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    CLPR
    Earnings call· Jun 2026(Q2 FY26)

    Clipper Realty Q2 FY26 earnings call CLPR

    Aug 6, 2026 Source

    Executive summary

    Clipper Realty Q2 FY26 — Strong Residential Performance and Prospect House Stabilization

    Clipper Realty reported strong operational performance in its residential portfolio for Q2 FY26, marked by high occupancy and record rental rates, with the newly developed Prospect House achieving full lease-up. However, financial results were significantly impacted by the vacancy and ongoing loan sale process of the 250 Livingston Street commercial property, leading to a decrease in revenue and AFFO. The company remains focused on optimizing its portfolio and capitalizing on future opportunities. This call was a monologue with no analyst Q&A.

    Highlights

    5

    • Residential properties continue to perform very well, with overall rents at all-time highs and increasing.

    • New free market leases across the portfolio exceeded prior rents by over 13% in Q2 FY26.

    • Stabilized properties are 99% leased overall, demonstrating strong occupancy.

    • Prospect House development at 953 Dean Street is fully leased with free market rents of $78 per foot, completing its initial lease-up on time and on budget.

    • Operating debt is 88% fixed at an average rate of 3.87% with an average duration of 3.2 years.

    Concerns

    5

    • Total revenues decreased by $0.4 million YoY to $38.6 million, primarily due to the termination of the New York City lease at 250 Livingston Street.

    • Net loss increased by $4.9 million YoY to $6.3 million ($0.19 per share), largely driven by the 250 Livingston Street vacancy.

    • AFFO decreased by $4.6 million YoY to $3.8 million ($0.09 per share), primarily due to the 250 Livingston Street property.

    • The 250 Livingston Street property is in the process of a loan sale, with the company in receivership and awaiting auction results.

    • Prospect House, while fully leased, had a net loss of $1.4 million and negative AFFO of $0.2 million in Q2 FY26 during its final lease-up period.

    Guidance & targets

    2
    CategoryTargetConfidence
    141 Livingston Street lease finalization
    Completed effective 2027
    medium materiality
    Medium
    Residential leasing demand
    Remain strong
    low materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Tribeca House
    Achieved high occupancy and strong rental rates.
    Leased Occupancy: 99%Overall Rent per Square Foot: $92New Rents per Square Foot: $97
    		————
    Clover House
    Maintained high occupancy with robust new lease pricing.
    Occupancy: 98%Average Overall Rents per Foot: $82New Leases per Foot: $95
    		————
    Pacific House
    Strong occupancy with competitive free market rents.
    Leased Occupancy: 99%Free Market Rents per Foot (New Leases): $78
    		————
    Aspen
    Continued strong performance with significant rent increases on new leases.
    Average Occupancy: Above 98%New Rents: 11% higher than previous leases
    		————
    Prospect House (953 Dean Street)
    Newly completed ground-up development, in final lease-up period, now fully leased. Contributed $2.3M in revenue but incurred a net loss of $1.4M and negative AFFO of $0.2M during Q2 FY26.
    Lease-up Status: Fully leasedFree Market Rents per Foot: $78Units: 240 (70% free market, 30% affordable)Commercial Square Feet: 19,000
    		$2.3M——Net Loss $1.4M
    250 Livingston Street
    Principal tenant (New York City) vacated in August 2025, leading to a $4.1M decrease in revenue and a $5.7M impact on net loss. Property is now in a loan sale process.
    		—-$4.1M—Net Loss impact $5.7M
    141 Livingston Street
    Operations continue, with a 5-year lease expected to be finalized effective 2027.
    Occupancy: Fully occupied by New York City Brooklyn Court House
    		————

    Operational metrics

    10
    Adjusted Funds From Operations (AFFO)
    $3.8Mdown $4.6M YoY
    Q2 FY26

    Compared to $8.4M in Q2 FY25.

    AFFO per share
    $0.09down $0.11 YoY
    Q2 FY26

    Compared to $0.20 per share in Q2 FY25.

    AFFO impact from 250 Livingston Street
    $5.8M decrease
    Q2 FY26

    Substantially all of which is noncash, due to termination of New York City lease.

    AFFO impact from Prospect House
    negative $0.2M
    Q2 FY26

    During its final lease-up period.

    AFFO improvement from remaining properties
    $1.4M
    Q2 FY26

    Due to strong residential leasing and new commercial leases at Tribeca House, offset by increased taxes/insurance/legal expenses.

    Unrestricted cash
    $37.7M
    End of Q2 FY26

    Benefiting from strong cash flow from residential properties and 141 Livingston office property.

    Restricted cash
    $24.9M
    End of Q2 FY26

    As of the end of the quarter.

    Operating debt fixed rate percentage
    88%
    End of Q2 FY26

    Debt instruments are nonrecourse, subject to limited standard carve-outs and noncross-collateralized.

    Dividend per share
    $0.095same as last quarter
    Q2 FY26

    Announced for the second quarter.

    Residential revenue increase from all other properties
    $2.1M
    Q2 FY26

    Due to record residential rental rates and occupancy and some new commercial leases at Tribeca House.

