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 December 31, 2021.

Highlights for the Three Months Ended December 31, 2021

Achieved quarterly revenues of $30.8 million for the fourth quarter of 2021
Achieved quarterly income from operations of $4.1 million for the fourth quarter of 2021, or $6.8 million exclusive of a non-recurring $2.7 million charge for a litigation settlement
Achieved quarterly net operating income ("NOI")¹ of $16.4 million for the fourth quarter of 2021
Recorded quarterly net loss of $6.2 million for the fourth quarter of 2021, or $3.5 million exclusive of a $2.7 million charge for a litigation settlement
Achieved quarterly adjusted funds from operations ("AFFO")¹ of $4.4 million for the fourth quarter of 2021
Declared a dividend of $0.095 per share for the fourth quarter of 2021

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, with the safety of our tenants and employees our highest priority. Our properties are 95% leased and our fourth quarter rent collection rate was over 98%. We have a strong liquidity position with $52.2 million of cash on the balance sheet, consisting of $34.5 million of unrestricted cash and $17.7 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 fourth quarter of 2021, revenues increased by $0.5 million, or 1.6%, to $30.8 million, compared to $30.3 million for the fourth quarter of 2020; the change was primarily attributable to the commencement of new leases at the Tribeca House, Aspen and Clover House properties partially offset by a decline in occupancy at the Flatbush Gardens property.

For the fourth quarter of 2021, net loss was $6.2 million, or $0.16 per share, or $3.5 million, or $0.09 per share exclusive of a non-recurring charge for a litigation settlement, compared to net loss of $3.8 million, or $0.10 per share, for the fourth quarter of 2020; the change was primarily attributable to the revenue change discussed above and lower property operating expenses (including a decrease in the provision for bad debt), substantially offset by increases in insurance expense, depreciation and amortization expense, general and administrative expense (including LTIP amortization expense) and interest expense (primarily resulting from the refinancing of the 141 Livingston Street property in February 2021). Lastly, as a result of NY court decisions made in March 2022 that established probability and ability to calculate amounts, the Company has recorded a charge of $2.7 million for the settlement of claims of tenant overcharges at the Tribeca House property.

For the fourth quarter of 2021, AFFO was $4.4 million, or $0.10 per share, compared to $3.0 million, or $0.07 per share, for the fourth quarter of 2020; the change was primarily attributable to the revenue change discussed above, and lower property operating expenses (including decreases in staffing, repairs and maintenance and the provision for bad debt), partially offset by increases in insurance expense, interest expense, and cash general and administrative expenses.

Balance Sheet

At December 31, 2021, notes payable (excluding unamortized loan costs) was $1,144.1 million, compared to $1,089.7 million at December 31, 2020; the increase primarily reflected the refinancing of the 141 Livingston Street property in February 2021, partially offset by scheduled principal amortization.

Dividend

The Company today declared a fourth quarter dividend of $0.095 per share, the same amount as last quarter, to shareholders of record on March 25, 2022, payable March 31, 2022.

Conference Call and Supplemental Material

The Company will host a conference call on March 15, 2022, at 5:00 PM Eastern Time to discuss the fourth quarter 2021 results and provide a business update. The conference call can be accessed by dialing (800) 346-7359 or (973) 528-0008, conference entry code 826656. A replay of the call will be available from March 15, 2022, following the call, through March 29, 2022, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 826656. 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.

_____________________________________

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)

	December 31, 2021			December 31, 2020

ASSETS
Investment in real estate
Land and improvements	$	540,859		$	540,859
Building and improvements		649,686			630,662
Tenant improvements		3,406			3,121
Furniture, fixtures and equipment		12,500			12,217
Real estate under development		97,301			36,118
Total investment in real estate		1,303,752			1,222,977
Accumulated depreciation		(158,002	)		(132,479	)
Investment in real estate, net		1,145,750			1,090,498

Cash and cash equivalents		34,524			72,058
Restricted cash		17,700			16,974
Tenant and other receivables, net of allowance for doubtful accounts		10,260			7,002
of $7,905 and $5,993, respectively
Deferred rent		2,656			2,454
Deferred costs and intangible assets, net		7,126			7,720
Prepaid expenses and other assets		15,641			11,160
TOTAL ASSETS	$	1,233,657		$	1,207,866

LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized loan costs	$	1,131,154		$	1,079,458
of $12,898 and $10,262, respectively
Accounts payable and accrued liabilities		19,558			11,725
Security deposits		7,110			6,983
Below-market leases, net		53			157
Other liabilities		5,833			5,429
TOTAL LIABILITIES		1,163,708			1,103,752

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		88,089			87,347
Accumulated deficit		(61,736	)		(48,045	)
Total stockholders' equity		26,513			39,462

Non-controlling interests		43,436			64,652
TOTAL EQUITY		69,949			104,114

TOTAL LIABILITIES AND EQUITY	$	1,233,657		$	1,207,866



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


	Three Months Ended December 31,						Year Ended December 31,
		2021			2020			2021			2020
	(unaudited)
REVENUES
Residential rental income	$	21,253		$	21,198		$	85,771		$	90,543
Commercial rental income		9,523			9,139			36,958			32,307
TOTAL REVENUES		30,776			30,337			122,729			122,850

OPERATING EXPENSES
Property operating expenses		6,450			8,008			28,997			29,902
Real estate taxes and insurance		7,921			7,181			30,449			28,286
General and administrative		2,791			2,404			10,570			9,728
Transaction pursuit costs		-			-			60			-
Depreciation and amortization		6,794			6,266			25,762			23,630
TOTAL OPERATING EXPENSES		23,956			23,859			95,838			91,546

Gain on termination of lease		-			-			-			838
Litigation settlement and other		(2,730	)		-			(2,730	)		-

INCOME FROM OPERATIONS		4,090			6,478			24,161			32,142

Interest expense, net		(10,326	)		(10,254	)		(41,284	)		(40,228	)
Loss on extinguishment of debt		-			-			(3,034	)		(4,228	)
Gain on involuntary conversion		-			-			139			85

Net loss		(6,236	)		(3,776	)		(20,018	)		(12,229	)

Net loss attributable to non-controlling interests		3,873			2,283			12,431			7,323
Net loss attributable to common stockholders	$	(2,363	)	$	(1,493	)	$	(7,587	)	$	(4,906	)

Basic and diluted net loss per share	$	(0.16	)	$	(0.10	)	$	(0.51	)	$	(0.31	)

Weighted average common shares / OP units
Common shares outstanding		16,063			17,080			16,063			17,629
OP units outstanding		26,317			26,317			26,317			26,317
Diluted shares outstanding		42,380			43,397			42,380			43,946



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

		Year Ended December 31,
	.		2021			2020

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(20,018	)	$	(12,229	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			25,536			23,148
Amortization of deferred financing costs			1,247			1,212
Amortization of deferred costs and intangible assets			707			963
Amortization of above- and below-market leases			(104	)		(390	)
Loss on extinguishment of debt			3,034			4,228
Gain on involuntary conversion			(139	)		(85	)
Gain on termination of lease			-			(838	)
Deferred rent			(202	)		(1,180	)
Stock-based compensation			2,611			1,805
Bad debt expense			1,850			2,543
Transaction pursuit costs			60			-
Changes in operating assets and liabilities:
Tenant and other receivables			(5,108	)		(5,358	)
Prepaid expenses, other assets and deferred costs			(2,639	)		3,228
Accounts payable and accrued liabilities			3,456			(1,602	)
Security deposits			127			(587	)
Other liabilities			404			1,132
Net cash provided by operating activities			10,822			15,990

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and improvements			(35,531	)		(31,811	)
Insurance proceeds from involuntary conversion			150			111
Sale and purchase of interest rate caps, net			-			(14	)
Acquisition deposit			(2,015	)		-
Cash paid in connection with acquisition of real estate			(40,548	)		-
Net cash used in investing activities			(77,944	)		(31,714	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock			-			(10,002	)
Payments of mortgage notes			(97,432	)		(249,630	)
Proceeds from mortgage notes			151,764			329,919
Dividends and distributions			(16,758	)		(17,243	)
Loan issuance and extinguishment costs			(7,260	)		(5,220	)
Net cash provided by financing activities			30,314			47,824

