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 March 31, 2019

☐ 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 12^th Avenue, Suite 1L

Brooklyn, New York 11219

(Address of principal executive offices) (Zip Code)

(718) 438-2804

(Registrant's telephone number, including area code)

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  ☒

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

As of May 9, 2019, there were 17,814,672 shares of the Registrant’s Common Stock outstanding.

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
ITEM 1.  FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018	3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (UNAUDITED)	4
CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (UNAUDITED)	5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (UNAUDITED)	6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	7
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 4.  CONTROLS AND PROCEDURES	28
PART II – OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS	28
ITEM 1A.  RISK FACTORS	29
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 4.  MINE SAFETY DISCLOSURE	29
ITEM 6.  EXHIBITS	29
SIGNATURES	30

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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:

● 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;

● 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;

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

● 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 may obligate us to pay transfer tax based on the fair market value of the real property transferred; and

● other risks and risk factors or uncertainties identified from time to time in our filings with the Securities and Exchange Commission (“SEC”).

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Reference is made to a more complete discussion of forward-looking statements and applicable risks contained under the captions “Cautionary Note Concerning Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 7, 2019, and other reports filed from time to time with the SEC. Clipper Realty Inc. undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise.

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ITEM 1. FINANCIAL STATEMENTS

Clipper Realty Inc.

Consolidated Balance Sheets

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

	March 31, 2019			December 31, 2018
	(unaudited)
ASSETS
Investment in real estate
Land and improvements	$	497,343		$	497,343
Building and improvements		483,786			479,360
Tenant improvements		3,051			3,051
Furniture, fixtures and equipment		11,052			10,978
Real estate under development		132,181			125,467
Total investment in real estate		1,127,413			1,116,199
Accumulated depreciation		(94,823	)		(90,462	)
Investment in real estate, net		1,032,590			1,025,737
Cash and cash equivalents		29,379			37,028
Restricted cash		13,255			8,836
Tenant and other receivables, net of allowance for doubtful accounts of $2,714 and $2,624, respectively		2,908			3,580
Deferred rent		1,851			2,485
Deferred costs and intangible assets, net		9,665			9,964
Prepaid expenses and other assets		7,506			13,378
TOTAL ASSETS	$	1,097,154		$	1,101,008
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized loan costs of $11,218 and $12,049, respectively	$	913,683		$	913,564
Accounts payable and accrued liabilities		12,562			12,550
Security deposits		6,704			6,637
Below-market leases, net		2,469			2,923
Other liabilities		4,489			3,849
TOTAL LIABILITIES		939,907			939,523
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,17,812,755 shares issued and outstanding		178			178
Additional paid-in-capital		92,980			92,945
Accumulated deficit		(29,687	)		(27,941	)
Total stockholders’ equity		63,471			65,182
Non-controlling interests		93,776			96,303
TOTAL EQUITY		157,247			161,485
TOTAL LIABILITIES AND EQUITY	$	1,097,154		$	1,101,008

See accompanying notes to these consolidated financial statements.

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Clipper Realty Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
REVENUES
Residential rental income	$	20,772		$	19,679
Commercial rental income		6,880			7,189
TOTAL REVENUES		27,652			26,868
OPERATING EXPENSES
Property operating expenses		7,563			7,256
Real estate taxes and insurance		5,731			5,348
General and administrative		1,668			3,138
Depreciation and amortization		4,549			4,596
TOTAL OPERATING EXPENSES		19,511			20,338
INCOME FROM OPERATIONS		8,141			6,530
Interest expense, net		(8,274	)		(8,543	)
Loss on extinguishment of debt		—			(6,981	)
Net loss		(133	)		(8,994	)
Net loss attributable to non-controlling interests		79			5,364
Net loss attributable to common stockholders	$	(54	)	$	(3,630	)
Basic and diluted net loss per share	$	(0.01	)	$	(0.21	)

See accompanying notes to these consolidated financial statements.

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Clipper Realty Inc.

Consolidated Statements of 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, 2018		17,812,755	$	178	$	92,945	$	(27,941	)	$	65,182		$	96,303		$	161,485
Amortization of LTIP grants		—		—		—		—			—			156			156
Dividends and distributions		—		—		—		(1,692	)		(1,692	)		(2,569	)		(4,261	)
Net loss		—		—		—		(54	)		(54	)		(79	)		(133	)
Reallocation of noncontrolling interests		—		—		35		—			35			(35	)		—
Balance March 31, 2019		17,812,755	$	178	$	92,980	$	(29,687	)	$	63,471		$	93,776		$	157,247

	Number of common shares		Common stock		Additional paid-in- capital			Accumulated deficit			Total stockholders’ equity			Non- controlling interests			Total equity
Balance December 31, 2017		17,812,755	$	178	$	92,273		$	(17,539	)	$	74,912		$	110,679		$	185,591
Issuance of common stock		—		—		(6	)		—			(6	)		—			(6	)
Amortization of LTIP grants		—		—		—			—			—			568			568
Dividends and distributions		—		—		—			(1,692	)		(1,692	)		(2,562	)		(4,254	)
Net loss		—		—		—			(3,630	)		(3,630	)		(5,364	)		(8,994	)
Reallocation of noncontrolling interests		—		—		208			—			208			(208	)		—
Balance March 31, 2018		17,812,755	$	178	$	92,475		$	(22,861	)	$	69,792		$	103,113		$	172,905

See accompanying notes to these consolidated financial statements.

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Clipper Realty Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(133	)	$	(8,994	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		4,361			4,043
Amortization of deferred financing costs		504			521
Amortization of deferred costs and intangible assets		307			671
Amortization of above- and below-market leases		(424	)		(479	)
Loss on extinguishment of debt		—			6,981
Deferred rent		634			256
Stock-based compensation		156			568
Change in fair value of interest rate caps		—			(227	)
Changes in operating assets and liabilities:
Tenant and other receivables		672			3,026
Prepaid expenses, other assets and deferred costs		5,812			4,190
Accounts payable and accrued liabilities		(646	)		(912	)
Security deposits		67			389
Other liabilities		640			779
Net cash provided by operating activities		11,950			10,812
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings, and improvements		(10,208	)		(10,112	)
Net cash used in investing activities		(10,208	)		(10,112	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds and costs from sale of common stock		—			(6	)
Payments of mortgage notes		(711	)		(579,231	)
Proceeds from mortgage notes		—			607,120
Dividends and distributions		(4,261	)		(4,254	)
Loan issuance and extinguishment costs		—			(8,338	)
Net cash (used in) provided by financing activities		(4,972	)		15,291
Net (decrease) increase in cash and cash equivalents and restricted cash		(3,230	)		15,991
Cash and cash equivalents and restricted cash - beginning of period		45,864			21,670
Cash and cash equivalents and restricted cash - end of period	$	42,634		$	37,661
Cash and cash equivalents and restricted cash – beginning of period:
Cash and cash equivalents	$	37,028		$	7,940
Restricted cash		8,836			13,730
Total cash and cash equivalents and restricted cash – beginning of period	$	45,864		$	21,670
Cash and cash equivalents and restricted cash – end of period:
Cash and cash equivalents	$	29,379		$	24,070
Restricted cash		13,255			13,591
Total cash and cash equivalents and restricted cash – end of period	$	42,634		$	37,661
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $1,836 and $1,191 in 2019 and 2018, respectively	$	8,290		$	9,610
Non-cash interest capitalized to real estate under development		348			252
Additions to investment in real estate included in accounts payable and accrued liabilities		6,656			2,205

See accompanying notes to these consolidated financial statements.

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Clipper Realty Inc.

Notes to 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, 2018, filed with the SEC on March 7, 2019.

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. Certain reclassifications have been made to the prior period financial statements in order to conform to the current year presentation. These reclassifications did not have an impact on net income previously reported. These results are not necessarily indicative of a full year’s results of operations.

1. Organization

The Company was organized in the state of Maryland on July 7, 2015. On August 3, 2015, we completed certain formation transactions and the sale of shares of common stock in a private offering. We contributed the net proceeds of the private offering to Clipper Realty L.P., our operating partnership subsidiary (the “Operating Partnership”), in exchange for units in the Operating Partnership. The Operating Partnership in turn contributed such net proceeds to the limited liability companies (“LLCs”) that comprised the predecessor of the Company (the “Predecessor”) in exchange for Class A LLC units in such LLCs and became the managing member of such LLCs. The owners of the LLCs exchanged their interests for Class B LLC units and an equal number of special, non-economic, voting stock in the Company. The Class B LLC units, together with the special voting shares, are convertible into common shares of the Company on a one-for-one basis and are entitled to distributions.

On June 27, 2016, the Operating Partnership acquired the Aspen property at 1955 First Avenue in Manhattan, New York.

On February 9, 2017, the Company priced an initial public offering of 6,390,149 primary shares of its common stock (including the exercise of the over-allotment option, which closed on March 10, 2017) at a price of $13.50 per share (the “IPO”). The net proceeds of the IPO were approximately $78.7 million. We contributed the proceeds of the IPO to the Operating Partnership, in exchange for units in the Operating Partnership.

On May 9, 2017, the Company completed the purchase of 107 Columbia Heights, a 161-unit apartment community located in Brooklyn Heights, New York, in vacant condition, for $87.5 million.

On October 27, 2017, the Company completed the acquisition of an 82-unit residential property at 10 West 65th Street in Manhattan, New York, for $79.0 million.

As of March 31, 2019, 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 2,496 rentable units;

• 141 Livingston Street in Brooklyn, a 15-story office building with approximately 216,000 square feet of GLA;

7

• 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;

• 107 Columbia Heights in Brooklyn, a 11-story residential building with approximately 102,000 square feet of residential rental GLA; and

• 10 West 65^th Street in Manhattan, a 6-story residential building with approximately 76,000 square feet of residential rental GLA.

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 March 31, 2019, the Company’s interest, through the Operating Partnership, in the LLCs that own the properties generally entitles it to 40.4% 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 was the primary beneficiary. The assets and liabilities of these VIEs represented substantially all of the Company’s assets and liabilities.

2. Issuance of Common Stock

On April 9, 2019, the Company issued 1,917 primary shares of its common stock to one of our directors, in connection with the conversion of vested long-term incentive plan (“LTIP”) units on a one-for-one basis. The Company did not receive any proceeds from the issuance.

3. Significant Accounting Policies

Segments

At March 31, 2019, 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 interest.

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.

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In accordance with ASU 2017-01, "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 March 31, 2019.

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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 (years)	10	–	44
Tenant improvements	Shorter of useful life or lease term
Furniture, fixtures and equipment (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 and capital improvements 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. The Company periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances. If a tenant fails to make contractual payments beyond any allowance, the Company may recognize additional bad debt expense in future periods.

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 financial statements. 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.

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Comprehensive Loss

Comprehensive loss is comprised of net 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 months ended March 31, 2019 and 2018, the Company did not own any financial instruments for which the change in value was not reported in net loss accordingly and its comprehensive loss was its net loss as presented in the consolidated statements of operations.

Revenue Recognition

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

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.

Stock-based Compensation

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

In March 2019, the Company granted 152,734 LTIP units with a weighted average grant date fair value of $13.35 per unit.

At March 31, 2019 and December 31, 2018, there were 877,182 and 724,448 LTIP units outstanding, respectively, with a weighted grant-date fair value of $12.70 and $12.56 per unit, respectively. As of March 31, 2019, and December 31, 2018, there was $2.7 million and $0.8 million, respectively, of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under share incentive plans. As of March 31, 2019, the weighted average period over which the unrecognized compensation expense will be recorded is approximately 1.3 years.

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 or the Predecessor’s financial position or results of operations. The prior three years’ income tax returns are subject to review by the Internal Revenue Service.

The Tax Cuts and Jobs Act was enacted in December 2017 and is generally effective beginning in 2018. This new legislation is not expected to have a material adverse effect on the Company’s business and allows non-corporate shareholders to deduct a portion of the Company’s qualified REIT dividends.

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Fair Value Measurements

Refer to Note 8, “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 (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 March 31, 2019, the Company has no derivatives for which it applies hedge accounting.

Loss Per Share

Basic and diluted loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding. As of March 31, 2019 and 2018, 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 loss per share pursuant to the two-class method. The Company did not have dilutive securities as of March 31, 2019 or 2018.

The effect of the conversion of the 26,317 Class B LLC units outstanding is not reflected in the computation of basic and diluted loss per share, as the effect would be anti-dilutive. The net loss allocable to such units is reflected as noncontrolling 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 March 31,
(in thousands, except per share amounts)	2019			2018
Numerator
Net loss attributable to common stockholders	$	(54	)	$	(3,630	)
Less: income attributable to participating securities		(69	)		(62	)
Subtotal	$	(123	)	$	(3,692	)
Denominator
Weighted average common shares outstanding		17,813			17,813
Basic and diluted net loss per share attributable to common stockholders	$	(0.01	)	$	(0.21	)

Recently Issued Pronouncements

In March 2019, FASB issued ASU 2019-01, “Leases (Topic 842), Codification Improvements.” There are three codification updates to Topic 842 covered by this ASU: Issue 1 provides guidance on how to compute fair value of leased items for lessors who are non-dealers or manufacturers; Issue 2 relates to cash flow presentation for lessors of sales-type and direct financing leases; and Issue 3 clarifies that certain transition disclosures will only be required in annual disclosures.

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In December 2018, FASB issued ASU 2018-20, “Leases (Topic 842), Narrow-Scope Improvements for Lessors.” This ASU modifies ASU 2016-02 to permit lessors, as an accounting policy election, not to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value-added, and some excise taxes and excludes real estate taxes). The Company has elected not to evaluate whether the aforementioned costs are lessor or lessee costs. This ASU also provides that certain lessor costs require lessors to exclude from variable payments, and therefore revenue, specifically lessor costs paid by lessees directly to third parties. The amendments also require lessors to account for costs excluded from the consideration of a contract that are paid by the lessor and reimbursed by the lessee as variable payments. A lessor will record those reimbursed costs as revenue.

