# EDGAR Filing Document

**Accession Number:** 0001649096
**File Stem:** 0001437749-25-025494
**Filing Date:** 2025-8
**Character Count:** 32577
**Document Hash:** 16362367bb0fd9b29eae7e0cdcd1c2a2
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-025494.hdr.sgml**: 20250807

**ACCESSION NUMBER**: 0001437749-25-025494

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20250807

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20250807

**DATE AS OF CHANGE**: 20250807

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Clipper Realty Inc.
- **CENTRAL INDEX KEY:** 0001649096
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 474579660
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38010
- **FILM NUMBER:** 251195200

**BUSINESS ADDRESS:**
- **STREET 1:** 4611 12TH AVENUE, SUITE 1L
- **CITY:** BROOKLYN
- **STATE:** NY
- **ZIP:** 11219
- **BUSINESS PHONE:** 718-438-2804

**MAIL ADDRESS:**
- **STREET 1:** 4611 12TH AVENUE, SUITE 1L
- **CITY:** BROOKLYN
- **STATE:** NY
- **ZIP:** 11219

?xml version='1.0' encoding='ASCII'? clpr20250806_8k.htm

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

**FORM 8-K**

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

**Date of Report (Date of earliest event reported):**

**August 7, 2025**

CLIPPER REALTY INC.

**(Exact Name of Registrant as Specified in Charter)**

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| | | |
|:---|:---|:---|
| Maryland | 001-38010 | 47-4579660 |
| (State or Other | (Commission | (IRS Employer |
| Jurisdiction of | File Number) | Identification No.) |
| Incorporation) |  |  |

---

---

| | |
|:---|:---|
| 4611 12th Avenue, Suite 1L<br> **Brooklyn, New York** | **11219** |
| (Address of Principal Executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code: (718) 438-2804

**Former name or former address, if changed since last report: N/A**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ☐ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | CLPR | New York Stock Exchange |

---

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**Item 2.02. Results of Operations and Financial Condition**

On August 7, 2025, Clipper Realty Inc. issued a press release announcing its financial results for the quarterly period ended June 30, 2025. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

*The information in this Form 8-K under Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed* "*filed*" *for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the* "*Exchange Act*"*), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific referencing in such filing.*

**Item 9.01 Financial Statements and Exhibits**

(d) Exhibits:

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| | |
|:---|:---|
| **Exhibit**<br> **Number** | **Exhibit**<br> **Description** |
| 99.1 | [Press Release dated August 7, 2025, announcing financial results for the quarterly period ended June 30, 2025](ex_849397.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

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**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | |
|:---|:---|
| **Clipper Realty Inc.** | **Clipper Realty Inc.** |
| (Registrant) | (Registrant) |
| By: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ David Bistricer |
| Name: | David Bistricer |
| Title: | Co-Chairman and Chief Executive Officer |

---

Date: August 7, 2025

## Exhibit 99.1

**Exhibit 99.1**

![logodark.jpg](logodark.jpg)

**Clipper Realty Inc. Announces Second Quarter 2025 Results**

NEW YORK, August 7, 2025 /Business Wire/ -- Clipper Realty Inc. (NYSE: CLPR) (the "Company"), a leading owner and operator of multifamily residential and commercial properties in the New York metropolitan area, today announced financial and operating results for the three months ended June 30, 2025.

**Highlights for the Three Months Ended June 30, 2025**

● Quarterly revenues of $39.0 million for the second quarter of 2025, up 5% from last year

● Quarterly income from operations of $10.1 million for the second quarter of 2025

● Record net operating income ("NOI")<sup>1</sup> of $22.1 million for the second quarter of 2025, up 5% from last year

● Quarterly net loss of $1.4 million, or $0.7 million excluding impairment charge of $0.7 million, for the second quarter of 2025

● Record adjusted funds from operations ("AFFO")<sup>1</sup> of $8.3 million for the second quarter of 2025, up 18% from last year

● Declared a dividend of $0.095 per share for the second quarter of 2025

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

"For the quarter, the Company continued to maintain revenue, NOI and AFFO at a very high level based on very strong residential leasing. We continue to have high occupancy and strong renter demand in our buildings. For all our properties, new leases exceeded previous rents by nearly 14% and renewals by over 6%. At Flatbush Gardens, as a result of the Article 11 agreement with New York City, we continue to achieve increased rental recoveries under Section 610 and make the committed capital improvements and other improvements in the property. At the Dean Street ground-up development, we have completed construction, begun leasing and completed a bridge financing that will reduce interest costs, help fund excess operating costs during the lease up period and provide additional working capital. At the 250 Livingston Street commercial property, New York City will vacate later this month as announced and we continue to actively seek solutions. At our nearby 141 Livingston Street property, we have agreed to a lease renewal with New York City and continue to work with our lender to get consent and resolve a technical issue. Lastly, as announced, we sold our 10W 65<sup>th</sup> Street property, generating nearly $13 million in cash."

