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What changed in Clipper Realty Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Clipper Realty Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+246 added−181 removedSource: 10-K (2025-02-14) vs 10-K (2024-03-14)

Top changes in Clipper Realty Inc.'s 2024 10-K

246 paragraphs added · 181 removed · 156 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

19 edited+6 added−4 removed33 unchanged
Biggest changeCompetitive Strengths We believe that the following competitive strengths distinguish us from other owners and operators of multifamily residential and commercial properties: ● Diverse portfolio of properties in the New York metropolitan area, which is characterized by supply constraints, high barriers to entry, near- and long-term prospects for job creation, vacancy absorption and long-term rental rate growth. ● Expertise in redeveloping and managing multifamily residential properties. ● Experienced management team with a proven track record over generations in New York real estate. ● Balance sheet well-positioned for future growth. ● Strong internal rent growth prospects. 6 Regulation Environmental and Related Matters Under various federal, state and local laws, ordinances and regulations, as a current or former owner and operator of real property, we may be liable for costs and damages resulting from the presence or release of hazardous substances (such as lead, asbestos and polychlorinated biphenyls), waste, petroleum products and other miscellaneous products (including but not limited to natural products such as methane and radon gas) at, on, in, under or from such property, including costs for investigation or remediation, natural resource damages or third-party liability for personal injury or property damage.
Biggest changeCompetitive Strengths We believe that the following competitive strengths distinguish us from other owners and operators of multifamily residential and commercial properties: ● Diverse portfolio of properties in the New York metropolitan area, which is characterized by supply constraints, high barriers to entry, near- and long-term prospects for job creation, vacancy absorption and long-term rental rate growth. ● Expertise in redeveloping and managing multifamily residential properties. ● Experienced management team with a proven track record over generations in New York real estate. 6 ● Balance sheet well-positioned for future growth. ● Strong internal rent growth prospects.
See “Descriptions of Our Properties” in Item 2 for a detailed discussion of the Company’s properties. These properties are located in the most densely populated major city in the United States, each with immediate access to mass transportation.
See “Descriptions of Our Properties” in Item 2 for a detailed discussion of the Company’s properties. 5 These properties are located in the most densely populated major city in the United States, each with immediate access to mass transportation.
In connection with the formation transactions, holders of interests in the predecessor entities received Class B LLC units in the LLC Subsidiaries and an equal number of special, non-economic, voting stock in the Company. The Class B LLC units, together with the special voting shares, are convertible into shares of stock of the Company on a one-for-one basis.
In connection with the formation transactions, holders of interests in the predecessor entities received Class B LLC units in the LLC Subsidiaries and an equal number of special, non-economic, voting stock in the Company. The Class B LLC units, together with the special voting shares, are convertible into shares of our common stock on a one-for-one basis.
We expect competition from other real estate investors, including other REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, individual investors and others, that may have greater financial resources or access to capital than we do or that are willing to acquire properties in transactions which are more highly leveraged or are less attractive from a financial viewpoint than we are willing to pursue. 8 Human Capital Resources As of December 31, 2023, we had 148 employees who provide property management, maintenance, landscaping, construction management and accounting services.
We expect competition from other real estate investors, including other REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, individual investors and others, that may have greater financial resources or access to capital than we do or that are willing to acquire properties in transactions which are more highly leveraged or are less attractive from a financial viewpoint than we are willing to pursue. 8 Human Capital Resources As of December 31, 2024, we had 171 employees who provide property management, maintenance, landscaping, construction management and accounting services.
The Company’s ownership interest in its initial portfolio of properties (Tribeca House, Flatbush Gardens, 141 Livingston Street and 250 Livingston Street) was acquired in the formation transactions in connection with the private offering of shares of our common stock on August 3, 2015.
Our ownership interest in our initial portfolio of properties (Tribeca House, Flatbush Gardens, 141 Livingston Street and 250 Livingston Street) was acquired in the formation transactions in connection with the private offering of shares of our common stock on August 3, 2015.
In connection with the private offering, we consummated a series of investment and other formation transactions that were designed, among other things, to enable us to qualify as a real estate investment trust (a “REIT”) for U.S. federal income tax purposes, and we elected to be treated as a REIT commencing with the taxable year ended December 31, 2015.
In connection with the private offering, we consummated a series of investment and other formation transactions that were designed, among other things, to enable us to qualify as a real estate investment trust, or a "REIT,” for U.S. federal income tax purposes, and we elected to be treated as a REIT commencing with the taxable year ended December 31, 2015.
The Operating Partnership’s interests in the LLC subsidiaries generally entitle the Operating Partnership to all cash distributions from, and the profits and losses of, the LLC subsidiaries, other than the preferred distribution to the continuing investors who hold Class B LLC units in these LLC subsidiaries (described below).
The Operating Partnership’s interests in the LLC subsidiaries generally entitle the Operating Partnership to all cash distributions from, and the profits and losses of, the LLC subsidiaries, other than the preferred distribution to the continuing investors who hold Class B LLC units in these LLC subsidiaries.
As of December 31, 2023, the properties owned by the Company consist of the following (collectively, the “Properties”): • Tribeca House in Manhattan, comprising two buildings, one with 21 stories and one with 12 stories, containing residential and retail space with an aggregate of approximately 483,000 square feet of residential rental Gross Leasable Area (“GLA”) and 77,000 square feet of retail rental and parking GLA; • Flatbush Gardens in Brooklyn, a 59-building residential housing complex with 2,494 rentable units and approximately 1,749,000 square feet of residential rental GLA; • 141 Livingston Street in Brooklyn, a 15-story office building with approximately 216,000 square feet of GLA; • 250 Livingston Street in Brooklyn, a 12-story office and residential building with approximately 370,000 square feet of GLA (fully remeasured); • Aspen in Manhattan, a 7-story building containing residential and retail space with approximately 166,000 square feet of residential rental GLA and approximately 21,000 square feet of retail rental GLA; 5 • Clover House in Brooklyn, a 11-story residential building with approximately 102,000 square feet of residential rental GLA; • 10 West 65th Street in Manhattan, a 6-story residential building with approximately 76,000 square feet of residential rental GLA; • 1010 Pacific Street in Brooklyn, a 9-story residential building with approximately 119,000 square feet of residential rental GLA; and • The Dean Street property in Brooklyn, which the Company plans to redevelop as a 9-story residential building with approximately 160,000 square feet of residential rental GLA and approximately 9,000 square feet of retail rental GLA.
As of December 31, 2024, the properties owned by the Company consisted of the following: • Tribeca House in Manhattan, comprising two buildings, one with 21 stories and one with 12 stories, containing residential and retail space with an aggregate of approximately 483,000 square feet of residential rental Gross Leasable Area ("GLA”) and 77,000 square feet of retail rental and parking GLA; • Flatbush Gardens in Brooklyn, a 59-building residential housing complex with 2,494 rentable units and approximately 1,749,000 square feet of residential rental GLA; • 141 Livingston Street in Brooklyn, a 15-story office building with approximately 216,000 square feet of GLA; • 250 Livingston Street in Brooklyn, a 12-story office and residential building with approximately 370,000 square feet of GLA (fully remeasured); • Aspen in Manhattan, a 7-story building containing residential and retail space with approximately 166,000 square feet of residential rental GLA and approximately 21,000 square feet of retail rental GLA; • Clover House in Brooklyn, a 11-story residential building with approximately 102,000 square feet of residential rental GLA; • 10 West 65th Street in Manhattan, a 6-story residential building with approximately 76,000 square feet of residential rental GLA; • 1010 Pacific Street in Brooklyn, a 9-story residential building with approximately 119,000 square feet of residential rental GLA; and • The Dean Street property in Brooklyn, which the Company plans to redevelop as a 9-story residential building with approximately 160,000 square feet of residential rental GLA and approximately 9,000 square feet of retail rental GLA.
The Company has two reportable operating segments: residential rental properties and commercial rental properties. Our revenue consists primarily of rents received from our residential, commercial and, to a lesser extent, retail tenants. We derive approximately 70% of our revenues from rents received from residents in our apartment rental properties and the remainder from commercial and retail rental customers.
We have two reportable operating segments: residential rental properties and commercial rental properties. Our revenue consists primarily of rents received from our residential, commercial and, to a lesser extent, retail tenants. We derive approximately 74% of our revenues from rents received from residents in our apartment rental properties and the remainder from commercial and retail rental customers.
We contributed the net proceeds of the private offering to Clipper Realty L.P., our operating partnership subsidiary (the “Operating Partnership”), in exchange for units in the Operating Partnership.
We contributed the net proceeds of the private offering to Clipper Realty L.P., our operating partnership subsidiary, or the "Operating Partnership,”, in exchange for units in the Operating Partnership.
These predecessor entities were formed by principals of our management team from 2002 to 2014. Our primary focus is to continue to own, manage and operate our portfolio, and to acquire and re-position additional multifamily residential and commercial properties in the New York metropolitan area.
These predecessor entities were formed by principals of our management team from 2002 to 2014. Our primary focus is to continue to own, manage and operate our portfolio, and to acquire and re-position additional multifamily residential and commercial properties in the New York metropolitan area. We were incorporated in the State of Maryland on July 7, 2015.
At December 31, 2023, the continuing investors owned an aggregate amount of 26,317,396 Class B LLC units, representing 62.1% of the Company’s common stock on a fully diluted basis. Accordingly, the Operating Partnership’s interests in the LLC subsidiaries entitle it to receive 37.9% of the aggregate distributions from the LLC subsidiaries.
As of December 31, 2024, the continuing investors owned an aggregate amount of 26,317,396 Class B LLC units, representing 62.0% of our common stock on a fully diluted basis. Accordingly, the Operating Partnership’s interests in the LLC subsidiaries entitle it to receive 38.0% of the aggregate distributions from the LLC subsidiaries.
The Local 32BJ Service Employees International Union apartment building contract is in effect through April 20, 2026. The Local 32BJ Service Employees International Union commercial building contract was in effect through December 31, 2023 and the contract is still under negotiation. The Building Maintenance Employees Union, Local 486 contract is in effect through February 28, 2026.
The Local 32BJ Service Employees International Union apartment building contract is in effect through April 20, 2026. The Local 32BJ Service Employees International Union commercial building contract in effect through December 31, 2027. The Building Maintenance Employees Union, Local 486 contract is in effect through February 28, 2026.
The Company was formed to continue and expand the commercial real estate business of the 50/53 JV LLC (a Delaware limited liability company), Renaissance Equity Holdings LLC (a Delaware limited liability company), Berkshire Equity LLC (a Delaware limited liability company) and Gunki Holdings LLC (a Delaware limited liability company) (collectively, the “Predecessor” or the “predecessor entities”).
We were formed to continue and expand the commercial real estate business of the 50/53 JV LLC, a Delaware limited liability company, Renaissance Equity Holdings LLC, a Delaware limited liability company, Berkshire Equity LLC, a Delaware limited liability company, and Gunki Holdings LLC, a Delaware limited liability company (collectively referred to as, the "Predecessor” or the "predecessor entities”).
On February 9, 2017, the Company priced an initial public offering of 6,390,149 primary shares of its common stock (including the exercise of the over-allotment option, which closed on March 10, 2017) at a price of $13.50 per share (the “IPO”). The net proceeds of the IPO were approximately $78.7 million.
On February 9, 2017, we priced an initial public offering, or the "IPO,” of 6,390,149 primary shares of our common stock (including the exercise of the over-allotment option, which closed on March 10, 2017). The net proceeds of the IPO were approximately $78.7 million.
Upon completion of the private offering and the formation transactions, we assumed responsibility for managing the LLC subsidiaries. We were incorporated in the State of Maryland on July 7, 2015. On August 3, 2015, we closed a private offering of shares of our common stock, in which we raised net proceeds of approximately $130.2 million.
On August 3, 2015, we closed a private offering of shares of our common stock, in which we raised net proceeds of approximately $130.2 million.
These properties are owned by the predecessor entities, which after the formation transactions are referred to as the “LLC subsidiaries.” .The LLC subsidiaries are managed by the Company through the Operating Partnership, which is the managing member of the LLC subsidiaries and owns Class A units in such LLC subsidiaries.
These properties are owned by the predecessor entities, which after the formation transactions are referred to as the "LLC subsidiaries.” Upon completion of the private offering and the formation transactions described above, we assumed responsibility for managing the LLC subsidiaries, which are managed by us through the Operating Partnership.
Our buildings are also subject to certain New York City environmental regulations which require us to meet certain environmental criteria over various periods of time. Environmental Social and Governance The Company believes that its success is dependent upon the diverse backgrounds of its employees and strives to build a culture that is collaborative, diverse, supportive and inclusive.
Our buildings are also subject to certain New York City environmental regulations which require us to meet certain environmental criteria over various periods of time. 7 Environmental Social and Governance The health and safety of the Company’s employees and their families remains a top priority, along with the health and safety of the Company’s tenants and the communities they serve.
As of December 31, 2023, agencies of the City of New York leased approximately 16% of the total rentable square feet in our portfolio, representing approximately 19% of our total portfolio’s annualized rent.
As of December 31, 2024, agencies of the City of New York leased an aggregate of 548,580 rentable square feet of commercial space at our commercial office properties at 141 Livingston Street and 250 Livingston Street, representing approximately 22% of our total revenues for the year ended December 31, 2024.
Removed
In furtherance of that goal, the company provides diversity equity and inclusion training as part of its annual harassment training for both supervisors and non-supervisors. The Company places a high value on the physical and mental health of its employees.
Added
The Operating Partnership is the managing member of the LLC subsidiaries and owns Class A units in such LLC subsidiaries.
Removed
The Company provides employees with competitive compensation and a wide range of benefits including comprehensive medical and dental insurance coverage, short and long-term disability benefits, a 401(K) retirement program with matching, vacation, sick and personal leave, flexible work arrangements, flexible savings accounts, and other benefits.
Added
As of February 23, 2024, the City of New York notified the Company of its intention to terminate its lease for 342,496 square feet of office space located at 240-250 Livingston Street effective August 23, 2025. The Lease generally provides for rent payments in the amount of $9.9 million through the end of the term.
Removed
The Company’s properties provide essential services to the communities in which they are located and the Company understands that they play an important role in making these communities better places to live and work.
Added
Additionally, the Company and the City of New York are negotiating the terms of a five-year extension of its current 206,084 square foot lease at 141 Livingston Street that expires in December of 2025. There can be no assurance that the negotiations will conclude with an agreement.
Removed
The Company is committed to making a positive impact in its communities and engages in community activities such as hosting and/or sponsoring free or not-for-profit activities at its properties. 7 The health and safety of the Company’s employees and their families remains a top priority, along with the health and safety of the Company’s tenants and the communities they serve.
Added
The current lease at 141 Livingston Street provides for $10.3 million rent per annum.
Added
Regulation Environmental and Related Matters Under various federal, state and local laws, ordinances and regulations, as a current or former owner and operator of real property, we may be liable for costs and damages resulting from the presence or release of hazardous substances (such as lead, asbestos and polychlorinated biphenyls), waste, petroleum products and other miscellaneous products (including but not limited to natural products such as methane and radon gas) at, on, in, under or from such property, including costs for investigation or remediation, natural resource damages or third-party liability for personal injury or property damage.
