Clipper Realty Inc. (NYSE:CLPR) (the "Company"), a leading owner and operator of multifamily residential and commercial properties in the New York metropolitan area, today announced financial and operating results for the three months ended March 31, 2022.

Highlights for the Three Months Ended March 31, 2022

Achieved record quarterly revenues of $32.1 million for the first quarter of 2022
Achieved quarterly income from operations of $6.5 million for the first quarter of 2022
Achieved quarterly net operating income ("NOI")¹ of $16.5 million for the first quarter of 2022
Recorded quarterly net loss of $3.5 million for the first quarter of 2022
Achieved quarterly adjusted funds from operations ("AFFO")¹ of $4.4 million for the first quarter of 2022
Declared a dividend of $0.095 per share for the first quarter of 2022

David Bistricer, Co-Chairman and Chief Executive Officer, commented,

"We continue to see improvements in our operations as New York City further recovers from the effects of the COVID-19 pandemic. We are experiencing strong rental demand at all our properties and consistently increasing rental rates as New York City continues to open and employees return to offices. We remain focused on efficiently operating our portfolio and optimizing our results. Our properties are 96% leased and our first quarter rent collection rate was 96.5%. We have a strong liquidity position with $43.8 million of cash on the balance sheet, consisting of $25.3 million of unrestricted cash and $18.5 million of restricted cash, and have no debt maturities on any operating properties until 2027, providing further support in the current environment. We remain committed to executing our strategic initiatives to create long-term value."

Financial Results

For the first quarter of 2022, revenues increased by $1.4 million, or 4.6%, to $32.1 million, compared to $30.7 million for the first quarter of 2021. Apart from the effects of a new accounting standard discussed below, residential revenue increased by $0.6 million, or 2.9%, due to improved occupancy and rental rates at the Tribeca House and Clover House properties; commercial income increased $0.4 million, or 5.0%, due to new leases at the Tribeca House property. Revenue in the first quarter of 2022 reflects implementation of a new accounting standard by which adjustments to receivables for collectability are made to revenue; in the first quarter of 2021, such adjustments are made to operating expenses.

For the first quarter of 2022, net loss was $3.5 million, or $0.09 per share compared to net loss of $7.1 million, or $0.18 per share, for the first quarter of 2021. Apart from a loss on extinguishment of debt in 2021 of $3.0 million, the change was primarily attributable to the revenue change discussed above and lower property operating expenses, partially offset by increases in insurance expense, depreciation and amortization expense and general and administrative expense.

For the first quarter of 2022, AFFO was $4.4 million, or $0.10 per share, compared to $3.1 million, or $0.07 per share, for the first quarter of 2021. The change was primarily attributable to the revenue change discussed above partially offset by increases in insurance expense and general and administrative expense.

Balance Sheet

At March 31, 2022, notes payable (excluding unamortized loan costs) was $1,151.1 million, compared to $1,144.1 million at December 31, 2021; the increase primarily reflected borrowings to develop the 1010 Pacific Street property partially offset by scheduled principal amortization.

Dividend

The Company today declared a first quarter dividend of $0.095 per share, the same amount as last quarter, to shareholders of record on May 20, 2022, payable May 27, 2022.

Conference Call and Supplemental Material

The Company will host a conference call on May 10, 2022, at 5:30 PM Eastern Time to discuss the first quarter 2022 results and provide a business update. The conference call can be accessed by dialing (800) 346-7359 or (973) 528-0008, conference entry code 485275. A replay of the call will be available from May 10, 2022, following the call, through May 24, 2022, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 485275. Supplemental data to this press release can be found under the "Quarterly Earnings" navigation tab on the "Investors" page of our website at www.clipperrealty.com. The Company's filings with the Securities and Exchange Commission (the "SEC") are filed at www.sec.gov under Clipper Realty Inc.

About Clipper Realty Inc.

Clipper Realty Inc. (NYSE:CLPR) is a self-administered and self-managed real estate company that acquires, owns, manages, operates and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn. For more information on the Company, please visit www.clipperrealty.com.

