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Clipper Realty Inc. (CLPR)·Q4 2024 Earnings Summary

Executive Summary

  • Record quarter on core operating metrics: revenues $38.0M (+9.1% YoY), NOI $22.5M (+12.9% YoY), and AFFO $8.1M (+29% YoY), while net loss narrowed to $1.1M ($0.05/share) from $2.9M YoY .
  • Strength driven by sustained residential leasing: portfolio ~99% leased; new lease rates up >7% and renewals up ~4.9%; Section 610 reimbursements meaningfully contributing ($1.1M in Q4; ~$2.3M YTD) .
  • Commercial exposure update: NYC intends to vacate 250 Livingston in Aug-2025; 141 Livingston renewal discussions are active with management “finalizing a 5-year extension” (expiring Dec-2025) .
  • Balance sheet and dividend: notes payable (excl. costs) $1,275.4M (development draws); dividend maintained at $0.095/share, payable Apr 3, 2025 to holders of record Mar 19, 2025 .
  • Potential stock catalysts: continued rent/occupancy strength and rising Section 610 reimbursements; development milestones at Dean Street; updates on Livingston Street leases; property recycling decisions at 10 West 65th Street .

What Went Well and What Went Wrong

What Went Well

  • Record operating performance: “record revenue, net operating income and AFFO based on our excellent residential activity” with Q4 revenue $38.0M, NOI $22.5M, AFFO $8.1M .
  • Leasing strength: residential properties ~99% leased; Tribeca House new leases ~$90/ft and Clover House ~$94/ft; overall rent levels $83–$86/ft; Pacific House is 100% leased and “yielding the project 7% cap rate” .
  • Section 610 benefits ramping: enhanced reimbursements contributed $1.1M in Q4 and ~$2.3M YTD, with an expectation to “increase steadily over the next few years” .

What Went Wrong

  • Collections and bad debt: portfolio collections 97%, but Flatbush Gardens collections eased to 88–92% over the last two quarters; increased bad debt offset part of revenue gains .
  • Higher operating costs: payroll costs at Flatbush (prevailing wage), slightly higher utilities and legal costs related to collection activities; real estate taxes modestly higher at non-Flatbush properties .
  • Commercial lease uncertainty: NYC notice to vacate 250 Livingston in Aug-2025; ongoing discussions at 141 Livingston, creating medium-term visibility risk despite active renewal efforts .

Financial Results

Core P&L and Operating Metrics – Sequential (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$37.346 $37.622 $38.047
Income from Operations ($USD Millions)$9.998 $10.752 $10.705
Net Loss ($USD Millions)$(1.743) $(1.088) $(1.086)
Diluted EPS ($USD)$(0.06) $(0.05) $(0.05)
Adjusted EBITDA ($USD Millions)$18.324 $19.122 $19.497
NOI ($USD Millions)$21.071 $21.780 $22.553
AFFO ($USD Millions)$7.052 $7.762 $8.097
AFFO per Share/Unit ($USD)$0.17 $0.18 $0.19
Net Income Margin %(4.7%) (2.9%) (2.9%)
Adjusted EBITDA Margin %49.1% 50.9% 51.3%
NOI Margin %56.4% 57.9% 59.3%

YoY Comparison – Q4 2023 vs Q4 2024

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$34.867 $38.047
Income from Operations ($USD Millions)$9.015 $10.705
Net Loss ($USD Millions)$(2.856) $(1.086)
Diluted EPS ($USD)$(0.09) $(0.05)
Adjusted EBITDA ($USD Millions)$17.647 $19.497
NOI ($USD Millions)$19.986 $22.553
AFFO ($USD Millions)$6.322 $8.097
AFFO per Share/Unit ($USD)$0.15 $0.19
Net Income Margin %(8.2%) (2.9%)
Adjusted EBITDA Margin %50.6% 51.3%
NOI Margin %57.3% 59.3%

Segment Revenue Breakdown – Residential vs Commercial (oldest → newest)

Segment Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024Q4 2023
Residential Rental Income$27.748 $27.846 $28.173 $25.235
Commercial Rental Income$9.598 $9.776 $9.874 $9.632

KPIs (oldest → newest)

KPIQ2 2024Q3 2024Q4 2024
Residential Portfolio Leased Occupancy (%)N/A~99% ~99%
New Lease Rate Uplift (%)~11% (portfolio) >9.5% >7%
Renewal Rate Uplift (%)~7% (portfolio) ~5.6% ~4.9%
Tribeca House New Leases ($/ft)N/A>$95 ~$90
Clover House New Leases ($/ft)N/A~$87 ~$94
Portfolio Avg Rent Levels ($/ft)N/A>$82–$85 ~$83–$86
Pacific House StatusN/AFully stabilized; 7% cap rate Fully stabilized; 7% cap rate
Flatbush Gardens Avg Rent ($/ft)N/A$29.07 $30.00
Flatbush Gardens New Leases ($/ft)N/AN/A~$35; ~+13% lift
Collections – Portfolio (%)N/A95% 97%
Collections – Flatbush (%)N/A~90% ~88–92%
Section 610 Reimbursements ($USD)N/AN/A$1.1M (Q4); ~$2.3M YTD