Added
The update to the New York eviction laws for the so-called “Good Cause-Eviction” law limits evictions for certain tenants that failed to pay what is deemed “unreasonable” rent increases.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

36 edited+27 added−10 removed293 unchanged
Biggest changeIf the Company is unable to replace the NYC at comparable rents it may not be able to cure the conditions listed in the loan agreement. If the excess cash is not released to us, it could impact our available cash to fund corporate operations and pay dividends and distributions to our its stockholders.
Biggest changeIf we are unable to replace the NYC lease at comparable rents, we may not be able to cure the conditions listed in the loan agreement.
These risks include, without limitation: ● the availability and pricing of financing on favorable terms or at all; ● the availability and timely receipt of zoning and other regulatory approvals; ● the potential for the fluctuation of occupancy rates and rents at development and redeveloped properties, which may result in our investment not being profitable; ● startup, development and redevelopment costs may be higher than anticipated; 13 ● cost overruns and untimely completion of construction (including risks beyond our control, such as weather or labor conditions or material shortages); and ● changes in the pricing and availability of buyers and sellers of such properties.
These risks include, without limitation: ● the availability and pricing of financing on favorable terms or at all; ● the availability and timely receipt of zoning and other regulatory approvals; ● the potential for the fluctuation of occupancy rates and rents at development and redeveloped properties, which may result in our investment not being profitable; 13 ● startup, development and redevelopment costs may be higher than anticipated; ● cost overruns and untimely completion of construction (including risks beyond our control, such as weather or labor conditions or material shortages); and ● changes in the pricing and availability of buyers and sellers of such properties.
We have adopted an Investment Policy that provides that our officers, including David Bistricer, JJ Bistricer and Jacob Schwimmer, are not required to present certain identified investment opportunities to us, including assets located outside the New York metropolitan area, for-sale condominium or cooperative conversions, development projects, projects that would require us to obtain guarantees from third parties or to backstop obligations of other parties, and land acquisitions.
We have adopted an Investment Policy that provides that our officers, including David Bistricer, JJ Bistricer and Jacob Schwimmer, are not required to present certain identified investment opportunities to us, including assets located outside the New York metropolitan area, for-sale condominium or cooperative conversions, development projects, projects that would require us to obtain guarantees from third parties or to backstop obligations of other parties, and land acquisitions.
Risks associated with joint venture arrangements may include but are not limited to the following: ● our joint venture partners might experience financial distress, become bankrupt or fail to fund their share of required capital contributions, which may delay construction or development of a property or increase our financial commitment to the joint venture; ● we may be responsible to our partners for indemnifiable losses; ● our joint venture partners may have business interests or goals with respect to a property that conflict with our business interests and goals (including as relates to compliance with the REIT requirements), which could increase the likelihood of disputes regarding the ownership, management or disposition of the property; ● we may be unable to take actions that are opposed by our joint venture partners under arrangements that require us to share decision-making authority over major decisions affecting the ownership or operation of the joint venture and any property owned by the joint venture, such as the sale or financing of the property or the making of additional capital contributions for the benefit of the property; ● our joint venture partners may take actions that we oppose; ● our ability to sell or transfer our interest in a joint venture to a third party without prior consent of our joint venture partners may be restricted; ● we may disagree with our joint venture partners about decisions affecting a property or a joint venture, which could result in litigation or arbitration that increases our expenses, distracts our officers and directors and disrupts the day-to-day operations of the property, including by delaying important decisions until the dispute is resolved; ● we may suffer losses as a result of actions taken by our joint venture partners with respect to our joint venture investments; and ● in the event that we obtain a minority position in a joint venture, we may not have significant influence or control over such joint venture or the performance of our investment therein.
Risks associated with joint venture arrangements may include but are not limited to the following: ● our joint venture partners might experience financial distress, become bankrupt or fail to fund their share of required capital contributions, which may delay construction or development of a property or increase our financial commitment to the joint venture; ● we may be responsible to our partners for indemnifiable losses; ● our joint venture partners may have business interests or goals with respect to a property that conflict with our business interests and goals (including as relates to compliance with the REIT requirements), which could increase the likelihood of disputes regarding the ownership, management or disposition of the property; 17 ● we may be unable to take actions that are opposed by our joint venture partners under arrangements that require us to share decision-making authority over major decisions affecting the ownership or operation of the joint venture and any property owned by the joint venture, such as the sale or financing of the property or the making of additional capital contributions for the benefit of the property; ● our joint venture partners may take actions that we oppose; ● our ability to sell or transfer our interest in a joint venture to a third party without prior consent of our joint venture partners may be restricted; ● we may disagree with our joint venture partners about decisions affecting a property or a joint venture, which could result in litigation or arbitration that increases our expenses, distracts our officers and directors and disrupts the day-to-day operations of the property, including by delaying important decisions until the dispute is resolved; ● we may suffer losses as a result of actions taken by our joint venture partners with respect to our joint venture investments; and ● in the event that we obtain a minority position in a joint venture, we may not have significant influence or control over such joint venture or the performance of our investment therein.
Our business may also be adversely affected by local economic conditions, as all of our revenue is currently derived from properties located in New York City, with our entire portfolio located in Manhattan and Brooklyn. 9 Factors that may affect our occupancy levels, our rental revenues, our income from operations, our funds from operations (“FFO”), our adjusted funds from operations (“AFFO”), our adjusted earnings before interest, income tax, depreciation and amortization (“Adjusted EBITDA”), our net operating income (“NOI”), our cash flow and/or the value of our properties include the following, among others: ● downturns in global, national, regional and local economic and demographic conditions; ● the Housing Stability and Tenant Protection Act of 2019, which was signed into law in New York in June 2019, as well as other rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs; ● declines in the financial condition of our tenants, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or other reasons, and declines in the financial condition of buyers and sellers of properties; ● declines in local, state and/or federal government budgets and/or increases in local, state and/or federal government budget deficits, which among other things could have an adverse effect on the financial condition of our only office tenant, the agencies of the City of New York, and may result in tenant defaults under leases and/or cause such tenant to seek alternative office space arrangements; ● the inability or unwillingness of our tenants to pay rent increases, or our inability to collect rents and other amounts due from our tenants; ● significant job losses in the industries in which our commercial and/or retail tenants operate, and/or from which our residential tenants derive their incomes, which may decrease demand for our commercial, retail and/or residential space, causing market rental rates and property values to be affected negatively; ● an oversupply of, or a reduced demand for, commercial and/or retail space and/or apartment homes; ● declines in household formation; ● unfavorable residential mortgage rates; ● changes in market rental rates in our markets and/or the attractiveness of our properties to tenants, particularly as our buildings continue to age, and our ability to fund repair and maintenance costs; ● competition from other available commercial and/or retail lessors and other available apartments and housing alternatives, and from other real estate investors with significant capital, such as other real estate operating companies, other REITs and institutional investment funds; ● economic conditions that could cause an increase in our operating expenses, such as increases in property taxes (particularly as a result of increased local, state and national government budget deficits and debt and potentially reduced federal aid to state and local governments), utilities, insurance, compensation of on-site personnel and routine maintenance; ● opposition from local community or political groups with respect to the development and/or operations at a property; ● investigation, removal or remediation of hazardous materials or toxic substances at a property; 10 ● changes in, and changes in enforcement of, laws, regulations and governmental policies, including without limitation, health, safety, environmental and zoning laws; and ● changes in rental housing subsidies provided by the government and/or other government programs that favor single-family rental housing or owner-occupied housing over multifamily rental housing.
Our business may also be adversely affected by local economic conditions, as all of our revenue is currently derived from properties located in New York City, with our entire portfolio located in Manhattan and Brooklyn. 10 Factors that may affect our occupancy levels, our rental revenues, our income from operations, our funds from operations (“FFO”), our adjusted funds from operations (“AFFO”), our adjusted earnings before interest, income tax, depreciation and amortization (“Adjusted EBITDA”), our net operating income (“NOI”), our cash flow and/or the value of our properties include the following, among others: ● downturns in global, national, regional and local economic and demographic conditions; ● the Housing Stability and Tenant Protection Act of 2019, which was signed into law in New York in June 2019, as well as other rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs; ● declines in the financial condition of our tenants, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or other reasons, and declines in the financial condition of buyers and sellers of properties; ● declines in local, state and/or federal government budgets and/or increases in local, state and/or federal government budget deficits, which among other things could have an adverse effect on the financial condition of our only office tenant, the agencies of the City of New York, and may result in tenant defaults under leases and/or cause such tenant to seek alternative office space arrangements; ● the inability or unwillingness of our tenants to pay rent increases, or our inability to collect rents and other amounts due from our tenants; ● significant job losses in the industries in which our commercial and/or retail tenants operate, and/or from which our residential tenants derive their incomes, which may decrease demand for our commercial, retail and/or residential space, causing market rental rates and property values to be affected negatively; ● an oversupply of, or a reduced demand for, commercial and/or retail space and/or apartment homes; ● declines in household formation; ● unfavorable residential mortgage rates; ● changes in market rental rates in our markets and/or the attractiveness of our properties to tenants, particularly as our buildings continue to age, and our ability to fund repair and maintenance costs; ● competition from other available commercial and/or retail lessors and other available apartments and housing alternatives, and from other real estate investors with significant capital, such as other real estate operating companies, other REITs and institutional investment funds; ● economic conditions that could cause an increase in our operating expenses, such as increases in property taxes (particularly as a result of increased local, state and national government budget deficits and debt and potentially reduced federal aid to state and local governments), utilities, insurance, compensation of on-site personnel and routine maintenance; ● opposition from local community or political groups with respect to the development and/or operations at a property; ● investigation, removal or remediation of hazardous materials or toxic substances at a property; 11 ● changes in, and changes in enforcement of, laws, regulations and governmental policies, including without limitation, health, safety, environmental and zoning laws; and ● changes in rental housing subsidies provided by the government and/or other government programs that favor single-family rental housing or owner-occupied housing over multifamily rental housing.
In these events, we cannot assure you that such tenants will renew those leases or not exercise early termination options or that we will be able to re-lease spaces on economically advantageous terms or at all. For example, the City of New York has advised us that it will vacate the 250 Livingston Street property in 2025.
In these events, we cannot assure you that such tenants will renew those leases or not exercise early termination options or that we will be able to re-lease spaces on economically advantageous terms or at all. For example, the City of New York has advised us that it will vacate the 250 Livingston Street property in August 2025.
Although we expect those costs to be offset by the savings provided under the Article 11 Agreement by property tax exemption and enhanced payments for tenants receiving government assistance, these costs are subject to market costs for construction materials and labor and may increase beyond current expectations. Real estate investments are relatively illiquid and may limit our flexibility.
Although we expect those costs to be offset by the savings provided under the Article 11 Agreement by property tax exemption and enhanced payments for tenants receiving government assistance, these costs are subject to market costs for construction materials and labor and may increase beyond current expectations. 14 Real estate investments are relatively illiquid and may limit our flexibility.
Our board of directors or the committees or officers to which such decisions are delegated have the ability to amend or revise these and our other policies at any time without stockholder approval. For example, we have established a policy for our target leverage ratio in a range of 45% to 55%.
Our board of directors or the committees or officers to which such decisions are delegated have the ability to amend or revise these and our other policies at any time without stockholder approval. For example, we previously established a policy for our target leverage ratio in a range of 45% to 55%.
These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions. 17 From time to time, we may enter into joint venture relationships or other arrangements regarding the joint ownership of property.
These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions. From time to time, we may enter into joint venture relationships or other arrangements regarding the joint ownership of property.
As of February 23, 2024, The City of New York, a municipal corporation acting through the Department of Citywide Administrative Services (“NYC”), notified us of its intention to terminate its lease at 250 Livingston Street effective August 23, 2025. The lease generally provides for rent payments in the amount of $15.4 million per annum.
As of February 23, 2024, The City of New York, a municipal corporation acting through the Department of Citywide Administrative Services ("NYC”), notified us of its intention to terminate its lease at 250 Livingston Street effective August 23, 2025. The lease generally provides for rent payments in the amount of $15.4 million per annum.
Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred. Undetected and/or unremediated critical vulnerabilities that are exploited could pose material risks to our business. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.
Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred. Undetected and/or unremedied critical vulnerabilities that are exploited could pose material risks to our business. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.
These provisions include the following: ● Our continuing investors hold shares of our special voting stock and shares of our common stock that generally entitle them to exercise 69.9% of the voting power in our Company, including in connection with a merger or other acquisition of our Company or a change in the composition of our board of directors.
These provisions include the following: ● Our continuing investors hold shares of our special voting stock and shares of our common stock that generally entitle them to exercise 69.8% of the voting power in our Company, including in connection with a merger or other acquisition of our Company or a change in the composition of our board of directors.
See Note 8, “Commitments and Contingencies” of our consolidated financial statements included in Item 15 of this Annual Report on Form 10-K. 19 Our subsidiaries may be prohibited from making distributions and other payments to us.
See Note 7, “Commitments and Contingencies” of our consolidated financial statements included in Item 15 of this Annual Report on Form 10-K. 19 Our subsidiaries may be prohibited from making distributions and other payments to us.
We cannot assure you that expiring leases will be renewed or tenants will not exercise any early termination options or that our properties will be re-leased at net effective rental rates equal to or above the current average net effective rental rates As of February 23, 2024, the NYC has notified the Company of its intention to terminate its lease at 250 Livingston Street effective August 23, 2025.
We cannot assure you that expiring leases will be renewed or tenants will not exercise any early termination options or that our properties will be re-leased at net effective rental rates equal to or above the current average net effective rental rates As of February 23, 2024, NYC notified us of its intention to terminate its lease at 250 Livingston Street effective August 23, 2025.
As of December 31, 2023, our portfolio consisted of nine properties, eight of which generated revenues in 2023 – the Tribeca House properties, the Flatbush Gardens complex, the 141 Livingston Street property, the 250 Livingston Street property, the Aspen property, the 10 West 65th Street property, the Clover House property and the 1010 Pacific Street property, which accounted for 28.8%, 31.1%, 11.9%, 12.7%, 4.8%, 2.8%, 5.6% and 2.3%, respectively, of our portfolio’s total revenue for the year ended December 31, 2023.
As of December 31, 2024, our portfolio consisted of nine properties, eight of which generated revenues in 2024 – the Tribeca House properties, the Flatbush Gardens complex, the 141 Livingston Street property, the 250 Livingston Street property, the Aspen property, the 10 West 65th Street property, the Clover House property and the 1010 Pacific Street property, which accounted for 28.2%, 31.3%, 11.1%, 12.1%, 4.8%, 2.7%, 5.5% and 4.3%, respectively, of our portfolio’s total revenue for the year ended December 31, 2024.
The Company may be unable to replace NYC as a tenant or unable to replace them with other commercial tenants at comparable rent rates, may incur substantial costs to improve the vacated space or may have to offer significant inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow.
We may be unable to replace NYC as a tenant or unable to replace it with other commercial tenants at comparable rent rates, may incur substantial costs to improve the vacated space or may have to offer significant inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow.