Forward-Looking Statements

Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include estimates concerning capital projects and the success of specific properties. Our forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "intend," "anticipate," "potential," "plan" or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this press release speak only as of the date of this press release.

We disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties (including uncertainties regarding the ongoing impact of the COVID-19 pandemic, and measures intended to curb its spread, on our business, our tenants and the economy generally), most of which are difficult to predict and many of which are beyond our control and which may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a discussion of these and other important factors that could affect our actual results, please refer to our filings with the SEC, including the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2021, and other reports filed from time to time with the SEC.

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¹ NOI and AFFO are non-GAAP financial measures. For a definition of these financial measures and a reconciliation of such measures to the most comparable GAAP measures, see "Reconciliation of Non-GAAP Measures" at the end of this release.


Clipper Realty Inc.
Consolidated Balance Sheets
(In thousands, except for share and per share data)

	March 31, 2022			December 31, 2021
	(unaudited)
ASSETS
Investment in real estate
Land and improvements	$	540,859		$	540,859
Building and improvements		651,437			649,686
Tenant improvements		3,406			3,406
Furniture, fixtures and equipment		12,582			12,500
Real estate under development		111,902			97,301
Total investment in real estate		1,320,186			1,303,752
Accumulated depreciation		(164,648	)		(158,002	)
Investment in real estate, net		1,155,538			1,145,750

Cash and cash equivalents		25,342			34,524
Restricted cash		18,493			17,700
Tenant and other receivables, net of allowance for doubtful accounts		5,076			10,260
of $179 and $7,905, respectively
Deferred rent		2,599			2,656
Deferred costs and intangible assets, net		6,966			7,126
Prepaid expenses and other assets		12,765			15,641
TOTAL ASSETS	$	1,226,779		$	1,233,657

LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized loan costs	$	1,139,038		$	1,131,154
of $12,077 and $12,898, respectively
Accounts payable and accrued liabilities		17,230			19,558
Security deposits		7,199			7,110
Below-market leases, net		44			53
Other liabilities		6,534			5,833
TOTAL LIABILITIES		1,170,045			1,163,708

Equity:
Preferred stock, $0.01 par value; 100,000 shares authorized (including 140 shares		-			-
of 12.5% Series A cumulative non-voting preferred stock),
zero shares issued and outstanding
Common stock, $0.01 par value; 500,000,000 shares authorized,		160			160
16,063,228 shares issued and outstanding
Additional paid-in-capital		88,215			88,089
Accumulated deficit		(66,871	)		(61,736	)
Total stockholders' equity		21,504			26,513

Non-controlling interests		35,230			43,436
TOTAL EQUITY		56,734			69,949

TOTAL LIABILITIES AND EQUITY	$	1,226,779		$	1,233,657

Clipper Realty Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

	Three Months Ended March 31,
	2022			2021

REVENUES
Residential rental income	$	21,462		$	21,604
Commercial rental income		10,588			9,047
TOTAL REVENUES		32,050			30,651

OPERATING EXPENSES
Property operating expenses		7,539			8,642
Real estate taxes and insurance		7,931			7,312
General and administrative		2,942			2,293
Transaction pursuit costs		424			60
Depreciation and amortization		6,705			6,227
TOTAL OPERATING EXPENSES		25,541			24,534

INCOME FROM OPERATIONS		6,509			6,117

Interest expense, net		(9,985	)		(10,217	)
Loss on extinguishment of debt		-			(3,034	)

Net loss		(3,476	)		(7,134	)

Net loss attributable to non-controlling interests		2,158			4,430
Net loss attributable to common stockholders	$	(1,318	)	$	(2,704	)

Basic and diluted net loss per share	$	(0.09	)	$	(0.18	)

Weighted average common shares / OP units
Common shares outstanding		16,063			16,063
OP units outstanding		26,317			26,317
Diluted shares outstanding		42,380			42,380

