Clipper Realty, Inc. Aktie

Good day, ladies and gentlemen, and welcome to the Clipper Realty Q2 Earnings Conference Call. [Operator Instructions].

It is now my pleasure to turn the floor over to your host, Lawrence Sava, Corporate Controller. Lawrence, the floor is yours.

Good afternoon, and thank you for joining us for the Second Quarter 2026 Clipper Realty Inc. Earnings Conference Call. Participating with me on today's call are David Bistricer, Co-Chairman of the Board and Chief Executive Officer; and Larry Kreider, Chief Financial Officer.

Please be aware that statements made during the call that are not historical may be deemed forward-looking statements, and actual results may differ materially from those indicated by such forward-looking statements. These statements are subject to numerous risks and uncertainties including those disclosed in the company's 2025 annual report on Form 10-K and 2026 second quarterly report on Form 10-Q just filed today, which are accessible at www.sec.gov and on our website.

As a reminder, the forward-looking statements speak only as of the date of this call, August 6, 2026, and the company undertakes no duty to update them. During this call, management may refer to certain nonfinancial -- certain non-GAAP financial measures, including adjusted funds from operations or AFFO, adjusted earnings before interest, taxes, depreciation and amortization or adjusted EBITDA and net operating income or NOI. Please see our press release, supplemental financial information and Form 10-Q posted today for a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

With that, I will now turn the call over to our Co-Chairman and CEO, David Bistricer.

Thank you, Lawrence. Good afternoon, and welcome to the second quarter 2026 earnings call for Clipper Realty. I will provide an update on our business performance, 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 continued high residential rental demand, generating excellent cash flow, demonstrating the professionalism of our leasing and management teams. Overall rents are generally at all-time highs and continue to increase, and we are nearly fully leased. In the second quarter, new free market leases exceeded prior rents by over 13% across the entire portfolio. We're in the final quarter of initial lease-up at our Prospect House development of 953 Dean Street. We brought the property online in August, on time and on budget and placed the bridge-loan last year and provided some new stabilization.

We are presently fully leased with free market rents of $78 a foot. This property was a ground-up development in Brooklyn, where we bought the land in 2021 and '22. Built a 9-story amenitized residential building with 162,000 a (sic) [ 160,000 ] residential square feet, 240 units, 70% free market, 30% affordable, 31 parking spaces and 19,000 commercial square feet. At 250 Livingston Street, New York City vacated in mid-August 2025, as more fully described in the 10-Q and press release. We have entered into a consent and cooperation agreement with the lender to sell the property loan, and they are actively marketing the loan. Also, the lender is currently funding all expenses. We await the results of the lender's auction.

I will now turn the call over to Larry.

Thank you. I am pleased to report that residential leasing at all our stabilized properties is very strong, and they are 99% leased overall. Rents are at record levels and continuing to increase. Overall new rental rates at residential free market properties in the second quarter exceeded previous rents by 13% and renewals by 6%. We expect demand for our residential leasing product to remain strong in the foreseeable future as the overall rental housing supply in New York City remains constrained and new development discouraged.

Our residential free market rents are now at record highs. In the second quarter, Tribeca House had leased occupancy of 99%, overall rent per square foot of $92 per square foot and new rents at $97 per foot. The Clover House property had occupancy of 98%. Average overall rents of $92 per foot a (sic) [ $82 per foot ] and new leases of $95 per foot. The Pacific House property consisting of a blend of free market and rent stabilized tenants had lease occupancy of 99% and free market rents of $78 per foot on new leases. Our Aspen property continues to perform at record levels with average occupancy above 98% and new rents 11% higher than compared to previous leases.

We have completed leasing at the newly completed Prospect House ground-up development that David just described at 953 Dean Street with free market units at $78 per square foot. As to our commercial leases, at the Tribeca House property, we entered to one new lease in the second quarter for 2,063 square feet, in addition to a long-term renewal in the fourth quarter for 33,000 square feet last year for a new -- for the fitness facility at the building. At Flatbush Gardens property, we substantially completed the 3-year capital spending requirements, required by the Article 11 agreement with New York City and look forward to continuing managing the property in a responsible manner.