We are considered an accelerated filer and are required to comply with Section 404 of the Sarbanes-Oxley Act of 2002, and our inability to maintain effective internal control over financial reporting in the future could result in investors losing confidence in the accuracy and completeness of our financial reports and negatively affect the market price of our common stock.
We are required to comply with Section 404 of the Sarbanes-Oxley Act of 2002, and our inability to maintain effective internal control over financial reporting in the future could result in investors losing confidence in the accuracy and completeness of our financial reports and negatively affect the market price of our common stock.
As a result, our continuing investors are generally entitled to exercise 69.9% of the voting power in our Company.
As a result, our continuing investors are generally entitled to exercise 69.8% of the voting power in our Company.
See Note 6 of the accompanying “Notes to Consolidated Financial Statements” for a discussion of the Company’s property-level debt.
See Note 4 of the accompanying “Notes to Consolidated Financial Statements” for a discussion of the Company’s property-level debt.
In periods when the capital and credit markets experience significant volatility, the amounts, sources and cost of capital available to us may be adversely affected. We primarily use third-party financing to fund acquisitions of properties and to refinance indebtedness as it matures. As of December 31, 2023, we had no corporate debt and $1,219.0 million in property-level debt.
In periods when the capital and credit markets experience significant volatility, the amounts, sources and cost of capital available to us may be adversely affected. We primarily use third-party financing to fund acquisitions of properties and to refinance indebtedness as it matures. As of December 31, 2024, we had no corporate debt and $1,275.4 million in property-level debt.
As of December 31, 2023, we had approximately $82.0 million of variable rate indebtedness outstanding, for our Dean Street development property and our 10 West 65 th Street property, which constitutes approximately 6.7% of total outstanding indebtedness as of such date, and we have experienced increases in the interest rates on such indebtedness, which has increased our interest expense and adversely impacted our results of operations and cash flows.
As of December 31, 2024, we had approximately $140.0 million of variable rate indebtedness outstanding, for our Dean Street development property and our 10 West 65 th Street property, which constitutes approximately 11.0% of total outstanding indebtedness as of such date, and we have experienced increases in the interest rates on such indebtedness, which has increased our interest expense and adversely impacted our results of operations and cash flows.
We are susceptible to adverse developments in New York City, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, terror attacks, increases in real estate and other taxes, increases in costs of complying with governmental regulations and/or increased regulation such as the Housing Stability and Tenant Protection Act of 2019, which was signed into law in New York in June 2019.
We are susceptible to adverse developments in New York City, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, terror attacks, increases in real estate and other taxes, increases in costs of complying with governmental regulations and/or increased regulation such as the Housing Stability and Tenant Protection Act of 2019, which was signed into law in New York in June 2019 and the so-called Good Cause Eviction law that was signed into law in New York in April of 2024.
In connection with the termination of the 250 Livingston lease, pursuant to the terms of the loan agreement related to $125 million building mortgage (see Item 2 below), we expect to establish a cash management account for the benefit of the lender, into which we will be obligated to deposit all revenue generated by the building at 250 Livingston Street.
In connection with the termination of the 250 Livingston Street lease, pursuant to the terms of the loan agreement related to $125 million building mortgage, we have established a cash management account for the benefit of the lender, into which we will be obligated to deposit all revenue generated by the building at 250 Livingston Street.
As of December 31, 2023, we had approximately 111,000 rentable square feet of vacant residential space (excluding leases signed but not yet commenced) at our operating properties, and leases representing approximately 74% of the square footage of residential space at the operating properties will expire during the year ending December 31, 2024 (including month-to-month leases).
As of December 31, 2024, we had approximately 65,696 rentable square feet of vacant residential space (excluding leases signed but not yet commenced) at our operating properties, and leases representing approximately 69% of the square footage of residential space at the operating properties will expire during the year ending December 31, 2025 (including month-to-month leases).
As of December 31, 2023, we had no vacant commercial space, and approximately 14,000 rentable square feet of vacant retail space.
As of December 31, 2024, we had no vacant commercial space, and approximately 13,000 rentable square feet of vacant retail space.
As of December 31, 2023, we had $1,219.0 million of total indebtedness, all of which was property-level debt. See Note 6 of the accompanying “Notes to Consolidated Financial Statements” for a discussion of the Company’s property-level debt.
As of December 31, 2024, we had $1,275.4 million of total indebtedness, all of which was property-level debt. See Note 4 of the accompanying “Notes to Consolidated Financial Statements” for a discussion of the Company’s property-level debt.
Additionally, if NYC were to decide not to renew the 141 Livingston lease, we would be at risk of not being able to replace the NYC as a tenant, leasing the space below the current rates, incurring costs to improve the space or offer other inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow.
The 141 Livingston Street lease expires on December 27, 2025, and if NYC were to decide not to renew or extend such lease on its stated termination date, pursuant to the terms of the lease, we would be at risk of not being able to replace NYC as a tenant, leasing the space below the current rates, incurring costs to improve the space or offer other inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow.
This Annual Report on Form 10-K contains forward-looking statements that involve risks see "Cautionary Note Concerning Forward-Looking Statements." Risks Related to Real Estate Unfavorable market and economic conditions in the United States and globally and in the specific markets or submarkets where our properties are located could adversely affect occupancy levels, rental rates, rent collections, operating expenses, and the overall market value of our assets, impair our ability to sell, recapitalize or refinance our assets and have an adverse effect on our results of operations, financial condition, cash flow and our ability to make distributions to our stockholders.
Unfavorable market and economic conditions in the United States and globally and in the specific markets or submarkets where our properties are located could adversely affect occupancy levels, rental rates, rent collections, operating expenses, and the overall market value of our assets, impair our ability to sell, recapitalize or refinance our assets and have an adverse effect on our results of operations, financial condition, cash flow and our ability to make distributions to our stockholders.
As of December 31, 2023, Kings County Court, the Human Resources Administration, and the Department of Environmental Protection, all of which are agencies of the City of New York, leased an aggregate of 548,580 rentable square feet of commercial space at our commercial office properties at 141 Livingston Street and 250 Livingston Street, representing approximately 16% of the total rentable square feet in our portfolio and approximately 19% of our total portfolio’s annualized rent.
As of December 31, 2024, Kings County Court, the Human Resources Administration, and the Department of Environmental Protection, all of which are agencies of the City of New York, leased an aggregate of 548,580 rentable square feet of commercial space at our commercial office properties at 141 Livingston Street and 250 Livingston Street, the rents from which represented approximately 22% of our total revenues for the year-ended December 31, 2024.
Our results of operations and cash available for distribution to our stockholders would be adversely affected if any of these properties were materially damaged or destroyed. 12 We may be unable to renew leases or lease currently vacant space or vacating space on favorable terms or at all as leases expire or terminate, which could adversely affect our financial condition, results of operations and cash flow.
We may be unable to renew leases or lease currently vacant space or vacating space on favorable terms or at all as leases expire or terminate, which could adversely affect our financial condition, results of operations and cash flow.
We are a smaller reporting company and, because we have opted to use the reduced reporting requirements available to us, certain investors may find investing in our securities less attractive.
This could result in significant expenses to remediate any internal control deficiency and lead to a decline in the price of our common stock. We are a smaller reporting company and, because we have opted to use the reduced reporting requirements available to us, certain investors may find investing in our securities less attractive.
Our compliance with the additional requirements of Section 404 of the Sarbanes-Oxley Act has been and will continue to be time-consuming. Further, the costs associated with compliance with and implementation of procedures under these and future laws and related rules could have a material impact on our results of operations.
Further, the costs associated with compliance with and implementation of procedures under these and future laws and related rules could have a material impact on our results of operations.
These potential difficulties in selling real estate in our markets may limit our ability to change, or reduce our exposure to, the properties in our portfolio promptly in response to changes in economic or other conditions. 14 Competition could limit our ability to acquire attractive investment opportunities and increase the costs of those opportunities, which may adversely affect us, including our profitability, and impede our growth.
These potential difficulties in selling real estate in our markets may limit our ability to change, or reduce our exposure to, the properties in our portfolio promptly in response to changes in economic or other conditions.
All amounts remaining in such cash management account after the lender’s allocations set forth in the Loan Agreement will be disbursed to 250 Livingston Owner once the tenant cure conditions are satisfied under the loan agreement.
All amounts remaining in such cash management account after the lender’s allocations set forth in the loan agreement will be disbursed to us once the tenant cure conditions are satisfied under the loan agreement. As of February 14, 2025, we are required to deposit into such cash management account approximately $5.7 million upon demand by the lender.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls. Our compliance with the requirements of Section 404 of the Sarbanes-Oxley Act has been and will continue to be time-consuming.
We compete with numerous commercial developers, real estate companies and other owners and operators of real estate for properties for acquisition and pursuing buyers for dispositions.
Competition could limit our ability to acquire attractive investment opportunities and increase the costs of those opportunities, which may adversely affect us, including our profitability, and impede our growth. We compete with numerous commercial developers, real estate companies and other owners and operators of real estate for properties for acquisition and pursuing buyers for dispositions.
Removed
Such adverse developments could materially reduce the value of our real estate portfolio and our rental revenues, and thus adversely affect our ability to meet our debt obligations and to make distributions to our stockholders. 11 We depend on certain agencies of the City of New York, as a single government tenant in our office buildings, which could cause an adverse effect on us, including our results of operations and cash flow, if the City of New York were to suffer financial difficulty or if these agencies opt to early terminate or opt not to renew their leases.
Added
This Annual Report on Form 10-K contains forward-looking statements that involve risks see "Cautionary Note Concerning Forward-Looking Statements." Risks Related to Real Estate We depend on two commercial leases with certain agencies of the City of New York (NYC), as a single government tenant in our office buildings, with one lease terminating effective August 23, 2025 and the other lease expiring on December 27, 2025.
Removed
General and regional economic conditions may adversely affect the City of New York and potential tenants in our markets.
Added
Our inability to replace NYC as a tenant at rent rates comparable to the rates in the lease that terminates in August 2025 or to negotiate a five-year extension of the lease expiring in December 2025 could cause a material adverse effect on us, including our financial condition, results of operations and cash flow.
Removed
The City of New York may experience a material business downturn or suffer negative effects from declines in local, state and/or federal government budgets and/or increases in local, state and/or federal government budget debt and deficits, which could potentially result in a failure to make timely rental payments and/or a default under its leases.
Added
We are also subject to covenants covering these leases in our loan agreements related to our commercial office properties located at 250 Livingston Street and 141 Livingston Street. Breaches of these covenants could result in defaults under the loan agreements.
Removed
In certain cases, through tenant improvement allowances and other concessions, we have made substantial upfront investments in the applicable leases that we may not be able to recover. In the event of a tenant default, we may experience delays in enforcing our rights and may also incur substantial costs to protect our investments.
Added
If the excess cash is not released to us, it could impact our available cash to fund corporate operations and pay dividends and distributions to our stockholders. 9 On January 2, 2025, we were notified that the loan servicing of the loan related to the 250 Livingston Street property was transferred, at our request, to LNR Partners (“LNR”) to serve as special servicer in order for us to engage in negotiations on a modification of our loan.
Removed
The bankruptcy or insolvency of a major tenant may adversely affect the income produced by our properties and may delay our efforts to collect past-due balances under the relevant leases and could ultimately preclude collection of these sums altogether.
Added
On January 6, 2025, we and LNR signed a Pre-Negotiation Letter Agreement to discuss our request for a reduction in the loan. These negotiations continue and there can be no guarantee that they will conclude with an agreement.
Removed
If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages that is limited in amount and which may only be paid to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims.
Added
We and NYC are in the process of negotiating the terms of a five-year extension of the current lease upon its expiration in December 2025. There can be no assurance that the negotiations will conclude with an agreement.
Removed
If any of our significant tenants were to become bankrupt or insolvent, suffer a downturn in their business or a reduction in funds available to them, default under their leases, fail to renew their leases or renew on terms less favorable to us than their current terms, our financial condition results of operations and cash flow could be adversely affected.
Added
Our subsidiary, 141 Livingston Owner LLC (the “Borrower”) and Citi Real Estate Funding Inc. entered into the loan agreement related to a $100 million loan. The loan is evidenced by promissory mortgage notes and secured by the 141 Livingston Street property.
Removed
Our portfolio ’ s revenue is currently generated from eight properties.
Added
We and our Operating Partnership subsidiary serve as limited guarantors of certain obligations under the loan, including those related to the reserve monthly deposit discussed below.
Removed
As of that date, 342,496 of rentable square feet of commercial space will be available.
Added
If we are not able to extend or replace the NYC lease at our 141 Livingston Street property for a minimum of a five-year term, we will be required to either fund a reserve account in the amount of $10 million payable in equal monthly payments over the 18 months after lease expiration or deliver to the lender a letter of credit in the amount of $10 million On October 28, 2024, we received notice that, as of October 7, 2024, the servicing of the mortgage notes was transferred to a special servicer (the “Special Servicer”) due to our alleged failure to make certain required payments under the loan agreement, including, but not limited to, the reserve deposit starting on July 7, 2024.
Removed
Because our status as an emerging growth company ended December 31, 2022 and we are an accelerated filer, Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting for the first time.
Added
The Special Servicer demanded that we pay (i) $2.2 million of reserve payments into a reserve account immediately (for July-October 2024) and continued monthly payments of $555,555 for an additional 14 months, (ii) $1.2 million of default interest and late charges through October 7, 2024, and (iii) an additional $10,417 per diem interest for each day thereafter.
Added
On November 11, 2024, the Special Servicer notified the Borrower that, due to its alleged event of default under the Loan Agreement, as a result of the failure to make the payments described above, the mortgage notes have been accelerated, and all amounts under the loan agreement were due and payable.
Added
Such amounts include, but are not limited to, $100.0 million principal amount of the mortgage notes, approximately $5.0 million of default yield maintenance premium, $10.0 million aggregate reserve deposit, and the above-described penalty default interest and penalties.
Added
We believe that (i) we have made timely payments under the loan agreement, (ii) the servicer and the Special Servicer have misinterpreted the terms of the loan agreement requiring monthly reserve payments beginning on July 7, 2024, (iii) we have no current obligation to make such reserve payments under the loan agreement and (iv) we should not be obligated to pay the default interest and late charges.
Added
We and the Special Servicer have entered into a pre-negotiation agreement and as such are engaged in good faith discussions regarding the terms of the loan agreement related to the monthly reserve deposit, among other matters.
Added
However, if we are unable to resolve this matter in a manner favorable to us, the lender may also seek to exercise any of its other rights or remedies under the loan agreement.
Added
On December 18, 2024, we received notice from the Special Servicer that due to its allegation that Clipper Realty (the “Guarantor”) did not maintain a net worth of not less than $100 million as of December 31, 2022 and 2023, respectively, as required under the loan agreement, we are in default on the loan.
Added
We replied to the Special Servicer disputing such calculation and alleging that the Special Servicer did not calculate net worth in a reasonable manner. We provided the Special Servicer with our own calculation of net worth that shows a net worth in excess of the required amount. We await a response from the Special Servicer.
Added
On January 21, 2025, we received notice from the Special Servicer alleging that certain elements of our insurance on the building at 141 Livingston Street are not in compliance with the loan agreement requirements, including, but not limited to, due to a deductible in excess of what is permitted under the terms of the loan agreement and the use of an insurance carrier with a rating agency rating below that which is permitted under the terms of the loan agreement.
