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 September 30, 2021.

Highlights for the Three Months Ended September 30, 2021

Achieved quarterly revenues of $30.6 million for the third quarter of 2021
Achieved quarterly income from operations of $7.0 million for the third quarter of 2021
Achieved quarterly net operating income ("NOI")¹ of $16.1 million for the third quarter of 2021
Recorded quarterly net loss of $3.4 million for the third quarter of 2021
Achieved quarterly adjusted funds from operations ("AFFO")¹ of $4.1 million for the third quarter of 2021
Declared a dividend of $0.095 per share for the third quarter of 2021

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

"We continue to see meaningful signs of improvement as New York City further strengthens from the depths of the COVID-19 pandemic. We anticipate recently strong rental demand to remain elevated, and pricing to improve, as New York City continues to reopen and vaccinations proliferate. We remain focused on efficiently operating our portfolio, with the safety of our tenants and employees our highest priority. Despite the pandemic-related headwinds, our properties are 94% leased and our third quarter rent collection rate was over 96%. We have a strong liquidity position with $88.2 million of cash on the balance sheet, consisting of $59.1 million of unrestricted cash and $29.1 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 third quarter of 2021, revenues increased by $0.6 million, or 2.0%, to $30.6 million, compared to $30.0 million for the third quarter of 2020; the change was primarily attributable to the commencement of a new office lease at the 250 Livingston Street property during the third quarter of 2020 and 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 third quarter of 2021, net loss was $3.4 million, or $0.09 per share, compared to net loss of $2.9 million, or $0.08 per share, for the third quarter of 2020 (or net loss of $3.7 million excluding a non-recurring gain on termination of lease); 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).

For the third quarter of 2021, AFFO was $4.1 million, or $0.10 per share, compared to $2.9 million, or $0.06 per share, for the third quarter of 2020; the change was primarily attributable to the revenue change discussed above, and lower property operating expenses (including a 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 September 30, 2021, notes payable (excluding unamortized loan costs) was $1,114.6 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 third quarter dividend of $0.095 per share, the same amount as last quarter, to shareholders of record on November 16, 2021, payable November 24, 2021.

Conference Call and Supplemental Material

The Company will host a conference call on November 9, 2021, at 5:00 PM Eastern Time to discuss the third 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 664288. A replay of the call will be available from November 9, 2021, following the call, through November 23, 2021, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 664288. 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, 2020, 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)

	September 30, 2021			December 31, 2020
	(unaudited)
ASSETS
Investment in real estate
Land and improvements	$	540,859		$	540,859
Building and improvements		644,520			630,662
Tenant improvements		3,406			3,121
Furniture, fixtures and equipment		12,418			12,217
Real estate under development		45,968			36,118
Total investment in real estate		1,247,171			1,222,977
Accumulated depreciation		(151,264	)		(132,479	)
Investment in real estate, net		1,095,907			1,090,498

Cash and cash equivalents		59,130			72,058
Restricted cash		29,104			16,974
Tenant and other receivables, net of allowance for doubtful accounts		7,893			7,002
of $8,323 and $5,993, respectively
Deferred rent		2,579			2,454
Deferred costs and intangible assets, net		7,261			7,720
Prepaid expenses and other assets		9,742			11,160
TOTAL ASSETS	$	1,211,616		$	1,207,866

LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized loan costs	$	1,102,492		$	1,079,458
of $12,103 and $10,262, respectively
Accounts payable and accrued liabilities		16,611			11,725
Security deposits		6,855			6,983
Below-market leases, net		61			157
Other liabilities		5,889			5,429
TOTAL LIABILITIES		1,131,908			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		87,898			87,347
Accumulated deficit		(57,847	)		(48,045	)
Total stockholders' equity		30,211			39,462

Non-controlling interests		49,497			64,652
TOTAL EQUITY		79,708			104,114

TOTAL LIABILITIES AND EQUITY	$	1,211,616		$	1,207,866

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020

REVENUES
Residential rental income	$	21,341		$	21,948		$	64,518		$	69,345
Commercial rental income		9,290			8,092			27,435			23,168
TOTAL REVENUES		30,631			30,040			91,953			92,513

OPERATING EXPENSES
Property operating expenses		6,684			7,867			22,547			21,894
Real estate taxes and insurance		7,853			7,463			22,528			21,105
General and administrative		2,684			2,297			7,779			7,324
Transaction pursuit costs		-			-			60			-
Depreciation and amortization		6,452			5,934			18,968			17,364
TOTAL OPERATING EXPENSES		23,673			23,561			71,882			67,687

Gain on termination of lease		-			838			-			838

INCOME FROM OPERATIONS		6,958			7,317			20,071			25,664

Interest expense, net		(10,375	)		(10,207	)		(30,958	)		(29,974	)
Loss on extinguishment of debt		-			-			(3,034	)		(4,228	)
Gain on involuntary conversion		-			-			139			85

Net loss		(3,417	)		(2,890	)		(13,782	)		(8,453	)

