Breaking Down Clipper Realty Inc. (CLPR) Financial Health: Key Insights for Investors

You're looking at Clipper Realty Inc. (CLPR) because you see the potential in New York City multifamily real estate, but the recent financials are giving you pause, and you defintely should scrutinize the details. The Q3 2025 results show a clear operational dichotomy: on one hand, the core residential portfolio is a powerhouse, delivering a sector-leading renewal rent growth of nearly 14% and maintaining a stellar 99% occupancy rate. But on the other, the company reported a net loss of $5.6 million for the quarter, a sharp increase from the previous year, driven largely by the commercial lease termination at 250 Livingston Street and costs associated with the initial lease-up of the new Prospect House development. This mixed bag translated to Adjusted Funds from Operations (AFFO) dropping to only $5.6 million, or $0.13 per share. The question isn't just about the quarterly loss; it's whether the strong residential performance and the successful 60% lease-up of Prospect House can quickly offset the impact of losing a major commercial tenant and manage the substantial $1.28 billion in notes payable on the balance sheet. We need to map out the path to sustained AFFO growth, and that starts with a deep dive into the underlying asset values and the timeline for stabilizing those new developments.

Revenue Analysis

You're looking at Clipper Realty Inc. (CLPR) and trying to figure out where the money actually comes from, especially with all the noise in the New York City real estate market. The direct takeaway is that Clipper Realty Inc. is fundamentally a residential story, and while that segment is growing strongly, the recent commercial property headwinds are masking the overall progress.

The company's revenue streams are straightforward, coming primarily from rents across two core reportable operating segments: Residential Rental Properties and Commercial Rental Properties. To a lesser extent, retail tenants also contribute. For the Trailing Twelve Months (TTM) ending September 30, 2025, Clipper Realty Inc.'s total revenue was approximately $154.10 million.

Residential properties are the clear engine, benefiting from high demand in the New York metropolitan area. Honestly, the residential market is carrying the load right now. New leases across the portfolio are exceeding previous rents by nearly 14%, and renewals are up over 6%, showing real pricing power.

Here's the quick math on segment contribution based on the third quarter of 2025 (Q3 2025) results, which gives you the clearest near-term picture:

What this estimate hides is the volatility in the commercial segment. The year-over-year revenue growth rate for the TTM ending September 30, 2025, was a respectable +7.69%. But breaking down the quarterly growth shows a more complex trend, driven by specific property events:

• Q1 2025 Revenue: $39.4 million (up 10.2% year-over-year)
• Q2 2025 Revenue: $39.0 million (up 4.5% year-over-year)
• Q3 2025 Revenue: $37.7 million (up only 0.2% year-over-year)

The flat Q3 revenue is a clear example of near-term risks mapping to numbers. The residential side actually increased by $1.9 million (a 6.9% rise) due to rent increases and the initial lease-up of the new Prospect House property in Brooklyn. But the commercial revenue dropped by $1.8 million in the same quarter. That drop came directly from the New York City tenant terminating its lease early at the 250 Livingston Street commercial property in mid-August 2025. Plus, the May 2025 sale of the 10 West 65th Street property also contributed to the overall revenue slowdown. So, the residential strength is offsetting the commercial weakness and asset sales. You can dig deeper into the ownership structure and institutional interest by Exploring Clipper Realty Inc. (CLPR) Investor Profile: Who's Buying and Why?

The action here is simple: watch the lease-up progress at Prospect House, which is about 60% leased, and the company's efforts to re-lease the space at 250 Livingston Street. That's where the near-term revenue recovery lies. The residential portfolio is defintely performing, but the commercial segment needs a new anchor tenant to stabilize.

Profitability Metrics

You need a clear picture of Clipper Realty Inc. (CLPR)'s ability to turn revenue into profit, and the 2025 quarterly data gives us a mixed but telling story. The short answer is that while their core operational efficiency, measured by Net Operating Income (NOI), remains solid, non-cash charges and strategic transitions are hammering their GAAP (Generally Accepted Accounting Principles) bottom line.