At the 141 Livingston Street property, we continue to operate the property fully occupied by New York City Brooklyn Court House, which is leasing from us, pending finalization of a 5-year lease as previously agreed. We expect this to be completed effective 2027, although there can be no assurance. Rent collections versus billings across our portfolio remains strong. The overall collection rate in the second quarter for all residential properties was approximately 96%.

Looking forward, 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 Lawrence, who will discuss our financial results.

Thank you, Larry. For our ongoing properties, our results for the current quarter versus last year reflect the continuation of very strong residential leasing at all residential properties. The progression to full occupancy at the new Prospect House property put in service in Q3 last year, some new commercial leases at Tribeca House and the continuation of operations at the 141 Livingston property.

At the 250 Livingston property, the principal tenant, New York City vacated in August 2025, where upon the company notified the lender that it would no longer support the property's operations. The lender has funded all expenses and placed all rents in escrow subsequent to the lease termination. And on June 4, 2026, we entered into a consent and cooperation agreement to market and sell the loan on the property that allows us to bid, but which puts us in receivership. We continue to accrue all expenses and record the relatively small residential revenue. However, despite the likelihood, we will not fund the recorded expenses at the completion of the loan sale process.

The following details our results, revenues. For the second quarter of 2026, revenues were $38.6 million as compared to revenues of $39 million during the second quarter of 2025, a decrease of $0.4 million. The decrease was primarily due to the termination of the New York City lease in August 2025 of $4.1 million. The sale of the 10 West 65th Street property, which had revenues in the second quarter of 2025 of $0.7 million, revenues of $2.3 million in this quarter for the Prospect House property placed in service in August of 2025 and still in its lease-up period and increases of $2.1 million on all other properties. The increase at all other properties was due to record residential rental rates and occupancy and some new commercial leases at Tribeca House.

For the second quarter of 2026, net loss was $6.3 million, $0.19 per share compared to a net loss of $1.4 million, $0.07 per share for the second quarter of 2025, an increase of $4.9 million. The increase in net loss was primarily due to the termination of the New York City lease at 250 Livingston office property of $5.7 million, substantially all of which is noncash, whereby the lender has funded all expenses and collected all the residential rents since termination of the New York City lease. The net loss in the second quarter of 2025 for the 10 West 65th Street property was $0.7 million. The new Prospect House property placed into service in August '25 and still in its final lease-up period had a net loss of $1.4 million in the second quarter of 2026.

All other residential properties and the 141 Livingston property had increased net income of $1.5 million, resulting from strong residential leasing and some new commercial leases at Tribeca House, somewhat offset by annual increases in real estate taxes and insurance at all of our properties and some increased legal expenses and settlement costs. For the second quarter of 2026, AFFO was $3.8 million or $0.09 per share compared to $8.3 million a (sic) [ $8.4 million ] or $0.20 per share for the second quarter of 2025, a decrease of $4.6 million. The decrease was primarily due to the termination of the New York City lease at 250 Livingston Office property, $5.8 million, substantially all of which is noncash in 2026 as described above.

AFFO in the second quarter of 2025 for the 10 West 65th Street property was negligible. AFFO at the new Prospect House property still in the final lease-up period was $0.2 million, negative. AFFO at the remaining residential properties and 141 Livingston Street office property improved by $1.4 million due to strong residential leasing and some new leases at Tribeca House, somewhat offset by annual increases in real estate taxes and insurance at all properties and some legal expenses.

With regard to our balance sheet, we have $37.7 million of unrestricted cash and $24.9 million restricted cash at the end of the quarter, benefiting from strong cash flow from residential properties and 141 Livingston office property. As of the end of the quarter, our operating debt is 88% fixed at an average rate of 3.87%, average duration of 3.2 years. Our debt instruments are nonrecourse, subject to limited standard carve-outs and noncross-collateralized. We finance our portfolio on an asset-by-asset basis.

Today, we are announcing a dividend of $0.095 per share for the second quarter, the same as last quarter. The dividend will be paid on August 26, 2026, to shareholders of record on August 18, 2026.

Let me now turn the call back to David for some concluding remarks.

Thank you, Lawrence. We remain focused on efficiently operating our portfolio. We look forward to the full stabilization of the Prospect House property and capitalizing on other possibilities that may present themselves.