Net loss attributable to non-controlling interests		2,122			1,723			8,558			5,040
Net loss attributable to common stockholders	$	(1,295	)	$	(1,167	)	$	(5,224	)	$	(3,413	)

Basic and diluted net loss per share	$	(0.09	)	$	(0.08	)	$	(0.36	)	$	(0.21	)

Weighted average common shares / OP units
Common shares outstanding		16,063			17,811			16,063			17,814
OP units outstanding		26,317			26,317			26,317			26,317
Diluted shares outstanding		42,380			44,128			42,380			44,131

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

		Nine Months Ended September 30,
	.	2021			2020

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(13,782	)	$	(8,453	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			18,798			16,939
Amortization of deferred financing costs			934			910
Amortization of deferred costs and intangible assets			531			785
Amortization of above- and below-market leases			(96	)		(358	)
Loss on extinguishment of debt			3,034			4,228
Gain on involuntary conversion			(139	)		(85	)
Gain on termination of lease			-			(838	)
Deferred rent			(125	)		(686	)
Stock-based compensation			1,946			1,249
Bad debt expense			2,278			1,558
Transaction pursuit costs			60			-
Changes in operating assets and liabilities:
Tenant and other receivables			(3,169	)		(5,429	)
Prepaid expenses, other assets and deferred costs			1,286			2,341
Accounts payable and accrued liabilities			1,601			(1,299	)
Security deposits			(128	)		(491	)
Other liabilities			460			(125	)
Net cash provided by operating activities			13,489			10,246

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and improvements			(20,803	)		(24,885	)
Insurance proceeds from involuntary conversion			150			111
Sale and purchase of interest rate caps, net			-			(14	)
Net cash used in investing activities			(20,653	)		(24,788	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock			-			(240	)
Payments of mortgage notes			(96,889	)		(248,706	)
Proceeds from mortgage notes			121,764			329,671
Dividends and distributions			(12,570	)		(12,922	)
Loan issuance and extinguishment costs			(5,939	)		(5,220	)
Net cash provided by financing activities			6,366			62,583

Net (decrease) increase in cash and cash equivalents and restricted cash			(798	)		48,041
Cash and cash equivalents and restricted cash - beginning of period			89,032			56,932
Cash and cash equivalents and restricted cash - end of period		$	88,234		$	104,973

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		$	59,130		$	82,856
Restricted cash			29,104			22,117
Total cash and cash equivalents and restricted cash - end of period		$	88,234		$	104,973

Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $1,257 and $1,065 in 2021 and 2020, respectively		$	30,262		$	29,576
Non-cash interest capitalized to real estate under development			130			813
Additions to investment in real estate included in accounts payable and accrued liabilities			7,474			3,887

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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
FFO
Net loss	$	(3,417	)	$	(2,890	)	$	(13,782	)	$	(8,453	)
Real estate depreciation and amortization		6,452			5,934			18,968			17,364
FFO	$	3,035		$	3,044		$	5,186		$	8,911


AFFO
FFO	$	3,035		$	3,044		$	5,186		$	8,911
Amortization of real estate tax intangible		120			120			361			360
Amortization of above- and below-market leases		(33	)		(130	)		(96	)		(358	)
Straight-line rent adjustments		(72	)		(221	)		(125	)		(686	)
Amortization of debt origination costs		313			302			934			910
Amortization of LTIP awards		665			556			1,946			1,249
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	)		-			(838	)
Non-recurring litigation-related expenses		75			76			199			610
Recurring capital spending		(51	)		(59	)		(159	)		(442	)
AFFO	$	4,052		$	2,850		$	11,201		$	13,859
AFFO Per Share/Unit	$	0.10		$	0.06		$	0.26		$	0.31

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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Adjusted EBITDA
Net loss	$	(3,417	)	$	(2,890	)	$	(13,782	)	$	(8,453	)
Real estate depreciation and amortization		6,452			5,934			18,968			17,364
Amortization of real estate tax intangible		120			120			361			360
Amortization of above- and below-market leases		(33	)		(130	)		(96	)		(358	)
Straight-line rent adjustments		(72	)		(221	)		(125	)		(686	)
Amortization of LTIP awards		665			556			1,946			1,249
Interest expense, net		10,375			10,207			30,958			29,974
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	)		-			(838	)
Non-recurring litigation-related expenses		75			76			199			610
Adjusted EBITDA	$	14,165		$	12,814		$	41,384		$	43,365

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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
NOI
Income from operations	$	6,958		$	7,317		$	20,071		$	25,664
Real estate depreciation and amortization		6,452			5,934			18,968			17,364
General and administrative expenses		2,684			2,297			7,779			7,324
Transaction pursuit costs		-			-			60			-
Amortization of real estate tax intangible		120			120			361			360
Amortization of above- and below-market leases		(33	)		(130	)		(96	)		(358	)
Straight-line rent adjustments		(72	)		(221	)		(125	)		(686	)
Gain on termination of lease		-			(838	)		-			(838	)
NOI	$	16,109		$	14,479		$	47,018		$	48,830

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Clipper Realty Inc. Announces Third Quarter 2021 Results