10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File Number: 001-38010

CLIPPER REALTY INC.

(Exact name of Registrant as specified in its charter)  

Maryland 47-4579660

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

4611 12th Avenue, Suite 1L

Brooklyn, New York 11219

(Address of principal executive offices) (Zip Code)

(718) 438-2804

(Registrant's telephone number, including area code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

As of November 2, 2023, there were 16,063,228 shares of the Registrant’s Common Stock outstanding.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
ITEM 1.	CONDENSED FINANCIAL STATEMENTS
	CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2023 (UNAUDITED) AND DECEMBER 31, 2022	3
	CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)	4
	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)	5
	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)	6
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 4.	CONTROLS AND PROCEDURES	27
PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	28
ITEM 1A.	RISK FACTORS	28
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES	28
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	28
ITEM 4.	MINE SAFETY DISCLOSURE	28
ITEM 5.	OTHER INFORMATION	28
ITEM 6.	EXHIBITS	29
SIGNATURES		30

1

PART I – FINANCIAL INFORMATION

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q for Clipper Realty Inc. (the “Company”), including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” regarding the Company’s financial position, business strategy and the plans, objectives, expectations, or assumptions of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “believe,” “expect,” “intend,” “continue,” “potential,” “plan,” “goal” or other words that convey the uncertainty of future events or outcomes are intended to identify forward-looking statements, which are generally not historical in nature. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. These risks, contingencies and uncertainties include, but are not limited to, the following:

● the impact of the recent increase in inflation in the United States which could increase the cost of acquiring, replacing and operating our properties

● market and economic conditions affecting occupancy levels, rental rates, the overall market value of our properties, our access to capital and the cost of capital and our ability to refinance indebtedness;

● economic or regulatory developments in New York City;

● the single government tenant in our commercial buildings may suffer financial difficulty;

● changes in rent stabilization regulations or claims by tenants in rent-stabilized units that their rents exceed specified maximum amounts under current regulations;

● our ability to control operating costs to the degree anticipated;

● the risk of damage to our properties, including from severe weather, natural disasters, climate change, and terrorist attacks;

● risks related to financing, cost overruns, and fluctuations in occupancy rates and rents resulting from development or redevelopment activities and the risk that we may not be able to pursue or complete development or redevelopment activities or that such development or redevelopment activities may not be profitable;

● concessions or significant capital expenditures that may be required to attract and retain tenants;

● the relative illiquidity of real estate investments;

● competition affecting our ability to engage in investment and development opportunities or attract or retain tenants;

● unknown or contingent liabilities in properties acquired in formative and future transactions;

● the possible effects of departure of key personnel in our management team on our investment opportunities and relationships with lenders and prospective business partners;

● conflicts of interest faced by members of management relating to the acquisition of assets and the development of properties, which may not be resolved in our favor;

● a transfer of a controlling interest in any of our properties that may obligate us to pay transfer tax based on the fair market value of the real property transferred;

● the need to establish litigation reserves, costs to defend litigation and unfavorable litigation settlements or judgments; and

● other risks and risk factors or uncertainties identified from time to time in our filings with the SEC.

These forward-looking statements speak only as of the date of this report, and the Company undertakes no obligation to revise or update these statements to reflect subsequent events or circumstances.

2

ITEM 1.  CONDENSED FINANCIAL STATEMENTS

Clipper Realty Inc.

Consolidated Balance Sheets

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

	September 30, 2023			December 31, 2022
	(unaudited)
ASSETS
Investment in real estate
Land and improvements	$	571,988		$	540,859
Building and improvements		722,350			656,460
Tenant improvements		3,366			3,406
Furniture, fixtures and equipment		13,227			12,878
Real estate under development		73,303			142,287
Total investment in real estate		1,384,234			1,355,890
Accumulated depreciation		(206,077	)		(184,781	)
Investment in real estate, net		1,178,157			1,171,109
Cash and cash equivalents		22,450			18,152
Restricted cash		14,904			12,514
Tenant and other receivables, net of allowance for doubtful accounts of $184 and $321, respectively		5,231			5,005
Deferred rent		2,508			2,573
Deferred costs and intangible assets, net		6,270			6,624
Prepaid expenses and other assets		10,239			13,654
TOTAL ASSETS	$	1,239,759		$	1,229,631
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized loan costs of $14,578 and $9,650, respectively	$	1,197,278		$	1,161,588
Accounts payable and accrued liabilities		12,954			17,094
Security deposits		8,653			7,940
Below-market leases, net		—			18
Other liabilities		7,234			5,812
TOTAL LIABILITIES		1,226,119			1,192,452
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,16,063,228 and 16,063,228 shares issued and outstanding, respectively		160			160
Additional paid-in-capital		89,302			88,829
Accumulated deficit		(84,290	)		(74,895	)
Total stockholders’ equity		5,172			14,094
Non-controlling interests		8,468			23,085
TOTAL EQUITY		13,640			37,179
TOTAL LIABILITIES AND EQUITY	$	1,239,759		$	1,229,631

See accompanying notes to these consolidated financial statements.

3

Clipper Realty Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
REVENUES
Residential rental income	$	25,501		$	23,108		$	74,481		$	67,167
Commercial rental income		9,627			9,692			28,857			29,570
TOTAL REVENUES		35,128			32,800			103,338			96,737
OPERATING EXPENSES
Property operating expenses		7,930			7,267			22,811			21,734
Real estate taxes and insurance		7,374			8,252			24,610			24,069
General and administrative		3,340			3,209			10,029			9,348
Transaction pursuit costs		—			(10	)		357			506
Depreciation and amortization		7,282			6,784			21,376			20,221
TOTAL OPERATING EXPENSES		25,926			25,502			79,183			75,878
INCOME FROM OPERATIONS		9,202			7,298			24,155			20,859
Interest expense, net		(11,527	)		(10,086	)		(32,996	)		(30,076	)
Loss on extinguishment of debt		—			—			(3,868	)		—
Net loss		(2,325	)		(2,788	)		(12,709	)		(9,217	)
Net loss attributable to non-controlling interests		1,444			1,731			7,892			5,723
Net loss attributable to common stockholders	$	(881	)	$	(1,057	)	$	(4,817	)	$	(3,494	)
Basic and diluted net loss per share	$	(0.07	)	$	(0.08	)	$	(0.36	)	$	(0.26	)

See accompanying notes to these consolidated financial statements.

4

Clipper Realty Inc.

Consolidated Statements of Changes in Equity

(In thousands, except for share data)

(Unaudited)

	Number of common shares		Common stock		Additional paid-in- capital		Accumulated deficit			Total stockholders' equity			Non- controlling interests			Total equity
Balance December 31, 2022		16,063,228	$	160	$	88,829	$	(74,895	)	$	14,094		$	23,085		$	37,179
Amortization of LTIP grants		—		—		—		—			—			648			648
Dividends and distributions		—		—		—		(1,526	)		(1,526	)		(2,822	)		(4,348	)
Net loss		—		—		—		(2,687	)		(2,687	)		(4,402	)		(7,089	)
Reallocation of noncontrolling interests		—		—		123		—			123			(123	)		—
Balance March 31, 2023		16,063,228	$	160	$	88,952	$	(79,108	)	$	10,004		$	16,386		$	26,390
Amortization of LTIP grants		—		—		—		—			—			783			783
Dividends and distributions		—		—		—		(1,526	)		(1,526	)		(2,822	)		(4,348	)
Net loss		—		—		—		(1,249	)		(1,249	)		(2,046	)		(3,295	)
Reallocation of noncontrolling interests		—		—		175		—			175			(175	)		—
Balance June 30, 2023		16,063,228	$	160	$	89,127	$	(81,883	)	$	7,404		$	12,126		$	19,530
Amortization of LTIP grants		—		—		—		—			—			783			783
Dividends and distributions		—		—		—		(1,526	)		(1,526	)		(2,822	)		(4,348	)
Net loss		—		—		—		(881	)		(881	)		(1,444	)		(2,325	)
Reallocation of noncontrolling interests		—		—		175		—			175			(175	)		—
Balance September 30, 2023		16,063,228	$	160	$	89,302	$	(84,290	)	$	5,172		$	8,468		$	13,640

	Number of common shares		Common stock		Additional paid-in- capital		Accumulated deficit			Total stockholders' equity			Non- controlling interests			Total equity
Balance December 31, 2021		16,063,228	$	160	$	88,089	$	(61,736	)	$	26,513		$	43,436		$	69,949
Cumulative-effect adjustment		—		—		—		(2,291	)		(2,291	)		(3,755	)		(6,046	)
Amortization of LTIP grants		—		—		—		—			—			495			495
Dividends and distributions		—		—		—		(1,526	)		(1,526	)		(2,662	)		(4,188	)
Net loss		—		—		—		(1,318	)		(1,318	)		(2,158	)		(3,476	)
Reallocation of noncontrolling interests		—		—		126		—			126			(126	)		—
Balance March 31, 2022		16,063,228	$	160	$	88,215	$	(66,871	)	$	21,504		$	35,230		$	56,734
Amortization of LTIP grants		—		—		—		—			—			714			714
Dividends and distributions		—		—		—		(1,526	)		(1,526	)		(2,747	)		(4,273	)
Net loss		—		—		—		(1,119	)		(1,119	)		(1,834	)		(2,953	)
Reallocation of noncontrolling interests		—		—		177		—			177			(177	)		—
Balance June 30, 2022		16,063,228	$	160	$	88,392	$	(69,516	)	$	19,036		$	31,186		$	50,222
Amortization of LTIP grants		—		—		—		—			—			855			855
Dividends and distributions		—		—		—		(1,526	)		(1,526	)		(2,780	)		(4,306	)
Net loss		—		—		—		(1,057	)		(1,057	)		(1,731	)		(2,788	)
Reallocation of noncontrolling interests		—		—		218		—			218			(218	)		—
Balance September 30, 2022		16,063,228	$	160	$	88,610	$	(72,099	)	$	16,671		$	27,312		$	43,983

See accompanying notes to these consolidated financial statements.

5

Clipper Realty Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(12,709	)	$	(9,217	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		21,296			20,041
Amortization of deferred financing costs		1,098			939
Amortization of deferred costs and intangible assets		441			540
Amortization of above- and below-market leases		(18	)		(26	)
Loss on extinguishment of debt		3,868			—
Deferred rent		66			(220	)
Stock-based compensation		2,214			2,064
Bad debt expense		(120	)		(387	)
Changes in operating assets and liabilities:
Tenant and other receivables		(103	)		(304	)
Prepaid expenses, other assets and deferred costs		3,328			2,606
Accounts payable and accrued liabilities		(4,366	)		(2,558	)
Security deposits		713			896
Other liabilities		1,422			785
Net cash provided by operating activities		17,130			15,159
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings, and improvements		(27,783	)		(35,966	)
Return of acquisition deposits		—			2,015
Cash paid in connection with acquisition of real estate		—			(8,041	)
Net cash used in investing activities		(27,783	)		(41,992	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of mortgage notes		(84,241	)		(1,652	)
Proceeds from mortgage notes		124,858			24,855
Dividends and distributions		(13,044	)		(12,767	)
Loan issuance and extinguishment costs		(10,232	)		(335	)
Net cash provided by financing activities		17,341			10,101
Net increase (decrease) in cash and cash equivalents and restricted cash		6,688			(16,732	)
Cash and cash equivalents and restricted cash - beginning of period		30,666			52,224
Cash and cash equivalents and restricted cash - end of period	$	37,354		$	35,492
Cash and cash equivalents and restricted cash – beginning of period:
Cash and cash equivalents	$	18,152		$	34,524
Restricted cash		12,514			17,700
Total cash and cash equivalents and restricted cash – beginning of period	$	30,666		$	52,224
Cash and cash equivalents and restricted cash – end of period:
Cash and cash equivalents	$	22,450		$	19,987
Restricted cash		14,904			15,505
Total cash and cash equivalents and restricted cash – end of period	$	37,354		$	35,492
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $3,855 and $3,775 in 2023 and 2022, respectively	$	32,924		$	29,244
Non-cash interest capitalized to real estate under development		339			1,749
Additions to investment in real estate included in accounts payable and accrued liabilities		5,102			5,214

See accompanying notes to these consolidated financial statements.

6

Clipper Realty Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except for share and per share data and as noted)

(Unaudited)

INTRODUCTION TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements of Clipper Realty Inc. (the “Company” or “we”) and subsidiaries have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 16, 2023. Note that any references to square footage and unit count are outside the scope of our Independent registered public accounting firm’s review.

The financial information presented reflects all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, cash flows and financial position for the interim periods presented. These results are not necessarily indicative of a full year’s results of operations.

1. Organization

As of September 30, 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;

• 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, 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. In February and April 2022, the Company purchased additional parcels of land for $3.7 million and $4.3 million, respectively, and, in August 2022, paid $2.5 million to a tenant to vacate a leased parcel.

7

During 2019, we entered into a joint venture in which we own a 50% interest through which we are paying certain legal and advisory expenses in connection with various rent laws and ordinances which govern certain of our properties. During the nine months ended September 30, 2022, the Company incurred $0.11 million which was recorded as part of general and administrative in the Condensed Consolidated Statements of Operations, and fulfilled its commitment in the joint venture.

On June 29, 2023 the Company’s Flatbush Gardens property entered into a 40 year regulatory agreement under Article 11 of the Private Housing Finance Law with the New York City Department Housing Preservation and Development (“Article 11 Agreement”). For the full term of the agreement, Flatbush Gardens received a full exemption from property taxes, committed to maintain rents with existing area median income groups, received eligibility for incremental rental assistance payments under Section 610 of the Private Housing Financing Law for tenants receiving government rental assistance, committed to lease 249 units to formerly homeless families and provide certain services as units become vacant, and committed to pay prevailing wage rates to employees of the property as defined under New York City regulations. The property also committed to a 3-year capital improvements plan. As part of the agreement, a new not-for-profit Corporation, Flatbush Gardens Housing Development Fund Corporation (“HDFC”), became nominal owner of the Flatbush Gardens properties. This has no effect on the beneficial operations and finances of the properties but provides HDFC with certain consent rights for transfers and financings of the properties. (See Note 8 Commitments and Contingencies).

The operations of Clipper Realty Inc. and its consolidated subsidiaries are carried on primarily through the Operating Partnership. The Company has elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code (the “Code”). The Company is the sole general partner of the Operating Partnership and the Operating Partnership is the sole managing member of the LLCs that comprised the Predecessor.

At September 30, 2023, the Company’s interest, through the Operating Partnership, in the LLCs that own the properties generally entitles it to 37.9% of the aggregate cash distributions from, and the profits and losses of, the LLCs.

The Company determined that the Operating Partnership and the LLCs are variable interest entities (“VIEs”) and that the Company had control over these entities and was the primary beneficiary. The assets and liabilities of these VIEs represented substantially all of the Company’s assets and liabilities.

2. Significant Accounting Policies

Segments

At September 30, 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.

Basis of Consolidation

The accompanying consolidated financial statements of the Company are prepared in accordance with 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. The ownership interests of other investors in these entities are recorded as non-controlling interests.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.

Investment in Real Estate

Real estate assets held for investment are carried at historical cost and consist of land, buildings and improvements, furniture, fixtures and equipment. Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Expenditures for improvements, renovations, and replacements of real estate assets are capitalized and depreciated over their estimated useful lives if the expenditures qualify as betterment or the life of the related asset will be substantially extended beyond the original life expectancy.

In accordance with ASU 2018-01, "Business Combinations – Clarifying the Definition of a Business,” the Company evaluates each acquisition of real estate or in-substance real estate to determine if the integrated set of assets and activities acquired meets the definition of a business and needs to be accounted for as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:

• Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or

• The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).

8

An acquired process is considered substantive if:

• The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable and experienced in performing the process:

• The process cannot be replaced without significant cost, effort or delay; or

• The process is considered unique or scarce.

Generally, the Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

Upon acquisition of real estate, the Company assesses the fair values of acquired tangible and intangible assets including land, buildings, tenant improvements, above-market and below-market leases, in-place leases and any other identified intangible assets and assumed liabilities. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. In estimating fair value of tangible and intangible assets acquired, the Company assesses and considers fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates, estimates of replacement costs, net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

The Company records acquired above-market and below-market lease values initially based on the present value, using a discount rate which reflects the risks associated with the leases acquired based on the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed renewal options for the below-market leases. Other intangible assets acquired include amounts for in-place lease values and tenant relationship values (if any) that are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A property’s value is impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. 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. In the event that the Company obtains proceeds through an insurance policy due to impairment, the proceeds are offset against the write-down in calculating gain/loss on disposal of assets. Management of the Company does not believe that any of its properties within the portfolio are impaired as of September 30, 2023.

For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the assets less estimated cost to sell is less than the carrying value of the assets. Properties classified as real estate held-for-sale generally represent properties that are actively marketed or contracted for sale with closing expected to occur within the next twelve months. Real estate held-for-sale is carried at the lower of cost, net of accumulated depreciation, or fair value less cost to sell, determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held-for-sale properties are charged to expense as incurred. Expenditures for improvements, renovations and replacements related to held-for-sale properties are capitalized at cost. Depreciation is not recorded on real estate held-for-sale.

If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balances of the related intangibles are written off. The tenant improvements and origination costs are amortized to expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date).

9

Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

Building and improvements (in years)	10	–	44
Tenant improvements	Shorter of useful life or lease term
Furniture, fixtures and equipment (in years)	3	–	15

The capitalized above-market lease values are amortized as a reduction to base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases.

Cash and Cash Equivalents

Cash and cash equivalents are defined as cash on hand and in banks, plus all short-term investments with a maturity of three months or less when purchased. The Company maintains some of its cash in bank deposit accounts, which, at times, may exceed the federally insured limit. No losses have been experienced related to such accounts.

Restricted Cash

Restricted cash generally consists of escrows for future real estate taxes and insurance expenditures, repairs, capital improvements, loan reserves and security deposits.

Tenant and Other Receivables and Allowance for Doubtful Accounts

Tenant and other receivables are comprised of amounts due for monthly rents and other charges less allowance for doubtful accounts. As described more fully under Revenue Recognition below, in the first quarter of 2022 the Company adopted Accounting Standards Codification (“ASC”) 842 “Leases” which replaced guidance under ASC 840 and provided for transition from balances at December 31, 2021. In accordance with ASC 842, the Company performed a detailed review of amounts due from tenants to determine if accounts receivable balances and future lease payments were probable of collection, wrote off receivables not probable of collection and recorded a general reserve against revenues for receivables probable of collection for which a loss can be reasonably estimated. 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. 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. 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 consolidated statements of operations. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions which do not close are expensed in the period the financing transaction is terminated.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) adjusted for changes in unrealized gains and losses, reported in equity, for financial instruments required to be reported at fair value under GAAP. For the three and nine months ended September 30, 2023 and 2022, the Company did not own any financial instruments for which the change in value was not reported in net income (loss); accordingly, its comprehensive income (loss) was its net income (loss) as presented in the consolidated statements of operations.

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 ASC 842, “Leases” which replaces the guidance under ASC 840. 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. 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. 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 ASC 450.

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In the three and nine months ended September 30, 2023 the Company has charged revenue in the amount of $0.9 million and $3.3 million, respectively for residential receivables not deemed probable of collection and recognized revenue of $0.2 million and $1.3 million respectively, for a reassessment of collectability of residential receivables previously not deemed probable of collection.