I would now like to open the line for questions.

Thank you.

Thank you for joining us today. We look forward to speaking with you again soon.

Tom, are you there?

Yes, sir, I am here, sir. I can give instructions for Q&A if you prefer.

Yes, please.

[Operator Instructions] Okay, gentlemen, we don't appear to have any questions on the lines at this time.

Thank you very much. Have a pleasant evening, and we'll talk to you next quarter.

Thank you. Ladies and gentlemen, this will conclude today's call, and you may disconnect your lines at this time. We thank you for your participation.

Good day, and welcome to the Clipper Realty Earnings Call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, Lawrence Sava, Corporate Controller at Clipper Realty. Sir, the floor is yours.

Good afternoon, and thank you for joining us for the First Quarter 2026 Clipper Realty Inc. Earnings Conference Call. Participating with me on today's call are David Bistricer, Co-Chairman of the Board and Chief Executive Officer; J.J. Bistricer, Chief Operating Officer; and Larry Kreider, Chief Financial Officer. Please be aware that statements made during the call that are not historical may be deemed forward-looking statements and actual results may differ materially from those indicated by such forward-looking statements.

These statements are subject to numerous risks and uncertainties, including those disclosed in the company's 2025 annual report on Form 10-K and 2026 first quarter report on Form 10-Q, just filed today, which is accessible at www.sec.gov and on our website. As a reminder, the forward-looking statements speak only as of the date of this call, May 14, 2026, and the company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures, including adjusted funds from operations or AFFO; adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA; and net operating income or NOI. Please see our press release, supplemental financial information and Form 10-Q posted today for a reconciliation of these non-GAAP financial measures with most directly comparable GAAP financial measures.

With that, I will now turn the call over to our Co-Chairman and CEO, 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.

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.

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.

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 Instructions] And the first question today is coming from Buck Horne from Raymond James.

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.

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.

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.

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?

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 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.

Thank you for joining us today. We look forward to speaking with you again in the future.

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.

Greetings, and welcome to the Clipper Realty Q4 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Lawrence Sava, Corporate Controller. Sir, the floor is yours.

Good afternoon, and thank you for joining us for the Fourth Quarter 2025 Clipper Realty Inc. Earnings Conference Call. Participating with me on today's call are David Bistricer, Co-Chairman of the Board and Chief Executive Officer; J.J. Bistricer, Chief Operating Officer; and Larry Kreider, Chief Financial Officer. Please be aware that statements made during the call that are not historical may be deemed forward-looking statements, and actual results may differ materially from those indicated by such forward-looking statements.

These statements are subject to numerous risks and uncertainties, including those disclosed in the company's 2025 annual report on Form 10-K just filed today, which is accessible at www.sec.gov and our website. As a reminder, the forward-looking statements speak only as of the date of this call, February 26, 2026, and the company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures, including adjusted funds from operations, or AFFO, adjusted earnings before interest, taxes, depreciation and amortization or adjusted EBITDA and net operating income or NOI. Please see our press release, supplemental financial information and Form 10-K posted today for a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures. With that, I will turn the call over to our Co-Chairman and CEO, David Bistricer.

Thank you, Lawrence. Good afternoon, and welcome to the Fourth Quarter 2025 Earnings Call for Clipper Realty. I will provide an update of our business performance and some 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'm pleased to report that our residential properties continue to perform very well due to continued high residential rental demand, generating excellent cash flow.

Overall rents are generally at all-time highs and are continuing to increase, and we are nearly fully leased. In the fourth quarter, new leases exceeded prior rents by nearly 13%, generally consistent with last quarter across the entire portfolio, as J.J. will detail. We are also in the second quarter of initial lease-up at our Prospect House development at 953 Dean Street. We brought the property online in August on time and on budget and replaced the bridge loan last quarter, and it will provide funds through stabilization.

We are presently approximately 78% leased with free market rents and about $85 a foot. This project was the ground-up development in Brooklyn, where we brought the land in 2021 and '22 and built a 9-story fully amenitized residential building with 160,000 residential rentable square feet, 240 units, 70% free market and 30% are affordable, 57 parking spaces and 19,000 commercial rental square feet. As to the office properties, we have settled the lender claims at 141 Livingston Street and obtained lender approval for a 5-year lease extension with the principal tenant, New York City, all as previously announced.