Added
On April 20, 2024, New York eviction laws were updated to enact the Good Cause Eviction Law (Good Cause), which dramatically impacts the rights and obligations of landlords and tenants in New York by limiting evictions, requiring lease renewals, and capping rent increases for most market rate apartments in New York City, and potentially, other villages, towns, or cities state-wide.
Added
Good Cause is effective immediately and will apply to all new leases and renewal leases, unless exempted, in New York City and to any other villages, towns, or cities that chose to opt-in to the law.
Added
Under Good Cause, unless an exemption applies, landlords are now subject to various limitations on seeking to remove a tenant from a residential unit, unless there is good cause to do so. The law listed what is considered Good Cause, including rent that is not unreasonable. This law generally restricts the amount the landlord can increase rents.
Added
Such adverse developments could materially reduce the value of our real estate portfolio and our rental revenues, and thus adversely affect our ability to meet our debt obligations and to make distributions to our stockholders. 12 Our portfolio ’ s revenue is currently generated from eight properties.
Added
Our results of operations and cash available for distribution to our stockholders would be adversely affected if any of these properties were materially damaged or destroyed.
Added
As of that date, 342,496 of rentable square feet of commercial space will be available. Additionally, the 206,084 square foot lease with the City of New York at 141 Livingston Street property will expire at December 27, 2025. We and the NYC are negotiating the terms of a five-year extension of the current lease.
Added
There can be no assurance that the negotiations will conclude with an agreement.
Added
If we fail to maintain the adequacy of our internal control over financial reporting in the future, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.
Added
Any failure to achieve and maintain an effective system of internal control could result in materially misstated consolidated financial statements and a failure to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed7 unchanged
Biggest changeGovernance Our Board of Directors holds oversight responsibility over the Company’s strategy and risk management, including material risks related to cybersecurity threats. This oversight is executed directly by the Board of Directors and through its committees.
Biggest changeHowever, we cannot assure you that we will not experience any such threats or incidents in the future. See “Item 1A. Risk factors” in this Annual Report on Form 10-K, for additional discussion about cybersecurity-related risks. Governance Our Board of Directors holds oversight responsibility over the Company’s strategy and risk management, including material risks related to cybersecurity threats.
The Audit Committee of the Board of Directors (the “Audit Committee”) oversees process by which senior management of the Company assesses and manages the Company’s exposure to risk, including cybersecurity, in accordance with its charter.
This oversight is executed directly by the Board of Directors and through its committees. The Audit Committee of the Board of Directors (the “Audit Committee”) oversees process by which senior management of the Company assesses and manages the Company’s exposure to risk, including cybersecurity, in accordance with its charter.
We are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, which have materially affected or are reasonably likely to materially affect our Company, including our business strategy, results of operations, or financial condition. See “Item 1A. Risk factors” in this Annual Report on Form 10-K, for additional discussion about cybersecurity-related risks.
During the reporting period, we have not identified any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, which we believe have materially affected, or are reasonably likely, to materially affect our Company, including our business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

23 edited+27 added−1 removed36 unchanged
Biggest changeFt. # Units Percent Leased Annualized December 2023 Base Rental Revenue (millions)(1) Net Effective Rent Per Occupied Square Foot Multifamily 50 Murray Street Manhattan 1964 396,224 390 95.9 % $ 28.1 $ 76.54 53 Park Place Manhattan 1921 86,288 116 97.4 % $ 6.8 $ 81.32 Flatbush Gardens complex Brooklyn 1950 1,748,671 2,494 98.0 % $ 45.0 $ 26.69 250 Livingston Street Brooklyn 1920 26,819 36 100.0 % $ 1.6 $ 58.93 Aspen Manhattan 2004 165,542 232 97.4 % $ 6.1 $ 38.65 10 West 65th Street Manhattan 1939 75,678 82 98.8 % $ 4.0 $ 53.87 Clover House Brooklyn 1959 102,131 158 95.6 % $ 7.9 $ 80.80 1010 Pacific Street Brooklyn 2023 115,401 175 100.0 % $ 5.5 $ 50.47 2,716,754 3,683 97.7 %(2) $ 105.0 $ 40.51 (2) Commercial 141 Livingston Street Brooklyn 1959 206,084 1 100.0 % $ 10.3 $ 50.00 250 Livingston Street Brooklyn 1920 342,496 1 100.0 % $ 15.4 $ 44.93 548,580 2 100.0 %(2) $ 25.7 $ 46.84 (2) Retail 50 Murray Street (retail) Manhattan 44,583 8 94.7 % $ 2.2 $ 51.23 50 Murray Street (parking) Manhattan 24,200 1 100.0 % $ 1.4 $ 59.01 53 Park Place (retail) Manhattan 8,600 1 — — — 141 Livingston Street (parking/other) Brooklyn 14,853 1 100.0 % $ 0.4 $ 28.18 250 Livingston Street (retail) Brooklyn 990 1 100.0 % $ 0.1 $ 128.35 250 Livingston Street (parking) Brooklyn — — — $ 0.2 — Aspen (retail) Manhattan 12,429 5 73.4 % $ 0.4 $ 44.46 Aspen (parking) Manhattan — — — — — 105,655 17 86.5 %(2) $ 4.7 $ 52.44 (2) Total 3,370,989 3,702 97.7 %(2) $ 135.4 $ 37.78 (2) Real Estate Under Development Dean Street Brooklyn 154,468 (3) 242 (3) (1) Represents annualized revenue based on December 2023 data.
Biggest changeFt. # Units Percent Leased Annualized December 2024 Base Rental Revenue (millions)(1) Net Effective Rent Per Occupied Square Foot Residential Tribeca House Manhattan 1921/1964 482,512 506 98.4 % $ 38.27 $ 84.98 Flatbush Gardens Brooklyn 1950 1,748,671 2,494 99.1 % $ 51.40 $ 30.04 250 Livingston Street Brooklyn 1920 26,819 36 100.0 % $ 1.49 $ 61.11 Aspen Manhattan 2004 165,542 232 99.5 % $ 6.56 $ 40.82 10 West 65th Street Manhattan 1939 75,678 82 100.0 % $ 4.28 $ 56.59 Clover House Brooklyn 1959 102,131 158 97.4 % $ 8.16 $ 85.91 1010 Pacific Street Brooklyn 2023 115,401 175 97.7 % $ 6.81 $ 62.80 2,716,754 3,683 98.9 % $ 116.7 $ 44.31 Commercial 141 Livingston Street Brooklyn 1959 220,937 2 100.0 % $ 10.7 $ 81.17 250 Livingston Street Brooklyn 1920 343,486 2 100.0 % $ 15.5 $ 175.85 Tribeca House Manhattan 1921/1964 77,383 10 88.5 % $ 3.89 $ 67.56 Aspen Manhattan 2004 12,429 5 73.4 % $ 0.46 $ 50.29 654,235 19 90.5 % $ 30.55 $ 51.60 Total 3,370,989 3,702 97.3 % $ 147.52 $ 44.97 (2) Real Estate Under Development Dean Street Brooklyn 154,468 (3) 242 (3) (1) Represents annualized revenue based on December 2024 data.
The Company has the option to prepay in full, or in part, the unpaid balance of the note prior to the maturity date. 953 Dean Street During the period December 2021 through April 2022, the Company purchased the Dean Street property which consists of multiple parcels of land in the Prospect Heights neighborhood of Brooklyn for approximately $48.5 million.
The Company has the option to prepay in full, or in part, the unpaid balance of the note prior to the maturity date. 40 953 Dean Street During the period December 2021 through April 2022, the Company purchased the Dean Street property which consists of multiple parcels of land in the Prospect Heights neighborhood of Brooklyn for approximately $48.5 million.
Property highlights include: Location • 50 Murray Street and 53 Park Place Building Type • Residential • Retail Number of Units • 506 Amenities • Doorman • Elevators • Landscaped roof deck • Rooftop basketball court • Tenant lounge • Game room • Toddler’s play room • In-house valet service • Screening room Nearby Rapid Transit Access • MTA Subway A, C, E, N, R, 1, 2, 3 trains • PATH train 36 The Tribeca House properties are encumbered by a loan through Deutsche Bank AG with a balance of $360.0 million as of December 31, 2023.
Property highlights include: Location • 50 Murray Street and 53 Park Place Building Type • Residential • Retail Number of Units • 506 Amenities • Doorman • Elevators • Landscaped roof deck • Rooftop basketball court • Tenant lounge • Game room • Toddler’s play room • In-house valet service • Screening room Nearby Rapid Transit Access • MTA Subway A, C, E, N, R, 1, 2, 3 trains • PATH train 36 The Tribeca House properties are encumbered by a loan through Deutsche Bank AG with a balance of $360.0 million as of December 31, 2024.
In addition, the property includes an adjacent lot at 22 Smith Street, currently used as a parking lot measuring approximately 5,000 square feet. 37 Property highlights include: Location • 141 Livingston Street Building Type • Commercial • Retail (parking) Tenant • City of New York Amenities • Elevators • Parking Nearby Rapid Transit Access • MTA Subway A, C, F, G, R, 2, 3, 4, 5 trains The 141 Livingston Street property is encumbered by a mortgage note to Citi Real Estate Funding Inc. with a balance of $100 million as of December 31, 2023.
In addition, the property includes an adjacent lot at 22 Smith Street, currently used as a parking lot measuring approximately 5,000 square feet. 37 Property highlights include: Location • 141 Livingston Street Building Type • Commercial • Retail (parking) Tenant • City of New York Amenities • Elevators • Parking Nearby Rapid Transit Access • MTA Subway A, C, F, G, R, 2, 3, 4, 5 trains The 141 Livingston Street property is encumbered by a mortgage note to Citi Real Estate Funding Inc. with a balance of $100 million as of December 31, 2024.
These properties include Tribeca House (two nearly adjacent residential properties with street-level and mezzanine-level retail space and an externally managed parking garage), the Flatbush Gardens complex (a 59-building residential complex), two properties in Downtown Brooklyn (one exclusively commercial, one mixed commercial and residential), the Aspen property (a residential building with street-level retail space and an externally managed parking garage), the 10 West 65th Street residential property, the Clover House residential property, the 1010 Pacific Street residential property and the Dean Street property (currently under development). 34 The table below presents an overview of the Company’s portfolio as of December 31, 2023: Address Submarket Year Built Leasable Sq.
These properties include Tribeca House (two nearly adjacent residential properties with street-level and mezzanine-level retail space and an externally managed parking garage), the Flatbush Gardens complex (a 59-building residential complex), two properties in Downtown Brooklyn (one exclusively commercial, one mixed commercial and residential), the Aspen property (a residential building with street-level retail space and an externally managed parking garage), the 10 West 65th Street residential property, the Clover House residential property, the 1010 Pacific Street residential property and the Dean Street property (currently under development). 34 The table below presents an overview of the Company’s portfolio as of December 31, 2024: Address Submarket Year Built Leasable Sq.
Property highlights include: Location • 1010 Pacific Street Building Type • Residential Number of Units • 175 Amenities • Elevator, media room, fitness center Nearby Rapid Transit Access • MTA Subway A, C, S, 2, 3 trains There is $80.0 million in mortgage debt secured by 1010 Pacific Street as of December 31, 2023, in the form of a mortgage note to Valley National Bank which provides for maximum borrowings of $80.0 million.
Property highlights include: Location • 1010 Pacific Street Building Type • Residential Number of Units • 175 Amenities • Elevator, media room, fitness center Nearby Rapid Transit Access • MTA Subway A, C, S, 2, 3 trains There is $80.0 million in mortgage debt secured by 1010 Pacific Street as of December 31, 2024, in the form of a mortgage note to Valley National Bank which provides for maximum borrowings of $80.0 million.
Property highlights include: Building Type • Residential Number of Units • 2,494 Amenities • Park-like space between buildings • Parking lots Nearby Rapid Transit Access • MTA Subway 2, 5 trains Flatbush Gardens is encumbered by a mortgage note to New York Community Bank with a balance of $329.0 million as of December 31, 2023.
Property highlights include: Building Type • Residential Number of Units • 2,494 Amenities • Park-like space between buildings • Parking lots Nearby Rapid Transit Access • MTA Subway 2, 5 trains Flatbush Gardens is encumbered by a mortgage note to New York Community Bank with a balance of $329.0 million as of December 31, 2024.
The properties also feature approximately 77,400 square feet of retail space, comprising approximately 53,000 square feet of street-level and mezzanine-level retail space, and an externally managed garage. Tenants include Equinox (a premium fitness club), Starbucks and 7 Eleven. The weighted average remaining lease duration of the retail tenants at December 31, 2023, is approximately four years.
The properties also feature approximately 77,400 square feet of retail space, comprising approximately 53,000 square feet of street-level and mezzanine-level retail space, and an externally managed garage. Tenants include Equinox (a premium fitness club), Starbucks and 7 Eleven. The weighted average remaining lease duration of the retail tenants at December 31, 2024, is approximately four years.
ITEM 2. PROPERTIES Our Portfolio Summary As of December 31, 2023, our portfolio consisted of nine properties totaling approximately 3.4 million rentable square feet (plus an approximately 154 thousand rentable square feet under development) and was approximately 98% leased (excluding square footage under development).
ITEM 2. PROPERTIES Our Portfolio Summary As of December 31, 2024, our portfolio consisted of nine properties totaling approximately 3.4 million rentable square feet (plus an approximately 154 thousand rentable square feet under development) and was approximately 98% leased (excluding square footage under development).
Property highlights include: Location • 10 West 65th Street Building Type • Residential Number of Units • 82 Amenities • Elevator Nearby Rapid Transit Access • MTA Subway A, B, C, D, 1, 2, 3 trains 39 The 10 West 65th Street property is encumbered by a mortgage note to New York Community Bank, entered into in connection with the acquisition of the property, with a balance of $31.8 million as of December 31, 2023.
Property highlights include: Location • 10 West 65th Street Building Type • Residential Number of Units • 82 Amenities • Elevator Nearby Rapid Transit Access • MTA Subway A, B, C, D, 1, 2, 3 trains The 10 West 65th Street property is encumbered by a mortgage note to New York Community Bank, entered into in connection with the acquisition of the property, with a balance of $31.4 million as of December 31, 2024.
On August 26, 2022 the Company signed an amendment to the note that changed the benchmark and spread used from LIBOR plus 2.75% to 1-Month CME term SOFR plus 2.5%, rounded up to the nearest 1/8th and reset monthly. The benchmark rate at December 31, 2023 was 5.375%.
On August 26, 2022, the Company signed an amendment to the note that changed the benchmark and spread used from LIBOR plus 2.75% to 1-Month CME term SOFR plus 2.5%, rounded up to the nearest 1/8th and reset monthly. The benchmark rate at December 31, 2024 was 4.75%.
Property highlights include: Location • 107 Columbia Heights Building Type • Residential Number of Units • 158 Amenities • Courtyard, rooftop terrace, fitness center Nearby Rapid Transit Access • MTA Subway 2, 3, A, C, F trains The Clover House property is encumbered by a mortgage note to MetLife Investment Management with a balance of $82.0 million as of December 31, 2023.