In the three and nine months ended September 30, 2022, the Company has charged revenue in the amount of $0.8 million and $2.3 million, respectively, for residential receivables not deemed probable of collection. and recognized revenue of $0.8 million and $5.0 million respectively, for a reassessment of collectability of residential receivables previously not deemed probable of collection. Additionally, during the nine months ended September 30, 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.

In transitioning to ASC 842 in the first quarter of 2022, the Company elected the modified retrospective approach to existing leases at the beginning of the quarter and has recorded a cumulative-effect adjustment in retained earnings using the above methods applied to balances as of December 31, 2021, of $6.0 million.

In accordance with the provisions of ASC 842, rental revenue for commercial leases is recognized on a straight-line basis over the terms of the respective leases. Deferred rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Rental income attributable to residential leases and parking is recognized as earned, which is not materially different from the straight-line basis. Leases entered by residents for apartment units are generally for one-year terms, renewable upon consent of both parties on an annual or monthly basis.

Reimbursements for operating expenses due from tenants pursuant to their lease agreements are recognized as revenue in the period the applicable expenses are incurred. These costs generally include real estate taxes, utilities, insurance, common area maintenance costs and other recoverable costs and are recorded as part of commercial rental income in the consolidated statements of operations.

Stock-based Compensation

The Company accounts for stock-based compensation pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Compensation — Stock Compensation.” As such, all equity-based awards are reflected as compensation expense in the Company’s consolidated statements of operations over their vesting period based on the fair value at the date of grant. In the event of a forfeiture, the previously recognized expense would be reversed.

As of September 30, 2023, and December 31, 2022, there were 3,382,465 and 2,949,823 long-term incentive plan (“LTIP”) units outstanding, respectively, with a weighted average grant date fair value of $8.80 and $9.26 per unit, respectively. As of September 30, 2023, and December 31, 2022, there was $10.4 million and $10.2 million, respectively, of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under share incentive plans. As of September 30, 2023, the weighted-average period over which the unrecognized compensation expense will be recorded is approximately four years.

In March 2023, the Company granted employees and non-employee directors 274,911 and 157,731 LTIP units, respectively, with a weighted-average grant date value of $5.62 per unit. The grants vesting period range from up to one year for those granted to the non-employee directors and from 1 to 2.5 years to those granted to employees as 2022 bonus and long-term incentive compensation.

In April 2022, the Company granted employees and non-employee directors 900,000 and 275,000 LTIP units, respectively, with a weighted-average grant date value of $8.70 per unit, substantially all which vest in 10 years. Of these grants, 270,000 and 82,500 were approved by the shareholders of the Company at the 2022 Annual Meeting of the Shareholders on June 15, 2022 to increase the number of shares issuable under the Company’s 2015 Omnibus Incentive Plan and the 2015 Non-Employee Director Plan by 1.3 million and 0.5 million shares, respectively.

Transaction Pursuit Costs

Transaction pursuit costs primarily reflect costs incurred for abandoned acquisition, disposition or other transaction pursuits.

During the three and nine-month periods ended September 30, 2023 transaction pursuit costs include $0 and $357, respectively of costs related to the Article 11 Agreement. During the three- and nine-month periods ended September 30, 2022 the company incurred $(10) and $506, respectively, primarily for an abandoned acquisition, as well as the acquisition of the Dean Street property.

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Income Taxes

The Company elected to be taxed and to operate in a manner that will allow it to qualify as a REIT under the Code. To qualify as a REIT, the Company is required to distribute dividends equal to at least 90% of the REIT taxable income (computed without regard to the dividends paid deduction and net capital gains) to its stockholders, and meet the various other requirements imposed by the Code relating to matters such as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided the Company qualifies for taxation as a REIT, it is generally not subject to U.S. federal corporate-level income tax on the earnings distributed currently to its stockholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and any applicable alternative minimum tax. In addition, the Company may not be able to re-elect as a REIT for the four subsequent taxable years. The entities comprising the Predecessor are limited liability companies and are treated as pass-through entities for income tax purposes. Accordingly, no provision has been made for federal, state or local income or franchise taxes in the accompanying consolidated financial statements.

In accordance with FASB ASC Topic 740, the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on its financial position or results of operations. The prior three years’ income tax returns are subject to review by the Internal Revenue Service.

Fair Value Measurements

Refer to Note 7, “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 required by FASB guidance, the Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation.

Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecast transactions, are considered cash flow hedges. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in the fair value or cash flows of the derivative hedging instrument with the changes in the fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value would be recognized in earnings. As of September 30, 2023 and December 31, 2022, 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 September 30, 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. The Company did not have dilutive securities as of September 30, 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 net loss allocable to such units is reflected as non-controlling interests in the accompanying consolidated financial statements.

The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2023			2022			2023			2022
Numerator
Net loss attributable to common stockholders	$	(881	)	$	(1,057	)	$	(4,817	)	$	(3,494	)
Less: income attributable to participating securities		(322	)		(280	)		(967	)		(688	)
Subtotal	$	(1,203	)	$	(1,337	)	$	(5,784	)	$	(4,182	)
Denominator
Weighted-average common shares outstanding		16,063			16,063			16,063			16,063
Basic and diluted net loss per share attributable to common stockholders	$	(0.07	)	$	(0.08	)	$	(0.36	)	$	(0.26	)

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Recently Issued Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables and other long-term financings including available for sale and held-to-maturity debt securities, and loans. Subsequently, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the standard and should continue to be accounted for in accordance with the leases standard (Topic 842). As a result, the adoption of the standard as of January 1, 2022 did not have a material impact on the consolidated financial statements. 

In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (Topic 848). ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and may be applied prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 as and when we enter transactions to which this guidance applies.

In January 2021, FASB issued ASU 2021-01, “Reference Rate Reform” (Topic 848). ASU 2021-01 modifies ASC 848 (ASU 2020-04), which was intended to provide relief related to “contracts and transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.” ASU 2021-01 expands the scope of ASC 848 to include all affected derivatives and give reporting entities the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. ASU 2021-01 also adds implementation guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. The Company does not expect the adoption of ASU 2021-01 to have a material impact on its consolidated financial statements.

3. Acquisitions

During the nine months ended September 30, 2022 the Company acquired additional parcels of land for the Dean Street property, for $3,701 including acquisition costs of $151.

4. Deferred Costs and Intangible Assets

Deferred costs and intangible assets consist of the following:

	September 30, 2023			December 31, 2022
	(unaudited)
Deferred costs	$	348		$	348
Lease origination costs		1,463			1,376
In-place leases		428			428
Real estate tax abatements		9,142			9,142
Total deferred costs and intangible assets		11,381			11,294
Less accumulated amortization		(5,111	)		(4,670	)
Total deferred costs and intangible assets, net	$	6,270		$	6,624

Amortization of deferred costs, lease origination costs and in-place lease intangible assets was $29 and $60 for the three months ended September 30, 2023 and 2022, respectively, and $79 and $178 for the nine months ended September 30, 2023 and 2022, respectively; Amortization of real estate tax abatements of $120 and $120 for the three months ended September 30, 2023 and 2022, respectively, and $361 and $361 for the nine months ended September 30, 2023 and 2022, is included in real estate taxes and insurance in the consolidated statements of operations.

Deferred costs and intangible assets as of September 30, 2023, amortize in future years as follows:

2023 (Remainder)	$	157
2024		587
2025		570
2026		546
2027		534
Thereafter		3,876
Total	$	6,270

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5. Notes Payable

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:

Property	Maturity	Interest Rate		September 30, 2023			December 31, 2022
Flatbush Gardens, Brooklyn, NY (a)	6/1/2032		3.125%	$	329,000		$	329,000
250 Livingston Street, Brooklyn, NY (b)	6/6/2029		3.63%		125,000			125,000
141 Livingston Street, Brooklyn, NY (c)	3/6/2031		3.21%		100,000			100,000
Tribeca House, Manhattan, NY (d)	3/6/2028		4.506%		360,000			360,000
Aspen, Manhattan, NY (e)	7/1/2028		3.68%		61,399			62,554
Clover House, Brooklyn, NY (f)	12/1/2029		3.53%		82,000			82,000
10 West 65th Street, Manhattan, NY (g)	11/1/2027	SOFR + 2.50%			31,929			32,222
1010 Pacific Street, Brooklyn, NY (h)	9/1/2024	LIBOR + 3.60%			—			43,477
1010 Pacific Street, Brooklyn, NY (h)	9/15/2025		5.55%		60,000			—
1010 Pacific Street, Brooklyn, NY (h)	9/15/2025		6.370%		20,000			—
Dean Street, Brooklyn, NY (i)	9/22/2023	Prime + 1.60%			—			36,985
Dean Street, Brooklyn, NY (i)	8/10/2026	SOFR + 4%			37,899			—
Dean Street, Brooklyn, NY (i)	8/10/2026	SOFR + 10%			4,629			—
Total debt				$	1,211,856		$	1,171,238
Unamortized debt issuance costs					(14,578	)		(9,650	)
Total debt, net of unamortized debt issuance costs				$	1,197,278		$	1,161,588

(a) The $329,000 mortgage note agreement with New York Community Bank (“NYCB”), entered into on May 8, 2020, matures on June 1, 2032, and bears interest at 3.125% through May 2027 and thereafter at the prime rate plus 2.75%, subject to an option to fix the rate. The note requires interest-only payments through May 2027, and monthly principal and interest payments thereafter based on a 30-year amortization schedule. The Company has 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.

(b) The $125,000 mortgage note agreement with Citi Real Estate Funding Inc., entered into on May 31, 2019, matures on June 6, 2029, bears interest at 3.63% and requires interest-only payments for the entire term. The Company has 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.

(c), The $100,000 mortgage note agreement with Citi Real Estate Funding Inc., entered into on February 18, 2021 matures on March 6, 2031, bears interest at 3.21% and requires interest-only payments for the entire term. The Company has 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.

(d) The $360,000 loan with Deutsche Bank, entered into on February 21, 2018, matures on March 6, 2028, bears interest at 4.506% and requires interest-only payments for the entire term. The Company has the option to prepay all (but not less than all) of the unpaid balance of the loan prior to the maturity date, subject to a prepayment premium if it occurs prior to December 6, 2027.

(e) The $70,000 mortgage note agreement with Capital One Multifamily Finance LLC matures on July 1, 2028, and bears interest at 3.68%. The note required interest-only payments through July 2017, and monthly principal and interest payments of $321 thereafter based on a 30-year amortization schedule. The Company has the option to prepay the note prior to the maturity date, subject to a prepayment premium.

(f) The $82,000 mortgage note agreement with MetLife Investment Management, entered into on November 8, 2019, matures on December 1, 2029, bears interest at 3.53% and requires interest-only payments for the entire term. The Company has 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.

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(g) The $32,200 mortgage note agreement with NYCB entered into in connection with the acquisition of the property matures on November 1, 2027. Through October 2022 the Company paid a fixed interest rate of 3.375% and thereafter was scheduled to pay interest at the prime rate plus 2.75%, subject to an option to fix the rate. 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 September 30, 2023). 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 has 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.

(h) On December 24, 2019, the Company entered into a $18,600 mortgage note agreement with CIT Bank, N.A., related to the 1010 Pacific Street acquisition. The Company also entered into a pre-development bridge loan secured by the property with the same lender to provide up to $2,987 for eligible pre-development and carrying costs. The notes were scheduled to mature on June 24, 2021, required interest-only payments and bore interest at one-month LIBOR (with a floor of 1.25%) plus 3.60%. The notes were extended in June 2021 with a new maturity date of August 30, 2021. The Company guaranteed this mortgage note and complied with the financial covenants therein.

On August 10, 2021, the Company refinanced the above 1010 Pacific Street loan with a group of loans with AIG Asset Management (U.S.), LLC providing for maximum borrowings of $52,500 to develop the property. The notes had a 36-month term, bearing interest at 30 days LIBOR plus 3.60% (with a floor of 4.1%) (9.35% as of March 31, 2023). The notes were scheduled to mature on September 1, 2024 and could have been extended until September 1, 2026. The Company could have prepaid the unpaid balance of the note within five months of maturity without penalty.

On February 9, 2023 the Company refinanced this construction loan with a mortgage loan with Valley National Bank which provided for maximum borrowings of $80,000. The loan provided initial funding of $60,000 and a further $20,000 subject to achievement of certain financial targets. The loan has a term of five years and an initial annual interest rate of 5.7% subject to reduction by up to 25 basis points upon achievement of certain financial targets. The interest rate on subsequent fundings will be fixed at the time of any funding. The loan requires interest-only payments for the first two years and principal and interest thereafter based on a 30-year amortization schedule. The Company has the option to prepay in full, or in part, the unpaid balance of the note prior to the maturity date. Prior to the second anniversary of the date of the note prepayment is subject to certain prepayment premiums, as defined. After the second anniversary of the date of the note the prepayment is not subject to a prepayment premium. During the quarter ended June 30, 2023 the company achieved a financial target and the interest rate was reduced by 15 basis points to 5.55%.

On September 15, 2023 the Company borrowed an additional $20,000 from Valley National Bank. The additional borrowing has a term of twenty-four months and an annual interest rate of 6.37%. The loan is interest only subject to the maintenance of certain financial targets after the first 16 months of the term. In conjunction with the additional borrowing, the Company and the bank agreed to amend the expiration date of the initial $60,000 to expire at the same time as the additional borrowing. No change was made to the interest rate on the initial borrowing.

In conjunction with the refinancing, the Company incurred $3,868 of loan extinguishment costs related to prepayment penalties, unamortized deferred financed costs of the previous loan and other fees. These costs are included in the consolidated statement of operations for the nine-month period ended September 30, 2023.

(i) On December 22, 2021, the Company entered into a $30,000 mortgage note agreement with Bank Leumi, N.A related to the Dean Street acquisition. The notes original maturity was December 22, 2022 and was subsequently extended to September 22, 2023. The note required interest-only payments and bears interest at the prime rate (with a floor of 3.25%) plus 1.60% (9.85% as of June 30, 2023). In April 2022, the Company borrowed an additional $6,985 under the mortgage note in connection with the acquisition of additional parcels of land in February and April 2022.

On August 10, 2023, the “Company refinanced its $37 million mortgage on its Dean Street development with a senior construction loan (“Senior Loan”) that permits borrowings up to $115 million with Valley National Bank and a Mezzanine Loan (combined “Construction Loans”) that permits borrowings up to $8 million with BADF 953 Dean Street Lender LLC. The Construction Loans will finance the development of 240 residential units and 9,319 square feet of commercial space.

The Senior Loan will allow maximum borrowings of $115 million for a 30-month term, have two 6-month extension options, and bear interest at 1-Month Term SOFR plus 4.00%, with an all-in floor of 5.50% (9.33% at September 30, 2023). The Senior Loan will consist of a land loan, funded at closing to refinance the existing loan totaling $37 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.

The Mezzanine Loan will allow 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% (15.33% at September 30, 2023). Interest shall accrue of the principal, is compounded monthly and is due at the end of the loan. At closing, $4.5 million was funded to cover closing costs incurred on the construction loans.

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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 September 30, 2023.

The Company has provided a limited guaranty for the mortgage notes at several of its properties. 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 and debt yield ratios. In the event that they are 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 following table summarizes principal payment requirements under the terms of the mortgage notes as of September 30, 2023:

2023 (Remainder)	$	487
2024		1,993
2025		82,092
2026		44,718
2027		33,461
Thereafter		1,049,105
Total	$	1,211,856

6. Rental Income under Operating Leases

The Company’s commercial properties are leased to commercial tenants under operating leases with fixed terms of varying lengths. As of September 30, 2023, the minimum future cash rents receivable (excluding tenant reimbursements for operating expenses) under non-cancelable operating leases for the commercial tenants in each of the next five years and thereafter are as follows:

2023 (Remainder)	$	7,580
2024		30,457
2025		24,822
2026		4,548
2027		3,915
Thereafter		19,315
Total	$	90,637

The Company has commercial leases with the City of New York that comprised approximately 23% and 24% of total revenues for the three months ended September 30, 2023 and 2022, respectively, and 23% and 24% of total revenues for the nine months ended September 30, 2023 and 2022, respectively.

7. Fair Value of Financial Instruments

GAAP requires the measurement of certain financial instruments at fair value on a recurring basis. In addition, GAAP requires the measure of other financial instruments and balances at fair value on a non-recurring basis. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that require inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices from an independent third-party source to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources.

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Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

The financial assets and liabilities in the consolidated balance sheets include cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued liabilities, security deposits and notes payable. The carrying amount of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued liabilities, and security deposits reported in the consolidated balance sheets approximates fair value due to the short-term nature of these instruments. The fair value of notes payable, which are classified as Level 2, is estimated by discounting the contractual cash flows of each debt instrument to their present value using adjusted market interest rates.

The carrying amount and estimated fair value of the notes payable are as follows:

	September 30, 2023		December 31, 2022
	(unaudited)
Carrying amount (excluding unamortized debt issuance costs)	$	1,211,856	$	1,171,238
Estimated fair value	$	1,117,041	$	1,092,345

8. Commitments and Contingencies

Legal

On July 3, 2017, the Supreme Court of the State of New York (the “Court”) ruled in favor of 41 present or former tenants of apartment units at the Company’s buildings located at 50 Murray Street and 53 Park Place in Manhattan, New York (the Tribeca House property), who brought an action (the “Kuzmich” case) against the Company alleging that they were subject to applicable rent stabilization laws with the result that rental payments charged by the Company exceeded amounts permitted under these laws because the buildings were receiving certain tax abatements under Real Property Tax Law (“RPTL”) 421-g. The Court also awarded the plaintiffs- tenants their attorney’s fees and costs. After various court proceedings and discussions from 2018-2022, on March 4, 2022 the court issued a ruling, finalized on May 9, 2022, on the rent overcharges to which the plaintiffs are entitled. While the court ruled that the overcharges to which the plaintiffs are entitled total $1.2 million, the court agreed with the Company’s legal arguments that rendered the overcharge liability lower than it could have been, and therefore the Company did not appeal the ruling. On June 23, 2022, the court ruled that the plaintiffs are entitled to attorneys’ fees incurred through February 28, 2022, in the amount of $0.4 million.

On November 18, 2019, the same law firm which filed the Kuzmich case filed a second action involving a separate group of 26 tenants (captioned Crowe et al v 50 Murray Street Acquisition LLC, Supreme Court, New York County, Index No. 161227/19), which action advances essentially the same claims as in Kuzmich. The Company’s deadline to answer or otherwise respond to the complaint in Crowe had been extended to June 30, 2020; on such date, the Company filed its answer to the complaint. Pursuant to the court’s rules, on July 16, 2020, the plaintiffs filed an amended complaint; the sole difference as compared to the initial complaint is that seven new plaintiffs-tenants were added to the caption; there were no substantive changes to the complaint’s allegations. On August 5, 2020, the Company filed its answer to the amended complaint. The case was placed on the court’s calendar and was next scheduled for a discovery conference on November 16, 2022. Counsel for the parties have been engaged in and are continuing settlement discussions. On November 16, 2022, the court held a compliance conference and ordered the plaintiffs to provide rent overcharge calculations in response to proposed calculations previously provided by the Company. On July 12, 2023, the court referred this matter to a Judicial Hearing Officer (“JHO”) to determine the outstanding issues. A hearing before the JHO was held in September 2023 and at this time all parties are engaged in settlement discussions.