**Financial Results for the Three Months Ended June 30, 2025**

For the second quarter of 2025, revenues increased by $1.7 million, or 4.5%, to $39.0 million as compared to revenue of $37.3 million during the second quarter of 2024. Residential revenue increased by $1.3 million, or 5.0%, due to increases in rental rates and leased occupancy at all properties in 2025 partially offset by higher bad debt expense. Commercial income increased by $0.4 million, or 4.2%, in the second quarter of 2025 due to slightly higher escalation income at our commercial properties and rents from new leases.

For the second quarter of 2025, net loss was $1.4 million ($0.7 per share), or $0.7 million ($0.04 per share) excluding an impairment charge related to the sale of the 10 West 65<sup>th</sup> Street property. The net loss excluding the impairment charge compares to net loss of $1.7 million ($0.06 per share) for the second quarter of 2024. This lower net loss excluding the impairment charge was primarily due to increased rental revenue discussed above and lower utilities costs partially offset by higher tenant legal and payroll costs at the Flatbush Gardens property and slightly increased real estate taxes and insurance premiums. The loss on disposal of long-lived assets of $0.7 results from additional costs incurred in the sale of the 10 West 65<sup>th</sup> St property.

For the second quarter of 2025, AFFO was $8.3 million, or $0.20 per share, compared to $7.1 million, or $0.17 per share, for the second quarter of 2024. As discussed above, the increase was primarily due to increased rental revenue and lower utilities costs partially offset by higher tenant legal and payroll costs at the Flatbush Gardens property and slightly increased real estate taxes and insurance premiums.

------

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

------

**Balance Sheet**

At June 30, 2025, notes payable (excluding unamortized loan costs) were $1,277.3 million, compared to $1,275.4 million at December 31, 2024. The increase was primarily due to borrowings on Dean Street development construction loan partially offset by the retired debt in the sale of the 10 West 65<sup>th</sup> Street property. On May 2, 2025, the Dean Street property entered into a $160 million, two-year bridge loan, borrowing $141.8 million at closing, and repaid the existing $125 million Dean Street construction loan. The new bridge loan offers a lower interest rate of 2.65% over SOFR as compared to the construction loan, provides funds for operating expenses through the lease-up period and additional working capital of up to $13 million after attaining certain operating objectives. On May 30, 2025, the Company sold the 10 West 65<sup>th</sup> Street property for $43.6 million net of expenses and retired $31.2 million of the property's debt.

**Dividend**

The Company today declared a second quarter dividend of $0.095 per share, the same amount as last quarter, to shareholders of record on August 21, 2025, payable September 5, 2025.

**Conference Call and Supplemental Material**

The Company will host a conference call on August 07, 2025, at 5:30 PM Eastern Time to discuss the second quarter 2025 results and provide a business update. The conference call can be accessed by dialing (800) 346-7359 or (973) 528-0008, conference entry code 526913. A replay of the call will be available from August 07, 2025, following the call, through August 21, 2025, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 526913. Supplemental data to this press release can be found under the "Quarterly Earnings" navigation tab on the "Investors" page of our website at www.clipperrealty.com. The Company's filings with the Securities and Exchange Commission (the "SEC") are filed at <u>www.sec.gov</u> under Clipper Realty Inc.

**About Clipper Realty Inc.**

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

**Forward-Looking Statements**

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

We disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties), most of which are difficult to predict and many of which are beyond our control and which may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a discussion of these and other important factors that could affect our actual results, please refer to our filings with the SEC, including the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2024, and other reports filed from time to time with the SEC.

