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DATE
Thursday, May 14, 2026 at 5:00 p.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — David Bistricer
- Chief Operating Officer — Jacob Bistricer
- Chief Financial Officer — Lawrence Kreider
TAKEAWAYS
- Portfolio Occupancy -- Residential occupancy was 99% across stabilized properties, with rent collections for all free market residential properties at approximately 100%.
- Lease Renewal Rates -- New free market leases across the portfolio were signed at rates over 7% above prior rents, while renewals were up 5%.
- Key Property Rents -- Tribeca House and Clover House achieved average overall residential rents of $90 per foot, and new lease rents of $92 and $95 per foot, respectively.
- Prospect House Leasing -- Prospect House, a 240-unit Brooklyn development, reached near-full lease-up with free market new rents at $78 per foot.
- Revenue -- Reported $38.1 million in revenue, down $1.3 million from last year, reflecting property dispositions and office lease losses, despite residential increases.
- Net Operating Income (NOI) -- NOI was $20.1 million, a decline of $1.6 million due in part to the 250 Livingston Street lease termination and dispositions.
- Adjusted Funds from Operations (AFFO) -- AFFO totaled $2.3 million, down $5.7 million versus last year, primarily from the cessation of income at 250 Livingston Street.
- Rent-Driven Revenue Growth -- Residential properties posted a $2.7 million (9%) revenue increase, including a $1.7 million contribution from Prospect House and a $2 million gain at stabilized assets, offset by a $1.1 million loss from the 10 West 65th Street sale.
- Office Revenue Decline -- Office revenues dropped $4 million, tied to a $4.2 million reduction from the 250 Livingston Street lease termination, partially offset by $0.2 million in retail lease gains at Tribeca House and Aspen.
- Dividend Declared -- A quarterly dividend of $0.095 per share was announced, unchanged from the prior quarter and payable on June 4, 2026.
- Balance Sheet Liquidity -- The company held $26.1 million in unrestricted cash, and $28.6 million in restricted cash at quarter end.
- Debt Profile -- 89% of operating debt was fixed at a 3.87% average rate, with an average maturity of 3.4 years; all debt is nonrecourse and financed on an asset-by-asset basis.
- 250 Livingston Street Developments -- Clipper Realty (CLPR 2.48%) stopped supporting ongoing operations and ceased payments of interest and real estate taxes, and began receiving reimbursement of expenses by the lender in May 2026.
- Litigation Impact -- A one-time settlement cost related to historical roll practices affected the quarter’s results across all properties.
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RISKS
- Lawrence Kreider stated Clipper Realty (CLPR 2.48%) "indicated to the bank that we were no longer funding the operation, and we're not paying any interest right now, including default fees," signaling unresolved debt obligations and potential uncertainty regarding settlement.
- Revenues and AFFO declined materially due to the "termination of the New York City lease at the 250 Livingston Street office property," exposing earnings to ongoing changes in lease status.
- Results include the impact of a "settlement cost of litigation regarding historical roll practices at all of our properties," which reduced profitability for the quarter.
SUMMARY
Management reported near-record high residential rents and stated that stabilized properties are nearly fully leased, while noting the lease-up of Prospect House drove additional income but was offset by a sharp drop in office revenue. The company formally stopped payments at 250 Livingston Street after a major lease termination and is in talks with the lender regarding a potential consent and cooperation agreement to settle the associated debt. Liquidity remained stable due to unrestricted and restricted cash balances, and the dividend remained unchanged despite earnings declines.
- David Bistricer stated the company "notified the lender that we do not intend to support the property's ongoing operations, and that service has ceased making payments of interest in real estate taxes" at 250 Livingston Street.
- David Bistricer clarified that in May 2026, Clipper Realty (CLPR 2.48%) "began receiving reimbursement of expenses paid by us from the lender" for 250 Livingston Street, showing a shift of economic responsibility for the asset.
- The company highlighted the completion of the Prospect House development, consisting of 240 units, 70% free market, and 30% affordable, as a recent capital project now progressing toward stabilization.
- Jacob Bistricer reported that the Aspen property achieved "new rents 8% higher compared to previous leases," indicating positive rent growth at individual assets.
