrieved from S&P Global.

Financial Results vs. Estimates

MetricQ3 2025 ConsensusQ3 2025 Actual
Revenue ($USD Millions)$37.900*$37.698
Primary EPS ($USD)N/A*$(0.14)
FFO / Share (REIT) ($USD)$0.06*Not disclosed (Company disclosed AFFO/share $0.13)

Notes: Asterisked values retrieved from S&P Global. FFO/share and AFFO/share are different measures.

Key Takeaways for Investors

  • Residential strength anchors the thesis: leasing spreads (+14% new, +5–6% renewals) and high occupancy underpin ongoing NOI resilience despite commercial headwinds .
  • Near-term drag from Prospect House lease-up and 250 Livingston vacancy weighed on AFFO and EPS; expect improving contribution as Prospect House approaches stabilization .
  • Balance sheet remains conservative with predominantly fixed-rate, non-recourse debt and adequate liquidity, supporting operational flexibility in resolving 250/141 Livingston .
  • Dividend stability ($0.095) signals confidence in cash generation from the residential portfolio, even with transitional impacts .
  • Estimate set is thin (limited analyst coverage): modest revenue miss vs consensus and lack of EPS estimates suggest potential for estimate revisions as lease-up and commercial solutions progress .
  • Watch catalysts: Prospect House leasing pace, re-tenanting/solutions for 250 Livingston, lender consent for 141 Livingston renewal, and sustained rent/collection trends at Flatbush Gardens .
  • Tactical view: Into Q4, residential momentum offsets commercial softness; stock narrative likely driven by evidence of lease-up conversion to cash flow and clarity on 250 Livingston path forward .