Net (decrease) increase in cash and cash equivalents and restricted cash			(36,808	)		32,100
Cash and cash equivalents and restricted cash - beginning of period			89,032			56,932
Cash and cash equivalents and restricted cash - end of period		$	52,224		$	89,032

Cash and cash equivalents and restricted cash - beginning of period:
Cash and cash equivalents		$	72,058		$	42,500
Restricted cash			16,974			14,432
Total cash and cash equivalents and restricted cash - beginning of period		$	89,032		$	56,932

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

Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $1,740 and $1,456 in 2021 and 2020, respectively		$	40,227		$	39,592
Non-cash interest capitalized to real estate under development			343			1,060
Additions to investment in real estate included in accounts payable and accrued liabilities			8,566			4,189

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 December 31,						Year Ended December 31,
		2021			2020			2021			2020
FFO
Net loss	$	(6,236	)	$	(3,776	)	$	(20,018	)	$	(12,229	)
Real estate depreciation and amortization		6,794			6,266			25,762			23,630
FFO	$	558		$	2,490		$	5,744		$	11,401


AFFO
FFO	$	558		$	2,490		$	5,744		$	11,401
Amortization of real estate tax intangible		120			121			481			481
Amortization of above- and below-market leases		(8	)		(32	)		(104	)		(390	)
Straight-line rent adjustments		(77	)		(494	)		(202	)		(1,180	)
Amortization of debt origination costs		313			302			1,247			1,212
Amortization of LTIP awards		665			556			2,611			1,805
Transaction pursuit costs		-			-			60			-
Loss on extinguishment of debt		-			-			3,034			4,228
Gain on involuntary conversion		-			-			(139	)		(85	)
Gain on termination of lease		-			-			-			(838	)
Litigation settlement and other		2,730			-			2,730			-
Non-recurring litigation-related expenses		100			114			299			724
Recurring capital spending		(46	)		(72	)		(205	)		(514	)
AFFO	$	4,355		$	2,985		$	15,556		$	16,844
AFFO Per Share/Unit	$	0.10		$	0.07		$	0.37		$	0.38

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 December 31,						Year Ended December 31,
		2021			2020			2021			2020
Adjusted EBITDA
Net loss	$	(6,236	)	$	(3,776	)	$	(20,018	)	$	(12,229	)
Real estate depreciation and amortization		6,794			6,266			25,762			23,630
Amortization of real estate tax intangible		120			121			481			481
Amortization of above- and below-market leases		(8	)		(32	)		(104	)		(390	)
Straight-line rent adjustments		(77	)		(494	)		(202	)		(1,180	)
Amortization of LTIP awards		665			556			2,611			1,805
Interest expense, net		10,326			10,254			41,284			40,228
Transaction pursuit costs		-			-			60			-
Loss on extinguishment of debt		-			-			3,034			4,228
Gain on involuntary conversion		-			-			(139	)		(85	)
Gain on termination of lease		-			-			-			(838	)
Litigation settlement and other		2,730			-			2,730			-
Non-recurring litigation-related expenses		100			114			299			724
Adjusted EBITDA	$	14,414		$	13,009		$	55,798		$	56,374

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 December 31,						Year Ended December 31,
		2021			2020			2021			2020
NOI
Income from operations	$	4,090		$	6,478		$	24,161		$	32,142
Real estate depreciation and amortization		6,794			6,266			25,762			23,630
General and administrative expenses		2,791			2,404			10,570			9,728
Transaction pursuit costs		-			-			60			-
Amortization of real estate tax intangible		120			121			481			481
Amortization of above- and below-market leases		(8	)		(32	)		(104	)		(390	)
Straight-line rent adjustments		(77	)		(494	)		(202	)		(1,180	)
Gain on termination of lease		-			-			-			(838	)
Litigation settlement and other		2,730			-			2,730			-
NOI	$	16,440		$	14,743		$	63,458		$	63,573

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Clipper Realty Inc. Announces Fourth Quarter 2021 Results