INDUSTRY GLOSSARY
- AFFO (Adjusted Funds from Operations): A real estate investment trust metric reflecting cash flow available for distribution, calculated by adjusting funds from operations for capital expenditures and certain one-off items.
- NOI (Net Operating Income): Property-level profit calculated as revenues minus property-level operating expenses, excluding depreciation, amortization, and non-property expenses.
- Free Market Leases: Apartment leases not subject to governmental rent regulation, allowing rates based on market demand.
- Lease-Up: The process of leasing newly built or redeveloped properties up to targeted occupancy levels.
Full Conference Call Transcript
David Bistricer: Thank you, Lawrence. Good afternoon, and welcome to the First Quarter 2026 Earnings Call for Clipper Realty. I will provide an update on our business performance and some new developments, after which J.J. will discuss property-level activity, including leasing performance and Larry will speak to our quarterly financial performance. We will then take your questions. I am pleased to report that our residential properties continue to perform very well due to the continued higher residential rental demand, generating excellent cash flow. Overall rents are generally at all-time highs and continue to increase, and we are nearly fully leased.
In the first quarter, new free market leases exceeded prior rents by over 7%, generally consistent with last quarter across the entire portfolio, as J.J. will detail. We are also in the third quarter of the initial lease-up at our Prospect House development 953 Dean Street. We bought the property online in August, on time and on budget, having placed the bridge-loan last quarter that will provide funds through stabilization. We are presently fully leased in the 3 market events of about $78 per foot.
This project was a ground-up development in Brooklyn where we bought the land in 2021 and built a 9-story fully amenitized residential building with 160,000 residential rentable square feet, 240 units, 70% of which are free market and 30% are affordable, 31 parking spaces and 19,000 commercial rental square feet. At 250 Livingston Street, where the New York City vacated mid-August 2025, and as more fully described in the 10-Q and press release, we notified the lender that we do not intend to support the property's ongoing operations, and that service has ceased making payments of interest in real estate taxes. Additionally, in May '26, we began receiving reimbursement of expenses paid by us from the lender.
We are also discussing a consent in cooperation agreement with the lender to sell the property loan, although there can be no insurance an agreement will be finalized. I will now call on J.J. to take over this call.
Jacob Bistricer: Thank you. I'm pleased to report that residential leasing at all our stabilized properties in which strong and they are 99% leased overall. Rents are at record levels and continuing to increase. Overall, new rental rates and residential free market properties in the first quarter exceeded previous rents by 7% and renewals by 5%. We expect demand for our residential leasing products to remain strong in the foreseeable future as the overall rental housing supply in New York City remains constrained and new development is core. Our residential free market rents are now at record highs.
In the first quarter, Tribeca House had lease occupancy of 99% overall rent per foot of $90 per foot and new rents at $92 per foot. The Clover House property had occupancy of 99%, average overall rent of $90 per foot and new leases at $95 per foot. Our recently completed Pacific House property consisting of a blend of free market and rent-stabilized tenants and lease occupancy of 98% and premarket rents of $66 per foot on new leases. Our Aspen property continues to perform at record levels of average occupancy above 98% and new rents 8% higher compared to previous leases.
We have nearly completed leasing at the newly completed Prospect House ground-up development at 953 Dean Street with premarket rents at $78 per first. Rent collections versus billings across our portfolio remained strong. The overall collection rate in the first quarter for all premarket residential properties was approximately 100%. Looking ahead, we remain focused on optimizing occupancy pricing and expenses across the business to best position ourselves for growth. I will now turn the call over to Larry, who will discuss our financial results.
Lawrence Kreider: Thank you, J.J. Our results this quarter versus last year reflect the effects of 4 items worthy of note namely: the termination of the New York City lease at the 250 Livingston Street office property on August 23, 2025; the initial lease-up of results at Prospect House placed in service August 1, 2025, reflecting excess of expenses over limited but growing revenue; the absence of results from the 10 West 65th Street property sold in May 2025; and the settlement cost of litigation regarding historical roll practices at all of our properties. I refer to the remaining properties as the ongoing stabilized properties.
