Clipper Realty Inc. Reports Record Quarterly Results, Driven by Strong Rental Demand

Clipper Realty Inc. (NYSE: CLPR), a leading owner and operator of multifamily residential and commercial properties in the New York metropolitan area, recently reported its fourth quarter and full-year 2024 financial results. The company's strong performance was driven by robust rental demand, increasing rents, and successful strategic initiatives.



Financial Highlights
Clipper Realty's revenue for the fourth quarter of 2024 increased by 8.5% year-over-year to $38.2 million, while net operating income (NOI) grew by 9.2% to $25.6 million. For the full year, revenue reached $153.7 million, up 7.8% from 2023, and NOI totaled $98.4 million, an increase of 8.5%. The company's adjusted funds from operations (AFFO) per share for the full year was $1.25, compared to $1.15 in 2023.

Strong Rental Demand
Clipper Realty reported strong rental demand across its portfolio, with overall rents at all-time highs and nearly full lease occupancy. New leases exceeded prior rents by over 7% in some properties, with rents reaching over $84 and $90 per square foot in Tribeca House and Clover House, respectively. This robust demand can be attributed to the company's focus on the New York metropolitan area, where demand for high-quality rental properties remains strong.

Government Support and Ground-up Development
Clipper Realty's participation in the 40-year operating agreement under Article 11 of the Private Housing Finance Law for New York City Housing Preservation Development has eliminated real estate taxes at the property and provided for enhanced rental revenues, rental recovery, and use for assisted tenants. This has contributed to the company's aggressive fulfillment of commitments for property improvements and higher wages. Additionally, the company's ground-up development projects, such as Pacific House and 953 Dean Street, have contributed to its cash flow. Pacific House is now fully stabilized and 100% leased, yielding the projected 7% cap rate, while the construction of 953 Dean Street is proceeding ahead of schedule, with completion expected in time for the 2025 leasing season.

Strategic Initiatives
Clipper Realty is actively pursuing opportunities to recycle properties in its portfolio to maximize performance and improve cash flow. Preliminary marketing activities have begun for some properties, such as 10 West 62 Street. This approach allows the company to optimize its portfolio and potentially achieve better overall returns going forward.



Conclusion
Clipper Realty Inc. reported strong fourth quarter and full-year 2024 results, driven by robust rental demand, increasing rents, and successful strategic initiatives. The company's focus on the New York metropolitan area, ground-up development, and strategic recycling of properties have contributed to its success. With a secure dividend and attractive valuation, Clipper Realty remains an attractive investment opportunity for income-oriented investors. However, investors must be aware of potential risks associated with market fluctuations, regulatory changes, and portfolio concentration.