Clipper Realty Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

		Three Months Ended March 31,
	.	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(3,476	)	$	(7,134	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			6,646			6,171
Amortization of deferred financing costs			313			308
Amortization of deferred costs and intangible assets			179			176
Amortization of above- and below-market leases			(9	)		(31	)
Loss on extinguishment of debt			-			3,034
Deferred rent			(189	)		(1	)
Stock-based compensation			495			486
Bad debt expense			(379	)		1,178
Transaction pursuit costs			-			60
Changes in operating assets and liabilities:
Tenant and other receivables			(237	)		(2,519	)
Prepaid expenses, other assets and deferred costs			3,122			2,101
Accounts payable and accrued liabilities			(668	)		2,986
Security deposits			89			6
Other liabilities			701			616
Net cash provided by operating activities			6,587			7,437

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and improvements			(13,885	)		(7,745	)
Acquisition deposit			(265	)		-
Cash paid in connection with acquisition of real estate			(3,701	)		-
Net cash used in investing activities			(17,851	)		(7,745	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments of mortgage notes			(554	)		(74,776	)
Proceeds from mortgage notes			7,617			100,248
Dividends and distributions			(4,188	)		(4,191	)
Loan issuance and extinguishment costs			-			(3,809	)
Net cash provided by financing activities			2,875			17,472

Net (decrease) increase in cash and cash equivalents and restricted cash			(8,389	)		17,164
Cash and cash equivalents and restricted cash - beginning of period			52,224			89,032
Cash and cash equivalents and restricted cash - end of period		$	43,835		$	106,196

Cash and cash equivalents and restricted cash - beginning of period:
Cash and cash equivalents		$	34,524		$	72,058
Restricted cash			17,700			16,974
Total cash and cash equivalents and restricted cash - beginning of period		$	52,224		$	89,032

Cash and cash equivalents and restricted cash - end of period:
Cash and cash equivalents		$	25,342		$	87,952
Restricted cash			18,493			18,244
Total cash and cash equivalents and restricted cash - end of period		$	43,835		$	106,196

Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $607 and $393 in 2022 and 2021, respectively		$	10,351		$	9,999
Non-cash interest capitalized to real estate under development			508			16
Additions to investment in real estate included in accounts payable and accrued liabilities			6,906			1,970

Clipper Realty Inc.

Reconciliation of Non-GAAP Measures

(In thousands, except per share data)

(Unaudited)

Non-GAAP Financial Measures

We disclose and discuss funds from operations ("FFO"), adjusted funds from operations ("AFFO"), adjusted earnings before interest, income taxes, depreciation and amortization ("Adjusted EBITDA") and net operating income ("NOI"), all of which meet the definition of "non-GAAP financial measures" set forth in Item 10(e) of Regulation S-K promulgated by the SEC.

While management and the investment community in general believe that presentation of these measures provides useful information to investors, neither FFO, AFFO, Adjusted EBITDA, nor NOI should be considered as an alternative to net income (loss) or income from operations as an indication of our performance. We believe that to understand our performance further, FFO, AFFO, Adjusted EBITDA, and NOI should be compared with our reported net income (loss) or income from operations and considered in addition to cash flows computed in accordance with GAAP, as presented in our consolidated financial statements.

Funds From Operations and Adjusted Funds From Operations

FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and impairment adjustments, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our calculation of FFO is consistent with FFO as defined by NAREIT.

AFFO is defined by us as FFO excluding amortization of identifiable intangibles incurred in property acquisitions, straight-line rent adjustments to revenue from long-term leases, amortization costs incurred in originating debt, interest rate cap mark-to-market adjustments, amortization of non-cash equity compensation, acquisition and other costs, transaction pursuit costs, loss on modification/extinguishment of debt, gain on involuntary conversion, gain on termination of lease and non-recurring litigation-related expenses, less recurring capital spending.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values have historically risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO useful in evaluating potential property acquisitions and measuring operating performance. We further consider AFFO useful in determining funds available for payment of distributions. Neither FFO nor AFFO represent net income or cash flows from operations computed in accordance with GAAP. You should not consider FFO and AFFO to be alternatives to net income (loss) as reliable measures of our operating performance; nor should you consider FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (computed in accordance with GAAP) as measures of liquidity.

Neither FFO nor AFFO measure whether cash flow is sufficient to fund all of our cash needs, including loan principal amortization, capital improvements and distributions to stockholders. FFO and AFFO do not represent cash flows from operating, investing or financing activities computed in accordance with GAAP. Further, FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO and AFFO.