Their operational profitability, represented by the NOI Margin (Net Operating Income divided by revenue), is the best gauge of their property management. In Q2 2025, the NOI Margin hit a high of 56.67% on $39.0 million in revenue. This means for every dollar of rent collected, nearly 57 cents is left after property-level operating expenses. However, this figure sits noticeably below the Q3 2025 benchmark of 65.0% reported by some peers in the residential real estate investment trust (REIT) sector, suggesting Clipper Realty Inc. has a higher property expense load or lower rent-per-square-foot efficiency.

Margin Trends and Operational Efficiency

When you look at the full profitability stack-Gross Profit, Operating Profit, and Net Profit-the trends are volatile, but the underlying operational efficiency is steady. The real swing factor is the non-cash and non-recurring expenses that hit the operating and net profit lines.

Here's the quick math on the GAAP margins for the first three quarters of 2025:

• Gross Profit Margin (Proxy: NOI Margin): Stable between 55.17% and 56.67% in Q1-Q3 2025. This stability shows strong residential leasing momentum, with new leases exceeding previous rents by nearly 14% in Q3 2025, which helps offset rising costs.
• Operating Profit Margin: Wildly inconsistent, swinging from a loss of -59.89% in Q1 2025 to a gain of 25.90% in Q2 2025.
• Net Profit Margin: Also highly negative, ranging from -3.59% in Q2 2025 to a deep loss of -89.09% in Q1 2025.

The massive Q1 loss was due to a $33.8 million impairment charge. What this estimate hides is that without that one-time charge, the Q1 Net Loss would have been only $1.3 million. The Q3 2025 Net Loss of $4.6 million is driven by the initial lease-up costs for the new Prospect House development and the termination of a major New York City lease at 250 Livingston Street. The core business is working, but the high cost of debt and asset transitions are eating up the profits below the NOI line. You can see more about the company's long-term strategy here: Mission Statement, Vision, & Core Values of Clipper Realty Inc. (CLPR).

Profitability Ratio Comparison

A simple table clarifies how Clipper Realty Inc. (CLPR) stacks up against a residential REIT peer's operational efficiency. Remember, in REITs, NOI is king for evaluating property performance.

The operational efficiency is stable, but not best-in-class. You can see the firm is managing costs well enough to keep the NOI Margin consistent, but the broader sector is facing pressure from rising insurance, payroll, and interest expenses, which is a key risk for Clipper Realty Inc. given its debt load. The next step is to watch how quickly the new Prospect House property leases up and starts contributing to NOI to boost that margin.

Debt vs. Equity Structure

When you look at Clipper Realty Inc. (CLPR)'s balance sheet, the first thing that jumps out is the extreme reliance on debt-a common feature in real estate, but one that's pushed to an uncomfortable limit here. The company's strategy is heavily weighted toward debt financing, which is clear from the sheer size of its obligations relative to its equity base.

As of the third quarter of 2025, Clipper Realty Inc.'s primary debt, listed as notes payable, stood at a significant $1,281.2 million. This figure is mostly long-term debt used to acquire and develop its core New York metropolitan area properties. The challenge isn't just the size of the debt; it's the structure of the financing that demands your attention.

The company's Debt-to-Equity (D/E) ratio is the clearest signal of this imbalance, registering a deeply negative figure, such as -52.09 recently. Here's the quick math: a negative D/E ratio means that Clipper Realty Inc. has negative shareholders' equity, where total liabilities exceed total assets. This is defintely a high-risk scenario, putting the company's capital structure in a precarious position.

To be fair, a healthy D/E ratio for a Multi-Family Residential REIT typically sits around 0.932. Clipper Realty Inc.'s negative equity position is a massive deviation from this industry norm, signaling that their growth is entirely financed by creditors, not shareholders' capital. This is why the metric is sometimes listed as 'Not Meaningful'-it's off the charts. You need to understand the implications of this for their long-term stability. The high leverage means any dip in property values or a rise in interest rates hits them harder than peers.