In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which prescribes a single, common revenue standard that supersedes nearly all existing revenue recognition guidance under U.S. GAAP, including most industry-specific requirements. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 outlines a five-step model to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. The Company’s revenues are primarily derived from rental income, which is scoped out from this standard and is currently accounted for in accordance with ASC Topic 840, Leases. Less than 5% of the Company’s revenues in 2018 would have fallen under the scope of this standard and comprises, principally, commercial operating expense reimbursements and garage and other income from residential tenants; for these revenues, the Company adopted this standard effective January 1, 2019, using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. The adoption of this standard did not have a material impact on the timing or amounts of the Company’s revenues.

For the approximate 5% of rental revenue that is subject to the new revenue recognition standard, the Company’s disaggregated revenue streams are disclosed in the tables below for the three months ended March 31, 2019 and 2018:

Three Months Ended March 31, 2019
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	20,350	$	5,940	$	26,290		95.1	%
Operating expense recoveries	Revenue Recognition		120		795		915		3.3	%
Other	Revenue Recognition		302		145		447		1.6	%
Total revenues		$	20,772	$	6,880	$	27,652		100.0	%

Three Months Ended March 31, 2018
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	19,297	$	6,271	$	25,568		95.2	%
Operating expense recoveries	Revenue Recognition		122		735		857		3.2	%
Other	Revenue Recognition		260		183		443		1.6	%
Total revenues		$	19,679	$	7,189	$	26,868		100.0	%

In February 2016, FASB issued ASU 2016-02, “Leases.” ASU 2016-02 supersedes the current accounting for leases and while retaining two distinct types of leases, finance and operating, requires lessees to recognize most leases on their balance sheets and makes targeted changes to lessor accounting. In July 2018, FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases,” which provides minor clarifications and corrections to ASU 2016-02, “Leases (Topic 842).” Further, in July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements.” This amendment provides a new practical expedient that allows lessors, by class of underlying asset, to avoid separating lease and associated non-lease components within a contract if certain criteria are met: (i) the timing and pattern of transfer for the non-lease component and the associated lease component are the same and (ii) the stand-alone lease component would be classified as an operating lease if accounted for separately. These pronouncements are effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company will adopt this standard effective January 1, 2020 and is currently evaluating the impact of adoption on its consolidated financial statements. As lessor, the Company expects that the adoption of ASU 2016-02 (as amended by subsequent ASUs) will not change the timing of revenue recognition of the Company’s rental revenues. As lessee, the Company is party to certain office equipment leases with future payment obligations for which the Company expects to record right-of-use assets and lease liabilities at the present value of the remaining minimum rental payments upon adoption of this standard. 

In August 2018, FASB issued ASU 2018-13, “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. This guidance is effective in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

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In August 2018, the Securities and Exchange Commission issued a final rule that amends certain of its disclosure requirements. The rule simplifies various disclosure requirements for public companies including primarily that it (i) eliminates the requirement for public companies to disclose in their filings a schedule of earnings to fixed charges, (ii) requires an analysis of changes in stockholders’ equity for the current and comparative year-to-date interim periods in interim reports, and (iii) reduces the requirements for market price information disclosures in annual reports. These changes were effective for public companies beginning on November 5, 2018.

In July 2018, FASB issued ASU 2018-09, “Codification Improvements.” These amendments provide clarifications and corrections to certain ASC subtopics including the following: 470-50 (Debt – Modifications and Extinguishments), 480-10 (Distinguishing Liabilities from Equity – Overall), 718-740 (Compensation – Stock Compensation – Income Taxes), 805-740 (Business Combinations – Income Taxes), 815-10 (Derivatives and Hedging – Overall) and 820-10 (Fair Value Measurement – Overall). The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

In June 2018, FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments provide specific guidance for transactions for acquiring goods and services from nonemployees and specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, “Revenue from Contracts with Customers.” This guidance is effective for the Company for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. Early adoption is permitted but not earlier than the adoption of Topic 606. The Company does not believe that this guidance will have a material effect on its consolidated financial statements as it has not historically issued share-based payments in exchange for goods or services to be consumed within its operations.

In February 2017, FASB issued ASU 2017-05, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20),” to add guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. ASU 2017-05 reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. ASU 2017-05 is effective for the Company for its annual reporting beginning after December 15, 2018, including interim reporting periods beginning after December 15, 2019. The Company adopted this standard effective January 1, 2019. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In November 2016, FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230) – Restricted Cash”. The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU does not provide a definition of restricted cash or restricted cash equivalents. The ASU is effective for the Company beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company has adopted this standard effective January 1, 2019.

In August 2016, FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A consensus of the Emerging Issues Task Force),” which provides specific guidance on eight cash flow classification issues and how to reduce diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for the Company beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company has adopted this standard effective January 1, 2019.

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4. Deferred Costs and Intangible Assets

Deferred costs and intangible assets consist of the following:

	March 31, 2019			December 31, 2018
	(unaudited)
Deferred costs	$	324		$	286
Above-market leases		480			480
Lease origination costs		3,092			3,110
In-place leases		7,347			8,078
Real estate tax abatements		9,143			12,571
Total deferred costs and intangible assets		20,386			24,525
Less accumulated amortization		(10,721	)		(14,561	)
Total deferred costs and intangible assets, net	$	9,665		$	9,964

Amortization of lease origination costs and in-place lease intangible assets was $188 and $553 for the three months ended March 31, 2019 and 2018, respectively; $749 of fully amortized lease origination costs and in-place leases was written off during the three months ended March 31, 2019. Amortization of real estate tax abatements of $119 and $118 for the three months ended March 31, 2019 and 2018, respectively, is included in real estate taxes and insurance in the consolidated statements of operations; $3,428 of fully amortized real estate tax abatements was written off during the three months ended March 31, 2019. Amortization of above-market leases of $30 and $59 for the three months ended March 31, 2019 and 2018, respectively, is included in commercial income in the consolidated statements of operations.

 

Deferred costs and intangible assets as of March 31, 2019, amortize in future years as follows:

2019 (Remainder)	$	848
2020		799
2021		769
2022		737
2023		591
Thereafter		5,921
Total	$	9,665

5. Below-Market Lease Intangibles

The Company’s below-market lease intangibles liabilities are as follows:

	March 31, 2019			December 31, 2018
	(unaudited)
Below-market leases	$	23,178		$	23,178
Less accumulated amortization		(20,709	)		(20,255	)
Below-market leases, net	$	2,469		$	2,923

Rental income included amortization of below-market leases of $454 and $538 for the three months ended March 31, 2019 and 2018, respectively.

Below-market leases as of March 31, 2019, amortize in future years as follows:

2019 (Remainder)	$	844
2020		517
2021		493
2022		423
2023		192
Thereafter		—
Total	$	2,469

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6. 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	March 31, 2019			December 31, 2018
Flatbush Gardens, Brooklyn, NY (a)	3/1/2028	3.50%	$	246,000		$	246,000
250 Livingston Street, Brooklyn, NY (b)	12/9/2020	LIBOR + 2.15%		75,000			75,000
141 Livingston Street, Brooklyn, NY (c)	6/1/2028	3.875%		76,959			77,333
Tribeca House, Manhattan, NY (d)	3/6/2028	4.506%		360,000			360,000
Aspen, Manhattan, NY (e)	7/1/2028	3.68%		67,861			68,199
107 Columbia Heights, Brooklyn, NY (f)	5/9/2020	LIBOR + 3.85%		64,731			64,731
10 West 65th Street, Manhattan, NY (g)	11/1/2027	3.375%		34,350			34,350
Total debt			$	924,901		$	925,613
Unamortized debt issuance costs				(11,218	)		(12,049	)
Total debt, net of unamortized debt issuance costs			$	913,683		$	913,564

(a) The $246,000 mortgage note agreement with New York Community Bank (“NYCB”), entered into on February 21, 2018, matures on March 1, 2028, and bears interest at 3.5% for the first five years and thereafter at the prime rate plus 2.75%, with an option to fix the rate subject to the payment of a fee that fluctuates depending on the date the election is made. The note requires interest-only payments through August 2020, 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 $75,000 mortgage note agreement with Citibank, N.A., entered into on December 6, 2018, matures on December 9, 2020, is subject to three one-year extension options, requires interest-only payments and bears interest at one-month LIBOR plus 2.15% (4.6% as of March 31, 2019). The Company may prepay the note within eighteen months of maturity, in whole or in part, without a prepayment premium.

(c) The $79,500 mortgage note agreement with NYCB matures on June 1, 2028, and bears interest at 3.875%. The note required interest-only payments through June 2017, and monthly principal and interest payments of $374 thereafter based on a 30-year amortization schedule.

(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) On May 9, 2017, the Company entered into a $59,000 mortgage note agreement with a unit of Blackstone Mortgage Trust, Inc., related to the 107 Columbia Heights acquisition. The Company also entered into a construction loan secured by the building with the same lender that will provide up to $14,700 for eligible capital improvements and carrying costs, of which $5,731 was drawn as of March 31, 2019. The notes mature on May 9, 2020, are subject to two one-year extension options, require interest-only payments and bear interest at one-month LIBOR plus 3.85% (6.3% as of March 31, 2019).

(g) On October 27, 2017, the Company entered into a $34,350 mortgage note agreement with NYCB, related to the 10 West 65^th Street acquisition. The note matures on November 1, 2027, and bears interest at 3.375% for the first five years and thereafter at the prime rate plus 2.75%, subject to an option to fix the rate. The note requires interest-only payments through October 2019, and monthly principal and interest payments thereafter based on a 30-year amortization schedule.

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The following table summarizes principal payment requirements under terms as of March 31, 2019:

2019 (Remainder)	$	2,250
2020		144,919
2021		8,553
2022		8,866
2023		9,191
Thereafter		751,122
Total	$	924,901

The Company recognized a loss on extinguishment of debt of $6,981 during the three months ended March 31, 2018, in connection with the refinancing of debt on the Flatbush Gardens and Tribeca House properties. The loss consisted of prepayment and other fees and the write-off of unamortized debt costs.

7. 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 March 31, 2019, 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:

2019 (Remainder)	$	16,578
2020		18,559
2021		4,695
2022		4,260
2023		2,190
Thereafter		10,490
Total	$	56,772

The Company has commercial leases with the City of New York that comprised approximately 19% and 19% of total revenues for the three months ended March 31, 2019 and 2018, respectively.

8. 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 (e.g., carrying value of impaired real estate and long-lived assets). 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, interest rate caps, accounts payable and accrued liabilities, security deposits and notes payable. The carrying amount of cash and cash equivalents, restricted cash, receivables, 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:

	March 31, 2019		December 31, 2018
	(unaudited)
Carrying amount (excluding unamortized debt issuance costs)	$	924,901	$	925,613
Estimated fair value	$	943,616	$	927,561

The Company purchased interest rate caps in connection with the Tribeca House loans obtained on November 9, 2016, the loans obtained for the 107 Columbia Heights acquisition and the 250 Livingston Street loan obtained on December 6, 2018. On April 27, 2018, the Company terminated the Tribeca House instrument for net proceeds of $385. The fair value of the interest rate caps, which are classified as Level 2, is estimated using market inputs and credit valuation inputs.

The estimated fair values of the interest rate caps are as follows:

Notional Amount		Related Property Loans	Maturity Date	Strike Rate		Estimated Fair Value at March 31, 2019		Estimated Fair Value at December 31, 2018
$	73,700	107 Columbia Heights	May 9, 2020		3.0%	$	2	$	24
$	75,000	250 Livingston Street	December 15, 2020		4.0%		—		—
Total fair value of derivative instruments included in prepaid expenses and other assets						$	2	$	24

These interest rate caps were not designated as hedges; accordingly, changes in fair value of the Tribeca House and 250 Livingston Street instruments are recognized in earnings, and changes in fair value of the 107 Columbia Heights instrument are recognized in real estate under development. Decreases (increases) in fair value of the Tribeca House and 250 Livingston Street instruments of $0 and $(227) for the three months ended March 31, 2019 and 2018, respectively, are included in interest expense. Decreases (increases) in fair value of the 107 Columbia Heights instrument of $22 and $(69) for the three months ended March 31, 2019 and 2018, respectively, are recognized in interest expense and capitalized to real estate under development.

The above disclosures regarding fair value of financial instruments are based on pertinent information available as of March 31, 2019, and December 31, 2018, respectively. Although the Company is not aware of any factors that would significantly affect the reasonableness of the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since those dates, and current estimates of fair value may differ significantly from the amounts presented herein.

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9. Commitments and Contingencies

Legal

On July 3, 2017, the New York Supreme Court (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, who brought an action 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 421-g. The Court also awarded the plaintiffs their attorney’s fees and costs. The Court declared that the plaintiff-tenants were subject to rent stabilization requirements and referred the matter to a special referee to determine the amount of rent over-charges, if any. On July 18, 2017, the Court stayed the above decision; the Company subsequently appealed the decision to the Appellate Division, First Department. On January 18, 2018, the Appellate Division unanimously ruled in favor of the Company, holding that the Company acted properly in de-regulating the apartments. The Appellate Division decision and order was subject to a motion for leave to appeal, which was granted on April 24, 2018. There can be no assurance as to the outcome of the appeal. Due to the inherent uncertainty and unpredictability of litigation, we cannot determine at this time with any specificity the Company’s potential liability. 

In addition to the above, the Company is subject to certain legal proceedings and claims arising in connection with its business, including a claim under the Americans with Disabilities Act of 1990 at the 141 Livingston Street property. 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.

Commitments

The Company is obligated to provide parking availability through August 2020 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:

	Commercial			Residential			Total
Three months ended March 31, 2019		25	%		75	%		100	%
Three months ended March 31, 2018		27	%		73	%		100	%

10. Related-Party Transactions

The Company recorded office and overhead expenses pertaining to a related company in general and administrative expense of $87 and $89 for the three months ended March 31, 2019 and 2018, respectively.

The Company paid legal and advisory fees to firms in which two of our directors were principals or partners of $0 and $1,880 for the three months ended March 31, 2019 and 2018, respectively.

