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 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 September 30, 2018, 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 481,000 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 381,000 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 10 -story residential building with approximately 154,000 gross square feet of space; and  10 West 65 th Street in Manhattan, a 6 -story 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 Company is the sole general partner of the Operating Partnership and the Operating Partnership is the sole managing member of the LLCs that comprised the Predecessor. At September 30, 2018, the Companys 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 Companys assets and liabilities. On June 21, 2017, the Company redeemed its Series A cumulative non-voting preferred stock for $145.