At 250 Livingston Street, where New York City vacated mid-August, as previously disclosed, we notified the lender we did not intend to support the property's ongoing operations. And subsequent to the New York City lease termination ceased making payments of interest and real estate taxes and applied for reimbursement of expenses recurrent since then. Furthermore, we may not fund these expenses at the conclusion of the distribution discussions. We have begun to restructure the property debt, although we cannot assure that this will be the case. I will now turn over the call to J.J. to provide an update on operations.

Thank you. I am pleased to report that residential leasing at all our stabilized properties is very strong, and they are 99% leased overall. Rents are at record levels and continuing to increase over previous levels. Overall, new rental rate at residential properties in the fourth quarter exceeded previous rents by over 13% and renewals by 7%. We expect demand for our residential leasing product to remain strong in the foreseeable future and the overall rental housing supply in New York City remains constrained and new development discouraged.

All our residential rents are now at record highs. In the fourth quarter, Tribeca House had leased occupancy of 99% overall, rent per foot of $89 and new rents at $95 per foot. The Clover House property had occupancy of 96%, average overall rents of $90 a foot and new leases at $95 a foot. Our fully stabilized [ Labgegards ] property had overall leased occupancy of 98%, average overall rents from all sources, including those under Article 11 agreement with New York City of $32 per foot and new leases of $54 per foot as we fulfill all our leasing commitments for assisted tenants and make required capital improvements.

Our recently completed Pacific House property consisting of a blend of free market and rent-stabilized tenants had leased occupancy of 96% and free market rents of $76 per foot on new leases. Our Aspen property continues to perform at record levels with average occupancy above 98% and new rents and renewals 15% higher compared to previous leases. We have begun leasing at the newly completed Prospect House ground-up development at 953 Dean Street, which is now 78% leased with free markets at $85 a foot. Rent collections across our portfolio remains strong. The overall collection rate in the fourth quarter for all residential properties was approximately 98%, including Flatbush Gardens at 98% as we steadily work through the legal system to minimize arrears.

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.

Thank you, J.J. Our results this quarter versus last year reflect 3 unusual items, namely the termination of the New York City lease at the 250 Livingston Street office property on August 23, 2025, the initial lease-up results at Prospect House placed in service in August, reflecting excess of expenses over limited but growing revenue and the absence of results from the 10 West 65th Street property, which we sold in May 2025.

I refer to the remaining properties as the "ongoing properties." We had revenues of $37.1 million versus $38.0 million last year, a decrease of $0.9 million, NOI of $20.7 million this quarter versus $22.6 million last year, a decrease of $1.9 million and AFFO of $1.7 million this quarter versus $8.1 million last year, a decrease of $6.4 million.

The following details these results. For revenue, revenues reflect a $2.7 million or 9% increase from residential properties due to the excellent residential leasing J.J. and David noted above. This consisted of $2.2 million increase on the ongoing stabilized residential properties, a $1.5 million increase from the second full quarter of initial lease-up at the Prospect House property, partially offset by a $1 million decrease from the absence of the 10 West 65th Street property sold in May. The residential property increase was more than offset by a $4.0 million decrease from the New York City lease termination at the 250 Livingston Street property, partially offset by a $0.3 million increase due to new retail leases at the Tribeca House and Aspen properties.

For NOI, the $1.7 million NOI decrease reflects a $1.4 million or 7% increase from ongoing stabilized residential properties, a $1.2 million increase from the inclusion of Prospect House this quarter partially offset by a $0.1 million decrease from the absence of the 10 West 65th Street property sold in May. This overall residential increase was more than offset by a $3.8 million decrease from the New York City lease termination at 250 Livingston Street.

And as for AFFO, the $6.4 million AFFO decrease reflects for residential properties, a $0.6 million or 10% increase from ongoing residential properties, a $1.2 million decrease from the inclusion of Prospect House due to full expenses and partial leasing and a $0.2 million increase from the absence of the 10 West 65th Street property sold in May. These residential properties results are more than offset by a $6.1 million decrease from the 250 Livingston 3 property New York City termination and with full expense accrual.