On March 9, 2021, the same law firm which filed the Kuzmich and Crowe cases filed a third action involving another tenant (captioned Horn v 50 Murray Street Acquisition LLC, Supreme Court, New York County, Index No. 152415/21), which action advances the same claims as in Kuzmich and Crowe. The Company filed its answer to the complaint on May 21, 2021. The case was placed on the court’s calendar and is next scheduled for a preliminary conference in December 2023

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As a result of the March 4 and May 9, 2022 decisions which established the probability and ability to reasonably compute amounts owed to tenants for all the cases, the Company recorded a charge for litigation settlement and other of $2.7 million in the consolidated statements of operations during the year ended December 31, 2021 comprising rent overcharges, interest and legal costs of plaintiff’s counsel. The Company paid $2.3 million to the plaintiffs related to the Kuzmich case during the year ended December 31, 2022 and $0.4 million related to the Crowe case during the nine month period ended September 30, 2023.

In addition to the above, the Company is subject to certain legal proceedings and claims arising in connection with its business. Management believes, based in part upon consultation with legal counsel, that the ultimate resolution of all such claims will not have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows.

The Office of the Attorney General of the State of New York (“OAG”) commenced an investigation concerning the conduct of screening of tenant applicants in the building portfolio in which Clipper Equity and its principals have a management and/or ownership interest. Clipper Equity cooperated with the investigation and, in April 2022, entered into an Assurance of Discontinuance with the OAG to resolve the investigation on behalf of itself and its affiliates, the terms of which have no impact to the Company’s financial position or results of operations.

Commitments

June 29, 2023 the Company entered into the Article 11 Agreement Under the Article 11 agreement, the Company has entered into a Housing Repair and Maintenance Letter Agreement in which the Company has agreed to perform certain capital improvements to Flatbush Gardens over the next three years. The current estimate is that the costs of that work will be an amount up to $27 million. 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).

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.

Concentrations

The Company’s properties are located in the Boroughs of Manhattan and Brooklyn in New York City, which exposes the Company to greater economic risks than if it owned a more geographically dispersed portfolio.

The breakdown between commercial and residential revenue is as follows (unaudited):

	Commercial			Residential			Total
Three months ended September 30, 2023		27	%		73	%		100	%
Three months ended September 30, 2022		30	%		70	%		100	%
Nine months ended September 30, 2023		28	%		72	%		100	%
Nine months ended September 30, 2022		31	%		69	%		100	%

9. Related-Party Transactions

The Company recorded office and overhead expenses pertaining to a related company in general and administrative expense of $0 and $64 for the three months ended September 30, 2023 and 2022, respectively, and $198 and $192 for the nine months ended September 30, 2023 and 2022. The Company recognized a charge/(credit) to reimbursable payroll expense pertaining to a related company in general and administrative expense of $(23) and $2 for the three months ended September 30, 2023 and 2022, respectively, and $(53) and $(16) for the nine months ended September 30, 2023 and 2022.

10. Segment Reporting

The Company has classified its reporting segments into commercial and residential rental properties. The commercial reporting segment includes the 141 Livingston Street property and portions of the 250 Livingston Street, Tribeca House and Aspen properties. The residential reporting segment includes the Flatbush Gardens property, the Clover House property, the 10 West 65th Street property, the 1010 Pacific Street property and portions of the 250 Livingston Street, Tribeca House and Aspen properties.

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The Company’s income from operations by segment for the three and nine months ended September 30, 2023 and 2022, is as follows (unaudited):

Three months ended September 30, 2023	Commercial		Residential		Total
Rental income	$	9,627	$	25,501	$	35,128
Total revenues	$	9,627	$	25,501	$	35,128
Property operating expenses		1,248		6,682		7,930
Real estate taxes and insurance		2,540		4,834		7,374
General and administrative		606		2,734		3,340
Depreciation and amortization		1,457		5,825		7,282
Total operating expenses		5,851		20,075		25,926
Income from operations	$	3,776	$	5,426	$	9,202

Three months ended September 30, 2022	Commercial		Residential			Total
Rental income	$	9,692	$	23,108		$	32,800
Total revenues	$	9,692	$	23,108		$	32,800
Property operating expenses		1,240		6,027			7,267
Real estate taxes and insurance		2,228		6,024			8,252
General and administrative		598		2,611			3,209
Transaction pursuit costs		—		(10	)		(10	)
Depreciation and amortization		1,386		5,398			6,784
Total operating expenses		5,452		20,050			25,502
Income from operations	$	4,240		3,058			7,298

Nine months ended September 30, 2023	Commercial		Residential		Total
Rental income	$	28,857	$	74,481	$	103,338
Total revenues		28,857		74,481		103,338
Property operating expenses		3,511		19,300		22,811
Real estate taxes and insurance		7,069		17,541		24,610
General and administrative		1,792		8,237		10,029
Transaction pursuit costs		—		357		357
Depreciation and amortization		4,346		17,030		21,376
Total operating expenses		16,718		62,465		79,183
Income from operations	$	12,139	$	12,016	$	24,155

Nine months ended September 30, 2022	Commercial		Residential		Total
Rental income	$	29,570	$	67,167	$	96,737
Total revenues		29,570		67,167		96,737
Property operating expenses		3,567		18,167		21,734
Real estate taxes and insurance		6,264		17,805		24,069
General and administrative		1,745		7,603		9,348
Transaction pursuit costs		81		425		506
Depreciation and amortization		4,108		16,113		20,221
Total operating expenses		15,765		60,113		75,878
Income from operations	$	13,805	$	7,054	$	20,859

The Company’s total assets by segment are as follows, as of:

	Commercial		Residential		Total
September 30, 2023 (unaudited)	$	312,029	$	927,730	$	1,239,759
December 31, 2022		312,404		917,227		1,229,631

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The Company’s interest expense by segment for the three and nine months ended September 30, 2023 and 2022, is as follows (unaudited):

	Commercial		Residential		Total
Three months ended September 30,
2023	$	2,577	$	8,950	$	11,527
2022	$	2,533	$	7,553	$	10,086
Nine months ended September 30,
2023	$	7,584	$	25,412	$	32,996
2022	$	7,537	$	22,539	$	30,076

The Company’s capital expenditures, including acquisitions, by segment for the three and nine months ended September 30, 2023 and 2022, are as follows (unaudited):

	Commercial		Residential		Total
Three months ended September 30,
2023	$	689	$	10,067	$	10,756
2022	$	917	$	8,883	$	9,800
Nine months ended September 30,
2023	$	2,929	$	25,414	$	28,343
2022	$	2,545	$	39,859	$	42,404

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with the more detailed information set forth under the caption, “Cautionary Note Concerning Forward-Looking Statements,” and in our financial statements and the related notes thereto appearing elsewhere in this Quarterly Report on Form 10-Qas well as information in our Annual Report on Form 10-K for the year ended December 31, 2022.

Overview of Our Company

Clipper Realty Inc. (the “Company” or “we”) 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 current portfolio in Manhattan and Brooklyn. Our primary focus is to own, manage and operate our portfolio and to acquire and reposition additional multifamily residential and commercial properties in the New York metropolitan area. The Company has been organized and operates in conformity with the requirements for qualification and taxation as a real estate investment trust (“REIT”) under the U.S. federal income tax law and elected to be treated as a REIT commencing with the taxable year ended December 31, 2015.

As of September 30, 2023, the Company owns:

• 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 building 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.

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These properties are located in the most densely populated major city in the United States, each with immediate access to mass transportation. At September 30, 2023, the Company had two reportable operating segments, residential rental properties and commercial rental properties.  The residential reporting segment includes the Flatbush Gardens property, the Clover House property, the 10 West 65th Street property, the 1010 Pacific Street property and portions of the 250 Livingston Street, Tribeca House and Aspen properties.  The commercial reporting segment includes the 141 Livingston Street property and portions of the 250 Livingston Street, Tribeca House and Aspen properties.

The Company’s ownership interest in its initial portfolio of properties, which includes the Tribeca House, Flatbush Gardens and the two Livingston Street properties, was acquired in the formation transactions in connection with the private offering. These properties are owned by the LLC subsidiaries, which are managed by the Company through the Operating Partnership. 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 distributions to the continuing investors who hold Class B LLC units in these LLC subsidiaries. The continuing investors own 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 the Operating Partnership to receive 37.9% of the aggregate distributions from the LLC subsidiaries. The Company, through the Operating Partnership, owns all of the ownership interests in the Aspen property, the Clover House property, the 10 West 65th Street property, the 1010 Pacific Street property and the Dean Street property.

Results of Operations

Our focus throughout 2022 and year-to-date 2023 has been to manage our properties to optimize revenues and control costs, while continuing to renovate and reposition certain properties. The discussion below highlights the specific properties contributing to the changes in the results of operations and focuses on the properties that were in operation for the full period in each comparison.

Income Statement for the Three Months Ended September 30, 2023 and 2022 (in thousands except rent per square foot and occupancy)

	2023			Less: 1010 Pacific			2023 Excluding 1010 Pacific			2022			Increase (decrease)			%
Revenues
Residential rental income	$	25,501		$	1,160		$	24,341		$	23,108		$	1,233			5.3	%
Commercial rental income		9,627			12			9,615			9,692			(77	)		(0.8	)%
Total revenues		35,128			1,172			33,956			32,800			1,156			3.5	%
Operating Expenses
Property operating expenses		7,930			286			7,644			7,267			377			5.2	%
Real estate taxes and insurance		7,374			137			7,237			8,252			(1,015	)		(12.3	)%
General and administrative		3,340			122			3,218			3,209			9			0.3	%
Transaction pursuit costs		-			-			-			(10	)		10			(100.0	)%
Depreciation and amortization		7,282			428			6,854			6,784			70			1.0	%
Total operating expenses		25,926			973			24,953			25,502			(549	)		(2.2	)%
Income from operations		9,202			199			9,003			7,298			1,705			23.4	%
Interest expense, net		(11,527	)		(893	)		(10,634	)		(10,086	)		(548	)		(5.4	)%
Net loss	$	(2,325	)	$	(694	)	$	(1,631	)	$	(2,788	)	$	1,157			41.5	%

Revenue. Residential rental income increased to $24,341 for the three months ended September 30, 2023, from $23,108 for the three months ended September 30, 2022, primarily due to increases in rental rates at all properties of $1,233. For example, base rent per square foot increased at the Tribeca House property to $78.22 at September 30, 2023, from $70.56 at September 30, 2022 and base rent per square foot increased at the Clover House property to $78.33 at September 30, 2023, from $70.13 at September 30, 2022;

Commercial rental income decreased to $9,615 for the three months ended September 30, 2023, from $9,692 for the three months ended September 30, 2022 due to the expiration of a few small leases at the Tribeca House and Aspen properties.

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. Property operating expenses increased to $7,644 for the three months ended September 30, 2023, from $7,267 for the three months ended September 30, 2022, primarily due to increased repairs and maintenance costs partially offset by decreased utilities and water and sewer costs.

Real estate taxes and insurance. Real estate taxes and insurance expenses decreased to $7,237 for the three months ended September 30, 2023, from $8,252 for the three months ended September 30, 2022, due to real estate tax exemption at Flatbush Gardens as a result of the Article 11 transaction partially offset by higher insurance costs across the portfolio.

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General and administrative. General and administrative expenses increased to $3,218 for the three months ended September 30, 2023, from $3,209 for the three months ended September 30, 2022 primarily due to the decrease in various administrative costs.

Transaction pursuit costs. Transaction pursuit costs during the three months ended September 30, 2023 primarily reflect costs related to the Article 11 Agreement.

Depreciation and amortization. Depreciation and amortization expense increased to $6,854 for the three months ended September 30, 2023, from $6,784 for the three months ended September 30, 2022, due to the additions to real estate across the portfolio during the three months ended September 30, 2023.

Interest expense, net. Interest expense, net, increased to $10,634 for the three months ended September 30, 2023, from $10,086 for the three months ended September 30, 2022 primarily  as a result of the interest rate conversion the 10 West 65th Street from fixed to a floating rate in the fourth quarter of 2022.

Net loss. As a result of the foregoing, net loss decreased to $1,631 for the three months ended September 30, 2023, from $2,788 for the three months ended September 30, 2022.

Income Statement for the Nine Months Ended September 30, 2023 and 2022 (in thousands)

	2023			Less:1010 Pacific			2023 Excluding 1010 Pacific			2022			Increase (decrease)			%
Revenues
Residential rental income	$	74,481		$	1,952		$	72,529		$	67,167		$	5,362			8.0	%
Commercial rental income		28,857			12			28,845			29,570			(725	)		(2.5	)%
Total revenues		103,338			1,964			101,374			96,737			4,637			4.8	%
Operating Expenses
Property operating expenses		22,811			458			22,353			21,734			619			2.8	%
Real estate taxes and insurance		24,610			236			24,374			24,069			305			1.3	%
General and administrative		10,029			198			9,831			9,348			483			5.2	%
Transaction pursuit costs		357			-			357			506			(149	)		(29.4	)%
Depreciation and amortization		21,376			851			20,525			20,221			304			1.5	%
Total operating expenses		79,183			1,743			77,440			75,878			1,562			2.1	%
Income from operations		24,155			221			23,934			20,859			3,075			14.7	%
Interest expense, net		(32,996	)		(1,656	)		(31,340	)		(30,076	)		(1,264	)		(4.2	)%
Loss on modification/extinguishment of debt		(3,868	)		-			(3,868	)		-			(3,868	)		(100.0	)%
Net loss	$	(12,709	)	$	(1,435	)	$	(11,274	)	$	(9,217	)	$	(2,057	)		(22.3	)%

Revenue. Residential rental income increased to $72,529 for the nine months ended September 30, 2023, from $67,167 for the nine months ended September 30, 2022, primarily, due to increases in rental rates. For example, base rent per square foot increased at the Tribeca House property to $78.22 at September 30, 2023, from $70.56 at September 30, 2022 and base rent per square foot increased at the Clover House property to $78.33 at September 30, 2023, from $70.13 at September 30, 2022.

Commercial rental income decreased to $28,845 for the nine months ended September 30, 2023, from $29,570 for the nine months ended September 30, 2022 primarily due to a net, $1,103 restoration of revenue as per ASC 842 from a tenant at Tribeca House deemed probable of collection during the nine months ended September 30, 2022, partially offset by the commencement of new leases at the Tribeca House property and increased escalation billings at the 141 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. Property operating expenses increased to $22,353 for the nine months ended September 30, 2023, from $21,734 for the nine months ended September 30, 2022, primarily due to increased repairs and maintenance, utilities and payroll costs, primarily at Flatbush Gardens.

Real estate taxes and insurance. Real estate taxes and insurance expenses increased to $24,374 for the nine months ended September 30, 2023, from $24,069 for the nine months ended September 30, 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.

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General and administrative. General and administrative expenses increased to $9,831 for the nine months ended September 30, 2023, from $9,348 for the nine months ended September 30, 2022 primarily due to higher payroll costs and accounting fees in relation to the separation from our prior auditor.

Transaction pursuit costs. Transaction pursuit costs primarily reflect costs related to the Article 11 Agreement during the nine months ended September 30, 2023 and costs incurred for an abandoned acquisition during the nine months ended September 30, 2022.

Depreciation and amortization. Depreciation and amortization expense increased to $20,525 for the nine months ended September 30, 2023, from $20,221 for the nine months ended September 30, 2022, due to the additions to real estate across the portfolio during the nine months ended September 30, 2023.

Interest expense, net. Interest expense, net, increased to $31,340 for the nine months ended September 30, 2023, from $30,076 for the nine months ended September 30, 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.

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. As a result of the foregoing, net loss increased to $11,274 for the nine months ended September 30, 2023, from $9,217 for the nine months ended September 30, 2022.

Liquidity and Capital Resources

As of September 30, 2023, we had $1,197 million of indebtedness, net of unamortized issuance costs, secured by our properties, $22.5 million of cash and cash equivalents, and $14.9 million of restricted cash. See Note 5, “Notes Payable” of our consolidated financial statements for a discussion of the Company’s property-level debt.

As a REIT, we are required to distribute at least 90% of our REIT taxable income, computed without regard to the dividends paid deduction and excluding net capital gains, to stockholders on an annual basis. We expect that these needs will be met from cash generated from operations and other sources, including proceeds from secured mortgages and unsecured indebtedness, proceeds from additional equity issuances and cash generated from the sale of property.

Short-Term and Long-Term Liquidity Needs

Our short-term liquidity needs will primarily be to fund operating expenses, recurring capital expenditures, property taxes and insurance, interest and scheduled debt principal payments, general and administrative expenses, and distributions to stockholders and unit holders. We generally expect to meet our short-term liquidity requirements through net cash provided by operations and cash on hand, and we believe we will have sufficient resources to meet our short-term liquidity requirements.

Our principal long-term liquidity needs will primarily be to fund additional property acquisitions, major renovation and upgrading projects, and debt payments and debt payments at maturity. We do not expect that net cash provided by operations will be sufficient to meet all these long-term liquidity needs. We anticipate meeting our long-term liquidity requirements by using cash as an interim measure and funds from public and private equity offerings and long-term secured and unsecured debt offerings.

We believe that as a publicly traded REIT, we will have access to multiple sources of capital to fund our long-term liquidity requirements. These sources include the incurrence of additional debt and the issuance of additional equity. However, we cannot provide assurance that this will be the case. Our ability to secure additional debt will depend on a number of factors, including our cash flow from operations, our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed. Our ability to access the equity capital markets will depend on a number of factors as well, including general market conditions, market conditions for REITs and market perceptions about our company.

We believe that our current cash flows from operations and cash on hand, coupled with additional mortgage debt, will be sufficient to allow us to continue operations, satisfy our contractual obligations and make distributions to our stockholders and the members of our LLC subsidiaries for at least the next twelve months. However, no assurance can be given that we will be able to refinance any of our outstanding indebtedness in the future on favorable terms or at all.

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Distributions

In order to qualify as a REIT for Federal income tax purposes, we must currently distribute at least 90% of our taxable income to our shareholders. During the three months ended September 30, 2023 and 2022, we paid dividends and distributions on our common shares, Class B LLC units and LTIP units totaling $4.3 million and $4.3 million, respectively.

Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (in thousands)

	Nine Months Ended September 30,
	2023			2022
Operating activities	$	17,130		$	15,159
Investing activities		(27,783	)		(41,992	)
Financing activities		17,341			10,101

Cash flows provided by (used in) operating activities, investing activities and financing activities for the nine months ended September 30, 2023 and 2022, were as follows:

Net cash flow provided by operating activities was $17,130 for the nine months ended September 30, 2023, compared to $15,159 for the nine months ended September 30, 2022. 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 $27,783 for the nine months ended September 30, 2023, compared to $41,992 for the nine months ended September 30, 2022. The decrease was primarily due to $7,871 lower capital spending at all of our operating properties, primarily Flatbush Gardens and 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 in the nine-month period ended September 30, 2022. These were partially offset by a refund of a potential acquisition deposit of $2,015 in the nine-month period ended September 30, 2022.