Contact Information:

Lawrence Kreider

Chief Financial Officer

(718) 438-2804 x2231

larry@clipperrealty.com

------

**Clipper Realty Inc.**

**Consolidated Balance Sheets**

**(In thousands, except for share and per share data)**

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
|  | (unaudited) |  |
| **ASSETS** |  |  |
| Investment in real estate |  |  |
| Land and improvements | $508311 | $571988 |
| Building and improvements | 720622 | 736420 |
| Tenant improvements | 3386 | 3366 |
| Furniture, fixtures and equipment | 13514 | 13897 |
| Real estate under development | 162281 | 146249 |
| Total investment in real estate | 1408114 | 1471920 |
| Accumulated depreciation | (250650) | (243392) |
| Investment in real estate, net | 1157464 | 1228528 |
| Cash and cash equivalents | 32029 | 19896 |
| Restricted cash | 28809 | 18156 |
| Tenant and other receivables, net of allowance for doubtful accounts of $321 and $258, respectively | 7843 | 6365 |
| Deferred rent | 2049 | 2108 |
| Deferred costs and intangible assets, net | 5465 | 5676 |
| Prepaid expenses and other assets | 7664 | 6236 |
| **TOTAL ASSETS** | $**1241323** | $**1286965** |
| **LIABILITIES AND EQUITY (DEFICIT)** |  |  |
| Liabilities: |  |  |
| Notes payable, net of unamortized loan costs of $9,152 and $9,019, respectively | $1268171 | $1266340 |
| Accounts payable and accrued liabilities | 15436 | 18731 |
| Security deposits | 9095 | 9067 |
| Other liabilities | 6317 | 7057 |
| **TOTAL LIABILITIES** | **1299019** | **1301195** |
| Equity: |  |  |
| Preferred stock, $0.01 par value; 100,000 shares authorized (including 140 shares of 12.5% Series A cumulative non-voting preferred stock), zero shares issued and outstanding |  |  |
| Common stock, $0.01 par value; 500,000,000 shares authorized, 16,146,546 shares issued and outstanding | 160 | 160 |
| Additional paid-in-capital | 90342 | 89938 |
| Accumulated deficit | (112438) | (95507) |
| Total stockholders' equity | (21936) | (5409) |
| Non-controlling interests | (35760) | (8821) |
| **TOTAL EQUITY (DEFICIT)** | **(57696)** | **(14230)** |
| **TOTAL LIABILITIES AND EQUITY (DEFICIT)** | $**1241323** | $**1286965** |

---

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**Clipper Realty Inc.**

**Consolidated Statements of Operations**

**(In thousands, except per share data)**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,**  | **Three Months Ended June 30,**  | **Six Months Ended June 30,**  | **Six Months Ended June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| **REVENUES** |  |  |  |  |
| Residential rental income | $29054 | $27748 | $58244 | $53854 |
| Commercial rental income | 9982 | 9598 | 20190 | 19252 |
| **TOTAL REVENUES** | **39036** | **37346** | **78434** | **73106** |
| **OPERATING EXPENSES** |  |  |  |  |
| Property operating expenses | 9561 | 8996 | 19672 | 17618 |
| Real estate taxes and insurance | 7518 | 7438 | 15145 | 14574 |
| General and administrative | 3819 | 3459 | 7644 | 7010 |
| Transaction pursuit costs | (10) |  | (10) |  |
| Depreciation and amortization | 7314 | 7455 | 14950 | 14834 |
| Impairment of Long-Lived Assets |  |  | 33780 |  |
| **TOTAL OPERATING EXPENSES** | **28202** | **27348** | **91181** | **54036** |
| Litigation settlement and other | (26) |  | (26) |  |
| **INCOME FROM OPERATIONS** | **10808** | **9998** | **(12773)** | **19070** |
| Loss on disposal of long-lived assets | (685) |  | (685) |  |
| Interest expense, net | (11479) | (11741) | (23001) | (23480) |
| **Net loss** | **(1356)** | **(1743)** | **(36459)** | **(4410)** |
| Net loss attributable to non-controlling interests | 840 | 1083 | 22596 | 2737 |
| **Net loss attributable to common stockholders** | $**(516)** | $**(660)** | $**(13863)** | $**(1673)** |
| Basic and diluted net loss per share | $(0.07) | $(0.06) | $(0.93) | $(0.15) |
| Weighted average common shares / OP units |  |  |  |  |
| Common shares outstanding | 16147 | 16063 | 16147 | 16063 |
| OP units outstanding | 26317 | 26317 | 26317 | 26317 |
| Diluted shares outstanding | 42464 | 42380 | 42464 | 42380 |

