Clipper Realty Inc. 8-K

What Happened

• Clipper Realty Inc. announced that its subsidiary, 250 Livingston Owner LLC, received a default notice on December 18, 2025 from the special servicer/trustee for the holders of the GSMS 2019‑GC40 Mortgage Trust certificates relating to a $125.0 million loan secured by 250 Livingston Street in Brooklyn. The loan (evidenced by promissory notes) bears interest at 3.63%, is interest‑only, and matures June 6, 2029. The Company and Clipper Realty L.P. are guarantors.
• The default follows prior missed funding events (failure to make a required deposit for the September 2025 interest/tax escrow and related actions earlier in October and November 2025). As of December 22, 2025, the Company believes it owed about $3.4 million in interest and default interest. The servicer’s notice warned it could pursue remedies including foreclosure or reconveyance. The Company is negotiating a Consent and Cooperation Agreement for a sale of the property, but there is no assurance it will be completed.

Key Details

• Loan principal: $125.0 million; interest rate: 3.63%; interest‑only payments; maturity: June 6, 2029.
• Default notice received: December 18, 2025; estimated interest/default interest owed: ~$3.4 million (as of Dec 22, 2025).
• Related matter at 141 Livingston: loans secured by that property total $100 million; proposed settlement could require a $10 million letter of credit and up to $3 million in fees, while the lender would waive claimed penalties, dismiss foreclosure actions with prejudice, and approve a five‑year lease extension effective December 28, 2025.
• All agreements described are not guaranteed and remain subject to negotiation and final documentation.

Why It Matters

• A default and potential foreclosure on the $125M 250 Livingston loan could materially affect Clipper’s asset base, liquidity, and could trigger guarantor liabilities for the Company and its subsidiary. Investors should note the company’s exposure tied to these two Brooklyn properties and the possible cash or credit commitments (e.g., a $10M letter of credit and up to $3M in fees) contemplated in the 141 Livingston settlement talks.
• The filing is forward‑looking about potential resolutions; there is no certainty a sale or settlement will occur. Retail investors should monitor future filings for outcomes of the negotiations, any foreclosure actions, and any material impact on financial results or balance sheet items.