Net cash provided by financing activities was $17,341 for the nine months ended September 30, 2023, compared to $10,101 for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, $40,617 was provided by refinancing the 1010 Pacific Street and Dean Street property loans, net of scheduled debt amortization payments, partially offset by $9,921 of loan extinguishment and issuance costs, and $13,044 of dividends and distributions. For the nine months ended September 30, 2022, $24,855 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 $12,767 of dividends and distributions and $335 of loan issuance and extinguishment costs. 

Income Taxes

No provision has been made for income taxes since all of the Company’s operations are held in pass-through entities and accordingly the income or loss of the Company is included in the individual income tax returns of the partners or members.

We elected to be treated as a REIT for U.S. federal income tax purposes, beginning with our first taxable three months ended March 31, 2015. As a REIT, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate tax rates. We believe that we are organized and operate in a manner that will enable us to qualify and be taxed as a REIT and we intend to continue to operate to satisfy the requirements for qualification as a REIT for federal income tax purposes.

Inflation

Inflation did not have a significant impact on the results of operations for the Company’s business for the periods reported in the consolidated financial statements. We do not believe that inflation currently poses a material risk to the Company. The leases at our residential rental properties, which comprise approximately 72% of our revenue, are short-term in nature. Our longer-term commercial and retail leases would generally allow us to recover some increased operating costs in the event of significant inflation.

24

Although the impact of inflation on our results of operations is not material, inflation has recently become a factor in the United States economy and could increase the cost of acquiring, replacing and operating the properties in the future.

Non-GAAP Financial Measures

In this Quarterly Report on Form 10-Q, 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 certain 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 (loss) 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 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 the Company’s FFO and AFFO for the periods presented to net loss, computed in accordance with GAAP (amounts in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
FFO
Net loss	$	(2,325	)	$	(2,788	)	$	(12,709	)	$	(9,217	)
Real estate depreciation and amortization		7,282			6,784			21,376			20,221
FFO	$	4,957		$	3,996		$	8,667		$	11,004
AFFO
FFO	$	4,957		$	3,996		$	8,667		$	11,004
Amortization of real estate tax intangible		120			121			361			361
Amortization of above- and below-market leases		(1	)		(9	)		(18	)		(26	)
Straight-line rent adjustments		39			(31	)		66			(220	)
Amortization of debt origination costs		423			313			1,098			939
Amortization of LTIP awards		783			856			2,214			2,064
Transaction pursuit costs		—			(10	)		357			506
Loss on extinguishment / modification of debt		—			—			3,868			—
Certain litigation-related expenses		(10	)		(65	)		(10	)		188
Recurring capital spending		(51	)		(138	)		(375	)		(276	)
AFFO	$	6,260		$	5,033		$	16,228		$	14,540

25

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 certain litigation-related expenses, less gain on involuntary conversion and gain on termination of lease.

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

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Adjusted EBITDA
Net loss	$	(2,325	)	$	(2,788	)	$	(12,709	)	$	(9,217	)
Real estate depreciation and amortization		7,282			6,784			21,376			20,221
Amortization of real estate tax intangible		120			121			361			361
Amortization of above- and below-market leases		(1	)		(9	)		(18	)		(26	)
Straight-line rent adjustments		39			(31	)		66			(220	)
Amortization of LTIP awards		783			856			2,214			2,064
Interest expense, net		11,527			10,086			32,996			30,076
Transaction pursuit costs		—			(10	)		357			506
Loss on extinguishment / modification of debt		—			—			3,868			—
Certain litigation-related expenses		(10	)		(65	)		(10	)		188
Adjusted EBITDA	$	17,415		$	14,944		$	48,501		$	43,953

Net Operating Income

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

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
NOI
Income from operations	$	9,202		$	7,298		$	24,155		$	20,859
Real estate depreciation and amortization		7,282			6,784			21,376			20,221
General and administrative expenses		3,340			3,209			10,029			9,348
Transaction pursuit costs		—			(10	)		357			506
Amortization of real estate tax intangible		120			121			361			361
Amortization of above- and below-market leases		(1	)		(9	)		(18	)		(26	)
Straight-line rent adjustments		39			(31	)		66			(220	)
NOI	$	19,982		$	17,362		$	56,326		$	51,049

26

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that there have been no material changes to the items that we disclosed as our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements

See Note 2, “Significant Accounting Policies” of our consolidated financial statements for a discussion of recent accounting pronouncements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair value relevant to our financial instruments depend upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Based upon the nature of our operations, the principal market risk to which we are exposed is the risk related to interest rate fluctuations. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control, contribute to interest rate risk.

A one percent change in interest rates on our $74.4 million of variable rate debt as of September 30, 2023, would impact annual net loss by approximately $0.7 million.

At September 30, 2023, there were no interest rate caps for the Company’s outstanding debt.

The fair value of the Company’s notes payable was approximately $1,117.0 million and $1,092.3 million as of September 30, 2023 and December 31, 2022, respectively.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2023. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the  Exchange Act is recorded, processed, and summarized, within the time periods specified in the SEC's rules and forms.

We continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

27

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

See Note 8, “Commitments and Contingencies” of our consolidated financial statements for a discussion of legal proceedings.

ITEM 1A.  RISK FACTORS

The risk factors disclosed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as subsequent Quarterly Report on Form 10-Q, set forth information relating to various risks and uncertainties that could materially adversely affect our business, financial condition, liquidity, and operating results. Such risk factors continue to be relevant to an understanding of our business, financial condition, liquidity and operating results as of September 30, 2023, and there have been no material changes to those risk factors for the nine months ended September 30, 2023.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5.  OTHER INFORMATION

Not applicable. 

28

ITEM 6.  EXHIBITS

Exhibit Number	Description
***10.1	Acquisition Loan Note, dated August 10, 2023, by Dean Owner LLC in favor of Valley National Bank
***10.2	Building Loan Note, dated August 10, 2023, by Dean Owner LLC in favor of Valley National Bank
***10.3	Project Loan Note, dated August 10, 2023, by Dean Owner LLC in favor of Valley National Bank
***10.4	Credit Agreement, dated August 10, 2023, by Dean Owner LLC in favor of Valley National Bank
***10.5	Mezzanine Loan Note, dated August 10, 2023, by Dean Member LLC in favor of BADF 953 Dean Street Lender LLC
***10.6	Line of Credit Note, dated August 10, 2023, between Clipper Realty Inc. in favor of Valley National Bank
*31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
*31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
*32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**101.INS	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
**101.SCH	Inline XBRL Taxonomy Extension Schema Document
**101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
**101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
**101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
**101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
**104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed herewith

**Submitted electronically with the report

*** Incorporated by reference to the Company’s Form 8-K dated August 10, 2023, filed on August 14, 2023 

29

SIGNATURES

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

	CLIPPER REALTY INC.
November 2, 2023	By:	/s/ David Bistricer
		David Bistricer
		Co-Chairman and Chief Executive Officer

30

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, David Bistricer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Clipper Realty Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 2, 2023	By:	/s/ David Bistricer
			David Bistricer
			Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Lawrence E. Kreider, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Clipper Realty Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 2, 2023	By:	/s/ Lawrence E. Kreider
			Lawrence E. Kreider
			Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q of Clipper Realty Inc. (the "Company") for the period ended September 30, 2023, as filed with the Securities and Exchange Commission (the "Report"), the undersigned, as the Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 2, 2023	Signed:	/s/ David Bistricer
			David Bistricer
			Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q of Clipper Realty Inc. (the "Company") for the period ended September 30, 2023, as filed with the Securities and Exchange Commission (the "Report"), the undersigned, as the Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 2, 2023	Signed:	/s/ Lawrence E. Kreider
			Lawrence E. Kreider
			Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Nov. 02, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-38010
Entity Registrant Name	CLIPPER REALTY INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	47-4579660
Entity Address, Address Line One	4611 12th Avenue, Suite 1L
Entity Address, City or Town	Brooklyn
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11219
City Area Code	718
Local Phone Number	438-2804
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	CLPR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		16,063,228
Entity Central Index Key	0001649096
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
ASSETS
Land and improvements	$ 571,988	$ 540,859
Building and improvements	722,350	656,460
Tenant improvements	3,366	3,406
Furniture, fixtures and equipment	13,227	12,878
Real estate under development	73,303	142,287
Total investment in real estate	1,384,234	1,355,890
Accumulated depreciation	(206,077)	(184,781)
Investment in real estate, net	1,178,157	1,171,109
Cash and cash equivalents	22,450	18,152
Restricted cash	14,904	12,514
Tenant and other receivables, net of allowance for doubtful accounts of $184 and $321, respectively	5,231	5,005
Deferred rent	2,508	2,573
Deferred costs and intangible assets, net	6,270	6,624
Prepaid expenses and other assets	10,239	13,654
TOTAL ASSETS	1,239,759	1,229,631
Liabilities:
Notes payable, net of unamortized loan costs of $14,578 and $9,650, respectively	1,197,278	1,161,588
Accounts payable and accrued liabilities	12,954	17,094
Security deposits	8,653	7,940
Below-market leases, net	0	18
Other liabilities	7,234	5,812
TOTAL LIABILITIES	1,226,119	1,192,452
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	0	0
Common stock, $0.01 par value; 500,000,000 shares authorized,16,063,228 and 16,063,228 shares issued and outstanding, respectively	160	160
Additional paid-in-capital	89,302	88,829
Accumulated deficit	(84,290)	(74,895)
Total stockholders’ equity	5,172	14,094
Non-controlling interests	8,468	23,085
TOTAL EQUITY	13,640	37,179
TOTAL LIABILITIES AND EQUITY	$ 1,239,759	$ 1,229,631

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Allowance for doubtful accounts	$ 184	$ 321
Unamortized loan costs	$ 14,578	$ 9,650
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000	100,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common Stock, Shares, Issued (in shares)	16,063,228	16,063,228
Common stock, shares outstanding (in shares)	16,063,228	16,063,228
Series A Cumulative Non-Voting Preferred Stock [Member]
Preferred stock, shares authorized (in shares)	140	140
Preferred stock, dividend rate, percentage	12.50%	12.50%

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
REVENUES
TOTAL REVENUES	$ 35,128	$ 32,800	$ 103,338	$ 96,737
OPERATING EXPENSES
Property operating expenses	7,930	7,267	22,811	21,734
Real estate taxes and insurance	7,374	8,252	24,610	24,069
General and administrative	3,340	3,209	10,029	9,348
Transaction pursuit costs	0	(10)	357	506
Depreciation and amortization	7,282	6,784	21,376	20,221
TOTAL OPERATING EXPENSES	25,926	25,502	79,183	75,878
INCOME FROM OPERATIONS	9,202	7,298	24,155	20,859
Interest expense, net	(11,527)	(10,086)	(32,996)	(30,076)
Loss on extinguishment of debt	0	0	(3,868)	0
Net loss	(2,325)	(2,788)	(12,709)	(9,217)
Net loss attributable to non-controlling interests	1,444	1,731	7,892	5,723
Net loss attributable to common stockholders	$ (881)	$ (1,057)	$ (4,817)	$ (3,494)
Basic and diluted net loss per share (in dollars per share)	$ (0.07)	$ (0.08)	$ (0.36)	$ (0.26)
Residential Rental [Member]
REVENUES
TOTAL REVENUES	$ 25,501	$ 23,108	$ 74,481	$ 67,167
Commercial Real Estate [Member]
REVENUES
TOTAL REVENUES	$ 9,627	$ 9,692	$ 28,857	$ 29,570

XML

Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Common Stock [Member]	Additional Paid-in Capital [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Retained Earnings [Member]	Parent [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Parent [Member]	Noncontrolling Interest [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Noncontrolling Interest [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Total
Balance (in shares) at Dec. 31, 2021	0	16,063,228
Balance at Dec. 31, 2021	$ 0	$ 160	$ 0	$ 88,089	$ (2,291)	$ (61,736)	$ (2,291)	$ 26,513	$ (3,755)	$ 43,436	$ (6,046)	$ 69,949
Amortization of LTIP grants		0		0		0		0		495		495
Dividends and distributions		0		0		(1,526)		(1,526)				(4,188)
Dividends and distributions										(2,662)
Net loss		0		0		(1,318)		(1,318)		(2,158)		(3,476)
Reallocation of noncontrolling interests		0		126		0		126		(126)		0
Dividends and distributions		$ 0		0		(1,526)		(1,526)				(4,188)
Balance (in shares) at Mar. 31, 2022		16,063,228
Balance at Mar. 31, 2022		$ 160		88,215		(66,871)		21,504		35,230		56,734
Balance (in shares) at Dec. 31, 2021	0	16,063,228
Balance at Dec. 31, 2021	$ 0	$ 160	$ 0	88,089	$ (2,291)	(61,736)	$ (2,291)	26,513	$ (3,755)	43,436	$ (6,046)	69,949
Net loss												(9,217)
Balance (in shares) at Sep. 30, 2022		16,063,228
Balance at Sep. 30, 2022		$ 160		88,610		(72,099)		16,671		27,312		43,983
Balance (in shares) at Mar. 31, 2022		16,063,228
Balance at Mar. 31, 2022		$ 160		88,215		(66,871)		21,504		35,230		56,734
Amortization of LTIP grants		0		0		0		0		714		714
Dividends and distributions		0		0		(1,526)		(1,526)				(4,273)
Dividends and distributions										(2,747)
Net loss		0		0		(1,119)		(1,119)		(1,834)		(2,953)
Reallocation of noncontrolling interests		0		177		0		177		(177)		0
Dividends and distributions		$ 0		0		(1,526)		(1,526)				(4,273)
Balance (in shares) at Jun. 30, 2022		16,063,228
Balance at Jun. 30, 2022		$ 160		88,392		(69,516)		19,036		31,186		50,222
Amortization of LTIP grants		0		0		0		0		855		855
Dividends and distributions		0		0		(1,526)		(1,526)				(4,306)
Dividends and distributions										(2,780)
Net loss		0		0		(1,057)		(1,057)		(1,731)		(2,788)
Reallocation of noncontrolling interests		0		218		0		218		(218)		0
Dividends and distributions		$ 0		0		(1,526)		(1,526)				(4,306)
Balance (in shares) at Sep. 30, 2022		16,063,228
Balance at Sep. 30, 2022		$ 160		88,610		(72,099)		16,671		27,312		43,983
Balance (in shares) at Dec. 31, 2022		16,063,228
Balance at Dec. 31, 2022		$ 160		88,829		(74,895)		14,094		23,085		37,179
Amortization of LTIP grants										648		648
Dividends and distributions		0		0		(1,526)		(1,526)				(4,348)
Dividends and distributions										(2,822)
Net loss		0		0		(2,687)		(2,687)		(4,402)		(7,089)
Reallocation of noncontrolling interests		0		123		0		123		(123)		0
Dividends and distributions		$ 0		0		(1,526)		(1,526)				(4,348)
Balance (in shares) at Mar. 31, 2023		16,063,228
Balance at Mar. 31, 2023		$ 160		88,952		(79,108)		10,004		16,386		26,390
Balance (in shares) at Dec. 31, 2022		16,063,228
Balance at Dec. 31, 2022		$ 160		88,829		(74,895)		14,094		23,085		37,179
Net loss												(12,709)
Balance (in shares) at Sep. 30, 2023		16,063,228
Balance at Sep. 30, 2023		$ 160		89,302		(84,290)		5,172		8,468		13,640
Balance (in shares) at Mar. 31, 2023		16,063,228
Balance at Mar. 31, 2023		$ 160		88,952		(79,108)		10,004		16,386		26,390
Amortization of LTIP grants		0		0		0		0		783		783
Dividends and distributions		0		0		(1,526)		(1,526)				(4,348)
Dividends and distributions										(2,822)
Net loss		0		0		(1,249)		(1,249)		(2,046)		(3,295)
Reallocation of noncontrolling interests		0		175		0		175		(175)		0
Dividends and distributions		$ 0		0		(1,526)		(1,526)				(4,348)
Balance (in shares) at Jun. 30, 2023		16,063,228
Balance at Jun. 30, 2023		$ 160		89,127		(81,883)		7,404		12,126		19,530
Amortization of LTIP grants		0		0		0		0		783		783
Dividends and distributions		0		0		(1,526)		(1,526)				(4,348)
Dividends and distributions										(2,822)
Net loss		0		0		(881)		(881)		(1,444)		(2,325)
Reallocation of noncontrolling interests		0		175		0		175		(175)		0
Dividends and distributions		$ 0		0		(1,526)		(1,526)				(4,348)
Balance (in shares) at Sep. 30, 2023		16,063,228
Balance at Sep. 30, 2023		$ 160		$ 89,302		$ (84,290)		$ 5,172		$ 8,468		$ 13,640

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (12,709)	$ (9,217)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	21,296	20,041
Amortization of deferred financing costs	1,098	939
Amortization of deferred costs and intangible assets	441	540
Amortization of above- and below-market leases	(18)	(26)
Loss on extinguishment of debt	3,868	0
Deferred rent	66	(220)
Stock-based compensation	2,214	2,064
Bad debt expense	(120)	(387)
Changes in operating assets and liabilities:
Tenant and other receivables	(103)	(304)
Prepaid expenses, other assets and deferred costs	3,328	2,606
Accounts payable and accrued liabilities	(4,366)	(2,558)
Security deposits	713	896
Other liabilities	1,422	785
Net cash provided by operating activities	17,130	15,159
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings, and improvements	(27,783)	(35,966)
Return of acquisition deposits	0	2,015
Cash paid in connection with acquisition of real estate	0	(8,041)
Net cash used in investing activities	(27,783)	(41,992)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of mortgage notes	(84,241)	(1,652)
Proceeds from mortgage notes	124,858	24,855
Dividends and distributions	(13,044)	(12,767)
Loan issuance and extinguishment costs	(10,232)	(335)
Net cash provided by financing activities	17,341	10,101
Net increase (decrease) in cash and cash equivalents and restricted cash	6,688	(16,732)
Cash and cash equivalents and restricted cash - beginning of period	30,666	52,224
Cash and cash equivalents and restricted cash - end of period	37,354	35,492
Cash and cash equivalents and restricted cash – beginning of period:
Cash and cash equivalents	18,152	34,524
Restricted cash	12,514	17,700
Cash and cash equivalents and restricted cash - beginning of period	30,666	52,224
Cash and cash equivalents	22,450	19,987
Restricted cash	14,904	15,505
Cash and cash equivalents and restricted cash - end of period	37,354	35,492
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $3,855 and $3,775 in 2023 and 2022, respectively	32,924	29,244
Non-cash interest capitalized to real estate under development	339	1,749
Additions to investment in real estate included in accounts payable and accrued liabilities	$ 5,102	$ 5,214

XML

Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Interest Paid, Capitalized, Investing Activities	$ 3,855	$ 3,775

XML

Note 1 - Organization

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Organization

As of September 30, 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;

• 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, 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. In February and April 2022, the Company purchased additional parcels of land for $3.7 million and $4.3 million, respectively, and, in August 2022, paid $2.5 million to a tenant to vacate a leased parcel.

During 2019, we entered into a joint venture in which we own a 50% interest through which we are paying certain legal and advisory expenses in connection with various rent laws and ordinances which govern certain of our properties. During the nine months ended September 30, 2022, the Company incurred $0.11 million which was recorded as part of general and administrative in the Condensed Consolidated Statements of Operations, and fulfilled its commitment in the joint venture.