With regard to our balance sheet, we have $30.8 million of unrestricted cash and $27.3 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 average duration of 3.7 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. Today, we are announcing a dividend of $0.095 per share for the fourth quarter, the same amount as last quarter. The dividend will be paid on March 19, 2026, to shareholders of record on March 12, [ 2096 ]. Let me now turn the call back to David for concluding remarks.

Thank you. We remain focused on efficiently operating our portfolio. We look forward to full lease-up of prospect development, resolving in 250 Livingston Street and capitalizing on other possibilities that may present themselves.

I would now like to open the line for questions.

[Operator Instructions]. There are currently no questions in the queue. I would like to turn the floor back to management for closing remarks.

Thank you for joining us today. We look forward to speaking with you again at the next quarterly earnings call.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

Good day, and welcome to the Clipper Realty Q3 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Lawrence Sava. Sir, the floor is yours.

Good afternoon, and thank you for joining us for the Third Quarter 2025 Clipper Realty Inc. Earnings Conference Call. Participating with me on today's call are David Bistricer, our Co-Chairman of the Board and Chief Executive Officer; J.J. Bistricer, Chief Operating Officer; and Larry Kreider, Chief Financial Officer.

Please be aware that statements made during the call that are not historical may be deemed forward-looking statements, and actual results may differ materially from those indicated by such forward-looking statements. These statements are subject to numerous risks and uncertainties, including those disclosed in the company's 2024 annual report on Form 10-K and the third quarter 2025 quarterly report on Form 10-Q, which will be accessible on www.sec.gov and on our website. As a reminder, the forward-looking statements speak only as of the date of this call, November 13, 2025, and the company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures, including adjusted funds from operations, or AFFO, adjusted earnings before interest, taxes, depreciation and amortization or adjusted EBITDA; and net operating income, or NOI. Please see our press release, supplemental financial information and Form 10-Q that will be posted for reconciliation on these non-GAAP financial measures with the most directly comparable GAAP financial measures.

With that, I will now turn the call over to our Co-Chairman and CEO, David Bistricer.

Thank you, Lawrence. Good afternoon, and welcome to the third quarter 2025 earnings call for Clipper Realty. I will provide an update on our business performance and some 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 continued high residential rental demand, excellent cash flow, overall rents are generally at all-time highs and continue to increase, and we are nearly fully leased. In the third quarter, new leases exceeded prior rents by over 14%, same as last quarter across the entire portfolio, as J.J. will detail.

We are also in the initial lease-up of Prospect House at 953 Dean Street. We bought the property online in August on time and on budget, having placed a bridge loan last quarter that will provide funds through stabilization. We are currently approximately 60% leased with free market rents in excess of $88 a foot. This project was the ground-up development in Brooklyn, where we bought the land in 2021 and '22 and built a 9-story fully amenitized building with 160,000 residential square feet, 240 units, 70% free market, 30% affordable, 57 parking space and 19,000 commercial square feet.

Our other ground-up development at Pacific House at 1010 Pacific Street in Brooklyn is stabilized and is contributing to cash flow after over 1 year of full operation. As to the office properties at 250 and 141, we previously reported that we are ongoing conversations with both of those properties to bring them back online to cash flow position.

With that, I would like to now turn over the phone to J.J.

Thank you. I am pleased to report that residential leasing at all our stabilized properties is very strong, and they are 99% leased overall. Rents are at record levels and continuing to increase over previous levels. Overall, new rental rates at residential properties in the third quarter exceeded previous rent by over 14% 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 discouraged. All our residential rents are now at record highs.

In the third quarter, Tribeca House had leased occupancy of 99% overall, rent per foot over $88 per foot and new rents at $105 per foot. The Clover House property had occupancy of 100% average, overall rent of $88 per foot and new leases of $95 per foot. Our recently completed Pacific House property consisting of a blend of free market and rent stabilized tenants had leased occupancy of 97% and free market rents of $82 per foot on new leases.

Our other residential properties at Aspen and 250 Livingston Street continued to perform at record levels with average occupancy above 98% and new rents and renewals 12% higher compared to previous leases. We have begun leasing at the newly completed Prospect House ground-up development at 953 Dean Street and are now 60% leased with free market units at $88 per square foot growth.