Amenities include various unit terraces, a rooftop terrace, a fitness center and a landscaped courtyard. 39 Property highlights include: Location • 107 Columbia Heights Building Type • Residential Number of Units • 158 Amenities • Courtyard, rooftop terrace, fitness center Nearby Rapid Transit Access • MTA Subway 2, 3, A, C, F trains The Clover House property is encumbered by a mortgage note to MetLife Investment Management with a balance of $82.0 million as of December 31, 2024.
Property amenities include a courtyard, game room, fitness center, clubhouse, laundry facilities and onsite below-grade garage parking. 38 Property highlights include: Location • 1955 1st Avenue Building Type • Residential • Retail Number of Units • 232 Amenities • Courtyard, game room, fitness center Nearby Rapid Transit Access • MTA Subway Q, 4, 5, 6 trains The Aspen property is encumbered by a mortgage note to Capital One Multifamily Finance LLC with a balance of $61.0 million as of December 31, 2023.
Property highlights include: Location • 1955 1st Avenue Building Type • Residential • Retail Number of Units • 232 Amenities • Courtyard, game room, fitness center Nearby Rapid Transit Access • MTA Subway Q, 4, 5, 6 trains The Aspen property is encumbered by a mortgage note to Capital One Multifamily Finance LLC with a balance of $59.4 million as of December 31, 2024.
The Company’s loan agreements contain customary representations, covenants, and events of default. Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage ratios and liquidity balances. If the Company is not compliant, certain lenders may require cash sweeps of rent until the conditions are cured.
Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage ratios and liquidity balances. If the Company is not compliant, certain lenders may require cash sweeps of rent until the conditions are cured. The Company believes it is not in default on any of its loan agreements.
The Company completed renovations in 2019 to create 158 well-appointed studio, one- and two-bedroom units across 102,131 square feet, with amenities and indoor parking for 68 cars. Amenities include various unit terraces, a rooftop terrace, a fitness center and a landscaped courtyard.
The Company completed renovations in 2019 to create 158 well-appointed studio, one- and two-bedroom units across 102,131 square feet, with amenities and indoor parking for 68 cars.
Property highlights include: Location • 250 Livingston Street Building Type • Commercial • Residential • Retail Commercial Tenant • City of New York Amenities • Elevators Nearby Rapid Transit Access • MTA Subway A, B, C, F, G, Q, R, 2, 3, 4, 5 trains The 250 Livingston Street property is encumbered by a mortgage note to Citi Real Estate Funding Inc. with a balance of $125.0 million as of December 31, 2023.
Additionally, the property includes 36 multifamily residential apartment units (26,819 square feet), which were developed by Clipper Equity from 2003 through 2013. 38 Property highlights include: Location • 250 Livingston Street Building Type • Commercial • Residential • Retail Commercial Tenant • City of New York Amenities • Elevators Nearby Rapid Transit Access • MTA Subway A, B, C, F, G, Q, R, 2, 3, 4, 5 trains The 250 Livingston Street property is encumbered by a mortgage note to Citi Real Estate Funding Inc. with a balance of $125.0 million as of December 31, 2024.
Aspen In June 2016, the Company purchased the Aspen property located at 1955 1st Avenue in Manhattan for $103 million. The property fronts the west side of First Avenue on the full block between 100th and 101st Streets, and comprises 186,602 square feet, 232 residential rental units, four retail units and a parking garage.
The property fronts the west side of First Avenue on the full block between 100th and 101st Streets, and comprises 186,602 square feet, 232 residential rental units, four retail units and a parking garage.
In April 2022, the Company borrowed an additional $7.0 under the mortgage note in connection with the acquisition of additional parcels of land in February and April 2022. 40 On August 10, 2023, the Company refinanced its $37 million mortgage on its Dean Street development with a senior construction loan with Valley National Bank that permits borrowings up to $115 million and a Mezzanine Loan with BADF 953 Dean Street Lender LLC that permits borrowings up to $8 million.
On August 10, 2023, the Company refinanced its $37 million mortgage on its Dean Street development with a senior construction loan with Valley National Bank that permits borrowings up to $115 million and a Mezzanine Loan with BADF 953 Dean Street Lender LLC that permits borrowings up to $8 million.
Year Number of Tenants Total Square Feet Annualized Rental Revenue % of Annualized Rental Revenue Expiring 2024 1 1,597 $ 78,336 0.3 % 2025 3 550,275 25,757,897 85.3 % 2026 1 510 18,727 0.1 % 2027 3 42,068 1,730,482 5.7 % 2028 1 — 55,200 0.2 % 2029 — — — 0.0 % 2030 1 990 94,905 0.3 % 2031 1 540 165,500 0.5 % 2032 2 4,606 334,632 1.1 % 2033 1 24,200 1,428,000 4.7 % Thereafter 3 8,052 541,500 1.8 % Total 17 632,838 $ 30,205,179 100.0 % Descriptions of Our Properties Tribeca House The Company purchased the 50 Murray Street and 53 Park Place buildings on December 15, 2014.
Year Number of Tenants Total Square Feet Annualized Rental Revenue % of Annualized Rental Revenue Expiring 2025 2 548,550 25,693,317 84.0 % 2026 1 510 18,727 0.1 % 2027 2 40,568 1,730,482 5.7 % 2028 2 1,597 138,336 0.5 % 2029 — — — 0.0 % 2030 2 2,685 172,017 0.6 % 2031 1 540 165,500 0.5 % 2032 3 6,106 522,132 1.7 % 2033 1 24,200 1,456,560 4.8 % 2034 1 2,212 149,976 0.5 % Thereafter 3 8,052 541,500 1.8 % Total 18 635,020 $ 30,588,547 100.0 % Descriptions of Our Properties Tribeca House The Company purchased the 50 Murray Street and 53 Park Place buildings on December 15, 2014.
On August 10, 2023, the Company entered into a $5 million corporate line of credit with Valley National Bank. The line of credit bears interest of Prime + 1.5%. The Company has not drawn on the line of credit as of December 31, 2023. The Company has provided a limited guaranty for mortgage notes at several of its properties.
The line of credit bears interest of Prime + 1.5%. The line of credit expired on August 10, 2024. The Company has provided a limited guaranty for mortgage notes at several of its properties. The Company’s loan agreements contain customary representations, covenants, and events of default.
The note matures on March 6, 2031, bears interest at 3.21% and requires interest-only payments for the entire term.
The note matures on March 6, 2031, bears interest at 3.21% and requires interest-only payments for the entire term. We have the option to prepay all (but not less than all) of the unpaid balance of the loan within three months of maturity, without a prepayment premium.
The City of New York has advised us that it will vacate the 250 Livingston Street property in 2025. Additionally, the property includes 36 multifamily residential apartment units (26,819 square feet), which were developed by Clipper Equity from 2003 through 2013.
The City of New York has advised us that it will vacate the 250 Livingston Street property in 2025.
We have the option to prepay all (but not less than all) of the unpaid balance of the loan within three months of maturity, without a prepayment premium. 250 Livingston Street The 250 Livingston Street property is a 12-story mixed-use building, with office and residential uses on the upper floors and office and retail at grade.
On January 21, 2025, we received notice from the Special Servicer alleging that certain elements of our insurance on the building at 141 Livingston Street are not in compliance with the loan agreement requirements, including, but not limited to, due to a deductible in excess of what is permitted under the terms of the loan agreement and the use of an insurance carrier with a rating agency rating below that which is permitted under the terms of the loan agreement. 250 Livingston Street The 250 Livingston Street property is a 12-story mixed-use building, with office and residential uses on the upper floors and office and retail at grade.
Removed
The Company believes it is not in default on any of its loan agreements.
Added
The 141 Livingston Street lease expires on December 27, 2025, and if NYC were to decide not to renew or extend such lease on its stated termination date, pursuant to the terms of the lease, we would be at risk of not being able to replace NYC as a tenant, leasing the space below the current rates, incurring costs to improve the space or offer other inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow.
Added
We and NYC are in the process of negotiating the terms of a five-year extension of the current lease upon its expiration in December 2025. There can be no assurance that the negotiations will conclude with an agreement.
Added
Our subsidiary, 141 Livingston Owner LLC (the “Borrower”) and Citi Real Estate Funding Inc. entered into the loan agreement related to a $100 million loan. The loan is evidenced by promissory mortgage notes and secured by the 141 Livingston Street property.
Added
We and our Operating Partnership subsidiary serve as limited guarantors of certain obligations under the loan, including those related to the reserve monthly deposit discussed below.
Added
If we are not able to extend or replace the NYC lease at our 141 Livingston Street property for a minimum of a five-year term, we will be required to either fund a reserve account in the amount of $10 million payable in equal monthly payments over the 18 months after lease expiration or deliver to the lender a letter of credit in the amount of $10 million On October 28, 2024, we received notice that, as of October 7, 2024, the servicing of the mortgage notes was transferred to a special servicer (the “Special Servicer”) due to our alleged failure to make certain required payments under the loan agreement, including, but not limited to, the reserve deposit starting on July 7, 2024.
Added
The Special Servicer demanded that we pay (i) $2.2 million of reserve payments into a reserve account immediately (for July-October 2024) and continued monthly payments of $555,555 for an additional 14 months, (ii) $1.2 million of default interest and late charges through October 7, 2024, and (iii) an additional $10,417 per diem interest for each day thereafter.
Added
On November 11, 2024, the Special Servicer notified the Borrower that, due to its alleged event of default under the Loan Agreement, as a result of the failure to make the payments described above, the mortgage notes have been accelerated, and all amounts under the loan agreement were due and payable.
Added
Such amounts include, but are not limited to, $100.0 million principal amount of the mortgage notes, approximately $5.0 million of default yield maintenance premium, $10.0 million aggregate reserve deposit, and the above-described penalty default interest and penalties.
Added
We believe that (i) we have made timely payments under the loan agreement, (ii) the servicer and the Special Servicer have misinterpreted the terms of the loan agreement requiring monthly reserve payments beginning on July 7, 2024, (iii) we have no current obligation to make such reserve payments under the loan agreement and (iv) we should not be obligated to pay the default interest and late charges.
Added
We and the Special Servicer have entered into a pre-negotiation agreement and as such are engaged in good faith discussions regarding the terms of the loan agreement related to the monthly reserve deposit, among other matters.
Added
However, if we are unable to resolve this matter in a manner favorable to us, the lender may also seek to exercise any of its other rights or remedies under the loan agreement.
Added
On December 18, 2024, we received notice from the Special Servicer that due to its allegation that Clipper Realty (the “Guarantor”) did not maintain a net worth of not less than $100 million as of December 31, 2022 and 2023, respectively, as required under the loan agreement, we are in default on the loan.
Added
We replied to the Special Servicer disputing such calculation and alleging that the Special Servicer did not calculate net worth in a reasonable manner. We provided the Special Servicer with our own calculation of net worth that shows a net worth in excess of the required amount. We await a response from the Special Servicer.
Added
As of February 23, 2024, The City of New York, a municipal corporation acting through the Department of Citywide Administrative Services ("NYC”), notified us of its intention to terminate its lease at 250 Livingston Street effective August 23, 2025. The lease generally provides for rent payments in the amount of $15.4 million per annum.
Added
We may be unable to replace NYC as a tenant or unable to replace it with other commercial tenants at comparable rent rates, may incur substantial costs to improve the vacated space or may have to offer significant inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow.
Added
In connection with the termination of the 250 Livingston Street lease, pursuant to the terms of the loan agreement related to $125 million building mortgage, we have established a cash management account for the benefit of the lender, into which we will be obligated to deposit all revenue generated by the building at 250 Livingston Street.
Added
All amounts remaining in such cash management account after the lender’s allocations set forth in the loan agreement will be disbursed to us once the tenant cure conditions are satisfied under the loan agreement. As of February 14, 2025, we are required to deposit into such cash management account approximately $5.7 million upon demand by the lender.
Added
If we are unable to replace the NYC lease at comparable rents, we may not be able to cure the conditions listed in the loan agreement. If the excess cash is not released to us, it could impact our available cash to fund corporate operations and pay dividends and distributions to our stockholders.
Added
On January 2, 2025, we were notified that the loan servicing of the loan related to the 250 Livingston Street property was transferred, at our request, to LNR Partners (“LNR”) to serve as special servicer in order for us to engage in negotiations on a modification of our loan.
Added
On January 6, 2025, we and LNR signed a Pre-Negotiation Letter Agreement to discuss our request for a reduction in the loan. These negotiations continue and there can be no guarantee that they will conclude with an agreement. Aspen In June 2016, the Company purchased the Aspen property located at 1955 1st Avenue in Manhattan for $103 million.
Added
Property amenities include a courtyard, game room, fitness center, clubhouse, laundry facilities and onsite below-grade garage parking.
Added
In April 2022, the Company borrowed an additional $7.0 under the mortgage note in connection with the acquisition of additional parcels of land in February and April 2022.
Added
The Senior Loan allows maximum borrowings of $115 million for a 30-month term, has two 6-month extension options, and bears interest at 1-Month Term SOFR plus 4.00%, with an all-in floor of 5.50% (8.55% at December 31, 2024).
Added
The Senior Loan consists of a land loan, funded at closing to refinance the existing loan totaling $37.0 million, a construction loan of up to $62.4 million and a project loan of up to $15.6 million. The Company has provided a 30% payment guarantee of outstanding borrowings among other standard indemnities.
Added
As of December 31, 2024, the Company has drawn $49.3 million from the construction loan and $12.5 million from the project loan. The Mezzanine Loan allows maximum borrowings of $8,000 for a 30-month term, have two 6-month extension options, and bears interest at 1-Month Term SOFR plus 10%, with an all-in floor of 13% (14.55% at December 31, 2024).
Added
Interest shall accrue on the principal, is compounded monthly and is due at the end of the term of the loan. At closing, $4,500 was funded to cover closing costs incurred on the construction loans. As of December 31,2024, the remaining $3,500 was drawn for ongoing construction costs.
Added
During the years ended December 31, 2024 and 2023, the Company incurred $1,508 and $161, respectively, in interest and is included in the balance of the Notes Payable in the Consolidated Balance Sheet. On August 10, 2023, the Company entered into a $5,000 corporate line of credit with Valley National Bank.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the NYSE under the ticker symbol “CLPR”. The stock began trading on February 10, 2017. Holders As of February 16, 2024, there were 4,812 beneficial holders of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the NYSE under the ticker symbol “CLPR”. The stock began trading on February 10, 2017. Holders As of February 14, 2025, there were 6,112 beneficial holders of our common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. RESERVED 43 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 43 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 59 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 59 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 59 ITEM 9A. CONTROLS AND PROCEDURES 59 ITEM 9B.