On June 29, 2023 the Company’s Flatbush Gardens property entered into a 40 year regulatory agreement under Article 11 of the Private Housing Finance Law with the New York City Department Housing Preservation and Development (“Article 11 Agreement”). For the full term of the agreement, Flatbush Gardens received a full exemption from property taxes, committed to maintain rents with existing area median income groups, received eligibility for incremental rental assistance payments under Section 610 of the Private Housing Financing Law for tenants receiving government rental assistance, committed to lease 249 units to formerly homeless families and provide certain services as units become vacant, and committed to pay prevailing wage rates to employees of the property as defined under New York City regulations. The property also committed to a 3-year capital improvements plan. As part of the agreement, a new not-for-profit Corporation, Flatbush Gardens Housing Development Fund Corporation (“HDFC”), became nominal owner of the Flatbush Gardens properties. This has no effect on the beneficial operations and finances of the properties but provides HDFC with certain consent rights for transfers and financings of the properties. (See Note 8 Commitments and Contingencies).

The operations of Clipper Realty Inc. and its consolidated subsidiaries are carried on primarily through the Operating Partnership. The Company has elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code (the “Code”). The Company is the sole general partner of the Operating Partnership and the Operating Partnership is the sole managing member of the LLCs that comprised the Predecessor.

At September 30, 2023, the Company’s interest, through the Operating Partnership, in the LLCs that own the properties generally entitles it to 37.9% of the aggregate cash distributions from, and the profits and losses of, the LLCs.

The Company determined that the Operating Partnership and the LLCs are variable interest entities (“VIEs”) and that the Company had control over these entities and was the primary beneficiary. The assets and liabilities of these VIEs represented substantially all of the Company’s assets and liabilities.

XML

Note 2- Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Significant Accounting Policies

Segments

At September 30, 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.

Basis of Consolidation

The accompanying consolidated financial statements of the Company are prepared in accordance with 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. The ownership interests of other investors in these entities are recorded as non-controlling interests.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.

Investment in Real Estate

Real estate assets held for investment are carried at historical cost and consist of land, buildings and improvements, furniture, fixtures and equipment. Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Expenditures for improvements, renovations, and replacements of real estate assets are capitalized and depreciated over their estimated useful lives if the expenditures qualify as betterment or the life of the related asset will be substantially extended beyond the original life expectancy.

In accordance with ASU 2018-01, "Business Combinations – Clarifying the Definition of a Business,” the Company evaluates each acquisition of real estate or in-substance real estate to determine if the integrated set of assets and activities acquired meets the definition of a business and needs to be accounted for as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:

• Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or

• The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).

An acquired process is considered substantive if:

• The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable and experienced in performing the process:

• The process cannot be replaced without significant cost, effort or delay; or

• The process is considered unique or scarce.

Generally, the Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

Upon acquisition of real estate, the Company assesses the fair values of acquired tangible and intangible assets including land, buildings, tenant improvements, above-market and below-market leases, in-place leases and any other identified intangible assets and assumed liabilities. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. In estimating fair value of tangible and intangible assets acquired, the Company assesses and considers fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates, estimates of replacement costs, net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

The Company records acquired above-market and below-market lease values initially based on the present value, using a discount rate which reflects the risks associated with the leases acquired based on the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed renewal options for the below-market leases. Other intangible assets acquired include amounts for in-place lease values and tenant relationship values (if any) that are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A property’s value is impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. 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. In the event that the Company obtains proceeds through an insurance policy due to impairment, the proceeds are offset against the write-down in calculating gain/loss on disposal of assets. Management of the Company does not believe that any of its properties within the portfolio are impaired as of September 30, 2023.

For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the assets less estimated cost to sell is less than the carrying value of the assets. Properties classified as real estate held-for-sale generally represent properties that are actively marketed or contracted for sale with closing expected to occur within the next twelve months. Real estate held-for-sale is carried at the lower of cost, net of accumulated depreciation, or fair value less cost to sell, determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held-for-sale properties are charged to expense as incurred. Expenditures for improvements, renovations and replacements related to held-for-sale properties are capitalized at cost. Depreciation is not recorded on real estate held-for-sale.

If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balances of the related intangibles are written off. The tenant improvements and origination costs are amortized to expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date).

Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

Building and improvements (in years)	10	–	44
Tenant improvements	Shorter of useful life or lease term
Furniture, fixtures and equipment (in years)	3	–	15

The capitalized above-market lease values are amortized as a reduction to base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases.

Cash and Cash Equivalents

Cash and cash equivalents are defined as cash on hand and in banks, plus all short-term investments with a maturity of three months or less when purchased. The Company maintains some of its cash in bank deposit accounts, which, at times, may exceed the federally insured limit. No losses have been experienced related to such accounts.

Restricted Cash

Restricted cash generally consists of escrows for future real estate taxes and insurance expenditures, repairs, capital improvements, loan reserves and security deposits.

Tenant and Other Receivables and Allowance for Doubtful Accounts

Tenant and other receivables are comprised of amounts due for monthly rents and other charges less allowance for doubtful accounts. As described more fully under Revenue Recognition below, in the first quarter of 2022 the Company adopted Accounting Standards Codification (“ASC”) 842 “Leases” which replaced guidance under ASC 840 and provided for transition from balances at December 31, 2021. In accordance with ASC 842, the Company performed a detailed review of amounts due from tenants to determine if accounts receivable balances and future lease payments were probable of collection, wrote off receivables not probable of collection and recorded a general reserve against revenues for receivables probable of collection for which a loss can be reasonably estimated. 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. 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. 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 consolidated statements of operations. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions which do not close are expensed in the period the financing transaction is terminated.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) adjusted for changes in unrealized gains and losses, reported in equity, for financial instruments required to be reported at fair value under GAAP. For the three and nine months ended September 30, 2023 and 2022, the Company did not own any financial instruments for which the change in value was not reported in net income (loss); accordingly, its comprehensive income (loss) was its net income (loss) as presented in the consolidated statements of operations.

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 ASC 842, “Leases” which replaces the guidance under ASC 840. 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. 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. 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 ASC 450.

In the three and nine months ended September 30, 2023 the Company has charged revenue in the amount of $0.9 million and $3.3 million, respectively for residential receivables not deemed probable of collection and recognized revenue of $0.2 million and $1.3 million respectively, for a reassessment of collectability of residential receivables previously not deemed probable of collection.

In the three and nine months ended September 30, 2022, the Company has charged revenue in the amount of $0.8 million and $2.3 million, respectively, for residential receivables not deemed probable of collection. and recognized revenue of $0.8 million and $5.0 million respectively, for a reassessment of collectability of residential receivables previously not deemed probable of collection. Additionally, during the nine months ended September 30, 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.

In transitioning to ASC 842 in the first quarter of 2022, the Company elected the modified retrospective approach to existing leases at the beginning of the quarter and has recorded a cumulative-effect adjustment in retained earnings using the above methods applied to balances as of December 31, 2021, of $6.0 million.

In accordance with the provisions of ASC 842, rental revenue for commercial leases is recognized on a straight-line basis over the terms of the respective leases. Deferred rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Rental income attributable to residential leases and parking is recognized as earned, which is not materially different from the straight-line basis. Leases entered by residents for apartment units are generally for one-year terms, renewable upon consent of both parties on an annual or monthly basis.

Reimbursements for operating expenses due from tenants pursuant to their lease agreements are recognized as revenue in the period the applicable expenses are incurred. These costs generally include real estate taxes, utilities, insurance, common area maintenance costs and other recoverable costs and are recorded as part of commercial rental income in the consolidated statements of operations.

Stock-based Compensation

The Company accounts for stock-based compensation pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Compensation — Stock Compensation.” As such, all equity-based awards are reflected as compensation expense in the Company’s consolidated statements of operations over their vesting period based on the fair value at the date of grant. In the event of a forfeiture, the previously recognized expense would be reversed.

As of September 30, 2023, and December 31, 2022, there were 3,382,465 and 2,949,823 long-term incentive plan (“LTIP”) units outstanding, respectively, with a weighted average grant date fair value of $8.80 and $9.26 per unit, respectively. As of September 30, 2023, and December 31, 2022, there was $10.4 million and $10.2 million, respectively, of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under share incentive plans. As of September 30, 2023, the weighted-average period over which the unrecognized compensation expense will be recorded is approximately four years.

In March 2023, the Company granted employees and non-employee directors 274,911 and 157,731 LTIP units, respectively, with a weighted-average grant date value of $5.62 per unit. The grants vesting period range from up to one year for those granted to the non-employee directors and from 1 to 2.5 years to those granted to employees as 2022 bonus and long-term incentive compensation.

In April 2022, the Company granted employees and non-employee directors 900,000 and 275,000 LTIP units, respectively, with a weighted-average grant date value of $8.70 per unit, substantially all which vest in 10 years. Of these grants, 270,000 and 82,500 were approved by the shareholders of the Company at the 2022 Annual Meeting of the Shareholders on June 15, 2022 to increase the number of shares issuable under the Company’s 2015 Omnibus Incentive Plan and the 2015 Non-Employee Director Plan by 1.3 million and 0.5 million shares, respectively.

Transaction Pursuit Costs

Transaction pursuit costs primarily reflect costs incurred for abandoned acquisition, disposition or other transaction pursuits.

During the three and nine-month periods ended September 30, 2023 transaction pursuit costs include $0 and $357, respectively of costs related to the Article 11 Agreement. During the three- and nine-month periods ended September 30, 2022 the company incurred $(10) and $506, respectively, primarily for an abandoned acquisition, as well as the acquisition of the Dean Street property.

Income Taxes

The Company elected to be taxed and to operate in a manner that will allow it to qualify as a REIT under the Code. To qualify as a REIT, the Company is required to distribute dividends equal to at least 90% of the REIT taxable income (computed without regard to the dividends paid deduction and net capital gains) to its stockholders, and meet the various other requirements imposed by the Code relating to matters such as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided the Company qualifies for taxation as a REIT, it is generally not subject to U.S. federal corporate-level income tax on the earnings distributed currently to its stockholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and any applicable alternative minimum tax. In addition, the Company may not be able to re-elect as a REIT for the four subsequent taxable years. The entities comprising the Predecessor are limited liability companies and are treated as pass-through entities for income tax purposes. Accordingly, no provision has been made for federal, state or local income or franchise taxes in the accompanying consolidated financial statements.

In accordance with FASB ASC Topic 740, the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on its financial position or results of operations. The prior three years’ income tax returns are subject to review by the Internal Revenue Service.

Fair Value Measurements

Refer to Note 7, “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 required by FASB guidance, the Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation.

Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecast transactions, are considered cash flow hedges. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in the fair value or cash flows of the derivative hedging instrument with the changes in the fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value would be recognized in earnings. As of September 30, 2023 and December 31, 2022, 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 September 30, 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. The Company did not have dilutive securities as of September 30, 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 net loss allocable to such units is reflected as non-controlling interests in the accompanying consolidated financial statements.

The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2023			2022			2023			2022
Numerator
Net loss attributable to common stockholders	$	(881	)	$	(1,057	)	$	(4,817	)	$	(3,494	)
Less: income attributable to participating securities		(322	)		(280	)		(967	)		(688	)
Subtotal	$	(1,203	)	$	(1,337	)	$	(5,784	)	$	(4,182	)
Denominator
Weighted-average common shares outstanding		16,063			16,063			16,063			16,063
Basic and diluted net loss per share attributable to common stockholders	$	(0.07	)	$	(0.08	)	$	(0.36	)	$	(0.26	)

Recently Issued Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables and other long-term financings including available for sale and held-to-maturity debt securities, and loans. Subsequently, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the standard and should continue to be accounted for in accordance with the leases standard (Topic 842). As a result, the adoption of the standard as of January 1, 2022 did not have a material impact on the consolidated financial statements. 

In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (Topic 848). ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and may be applied prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 as and when we enter transactions to which this guidance applies.

In January 2021, FASB issued ASU 2021-01, “Reference Rate Reform” (Topic 848). ASU 2021-01 modifies ASC 848 (ASU 2020-04), which was intended to provide relief related to “contracts and transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.” ASU 2021-01 expands the scope of ASC 848 to include all affected derivatives and give reporting entities the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. ASU 2021-01 also adds implementation guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. The Company does not expect the adoption of ASU 2021-01 to have a material impact on its consolidated financial statements.

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Note 3 - Acquisitions

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Business Combination Disclosure [Text Block]

3. Acquisitions

During the nine months ended September 30, 2022 the Company acquired additional parcels of land for the Dean Street property, for $3,701 including acquisition costs of $151.

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Note 4 - Deferred Costs and Intangible Assets

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Deferred Costs and Intangible Assets Disclosure [Text Block]

4. Deferred Costs and Intangible Assets

Deferred costs and intangible assets consist of the following:

	September 30, 2023			December 31, 2022
	(unaudited)
Deferred costs	$	348		$	348
Lease origination costs		1,463			1,376
In-place leases		428			428
Real estate tax abatements		9,142			9,142
Total deferred costs and intangible assets		11,381			11,294
Less accumulated amortization		(5,111	)		(4,670	)
Total deferred costs and intangible assets, net	$	6,270		$	6,624

Amortization of deferred costs, lease origination costs and in-place lease intangible assets was $29 and $60 for the three months ended September 30, 2023 and 2022, respectively, and $79 and $178 for the nine months ended September 30, 2023 and 2022, respectively; Amortization of real estate tax abatements of $120 and $120 for the three months ended September 30, 2023 and 2022, respectively, and $361 and $361 for the nine months ended September 30, 2023 and 2022, is included in real estate taxes and insurance in the consolidated statements of operations.

Deferred costs and intangible assets as of September 30, 2023, amortize in future years as follows:

2023 (Remainder)	$	157
2024		587
2025		570
2026		546
2027		534
Thereafter		3,876
Total	$	6,270

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Note 5 - Notes Payable

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Long-Term Debt [Text Block]

5. Notes Payable

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:

Property	Maturity	Interest Rate		September 30, 2023			December 31, 2022
Flatbush Gardens, Brooklyn, NY (a)	6/1/2032		3.125%	$	329,000		$	329,000
250 Livingston Street, Brooklyn, NY (b)	6/6/2029		3.63%		125,000			125,000
141 Livingston Street, Brooklyn, NY (c)	3/6/2031		3.21%		100,000			100,000
Tribeca House, Manhattan, NY (d)	3/6/2028		4.506%		360,000			360,000
Aspen, Manhattan, NY (e)	7/1/2028		3.68%		61,399			62,554
Clover House, Brooklyn, NY (f)	12/1/2029		3.53%		82,000			82,000
10 West 65th Street, Manhattan, NY (g)	11/1/2027	SOFR + 2.50%			31,929			32,222
1010 Pacific Street, Brooklyn, NY (h)	9/1/2024	LIBOR + 3.60%			—			43,477
1010 Pacific Street, Brooklyn, NY (h)	9/15/2025		5.55%		60,000			—
1010 Pacific Street, Brooklyn, NY (h)	9/15/2025		6.370%		20,000			—
Dean Street, Brooklyn, NY (i)	9/22/2023	Prime + 1.60%			—			36,985
Dean Street, Brooklyn, NY (i)	8/10/2026	SOFR + 4%			37,899			—
Dean Street, Brooklyn, NY (i)	8/10/2026	SOFR + 10%			4,629			—
Total debt				$	1,211,856		$	1,171,238
Unamortized debt issuance costs					(14,578	)		(9,650	)
Total debt, net of unamortized debt issuance costs				$	1,197,278		$	1,161,588

(a) The $329,000 mortgage note agreement with New York Community Bank (“NYCB”), entered into on May 8, 2020, matures on June 1, 2032, and bears interest at 3.125% through May 2027 and thereafter at the prime rate plus 2.75%, subject to an option to fix the rate. The note requires interest-only payments through May 2027, and monthly principal and interest payments thereafter based on a 30-year amortization schedule. The Company has 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.

(b) The $125,000 mortgage note agreement with Citi Real Estate Funding Inc., entered into on May 31, 2019, matures on June 6, 2029, bears interest at 3.63% and requires interest-only payments for the entire term. The Company has 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.

(c), The $100,000 mortgage note agreement with Citi Real Estate Funding Inc., entered into on February 18, 2021 matures on March 6, 2031, bears interest at 3.21% and requires interest-only payments for the entire term. The Company has 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.

(d) The $360,000 loan with Deutsche Bank, entered into on February 21, 2018, matures on March 6, 2028, bears interest at 4.506% and requires interest-only payments for the entire term. The Company has the option to prepay all (but not less than all) of the unpaid balance of the loan prior to the maturity date, subject to a prepayment premium if it occurs prior to December 6, 2027.

(e) The $70,000 mortgage note agreement with Capital One Multifamily Finance LLC matures on July 1, 2028, and bears interest at 3.68%. The note required interest-only payments through July 2017, and monthly principal and interest payments of $321 thereafter based on a 30-year amortization schedule. The Company has the option to prepay the note prior to the maturity date, subject to a prepayment premium.

(f) The $82,000 mortgage note agreement with MetLife Investment Management, entered into on November 8, 2019, matures on December 1, 2029, bears interest at 3.53% and requires interest-only payments for the entire term. The Company has 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.

(g) The $32,200 mortgage note agreement with NYCB entered into in connection with the acquisition of the property matures on November 1, 2027. Through October 2022 the Company paid a fixed interest rate of 3.375% and thereafter was scheduled to pay interest at the prime rate plus 2.75%, subject to an option to fix the rate. 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 September 30, 2023). 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 has 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.

(h) On December 24, 2019, the Company entered into a $18,600 mortgage note agreement with CIT Bank, N.A., related to the 1010 Pacific Street acquisition. The Company also entered into a pre-development bridge loan secured by the property with the same lender to provide up to $2,987 for eligible pre-development and carrying costs. The notes were scheduled to mature on June 24, 2021, required interest-only payments and bore interest at one-month LIBOR (with a floor of 1.25%) plus 3.60%. The notes were extended in June 2021 with a new maturity date of August 30, 2021. The Company guaranteed this mortgage note and complied with the financial covenants therein.

On August 10, 2021, the Company refinanced the above 1010 Pacific Street loan with a group of loans with AIG Asset Management (U.S.), LLC providing for maximum borrowings of $52,500 to develop the property. The notes had a 36-month term, bearing interest at 30 days LIBOR plus 3.60% (with a floor of 4.1%) (9.35% as of March 31, 2023). The notes were scheduled to mature on September 1, 2024 and could have been extended until September 1, 2026. The Company could have prepaid the unpaid balance of the note within five months of maturity without penalty.

On February 9, 2023 the Company refinanced this construction loan with a mortgage loan with Valley National Bank which provided for maximum borrowings of $80,000. The loan provided initial funding of $60,000 and a further $20,000 subject to achievement of certain financial targets. The loan has a term of five years and an initial annual interest rate of 5.7% subject to reduction by up to 25 basis points upon achievement of certain financial targets. The interest rate on subsequent fundings will be fixed at the time of any funding. The loan requires interest-only payments for the first two years and principal and interest thereafter based on a 30-year amortization schedule. The Company has the option to prepay in full, or in part, the unpaid balance of the note prior to the maturity date. Prior to the second anniversary of the date of the note prepayment is subject to certain prepayment premiums, as defined. After the second anniversary of the date of the note the prepayment is not subject to a prepayment premium. During the quarter ended June 30, 2023 the company achieved a financial target and the interest rate was reduced by 15 basis points to 5.55%.