And at the Flatbush Gardens property, overall average rents were $31.67 per foot at the end of the quarter, an increase of 9% over last year. As previously disclosed, we have been operating under the 40-year Article 11 agreement made with the Housing Preservation Department of New York City in June 2023. Since the beginning of the agreement, we have spent nearly $17 million towards filling our capital improvement, commitment in the agreement funded principally by a full abatement of real estate taxes and other rent supplements.

Rent collections across our portfolio remains strong. The overall collection rate in the third quarter for all residential properties was approximately 95%, including Flatbush Gardens at 92%. We are steadily working through the legal system to minimize arrears.

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.

Thank you, J.J. Our results this quarter versus last year reflect 3 unusual items, namely the termination of the New York City lease at the 250 Livingston Street property on August 23, 2025, the initial lease-up results at Prospect House placed in service August 1, reflecting an excess of expenses over revenue and the absence of results from the 10 West 65th Street properties sold in May 2025. I will refer here and after to these remaining -- to the remaining properties as the ongoing properties.

For the third quarter, we achieved flat revenues of $37.7 million versus $37.6 million last year. NOI of $20.8 million this quarter versus $21.8 million last year, a decrease of $1 million and AFFO of $5.6 million this quarter versus $7.8 million last year, a decrease of $2.2 million. The following details these results.

For revenue, the flat revenues reflect a $2.4 million or 7% increase from ongoing residential properties due to excellent residential leasing. Also a $1 million decrease from the absence of the 10 West 65th Street property sold in May, a $1.9 million decrease from the New York City lease termination at 250 Livingston Street and a $0.5 million increase from the initial lease-up at the Prospect House property placement service in August.

For NOI, the $1 million NOI decrease reflects a $1.5 million or 8% increase from ongoing properties, a $0.7 million decrease from the absence of the 10 West 65th Street property sold in May, a $1.8 million decrease from the New York City lease termination at 250 Livingston Street and a nominal decrease from the inclusion of Prospect House in this quarter.

The $1.5 million NOI increase from ongoing properties reflects the $2.4 million revenue increase, partially offset by $0.7 million higher collection and payroll expenses and $0.2 million from routine annual real estate taxes and insurance increases.

The payroll expenses primarily relate to staff focused on repairs and maintenance and CapEx. The $0.7 million NOI decrease from the absence of the 10 West 65th Street property reflect the absence of $1 million revenue less real estate taxes.

And finally, for AFFO, the $2.2 million AFFO decrease reflects a $1.5 million or 19% increase from ongoing properties, a nominal decrease from the absence of the 10 West 65th Street property sold in May, a $1.9 million decrease from the termination of the New York City lease at 250 Livingston Street and a $1.8 million decrease from the inclusion of Prospect House in this quarter.

The $1.5 million AFFO increase from ongoing properties matches the increase in NOI. The nominal AFFO decrease from the 10 West 65th Street property reflects the absence of the $0.7 million NOI offset by interest expense and the $1.8 million decrease from the inclusion of Prospect House reflects the nominal NOI offset by interest expense for 2 months. Lastly, for AFFO, the increase in G&A was entirely offset by noncash increase in amortization of stock-based executive compensation.

With regard to our balance sheet, we have $26.1 million unrestricted cash and $30.6 million restricted cash at the end of the quarter. As of the end of the quarter, our operating debt is 88% fixed at an average rate of 3.87% and average duration of 3.7 years. Our debt instruments are nonrecourse subject to limited standard carve-outs and are not cross-collateralized. We finance our portfolio on an asset-by-asset basis.

Today, we are announcing a dividend of $0.095 per share for the third quarter, the same amount as last quarter. The dividend will be paid on December 4, 2025, to shareholders of record on November 26, 2025.

Let me now turn the call back to David for concluding remarks.

Thank you, Lawrence. We remain focused on efficiently operating our portfolio. We look forward to full lease-up of Prospect House, finalization of the 141 and 250 Livingston negotiations and capitalizing on other possibilities that may present themselves.

I would now like to open the line for questions.

[Operator Instructions] And there are no questions from the lines at this time.

Thank you for joining us today. We look forward to speaking with you again next quarter.

This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.