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**Clipper Realty Inc.**

**Consolidated Statements of Cash Flows**

**(In thousands)**

**(Unaudited)**

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| | | | |
|:---|:---|:---|:---|
|  |  | **Six Months Ended June 30,**  | **Six Months Ended June 30,**  |
|  | . | **2025** | **2024** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |  |
| Net loss | Net loss | $(36459) | $(4410) |
| *Adjustments to reconcile net loss to net cash provided by operating activities:* | *Adjustments to reconcile net loss to net cash provided by operating activities:* | *Adjustments to reconcile net loss to net cash provided by operating activities:* | |
| Depreciation | Depreciation | 14900 | 14781 |
| Amortization of deferred financing costs | Amortization of deferred financing costs | 914 | 1061 |
| Amortization of deferred costs and intangible assets | Amortization of deferred costs and intangible assets | 291 | 294 |
| Impairment of long-lived asset | Impairment of long-lived asset | 33780 |  |
| Loss on disposal of fixed assets | Loss on disposal of fixed assets | 685 |  |
| Gain on termination of lease | Gain on termination of lease |  |  |
| Deferred rent | Deferred rent | 59 | 87 |
| Stock-based compensation | Stock-based compensation | 2221 | 1274 |
| Bad debt expense | Bad debt expense | 50 | 16 |
| *Changes in operating assets and liabilities:* |  | | |
| Tenant and other receivables | Tenant and other receivables | (1524) | (671) |
| Prepaid expenses, other assets and deferred costs | Prepaid expenses, other assets and deferred costs | (1411) | 4511 |
| Accounts payable and accrued liabilities | Accounts payable and accrued liabilities | 2251 | (1777) |
| Security deposits | Security deposits | 24 | 345 |
| Other liabilities | Other liabilities | (737) | (467) |
| **Net cash provided by operating activities** | **Net cash provided by operating activities** | **15044** | **15044** |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |  |
| Additions to land, buildings and improvements | Additions to land, buildings and improvements | (25425) | (42051) |
| Proceeds from sale of real estate | Proceeds from sale of real estate | 43489 |  |
| Sale and purchase of interest rate caps, net | Sale and purchase of interest rate caps, net | (97) |  |
| **Net cash provided by (used in) investing activities** | **Net cash provided by (used in) investing activities** | **17967** | **(42051** |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |  |
| Payments of mortgage notes | Payments of mortgage notes | (163224) | (985) |
| Proceeds from mortgage notes | Proceeds from mortgage notes | 165188 | 37303 |
| Dividends and distributions | Dividends and distributions | (9228) | (8792) |
| Loan issuance and extinguishment costs | Loan issuance and extinguishment costs | (2961) |  |
| **Net cash (used in) provided by financing activities** | **Net cash (used in) provided by financing activities** | **(10225** | **27526** |
| Net increase in cash and cash equivalents and restricted cash, including cash and cash equivelnats and restricted cash classified with assets held for sale | Net increase in cash and cash equivalents and restricted cash, including cash and cash equivelnats and restricted cash classified with assets held for sale | 22786 | 519 |
| Cash and cash equivalents and restricted cash - beginning of period | Cash and cash equivalents and restricted cash - beginning of period | 38052 | 36225 |
| **Cash and cash equivalents and restricted cash - end of period** | **Cash and cash equivalents and restricted cash - end of period** | $**60838** | $**36744** |
| Cash and cash equivalents and restricted cash - beginning of period: | Cash and cash equivalents and restricted cash - beginning of period: | Cash and cash equivalents and restricted cash - beginning of period: |  |
| Cash and cash equivalents | Cash and cash equivalents | $19896 | $22163 |
| Restricted cash | Restricted cash | 18156 | 14062 |
| Total cash and cash equivalents and restricted cash - beginning of period | Total cash and cash equivalents and restricted cash - beginning of period | $38052 | $36225 |
| Cash and cash equivalents and restricted cash - end of period: | Cash and cash equivalents and restricted cash - end of period: |  |  |
| Cash and cash equivalents | Cash and cash equivalents | $32029 | $20254 |
| Restricted cash | Restricted cash | 28809 | 16490 |
| Total cash and cash equivalents and restricted cash - end of period | Total cash and cash equivalents and restricted cash - end of period | $60838 | $36744 |
| Supplemental cash flow information: |  |  |  |
| Cash paid for interest, net of capitalized interest of $5,902 and $4,760 in 2025 and 2024, respectively | Cash paid for interest, net of capitalized interest of $5,902 and $4,760 in 2025 and 2024, respectively | $23927 | $21232 |
| Non-cash interest capitalized to real estate under development | Non-cash interest capitalized to real estate under development | 1913 | 1132 |
| Additions to investment in real estate included in accounts payable and accrued liabilities | Additions to investment in real estate included in accounts payable and accrued liabilities | 2621 | 10070 |