On September 15, 2023 the Company borrowed an additional $20,000 from Valley National Bank. The additional borrowing has a term of twenty-four months and an annual interest rate of 6.37%. The loan is interest only subject to the maintenance of certain financial targets after the first 16 months of the term. In conjunction with the additional borrowing, the Company and the bank agreed to amend the expiration date of the initial $60,000 to expire at the same time as the additional borrowing. No change was made to the interest rate on the initial borrowing.

In conjunction with the refinancing, the Company incurred $3,868 of loan extinguishment costs related to prepayment penalties, unamortized deferred financed costs of the previous loan and other fees. These costs are included in the consolidated statement of operations for the nine-month period ended September 30, 2023.

(i) On December 22, 2021, the Company entered into a $30,000 mortgage note agreement with Bank Leumi, N.A related to the Dean Street acquisition. The notes original maturity was December 22, 2022 and was subsequently extended to September 22, 2023. The note required interest-only payments and bears interest at the prime rate (with a floor of 3.25%) plus 1.60% (9.85% as of June 30, 2023). In April 2022, the Company borrowed an additional $6,985 under the mortgage note in connection with the acquisition of additional parcels of land in February and April 2022.

On August 10, 2023, the “Company refinanced its $37 million mortgage on its Dean Street development with a senior construction loan (“Senior Loan”) that permits borrowings up to $115 million with Valley National Bank and a Mezzanine Loan (combined “Construction Loans”) that permits borrowings up to $8 million with BADF 953 Dean Street Lender LLC. The Construction Loans will finance the development of 240 residential units and 9,319 square feet of commercial space.

The Senior Loan will allow maximum borrowings of $115 million for a 30-month term, have two 6-month extension options, and bear interest at 1-Month Term SOFR plus 4.00%, with an all-in floor of 5.50% (9.33% at September 30, 2023). The Senior Loan will consist of a land loan, funded at closing to refinance the existing loan totaling $37 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.

The Mezzanine Loan will allow 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% (15.33% at September 30, 2023). Interest shall accrue of the principal, is compounded monthly and is due at the end of the loan. At closing, $4.5 million was funded to cover closing costs incurred on the construction loans.

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 September 30, 2023.

The Company has provided a limited guaranty for the mortgage notes at several of its properties. 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 and debt yield ratios. In the event that they are 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 following table summarizes principal payment requirements under the terms of the mortgage notes as of September 30, 2023:

2023 (Remainder)	$	487
2024		1,993
2025		82,092
2026		44,718
2027		33,461
Thereafter		1,049,105
Total	$	1,211,856

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Note 6 - Rental Income Under Operating Leases

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Lessor, Operating Leases [Text Block]

6. Rental Income under Operating Leases

The Company’s commercial properties are leased to commercial tenants under operating leases with fixed terms of varying lengths. As of September 30, 2023, the minimum future cash rents receivable (excluding tenant reimbursements for operating expenses) under non-cancelable operating leases for the commercial tenants in each of the next five years and thereafter are as follows:

2023 (Remainder)	$	7,580
2024		30,457
2025		24,822
2026		4,548
2027		3,915
Thereafter		19,315
Total	$	90,637

The Company has commercial leases with the City of New York that comprised approximately 23% and 24% of total revenues for the three months ended September 30, 2023 and 2022, respectively, and 23% and 24% of total revenues for the nine months ended September 30, 2023 and 2022, respectively.

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Note 7 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

7. Fair Value of Financial Instruments

GAAP requires the measurement of certain financial instruments at fair value on a recurring basis. In addition, GAAP requires the measure of other financial instruments and balances at fair value on a non-recurring basis. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that require inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices from an independent third-party source to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

The financial assets and liabilities in the consolidated balance sheets include cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued liabilities, security deposits and notes payable. The carrying amount of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued liabilities, and security deposits reported in the consolidated balance sheets approximates fair value due to the short-term nature of these instruments. The fair value of notes payable, which are classified as Level 2, is estimated by discounting the contractual cash flows of each debt instrument to their present value using adjusted market interest rates.

The carrying amount and estimated fair value of the notes payable are as follows:

	September 30, 2023		December 31, 2022
	(unaudited)
Carrying amount (excluding unamortized debt issuance costs)	$	1,211,856	$	1,171,238
Estimated fair value	$	1,117,041	$	1,092,345

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Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8. Commitments and Contingencies

Legal

On July 3, 2017, the Supreme Court of the State of New York (the “Court”) ruled in favor of 41 present or former tenants of apartment units at the Company’s buildings located at 50 Murray Street and 53 Park Place in Manhattan, New York (the Tribeca House property), who brought an action (the “Kuzmich” case) against the Company alleging that they were subject to applicable rent stabilization laws with the result that rental payments charged by the Company exceeded amounts permitted under these laws because the buildings were receiving certain tax abatements under Real Property Tax Law (“RPTL”) 421-g. The Court also awarded the plaintiffs- tenants their attorney’s fees and costs. After various court proceedings and discussions from 2018-2022, on March 4, 2022 the court issued a ruling, finalized on May 9, 2022, on the rent overcharges to which the plaintiffs are entitled. While the court ruled that the overcharges to which the plaintiffs are entitled total $1.2 million, the court agreed with the Company’s legal arguments that rendered the overcharge liability lower than it could have been, and therefore the Company did not appeal the ruling. On June 23, 2022, the court ruled that the plaintiffs are entitled to attorneys’ fees incurred through February 28, 2022, in the amount of $0.4 million.

On November 18, 2019, the same law firm which filed the Kuzmich case filed a second action involving a separate group of 26 tenants (captioned Crowe et al v 50 Murray Street Acquisition LLC, Supreme Court, New York County, Index No. 161227/19), which action advances essentially the same claims as in Kuzmich. The Company’s deadline to answer or otherwise respond to the complaint in Crowe had been extended to June 30, 2020; on such date, the Company filed its answer to the complaint. Pursuant to the court’s rules, on July 16, 2020, the plaintiffs filed an amended complaint; the sole difference as compared to the initial complaint is that seven new plaintiffs-tenants were added to the caption; there were no substantive changes to the complaint’s allegations. On August 5, 2020, the Company filed its answer to the amended complaint. The case was placed on the court’s calendar and was next scheduled for a discovery conference on November 16, 2022. Counsel for the parties have been engaged in and are continuing settlement discussions. On November 16, 2022, the court held a compliance conference and ordered the plaintiffs to provide rent overcharge calculations in response to proposed calculations previously provided by the Company. On July 12, 2023, the court referred this matter to a Judicial Hearing Officer (“JHO”) to determine the outstanding issues. A hearing before the JHO was held in September 2023 and at this time all parties are engaged in settlement discussions.

On March 9, 2021, the same law firm which filed the Kuzmich and Crowe cases filed a third action involving another tenant (captioned Horn v 50 Murray Street Acquisition LLC, Supreme Court, New York County, Index No. 152415/21), which action advances the same claims as in Kuzmich and Crowe. The Company filed its answer to the complaint on May 21, 2021. The case was placed on the court’s calendar and is next scheduled for a preliminary conference in December 2023

As a result of the March 4 and May 9, 2022 decisions which established the probability and ability to reasonably compute amounts owed to tenants for all the cases, the Company recorded a charge for litigation settlement and other of $2.7 million in the consolidated statements of operations during the year ended December 31, 2021 comprising rent overcharges, interest and legal costs of plaintiff’s counsel. The Company paid $2.3 million to the plaintiffs related to the Kuzmich case during the year ended December 31, 2022 and $0.4 million related to the Crowe case during the nine month period ended September 30, 2023.

In addition to the above, the Company is subject to certain legal proceedings and claims arising in connection with its business. Management believes, based in part upon consultation with legal counsel, that the ultimate resolution of all such claims will not have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows.

The Office of the Attorney General of the State of New York (“OAG”) commenced an investigation concerning the conduct of screening of tenant applicants in the building portfolio in which Clipper Equity and its principals have a management and/or ownership interest. Clipper Equity cooperated with the investigation and, in April 2022, entered into an Assurance of Discontinuance with the OAG to resolve the investigation on behalf of itself and its affiliates, the terms of which have no impact to the Company’s financial position or results of operations.

Commitments

June 29, 2023 the Company entered into the Article 11 Agreement Under the Article 11 agreement, the Company has entered into a Housing Repair and Maintenance Letter Agreement in which the Company has agreed to perform certain capital improvements to Flatbush Gardens over the next three years. The current estimate is that the costs of that work will be an amount up to $27 million. 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).

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.

Concentrations

The Company’s properties are located in the Boroughs of Manhattan and Brooklyn in New York City, which exposes the Company to greater economic risks than if it owned a more geographically dispersed portfolio.

The breakdown between commercial and residential revenue is as follows (unaudited):

	Commercial			Residential			Total
Three months ended September 30, 2023		27	%		73	%		100	%
Three months ended September 30, 2022		30	%		70	%		100	%
Nine months ended September 30, 2023		28	%		72	%		100	%
Nine months ended September 30, 2022		31	%		69	%		100	%

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Note 9 - Related-party Transactions

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

9. Related-Party Transactions

The Company recorded office and overhead expenses pertaining to a related company in general and administrative expense of $0 and $64 for the three months ended September 30, 2023 and 2022, respectively, and $198 and $192 for the nine months ended September 30, 2023 and 2022. The Company recognized a charge/(credit) to reimbursable payroll expense pertaining to a related company in general and administrative expense of $(23) and $2 for the three months ended September 30, 2023 and 2022, respectively, and $(53) and $(16) for the nine months ended September 30, 2023 and 2022.

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Note 10 - Segment Reporting

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

10. Segment Reporting

The Company has classified its reporting segments into commercial and residential rental properties. The commercial reporting segment includes the 141 Livingston Street property and portions of the 250 Livingston Street, Tribeca House and Aspen properties. The residential reporting segment includes the Flatbush Gardens property, the Clover House property, the 10 West 65th Street property, the 1010 Pacific Street property and portions of the 250 Livingston Street, Tribeca House and Aspen properties.

The Company’s income from operations by segment for the three and nine months ended September 30, 2023 and 2022, is as follows (unaudited):

Three months ended September 30, 2023	Commercial		Residential		Total
Rental income	$	9,627	$	25,501	$	35,128
Total revenues	$	9,627	$	25,501	$	35,128
Property operating expenses		1,248		6,682		7,930
Real estate taxes and insurance		2,540		4,834		7,374
General and administrative		606		2,734		3,340
Depreciation and amortization		1,457		5,825		7,282
Total operating expenses		5,851		20,075		25,926
Income from operations	$	3,776	$	5,426	$	9,202

Three months ended September 30, 2022	Commercial		Residential			Total
Rental income	$	9,692	$	23,108		$	32,800
Total revenues	$	9,692	$	23,108		$	32,800
Property operating expenses		1,240		6,027			7,267
Real estate taxes and insurance		2,228		6,024			8,252
General and administrative		598		2,611			3,209
Transaction pursuit costs		—		(10	)		(10	)
Depreciation and amortization		1,386		5,398			6,784
Total operating expenses		5,452		20,050			25,502
Income from operations	$	4,240		3,058			7,298

Nine months ended September 30, 2023	Commercial		Residential		Total
Rental income	$	28,857	$	74,481	$	103,338
Total revenues		28,857		74,481		103,338
Property operating expenses		3,511		19,300		22,811
Real estate taxes and insurance		7,069		17,541		24,610
General and administrative		1,792		8,237		10,029
Transaction pursuit costs		—		357		357
Depreciation and amortization		4,346		17,030		21,376
Total operating expenses		16,718		62,465		79,183
Income from operations	$	12,139	$	12,016	$	24,155

Nine months ended September 30, 2022	Commercial		Residential		Total
Rental income	$	29,570	$	67,167	$	96,737
Total revenues		29,570		67,167		96,737
Property operating expenses		3,567		18,167		21,734
Real estate taxes and insurance		6,264		17,805		24,069
General and administrative		1,745		7,603		9,348
Transaction pursuit costs		81		425		506
Depreciation and amortization		4,108		16,113		20,221
Total operating expenses		15,765		60,113		75,878
Income from operations	$	13,805	$	7,054	$	20,859

The Company’s total assets by segment are as follows, as of:

	Commercial		Residential		Total
September 30, 2023 (unaudited)	$	312,029	$	927,730	$	1,239,759
December 31, 2022		312,404		917,227		1,229,631

The Company’s interest expense by segment for the three and nine months ended September 30, 2023 and 2022, is as follows (unaudited):

	Commercial		Residential		Total
Three months ended September 30,
2023	$	2,577	$	8,950	$	11,527
2022	$	2,533	$	7,553	$	10,086
Nine months ended September 30,
2023	$	7,584	$	25,412	$	32,996
2022	$	7,537	$	22,539	$	30,076

The Company’s capital expenditures, including acquisitions, by segment for the three and nine months ended September 30, 2023 and 2022, are as follows (unaudited):

	Commercial		Residential		Total
Three months ended September 30,
2023	$	689	$	10,067	$	10,756
2022	$	917	$	8,883	$	9,800
Nine months ended September 30,
2023	$	2,929	$	25,414	$	28,343
2022	$	2,545	$	39,859	$	42,404

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Segment Reporting, Policy [Policy Text Block]

Segments

At September 30, 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.

Consolidation, Policy [Policy Text Block]

Basis of Consolidation

The accompanying consolidated financial statements of the Company are prepared in accordance with 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. The ownership interests of other investors in these entities are recorded as non-controlling interests.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.

Real Estate, Policy [Policy Text Block]

Investment in Real Estate

Real estate assets held for investment are carried at historical cost and consist of land, buildings and improvements, furniture, fixtures and equipment. Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Expenditures for improvements, renovations, and replacements of real estate assets are capitalized and depreciated over their estimated useful lives if the expenditures qualify as betterment or the life of the related asset will be substantially extended beyond the original life expectancy.

In accordance with ASU 2018-01, "Business Combinations – Clarifying the Definition of a Business,” the Company evaluates each acquisition of real estate or in-substance real estate to determine if the integrated set of assets and activities acquired meets the definition of a business and needs to be accounted for as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:

• Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or

• The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).

An acquired process is considered substantive if:

• The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable and experienced in performing the process:

• The process cannot be replaced without significant cost, effort or delay; or

• The process is considered unique or scarce.

Generally, the Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

Upon acquisition of real estate, the Company assesses the fair values of acquired tangible and intangible assets including land, buildings, tenant improvements, above-market and below-market leases, in-place leases and any other identified intangible assets and assumed liabilities. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. In estimating fair value of tangible and intangible assets acquired, the Company assesses and considers fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates, estimates of replacement costs, net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

The Company records acquired above-market and below-market lease values initially based on the present value, using a discount rate which reflects the risks associated with the leases acquired based on the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed renewal options for the below-market leases. Other intangible assets acquired include amounts for in-place lease values and tenant relationship values (if any) that are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A property’s value is impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. 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. In the event that the Company obtains proceeds through an insurance policy due to impairment, the proceeds are offset against the write-down in calculating gain/loss on disposal of assets. Management of the Company does not believe that any of its properties within the portfolio are impaired as of September 30, 2023.

For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the assets less estimated cost to sell is less than the carrying value of the assets. Properties classified as real estate held-for-sale generally represent properties that are actively marketed or contracted for sale with closing expected to occur within the next twelve months. Real estate held-for-sale is carried at the lower of cost, net of accumulated depreciation, or fair value less cost to sell, determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held-for-sale properties are charged to expense as incurred. Expenditures for improvements, renovations and replacements related to held-for-sale properties are capitalized at cost. Depreciation is not recorded on real estate held-for-sale.

If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balances of the related intangibles are written off. The tenant improvements and origination costs are amortized to expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date).

Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

Building and improvements (in years)	10	–	44
Tenant improvements	Shorter of useful life or lease term
Furniture, fixtures and equipment (in years)	3	–	15

The capitalized above-market lease values are amortized as a reduction to base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents are defined as cash on hand and in banks, plus all short-term investments with a maturity of three months or less when purchased. The Company maintains some of its cash in bank deposit accounts, which, at times, may exceed the federally insured limit. No losses have been experienced related to such accounts.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted Cash

Restricted cash generally consists of escrows for future real estate taxes and insurance expenditures, repairs, capital improvements, loan reserves and security deposits.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Tenant and Other Receivables and Allowance for Doubtful Accounts

Tenant and other receivables are comprised of amounts due for monthly rents and other charges less allowance for doubtful accounts. As described more fully under Revenue Recognition below, in the first quarter of 2022 the Company adopted Accounting Standards Codification (“ASC”) 842 “Leases” which replaced guidance under ASC 840 and provided for transition from balances at December 31, 2021. In accordance with ASC 842, the Company performed a detailed review of amounts due from tenants to determine if accounts receivable balances and future lease payments were probable of collection, wrote off receivables not probable of collection and recorded a general reserve against revenues for receivables probable of collection for which a loss can be reasonably estimated. 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. 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 Charges, Policy [Policy Text Block]

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.

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 consolidated statements of operations. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions which do not close are expensed in the period the financing transaction is terminated.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) adjusted for changes in unrealized gains and losses, reported in equity, for financial instruments required to be reported at fair value under GAAP. For the three and nine months ended September 30, 2023 and 2022, the Company did not own any financial instruments for which the change in value was not reported in net income (loss); accordingly, its comprehensive income (loss) was its net income (loss) as presented in the consolidated statements of operations.

Revenue [Policy Text Block]

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 ASC 842, “Leases” which replaces the guidance under ASC 840. 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. 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. 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 ASC 450.

In the three and nine months ended September 30, 2023 the Company has charged revenue in the amount of $0.9 million and $3.3 million, respectively for residential receivables not deemed probable of collection and recognized revenue of $0.2 million and $1.3 million respectively, for a reassessment of collectability of residential receivables previously not deemed probable of collection.

In the three and nine months ended September 30, 2022, the Company has charged revenue in the amount of $0.8 million and $2.3 million, respectively, for residential receivables not deemed probable of collection. and recognized revenue of $0.8 million and $5.0 million respectively, for a reassessment of collectability of residential receivables previously not deemed probable of collection. Additionally, during the nine months ended September 30, 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.

In transitioning to ASC 842 in the first quarter of 2022, the Company elected the modified retrospective approach to existing leases at the beginning of the quarter and has recorded a cumulative-effect adjustment in retained earnings using the above methods applied to balances as of December 31, 2021, of $6.0 million.

In accordance with the provisions of ASC 842, rental revenue for commercial leases is recognized on a straight-line basis over the terms of the respective leases. Deferred rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Rental income attributable to residential leases and parking is recognized as earned, which is not materially different from the straight-line basis. Leases entered by residents for apartment units are generally for one-year terms, renewable upon consent of both parties on an annual or monthly basis.

Reimbursements for operating expenses due from tenants pursuant to their lease agreements are recognized as revenue in the period the applicable expenses are incurred. These costs generally include real estate taxes, utilities, insurance, common area maintenance costs and other recoverable costs and are recorded as part of commercial rental income in the consolidated statements of operations.

Share-Based Payment Arrangement [Policy Text Block]

Stock-based Compensation

The Company accounts for stock-based compensation pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Compensation — Stock Compensation.” As such, all equity-based awards are reflected as compensation expense in the Company’s consolidated statements of operations over their vesting period based on the fair value at the date of grant. In the event of a forfeiture, the previously recognized expense would be reversed.