11. 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 107 Columbia Heights property, the 10 West 65^th 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 months ended March 31, 2019 and 2018, is as follows:

Three months ended March 31, 2019	Commercial		Residential		Total
Rental income	$	6,880	$	20,772	$	27,652
Total revenues		6,880		20,772		27,652
Property operating expenses		1,141		6,422		7,563
Real estate taxes and insurance		1,236		4,495		5,731
General and administrative		279		1,389		1,668
Depreciation and amortization		946		3,603		4,549
Total operating expenses		3,602		15,909		19,511
Income from operations	$	3,278	$	4,863	$	8,141

Three months ended March 31, 2018	Commercial		Residential		Total
Rental income	$	7,189	$	19,679	$	26,868
Total revenues		7,189		19,679		26,868
Property operating expenses		1,210		6,046		7,256
Real estate taxes and insurance		1,106		4,242		5,348
General and administrative		318		2,820		3,138
Depreciation and amortization		875		3,721		4,596
Total operating expenses		3,509		16,829		20,338
Income from operations	$	3,680	$	2,850	$	6,530

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

	Commercial		Residential		Total
March 31, 2019	$	244,163	$	852,991	$	1,097,154
December 31, 2018		245,940		855,068		1,101,008

The Company’s interest expense by segment for the three months ended March 31, 2019 and 2018, is as follows:

	Commercial		Residential		Total
Three months ended March 31,
2019	$	1,734	$	6,540	$	8,274
2018		1,821		6,722		8,543

The Company’s capital expenditures by segment for the three months ended March 31, 2019 and 2018, are as follows:

	Commercial		Residential		Total
Three months ended March 31,
2019	$	908	$	10,306	$	11,214
2018		238		12,331		12,569

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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-Q.

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.

The Company was incorporated on July 7, 2015. On August 3, 2015, we closed a private offering of shares of our common stock, in which we raised net proceeds of approximately $130.2 million. In connection with the private offering, we consummated a series of investment and other formation transactions that were designed, among other things, to enable us to qualify as a REIT for U.S. federal income tax purposes.

In February 2017, the Company sold 6,390,149 primary shares of common stock (including the exercise of the over-allotment option, which closed on March 10, 2017) to investors in an initial public offering (“IPO”) at $13.50 per share. The proceeds, net of offering costs, were approximately $78.7 million. The Company contributed the IPO proceeds to the Operating Partnership in exchange for units in the Operating Partnership.

On May 9, 2017, the Company completed the purchase of 107 Columbia Heights, a 161-unit apartment community located in Brooklyn Heights, New York, for $87.5 million.

On October 27, 2017, the Company completed the acquisition of an 82-unit residential property at 10 West 65th Street in Manhattan, New York, for $79.0 million.

As of March 31, 2019, 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 1^st Avenue in Manhattan;

• one residential rental property at 107 Columbia Heights in the Brooklyn Heights neighborhood of Brooklyn; and

• one residential rental property at 10 West 65^th Street in the Upper West Side neighborhood of Manhattan.

These properties are located in the most densely populated major city in the United States, each with immediate access to mass transportation.

On March 25, 2019, the Company announced that it signed a lease with the City of New York for renewal of its commercial leases at the 250 Livingston Street property. The lease will be in effect upon approval and countersignature by the City. The new lease will have a ten-year term commencing upon expiration of the current leases in August 2020, and combines the two existing leases into one; the City will hold one-time termination options at the end of the fifth year and the seventh year. The lease encompasses 342,496 remeasured square feet at an initial $43.62 blended rent per square foot, with rent escalators beginning in the third year, and contemplates the Company making certain alterations and improvements to the property.

Touro College, which had leased 40 apartment units at the 10 West 65^th Street property in accordance with an agreement entered into when the Company purchased the property, exercised its option to terminate the leases, effective January 31, 2019. The Company is in the process of repositioning the apartments and expects to lease them at market rates.

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Both the Flatbush Gardens and 107 Columbia Heights properties are located in newly designated qualified opportunity zones, in connection with the opportunity zone community development program offered through the Tax Cuts and Jobs Act of 2017. The federal program encourages private investment in low-income urban and rural communities. Opportunity zones are designed to spur economic development and job creation in specified communities by providing tax benefits to investors, including the potential deferral and exclusion of prior capital gains from taxable income.

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 REIT under Sections 856 through 860 of the Internal Revenue 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 March 31, 2019, the Company’s interest, through the Operating Partnership, in the LLCs that own the properties generally entitles it to 40.4% of the aggregate cash distributions from, and the profits and losses of, the LLCs.

Results of Operations

Our focus throughout 2018 and year-to-date 2019 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.

Income Statement for the Three Months Ended March 31, 2019 and 2018 (in thousands)

	2019			2018			Increase (decrease)			%
Revenues
Residential rental income	$	20,772		$	19,679		$	1,093			5.6	%
Commercial rental income		6,880			7,189			(309	)		(4.3	)%
Total revenues		27,652			26,868			784			2.9	%
Operating Expenses
Property operating expenses		7,563			7,256			307			4.2	%
Real estate taxes and insurance		5,731			5,348			383			7.2	%
General and administrative		1,668			3,138			(1,470	)		(46.8	)%
Depreciation and amortization		4,549			4,596			(47	)		(1.0	)%
Total operating expenses		19,511			20,338			(827	)		(4.1	)%
Income from operations		8,141			6,530			1,611			24.7	%
Interest expense, net		(8,274	)		(8,543	)		(269	)		(3.1	)%
Loss on extinguishment of debt		—			(6,981	)		(6,981	)		(100.0	)%
Net loss	$	(133	)	$	(8,994	)	$	8,861			98.5	%

Revenue. Residential rental income increased from $19,679 for the three months ended March 31, 2018, to $20,772 for the three months ended March 31, 2019, primarily due to increases in rental rates and occupancy at the Flatbush Gardens and Tribeca House properties. Base rent per square foot increased at the Flatbush Gardens property from $22.58 (97.2% leased occupancy) at March 31, 2018, to $24.04 (99.5% leased occupancy) at March 31, 2019. Base rent per square foot increased at the Tribeca House property from $68.60 (96.2% leased occupancy) at March 31, 2018, to $69.14 (99.0% leased occupancy) at March 31, 2019.

Commercial rental income decreased from $7,189 for the three months ended March 31, 2018, to $6,880 for the three months ended March 31, 2019, primarily due to a non-recurring non-cash write-off of a straight-line rent balance related to a tenant lease amendment.

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 from $7,256 for the three months ended March 31, 2018, to $7,563 for the three months ended March 31, 2019, primarily due to a higher provision for bad debts.

Real estate taxes and insurance. Real estate taxes and insurance expenses increased from $5,348 for the three months ended March 31, 2018, to $5,731 for the three months ended March 31, 2019, primarily due to increased real estate taxes across the portfolio and an increase in property insurance expense at the Flatbush Gardens property.

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General and administrative. General and administrative expenses decreased from $3,138 for the three months ended March 31, 2018, to $1,668 for the three months ended March 31, 2019, primarily due to a decrease in executive cash bonuses and decreases in LTIP amortization expense and other fees and expenses in 2019.

Depreciation and amortization. Depreciation and amortization expense decreased from $4,596 for the three months ended March 31, 2018, to $4,549 for the three months ended March 31, 2019, due to reduced intangibles amortization at the 10 West 65^th Street property, offset by additions to real estate across the portfolio.

Interest expense, net. Interest expense, net, decreased from $8,543 for the three months ended March 31, 2018, to $8,274 for the three months ended March 31, 2019. The decrease primarily resulted from lower interest rates obtained in refinancing the Tribeca House and Flatbush Gardens properties in February 2018, offset by a higher loan amount and interest rate obtained in refinancing the 250 Livingston Street property in December 2018. Interest expense included amortization of loan costs and changes in fair value of interest rate caps of $504 and $294 for the three months ended March 31, 2019 and 2018, respectively.

Loss on extinguishment of debt. Loss on extinguishment of debt related to the refinancings of the Flatbush Gardens and Tribeca House loans in February 2018. The amount included charges for early extinguishment of the debt and the associated write-off of unamortized debt costs.

Net loss.   As a result of the foregoing, net loss decreased from $8,994 for the three months ended March 31, 2018, to $133 for the three months ended March 31, 2019.

Liquidity and Capital Resources

As of March 31, 2019, we had $913.7 million of indebtedness (net of unamortized issuance costs) secured by our properties, $29.4 million of cash and cash equivalents, and $13.3 million of restricted cash. As described in Note 6 of the accompanying “Notes to Consolidated Financial Statements,” the Company refinanced its outstanding Flatbush Gardens and Tribeca House loans on February 21, 2018, and its outstanding 250 Livingston Street loan on December 6, 2018.

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 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 retirements at maturity. We do not expect that net cash provided by operations will be sufficient to meet all of 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 for REITs and market perceptions about our company.

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We believe that our current cash flows from operations, 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.

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 March 31, 2019 and 2018, 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 Three Months Ended March 31, 2019 and 2018 (in thousands)

	Three Months Ended March 31,
	2019			2018
Operating activities	$	11,950		$	10,812
Investing activities		(10,208	)		(10,112	)
Financing activities		(4,972	)		15,291

Cash flows provided by (used in) operating activities, investing activities and financing activities for the three months ended March 31, 2019 and 2018, were as follows:

Net cash flow provided by operating activities was $11,950 for the three months ended March 31, 2019, compared to $10,812 for the three months ended March 31, 2018. The net increase during the 2019 period reflected an increase of $2,065 of cash flow from operating results, offset by a decrease of $927 of cash generated by operating assets and liabilities.

Net cash used in investing activities was $10,208 for the three months ended March 31, 2019, compared to $10,112 for the three months ended March 31, 2018. The cash in the respective periods was spent on capital projects.

Net cash used in financing activities was $4,972 for the three months ended March 31, 2019, compared to net cash provided by financing activities of $15,291 for the three months ended March 31, 2018. Cash was used in the three months ended March 31, 2019, for scheduled debt amortization ($711); and cash was primarily provided in the three months ended March 31, 2018, by proceeds from new loans on the Flatbush Gardens and Tribeca House properties ($606,000), offset by repayment of existing loans on the Flatbush Gardens and Tribeca House properties (approximately $578,000), and loan issuance and extinguishment costs ($8,338). The Company paid distributions of $4,261 and $4,254 in the three months ended March 31, 2019 and 2018, respectively.

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 so as to satisfy the requirements for qualification as a REIT for federal income tax purposes.

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Inflation

Inflation in the United States has been relatively low in recent years and did not have a significant impact on the results of operations for the Company’s business for the periods shown 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 74% of our revenue, are short-term in nature. Our longer-term commercial and retail leases would generally allow us to recover some increased costs in the event of significant inflation.

Although the impact of inflation has been relatively insignificant in recent years, it does remain a factor in the United States economy and could increase the cost of acquiring or replacing properties in the future.

Off-Balance Sheet Arrangements

As of March 31, 2019, we do not have any off-balance sheet arrangements that have had or are reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

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 measure” 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 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 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 and loss on extinguishment of debt, less recurring capital expenditures.

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

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

	Three Months Ended March 31,
	2019			2018
FFO
Net loss	$	(133	)	$	(8,994	)
Real estate depreciation and amortization		4,549			4,596
FFO	$	4,416		$	(4,398	)
AFFO
FFO	$	4,416		$	(4,398	)
Amortization of real estate tax intangible		119			118
Amortization of above- and below-market leases		(424	)		(479	)
Straight-line rent adjustments		634			256
Amortization of debt origination costs		504			521
Interest rate cap mark-to-market adjustments		—			(227	)
Amortization of LTIP awards		156			568
Loss on extinguishment of debt		—			6,981
Recurring capital spending		(153	)		(141	)
AFFO	$	5,252		$	3,199

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) and loss on extinguishment of debt.

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 before allocation to non-controlling interests, computed in accordance with GAAP (amounts in thousands):

	Three Months Ended March 31,
	2019			2018
Adjusted EBITDA
Net loss	$	(133	)	$	(8,994	)
Real estate depreciation and amortization		4,549			4,596
Amortization of real estate tax intangible		119			118
Amortization of above- and below-market leases		(424	)		(479	)
Straight-line rent adjustments		634			256
Amortization of LTIP awards		156			568
Interest expense, net		8,274			8,543
Loss on extinguishment of debt		—			6,981
Adjusted EBITDA	$	13,175		$	11,589

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Net Operating Income

We believe that NOI is a useful measure of our operating performance. We define NOI as income from operations plus real estate depreciation and amortization, general and administrative expenses, amortization of identifiable intangibles and straight-line rent adjustments to revenue from long-term leases. We believe that this measure is widely recognized and provides an operating perspective not immediately apparent from GAAP operating income or net income. 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 March 31,
	2019			2018
NOI
Income from operations	$	8,141		$	6,530
Real estate depreciation and amortization		4,549			4,596
General and administrative expenses		1,668			3,138
Amortization of real estate tax intangible		119			118
Amortization of above- and below-market leases		(424	)		(479	)
Straight-line rent adjustments		634			256
NOI	$	14,687		$	14,159

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, 2018.

Recent Accounting Pronouncements

See Note 3, “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 depends 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. To manage this risk, we purchased interest rate caps on the $410.0 million of Tribeca House debt outstanding (prior to the Tribeca House debt refinancing on February 21, 2018), the $64.7 million of 107 Columbia Heights debt outstanding and the $75.0 million of 250 Livingston Street debt outstanding as of March 31, 2019, that would provide interest rate protection if one-month LIBOR exceeds 2.0% for the Tribeca House loans, 3.0% for the 107 Columbia Heights loans and 4.0% for the 250 Livingston Street loan. On April 27, 2018, we terminated the Tribeca House interest rate cap.

A one percent change in interest rates on our $139.7 million of variable rate debt as of March 31, 2019, would impact annual net income by approximately $1.4 million.