Still, Clipper Realty Inc. has been actively managing its debt in 2025, which is a positive sign of operational focus. They are constantly shuffling debt to optimize costs and secure working capital:

• Refinancing: They closed a two-year bridge loan for the Dean Street property in May 2025, securing up to $160 million and repaying an existing construction loan.
• Cost Reduction: This new bridge loan carries a lower interest rate of 2.65% over SOFR compared to the previous construction loan.
• Debt Retirement: The sale of the 10 West 65th Street property in May 2025 allowed them to retire $31.2 million of associated debt, which is a smart move to shed high-cost obligations.

The balance between debt and equity is fundamentally broken, forcing the company to use debt as the sole engine for growth and capital expenditure. The recent refinancing activities show a focus on lowering the cost of this debt, but the sheer volume remains a long-term risk. For more on the company's long-term vision, you can review their Mission Statement, Vision, & Core Values of Clipper Realty Inc. (CLPR).

Liquidity and Solvency

You need a clear picture of how Clipper Realty Inc. (CLPR) manages its short-term obligations, and honestly, the liquidity position is tight. As of the most recent quarter in 2025, the company's ability to cover its immediate debts using current assets is below the industry comfort zone. This is defintely a point to watch.

The Current Ratio sits at approximately 0.83, meaning Clipper Realty Inc. has only 83 cents of current assets (like cash and receivables) for every dollar of current liabilities. Even more telling is the Quick Ratio (or acid-test ratio), which strips out less-liquid assets like inventory, coming in at a low 0.38. For a real estate investment trust (REIT), these ratios are often lower than a typical operating company because the bulk of their assets are long-term real estate, but anything below 1.0 signals a short-term liquidity risk that needs to be managed actively.

Working capital-the difference between current assets and current liabilities-is structurally low, which is typical for a heavily-leveraged real estate entity. The immediate concern isn't a lack of assets, but a potential timing mismatch between when short-term debts are due and when cash from operations is generated. This is why a REIT's cash flow statement is so important; it tells the real story.

Here's the quick math on cash flow trends (Trailing Twelve Months, TTM):

• Cash from Operating Activities (CFO): $26.99 million. This is the core cash generated by rental properties.
• Cash from Investing Activities (CFI): $1.20 million. This shows minimal net capital expenditure or acquisitions/disposals.
• Cash and Restricted Cash (as of September 30, 2025): $56.645 million. This is the immediate buffer.

The operating cash flow is positive, which is a strength, but it's not massive relative to the overall debt load. The company's strategy leans heavily on the financing side to manage its capital structure, which is common in real estate. Notes payable (long-term debt) stood at $1,281.2 million as of September 30, 2025. The increase from late 2024 is due to additional borrowings for projects like the Prospect House bridge loan refinancing, which is a key financing action to maintain liquidity during a lease-up period.

The core liquidity strength of Clipper Realty Inc. isn't in its current ratio, but in its ability to refinance and manage its substantial long-term debt. What this estimate hides is the value of the underlying, high-quality New York metropolitan area real estate, which serves as collateral and is the ultimate source of value. Still, the reliance on debt markets means higher interest rates are a continuous headwind. For a deeper look at who is betting on this debt-heavy structure, you should check out Exploring Clipper Realty Inc. (CLPR) Investor Profile: Who's Buying and Why?

Valuation Analysis

You want to know if Clipper Realty Inc. (CLPR) is a buy, a hold, or a sell right now. The quick answer is that its valuation metrics are mixed, pointing to a potentially undervalued asset based on its Net Asset Value (NAV), but the core earnings picture is still a real concern. The stock is currently trading around $3.67 as of mid-November 2025, which is a significant drop from its 52-week high of $6.49.