    Industry KPIs

    6
    MetricValueDetails
    Occupancy rate99%%
    New supply backdropConstrained
    Renewal rent change6%%
    New lease rent change13%%
    Development starts lease upFully leased
    Bad debt uncollectible revenue4%% of revenue

    Deals & partnerships

    4
    Lender (250 Livingston Street)Consent and cooperation agreement to market and sell the loan on the property.

    New York City vacated 250 Livingston Street in mid-August 2025. The company entered into an agreement with the lender to sell the property loan, and the lender is actively marketing the loan. The company is in receivership and awaits the results of the lender's auction. The lender is currently funding all expenses.

    New York City Brooklyn Court HouseLease agreement for 141 Livingston Street.5-year

    The property continues to be fully occupied by New York City Brooklyn Court House, pending finalization of a 5-year lease as previously agreed. Expected to be completed effective 2027.

    UndisclosedNew commercial lease at Tribeca House.

    Entered into one new lease for 2,063 square feet in the second quarter.

    Fitness facilityLong-term renewal for commercial space at Tribeca House.long-term

    A long-term renewal was signed in the fourth quarter of last year for 33,000 square feet for the fitness facility at the building.

    Capital programs

    1
    Flatbush Gardens capital spending requirementscompleted

    Substantially completed the 3-year capital spending requirements, required by the Article 11 agreement with New York City.

    Risks & headwinds

    3
    Vacancy and loan sale process of 250 Livingston StreetOngoing

    Decreased Q2 FY26 revenues by $4.1M; increased net loss by $5.7M; decreased AFFO by $5.8M.

    Mitigation: Entered into a consent and cooperation agreement with the lender to market and sell the loan; lender is funding all expenses.

    Increased operating expensesAnnual

    Offset increased net income and AFFO from other properties.

    Mitigation: Focus on optimizing expenses across the business.

    Prospect House initial lease-up period financial dragQ2 FY26 (final lease-up)

    Net loss of $1.4M and negative AFFO of $0.2M in Q2 FY26.

    Mitigation: Property is now fully leased, expecting full stabilization.

    What to watch in Q3 FY26

    5

    250 Livingston Street loan sale outcome

    Next quarter
    CurrentLoan actively marketed, company in receivership
    TargetResults of lender's auction

    Why it matters

    The resolution of this property's loan sale will significantly impact the company's financial structure and future operations.

    We await the results of the lender's auction.

    3 min read6 chapters

    Detailed Narrative

    01

    Residential Portfolio Performance Highlights

    Clipper Realty's residential properties demonstrated strong performance in Q2 FY26, driven by high demand in New York City. Overall rents reached record levels, with new free market leases across the portfolio exceeding prior rents by over 13%. Stabilized properties achieved an impressive 99% overall leased occupancy, reflecting effective management and robust market conditions. Renewal rates for residential free market properties also saw a 6% increase.

    02

    Prospect House Development Stabilization

    The initial lease-up phase for the Prospect House development at 953 Dean Street is now complete, with the property fully leased. This ground-up project in Brooklyn, which began in 2021-2022, was delivered on time and on budget. It features 240 residential units (70% free market, 30% affordable) and 19,000 square feet of commercial space, with free market rents achieving $78 per foot. Despite its operational success, the property recorded a net loss of $1.4 million and negative AFFO of $0.2 million during its final lease-up period in Q2 FY26.

    03

    250 Livingston Street Divestiture Process

    The 250 Livingston Street property, which became vacant after New York City's lease termination in August 2025, is currently undergoing a loan sale process. Clipper Realty has entered into a consent and cooperation agreement with the lender to market and sell the loan, placing the company in receivership for this asset. The lender is covering all property expenses, and the company is awaiting the results of the loan auction. This situation significantly impacted the company's Q2 FY26 financial results.

    04

    Property-Specific Leasing Metrics

    Key properties showed strong individual performance. Tribeca House reported 99% leased occupancy with overall rents of $92 per square foot and new rents at $97 per foot. Clover House achieved 98% occupancy, with average overall rents of $82 per foot and new leases at $95 per foot. Pacific House maintained 99% leased occupancy, with free market new leases at $78 per foot. The Aspen property continued its strong trend with over 98% occupancy and new rents 11% higher than previous leases.

    05

    Commercial and Capital Expenditure Updates

    In the commercial segment, Tribeca House secured a new lease for 2,063 square feet and renewed a long-term lease for 33,000 square feet for a fitness facility. At Flatbush Gardens, the company completed the 3-year capital spending requirements mandated by the Article 11 agreement with New York City. The 141 Livingston Street property, fully occupied by the New York City Brooklyn Court House, is expected to finalize a 5-year lease effective 2027.

    06

    Financial Performance and Balance Sheet

    For Q2 FY26, revenues were $38.6 million, a $0.4 million decrease year-over-year, primarily due to the 250 Livingston Street vacancy. The company reported a net loss of $6.3 million ($0.19 per share) and AFFO of $3.8 million ($0.09 per share), both negatively affected by the 250 Livingston situation. Excluding this impact, other residential properties and 141 Livingston Street saw a $1.5 million increase in net income and a $1.4 million improvement in AFFO. The balance sheet shows $37.7 million in unrestricted cash and $24.9 million in restricted cash, with 88% of operating debt fixed at an average rate of 3.87%.

    AI-generated summary of the company’s earnings call. Not investment advice.