The fair value of the Company’s notes payable was approximately $943.6 million and $927.6 million as of March 31, 2019, and December 31, 2018, respectively.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our 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 the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of March 31, 2019, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control 

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act 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.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDIngs

On July 3, 2017, the New York Supreme Court (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, who brought an action 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 421-g. The Court also awarded the plaintiffs their attorney’s fees and costs. The Court declared that the plaintiff-tenants were subject to rent stabilization requirements and referred the matter to a special referee to determine the amount of rent over-charges, if any. On July 18, 2017, the Court stayed the above decision; the Company subsequently appealed the decision to the Appellate Division, First Department. On January 18, 2018, the Appellate Division unanimously ruled in favor of the Company, holding that the Company acted properly in de-regulating the apartments. The Appellate Division decision and order was subject to a motion for leave to appeal, which was granted on April 24, 2018. There can be no assurance as to the outcome of the appeal. Due to the inherent uncertainty and unpredictability of litigation, we cannot determine at this time with any specificity the Company’s potential liability.

In addition to the above, the Company is subject to certain legal proceedings and claims arising in connection with its business, including a claim under the Americans with Disabilities Act of 1990 at the 141 Livingston Street property. 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.

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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, 2018, set forth information relating to various risks and uncertainties that could materially adversely affect our business, financial condition and operating results. Such risk factors continue to be relevant to an understanding of our business, financial condition and operating results. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes with respect to such risk factors.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 6. EXHIBITS

Exhibit Number	Description
*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	XBRL Instance Document.
**101.SCH	XBRL Taxonomy Extension Schema Document.
**101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
**101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
**101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
**101 DEF	XBRL Taxonomy Extension Definition Linkbase Document

*Filed herewith

**Submitted electronically with the report

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.
May 9, 2019	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:	May 9, 2019	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:	May 9, 2019	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 March 31, 2019, 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:	May 9, 2019	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 March 31, 2019, 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:	May 9, 2019	Signed:	/s/ Lawrence E. Kreider
			Lawrence E. Kreider
			Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 09, 2019
Document Information [Line Items]
Entity Registrant Name	Clipper Realty Inc.
Entity Central Index Key	0001649096
Trading Symbol	clpr
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		17,814,672
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
ASSETS
Land and improvements	$ 497,343	$ 497,343
Building and improvements	483,786	479,360
Tenant improvements	3,051	3,051
Furniture, fixtures and equipment	11,052	10,978
Real estate under development	132,181	125,467
Total investment in real estate	1,127,413	1,116,199
Accumulated depreciation	(94,823)	(90,462)
Investment in real estate, net	1,032,590	1,025,737
Cash and cash equivalents	29,379	37,028
Restricted cash	13,255	8,836
Tenant and other receivables, net of allowance for doubtful accounts of $2,714 and $2,624, respectively	2,908	3,580
Deferred rent	1,851	2,485
Deferred costs and intangible assets, net	9,665	9,964
Prepaid expenses and other assets	7,506	13,378
TOTAL ASSETS	1,097,154	1,101,008
Liabilities:
Notes payable, net of unamortized loan costs of $11,218 and $12,049, respectively	913,683	913,564
Accounts payable and accrued liabilities	12,562	12,550
Security deposits	6,704	6,637
Below-market leases, net	2,469	2,923
Other liabilities	4,489	3,849
TOTAL LIABILITIES	939,907	939,523
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,17,812,755 shares issued and outstanding	178	178
Additional paid-in-capital	92,980	92,945
Accumulated deficit	(29,687)	(27,941)
Total stockholders’ equity	63,471	65,182
Non-controlling interests	93,776	96,303
TOTAL EQUITY	157,247	161,485
TOTAL LIABILITIES AND EQUITY	$ 1,097,154	$ 1,101,008

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 2,714	$ 2,624
Unamortized loan costs	$ 11,218	$ 12,049
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Preferred stock, shares authorized (in shares)	100,000	100,000
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)	17,812,755	17,812,755
Common stock, shares outstanding (in shares)	17,812,755	17,812,755
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
	Mar. 31, 2019	Mar. 31, 2018
REVENUES
TOTAL REVENUES	$ 27,652	$ 26,868
OPERATING EXPENSES
Property operating expenses	7,563	7,256
Real estate taxes and insurance	5,731	5,348
General and administrative	1,668	3,138
Depreciation and amortization	4,549	4,596
TOTAL OPERATING EXPENSES	19,511	20,338
INCOME FROM OPERATIONS	8,141	6,530
Interest expense, net	(8,274)	(8,543)
Loss on extinguishment of debt		(6,981)
Net loss	(133)	(8,994)
Net loss attributable to non-controlling interests	79	5,364
Net loss attributable to common stockholders	$ (54)	$ (3,630)
Basic and diluted net loss per share (in dollars per share)	$ (0.01)	$ (0.21)
Residential Rental [Member]
REVENUES
TOTAL REVENUES	$ 20,772	$ 19,679
Commercial Real Estate [Member]
REVENUES
TOTAL REVENUES	$ 6,880	$ 7,189

XML

Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance (in shares) at Dec. 31, 2017	17,812,755
Balance at Dec. 31, 2017	$ 178	$ 92,273	$ (17,539)	$ 74,912	$ 110,679	$ 185,591
Amortization of LTIP grants					568	568
Dividends and distributions			(1,692)	(1,692)	(2,562)	(4,254)
Net loss			(3,630)	(3,630)	(5,364)	(8,994)
Reallocation of noncontrolling interests		208		208	(208)
Balance (in shares) at Mar. 31, 2018	17,812,755
Balance at Mar. 31, 2018	$ 178	92,475	(22,861)	69,792	103,113	172,905
Issuance of common stock		(6)		(6)		(6)
Balance (in shares) at Dec. 31, 2018	17,812,755
Balance at Dec. 31, 2018	$ 178	92,945	(27,941)	65,182	96,303	161,485
Amortization of LTIP grants					156	156
Dividends and distributions			(1,692)	(1,692)	(2,569)	(4,261)
Net loss			(54)	(54)	(79)	(133)
Reallocation of noncontrolling interests		35		35	(35)
Balance (in shares) at Mar. 31, 2019	17,812,755
Balance at Mar. 31, 2019	$ 178	$ 92,980	$ (29,687)	$ 63,471	$ 93,776	$ 157,247

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (133)	$ (8,994)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	4,361	4,043
Amortization of deferred financing costs	504	521
Amortization of deferred costs and intangible assets	307	671
Amortization of above- and below-market leases	(424)	(479)
Loss on extinguishment of debt		6,981
Deferred rent	634	256
Stock-based compensation	156	568
Change in fair value of interest rate caps		(227)
Changes in operating assets and liabilities:
Tenant and other receivables	672	3,026
Prepaid expenses, other assets and deferred costs	5,812	4,190
Accounts payable and accrued liabilities	(646)	(912)
Security deposits	67	389
Other liabilities	640	779
Net cash provided by operating activities	11,950	10,812
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings, and improvements	(10,208)	(10,112)
Net cash used in investing activities	(10,208)	(10,112)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds and costs from sale of common stock		(6)
Payments of mortgage notes	(711)	(579,231)
Proceeds from mortgage notes		607,120
Dividends and distributions	(4,261)	(4,254)
Loan issuance and extinguishment costs		(8,338)
Net cash (used in) provided by financing activities	(4,972)	15,291
Net (decrease) increase in cash and cash equivalents and restricted cash	(3,230)	15,991
Cash and cash equivalents and restricted cash - beginning of period	45,864	21,670
Cash and cash equivalents and restricted cash - end of period	42,634	37,661
Cash and cash equivalents	37,028	7,940
Restricted cash	8,836	13,730
Cash and cash equivalents	29,379	24,070
Restricted cash	13,255	13,591
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest of $1,836 and $1,191 in 2019 and 2018, respectively	8,290	9,610
Non-cash interest capitalized to real estate under development	348	252
Additions to investment in real estate included in accounts payable and accrued liabilities	$ 6,656	$ 2,205

XML

Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Capitalized interest	$ 1,836	$ 1,191

XML

Note 1 - Organization

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

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

1.

Organization

The Company was organized in the state of Maryland on

July 7, 2015.

On

August 3, 2015,

we completed certain formation transactions and the sale of shares of common stock in a private offering. We contributed the net proceeds of the private offering to Clipper Realty L.P., our operating partnership subsidiary (the “Operating Partnership”), in exchange for units in the Operating Partnership. The Operating Partnership in turn contributed such net proceeds to the limited liability companies (“LLCs”) that comprised the predecessor of the Company (the “Predecessor”) in exchange for Class A LLC units in such LLCs and became the managing member of such LLCs. The owners of the LLCs exchanged their interests for Class B LLC units and an equal number of special, non-economic, voting stock in the Company. The Class B LLC units, together with the special voting shares, are convertible into common shares of the Company on a

one

-for-

one

basis and are entitled to distributions.

On

June 27, 2016,

the Operating Partnership acquired the Aspen property at

1955

First Avenue in Manhattan, New York.

On

February 9, 2017,

the Company priced an initial public offering of

6,390,149

primary shares of its common stock (including the exercise of the over-allotment option, which closed on

March 10, 2017)

at a price of

$13.50

per share (the “IPO”). The net proceeds of the IPO were approximately

$78.7

million. We contributed the proceeds of the IPO to the Operating Partnership, in exchange for units in the Operating Partnership.

On

May 9, 2017,

the Company completed the purchase of

107

Columbia Heights, a

161

-unit apartment community located in Brooklyn Heights, New York, in vacant condition, for

$87.5

million.

On

October 27, 2017,

the Company completed the acquisition of an

82

-unit residential property at

10

West

65th

Street in Manhattan, New York, for

$79.0

million.

As of

March 31, 2019,

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 2,496 rentable units;

• 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;

• 107 Columbia Heights in Brooklyn, a 11 -story residential building with approximately 102,000 square feet of residential rental GLA; and

• 10 West 65 th Street in Manhattan, a 6 -story residential building with approximately 76,000 square feet of residential rental GLA.

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

March 31, 2019,

the Company’s interest, through the Operating Partnership, in the LLCs that own the properties generally entitles it to

40.4%

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 was the primary beneficiary. The assets and liabilities of these VIEs represented substantially all of the Company’s assets and liabilities.

XML

Note 2 - Issuance of Common Stock

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Sale of Common Stock and Formation Transactions [Text Block]

2.

Issuance of Common Stock

On

April 9, 2019,

the Company issued

1,917

primary shares of its common stock to

one

of our directors, in connection with the conversion of vested long-term incentive plan (“LTIP”) units on a

one

-for-

one

basis. The Company did

not

receive any proceeds from the issuance.

XML

Note 3 - Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

3.

Significant Accounting Policies

Segments

At

March 31, 2019,

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 interest.

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

2017

-

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

March 31, 2019.

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 (years)	10	–	44
Tenant improvements	Shorter of useful life or lease term
Furniture, fixtures and equipment (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 and capital improvements 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. The Company periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances. If a tenant fails to make contractual payments beyond any allowance, the Company

may

recognize additional bad debt expense in future periods.

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 financial statements. 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 Loss

Comprehensive loss is comprised of net 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

months ended

March 31, 2019

and

2018,

the Company did

not

own any financial instruments for which the change in value was

not

reported in net loss accordingly and its comprehensive loss was its net loss as presented in the consolidated statements of operations.

Revenue Recognition

Rental revenue for commercial leases is recognized on a straight-line basis over the terms of the respective leases. Rental income attributable to residential leases and parking is recognized as earned, which is

not

materially different from the straight-line basis. Leases entered into by residents for apartment units are generally for

one

-year terms, renewable upon consent of both parties on an annual or monthly basis. Deferred rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.

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.

Stock-based Compensation

The Company accounts for stock-based compensation pursuant to Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic

718,

“Compensation — Stock Compensation.” As such, all equity-based awards are reflected as compensation expense in the Company’s consolidated financial statements over their vesting period based on the fair value at the date of grant.

In

March 2019,

the Company granted

152,734

LTIP units with a weighted average grant date fair value of

$13.35

per unit.

At

March 31, 2019

and

December 31, 2018,

there were

877,182

and

724,448

LTIP units outstanding, respectively, with a weighted grant-date fair value of

$12.70

and

$12.56

per unit, respectively. As of

March 31, 2019,

and

December 31, 2018,

there was

$2.7

million and

$0.8

million, respectively, of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under share incentive plans. As of

March 31, 2019,

the weighted average period over which the unrecognized compensation expense will be recorded is approximately

1.3

years.

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 or the Predecessor’s financial position or results of operations. The prior

three

years’ income tax returns are subject to review by the Internal Revenue Service.

The Tax Cuts and Jobs Act was enacted in

December 2017

and is generally effective beginning in

2018.

This new legislation is

not

expected to have a material adverse effect on the Company’s business and allows non-corporate shareholders to deduct a portion of the Company’s qualified REIT dividends.

Fair Value Measurements

Refer to Note

8,

“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 (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

March 31, 2019,

the Company has

no

derivatives for which it applies hedge accounting.

Loss Per Share

Basic and diluted loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding. As of

March 31, 2019

and

2018,

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 loss per share pursuant to the

two

-class method. The Company did

not

have dilutive securities as of

March 31, 2019

or

2018.

The effect of the conversion of the

26,317

Class B LLC units outstanding is

not

reflected in the computation of basic and diluted loss per share, as the effect would be anti-dilutive. The net loss allocable to such units is reflected as noncontrolling 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 March 31,
(in thousands, except per share amounts)	2019			2018
Numerator
Net loss attributable to common stockholders	$	(54	)	$	(3,630	)
Less: income attributable to participating securities		(69	)		(62	)
Subtotal	$	(123	)	$	(3,692	)
Denominator
Weighted average common shares outstanding		17,813			17,813
Basic and diluted net loss per share attributable to common stockholders	$	(0.01	)	$	(0.21	)

Recently Issued Pronouncements

In

March 2019,

FASB issued ASU

2019

-

01,

“Leases (Topic

842

), Codification Improvements.” There are

three

codification updates to Topic

842

covered by this ASU: Issue

1

provides guidance on how to compute fair value of leased items for lessors who are non-dealers or manufacturers; Issue

2

relates to cash flow presentation for lessors of sales-type and direct financing leases; and Issue

3

clarifies that certain transition disclosures will only be required in annual disclosures.