The core valuation ratios tell a complex story. Because Clipper Realty Inc. reported a trailing twelve months (TTM) net loss, the standard Price-to-Earnings (P/E) ratio is negative, or Not Meaningful (NM). You can't divide by a loss. However, a normalized P/E is cited at approximately 5.10, which looks incredibly cheap compared to the Residential REIT industry average.

Here's the quick math on the key metrics we can use to anchor the valuation:

• P/E Ratio (Normalized): 5.10. This suggests the market expects a swift earnings recovery or is pricing in significant future growth.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM ratio is 17.63. This is high for a REIT and suggests the company's debt load is substantial, which is a critical point for a real estate business.
• Price-to-Book (P/B): This metric is often listed as NM, but some analysts estimate the stock trades at a deep discount, potentially 57% below its estimated NAV of $9 per share. This is where the value argument defintely comes from.

Stock Performance and Analyst Sentiment

The stock price trend has been brutal, still. Over the last 12 months, Clipper Realty Inc.'s share price has decreased by approximately 30.75%, underperforming both the broader US market and the Residential REIT industry. This sharp decline is a clear signal of investor caution, largely tied to the challenges in their commercial office portfolio, despite strong residential performance.

The dividend yield is the most eye-catching number here. Clipper Realty Inc. offers a forward dividend yield of around 10.35%, an extremely high figure that attracts income-focused investors. But you must look closer: the payout ratio is negative because of the net loss, meaning the dividend is currently not covered by earnings. They are paying it out of cash flow, which is not sustainable long-term without an earnings turnaround. This is a classic yield trap risk.

As for Wall Street's take, the analyst consensus is currently a Moderate Sell. This consensus is based on limited coverage, but it reflects the skepticism around the company's ability to navigate its office property issues and convert its strong residential leasing momentum into consistent, positive net income. There is currently no average 12-month price target available from analysts, which is another sign of high uncertainty. You need to understand the underlying assets to make a call here, and you can learn more about who is betting on this turnaround by Exploring Clipper Realty Inc. (CLPR) Investor Profile: Who's Buying and Why?

The core risk is the debt-fueled Enterprise Value and the negative earnings, which overshadow the cheap P/E and massive dividend yield. The opportunity is the deep discount to estimated NAV, assuming management can successfully reposition or monetize the challenged office assets.

Risk Factors

You need to understand that while Clipper Realty Inc. (CLPR) is capitalizing on strong New York City residential demand, its financial structure carries significant near-term risks, primarily tied to commercial property vacancies and elevated debt. The direct takeaway is that operational success in residential units is currently offsetting financial strain from the commercial portfolio and higher interest rates.

Operational and Financial Headwinds

The biggest internal risks stem from the commercial side of the business and the company's debt load. The Q3 2025 results show the strain: Net Operating Income (NOI) declined to $20.8 million from $21.8 million in the prior year, and Adjusted Funds from Operations (AFFO) dropped to $5.6 million from $7.8 million.

This drop is largely because of issues with key commercial assets. The termination of a New York City lease at 250 Livingston Street and the absence of results from a property sold earlier in 2025 directly impacted cash flow. Also, the new Prospect House development, a critical growth driver, is only about 60% leased, meaning it's not yet contributing its full potential.

Here's the quick math on the leverage: as of September 30, 2025, total liabilities stood at approximately $1.304 billion, with total equity showing a deficit of $(65.840) million. That's a lot of debt to manage, defintely. The high interest expense, which rose to $13.320 million in Q3 2025, eats directly into profitability.

• Residential strength is masking commercial weakness.

External Market and Regulatory Pressures

The external risks for Clipper Realty Inc. (CLPR) are largely macro-driven, centered on interest rates and the New York regulatory environment. The multi-family residential sector is competitive, but the company's primary threat is the cost of capital. Rising interest rates mean higher borrowing costs and refinancing risk for their substantial debt.