As of September 30, 2023, and December 31, 2022, there were 3,382,465 and 2,949,823 long-term incentive plan (“LTIP”) units outstanding, respectively, with a weighted average grant date fair value of $8.80 and $9.26 per unit, respectively. As of September 30, 2023, and December 31, 2022, there was $10.4 million and $10.2 million, respectively, of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under share incentive plans. As of September 30, 2023, the weighted-average period over which the unrecognized compensation expense will be recorded is approximately four years.

In March 2023, the Company granted employees and non-employee directors 274,911 and 157,731 LTIP units, respectively, with a weighted-average grant date value of $5.62 per unit. The grants vesting period range from up to one year for those granted to the non-employee directors and from 1 to 2.5 years to those granted to employees as 2022 bonus and long-term incentive compensation.

In April 2022, the Company granted employees and non-employee directors 900,000 and 275,000 LTIP units, respectively, with a weighted-average grant date value of $8.70 per unit, substantially all which vest in 10 years. Of these grants, 270,000 and 82,500 were approved by the shareholders of the Company at the 2022 Annual Meeting of the Shareholders on June 15, 2022 to increase the number of shares issuable under the Company’s 2015 Omnibus Incentive Plan and the 2015 Non-Employee Director Plan by 1.3 million and 0.5 million shares, respectively.

Transaction Pursuit Costs, Policy [Policy Text Block]

Transaction Pursuit Costs

Transaction pursuit costs primarily reflect costs incurred for abandoned acquisition, disposition or other transaction pursuits.

During the three and nine-month periods ended September 30, 2023 transaction pursuit costs include $0 and $357, respectively of costs related to the Article 11 Agreement. During the three- and nine-month periods ended September 30, 2022 the company incurred $(10) and $506, respectively, primarily for an abandoned acquisition, as well as the acquisition of the Dean Street property.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company elected to be taxed and to operate in a manner that will allow it to qualify as a REIT under the Code. To qualify as a REIT, the Company is required to distribute dividends equal to at least 90% of the REIT taxable income (computed without regard to the dividends paid deduction and net capital gains) to its stockholders, and meet the various other requirements imposed by the Code relating to matters such as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided the Company qualifies for taxation as a REIT, it is generally not subject to U.S. federal corporate-level income tax on the earnings distributed currently to its stockholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and any applicable alternative minimum tax. In addition, the Company may not be able to re-elect as a REIT for the four subsequent taxable years. The entities comprising the Predecessor are limited liability companies and are treated as pass-through entities for income tax purposes. Accordingly, no provision has been made for federal, state or local income or franchise taxes in the accompanying consolidated financial statements.

In accordance with FASB ASC Topic 740, the Company believes that it has appropriate support for the income tax positions taken and, as such, does not have any uncertain tax positions that, if successfully challenged, could result in a material impact on its financial position or results of operations. The prior three years’ income tax returns are subject to review by the Internal Revenue Service.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value Measurements

Refer to Note 7, “Fair Value of Financial Instruments”.

Derivatives, Policy [Policy Text Block]

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 required by FASB guidance, the Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation.

Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecast transactions, are considered cash flow hedges. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in the fair value or cash flows of the derivative hedging instrument with the changes in the fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value would be recognized in earnings. As of September 30, 2023 and December 31, 2022, the Company has no derivatives for which it applies hedge accounting.

Earnings Per Share, Policy [Policy Text Block]

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 September 30, 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. The Company did not have dilutive securities as of September 30, 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 net loss allocable to such units is reflected as non-controlling interests in the accompanying consolidated financial statements.

The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2023			2022			2023			2022
Numerator
Net loss attributable to common stockholders	$	(881	)	$	(1,057	)	$	(4,817	)	$	(3,494	)
Less: income attributable to participating securities		(322	)		(280	)		(967	)		(688	)
Subtotal	$	(1,203	)	$	(1,337	)	$	(5,784	)	$	(4,182	)
Denominator
Weighted-average common shares outstanding		16,063			16,063			16,063			16,063
Basic and diluted net loss per share attributable to common stockholders	$	(0.07	)	$	(0.08	)	$	(0.36	)	$	(0.26	)

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables and other long-term financings including available for sale and held-to-maturity debt securities, and loans. Subsequently, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the standard and should continue to be accounted for in accordance with the leases standard (Topic 842). As a result, the adoption of the standard as of January 1, 2022 did not have a material impact on the consolidated financial statements. 

In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (Topic 848). ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and may be applied prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 as and when we enter transactions to which this guidance applies.

In January 2021, FASB issued ASU 2021-01, “Reference Rate Reform” (Topic 848). ASU 2021-01 modifies ASC 848 (ASU 2020-04), which was intended to provide relief related to “contracts and transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.” ASU 2021-01 expands the scope of ASC 848 to include all affected derivatives and give reporting entities the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. ASU 2021-01 also adds implementation guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. The Company does not expect the adoption of ASU 2021-01 to have a material impact on its consolidated financial statements.

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Note 2- Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Property, Plant and Equipment, Useful Life [Table Text Block]

Building and improvements (in years)	10	–	44
Tenant improvements	Shorter of useful life or lease term
Furniture, fixtures and equipment (in years)	3	–	15

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2023			2022			2023			2022
Numerator
Net loss attributable to common stockholders	$	(881	)	$	(1,057	)	$	(4,817	)	$	(3,494	)
Less: income attributable to participating securities		(322	)		(280	)		(967	)		(688	)
Subtotal	$	(1,203	)	$	(1,337	)	$	(5,784	)	$	(4,182	)
Denominator
Weighted-average common shares outstanding		16,063			16,063			16,063			16,063
Basic and diluted net loss per share attributable to common stockholders	$	(0.07	)	$	(0.08	)	$	(0.36	)	$	(0.26	)

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Note 4 - Deferred Costs and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of Deferred Costs and Intangible Assets [Table Text Block]

	September 30, 2023			December 31, 2022
	(unaudited)
Deferred costs	$	348		$	348
Lease origination costs		1,463			1,376
In-place leases		428			428
Real estate tax abatements		9,142			9,142
Total deferred costs and intangible assets		11,381			11,294
Less accumulated amortization		(5,111	)		(4,670	)
Total deferred costs and intangible assets, net	$	6,270		$	6,624

Schedule of Deferred Costs and Intangible Assets, Future Amortization Expense [Table Text Block]

2023 (Remainder)	$	157
2024		587
2025		570
2026		546
2027		534
Thereafter		3,876
Total	$	6,270

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Note 5 - Notes Payable (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of Long-Term Debt Instruments [Table Text Block]

Property	Maturity	Interest Rate		September 30, 2023			December 31, 2022
Flatbush Gardens, Brooklyn, NY (a)	6/1/2032		3.125%	$	329,000		$	329,000
250 Livingston Street, Brooklyn, NY (b)	6/6/2029		3.63%		125,000			125,000
141 Livingston Street, Brooklyn, NY (c)	3/6/2031		3.21%		100,000			100,000
Tribeca House, Manhattan, NY (d)	3/6/2028		4.506%		360,000			360,000
Aspen, Manhattan, NY (e)	7/1/2028		3.68%		61,399			62,554
Clover House, Brooklyn, NY (f)	12/1/2029		3.53%		82,000			82,000
10 West 65th Street, Manhattan, NY (g)	11/1/2027	SOFR + 2.50%			31,929			32,222
1010 Pacific Street, Brooklyn, NY (h)	9/1/2024	LIBOR + 3.60%			—			43,477
1010 Pacific Street, Brooklyn, NY (h)	9/15/2025		5.55%		60,000			—
1010 Pacific Street, Brooklyn, NY (h)	9/15/2025		6.370%		20,000			—
Dean Street, Brooklyn, NY (i)	9/22/2023	Prime + 1.60%			—			36,985
Dean Street, Brooklyn, NY (i)	8/10/2026	SOFR + 4%			37,899			—
Dean Street, Brooklyn, NY (i)	8/10/2026	SOFR + 10%			4,629			—
Total debt				$	1,211,856		$	1,171,238
Unamortized debt issuance costs					(14,578	)		(9,650	)
Total debt, net of unamortized debt issuance costs				$	1,197,278		$	1,161,588

Schedule of Maturities of Long-Term Debt [Table Text Block]

2023 (Remainder)	$	487
2024		1,993
2025		82,092
2026		44,718
2027		33,461
Thereafter		1,049,105
Total	$	1,211,856

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Note 6 - Rental Income Under Operating Leases (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Lessor, Operating Lease, Payment to be Received, Maturity [Table Text Block]

2023 (Remainder)	$	7,580
2024		30,457
2025		24,822
2026		4,548
2027		3,915
Thereafter		19,315
Total	$	90,637

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Note 7 - Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Fair Value, by Balance Sheet Grouping [Table Text Block]

	September 30, 2023		December 31, 2022
	(unaudited)
Carrying amount (excluding unamortized debt issuance costs)	$	1,211,856	$	1,171,238
Estimated fair value	$	1,117,041	$	1,092,345

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Note 8 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Commercial			Residential			Total
Three months ended September 30, 2023		27	%		73	%		100	%
Three months ended September 30, 2022		30	%		70	%		100	%
Nine months ended September 30, 2023		28	%		72	%		100	%
Nine months ended September 30, 2022		31	%		69	%		100	%

XML

Note 10 - Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Three months ended September 30, 2023	Commercial		Residential		Total
Rental income	$	9,627	$	25,501	$	35,128
Total revenues	$	9,627	$	25,501	$	35,128
Property operating expenses		1,248		6,682		7,930
Real estate taxes and insurance		2,540		4,834		7,374
General and administrative		606		2,734		3,340
Depreciation and amortization		1,457		5,825		7,282
Total operating expenses		5,851		20,075		25,926
Income from operations	$	3,776	$	5,426	$	9,202

Three months ended September 30, 2022	Commercial		Residential			Total
Rental income	$	9,692	$	23,108		$	32,800
Total revenues	$	9,692	$	23,108		$	32,800
Property operating expenses		1,240		6,027			7,267
Real estate taxes and insurance		2,228		6,024			8,252
General and administrative		598		2,611			3,209
Transaction pursuit costs		—		(10	)		(10	)
Depreciation and amortization		1,386		5,398			6,784
Total operating expenses		5,452		20,050			25,502
Income from operations	$	4,240		3,058			7,298

Nine months ended September 30, 2023	Commercial		Residential		Total
Rental income	$	28,857	$	74,481	$	103,338
Total revenues		28,857		74,481		103,338
Property operating expenses		3,511		19,300		22,811
Real estate taxes and insurance		7,069		17,541		24,610
General and administrative		1,792		8,237		10,029
Transaction pursuit costs		—		357		357
Depreciation and amortization		4,346		17,030		21,376
Total operating expenses		16,718		62,465		79,183
Income from operations	$	12,139	$	12,016	$	24,155

Nine months ended September 30, 2022	Commercial		Residential		Total
Rental income	$	29,570	$	67,167	$	96,737
Total revenues		29,570		67,167		96,737
Property operating expenses		3,567		18,167		21,734
Real estate taxes and insurance		6,264		17,805		24,069
General and administrative		1,745		7,603		9,348
Transaction pursuit costs		81		425		506
Depreciation and amortization		4,108		16,113		20,221
Total operating expenses		15,765		60,113		75,878
Income from operations	$	13,805	$	7,054	$	20,859

	Commercial		Residential		Total
September 30, 2023 (unaudited)	$	312,029	$	927,730	$	1,239,759
December 31, 2022		312,404		917,227		1,229,631

	Commercial		Residential		Total
Three months ended September 30,
2023	$	2,577	$	8,950	$	11,527
2022	$	2,533	$	7,553	$	10,086
Nine months ended September 30,
2023	$	7,584	$	25,412	$	32,996
2022	$	7,537	$	22,539	$	30,076

	Commercial		Residential		Total
Three months ended September 30,
2023	$	689	$	10,067	$	10,756
2022	$	917	$	8,883	$	9,800
Nine months ended September 30,
2023	$	2,929	$	25,414	$	28,343
2022	$	2,545	$	39,859	$	42,404

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Note 1 - Organization (Details Textual) $ in Thousands	1 Months Ended			9 Months Ended
	Aug. 31, 2022 USD ($)	Apr. 30, 2022 USD ($)	Feb. 28, 2022 USD ($)	Sep. 30, 2023 USD ($) ft²	Sep. 30, 2022 USD ($)	Dec. 31, 2019
Payments to Acquire Real Estate | $				$ 27,783	$ 35,966
Percentage of Aggregate Cash Distributions From, and Profits and Losses				37.90%
Corporate Joint Venture [Member]
Joint Venture, Ownership Percentage						50.00%
Corporate Joint Venture [Member] | General and Administrative Expense [Member]
Joint Venture Expense | $					$ 110
Land [Member]
Payments to Acquire Real Estate | $	$ 2,500	$ 4,300	$ 3,700
Tribeca House properties in Manhattan [Member]
Number of Buildings				2
Tribeca House properties in Manhattan [Member] | Residential Rental [Member]
Gross Leasable Area (Square Foot)				483,000
Tribeca House properties in Manhattan, Building One [Member]
Number of Stories				21
Tribeca House properties in Manhattan, Building One [Member] | Rental Retail and Parking [Member]
Gross Leasable Area (Square Foot)				77,000
Tribeca House properties in Manhattan, Building Two [Member]
Number of Stories				12
Flatbush Gardens, Brooklyn, NY [Member] | Multifamily [Member]
Number of Buildings				59
Gross Leasable Area (Square Foot)				1,749,000
Number of Rentable Units				2,494
141 Livingston Street in Brooklyn [Member] | Office Building [Member]
Number of Stories				15
Gross Leasable Area (Square Foot)				216,000
250 Livingston Street in Brooklyn [Member] | Office and Residential Building [Member]
Number of Stories				12
Gross Leasable Area (Square Foot)				370,000
Aspen [Member]
Number of Stories				7
Aspen [Member] | Residential Rental [Member]
Gross Leasable Area (Square Foot)				166,000
Aspen [Member] | Retail Site [Member]
Gross Leasable Area (Square Foot)				21,000
Clover House [Member]
Number of Stories				11
Clover House [Member] | Apartment Building [Member]
Gross Leasable Area (Square Foot)				102,000
Residential Property At 10 West 65th Street [Member] | Residential Rental [Member]
Number of Stories				6
Gross Leasable Area (Square Foot)				76,000
Residential Property At 1010 Pacific Street [Member] | Residential Rental [Member]
Number of Stories				9
Gross Leasable Area (Square Foot)				119,000
Dean Street, Prospect Heights [Member] | Residential Rental [Member]
Number of Stories				9
Gross Leasable Area (Square Foot)				160,000
Dean Street, Prospect Heights [Member] | Retail Site [Member]
Gross Leasable Area (Square Foot)				9,000

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Note 2- Significant Accounting Policies (Details Textual) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares	Apr. 30, 2022 $ / shares shares	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) shares	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jan. 01, 2022 USD ($)	Dec. 31, 2021 USD ($)
Number of Operating Segments					2
Equity, Including Portion Attributable to Noncontrolling Interest	$ 26,390		$ 13,640	$ 43,983	$ 13,640	$ 43,983	$ 19,530	$ 37,179	$ 50,222	$ 56,734		$ 69,949
Retained Earnings (Accumulated Deficit)			(84,290)		(84,290)			(74,895)
Share-Based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount			$ 10,400		$ 10,400			$ 10,200
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)					4 years
Percent of Distributed Dividends Equal to Taxable REIT Income			90.00%		90.00%
Income Tax Expense (Benefit)					$ 0
Weighted Average Number of Shares Outstanding, Diluted, Adjustment (in shares) | shares					0	0
Class B LLC Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | shares					26,317
Abandoned Acquisition and Dean Street Property [Member]
Transaction Pursuit Costs, Total				(10)		$ 506
Multifamily [Member] | Flatbush Gardens, Brooklyn, NY [Member]
Transaction Pursuit Costs, Total			$ 0		$ 357
LTIP Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in shares) | shares			3,382,465		3,382,465			2,949,823
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares			$ 8.80		$ 8.80			$ 9.26
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares		$ 8.70
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)		10 years
LTIP Units [Member] | The 2015 Omnibus Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized, Subject to Approval (in shares) | shares		1,300,000
LTIP Units [Member] | The 2015 Non-Employee Director Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized, Subject to Approval (in shares) | shares		500,000
LTIP Units [Member] | Share-Based Payment Arrangement, Employee [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | shares		900,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Subject to Approval (in shares) | shares		270,000
LTIP Units [Member] | Share-Based Payment Arrangement, Nonemployee [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | shares		275,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Subject to Approval (in shares) | shares		82,500
LTIP Units [Member] | Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | shares	274,911
LTIP Units [Member] | Employees [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)	1 year
LTIP Units [Member] | Employees [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)	2 years 6 months
LTIP Units [Member] | Non-employee Director [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | shares	157,731
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	$ 5.62
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)	1 year
Collectability of Lease Receivables [Member]
Loss Contingency, Loss in Period			$ 900	800	$ 3,300	2,300
Revenues			$ 200	$ 800	$ 1,300	5,000
Collectability of Lease Receivables [Member] | One Customer at Tribeca House [Member]
Revenues						$ 1,100
Cumulative Effect, Period of Adoption, Adjustment [Member]
Equity, Including Portion Attributable to Noncontrolling Interest												(6,046)
Retained Earnings (Accumulated Deficit)												$ 6,000
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-02 [Member]
Equity, Including Portion Attributable to Noncontrolling Interest											$ 6,000

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Note 2 - Significant Accounting Policies - Estimated Useful Lives of Assets (Details)	Sep. 30, 2023
Building and Building Improvements [Member] | Minimum [Member]
Building and improvements (in years) (Year)	10 years
Building and Building Improvements [Member] | Maximum [Member]
Building and improvements (in years) (Year)	44 years
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Building and improvements (in years) (Year)	3 years
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Building and improvements (in years) (Year)	15 years

XML

Note 2 - Significant Accounting Policies - Basic and Diluted Earnings (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net loss attributable to common stockholders	$ (881)	$ (1,057)	$ (4,817)	$ (3,494)
Less: income attributable to participating securities	(322)	(280)	(967)	(688)
Subtotal	$ (1,203)	$ (1,337)	$ (5,784)	$ (4,182)
Weighted-average common shares outstanding (in shares)	16,063	16,063	16,063	16,063
Basic and diluted net loss per share (in dollars per share)	$ (0.07)	$ (0.08)	$ (0.36)	$ (0.26)

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Note 3 - Acquisitions (Details Textual) - Residential Property At 1010 Pacific Street [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Business Combination, Consideration Transferred	$ 3,701
Business Combination, Acquisition Related Costs	$ 151

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Note 4 - Deferred Costs and Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Amortization of Lease Origination Costs and In-place Lease Intangible Assets	$ 29	$ 60	$ 79	$ 178
Amortization of Real Estate Abatements	$ 120	$ 120	$ 361	$ 361

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Note 4 - Deferred Costs and Intangible Assets - Deferred Costs and Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Deferred costs	$ 348	$ 348
Lease origination costs	1,463	1,376
In-place leases	428	428
Real estate tax abatements	9,142	9,142
Total deferred costs and intangible assets	11,381	11,294
Less accumulated amortization	(5,111)	(4,670)
Total deferred costs and intangible assets, net	$ 6,270	$ 6,624