In

December 2018,

FASB issued ASU

2018

-

20,

“

Leases (Topic

842

), Narrow-Scope Improvements for Lessors.” This ASU modifies ASU

2016

-

02

to permit lessors, as an accounting policy election,

not

to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments

not

included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value-added, and some excise taxes and excludes real estate taxes). The Company has elected

not

to evaluate whether the aforementioned costs are lessor or lessee costs. This ASU also provides that certain lessor costs require lessors to exclude from variable payments, and therefore revenue, specifically lessor costs paid by lessees directly to

third

parties. The amendments also require lessors to account for costs excluded from the consideration of a contract that are paid by the lessor and reimbursed by the lessee as variable payments. A lessor will record those reimbursed costs as revenue.

In

May 2014,

FASB issued ASU

2014

-

09,

 “Revenue from Contracts with Customers,” which prescribes a single, common revenue standard that supersedes nearly all existing revenue recognition guidance under U.S. GAAP, including most industry-specific requirements. The core principle of ASU

2014

-

09

is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU

2014

-

09

outlines a

five

-step model to achieve this core principle and, in doing so, more judgment and estimates

may

be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after

December 15, 2018,

and interim periods within annual reporting periods beginning after

December 15, 2019. 

The Company’s revenues are primarily derived from rental income, which is scoped out from this standard and is currently accounted for in accordance with ASC Topic

840,

Leases. Less than

5%

of the Company’s revenues in

2018

would have fallen under the scope of this standard and comprises, principally, commercial operating expense reimbursements and garage and other income from residential tenants; for these revenues, the Company adopted this standard effective

January 1, 2019,

using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. The adoption of this standard did

not

have a material impact on the timing or amounts of the Company’s revenues.

For the approximate

5%

of rental revenue that is subject to the new revenue recognition standard, the Company’s disaggregated revenue streams are disclosed in the tables below for the

three

months ended

March 31, 2019

and

2018:

Three Months Ended March 31, 2019
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	20,350	$	5,940	$	26,290		95.1	%
Operating expense recoveries	Revenue Recognition		120		795		915		3.3	%
Other	Revenue Recognition		302		145		447		1.6	%
Total revenues		$	20,772	$	6,880	$	27,652		100.0	%

Three Months Ended March 31, 2018
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	19,297	$	6,271	$	25,568		95.2	%
Operating expense recoveries	Revenue Recognition		122		735		857		3.2	%
Other	Revenue Recognition		260		183		443		1.6	%
Total revenues		$	19,679	$	7,189	$	26,868		100.0	%

In

February 2016,

FASB issued ASU

2016

-

02,

“Leases

.

” ASU

2016

-

02

supersedes the current accounting for leases and while retaining

two

distinct types of leases, finance and operating, requires lessees to recognize most leases on their balance sheets and makes targeted changes to lessor accounting. In

July 2018,

FASB issued ASU

2018

-

10,

“Codification Improvements to Topic

842,

Leases,” which provides minor clarifications and corrections to ASU

2016

-

02,

“Leases (Topic

842

).” Further, in

July 2018,

the FASB issued ASU

2018

-

11,

“Leases (Topic

842

): Targeted Improvements.” This amendment provides a new practical expedient that allows lessors, by class of underlying asset, to avoid separating lease and associated non-lease components within a contract if certain criteria are met: (i) the timing and pattern of transfer for the non-lease component and the associated lease component are the same and (ii) the stand-alone lease component would be classified as an operating lease if accounted for separately. These pronouncements are effective for fiscal years beginning after

December 15, 2019,

and early adoption is permitted. The Company will adopt this standard effective

January 1, 2020

and is currently evaluating the impact of adoption on its consolidated financial statements. As lessor, the Company expects that the adoption of ASU

2016

-

02

(as amended by subsequent ASUs) will

not

change the timing of revenue recognition of the Company’s rental revenues. As lessee, the Company is party to certain office equipment leases with future payment obligations for which the Company expects to record right-of-use assets and lease liabilities at the present value of the remaining minimum rental payments upon adoption of this standard. 

In

August 2018,

FASB issued ASU

2018

-

13,

“Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC

820.

This guidance is effective in fiscal years beginning after

December 15, 2019

with early adoption permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

In

August 2018,

the Securities and Exchange Commission issued a final rule that amends certain of its disclosure requirements. The rule simplifies various disclosure requirements for public companies including primarily that it (i) eliminates the requirement for public companies to disclose in their filings a schedule of earnings to fixed charges, (ii) requires an analysis of changes in stockholders’ equity for the current and comparative year-to-date interim periods in interim reports, and (iii) reduces the requirements for market price information disclosures in annual reports. These changes were effective for public companies beginning on

November 5, 2018.

In

July 2018,

FASB issued ASU

2018

-

09,

“Codification Improvements.” These amendments provide clarifications and corrections to certain ASC subtopics including the following:

470

-

50

(Debt – Modifications and Extinguishments),

480

-

10

(Distinguishing Liabilities from Equity – Overall),

718

-

740

(Compensation – Stock Compensation – Income Taxes),

805

-

740

(Business Combinations – Income Taxes),

815

-

10

(Derivatives and Hedging – Overall) and

820

-

10

(Fair Value Measurement – Overall). The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

In

June 2018,

FASB issued ASU

2018

-

07,

“Compensation – Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments provide specific guidance for transactions for acquiring goods and services from nonemployees and specify that Topic

718

applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic

718

does

not

apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic

606,

“Revenue from Contracts with Customers.” This guidance is effective for the Company for fiscal years beginning after

December 15, 2019,

and interim periods beginning after

December 15, 2020.

Early adoption is permitted but

not

earlier than the adoption of Topic

606.

The Company does

not

believe that this guidance will have a material effect on its consolidated financial statements as it has

not

historically issued share-based payments in exchange for goods or services to be consumed within its operations.

In

February 2017,

FASB issued ASU

2017

-

05,

“Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic

610

-

20

),” to add guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. ASU

2017

-

05

reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. ASU

2017

-

05

is effective for the Company for its annual reporting beginning after

December 15, 2018,

including interim reporting periods beginning after

December 15, 2019.

The Company adopted this standard effective

January 1, 2019.

The adoption of this standard is

not

expected to have a material impact on our consolidated financial statements.

In

November 2016,

FASB issued ASU

2016

-

18

“Statement of Cash Flows (Topic

230

) – Restricted Cash”. The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU does

not

provide a definition of restricted cash or restricted cash equivalents. The ASU is effective for the Company beginning after

December 15, 2018,

and interim periods within fiscal years beginning after

December 15, 2019.

Early adoption is permitted, including adoption in an interim period. The Company has adopted this standard effective

January 1, 2019.

In

August 2016,

FASB issued ASU

2016

-

15,

“Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments (A consensus of the Emerging Issues Task Force),” which provides specific guidance on

eight

cash flow classification issues and how to reduce diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for the Company beginning after

December 15, 2018,

and interim periods within fiscal years beginning after

December 15, 2019.

Early adoption is permitted. The Company has adopted this standard effective

January 1, 2019.

XML

Note 4 - Deferred Costs and Intangible Assets

3 Months Ended

Mar. 31, 2019

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:

	March 31, 2019			December 31, 2018
	(unaudited)
Deferred costs	$	324		$	286
Above-market leases		480			480
Lease origination costs		3,092			3,110
In-place leases		7,347			8,078
Real estate tax abatements		9,143			12,571
Total deferred costs and intangible assets		20,386			24,525
Less accumulated amortization		(10,721	)		(14,561	)
Total deferred costs and intangible assets, net	$	9,665		$	9,964

Amortization of lease origination costs and in-place lease intangible assets was

$188

and

$553

for the

three

months ended

March 31, 2019

and

2018,

respectively;

$749

of fully amortized lease origination costs and in-place leases was written off during the

three

months ended

March 31, 2019.

Amortization of real estate tax abatements of

$119

and

$118

for the

three

months ended

March 31, 2019

and

2018,

respectively, is included in real estate taxes and insurance in the consolidated statements of operations;

$3,428

of fully amortized real estate tax abatements was written off during the

three

months ended

March 31, 2019.

Amortization of above-market leases of

$30

and

$59

for the

three

months ended

March 31, 2019

and

2018,

respectively, is included in commercial income in the consolidated statements of operations.

 

Deferred costs and intangible assets as of

March 31, 2019,

amortize in future years as follows:

2019 (Remainder)	$	848
2020		799
2021		769
2022		737
2023		591
Thereafter		5,921
Total	$	9,665

XML

Note 5 - Below-market Lease Intangibles

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Below Market Lease Intangibles Disclosure [Text Block]

5.

Below-Market Lease Intangibles

The Company’s below-market lease intangibles liabilities are as follows:

	March 31, 2019			December 31, 2018
	(unaudited)
Below-market leases	$	23,178		$	23,178
Less accumulated amortization		(20,709	)		(20,255	)
Below-market leases, net	$	2,469		$	2,923

Rental income included amortization of below-market leases of

$454

and

$538

for the

three

months ended

March 31, 2019

and

2018,

respectively.

Below-market leases as of

March 31, 2019,

amortize in future years as follows:

2019 (Remainder)	$	844
2020		517
2021		493
2022		423
2023		192
Thereafter		—
Total	$	2,469

XML

Note 6 - Notes Payable

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Long-term Debt [Text Block]

6.

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	March 31, 2019			December 31, 2018
Flatbush Gardens, Brooklyn, NY (a)	3/1/2028	3.50%	$	246,000		$	246,000
250 Livingston Street, Brooklyn, NY (b)	12/9/2020	LIBOR + 2.15%		75,000			75,000
141 Livingston Street, Brooklyn, NY (c)	6/1/2028	3.875%		76,959			77,333
Tribeca House, Manhattan, NY (d)	3/6/2028	4.506%		360,000			360,000
Aspen, Manhattan, NY (e)	7/1/2028	3.68%		67,861			68,199
107 Columbia Heights, Brooklyn, NY (f)	5/9/2020	LIBOR + 3.85%		64,731			64,731
10 West 65 th Street, Manhattan, NY (g)	11/1/2027	3.375%		34,350			34,350
Total debt			$	924,901		$	925,613
Unamortized debt issuance costs				(11,218	)		(12,049	)
Total debt, net of unamortized debt issuance costs			$	913,683		$	913,564

(a) The

$246,000

mortgage note agreement with New York Community Bank (“NYCB”), entered into on

February 21, 2018,

matures on

March 1, 2028,

and bears interest at

3.5%

for the

first

five

years and thereafter at the prime rate plus

2.75%,

with an option to fix the rate subject to the payment of a fee that fluctuates depending on the date the election is made. The note requires interest-only payments through

August 2020,

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

$75,000

mortgage note agreement with Citibank, N.A., entered into on

December 6, 2018,

matures on

December 9, 2020,

is subject to

three one

-year extension options, requires interest-only payments and bears interest at

one

-month LIBOR plus

2.15%

(

4.6%

as of

March 31, 2019).

The Company

may

prepay the note within

eighteen

months of maturity, in whole or in part, without a prepayment premium.

(c) The

$79,500

mortgage note agreement with NYCB matures on

June 1, 2028,

and bears interest at

3.875%.

The note required interest-only payments through

June 2017,

and monthly principal and interest payments of

$374

thereafter based on a

30

-year amortization schedule.

(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) On

May 9, 2017,

the Company entered into a

$59,000

mortgage note agreement with a unit of Blackstone Mortgage Trust, Inc., related to the

107

Columbia Heights acquisition. The Company also entered into a construction loan secured by the building with the same lender that will provide up to

$14,700

for eligible capital improvements and carrying costs, of which

$5,731

was drawn as of

March 31, 2019.

The notes mature on

May 9, 2020,

are subject to

two one

-year extension options, require interest-only payments and bear interest at

one

-month LIBOR plus

3.85%

(

6.3%

as of

March 31, 2019).

(g) On

October 27, 2017,

the Company entered into a

$34,350

mortgage note agreement with NYCB, related to the

10

West

65

th

Street acquisition. The note matures on

November 1, 2027,

and bears interest at

3.375%

for the

first

five

years and thereafter at the prime rate plus

2.75%,

subject to an option to fix the rate. The note requires interest-only payments through

October 2019,

and monthly principal and interest payments thereafter based on a

30

-year amortization schedule.

The following table summarizes principal payment requirements under terms as of

March 31, 2019:

2019 (Remainder)	$	2,250
2020		144,919
2021		8,553
2022		8,866
2023		9,191
Thereafter		751,122
Total	$	924,901

The Company recognized a loss on extinguishment of debt of

$6,981

during the

three

months ended

March 31, 2018,

in connection with the refinancing of debt on the Flatbush Gardens and Tribeca House properties. The loss consisted of prepayment and other fees and the write-off of unamortized debt costs.

XML

Note 7 - Rental Income Under Operating Leases

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Lessor, Operating Leases [Text Block]

7.

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

March 31, 2019,

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:

2019 (Remainder)	$	16,578
2020		18,559
2021		4,695
2022		4,260
2023		2,190
Thereafter		10,490
Total	$	56,772

The Company has commercial leases with the City of New York that comprised approximately

19%

and

19%

of total revenues for the

three

months ended

March 31, 2019

and

2018,

respectively.

XML

Note 8 - Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

8.

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 (e.g., carrying value of impaired real estate and long-lived assets). 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, interest rate caps, accounts payable and accrued liabilities, security deposits and notes payable. The carrying amount of cash and cash equivalents, restricted cash, receivables, 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:

	March 31, 2019		December 31, 2018
	(unaudited)
Carrying amount (excluding unamortized debt issuance costs)	$	924,901	$	925,613
Estimated fair value	$	943,616	$	927,561

The Company purchased interest rate caps in connection with the Tribeca House loans obtained on

November 9, 2016,

the loans obtained for the

107

Columbia Heights acquisition and the

250

Livingston Street loan obtained on

December 6, 2018.