Biggest changeITEM 6. RESERVED 43 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 43 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 60 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 60 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 60 ITEM 9A. CONTROLS AND PROCEDURES 60 ITEM 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe discussion below highlights the specific properties contributing to the changes in the results of operations and focuses on the properties that the Company owned and operated for the full period in each comparison. 50 Income Statement for the Years Ended December 31, 2023 and 2022 (in thousands) 2023 Less: 1010 Pacific 2023: Excluding 1010 Pacific 2022 Increase (decrease) % Revenues Residential rental income $ 99,716 $ 3,114 $ 96,602 $ 90,262 $ 6,340 7.0 % Commercial rental income 38,489 24 38,465 39,484 (1,019 ) (2.6 )% Total revenues 138,205 3,138 135,067 129,746 5,321 4.1 % Operating Expenses Property operating expenses 30,619 702 29,917 29,306 611 2.1 % Real estate taxes and insurance 31,951 360 31,591 32,561 (970 ) (3.0 )% General and administrative 13,169 240 12,929 12,752 177 1.4 % Transaction pursuit costs 357 — 357 506 (149 ) (29.4 )% Depreciation and amortization 28,939 1,305 27,634 26,985 649 2.4 % Total operating expenses 105,035 2,607 102,428 102,110 318 0.3 % Income from operations 33,170 531 32,639 27,636 5,003 18.1 % Interest expense, net (44,867 ) (3,013 ) (41,854 ) (40,207 ) (1,647 ) (4.1 )% Loss on modification/extinguishment of debt (3,868 ) — (3,868 ) — (3,868 ) (100.0 )% Net loss $ (15,565 ) $ (2,482 ) $ (13,083 ) $ (12,571 ) $ (512 ) (4.1 )% The dollar amounts in the narrative disclosure below are in thousands, other than the base rent per square foot figures.
Biggest changeThe discussion below highlights the specific properties contributing to the changes in the results of operations and focuses on the properties that the Company owned and operated for the full period in each comparison. 50 Income Statement for the Years Ended December 31, 2024 and 2023 (in thousands) 2024 Less: 1010 Pacific 2024: Excluding 1010 Pacific 2023 Less: 1010 Pacific 2023: Excluding 1010 Pacific Increase (decrease) Excluding 1010 Pacific % Revenues Residential rental income $ 109,873 $ 6,451 $ 103,422 $ 99,716 $ 3,114 $ 96,602 $ 6,820 7.1 % Commercial rental income 38,902 66 38,836 38,489 24 38,465 371 1.0 % Total revenues 148,775 6,517 142,258 138,205 3,138 135,067 7,191 5.3 % Operating Expenses Property operating expenses 34,163 906 33,257 30,619 702 29,917 3,340 11.2 % Real estate taxes and insurance 29,770 (20 ) 29,790 31,951 360 31,591 (1,801 ) (5.7 )% General and administrative 14,152 421 13,731 13,169 240 12,929 802 6.2 % Transaction pursuit costs — — — 357 — 357 (357 ) (100.0 )% Depreciation and amortization 29,892 1,417 28,475 28,939 1,305 27,634 841 3.0 % Total operating expenses 107,977 2,724 105,253 105,035 2,607 102,428 2,825 2.8 % Litigation settlement and other (269 ) — (269 ) — — — (269 ) — Income from operations 40,529 3,793 36,736 33,170 531 32,639 4,097 12.6 % Interest expense, net (47,111 ) (5,168 ) (41,943 ) (44,867 ) (3,013 ) (41,854 ) (89 ) (0.2 )% Loss on modification/extinguishment of debt — — — (3,868 ) — (3,868 ) 3,868 100.0 % Net loss $ (6,582 ) $ (1,375 ) $ (5,207 ) $ (15,565 ) $ (2,482 ) $ (13,083 ) $ 7,876 60.2 % The dollar amounts in the narrative disclosure below are in thousands, other than the base rent per square foot figures.
Non-GAAP Financial Measures In this Annual Report on Form 10-K, 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. 56 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.
Non-GAAP Financial Measures In this Annual Report on Form 10-K, 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. 57 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.
During the period December 2021 through April 2022, the Company purchased the Dean Street property located in Prospect Heights, New York, for approximately $48.5 million. 43 As of December 31, 2023, the Company owned: • two neighboring residential/retail rental properties at 50 Murray Street and 53 Park Place in the Tribeca neighborhood of Manhattan; • one residential property complex in the East Flatbush neighborhood of Brooklyn consisting of 59 buildings; • two primarily commercial properties in Downtown Brooklyn (one of which includes 36 residential apartment units); • one residential/retail rental property at 1955 1st Avenue in Manhattan; • one residential rental property at 107 Columbia Heights in the Brooklyn Heights neighborhood of Brooklyn; • one residential rental property at 10 West 65th Street in the Upper West Side neighborhood of Manhattan; • one residential rental property at 1010 Pacific Street in the Prospect Heights neighborhood of Brooklyn; and • the Dean Street property, to be redeveloped as a residential/retail rental building.
During the period December 2021 through April 2022, the Company purchased the Dean Street property located in Prospect Heights, New York, for approximately $48.5 million. 43 As of December 31, 2024, the Company owned: • two neighboring residential/retail rental properties at 50 Murray Street and 53 Park Place in the Tribeca neighborhood of Manhattan; • one residential property complex in the East Flatbush neighborhood of Brooklyn consisting of 59 buildings; • two primarily commercial properties in Downtown Brooklyn (one of which includes 36 residential apartment units); • one residential/retail rental property at 1955 1st Avenue in Manhattan; • one residential rental property at 107 Columbia Heights in the Brooklyn Heights neighborhood of Brooklyn; • one residential rental property at 10 West 65th Street in the Upper West Side neighborhood of Manhattan; • one residential rental property at 1010 Pacific Street in the Prospect Heights neighborhood of Brooklyn; and • the Dean Street property, to be redeveloped as a residential/retail rental building.
As of December 31, 2023, the Company has no derivatives for which it applies hedge accounting. Loss Per Share Basic and diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding.
As of December 31, 2024 and 2023, the Company has no derivatives for which it applies hedge accounting. Loss Per Share Basic and diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding.
The note required interest-only payments through July 2018, and monthly principal and interest payments of approximately $321,000 thereafter based on a 30-year amortization schedule. We have the option to prepay the note prior to the maturity date, subject to a prepayment premium.
The note required interest-only payments through July 2018, and monthly principal and interest payments of approximately $321 thereafter based on a 30-year amortization schedule. We have the option to prepay the note prior to the maturity date, subject to a prepayment premium.
The Company is obligated to provide parking availability through August 2025 under a lease with a tenant at the 250 Livingston Street property; the current cost to the Company is approximately $205,000 per year.
The Company is obligated to provide parking availability through August 2025 under a lease with a tenant at the 250 Livingston Street property; the current cost to the Company is approximately $205 per year.
We have two reportable operating segments, Residential Rental Properties and Commercial Rental Properties. See Note 10. Segment Reporting to our consolidated financial statements included in this Form 10-K.
We have two reportable operating segments, Residential Rental Properties and Commercial Rental Properties. See Note 9. Segment Reporting to our consolidated financial statements included in this Form 10-K.
We have the option to prepay all (but not less than all) of the unpaid balance of the note prior to the maturity date, subject to certain prepayment premiums, as defined. 250 Livingston Street There is $125.0 million in mortgage debt secured by 250 Livingston Street, as of December 31, 2023, in the form of a mortgage note to Citi Real Estate Funding Inc.
We have the option to prepay all (but not less than all) of the unpaid balance of the note prior to the maturity date, subject to certain prepayment premiums, as defined. 250 Livingston Street There is $125.0 million in mortgage debt secured by 250 Livingston Street, as of December 31, 2024, in the form of a mortgage note to Citi Real Estate Funding Inc.
The net loss allocable to such units is reflected as non-controlling interests in the accompanying consolidated financial statements. Results of Operations Our focus throughout the years ended December 31, 2023 and 2022, has been to manage our properties to optimize revenues and control costs, while continuing to renovate and reposition certain properties.
The net loss allocable to such units is reflected as non-controlling interests in the accompanying consolidated financial statements. Results of Operations Our focus throughout the years ended December 31, 2024 and 2023, has been to manage our properties to optimize revenues and control costs, while continuing to renovate and reposition certain properties.
As of December 31, 2023 the Company’s office properties had not been adversely affected from a rent perspective as a result of its long-term leases with the City of New York. However, as of February 23, 2024, the City of New York informed the Company of its intention to terminate the lease at 250 Livingston effective August 23, 2025.
As of December 31, 2024, the Company’s office properties had not been adversely affected from a rent perspective as a result of its long-term leases with the City of New York. However, As of February 23, 2024, the City of New York informed the Company of its intention to terminate the lease at 250 Livingston Street effective August 23, 2025.
The prior three years’ income tax returns are subject to review by the Internal Revenue Service. Fair Value Measurements Refer to Note 9, “Fair Value of Financial Instruments”. Derivative Financial Instruments FASB derivative and hedging guidance establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.
The prior three years’ income tax returns are subject to review by the Internal Revenue Service. Fair Value Measurements Refer to Note 6, “Fair Value of Financial Instruments”. Derivative Financial Instruments FASB derivative and hedging guidance establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.
As of December 31, 2023 and 2022, the Company had unvested LTIP units which provide for non-forfeitable rights to dividend-equivalent payments. Accordingly, these unvested LTIP units are considered participating securities and are included in the computation of basic and diluted net loss per share pursuant to the two-class method.
As of December 31, 2024 and 2023, the Company had unvested LTIP units which provide for non-forfeitable rights to dividend-equivalent payments. Accordingly, these unvested LTIP units are considered participating securities and are included in the computation of basic and diluted net loss per share pursuant to the two-class method.
To the extent impairment has occurred, a write-down is recorded and measured by the amount of the difference between the carrying value of the asset and the fair value of the asset. Management of the Company does not believe that any of its properties within the portfolio are impaired as of December 31, 2023.
To the extent impairment has occurred, a write-down is recorded and measured by the amount of the difference between the carrying value of the asset and the fair value of the asset. Management of the Company does not believe that any of its properties within the portfolio are impaired as of December 31, 2024.
The Company did not have dilutive securities as of December 31, 2023, or 2022. The effect of the conversion of the 26,317 Class B LLC units outstanding is not reflected in the computation of basic and diluted net loss per share, as the effect would be anti-dilutive.
The Company did not have dilutive securities as of December 31, 2024, or 2023. The effect of the conversion of the 26,317 Class B LLC units outstanding is not reflected in the computation of basic and diluted net loss per share, as the effect would be anti-dilutive.
Factors that May Influence Future Results of Operations We derive approximately 72% of our revenues from rents received from residents in our apartment rental properties and the remainder from commercial and retail rental customers. We believe that we have expertise in operating, renovating and repositioning our properties.
Factors that May Influence Future Results of Operations We derive approximately 74% of our revenues from rents received from residents in our apartment rental properties and the remainder from commercial and retail rental customers. We believe that we have expertise in operating, renovating and repositioning our properties.
For comparison of the year ended December 31, 2022 to the year ended December 31, 2021, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
For comparison of the year ended December 31, 2023 to the year ended December 31, 2022, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Basis of Consolidation The consolidated financial statements of the Company included elsewhere herein are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The effect of all significant intercompany balances and transactions has been eliminated. The consolidated financial statements include the accounts of all entities in which the Company has a controlling interest.
Basis of Consolidation The consolidated financial statements of the Company included elsewhere herein are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The effect of all intercompany balances has been eliminated. The consolidated financial statements include the accounts of all entities in which the Company has a controlling interest.
There is a $60.0 million note which has an annual interest rate of 5.55% and a second note of $20.0 million with an annual interest rate of 6.37%. The total borrowing of $80.0 million has a term of twenty-four months and matures on September 15, 2025.
There is a $60,000 note which has an annual interest rate of 5.55% and a second note of $20,000 with an annual interest rate of 6.37%. The total borrowing of $80,000 has a term of twenty-four months and matures on September 15, 2025.
We have the option, commencing on January 1, 2024, to prepay the note prior to the maturity date, subject to a prepayment premium if it occurs prior to September 2, 2029. 10 West 65th Street There is $31.8 million in mortgage debt secured by 10 West 65th Street as of December 31, 2023, in the form of a mortgage note to New York Community Bank (“NYCB”), entered into in connection with the acquisition of the property.
We have the option, commencing on January 1, 2024, to prepay the note prior to the maturity date, subject to a prepayment premium if it occurs prior to September 2, 2029. 54 There is $31,437 in mortgage debt secured by 10 West 65th Street as of December 31, 2024, in the form of a mortgage note to New York Community Bank (“NYCB”), entered into in connection with the acquisition of the property.
Management adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of accounts receivable, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, and the useful lives of long-lived assets. Actual results could materially differ from these estimates.
Management adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of accounts receivable, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, the useful lives of long-lived assets, review of long-lived assets for impairment and contingent liabilities. Actual results could materially differ from these estimates.
ASC842 applies to the Company principally as lessor; as a lessee, the Company’s leases are immaterial. The Company has determined that all its leases as lessor are operating leases. The Company has elected to not bifurcate lease and non-lease components under a practical expedient provision.
ASC 842 applies to the Company principally as lessor; as a lessee, the Company’s leases are immaterial. The Company has determined that all its leases as lessor are operating leases. The Company has elected to not bifurcate lease and non-lease components under a practical expedient provision.
On August 26, 2022 the Company and NYCB amended the note to replace prime plus 2.75% rate with SOFR plus 2.5% (7.875% at December 31, 2023). The note required interest-only payments through November 2019, and monthly principal and interest payments thereafter based on a 30-year amortization schedule.
On August 26, 2022 the Company and NYCB amended the note to replace prime plus 2.75% rate with SOFR plus 2.5% (7.88% at December 31, 2024). The note required interest-only payments through November 2019, and monthly principal and interest payments thereafter based on a 30-year amortization schedule.
The Company expects those costs to be offset by the savings provided by property tax exemption and enhanced payments for tenants receiving government assistance (See note 1). Through December 31, 2023 the Company spent approximately $2.1 million on capital improvements required under the HRMLA.
The Company expects those costs to be offset by the savings provided by property tax exemption and enhanced payments for tenants receiving government assistance (See note 1). Through December 31, 2024 the Company spent approximately $9.1 million on capital improvements required under the HRMLA.
We have the option to prepay all (but not less than all) of the unpaid balance of the note prior to the maturity date, subject to certain prepayment premiums, as defined. 1010 Pacific Street There is $80.0 million in mortgage debt secured by 1010 Pacific Street as of December 31, 2023, in the form of two mortgage notes to Valley National Bank.
We have the option to prepay all (but not less than all) of the unpaid balance of the note prior to the maturity date, subject to certain prepayment premiums, as defined. 1010 Pacific Street There is $80,000 in mortgage debt secured by 1010 Pacific Street as of December 31, 2024, in the form of two mortgage notes to Valley National Bank.
Clover House There is $82.0 million in mortgage debt secured by Clover House as of December 31, 2023, in the form of a mortgage note to MetLife Investment Management. The note matures on December 1, 2029, bears interest at 3.53% and requires interest-only payments for the entire term.
Clover House There is $82,000 in mortgage debt secured by Clover House as of December 31, 2024, in the form of a mortgage note to MetLife Investment Management. The note matures on December 1, 2029, bears interest at 3.53% and requires interest-only payments for the entire term.
Trends During 2023, the Company’s residential properties continued to have elevated occupancy levels and experienced growth in rental rates, as a result of a robust rental market in the New York metro area. The average rental rate per square foot at the Tribeca House property at December 31, 2023 was $77.70, up from $73.75 at December 31, 2022.