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per ShareQ4 2024$0.095 (Q3 2024) $0.095; payable Apr 3, 2025; record Mar 19, 2025 Maintained
Dean Street Development Completion2025 Leasing SeasonOn-time completion next year; ahead of schedule (Q3) On-time completion early this year to capture 2025 season Timeline reinforced/advanced
141 Livingston Street LeaseThrough Dec 2025Actively negotiating 5-year extension (Q3) Finalizing 5-year extension; active discussions (Q4) Progressing
250 Livingston Street Tenant PlanAug 2025NYC intends to vacate; seeking solutions (Q3) Continued pursuit of solutions/opportunities (Q4) Maintained
Property Recycling (10 W 65th)OngoingBegan marketing; potential loss vs book value (Q3) Continuing marketing; potential loss vs book value (Q4) Maintained
Formal Financial Guidance (Revenue, Margins, OpEx, Tax)Q4 2024Not providedNot providedN/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Residential leasing strengthNew leases +11%, renewals +7% (press release) New +9.5%, renewals +5.6%; ~99% leased New >7%, renewals ~4.9%; ~99% leased Sustained strength; uplift moderating slightly
Rents per foot (Tribeca, Clover)N/ATribeca >$95/ft; Clover ~$87/ft Tribeca ~$90/ft; Clover ~$94/ft; overall $83–$86/ft High rent levels; mix-driven variation
Article 11 / Section 610 reimbursementsBeginning to collect meaningful reimbursements (press release) Process advancing; collections dip at Flatbush $1.1M Q4; ~$2.3M YTD; expected to rise Meaningful and rising
CollectionsN/APortfolio 95%; Flatbush ~90% Portfolio 97%; Flatbush 88–92% Portfolio improvement; Flatbush stabilizing lower
Development (Pacific House, Dean Street)Dean ahead of schedule; 2025 season Pacific 100% leased; Dean superstructure; 2025 target Pacific stabilized at 7% cap; Dean completion early 2025 On plan to ahead of schedule
NYC office exposure (250 & 141 Livingston)Vacate intent disclosed; solutions sought Negotiating 141 lease; 250 vacate remains Finalizing 5-year 141 renewal; active 250 solutions Improved 141 visibility; 250 risk unchanged
Property recycling (10 W 65th)Preliminary marketing begun Marketing continues Continuing marketing; potential loss vs book Steady execution
Interest rate & debt profileN/A91% fixed; avg rate 3.87%; duration 4.9 yrs 91% fixed; avg rate 3.87%; duration 4.3 yrs Stable fixed-rate profile

Management Commentary

  • “We are reporting record operating results once again, including record revenue, net operating income and AFFO based on our excellent residential activity…we are nearly fully leased.” – David Bistricer, CEO .
  • “New leases exceeded prior rents by over 7%…rent levels were $83 and $86 per foot…Pacific House…is now 100% leased and yielding the project 7% cap rate.” – David Bistricer, CEO .
  • “We have begun to meaningfully obtain the enhanced reimbursements…These benefits have amounted to $1.1 million in the current period and nearly $2.3 million so far this year…should steadily increase over the next couple of years.” – J.J. Bistricer, COO .
  • “Property operating expenses increased…due to prevailing wage requirements…Real estate taxes…increased…at properties other than Flatbush…Interest expense decreased by $80,000…due to slightly lower rates on limited variable debt.” – Lawrence Kreider, CFO .
  • “We continue to actively seek solutions [for 250 Livingston]…[at] 141 Livingston…finalizing a 5-year extension.” – David Bistricer, CEO .

Q&A Highlights

  • Flatbush bad debt and collections: Management framed the dip to ~90% in Q3 as procedural with NYC, expecting normalization; portfolio collections improved to 97% in Q4 while Flatbush remained 88–92% as processes evolve .
  • Cash management and escrow mechanics (Livingston properties): Q3 discussion clarified DACA/cash management impacts restricted cash presentation but not income statement profitability; disputed special servicer escrow interpretation at 141 Livingston and sought negotiation .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (revenue, EPS, EBITDA) were unavailable at the time of this analysis due to provider request limits; as a result, we cannot assess beats/misses versus Street for this quarter. Estimates will be incorporated once accessible from S&P Global [GetEstimates error].
  • Directionally, robust YoY growth in NOI (+12.9%) and AFFO (+29%) and sequential margin expansion may prompt upward revisions to cash flow forecasts, while Flatbush collections and 250 Livingston vacate risk are likely offsets to top-line/NOI assumptions .

Key Takeaways for Investors

  • Residential fundamentals remain the core driver: near-full occupancy and continued rent growth sustained record NOI and AFFO in Q4 .
  • Section 610 reimbursements are becoming material and should rise, supporting Flatbush profitability and portfolio cash flow despite prevailing wage requirements and elevated maintenance spend .
  • Commercial exposure is manageable near term with active 141 Livingston renewal efforts, but 250 Livingston’s Aug-2025 vacate notice remains a key medium-term risk to commercial revenue and NOI .
  • Development execution is on track: Pacific House fully stabilized at a 7% cap; Dean Street nearing completion to capture 2025 leasing season, adding incremental residential revenue/NOI in coming periods .
  • Balance sheet profile: largely fixed-rate debt (91% fixed at ~3.87% avg rate; ~4.3-year duration) provides rate stability, though leverage remains high with notes payable rising due to development draws .
  • Dividend maintained ($0.095/share), underpinned by improving AFFO; sustainability supported by residential strength and Section 610 ramp, with watchpoints around collections and commercial transitions .
  • Tactical monitoring: updates on Livingston leases, Dean Street lease-up pace, Flatbush collections trajectory, and potential asset recycling (10 W 65th) are expected to drive narrative and valuation multiples over the next 1–3 quarters .