On

April 27, 2018,

the Company terminated the Tribeca House instrument for net proceeds of

$385.

The fair value of the interest rate caps, which are classified as Level

2,

is estimated using market inputs and credit valuation inputs.

The estimated fair values of the interest rate caps are as follows:

Notional Amount		Related Property Loans	Maturity Date	Strike Rate		Estimated Fair Value at March 31, 2019		Estimated Fair Value at December 31, 2018
$	73,700	107 Columbia Heights	May 9, 2020		3.0%	$	2	$	24
$	75,000	250 Livingston Street	December 15, 2020		4.0%		—		—
Total fair value of derivative instruments included in prepaid expenses and other assets						$	2	$	24

These interest rate caps were

not

designated as hedges; accordingly, changes in fair value of the Tribeca House and

250

Livingston Street instruments are recognized in earnings, and changes in fair value of the

107

Columbia Heights instrument are recognized in real estate under development. Decreases (increases) in fair value of the Tribeca House and

250

Livingston Street instruments of

$0

and $(

227

) for the

three

months ended

March 31, 2019

and

2018,

respectively, are included in interest expense. Decreases (increases) in fair value of the

107

Columbia Heights instrument of

$22

and $(

69

) for the

three

months ended

March 31, 2019

and

2018,

respectively, are recognized in interest expense and capitalized to real estate under development.

The above disclosures regarding fair value of financial instruments are based on pertinent information available as of

March 31, 2019,

and

December 31, 2018,

respectively. Although the Company is

not

aware of any factors that would significantly affect the reasonableness of the estimated fair value amounts, such amounts have

not

been comprehensively revalued for purposes of these financial statements since those dates, and current estimates of fair value

may

differ significantly from the amounts presented herein.

XML

Note 9 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

9.

Commitments and Contingencies

Legal

On

July 3, 2017,

the New York Supreme Court (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, who brought an action 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

421

-g. The Court also awarded the plaintiffs their attorney’s fees and costs. The Court declared that the plaintiff-tenants were subject to rent stabilization requirements and referred the matter to a special referee to determine the amount of rent over-charges, if any. On

July 18, 2017,

the Court stayed the above decision; the Company subsequently appealed the decision to the Appellate Division, First Department. On

January 18, 2018, 

the Appellate Division unanimously ruled in favor of the Company, holding that the Company acted properly in de-regulating the apartments. The Appellate Division decision and order was subject to a motion for leave to appeal, which was granted on

April 24, 2018.

There can be

no

assurance as to the outcome of the appeal. Due to the inherent uncertainty and unpredictability of litigation, we cannot determine at this time with any specificity the Company’s potential liability. 

In addition to the above, the Company is subject to certain legal proceedings and claims arising in connection with its business, including a claim under the Americans with Disabilities Act of

1990

at the

141

Livingston Street property. 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.

Commitments

The Company is obligated to provide parking availability through

August 2020

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:

	Commercial			Residential			Total
Three months ended March 31, 2019		25	%		75	%		100	%
Three months ended March 31, 2018		27	%		73	%		100	%

XML

Note 10 - Related-party Transactions

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

10.

Related-Party Transactions

The Company recorded office and overhead expenses pertaining to a related company in general and administrative expense of

$87

and

$89

for the

three

months ended

March 31, 2019

and

2018,

respectively.

The Company paid legal and advisory fees to firms in which

two

of our directors were principals or partners of

$0

and

$1,880

for the

three

months ended

March 31, 2019

and

2018,

respectively.

XML

Note 11 - Segment Reporting

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

11.

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

107

Columbia Heights property, the

10

West

65

th

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

months ended

March 31, 2019

and

2018,

is as follows:

Three months ended March 31, 2019	Commercial		Residential		Total
Rental income	$	6,880	$	20,772	$	27,652
Total revenues		6,880		20,772		27,652
Property operating expenses		1,141		6,422		7,563
Real estate taxes and insurance		1,236		4,495		5,731
General and administrative		279		1,389		1,668
Depreciation and amortization		946		3,603		4,549
Total operating expenses		3,602		15,909		19,511
Income from operations	$	3,278	$	4,863	$	8,141

Three months ended March 31, 2018	Commercial		Residential		Total
Rental income	$	7,189	$	19,679	$	26,868
Total revenues		7,189		19,679		26,868
Property operating expenses		1,210		6,046		7,256
Real estate taxes and insurance		1,106		4,242		5,348
General and administrative		318		2,820		3,138
Depreciation and amortization		875		3,721		4,596
Total operating expenses		3,509		16,829		20,338
Income from operations	$	3,680	$	2,850	$	6,530

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

	Commercial		Residential		Total
March 31, 2019	$	244,163	$	852,991	$	1,097,154
December 31, 2018		245,940		855,068		1,101,008

The Company’s interest expense by segment for the

three

months ended

March 31, 2019

and

2018,

is as follows:

	Commercial		Residential		Total
Three months ended March 31,
2019	$	1,734	$	6,540	$	8,274
2018		1,821		6,722		8,543

The Company’s capital expenditures by segment for the

three

months ended

March 31, 2019

and

2018,

are as follows:

	Commercial		Residential		Total
Three months ended March 31,
2019	$	908	$	10,306	$	11,214
2018		238		12,331		12,569

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Segment Reporting, Policy [Policy Text Block]

Segments

At

March 31, 2019,

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 interest.

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

2017

-

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

March 31, 2019.

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 (years)	10	–	44
Tenant improvements	Shorter of useful life or lease term
Furniture, fixtures and equipment (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 and capital improvements 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. The Company periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances. If a tenant fails to make contractual payments beyond any allowance, the Company

may

recognize additional bad debt expense in future periods.

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 financial statements. 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 Loss

Comprehensive loss is comprised of net 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

months ended

March 31, 2019

and

2018,

the Company did

not

own any financial instruments for which the change in value was

not

reported in net loss accordingly and its comprehensive loss was its net loss as presented in the consolidated statements of operations.

Revenue [Policy Text Block]

Revenue Recognition

Rental revenue for commercial leases is recognized on a straight-line basis over the terms of the respective leases. Rental income attributable to residential leases and parking is recognized as earned, which is

not

materially different from the straight-line basis. Leases entered into by residents for apartment units are generally for

one

-year terms, renewable upon consent of both parties on an annual or monthly basis. Deferred rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.

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.

Share-based Payment Arrangement [Policy Text Block]

Stock-based Compensation

The Company accounts for stock-based compensation pursuant to Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic

718,

“Compensation — Stock Compensation.” As such, all equity-based awards are reflected as compensation expense in the Company’s consolidated financial statements over their vesting period based on the fair value at the date of grant.

In

March 2019,

the Company granted

152,734

LTIP units with a weighted average grant date fair value of

$13.35

per unit.

At

March 31, 2019

and

December 31, 2018,

there were

877,182

and

724,448

LTIP units outstanding, respectively, with a weighted grant-date fair value of

$12.70

and

$12.56

per unit, respectively. As of

March 31, 2019,

and

December 31, 2018,

there was

$2.7

million and

$0.8

million, respectively, of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under share incentive plans. As of

March 31, 2019,

the weighted average period over which the unrecognized compensation expense will be recorded is approximately

1.3

years.

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 or the Predecessor’s financial position or results of operations. The prior

three

years’ income tax returns are subject to review by the Internal Revenue Service.

The Tax Cuts and Jobs Act was enacted in

December 2017

and is generally effective beginning in

2018.

This new legislation is

not

expected to have a material adverse effect on the Company’s business and allows non-corporate shareholders to deduct a portion of the Company’s qualified REIT dividends.

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

Fair Value Measurements

Refer to Note

8,

“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 (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

March 31, 2019,

the Company has

no

derivatives for which it applies hedge accounting.

Earnings Per Share, Policy [Policy Text Block]

Loss Per Share

Basic and diluted loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding. As of

March 31, 2019

and

2018,

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 loss per share pursuant to the

two

-class method. The Company did

not

have dilutive securities as of

March 31, 2019

or

2018.

The effect of the conversion of the

26,317

Class B LLC units outstanding is

not

reflected in the computation of basic and diluted loss per share, as the effect would be anti-dilutive. The net loss allocable to such units is reflected as noncontrolling 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 March 31,
(in thousands, except per share amounts)	2019			2018
Numerator
Net loss attributable to common stockholders	$	(54	)	$	(3,630	)
Less: income attributable to participating securities		(69	)		(62	)
Subtotal	$	(123	)	$	(3,692	)
Denominator
Weighted average common shares outstanding		17,813			17,813
Basic and diluted net loss per share attributable to common stockholders	$	(0.01	)	$	(0.21	)

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Pronouncements

In

March 2019,

FASB issued ASU

2019

-

01,

“Leases (Topic

842

), Codification Improvements.” There are

three

codification updates to Topic

842

covered by this ASU: Issue

1

provides guidance on how to compute fair value of leased items for lessors who are non-dealers or manufacturers; Issue

2

relates to cash flow presentation for lessors of sales-type and direct financing leases; and Issue

3

clarifies that certain transition disclosures will only be required in annual disclosures.

In

December 2018,

FASB issued ASU

2018

-

20,

“

Leases (Topic

842

), Narrow-Scope Improvements for Lessors.” This ASU modifies ASU

2016

-

02

to permit lessors, as an accounting policy election,

not

to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments

not

included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value-added, and some excise taxes and excludes real estate taxes). The Company has elected

not

to evaluate whether the aforementioned costs are lessor or lessee costs. This ASU also provides that certain lessor costs require lessors to exclude from variable payments, and therefore revenue, specifically lessor costs paid by lessees directly to

third

parties. The amendments also require lessors to account for costs excluded from the consideration of a contract that are paid by the lessor and reimbursed by the lessee as variable payments. A lessor will record those reimbursed costs as revenue.

In

May 2014,

FASB issued ASU

2014

-

09,

 “Revenue from Contracts with Customers,” which prescribes a single, common revenue standard that supersedes nearly all existing revenue recognition guidance under U.S. GAAP, including most industry-specific requirements. The core principle of ASU

2014

-

09

is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU

2014

-

09

outlines a

five

-step model to achieve this core principle and, in doing so, more judgment and estimates

may

be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after

December 15, 2018,

and interim periods within annual reporting periods beginning after

December 15, 2019. 

The Company’s revenues are primarily derived from rental income, which is scoped out from this standard and is currently accounted for in accordance with ASC Topic

840,

Leases. Less than

5%

of the Company’s revenues in

2018

would have fallen under the scope of this standard and comprises, principally, commercial operating expense reimbursements and garage and other income from residential tenants; for these revenues, the Company adopted this standard effective

January 1, 2019,

using the modified retrospective approach, applying the provisions to open contracts as of the date of adoption. The adoption of this standard did

not

have a material impact on the timing or amounts of the Company’s revenues.

For the approximate

5%

of rental revenue that is subject to the new revenue recognition standard, the Company’s disaggregated revenue streams are disclosed in the tables below for the

three

months ended

March 31, 2019

and

2018:

Three Months Ended March 31, 2019
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	20,350	$	5,940	$	26,290		95.1	%
Operating expense recoveries	Revenue Recognition		120		795		915		3.3	%
Other	Revenue Recognition		302		145		447		1.6	%
Total revenues		$	20,772	$	6,880	$	27,652		100.0	%

Three Months Ended March 31, 2018
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	19,297	$	6,271	$	25,568		95.2	%
Operating expense recoveries	Revenue Recognition		122		735		857		3.2	%
Other	Revenue Recognition		260		183		443		1.6	%
Total revenues		$	19,679	$	7,189	$	26,868		100.0	%

In

February 2016,

FASB issued ASU

2016

-

02,

“Leases

.

” ASU

2016

-

02

supersedes the current accounting for leases and while retaining

two

distinct types of leases, finance and operating, requires lessees to recognize most leases on their balance sheets and makes targeted changes to lessor accounting. In

July 2018,

FASB issued ASU

2018

-

10,

“Codification Improvements to Topic

842,

Leases,” which provides minor clarifications and corrections to ASU

2016

-

02,

“Leases (Topic

842

).” Further, in

July 2018,

the FASB issued ASU

2018

-

11,

“Leases (Topic

842

): Targeted Improvements.” This amendment provides a new practical expedient that allows lessors, by class of underlying asset, to avoid separating lease and associated non-lease components within a contract if certain criteria are met: (i) the timing and pattern of transfer for the non-lease component and the associated lease component are the same and (ii) the stand-alone lease component would be classified as an operating lease if accounted for separately. These pronouncements are effective for fiscal years beginning after

December 15, 2019,

and early adoption is permitted. The Company will adopt this standard effective

January 1, 2020

and is currently evaluating the impact of adoption on its consolidated financial statements. As lessor, the Company expects that the adoption of ASU

2016

-

02

(as amended by subsequent ASUs) will

not

change the timing of revenue recognition of the Company’s rental revenues. As lessee, the Company is party to certain office equipment leases with future payment obligations for which the Company expects to record right-of-use assets and lease liabilities at the present value of the remaining minimum rental payments upon adoption of this standard. 

In

August 2018,

FASB issued ASU

2018

-

13,

“Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC

820.

This guidance is effective in fiscal years beginning after

December 15, 2019

with early adoption permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

In

August 2018,

the Securities and Exchange Commission issued a final rule that amends certain of its disclosure requirements. The rule simplifies various disclosure requirements for public companies including primarily that it (i) eliminates the requirement for public companies to disclose in their filings a schedule of earnings to fixed charges, (ii) requires an analysis of changes in stockholders’ equity for the current and comparative year-to-date interim periods in interim reports, and (iii) reduces the requirements for market price information disclosures in annual reports. These changes were effective for public companies beginning on

November 5, 2018.