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**Clipper Realty Inc.**

**Reconciliation of Non-GAAP Measures**

**(In thousands, except per share data)** <br> **(Unaudited)**

**Non-GAAP Financial Measures**

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

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

**Funds From Operations and Adjusted Funds From Operations**

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

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

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

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

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,**  | **Three Months Ended June 30,**  | **Six Months Ended June 30,**  | **Six Months Ended June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| **FFO** |  |  |  |  |
| Net loss | $(1356) | $(1743) | $(36459) | $(4410) |
| Real estate depreciation and amortization | 7314 | 7455 | 14950 | 14834 |
| **FFO** | $**5958** | $**5712** | $**(21509)** | $**10424** |
| **AFFO** |  |  |  |  |
| FFO | $5958 | $5712 | $(21509) | $10424 |
| Amortization of real estate tax intangible | 121 | 121 | 241 | 241 |
| Straight-line rent adjustments | 37 | 38 | 59 | 87 |
| Amortization of debt origination costs | 457 | 530 | 914 | 1061 |
| Amortization of LTIP awards | 1078 | 713 | 2221 | 1274 |
| Transaction pursuit costs | (10) |  | (10) |  |
| Loss on impairment of Long-Lived Assets |  |  | 33780 |  |
| Loss on disposal of long-lived assets | 685 |  | 685 |  |
| Litigation settlement and other | 26 |  | 26 |  |
| Recurring capital spending | (34) | (61) | (69) | (134) |
| **AFFO** | $**8318** | $**7053** | $**16338** | $**12953** |
| *AFFO Per Share/Unit* | $*0.20* | $*0.17* | $*0.38* | $*0.31* |

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**Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization**

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

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

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

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,**  | **Three Months Ended June 30,**  | **Six Months Ended June 30,**  | **Six Months Ended June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| **Adjusted EBITDA** |  |  |  |  |
| Net loss | $(1356) | $(1743) | $(36459) | $(4410) |
| Real estate depreciation and amortization | 7314 | 7455 | 14950 | 14834 |
| Amortization of real estate tax intangible | 121 | 121 | 241 | 241 |
| Straight-line rent adjustments | 37 | 38 | 59 | 87 |
| Amortization of LTIP awards | 1078 | 713 | 2221 | 1274 |
| Interest expense, net | 11479 | 11741 | 23001 | 23480 |
| Transaction pursuit costs | (10) |  | (10) |  |
| Loss on impairment of long-lived assets |  |  | 33780 |  |
| Loss on disposal of long-lived assets | 685 |  | 685 |  |
| Litigation settlement and other | 26 |  | 26 |  |
| **Adjusted EBITDA** | $**19374** | $**18325** | $**38494** | $**35506** |

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**Net Operating Income**

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

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

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,**  | **Three Months Ended June 30,**  | **Six Months Ended June 30,**  | **Six Months Ended June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| **NOI** |  |  |  |  |
| Income from operations | $10808 | $9998 | $(12773) | $19070 |
| Real estate depreciation and amortization | 7314 | 7455 | 14950 | 14834 |
| General and administrative expenses | 3819 | 3459 | 7644 | 7010 |
| Transaction pursuit costs | (10) |  | (10) |  |
| Amortization of real estate tax intangible | 121 | 121 | 241 | 241 |
| Straight-line rent adjustments | 37 | 38 | 59 | 87 |
| Loss on impairment of long-lived assets |  |  | 33780 |  |
| Litigation settlement and other | 26 |  | 26 |  |
| **NOI** | $**22115** | $**21071** | $**43917** | $**41242** |

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