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Note 4 - Deferred Costs and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
2023 (Remainder)	$ 157
2024	587
2025	570
2026	546
2027	534
Thereafter	3,876
Total deferred costs and intangible assets, net	$ 6,270	$ 6,624

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Note 5 - Notes Payable (Details Textual) - USD ($) $ in Thousands										1 Months Ended	3 Months Ended			5 Months Ended	9 Months Ended		60 Months Ended	132 Months Ended
	Sep. 15, 2023	Aug. 10, 2023	Feb. 09, 2023	Dec. 22, 2021	Aug. 10, 2021	Feb. 18, 2021	May 08, 2020	Dec. 24, 2019	May 31, 2019	Apr. 30, 2022	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Nov. 01, 2027	Jul. 31, 2028	Mar. 31, 2023	Oct. 31, 2022	Aug. 26, 2022	Nov. 08, 2019	Feb. 21, 2018	Jun. 27, 2016
Long-Term Debt, Gross											$ 1,211,856				$ 1,211,856
Gain (Loss) on Extinguishment of Debt											$ 0		$ 0		$ (3,868)	$ 0
New York Community Bank [Member] | Property at 10 W 65th St. Manhattan, NY [Member]
Debt Instrument, Interest Rate, Effective Percentage											7.875%				7.875%
Metlife Real Estate Lending LLC [Member] | Clover House Loans [Member]
Long-Term Debt, Gross																						$ 82,000
Debt Instrument, Interest Rate, Effective Percentage																						3.53%
Valley National Bank [Member] | Dean Street, Prospect Heights [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 5,000
Long-Term Line of Credit											$ 0				$ 0
BADF 953 Dean Street Lender LLC [Member] | Dean Street, Prospect Heights [Member]
Line of Credit Facility, Maximum Borrowing Capacity		8,000
Secured First Mortgage Loan [Member] | New York Community Bank [Member]
Debt Instrument, Face Amount							$ 329,000
Debt Instrument, Interest Rate, Stated Percentage							3.125%
Secured First Mortgage Loan [Member] | New York Community Bank [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate							2.75%
First Mortgage Loan With Interest-only Payments [Member] | Citi Real Estate Funding Inc. [Member]
Debt Instrument, Interest Rate, Stated Percentage									3.63%
Proceeds from Issuance of Long-Term Debt									$ 125,000
Debt Instrument, Prepayment Option, Number of Months Before Maturity (Year)									3 years
Secured First Mortgage Note [Member] | Citi Real Estate Funding Inc. [Member] | 141 Livingston Street, Brooklyn [Member]
Debt Instrument, Interest Rate, Stated Percentage						3.21%
Proceeds from Issuance of Long-Term Debt						$ 100,000
Gain (Loss) on Extinguishment of Debt														$ 3,868
Fixed Interest Rate Financing [Member]
Debt Instrument, Interest Rate, Stated Percentage																							4.506%
Long-Term Debt, Gross																							$ 360,000
Mortgages [Member] | New York Community Bank [Member] | Property at 10 W 65th St. Manhattan, NY [Member]
Debt Instrument, Interest Rate, Stated Percentage																				3.375%	2.50%
Long-Term Debt, Gross																					$ 32,200
Mortgages [Member] | New York Community Bank [Member] | Prime Rate [Member] | Property at 10 W 65th St. Manhattan, NY [Member] | Forecast [Member]
Debt Instrument, Basis Spread on Variable Rate																	2.75%
Mortgages [Member] | Capital One Multifamily Finance LLC [Member] | Aspen [Member]
Debt Instrument, Interest Rate, Stated Percentage																								3.68%
Long-Term Debt, Gross																								$ 70,000
Mortgages [Member] | Capital One Multifamily Finance LLC [Member] | Aspen [Member] | Forecast [Member]
Debt Instrument, Periodic Payment																		$ 321
Mortgages [Member] | Citibank NA [Member] | Residential Property At 1010 Pacific Street [Member]
Long-Term Debt, Gross								$ 18,600
Mortgages [Member] | Citibank NA [Member] | Residential Property At 1010 Pacific Street [Member] | Minimum [Member]
Debt Instrument, Interest Rate, Effective Percentage								1.25%
Mortgages [Member] | Citibank NA [Member] | London Interbank Offered Rate (LIBOR) 1 [Member] | Residential Property At 1010 Pacific Street [Member]
Debt Instrument, Basis Spread on Variable Rate								3.60%
Mortgages [Member] | Bank Leumi, N.A [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Face Amount		37,000
Long-Term Debt, Gross				$ 30,000
Debt Instrument, Interest Rate, Effective Percentage												9.85%		9.85%
Proceeds from Issuance of Debt										$ 6,985
Mortgages [Member] | Bank Leumi, N.A [Member] | Dean Street, Prospect Heights [Member] | Minimum [Member]
Debt Instrument, Interest Rate, Effective Percentage				3.25%
Mortgages [Member] | Bank Leumi, N.A [Member] | Prime Rate [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Basis Spread on Variable Rate				1.60%
Construction Loans [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Face Amount		62,400
Construction Loans [Member] | Citibank NA [Member] | Residential Property At 1010 Pacific Street [Member]
Debt Agreement Maximum Borrowing Capacity								$ 2,987
Mortgages 2 [Member] | AIG Asset Management[Member] | Residential Property At 1010 Pacific Street [Member]
Debt Agreement Maximum Borrowing Capacity					$ 52,500
Mortgages 2 [Member] | AIG Asset Management[Member] | Residential Property At 1010 Pacific Street [Member] | Minimum [Member]
Debt Instrument, Interest Rate, Stated Percentage					4.10%
Mortgages 2 [Member] | AIG Asset Management[Member] | London Interbank Offered Rate [Member] | Residential Property At 1010 Pacific Street [Member]
Debt Instrument, Basis Spread on Variable Rate					3.60%
Mortgages 2 [Member] | Valley National Bank [Member] | Residential Property At 1010 Pacific Street [Member]
Debt Instrument, Interest Rate, Stated Percentage	6.37%		5.70%									5.55%		5.55%
Proceeds from Issuance of Long-Term Debt	$ 20,000		$ 60,000
Debt Agreement Maximum Borrowing Capacity			80,000
Debt Instrument, Contingent Funding.			$ 20,000
Debt Instrument, Interest Rate, Increase (Decrease)												15.00%
Mortgages 2 [Member] | Valley National Bank [Member] | Contingent Rate [member]
Debt Instrument, Basis Spread on Variable Rate			0.25%
Residential Property At 1010 Pacific Street [Member] | AIG Asset Management[Member]
Debt Instrument, Interest Rate, Effective Percentage																			9.35%
Mezzanine Note Agreement [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Face Amount		$ 8,000
Debt Instrument, Basis Spread on Variable Rate		10.00%
Proceeds from Issuance of Long-Term Debt		$ 4,500
Debt Instrument, Term (Month)		30 months
Debt Instrument, Interest Rate Floor		13.00%									15.33%				15.33%
Mezzanine Note Agreement [Member] | Valley National Bank [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Face Amount		$ 115,000
Senior Notes [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Face Amount		$ 115,000
Debt Instrument, Term (Month)		30 months
Debt Instrument, Interest Rate Floor		5.50%									9.33%				9.33%
Debt Instrument, Payment Guarantee Percentage											30.00%				30.00%
Senior Notes [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Basis Spread on Variable Rate		4.00%
Project Loan [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Face Amount		$ 15,600
Line of Credit [Member] | Valley National Bank [Member] | Prime Rate [Member] | Dean Street, Prospect Heights [Member]
Debt Instrument, Basis Spread on Variable Rate		1.50%

XML

Note 5 - Notes Payable - Mortgages and Mezzanine Note Payable (Details) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2023	Dec. 31, 2022
Debt, gross		$ 1,211,856
Unamortized debt issuance costs		(14,578)	$ (9,650)
Debt, gross		1,197,278	1,161,588
Mortgages and Mezzanine Notes 1[Member]
Debt, gross		1,211,856	1,171,238
Unamortized debt issuance costs		$ (14,578)	(9,650)
Mortgages and Mezzanine Notes 1[Member] | Flatbush Gardens, Brooklyn, NY [Member]
Interest Rate	[1]	3.125%
Debt, gross	[1]	$ 329,000	329,000
Mortgages and Mezzanine Notes 1[Member] | 250 Livingston Street in Brooklyn [Member]
Interest Rate	[2]	3.63%
Debt, gross	[2]	$ 125,000	125,000
Mortgages and Mezzanine Notes 1[Member] | 141 Livingston Street, Brooklyn [Member]
Interest Rate	[3]	3.21%
Debt, gross	[3]	$ 100,000	100,000
Mortgages and Mezzanine Notes 1[Member] | Tribeca House Properties [Member]
Interest Rate	[4]	4.506%
Debt, gross	[4]	$ 360,000	360,000
Mortgages and Mezzanine Notes 1[Member] | Aspen [Member]
Interest Rate	[5]	3.68%
Debt, gross	[5]	$ 61,399	62,554
Mortgages and Mezzanine Notes 1[Member] | Clover House [Member]
Interest Rate	[6]	3.53%
Debt, gross	[6]	$ 82,000	82,000
Mortgages and Mezzanine Notes 1[Member] | Property at 10 W 65th St. Manhattan, NY [Member]
Debt, gross	[7]	$ 31,929
Mortgages and Mezzanine Notes 1[Member] | Property at 10 W 65th St. Manhattan, NY [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt, gross	[7]		32,222
Debt Instrument, Basis Spread on Variable Rate	[7]	2.50%
Mortgages and Mezzanine Notes 1[Member] | Residential Property At 1010 Pacific Street [Member]
Debt, gross	[8]	$ 0
Mortgages and Mezzanine Notes 1[Member] | Residential Property At 1010 Pacific Street [Member] | London Interbank Offered Rate [Member]
Debt, gross	[8]		43,477
Debt Instrument, Basis Spread on Variable Rate	[8]	3.60%
Mortgages and Mezzanine Notes 1[Member] | Dean Street, Prospect Heights [Member]
Debt, gross	[9]	$ 0
Mortgages and Mezzanine Notes 1[Member] | Dean Street, Prospect Heights [Member] | Prime Rate [Member]
Debt, gross	[9]		36,985
Debt Instrument, Basis Spread on Variable Rate	[9]	1.60%
Mortgages and Mezzanine Notes 2 [Member] | Residential Property At 1010 Pacific Street [Member]
Interest Rate	[8]	5.55%
Debt, gross	[8]	$ 60,000	0
Mortgages and Mezzanine Notes 2 [Member] | Dean Street, Prospect Heights [Member]
Debt, gross	[9]	$ 37,899	0
Mortgages and Mezzanine Notes 2 [Member] | Dean Street, Prospect Heights [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	[9]	4.00%
Mortgages and Mezzanine Notes 3[Member] | Residential Property At 1010 Pacific Street [Member]
Interest Rate	[8]	6.37%
Debt, gross	[8]	$ 20,000	0
Mortgages and Mezzanine Notes 3[Member] | Dean Street, Prospect Heights [Member]
Debt, gross	[9]	$ 4,629	$ 0
Mortgages and Mezzanine Notes 3[Member] | Dean Street, Prospect Heights [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Interest Rate	[9]	10.00%

[1] The $329,000 mortgage note agreement with New York Community Bank (“NYCB”), entered into on May 8, 2020, matures on June 1, 2032, and bears interest at 3.125% through May 2027 and thereafter at the prime rate plus 2.75%, subject to an option to fix the rate. The note requires interest-only payments through May 2027, and monthly principal and interest payments thereafter based on a 30-year amortization schedule. The Company has 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.

[2] The $125,000 mortgage note agreement with Citi Real Estate Funding Inc., entered into on May 31, 2019, matures on June 6, 2029, bears interest at 3.63% and requires interest-only payments for the entire term. The Company has 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.

[3] The $100,000 mortgage note agreement with Citi Real Estate Funding Inc., entered into on February 18, 2021 matures on March 6, 2031, bears interest at 3.21% and requires interest-only payments for the entire term. The Company has 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.

[4] The $360,000 loan with Deutsche Bank, entered into on February 21, 2018, matures on March 6, 2028, bears interest at 4.506% and requires interest-only payments for the entire term. The Company has the option to prepay all (but not less than all) of the unpaid balance of the loan prior to the maturity date, subject to a prepayment premium if it occurs prior to December 6, 2027.

[5] The $70,000 mortgage note agreement with Capital One Multifamily Finance LLC matures on July 1, 2028, and bears interest at 3.68%. The note required interest-only payments through July 2017, and monthly principal and interest payments of $321 thereafter based on a 30-year amortization schedule. The Company has the option to prepay the note prior to the maturity date, subject to a prepayment premium.

[6] The $82,000 mortgage note agreement with MetLife Investment Management, entered into on November 8, 2019, matures on December 1, 2029, bears interest at 3.53% and requires interest-only payments for the entire term. The Company has 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.

[7] The $32,200 mortgage note agreement with NYCB entered into in connection with the acquisition of the property matures on November 1, 2027. Through October 2022 the Company paid a fixed interest rate of 3.375% and thereafter was scheduled to pay interest at the prime rate plus 2.75%, subject to an option to fix the rate. 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 September 30, 2023). 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 has 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.

[8] On December 24, 2019, the Company entered into a $18,600 mortgage note agreement with CIT Bank, N.A., related to the 1010 Pacific Street acquisition. The Company also entered into a pre-development bridge loan secured by the property with the same lender to provide up to $2,987 for eligible pre-development and carrying costs. The notes were scheduled to mature on June 24, 2021, required interest-only payments and bore interest at one-month LIBOR (with a floor of 1.25%) plus 3.60%. The notes were extended in June 2021 with a new maturity date of August 30, 2021. The Company guaranteed this mortgage note and complied with the financial covenants therein.

[9] On December 22, 2021, the Company entered into a $30,000 mortgage note agreement with Bank Leumi, N.A related to the Dean Street acquisition. The notes original maturity was December 22, 2022 and was subsequently extended to September 22, 2023. The note required interest-only payments and bears interest at the prime rate (with a floor of 3.25%) plus 1.60% (9.85% as of June 30, 2023). In April 2022, the Company borrowed an additional $6,985 under the mortgage note in connection with the acquisition of additional parcels of land in February and April 2022.

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Note 5 - Notes Payable - Summary of Principal Payment Requirements (Details) $ in Thousands	Sep. 30, 2023 USD ($)
2023 (Remainder)	$ 487
2024	1,993
2025	82,092
2026	44,718
2027	33,461
Thereafter	1,049,105
Total	$ 1,211,856

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Note 6 - Rental Income Under Operating Leases (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Total Revenue [Member] | Customer Concentration Risk [Member] | City of New York [Member]
Concentration Risk, Percentage	23.00%	24.00%	23.00%	24.00%

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Note 6 - Rental Income Under Operating Leases - Minimum Future Cash Rents Receivable (Details) $ in Thousands	Sep. 30, 2023 USD ($)
2023 (Remainder)	$ 7,580
2024	30,457
2025	24,822
2026	4,548
2027	3,915
Thereafter	19,315
Total	$ 90,637

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Note 7 - Fair Value of Financial Instruments - Carrying Amount and Fair Value of Mortgage Notes Payable (Details) - Mortgages [Member] - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Reported Value Measurement [Member]
Long-term debt	$ 1,211,856	$ 1,171,238
Estimate of Fair Value Measurement [Member]
Long-term debt	$ 1,117,041	$ 1,092,345

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Note 8 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands			3 Months Ended	12 Months Ended
	Jun. 23, 2022	May 09, 2022	Dec. 31, 2021	Dec. 31, 2022	Sep. 30, 2023	Jun. 29, 2023
Litigation Settlement, Expense			$ 2,700
Housing Repair and Maintenance Letter Agreement [Member]
Other Commitment						$ 27,000
Obligated to Provide Parking [Member]
Other Commitment					$ 205
The Kuzmich Case [Member]
Litigation Settlement, Amount Awarded to Other Party		$ 1,200
Litigation Settlement, Amount Awarded to Other Party, Attorney Fee's	$ 400
Horn v 50 Murray Street Acquisition LLC, Index No.152415/21 [Member]
Loss Contingency Accrual, Payments				$ 2,300
Loss Contingency Accrual					$ 400

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Note 8 - Commitments and Contingencies - Summary of Concentration Risk by Segment (Details) - Total Revenue [Member] - Geographic Concentration Risk [Member] - New York City [Member]	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Concentration risk	100.00%	100.00%	100.00%	100.00%
Commercial Segment [Member]
Concentration risk	27.00%	30.00%	28.00%	31.00%
Residential Segment [Member]
Concentration risk	73.00%	70.00%	72.00%	69.00%

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Note 9 - Related-party Transactions (Details Textual) - General and Administrative Expense [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Overhead Charged Related to Office Expenses [Member]
Related Party Transaction, Amounts of Transaction	$ 0	$ 64	$ 198	$ 192
Reimbursable Payroll Expense [Member]
Related Party Transaction, Amounts of Transaction	$ (23)	$ 2	$ (53)	$ (16)

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Note 10 - Segment Reporting - Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Total revenues	$ 35,128	$ 32,800	$ 103,338	$ 96,737
Assets	1,239,759		1,239,759		$ 1,229,631
Interest expense	11,527	10,086	32,996	30,076
Capital expenditures	10,756	9,800	28,343	42,404
Property operating expenses	7,930	7,267	22,811	21,734
Real estate taxes and insurance	7,374	8,252	24,610	24,069
General and administrative	3,340	3,209	10,029	9,348
Depreciation and amortization	7,282	6,784	21,376	20,221
Transaction pursuit costs	0	(10)	357	506
Total operating expenses	25,926	25,502	79,183	75,878
Income from operations	9,202	7,298	24,155	20,859
Rental Income [Member]
Total revenues	35,128	32,800	103,338	96,737
Commercial Segment [Member]
Total revenues	9,627	9,692	28,857	29,570
Assets	312,029		312,029		312,404
Interest expense	2,577	2,533	7,584	7,537
Capital expenditures	689	917	2,929	2,545
Property operating expenses	1,248	1,240	3,511	3,567
Real estate taxes and insurance	2,540	2,228	7,069	6,264
General and administrative	606	598	1,792	1,745
Depreciation and amortization	1,457	1,386	4,346	4,108
Transaction pursuit costs		0	0	81
Total operating expenses	5,851	5,452	16,718	15,765
Income from operations	3,776	4,240	12,139	13,805
Commercial Segment [Member] | Rental Income [Member]
Total revenues	9,627	9,692	28,857	29,570
Residential Segment [Member]
Total revenues	25,501	23,108	74,481	67,167
Assets	927,730		927,730		$ 917,227
Interest expense	8,950	7,553	25,412	22,539
Capital expenditures	10,067	8,883	25,414	39,859
Property operating expenses	6,682	6,027	19,300	18,167
Real estate taxes and insurance	4,834	6,024	17,541	17,805
General and administrative	2,734	2,611	8,237	7,603
Depreciation and amortization	5,825	5,398	17,030	16,113
Transaction pursuit costs		(10)	357	425
Total operating expenses	20,075	20,050	62,465	60,113
Income from operations	5,426	3,058	12,016	7,054
Residential Segment [Member] | Rental Income [Member]
Total revenues	$ 25,501	$ 23,108	$ 74,481	$ 67,167