For the nine months ended September 30, 2025, the company reported a net loss of approximately $41.066 million, driven in part by a prior impairment charge. This wider loss highlights how sensitive the company is to market value shifts and financial costs. Still, the underlying market dynamics for their core business are strong; residential rental income for the nine months ended September 30, 2025, increased to $85.725 million from $78.633 million in the prior year, thanks to rent increases.

Mitigation and Forward Action

Management is taking clear steps to mitigate these risks. On the debt front, they successfully refinanced the 1010 Pacific Street property with an $84.5 million loan at 5.73%, which extends the debt maturity to 2030 and provides some breathing room. This kind of proactive debt management is crucial.

On the operational side, the focus is on maximizing the high-demand residential portfolio, where new leases are exceeding prior rents by over 14%. For the troubled commercial assets, management is actively negotiating to bring 141 and 250 Livingston Street back to cash-flowing positions, plus they anticipate the full lease-up of Prospect House. The strategy is to use the strong residential market to create a stable base while they work out the commercial and debt issues. If you want to dive deeper into the full context of these numbers, you can read the full post: Breaking Down Clipper Realty Inc. (CLPR) Financial Health: Key Insights for Investors.

Next Step: Monitor the Q4 2025 filing specifically for progress on the 250 Livingston Street negotiations and the lease-up rate at Prospect House. That's where the real operational leverage will come from.

Growth Opportunities

You're looking for a clear path through Clipper Realty Inc.'s (CLPR) current mix of residential strength and commercial property transitions, and the takeaway is this: the company's future growth is defintely tethered to the successful lease-up of its new Brooklyn development and its ability to quickly re-tenant a major vacant office space.

The core engine remains their residential portfolio in the constrained New York City market. This asset base delivered a strong performance in Q3 2025, with overall residential occupancy holding at a near-perfect 99%. This market leverage allowed new residential leases to exceed prior rents by nearly 14% across the portfolio, a clear sign of pricing power that drives Net Operating Income (NOI), which saw a $1.5 million increase from ongoing properties in the quarter. That's a solid foundation.

Here's the quick math on the near-term revenue boost:

• Product Innovation: The new Prospect House development at 953 Dean Street in Brooklyn is the immediate growth lever. This 240-unit project is already approximately 60% leased as of Q3 2025, with free market rents exceeding $88 per square foot. As those final units fill up, that new, high-rate cash flow will start flowing directly to the top line.
• Strategic Resolution: The sale of the 10 West 65th Street property in May 2025, which netted about $12 million in cash after debt and costs, was a smart move to exit a rent-restricted asset and redeploy capital. However, the termination of the major New York City lease at 250 Livingston Street in August 2025 is a headwind, reducing commercial revenue by $1.8 million in Q3 2025 alone. Getting that space re-tenanted is a critical action item for management.

What this estimate hides is the drag from the commercial vacancy. For the full fiscal year 2025, the consensus Earnings Per Share (EPS) forecast is $0.39. This projection assumes they can mitigate the impact from the 250 Livingston Street vacancy, which is a big 'if.' If re-leasing takes 12+ months, the pressure on Adjusted Funds from Operations (AFFO) will continue, which was already down to $5.6 million in Q3 2025 from $7.8 million last year.

The company's competitive advantage is its concentrated portfolio of residential properties in high-demand areas of Manhattan and Brooklyn. They are a pure-play bet on the resilience of the New York City rental market. Plus, the five-year lease renewal with New York City at 141 Livingston Street provides a stable, long-term anchor for a portion of their commercial segment.

For a deeper dive into who is betting on this strategy, you should check out Exploring Clipper Realty Inc. (CLPR) Investor Profile: Who's Buying and Why?

To summarize the forward-looking financial picture, here is a snapshot of the most recent TTM revenue and the key growth projections for Clipper Realty Inc.:

The path forward is clear: watch the lease-up rate at Prospect House and listen closely for updates on re-tenanting 250 Livingston. Those are the two variables that will dictate if Clipper Realty Inc. hits or misses that $0.39 EPS forecast.