Trends During 2024, the Company’s residential properties continued to have elevated occupancy levels and experienced growth in rental rates, as a result of a robust rental market in the New York metro area. The average rental rate per square foot at the Tribeca House property at December 31, 2024 was $82.52, up from $77.70 at December 31, 2023.
With respect to collectability, beginning the first quarter of 2022, the Company has written off all receivables not probable of collection and related deferred rent, and has recorded income for those tenants on a cash basis.
With respect to collectability, the Company has written off all receivables not probable of collection and related deferred rent, and has recorded income for those tenants on a cash basis.
The net increase during the 2023 period primarily reflects improved revenues discussed above, improved collection experience and lower property tax payments due to the entry into the Article 11 Agreement. Net cash used in investing activities was $41,357 for the year ended December 31, 2023, compared to $51,476 for the year ended December 31, 2022.
The net increase during the 2024 period primarily reflects improved revenues discussed above, improved collection experience and lower property tax payments due to the entry into the Article 11 Agreement. Net cash used in investing activities was $68,781 for the year ended December 31, 2024, compared to $41,357 for the year ended December 31, 2023.
Real estate taxes and insurance expenses decreased to $31,591 for the year ended December 31, 2023, from $32,561 for the year ended December 31, 2022, due to increased property taxes and insurance across the portfolio partially offset by the real estate tax exemption at Flatbush Gardens that began July 1, 2023. 51 General and administrative .
Real estate taxes and insurance expenses decreased to $29,790 for the year ended December 31, 2024, from $31,591 for the year ended December 31, 2023, due to the real estate tax exemption at Flatbush Gardens that began July 1, 2023, partially offset by increased property taxes and insurance across the portfolio . 51 General and administrative .
Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage and debt yield ratios. In the event that the Company is not compliant, certain lenders may require cash sweeps of rent until the conditions are cured. The Company believes it is not in default on any of its loan agreements.
Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage and debt yield ratios. In the event that the Company is not compliant, certain lenders may require cash sweeps of rent until the conditions are cured.
Property-Level Debt The mortgages, loans and mezzanine notes payable collateralized by the properties, or the Company’s interest in the entities that own the properties and assignment of leases, are as follows (in thousands): Property Maturity Interest Rate December 31, 2023 Flatbush Gardens, Brooklyn, NY 6/1/2032 3.125 % $ 329,000 250 Livingston Street, Brooklyn, NY 6/6/2029 3.63 % 125,000 141 Livingston Street, Brooklyn, NY 3/6/2031 3.21 % 100,000 Tribeca House, Manhattan, NY 3/6/2028 4.506 % 360,000 Aspen, Manhattan, NY 7/1/2028 3.68 % 61,004 Clover House, Brooklyn, NY 12/1/2029 3.53 % 82,000 10 West 65th Street, Manhattan, NY 11/1/2027 SOFR + 2.50 % 31,836 1010 Pacific Street, Brooklyn, NY 9/15/2025 5.55 % 60,000 1010 Pacific Street, Brooklyn, NY 9/15/2025 6.37 % 20,000 953 Dean Street, Brooklyn, NY 8/10/2026 SOFR + 4 % 42,909 953 Dean Street, Brooklyn, NY 8/10/2026 SOFR + 10 % 7,280 $ 1,219,029 Flatbush Gardens There is $329.0 million of mortgage debt secured by Flatbush Gardens, as of December 31, 2023, in the form of a mortgage note to New York Community Bank.
Property-Level Debt The mortgages, loans and mezzanine notes payable collateralized by the properties, or the Company’s interest in the entities that own the properties and assignment of leases, are as follows (in thousands): Property Maturity Interest Rate December 31, 2024 Flatbush Gardens, Brooklyn, NY 6/1/2032 3.125 % $ 329,000 250 Livingston Street, Brooklyn, NY 6/6/2029 3.63 % 125,000 141 Livingston Street, Brooklyn, NY 3/6/2031 3.21 % 100,000 Tribeca House, Manhattan, NY 3/6/2028 4.506 % 360,000 Aspen, Manhattan, NY 7/1/2028 3.68 % 59,403 Clover House, Brooklyn, NY 12/1/2029 3.53 % 82,000 10 West 65th Street, Manhattan, NY 11/1/2027 SOFR + 2.50 % 31,437 1010 Pacific Street, Brooklyn, NY 9/15/2025 5.55 % 60,000 1010 Pacific Street, Brooklyn, NY 9/15/2025 6.37 % 20,000 953 Dean Street, Brooklyn, NY 8/10/2026 SOFR + 4 % 98,849 953 Dean Street, Brooklyn, NY 8/10/2026 SOFR + 10 % 9,670 $ 1,275,359 Flatbush Gardens There is $329,000 of mortgage debt secured by Flatbush Gardens, as of December 31, 2024, in the form of a mortgage note to New York Community Bank.
Aspen There is $61.0 million in mortgage debt secured by Aspen, as of December 31, 2023, in the form of a mortgage note to Capital One Multifamily Finance LLC. The note matures on July 1, 2028, and bears interest at 3.68%.
Aspen There is $59,403 in mortgage debt secured by Aspen, as of December 31, 2024, in the form of a mortgage note to Capital One Multifamily Finance LLC. The note matures on July 1, 2028, and bears interest at 3.68%.
The discussion below compares amounts in 2023, excluding 1010 Pacific, to 2022 amounts. Revenue . Residential rental income increased to $96,602 for the year ended December 31, 2023, from $90,262 for the year ended December 31, 2022, primarily, due to increases in rental rates.
The discussion below compares amounts in 2024, excluding 1010 Pacific, to 2023 amounts. Revenue . Residential rental income increased to $103,422 for the year ended December 31, 2024, from $96,602 for the year ended December 31, 2023, primarily, due to increases in rental rates.
These regulations generally limit rental increases that we can charge at our Flatbush Gardens property, our Aspen property and a portion of our Tribeca House and 10 West 65th Street property upon lease renewal; effective October 1, 2023, such increases are 3.0% for a one-year lease and 2.75% in the first year and 3.2% in the second year for a two-year lease.
These regulations generally limit rental increases that we can charge at our Flatbush Gardens property, our Aspen property and a portion of our Tribeca House and 10 West 65th Street property upon lease renewal; effective October 1, 2024, such increases are 2.75% for a one-year lease and 5.25% for a two-year lease.
The Senior Loan consists of a land loan, funded at closing to refinance the existing loan totaling $37million, a construction loan of up to $62.4 million and a project loan of up to $15.6 million. The Company has provided a 30% payment guarantee of outstanding borrowings among other standard indemnities.
The Senior Loan consists of a land loan, funded at closing to refinance the existing loan totaling $36,985, a construction loan of up to $62,400 and a project loan of up to $15,600. The Company has provided a 30% payment guarantee of outstanding borrowings among other standard indemnities.
When the probability assessment has changed for these receivables, the Company has recognized lease income to the extent of the difference between the lease income that would have been recognized if collectability had always been assessed as probable and the lease income recognized to date. For remaining receivables probable of collection, the Company has recorded a general reserve under ASC450.
When the probability assessment has changed for these receivables, the Company has recognized lease income to the extent of the difference between the lease income that would have been recognized if collectability had always been assessed as probable and the lease income recognized to date.
Liquidity and Capital Resources As of December 31, 2023, we had $1,205.6 million of indebtedness (net of unamortized issuance costs) secured by our properties, $22.2 million of cash and cash equivalents, and $14.1 million of restricted cash. See Note 6 “Notes Payable” of the accompanying “Notes to Consolidated Financial Statements” for a discussion of the Company’s property-level debt.
Liquidity and Capital Resources As of December 31, 2024, we had $1,275.4 million of indebtedness (net of unamortized issuance costs) secured by our properties, $19.9 million of cash and cash equivalents, and $18.2 million of restricted cash. See Note 4 “Notes Payable” of the accompanying “Notes to Consolidated Financial Statements” for a discussion of the Company’s property-level debt.
General and administrative expenses increased to $12,929 for the year ended December 31, 2023, from $12,752 for the year ended December 31, 2022, primarily due to higher payroll costs and accounting fees in relation to the separation from our prior auditor. Transaction pursuit costs.
General and administrative expenses increased to $13,731 for the year ended December 31, 2024, from $12,929 for the year ended December 31, 2023, primarily due to higher payroll costs partially offset by lower accounting fees in relation to the separation from our prior auditor in 2023. Transaction pursuit costs.
In the year ended December 31, 2023, the Company charged revenue in the amount of $4.5 million for residential receivables not deemed probable of collection and recognized revenue of $1.4 million for a reassessment of collectability of residential receivables previously not deemed probable of collection.
For the year ended December 31, 2024 and 2023, the Company charged revenue in the amount of $4,219 and $4,526, respectively, for residential receivables not deemed probable of collection and recognized revenue of $299 and $1,447, respectively, for a reassessment of collectability of residential receivables previously not deemed probable of collection.
Further, other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to that of other REITs. 58 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): Years ended December 31, 2023 2022 NOI Income from operations $ 33,170 $ 27,636 Real estate depreciation and amortization 28,939 26,985 General and administrative expenses 13,169 12,752 Transaction pursuit costs 357 506 Amortization of real estate tax intangible 481 481 Amortization of above- and below-market leases (18 ) (35 ) Straight-line rent adjustments 214 (163 ) NOI $ 76,312 $ 68,162 Recent Accounting Pronouncements See Note 2, “Significant Accounting Policies” of our consolidated financial statements included in Item 15 for a discussion of recent accounting pronouncements.
Further, other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to that of other REITs. 59 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): Years ended December 31, 2024 2023 NOI Income from operations $ 40,529 $ 33,170 Real estate depreciation and amortization 29,892 28,939 General and administrative expenses 14,152 13,169 Transaction pursuit costs - 357 Amortization of real estate tax intangible 481 481 Amortization of above- and below-market leases - (18 ) Certain litigation expenses 269 - Straight-line rent adjustments 251 214 NOI $ 85,574 $ 76,312 Recent Accounting Pronouncements See Note 2, “Significant Accounting Policies” of our consolidated financial statements included in Item 15 for a discussion of recent accounting pronouncements.
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): Years ended December 31, 2023 2022 Adjusted EBITDA Net loss $ (15,565 ) $ (12,571 ) Real estate depreciation and amortization 28,939 26,985 Amortization of real estate tax intangible 481 481 Amortization of above- and below-market leases (18 ) (35 ) Straight-line rent adjustments 214 (163 ) Amortization of LTIP awards 3,015 2,920 Interest expense, net 44,867 40,207 Transaction pursuit costs 357 506 Loss on modification/extinguishment of debt 3,868 — Certain litigation-related expenses (10 ) 188 Adjusted EBITDA $ 66,148 $ 58,518 Net Operating Income We believe that NOI is a useful measure of our operating performance.
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): Years ended December 31, 2024 2023 Adjusted EBITDA Net loss $ (6,582 ) $ (15,565 ) Real estate depreciation and amortization 29,892 28,939 Amortization of real estate tax intangible 481 481 Amortization of above- and below-market leases - (18 ) Straight-line rent adjustments 251 214 Amortization of LTIP awards 2,701 3,015 Interest expense, net 47,111 44,867 Transaction pursuit costs - 357 Loss on modification/extinguishment of debt - 3,868 Certain litigation-related expenses 269 (10 ) Adjusted EBITDA $ 74,123 $ 66,148 Net Operating Income We believe that NOI is a useful measure of our operating performance.
During the years ended December 31, 2023 and 2022, we paid dividends and distributions on our common shares, Class B LLC units and LTIP units totaling $17.4 million and $17.1 million, respectively. 55 Cash Flows for the Years ended December 31, 2023 and 2022 (in thousands) Year Ended December 31, 2023 2022 Operating activities $ 26,185 $ 20,139 Investing activities (41,357 ) (51,476 ) Financing activities 20,731 9,779 Cash flows provided by (used in) operating activities, investing activities and financing activities for the years ended December 31, 2023 and 2022, are as follows: Net cash provided by operating activities was $26,185 for the year ended December 31, 2023, compared to $20,139 for the year ended December 31, 2022.
During the years ended December 31, 20424 and 2023, we paid dividends and distributions on our common shares, Class B LLC units and LTIP units totaling $17.6 million and $17.4 million, respectively. 56 Cash Flows for the Years ended December 31, 2024 and 2023 (in thousands) Year Ended December 31, 2024 2023 Operating activities $ 31,862 $ 26,185 Investing activities (68,781 ) (41,357 ) Financing activities 38,746 20,731 Cash flows provided by (used in) operating activities, investing activities and financing activities for the years ended December 31, 2024 and 2023, are as follows: Net cash provided by operating activities was $31,862 for the year ended December 31, 2024, compared to $26,185 for the year ended December 31, 2023.
For example, base rent per square foot increased at the Tribeca House property to $77.70 at December 31, 2023, from $73.75 at December 31, 2022 and base rent per square foot increased at the Clover House property to $80.93 at December 31, 2023, from $73.31 at December 31, 2022.
For example, base rent per square foot increased at the Tribeca House property to $82.52 at December 31, 2024, from $77.70 at December 31, 2023 and base rent per square foot increased at the Clover House property to $85.91 at December 31, 2024, from $80.93 at December 31, 2023.
The Company has provided a limited guaranty for mortgage notes at several of its properties which require the Company to maintain certain minimum liquidity and net worth levels. The Company’s loan agreements contain customary representations, covenants and events of default.
The line of credit bears interest of Prime + 1.5%. The line of credit expired on August 10, 2024. The Company has provided a limited guaranty for mortgage notes at several of its properties which require the Company to maintain certain minimum liquidity and net worth levels. The Company’s loan agreements contain customary representations, covenants and events of default.
Loss on modification/extinguishment of debt . Loss on the extinguishment of debt consists of costs related to the early termination of our construction loan at 1010 Pacific. Additionally, we accelerated the remaining unamortized loan costs from the prior loan. Net loss .
Loss on the extinguishment of debt in 2023 consists of costs related to the early termination of our construction loan at 1010 Pacific including the acceleration of the remaining unamortized loan costs from the prior loan. Net loss .
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): Years ended December 31, 2023 2022 FFO Net loss $ (15,565 ) $ (12,571 ) Real estate depreciation and amortization 28,939 26,985 FFO $ 13,374 $ 14,414 AFFO FFO $ 13,374 $ 14,414 Amortization of real estate tax intangible 481 481 Amortization of above- and below-market leases (18 ) (35 ) Straight-line rent adjustments 214 (163 ) Amortization of debt origination costs 1,705 1,252 Amortization of LTIP awards 3,015 2,920 Transaction pursuit costs 357 506 Loss on modification/extinguishment of debt 3,868 — Certain litigation-related expenses (10 ) 188 Recurring capital spending (436 ) (326 ) AFFO $ 22,550 $ 19,237 57 Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization We believe that Adjusted EBITDA is a useful measure of our operating performance.