In

July 2018,

FASB issued ASU

2018

-

09,

“Codification Improvements.” These amendments provide clarifications and corrections to certain ASC subtopics including the following:

470

-

50

(Debt – Modifications and Extinguishments),

480

-

10

(Distinguishing Liabilities from Equity – Overall),

718

-

740

(Compensation – Stock Compensation – Income Taxes),

805

-

740

(Business Combinations – Income Taxes),

815

-

10

(Derivatives and Hedging – Overall) and

820

-

10

(Fair Value Measurement – Overall). The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

In

June 2018,

FASB issued ASU

2018

-

07,

“Compensation – Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments provide specific guidance for transactions for acquiring goods and services from nonemployees and specify that Topic

718

applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic

718

does

not

apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic

606,

“Revenue from Contracts with Customers.” This guidance is effective for the Company for fiscal years beginning after

December 15, 2019,

and interim periods beginning after

December 15, 2020.

Early adoption is permitted but

not

earlier than the adoption of Topic

606.

The Company does

not

believe that this guidance will have a material effect on its consolidated financial statements as it has

not

historically issued share-based payments in exchange for goods or services to be consumed within its operations.

In

February 2017,

FASB issued ASU

2017

-

05,

“Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic

610

-

20

),” to add guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. ASU

2017

-

05

reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. ASU

2017

-

05

is effective for the Company for its annual reporting beginning after

December 15, 2018,

including interim reporting periods beginning after

December 15, 2019.

The Company adopted this standard effective

January 1, 2019.

The adoption of this standard is

not

expected to have a material impact on our consolidated financial statements.

In

November 2016,

FASB issued ASU

2016

-

18

“Statement of Cash Flows (Topic

230

) – Restricted Cash”. The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU does

not

provide a definition of restricted cash or restricted cash equivalents. The ASU is effective for the Company beginning after

December 15, 2018,

and interim periods within fiscal years beginning after

December 15, 2019.

Early adoption is permitted, including adoption in an interim period. The Company has adopted this standard effective

January 1, 2019.

In

August 2016,

FASB issued ASU

2016

-

15,

“Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments (A consensus of the Emerging Issues Task Force),” which provides specific guidance on

eight

cash flow classification issues and how to reduce diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for the Company beginning after

December 15, 2018,

and interim periods within fiscal years beginning after

December 15, 2019.

Early adoption is permitted. The Company has adopted this standard effective

January 1, 2019.

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Note 3 - Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

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

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

	Three Months Ended March 31,
(in thousands, except per share amounts)	2019			2018
Numerator
Net loss attributable to common stockholders	$	(54	)	$	(3,630	)
Less: income attributable to participating securities		(69	)		(62	)
Subtotal	$	(123	)	$	(3,692	)
Denominator
Weighted average common shares outstanding		17,813			17,813
Basic and diluted net loss per share attributable to common stockholders	$	(0.01	)	$	(0.21	)

Disaggregation of Revenue [Table Text Block]

Three Months Ended March 31, 2019
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	20,350	$	5,940	$	26,290		95.1	%
Operating expense recoveries	Revenue Recognition		120		795		915		3.3	%
Other	Revenue Recognition		302		145		447		1.6	%
Total revenues		$	20,772	$	6,880	$	27,652		100.0	%

Three Months Ended March 31, 2018
		Amount of Rental Income
Revenue Stream	Applicable Standard	Residential		Commercial		Total		% of Rental Income
Leasing	Leases	$	19,297	$	6,271	$	25,568		95.2	%
Operating expense recoveries	Revenue Recognition		122		735		857		3.2	%
Other	Revenue Recognition		260		183		443		1.6	%
Total revenues		$	19,679	$	7,189	$	26,868		100.0	%

XML

Note 4 - Deferred Costs and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

	March 31, 2019			December 31, 2018
	(unaudited)
Deferred costs	$	324		$	286
Above-market leases		480			480
Lease origination costs		3,092			3,110
In-place leases		7,347			8,078
Real estate tax abatements		9,143			12,571
Total deferred costs and intangible assets		20,386			24,525
Less accumulated amortization		(10,721	)		(14,561	)
Total deferred costs and intangible assets, net	$	9,665		$	9,964

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

2019 (Remainder)	$	848
2020		799
2021		769
2022		737
2023		591
Thereafter		5,921
Total	$	9,665

XML

Note 5 - Below-market Lease Intangibles (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Below-Market Lease Intangibles Liabilities [Table Text Block]

	March 31, 2019			December 31, 2018
	(unaudited)
Below-market leases	$	23,178		$	23,178
Less accumulated amortization		(20,709	)		(20,255	)
Below-market leases, net	$	2,469		$	2,923

Below Market Lease, Future Amortization Income [Table Text Block]

2019 (Remainder)	$	844
2020		517
2021		493
2022		423
2023		192
Thereafter		—
Total	$	2,469

XML

Note 6 - Notes Payable (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

Property	Maturity	Interest Rate	March 31, 2019			December 31, 2018
Flatbush Gardens, Brooklyn, NY (a)	3/1/2028	3.50%	$	246,000		$	246,000
250 Livingston Street, Brooklyn, NY (b)	12/9/2020	LIBOR + 2.15%		75,000			75,000
141 Livingston Street, Brooklyn, NY (c)	6/1/2028	3.875%		76,959			77,333
Tribeca House, Manhattan, NY (d)	3/6/2028	4.506%		360,000			360,000
Aspen, Manhattan, NY (e)	7/1/2028	3.68%		67,861			68,199
107 Columbia Heights, Brooklyn, NY (f)	5/9/2020	LIBOR + 3.85%		64,731			64,731
10 West 65 th Street, Manhattan, NY (g)	11/1/2027	3.375%		34,350			34,350
Total debt			$	924,901		$	925,613
Unamortized debt issuance costs				(11,218	)		(12,049	)
Total debt, net of unamortized debt issuance costs			$	913,683		$	913,564

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

2019 (Remainder)	$	2,250
2020		144,919
2021		8,553
2022		8,866
2023		9,191
Thereafter		751,122
Total	$	924,901

XML

Note 7 - Rental Income Under Operating Leases (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

2019 (Remainder)	$	16,578
2020		18,559
2021		4,695
2022		4,260
2023		2,190
Thereafter		10,490
Total	$	56,772

XML

Note 8 - Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

	March 31, 2019		December 31, 2018
	(unaudited)
Carrying amount (excluding unamortized debt issuance costs)	$	924,901	$	925,613
Estimated fair value	$	943,616	$	927,561

Schedule of Derivative Instruments [Table Text Block]

Notional Amount		Related Property Loans	Maturity Date	Strike Rate		Estimated Fair Value at March 31, 2019		Estimated Fair Value at December 31, 2018
$	73,700	107 Columbia Heights	May 9, 2020		3.0%	$	2	$	24
$	75,000	250 Livingston Street	December 15, 2020		4.0%		—		—
Total fair value of derivative instruments included in prepaid expenses and other assets						$	2	$	24

XML

Note 9 - Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

	Commercial			Residential			Total
Three months ended March 31, 2019		25	%		75	%		100	%
Three months ended March 31, 2018		27	%		73	%		100	%

XML

Note 11 - Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

Three months ended March 31, 2019	Commercial		Residential		Total
Rental income	$	6,880	$	20,772	$	27,652
Total revenues		6,880		20,772		27,652
Property operating expenses		1,141		6,422		7,563
Real estate taxes and insurance		1,236		4,495		5,731
General and administrative		279		1,389		1,668
Depreciation and amortization		946		3,603		4,549
Total operating expenses		3,602		15,909		19,511
Income from operations	$	3,278	$	4,863	$	8,141

Three months ended March 31, 2018	Commercial		Residential		Total
Rental income	$	7,189	$	19,679	$	26,868
Total revenues		7,189		19,679		26,868
Property operating expenses		1,210		6,046		7,256
Real estate taxes and insurance		1,106		4,242		5,348
General and administrative		318		2,820		3,138
Depreciation and amortization		875		3,721		4,596
Total operating expenses		3,509		16,829		20,338
Income from operations	$	3,680	$	2,850	$	6,530

	Commercial		Residential		Total
March 31, 2019	$	244,163	$	852,991	$	1,097,154
December 31, 2018		245,940		855,068		1,101,008

	Commercial		Residential		Total
Three months ended March 31,
2019	$	1,734	$	6,540	$	8,274
2018		1,821		6,722		8,543

	Commercial		Residential		Total
Three months ended March 31,
2019	$	908	$	10,306	$	11,214
2018		238		12,331		12,569

XML

Note 1 - Organization (Details Textual) $ / shares in Units, $ in Millions	Oct. 27, 2017 USD ($)	May 09, 2017 USD ($)	Feb. 09, 2017 USD ($) $ / shares shares	Mar. 31, 2019 ft² a	Aug. 03, 2015
Formation Transaction, Units Converted to Commons Shares, Ratio					1
Percentage of Aggregate Cash Distributions From, and Profits and Losses				40.40%
Residential Rental [Member] | Residential Property At 10 West 65th Street [Member]
Number of Units	82
Business Combination, Consideration Transferred, Total | $	$ 79.0
107 Columbia Heights in Brooklyn, NY [Member]
Number of Stories				11
107 Columbia Heights in Brooklyn, NY [Member] | Apartment Building [Member]
Number of Units		161
Business Combination, Consideration Transferred, Total | $		$ 87.5
Gross Leasable Area				102,000
Tribeca House properties in Manhattan [Member]
Number of Buildings				2
Tribeca House properties in Manhattan [Member] | Residential Rental [Member]
Gross Leasable Area				483,000
Tribeca House properties in Manhattan [Member] | Rental Retail and Parking [Member]
Gross Leasable Area				77,000
Tribeca House properties in Manhattan, Building One [Member]
Number of Stories				21
Tribeca House properties in Manhattan, Building Two [Member]
Number of Stories				12
Flatbush Gardens in Brooklyn [Member] | Multifamily [Member]
Number of Buildings				59
Number of Rentable Units				2,496
141 Livingston Street in Brooklyn [Member] | Office Building [Member]
Number of Stories				15
Gross Leasable Area				216,000
250 Livingston Street in Brooklyn [Member] | Office and Residential Building [Member]
Number of Stories				12
Gross Leasable Area | a				370,000
Aspen [Member]
Number of Stories				7
Aspen [Member] | Residential Rental [Member]
Gross Leasable Area				166,000
Aspen [Member] | Retail Site [Member]
Gross Leasable Area				21,000
Property at 10 W 65th St. Manhattan, NY [Member] | Residential Rental [Member]
Number of Stories				6
Gross Leasable Area				76,000
IPO [Member] | Common Stock [Member]
Stock Issued During Period, Shares, New Issues | shares			6,390,149
Shares Issued, Price Per Share | $ / shares			$ 13.50
Proceeds from Issuance Initial Public Offering | $			$ 78.7

XML

Note 2 - Issuance of Common Stock (Details Textual) - Director [Member] $ in Thousands	Apr. 09, 2019 USD ($) shares
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture, Total | shares	1,917
Proceeds from Issuance of Common Stock | $	$ 0

XML

Note 3 - Significant Accounting Policies (Details Textual) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) $ / shares shares	Mar. 31, 2018 shares	Dec. 31, 2018 USD ($) $ / shares shares
Number of Operating Segments	2
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $	$ 2,700		$ 800
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	1 year 109 days
Income Tax Expense (Benefit), Total | $	$ 0
Derivative, Amount of Hedged Item | $	$ 0
Weighted Average Number Diluted Shares Outstanding Adjustment, Total	0	0
Percentage of Rental Revenue Subject to New Revenue Recognition Standard	5.00%
Class B LLC Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	26,317
LTIP Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	152,734
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares	$ 13.35
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance	877,182		724,448
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares	$ 12.70		$ 12.56

XML

Note 3 - Significant Accounting Policies - Estimated Useful Lives of Assets (Details)	3 Months Ended
	Mar. 31, 2019
Building and Building Improvements [Member] | Minimum [Member]
Estimated useful life (Year)	10 years
Building and Building Improvements [Member] | Maximum [Member]
Estimated useful life (Year)	44 years
Tenant Improvements [Member]
Estimated useful life	Shorter of useful life or lease term
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Estimated useful life (Year)	3 years
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Estimated useful life (Year)	15 years

XML

Note 3 - Significant Accounting Policies - Basic and Diluted Earnings (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net loss attributable to common stockholders	$ (54)	$ (3,630)
Less: income attributable to participating securities	(69)	(62)
Subtotal	$ (123)	$ (3,692)
Weighted average common shares outstanding (in shares)	17,813	17,813
Basic and diluted net loss per share attributable to common stockholders (in dollars per share)	$ (0.01)	$ (0.21)

XML

Note 3 - Significant Accounting Policies - Disaggregated Revenue Streams (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
TOTAL REVENUES	$ 27,652	$ 26,868
Percent of Rental Income	100.00%	100.00%
Leases [Member]
TOTAL REVENUES	$ 26,290	$ 25,568
Percent of Rental Income	95.10%	95.20%
Other Expense Recoveries [Member]
TOTAL REVENUES	$ 915	$ 857
Percent of Rental Income	3.30%	3.20%
Other Revenue Stream [Member]
TOTAL REVENUES	$ 447	$ 443
Percent of Rental Income	1.60%	1.60%
Residential Segment [Member]
TOTAL REVENUES	$ 20,772	$ 19,679
Residential Segment [Member] | Leases [Member]
TOTAL REVENUES	20,350	19,297
Residential Segment [Member] | Other Expense Recoveries [Member]
TOTAL REVENUES	120	122
Residential Segment [Member] | Other Revenue Stream [Member]
TOTAL REVENUES	302	260
Commercial Segment [Member]
TOTAL REVENUES	6,880	7,189
Commercial Segment [Member] | Leases [Member]
TOTAL REVENUES	5,940	6,271
Commercial Segment [Member] | Other Expense Recoveries [Member]
TOTAL REVENUES	795	735
Commercial Segment [Member] | Other Revenue Stream [Member]
TOTAL REVENUES	$ 145	$ 183