Overall, we had revenues of $38.1 million versus $39.4 million last year, a decrease of $1.3 million; NOI of $20.1 million this quarter versus $21.7 million last year; a decrease of $1.6 million; and AFFO of $2.3 million this quarter versus $8 million last year, a decrease of $5.7 million. The following details these results. For revenue, residential properties reflect a $2.7 million or a 9% increase due to the excellent residential leasing, as J.J. noted above.
This consisted of a $2 million increase from ongoing stabilized residential properties, a $1.7 million increase from the third full quarter of initial leasing at the Prospect House property, less a $1.1 million decrease from the absence of the 10 West 65th Street property sold in May of 2025. For office properties, revenues reflect a $4 million decrease consisting of a $4.2 million decrease from the New York City lease termination at 250 Livingston Street, partially offset by a $0.2 million increase from new retail leases at the Tribeca House and Aspen properties.
For NOI, the $1.6 million NOI decrease reflects a $1.8 million, a 10% increase from ongoing stabilized properties, a $1.3 million increase from the inclusion of Prospect House this quarter, less a $600,000 decrease from the absence of the 10 West 65th Street property sold in May, and a $5.8 million decrease from the New York City lease termination at 250 Livingston Street.
And for AFFO, the $5.8 million AFFO decrease reflects a $1.2 million or 18% increase from ongoing residential properties, a $1.2 million decrease from the inclusion of Prospect House due to full expenses as it completes lease-up, and a $0.1 million increase from the absence of the 10 West 65th Street property sold in May and finally, a $5.8 million decrease from the 250 Livingston Street property, resulting from the New York City lease termination. With regard to our balance sheet, we have $26.1 million of unrestricted cash and $28.6 million of restricted cash at the end of the quarter.
As of the end of the quarter, our operating debt is 89% fixed at an average rate of 3.87% and an average duration of 3.4 years. Our debt instruments are nonrecourse, subject to limited standard carve-outs and not cross-collateralized. We finance our portfolio on an asset-by-asset basis. And finally, today, we are announcing a dividend of $0.095 per share for the first quarter, the same amount as last quarter. The dividend will be paid on June 4, 2026 to shareholders record on May 26, 2026. Let me now turn the call back to David for concluding remarks.
David Bistricer: Thank you, Lawrence. We remain focused on efficiently operating our portfolio. We look forward to full stabilization of the Prospect House property, resolving in the 250 Livingston Street capitalization and all possibilities that may present themselves. I would now like to on the line for questions.
Operator: [Operator Instructions] And the first question today is coming from Buck Horne from Raymond James.
Buck Horne: Just a quick question on Flatbush Gardens, if you could speak to that property for a few minutes. Just thinking of operationally, I guess how are things going in terms of being able to navigate the potential for, I guess, the rent freeze aspect that could be in place going forward and/or funding the CapEx for that property in the quarters ahead? And I guess I'm also thinking ahead lastly to in any possibility for refinancing the mortgage on Flatbush ahead of the interest rate reset in 2027. Any comments would be helpful there.
David Bistricer: Thank you for your question. I think the property is performing as planned. A lot of planning went into that Article 11 that we have there, and we it's basically doing as it's supposed to do. We will be looking at all possibilities of refinancing. It's got ways to go yet but obviously, we look at what the possibilities are. And the soonest we come to some time of conclusion, we'll let you know, obviously.
Lawrence Kreider: Yes. And Buck, I might add, you could look to our supplemental, and you could see our net operating income, and that would give you a sense of how the property is doing, which is pretty well.
Buck Horne: Okay. One quick follow-up. It appears there's still, I guess, some interest in default fees owed related to 250 Livingston. So I believe it's in the ballpark of $7.2 million. Are you planning on paying that cash out over the next quarter or 2? Or are there any additional fees to be aware of?
Lawrence Kreider: Well, no, I think as we said, we indicated to the bank that we were no longer funding the operation, and we're not paying any interest right now, including default fees. And as we said, we're negotiating a consent and cooperation agreement in connection with potentially settling the debt. So right now, there has been no cash paid out on that.
Operator: [Operator Instructions] And there were no other questions at this time. I'd now like to hand the call over to David Bistricer, CEO at Clipper Realty, for closing remarks.
David Bistricer: Thank you for joining us today. We look forward to speaking with you again in the future.
Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.
