Clipper Realty Q2 Results: Net loss widens to $6.3M on lease termination
Clipper Realty Inc. reported a Q2 2026 net loss of $6.3 million, up from $1.4 million in Q2 2025, due to the NYC lease termination at 250 Livingston Street. Residential revenues rose 10.7% to $32.2 million, offsetting a 36% drop in commercial revenues. AFFO fell to $3.8 million. The company declared a $0.095 dividend and agreed to jointly market the troubled property's loan with its lender.
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Clipper Realty Inc. (NYSE: CLPR) reported a net loss of $6.3 million for the second quarter of 2026, a significant widening from the $1.4 million net loss recorded in the second quarter of 2025. The deterioration was primarily driven by the termination of the New York City ("NYC") lease at the company’s 250 Livingston Street office property in August 2025, which resulted in a $5.7 million non-cash charge as the lender assumed responsibility for operating expenses and collected residual residential rents. Despite the headwind from the office portfolio, the company maintained strong performance in its residential segment, with new free market leases exceeding previous rents by 13% and renewals rising by over 5%.
Total revenues for the quarter were $38.6 million, down slightly from $39.0 million in the prior year period. This modest decline masked a sharp divergence between segments: residential revenues grew by $3.1 million to $32.2 million, buoyed by record occupancy and leasing activity, including the full leasing of the new Prospect House property at 953 Dean Street in Brooklyn. Conversely, commercial revenues contracted by $3.6 million to $6.4 million, reflecting the impact of the NYC lease termination, partially offset by new leases at Tribeca House. Income from operations decreased to $9.3 million from $10.8 million in the same quarter last year.
The company’s adjusted funds from operations (AFFO), a key non-GAAP metric for REITs, fell by $4.6 million to $3.8 million ($0.09 per share) from $8.3 million ($0.20 per share) in the second quarter of 2025. The decline was largely attributable to the $5.8 million negative impact from the 250 Livingston Street lease termination. Net operating income (NOI) also declined slightly to $21.6 million from $22.8 million year-over-year. On June 30, 2026, the company held cash and cash equivalents of $37.7 million, an increase from $30.8 million at December 31, 2025, supported by strong operating cash flow from residential properties.
Regarding the 250 Livingston Street property, Clipper Realty entered into a Consent and Cooperation Agreement with its lender in June 2026 to jointly market and sell the loan. The agreement grants the lender the right to foreclose or take the deed in lieu of foreclosure at the end of the marketing period, while also providing the company the right to submit an offer to purchase the loan. As of the filing date, the lender had not taken such action. The company ceased making payments for interest and property tax escrows, including default interest of 5%, in November 2025 after notifying the lender it would no longer support the property’s operating shortfall.
The Board of Directors declared a quarterly dividend of $0.095 per share, unchanged from the previous quarter, payable on August 26, 2026, to shareholders of record on August 18, 2026. The company will host a conference call on August 6, 2026, to discuss these results. Total assets stood at $1,220.7 million, while total liabilities were $1,326.1 million, resulting in a total equity deficit of $105.4 million.
Financial Performance Summary
| Metric | Q2 2026 | Q2 2025 | Change |
|---|---|---|---|
| Total Revenues | $38.6 million | $39.0 million | $(0.4) million |
| Residential Revenues | $32.2 million | $29.1 million | $3.1 million |
| Commercial Revenues | $6.4 million | $10.0 million | $(3.6) million |
| Income from Operations | $9.3 million | $10.8 million | $(1.5) million |
| Net Operating Income (NOI) | $21.6 million | $22.8 million | $(1.2) million |
| Net Loss | $(6.3) million | $(1.4) million | $(4.9) million |
| Adjusted FFO (AFFO) | $3.8 million | $8.3 million | $(4.5) million |
What the Numbers Show
The divergence between GAAP net loss and operational cash flow metrics highlights the structural shift in Clipper Realty’s portfolio. While the net loss widened significantly due to non-cash charges related to the 250 Livingston Street lease termination, the core residential business remains robust. Residential revenues grew by approximately 10.7% year-over-year, demonstrating pricing power and demand strength in the New York metropolitan area. However, the reliance on this single asset class is now more pronounced following the effective exit from the commercial office space at 250 Livingston Street. The drop in AFFO underscores that while operations are stable, the resolution of the lender issues at the office property remains a key variable for future cash flow stability.
How might the resolution of the 250 Livingston Street lender agreement impact Clipper Realty's total equity deficit and future leverage ratios?
Will Clipper Realty consider further divesting its remaining commercial assets to fully transition into a pure-play residential REIT?
What is the projected timeline for the marketing and sale of the 250 Livingston Street loan, and how could a foreclosure scenario affect the company's credit profile?
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