XML

Note 4 - Deferred Costs and Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Amortization of Lease Origination Costs and In-place Lease Intangible Assets	$ 188	$ 553
Write off of Fully Amortized Lease Origination Costs and In-place Leases	749
Amortization of Real Estate Abatements	119	118
Write off of Fully Amortized Real Estate Tax Abatements	3,428
Above Market Leases [Member]
Amortization of Intangible Assets, Total	$ 30	$ 59

XML

Note 4 - Deferred Costs and Intangible Assets - Deferred Costs and Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Deferred costs	$ 324	$ 286
Above-market leases	480	480
Lease origination costs	3,092	3,110
In-place leases	7,347	8,078
Real estate tax abatements	9,143	12,571
Total deferred costs and intangible assets	20,386	24,525
Less accumulated amortization	(10,721)	(14,561)
Total	$ 9,665	$ 9,964

XML

Note 4 - Deferred Costs and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
2019 (Remainder)	$ 848
2020	799
2021	769
2022	737
2023	591
Thereafter	5,921
Total	$ 9,665	$ 9,964

XML

Note 5 - Below-market Lease Intangibles (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Amortization of Below Market Lease	$ 454	$ 538

XML

Note 5 - Below-market Lease Intangibles - Below-market Lease Intangibles Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Below-market leases	$ 23,178	$ 23,178
Less accumulated amortization	(20,709)	(20,255)
Total	$ 2,469	$ 2,923

XML

Note 5 - Below-market Lease Intangibles - Future Amortization Income (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
2019 (Remainder)	$ 844
2020	517
2021	493
2022	423
2023	192
Thereafter
Total	$ 2,469	$ 2,923

XML

Note 6 - Notes Payable (Details Textual) - USD ($) $ in Thousands				3 Months Ended		12 Months Ended	60 Months Ended	132 Months Ended
	Dec. 06, 2018	Feb. 21, 2018	May 09, 2017	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Nov. 01, 2027	Jul. 31, 2028	Jun. 30, 2028	Oct. 27, 2017	Jun. 27, 2016	May 11, 2016
Long-term Debt, Gross				$ 924,901		$ 925,613
Gain (Loss) on Extinguishment of Debt, Total					$ (6,981)
Secured First Mortgage Loan [Member] | New York Community Bank [Member]
Long-term Debt, Gross		$ 246,000
Debt Instrument, Interest Rate, Stated Percentage		3.50%
Debt Instrument, Interest Only Payments Period		2 years 180 days
Secured First Mortgage Loan [Member] | New York Community Bank [Member] | Prime Rate [Member]
Derivative, Basis Spread on Variable Rate		2.75%
Secured First Mortgage Loan [Member] | Citibank NA [Member]
Long-term Debt, Gross	$ 75,000
Debt Instrument, Interest Rate, Effective Percentage				4.60%
Debt Instrument, Term	18 years
Secured First Mortgage Loan [Member] | Citibank NA [Member] | London Interbank Offered Rate (LIBOR) [Member]
Derivative, Basis Spread on Variable Rate	2.15%
Mortgages 2 [Member] | New York Community Bank [Member] | 141 Livingston Street, Brooklyn [Member]
Long-term Debt, Gross												$ 79,500
Debt Instrument, Interest Rate, Stated Percentage												3.875%
Mortgages 2 [Member] | New York Community Bank [Member] | 141 Livingston Street, Brooklyn [Member] | Forecast [Member]
Debt Instrument, Periodic Payment, Total									$ 374
Fixed Interest Rate Financing [Member]
Long-term Debt, Gross		$ 360,000
Debt Instrument, Interest Rate, Stated Percentage		4.506%
Mortgages [Member] | New York Community Bank [Member] | Property at 10 W 65th St. Manhattan, NY [Member]
Long-term Debt, Gross										$ 34,350
Debt Instrument, Interest Rate, Stated Percentage										3.375%
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]
Long-term Debt, Gross											$ 70,000
Debt Instrument, Interest Rate, Stated Percentage											3.68%
Mortgages [Member] | Capital One Multifamily Finance LLC [Member] | Aspen [Member] | Forecast [Member]
Debt Instrument, Periodic Payment, Total								$ 321
Mortgages [Member] | Blackstone Real Estate Special Situations Advisors LLC [Member] | 107 Columbia Heights in Brooklyn, NY [Member]
Long-term Debt, Gross			$ 59,000
Mortgages [Member] | Blackstone Real Estate Special Situations Advisors LLC [Member] | London Interbank Offered Rate (LIBOR) [Member] | 107 Columbia Heights in Brooklyn, NY [Member]
Debt Instrument, Interest Rate, Effective Percentage				6.30%
Debt Instrument, Basis Spread on Variable Rate			3.85%
Construction Loans [Member] | Blackstone Real Estate Special Situations Advisors LLC [Member] | 107 Columbia Heights in Brooklyn, NY [Member]
Debt Agreement Maximum Borrowing Capacity			$ 14,700
Proceeds from Issuance of Long-term Debt, Total						$ 5,731

XML

Note 6 - Notes Payable - Mortgages and Mezzanine Note Payable (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Dec. 31, 2018
Debt, gross		$ 924,901	$ 925,613
Unamortized debt issuance costs		(11,218)	(12,049)
Total debt, net of unamortized debt issuance costs		$ 913,683	913,564
Mortgages and Mezzanine Notes 1[Member] | Flatbush Gardens, Brooklyn, NY [Member]
Maturity date	[1]	Mar. 01, 2028
Interest rate	[1]	3.50%
Debt, gross	[1]	$ 246,000	246,000
Mortgages and Mezzanine Notes 1[Member] | 250 Livingston Street in Brooklyn [Member]
Maturity date	[2]	Dec. 09, 2020
Debt, gross	[2]	$ 75,000	75,000
Mortgages and Mezzanine Notes 1[Member] | 250 Livingston Street in Brooklyn [Member] | London Interbank Offered Rate (LIBOR) [Member]
Interest rate	[2]	2.15%
Mortgages and Mezzanine Notes 1[Member] | Tribeca House Properties [Member]
Maturity date	[3]	Mar. 06, 2028
Debt, gross	[3]	$ 360,000	360,000
Mortgages and Mezzanine Notes 1[Member] | Tribeca House Properties [Member] | London Interbank Offered Rate (LIBOR) [Member]
Interest rate	[3]	4.506%
Mortgages and Mezzanine Notes 1[Member] | Aspen [Member]
Maturity date	[4]	Jul. 01, 2028
Interest rate	[4]	3.68%
Debt, gross	[4]	$ 67,861	68,199
Mortgages and Mezzanine Notes 1[Member] | 107 Columbia Heights in Brooklyn, NY [Member]
Maturity date	[5]	May 09, 2020
Debt, gross	[5]	$ 64,731	64,731
Mortgages and Mezzanine Notes 1[Member] | 107 Columbia Heights in Brooklyn, NY [Member] | London Interbank Offered Rate (LIBOR) [Member]
Interest rate	[5]	3.85%
Mortgages and Mezzanine Notes 1[Member] | Property at 10 W 65th St. Manhattan, NY [Member]
Maturity date	[6]	Nov. 01, 2027
Interest rate	[6]	3.375%
Debt, gross	[6]	$ 34,350	34,350
Mortgages and Mezzanine Notes 2[Member] | 141 Livingston Street, Brooklyn [Member]
Maturity date	[7]	Jun. 01, 2028
Interest rate	[7]	3.875%
Debt, gross	[7]	$ 76,959	77,333
Mortgages and Mezzanine Notes [Member]
Unamortized debt issuance costs		$ (11,218)	$ (12,049)

[1] The $246,000 mortgage note agreement with New York Community Bank ("NYCB"), entered into on February 21, 2018, matures on March 1, 2028, and bears interest at 3.5% for the first five years and thereafter at the prime rate plus 2.75%, with an option to fix the rate subject to the payment of a fee that fluctuates depending on the date the election is made. The note requires interest-only payments through August 2020, 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 $75,000 mortgage note agreement with Citibank, N.A., entered into on December 6, 2018, matures on December 9, 2020, is subject to three one-year extension options, requires interest-only payments and bears interest at one-month LIBOR plus 2.15% (4.6% as of March 31, 2019). The Company may prepay the note within eighteen months of maturity, in whole or in part, without a prepayment premium.

[3] 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.

[4] 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.

[5] On May 9, 2017, the Company entered into a $59,000 mortgage note agreement with a unit of Blackstone Mortgage Trust, Inc., related to the 107 Columbia Heights acquisition. The Company also entered into a construction loan secured by the building with the same lender that will provide up to $14,700 for eligible capital improvements and carrying costs, of which $5,731 was drawn as of March 31, 2019. The notes mature on May 9, 2020, are subject to two one-year extension options, require interest-only payments and bear interest at one-month LIBOR plus 3.85% (6.3% as of March 31, 2019).

[6] On October 27, 2017, the Company entered into a $34,350 mortgage note agreement with NYCB, related to the 10 West 65th Street acquisition. The note matures on November 1, 2027, and bears interest at 3.375% for the first five years and thereafter at the prime rate plus 2.75%, subject to an option to fix the rate. The note requires interest-only payments through October 2019, and monthly principal and interest payments thereafter based on a 30-year amortization schedule.

[7] The $79,500 mortgage note agreement with NYCB matures on June 1, 2028, and bears interest at 3.875%. The note required interest-only payments through June 2017, and monthly principal and interest payments of $374 thereafter based on a 30-year amortization schedule.

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Note 6 - Notes Payable - Summarizes Principal Payment (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
2019 (Remainder)	$ 2,250
2020	144,919
2021	8,553
2022	8,866
2023	9,191
Thereafter	751,122
Total	$ 924,901	$ 925,613

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Note 7 - Rental Income Under Operating Leases (Details Textual)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Total Revenue [Member] | Customer Concentration Risk [Member] | City of New York [Member]
Concentration Risk, Percentage	19.00%	19.00%

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Note 7 - Rental Income Under Operating Leases - Minimum Future Cash Rents Receivable (Details) $ in Thousands	Mar. 31, 2019 USD ($)
2019 (Remainder)	$ 16,578
2020	18,559
2021	4,695
2022	4,260
2023	2,190
Thereafter	10,490
Total	$ 56,772

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Note 8 - Fair Value of Financial Instruments (Details Textual) - USD ($)		3 Months Ended
	Apr. 27, 2018	Mar. 31, 2019	Mar. 31, 2018
Tribeca House Instrument [Member]
Proceeds from Derivative Instrument, Investing Activities	$ 385,000
Interest Rate Cap 1 [Member] | Not Designated as Hedging Instrument [Member]
Derivative, Gain (Loss) on Derivative, Net, Total		$ 0	$ (227,000)
Interest Rate Cap 2 [Member] | Not Designated as Hedging Instrument [Member]
Derivative, Gain (Loss) on Derivative, Net, Total		$ 22,000	$ (69,000)

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Note 8 - Fair Value of Financial Instruments - Carrying Amount and Fair Value of Mortgage Notes Payable (Details) - Mortgages [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Reported Value Measurement [Member]
Mortgage notes payable	$ 924,901	$ 925,613
Estimate of Fair Value Measurement [Member]
Mortgage notes payable	$ 943,616	$ 927,561

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Note 8 - Fair Value of Financial Instruments - Interest Rate Caps in Connection With Mortgage Loans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Estimated fair market value	$ 2	$ 24
Interest Rate Cap 1 [Member]
Notional amount	$ 73,700
Maturity date	May 09, 2020
Strike rate	3.00%
Estimated fair market value	$ 2	$ 24
Interest Rate Cap 2 [Member]
Notional amount	$ 75,000
Maturity date	Dec. 15, 2020
Strike rate	4.00%

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Note 9 - Commitments and Contingencies (Details Textual) $ in Thousands	Mar. 31, 2019 USD ($)
Obligated to Provide Parking [Member]
Other Commitment, Total	$ 205

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Note 9 - Commitments and Contingencies - Summary of Concentrations Risk by Segment (Details) - Total Revenue [Member] - Geographic Concentration Risk [Member] - New York City [Member]	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Concentration risk	100.00%	100.00%
Commercial Segment [Member]
Concentration risk	25.00%	27.00%
Residential Segment [Member]
Concentration risk	75.00%	73.00%

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Note 10 - Related-party Transactions (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Firms in Which Two Directors Were Principals or Partners [Member]
Related Party Transaction, Amounts of Transaction	$ 0	$ 1,880,000
General and Administrative Expense [Member] | Overhead Charged Related to Office Expenses [Member]
Related Party Transaction, Amounts of Transaction	$ 87,000	$ 89,000

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Note 11 - Segment Reporting - Income From Operations by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Total revenues	$ 27,652	$ 26,868
Property operating expenses	7,563	7,256
Real estate taxes and insurance	5,731	5,348
General and administrative	1,668	3,138
Depreciation and amortization	4,549	4,596
Total operating expenses	19,511	20,338
Income from operations	8,141	6,530
Total Assets	1,097,154		$ 1,101,008
Interest expense	8,274	8,543
Capital expenditures	11,214	12,569
Rental Income [Member]
Total revenues	27,652	26,868
Commercial Segment [Member]
Total revenues	6,880	7,189
Property operating expenses	1,141	1,210
Real estate taxes and insurance	1,236	1,106
General and administrative	279	318
Depreciation and amortization	946	875
Total operating expenses	3,602	3,509
Income from operations	3,278	3,680
Total Assets	244,163		245,940
Interest expense	1,734	1,821
Capital expenditures	908	238
Commercial Segment [Member] | Rental Income [Member]
Total revenues	6,880	7,189
Residential Segment [Member]
Total revenues	20,772	19,679
Property operating expenses	6,422	6,046
Real estate taxes and insurance	4,495	4,242
General and administrative	1,389	2,820
Depreciation and amortization	3,603	3,721
Total operating expenses	15,909	16,829
Income from operations	4,863	2,850
Total Assets	852,991		$ 855,068
Interest expense	6,540	6,722
Capital expenditures	10,306	12,331
Residential Segment [Member] | Rental Income [Member]
Total revenues	$ 20,772	$ 19,679