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): Years ended December 31, 2024 2023 FFO Net loss $ (6,582 ) $ (15,565 ) Real estate depreciation and amortization 29,892 28,939 FFO $ 23,310 $ 13,374 AFFO FFO $ 23,310 $ 13,374 Amortization of real estate tax intangible 481 481 Amortization of above- and below-market leases - (18 ) Straight-line rent adjustments 251 214 Amortization of debt origination costs 2,122 1705 Amortization of LTIP awards 2,701 3,015 Transaction pursuit costs - 357 Loss on modification/extinguishment of debt - 3,868 Certain litigation-related expenses 269 (10 ) Recurring capital spending (324 ) (436 ) AFFO $ 28,810 $ 22,550 58 Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization We believe that Adjusted EBITDA is a useful measure of our operating performance.
As a result of the foregoing, net loss increased to $13,083 for the year ended December 31, 2023, from $12,571 for the year ended December 31, 2022.
As a result of the foregoing, net loss decreased to $5,205 for the year ended December 31, 2024, from $13,083 for the year ended December 31, 2023.
Costs incurred in seeking financing transactions which do not close are expensed in the period the financing transaction is terminated. 48 Revenue Recognition As mentioned above under Tenant and Other Receivables and Allowance for Doubtful Accounts, effective the first quarter of 2022, the Company has adopted ASC842, “Leases” which replaces the guidance under ASC840.
Costs incurred in seeking financing transactions which do not close are expensed in the period the financing transaction is terminated. 48 Revenue Recognition As mentioned above under Tenant and Other Receivables and Allowance for Doubtful Accounts the Company records lease income under ASC 842,"Leases” which replaces the guidance under ASC 840.
The loan matures on March 6, 2028, bears interest at 4.506% and requires interest-only payments for the entire term. We have the option to prepay all (but not less than all) of the unpaid balance of the note prior to the maturity date, subject to a prepayment premium if it occurs prior to December 6, 2027.
The note matures on March 6, 2031, bears interest at 3.21% and requires interest-only payments for the entire term. We have the option to prepay all (but not less than all) of the unpaid balance of the loan within three months of maturity, without a prepayment premium.
The costs include the costs of repainting and repairing apartment units, replacing obsolete or damaged appliances and re-leasing the units. While we budget for turnover and the costs associated therewith, our turnover cost may be affected by certain factors we cannot control.
While we budget for turnover and the costs associated therewith, our turnover cost may be affected by certain factors we cannot control.
Lease costs are being amortized using the straight-line method over the terms of the respective leases. Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are amortized over the term of the financing and are recorded in interest expense in the combined financial statements.
Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are amortized over the term of the financing and are recorded in interest expense in the combined financial statements. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity.
Property operating expenses increased to $29,917 for the year ended December 31, 2023, from $29,306 for the year ended December 31, 2022, primarily due to increased repairs and maintenance, payroll costs, union costs and security costs partially offset by lower utilities costs, commissions, and miscellaneous other costs. Real estate taxes and insurance .
Property operating expenses increased to $33,257 for the year ended December 31, 2024, from $29,917 for the year ended December 31, 2023, primarily due to increased payroll for maintenance activities, legal costs for collection activities and utilities costs. Real estate taxes and insurance .
Interest expense, net, increased to $41,854 for the year ended December 31, 2023 from $40,207 for the year ended December 31, 2022, primarily due to increased interest at the 10 West 65th Street as a result of the interest rate changing from fixed to a floating rate in the fourth quarter of 2022 and lower capitalized interest as a result of the completion of the 1010 Pacific development in the second quarter of 2023.
Interest expense, net, increased to $41,943 for the year ended December 31, 2024 from $41,854 for the year ended December 31, 2023, primarily due to lower capitalized interest as a result of completion of development of the 1010 Pacific property in the second quarter of 2023. Loss on modification/extinguishment of debt .
At the Aspen property, average residential rent per square foot increased at December 31, 2023, was $38.65, up from $36.78 at December 31, 2022. At the Clover House property, average residential rent per square foot at December 31, 2023, was $80.93, an increase from $73.71 at December 31, 2022.
At the Flatbush Garden property, average residential rent per square foot increased at December 31, 2024, was $30.04, up from $26.69 at December 31, 2023. At the Clover House property, average residential rent per square foot at December 31, 2024, was $85.91, an increase from $80.93 at December 31, 2023.
If management determines that the tenant receivable is not probable of collection it is written off against revenues. In addition, the Company records a general reserve under ASC 450.
If management determines that the tenant receivable is not probable of collection it is written off against revenues. In addition, the Company records a general reserve under ASC 450. Deferred Costs Deferred lease costs consist of fees incurred to initiate and renew operating leases. Lease costs are being amortized using the straight-line method over the terms of the respective leases.
The Mezzanine Loan allows maximum borrowings of $8 million for a 30-month term, have two 6-month extension options, and bear interest at 1-Month Term SOFR plus 10%, with an all-in floor of 13% (15.34% at December 31, 2023). Interest shall accrue of the principal, is compounded monthly and is due at the end of the loan.
As of December 31, 2024, the Company has drawn $49,315 from the construction loan and $12,549 from the project loan. The Mezzanine Loan allows maximum borrowings of $8,000 for a 30-month term, have two 6-month extension options, and bears interest at 1-Month Term SOFR plus 10%, with an all-in floor of 13% (14.55% at December 31, 2024).
Depreciation and amortization expense increased to $27,634 for the year ended December 31, 2023, from $26,985 for the year ended December 31, 2022, due to additions to real estate across the portfolio, primarily at Flatbush Gardens and 141 Livingston. Interest expense, net .
Transaction pursuit costs of $357 in 2023 primarily reflect costs related to the Article 11 Agreement and an abandoned acquisition. Depreciation and amortization . Depreciation and amortization expense increased to $28,475 for the year ended December 31, 2024, from $27,634 for the year ended December 31, 2023, due to additions to real estate across the portfolio, primarily at Flatbush Gardens.
Separately, certain of our smaller commercial spaces which were vacated because of the COVID-19 pandemic had been released at favorable rental rates. 44 Throughout 2023 and 2022, we continued to benefit from relatively low interest rates on our debt. Our weighted average interest rate as of December 31, 2023, was approximately 4.2% per annum.
Risk Factors.” 44 Throughout 2024 and 2023, we continued to benefit from relatively low interest rates on our debt. Our weighted average interest rate as of December 31, 2024, was approximately 4.0% per annum.
On August 10, 2023, the “Company refinanced its $37 million mortgage on its Dean Street development with a senior construction loan (“Senior Loan”) with Valley National Bank that permits borrowings up to $115 million and a mezzanine loan (the “Mezzanine Loan”) with BADF 953 Dean Street Lender LLC that permits borrowings up to $8 million 54 The Senior Loan allows maximum borrowings of $115 million for a 30-month term, has two 6-month extension options, and bear interest at 1-Month Term SOFR plus 4.00%, with an all-in floor of 5.50% (9.35% at December 31, 2023).
On August 10, 2023, the “Company refinanced its $36,985 mortgage on its Dean Street development with a senior construction loan (“Senior Loan”) with Valley National Bank that permits borrowings up to $115,000 and a mezzanine loan (the “Mezzanine Loan”) with BADF 953 Dean Street Lender LLC that permits borrowings up to $8,000.
The note matures on June 6, 2029, bears interest at 3.63% and requires interest-only payments for the entire term.
The note matures on June 6, 2029, bears interest at 3.63% and requires interest-only payments for the entire term. We have the option to prepay all (but not less than all) of the unpaid balance of the note within three months of maturity, without a prepayment premium.
There are no rent stabilization restrictions at our Tribeca House properties, our 250 Livingston Street property, our Clover House property and a portion of our 10 West 65th Street property. We also incur costs on turnover of residents when one resident moves out and we prepare the apartment for a new resident.
There are no rent stabilization restrictions at our Tribeca House properties, our 250 Livingston Street property, our Clover House property and a portion of our 10 West 65th Street property. However, they may be impacted by the April 2024 New York “Good-Cause eviction” law.
We have the option to prepay all (but not less than all) of the unpaid balance of the note within three months of maturity, without a prepayment premium. 141 Livingston Street There is $100.0 million in mortgage debt secured by 141 Livingston Street, as of December 31, 2023, in the form of a mortgage note to Citi Real Estate Funding Inc.
The arrangement was approved by an independent committee of the Company’s board of directors. 53 141 Livingston Street There is $100,000 in mortgage debt secured by 141 Livingston Street, as of December 31, 2024, in the form of a mortgage note to Citi Real Estate Funding Inc.
Contractual Obligations and Commitments The following table summarizes principal and interest payment requirements on our debt under terms as of December 31, 2023: (in thousands) Principal Interest Total 2024 $ 1,993 $ 45,678 $ 47,671 2025 82,092 44,791 126,883 2026 45,099 42,029 87,128 2027 40,741 51,570 92,311 2028 416,554 45,712 462,266 Thereafter 632,550 113,654 746,204 Total $ 1,219,029 $ 343,434 $ 1,562,463 On June 29, 2023 the Company entered into the Article 11 Agreement.
Except as described above, the Company is not in default on any of its loan agreements. 55 Contractual Obligations and Commitments The following table summarizes principal and interest payment requirements on our debt under terms as of December 31, 2024: (in thousands) Principal Interest Total 2025 $ 82,144 $ 44,554 $ 126,699 2026 101,091 41,792 142,883 2027 43,019 51,333 94,352 2028 416,554 45,712 462,266 2029 209,571 37,714 247,285 Thereafter 422,980 75,940 498,919 Total $ 1,275,359 $ 297,045 $ 1,572,404 On June 29, 2023 the Company entered into the Article 11 Agreement.
For the year ended December 31, 2022, $27,187 was provided by net borrowings under the 1010 Pacific Street and 953 Dean Street development property loans, net of scheduled debt amortization payments, partially offset by $17,073 of dividends and distributions and $335 of loan issuance and extinguishment costs.
Net cash provided by financing activities was $38,746 for the year ended December 31, 2024, compared to $20,731 for the year ended December 31, 2023. The increase was primarily due to $45,126 additional borrowings under the Dean Street property loans partially offset by $36,523 borrowings in 2023 under the 1010 Pacific Street loans and scheduled debt amortization payments in 2024.
Property operating expenses . Property operating expenses include property-level costs such as compensation costs for property-level personnel, repairs and maintenance, supplies, utilities and landscaping.
Commercial rental income increased to $38,836 for the year ended December 31, 2024, from $38,465 for the year ended December 31, 2023, primarily due to increased escalation billings at the 250 Livingston Street property. Property operating expenses . Property operating expenses include property-level costs such as compensation costs for property-level personnel, repairs and maintenance, supplies, utilities and landscaping.
Significant Accounting Policies Segments On December 31, 2023, the Company had two reportable operating segments, Residential Rental Properties and Commercial Rental Properties. The Company’s chief operating decision maker may review operational and financial data on a property basis.
Significant Accounting Policies Segments On December 31, 2024, the Company had two reportable operating segments, Residential Rental Properties and Commercial Rental Properties. Our Chief Operating Decision Maker (“CODM”), represented by our Co-Chairman and Chief Executive Officer, reviews the results in which the revenue and Income from Operations is divided between the commercial and residential performance.
At closing, $4.5 million was funded to cover closing costs incurred on the construction loans. Corporate On August 10, 2023, the Company entered into a $5 million corporate line of credit with Valley National Bank. The line of credit bears interest of Prime + 1.5%. The Company has not drawn on the line of credit as of December 31, 2023.
During the years ended December 31, 2024 and 2023, the Company incurred $1,508 and $161, respectively, in interest and is included in the balance of the Notes Payable in the Consolidated Balance Sheet. Corporate On August 10, 2023 the Company entered into a $5,000 corporate line of credit with Valley National Bank.
The decrease was primarily due to $20,372 lower capital spending at all of our operating properties, primarily at 1010 Pacific Street, partially offset by increased capital spending at the Dean Street property. Additionally, the Company purchased parcels of land at Dean Street for $8,041 during the year ended December 31, 2022.
The increase was primarily due to $41,099 increased capital spending at the Dean Street and Flatbush Garden properties partially offset by $13,675 lower capital spending at all of our operating properties, primarily at 1010 Pacific Street which went into service in early 2023.
Additionally, as we move forward with the approaching expiration of the 141 Livingston lease in 2025, the Company will be at risk of not replacing that tenant or not being able to replace it at comparable rents.
There can be no assurance that the negotiations will conclude with an agreement, and the Company is at risk of not replacing the City of New York as its tenant or not being able to replace it at comparable rents. See “- Liquidity and Capital Resources” below and Part I, Item 1A.
We have the option to prepay all (but not less than all) of the unpaid balance of the loan within three months of maturity, without a prepayment premium. 53 Tribeca House There is a $360.0 million loan secured by the Tribeca House properties, as of December 31, 2023, through Deutsche Bank AG.
We have the option to prepay all (but not less than all) of the unpaid balance of the note prior to the maturity date, subject to a prepayment premium if it occurs prior to December 6, 2027.
The note matures on March 6, 2031, bears interest at 3.21% and requires interest-only payments for the entire term.
Tribeca House There is a $360,000 loan secured by the Tribeca House properties, as of December 31, 2024, through Deutsche Bank AG. The loan matures on March 6, 2028, bears interest at 4.506% and requires interest-only payments for the entire term.
Removed
All significant intercompany transactions and balances are eliminated in consolidation/combination.
Added
Additionally, as we move forward with the approaching expiration of the lease at 141 Livingston Street in December 2025, the Company and the City of New York are negotiating the terms of a five-year extension of their current lease.
Removed
In connection with the adoption of ASC 842, the Company recorded a cumulative effect adjustment in the amount of $6 million as of January 1, 2022, based on the modified retrospective method in accordance with the provisions of ASC 842. Deferred Costs Deferred lease costs consist of fees incurred to initiate and renew operating leases.
Added
We also incur costs on turnover of residents when one resident moves out and we prepare the apartment for a new resident. The costs include the costs of repainting and repairing apartment units, replacing obsolete or damaged appliances and re-leasing the units.
Removed
Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity.
Added
The ownership interests of other investors in these entities are recorded as non-controlling interests.
Removed
In the year ended December 31, 2022, the Company has charged revenue in the amount of $6.2 million for residential receivables not deemed probable of collection and recognized revenue of $3.0 million for a reassessment of collectability of residential receivables previously not deemed probable of collection.
Added
For remaining receivables probable of collection, the Company has recorded a general reserve under ASC 450.
Removed
Additionally, during the year ended December 31, 2022, the Company recognized a net $1.1 million for a reassessment of collectability of one commercial tenant at Tribeca House that was determined to be probable of collection.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA one percent change in interest rates on our $82.0 million of variable rate debt as of December 31, 2023, would impact annual net income by approximately $0.8 million. At December 31, 2023, there were no interest rate caps for the Company’s outstanding debt.
Biggest changeA one percent change in interest rates on our $140.0 million of variable rate debt as of December 31, 2024, would impact annual net income by approximately $1.4 million. At December 31, 2024, there were no interest rate caps for the Company’s outstanding debt.
The fair value of the Company’s notes payable was approximately $1,160.4 million and $1,092.3 million as of December 31, 2023 and 2022, respectively.
The fair value of the Company’s notes payable was approximately $1,209.6 million and $1,160.4 million as of December 31, 2024 and 2023, respectively.

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