Clipper Realty Inc

Previous wording

The risk factors disclosed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, 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 March 31, 2024, and there have been no material changes to those risk factors for the three months ended March 31, 2024 except for the following update:

Current wording

The risk factors disclosed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, 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 June 30, 2024, and there have been no material changes to those risk factors for the six months ended June 30, 2024 except for the following updates:

Previous wording

Our rental revenue depends on entering into leases with and collecting rents from tenants. As of March 31, 2024, Kings County Court, the Human Resources Administration, and the Department of Environmental Protection, all of which are agencies of the City of New York, leased an aggregate of 548,580 rentable square feet of commercial space at our commercial office properties at 141 Livingston Street and 250 Livingston Street, representing approximately 22% of our total revenues for the three months ended March 31, 2024.

Current wording

Our rental revenue depends on entering into leases with and collecting rents from tenants. As of June 30, 2024, Kings County Court, the Human Resources Administration, and the Department of Environmental Protection, all of which are agencies of the City of New York, leased an aggregate of 548,580 rentable square feet of commercial space at our commercial office properties at 141 Livingston Street and 250 Livingston Street, representing approximately 22% of our total revenues for the six months ended June 30, 2024.

Previous wording

If NYC were to decide not to renew the 141 Livingston Street lease which expires December 27, 2025, we would be at risk of not being able to replace the NYC as a tenant, leasing the space below the current rates, incurring costs to improve the space or offer other inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow. Additionally, if we are not able to extend or replace the NYC lease at our 141 Livingston property for a minimum of a five year term prior to June 27, 2024, we will be required to fund an escrow account in the amount of $10 million, payable over 18 months for the benefit of the lender, which may also have an adverse effect on our financial condition, results of operations and cash flow.

Current wording

If NYC were to decide not to renew the 141 Livingston Street lease which expires December 27, 2025, which is the stated termination date pursuant to the terms of the lease, we would be at risk of not being able to replace the NYC as a tenant, leasing the space below the current rates, incurring costs to improve the space or offer other inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow. Additionally, if we are not able to extend or replace the NYC lease at our 141 Livingston property for a minimum of a five year term, we will be required to fund an escrow account in the amount of $10 million, payable over 18 months prior to lease expiration, for the benefit of the lender, which may also have an adverse effect on our financial condition, results of operations and cash flow.