The following table sets forth a reconciliation of FFO and AFFO for the periods presented to net loss, computed in accordance with GAAP (amounts in thousands):


	Three Months Ended March 31,
	2022			2021
FFO
Net loss	$	(3,476	)	$	(7,134	)
Real estate depreciation and amortization		6,705			6,227
FFO	$	3,229		$	(907	)


AFFO
FFO	$	3,229		$	(907	)
Amortization of real estate tax intangible		120			120
Amortization of above- and below-market leases		(9	)		(31	)
Straight-line rent adjustments		(189	)		(1	)
Amortization of debt origination costs		313			308
Amortization of LTIP awards		495			486
Transaction pursuit costs		424			60
Loss on extinguishment of debt		-			3,034
Certain litigation-related expenses		86			59
Recurring capital spending		(49	)		(50	)
AFFO	$	4,420		$	3,078
AFFO Per Share/Unit	$	0.10		$	0.07

Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization

We believe that Adjusted EBITDA is a useful measure of our operating performance. We define Adjusted EBITDA as net income (loss) before allocation to non-controlling interests, plus real estate depreciation and amortization, amortization of identifiable intangibles, straight-line rent adjustments to revenue from long-term leases, amortization of non-cash equity compensation, interest expense (net), acquisition and other costs, transaction pursuit costs, loss on modification/extinguishment of debt and non-recurring litigation-related expenses, less gain on involuntary conversion and gain on termination of lease.

We believe that this measure provides an operating perspective not immediately apparent from GAAP income from operations or net income (loss). We consider Adjusted EBITDA to be a meaningful financial measure of our core operating performance.

However, Adjusted EBITDA should only be used as an alternative measure of our financial performance. Further, other REITs may use different methodologies for calculating Adjusted EBITDA, and accordingly, our Adjusted EBITDA may not be comparable to that of other REITs.

The following table sets forth a reconciliation of Adjusted EBITDA for the periods presented to net loss, computed in accordance with GAAP (amounts in thousands):

	Three Months Ended March 31,
	2022			2021
Adjusted EBITDA
Net loss	$	(3,476	)	$	(7,134	)
Real estate depreciation and amortization		6,705			6,227
Amortization of real estate tax intangible		120			120
Amortization of above- and below-market leases		(9	)		(31	)
Straight-line rent adjustments		(189	)		(1	)
Amortization of LTIP awards		495			486
Interest expense, net		9,985			10,217
Transaction pursuit costs		424			60
Loss on extinguishment of debt		-			3,034
Certain litigation-related expenses		86			59
Adjusted EBITDA	$	14,141		$	13,037

Net Operating Income

We believe that NOI is a useful measure of our operating performance. We define NOI as income from operations plus real estate depreciation and amortization, general and administrative expenses, acquisition and other costs, transaction pursuit costs, amortization of identifiable intangibles and straight-line rent adjustments to revenue from long-term leases, less gain on termination of lease. We believe that this measure is widely recognized and provides an operating perspective not immediately apparent from GAAP income from operations or net income (loss). We use NOI to evaluate our performance because NOI allows us to evaluate the operating performance of our company by measuring the core operations of property performance and capturing trends in rental housing and property operating expenses. NOI is also a widely used metric in valuation of properties.

However, NOI should only be used as an alternative measure of our financial performance. Further, other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to that of other REITs.

The following table sets forth a reconciliation of NOI for the periods presented to income from operations, computed in accordance with GAAP (amounts in thousands):

	Three Months Ended March 31,
	2022			2021
NOI
Income from operations	$	6,509		$	6,117
Real estate depreciation and amortization		6,705			6,227
General and administrative expenses		2,942			2,293
Transaction pursuit costs		424			60
Amortization of real estate tax intangible		120			120
Amortization of above- and below-market leases		(9	)		(31	)
Straight-line rent adjustments		(189	)		(1	)
NOI	$	16,502		$	14,785

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Clipper Realty Inc. Announces First Quarter 2022 Results