The risk factors disclosed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, set forth information relating to various risks and uncertainties that could materially adversely affect our business, financial condition, liquidity, and operating results. Such risk factors continue to be relevant to an understanding of our business, financial condition, liquidity and operating results as of June 30, 2026, and there have been no material changes to those risk factors for the three months ended June 30, 2026 except for the following updates: Our defaults under the loan secured by our 250 Livingston Street property and the resulting appointment of a temporary receiver and the lender's right to foreclose on or take a deed in lieu of foreclosure to that property could cause a material adverse effect on us, including our financial condition, results of operations and cash flow. Certain agencies of the City of New York (“NYC”) terminated their lease and vacated all 342,496 rentable square feet of commercial space at our 250 Livingston Street property in Brooklyn, New York (the “Property”) effective August 23, 2025. The lease generally provided for rent payments in the amount of $15.4 million per annum. Our subsidiary, 250 Livingston Owner LLC (“Borrower”), entered into the Loan Agreement, dated as of May 31, 2019 (the “Loan Agreement”), with Citi Real Estate Funding Inc., related to a loan in the principal amount of $125 million (the “Loan”). The Loan is evidenced by certain promissory notes (the “Notes”) and secured by our 250 Livingston Street property in Brooklyn, New York (the “Property”). We and our Operating Partnership serve as guarantors of certain obligations under the Loan. . See Note 4, Notes Payable, to Condensed Consolidated Financial Statements (Unaudited) included in Part I of this Form 10-Q for additional information related to Property and the Loan. On March 25, 2026, the Lender filed a complaint against the Borrower, us as and our subsidiary Clipper Realty L.P. due to the Borrower’s defaults under the Notes and the other Loan documents. The Plaintiff demanded, among other things, that a receiver be appointed to manage the Property and that the Property and the personal property within the Property be sold and the proceeds be applied to the satisfaction of indebtedness evidenced by the Notes and other Loan documents. On April 29, 2026, the court entered an order granting the Lender's demand to appoint a temporary receiver. Pursuant to the court order, the receiver is authorized to enter into the possession of the Property, to rent or lease any part of the premises, to collect and receive all rents and fees due and unpaid in connection with the premises, and we must turn over to the receiver all rents collected from and after the date of the court order. The Borrower, the Guarantors and the Lender entered into the Consent and Cooperation Agreement (the “Agreement”), effective as of June 4, 2026 (the “Effective Date”). Pursuant to the Agreement, the Lender and the Borrower agreed to jointly market and sell the Loan to a third-party buyer during a marketing period that commenced on the Effective Date and will end 45 days thereafter (the “Marketing Period”), subject to extension at the Lender’s sole discretion. At the end of the Marketing Period, the Lender has the right to foreclose on the Property, including taking the deed to the Property in lieu of foreclosure. The Agreement also provides that the Borrower has the right to submit an offer to purchase the Loan. , and the Lender has not yet taken any such action. The Agreement also provides that the Borrower has the right to submit an offer to purchase the Loan. If the lender were to foreclose on, or takes a deed in lieu of foreclosure to, the Property, it could have a material adverse effect on us, including our financial condition, results of operations and cash flow. . 35 Even if we successfully acquire the loan after the Marketing Period is over , we may continue to be unable to replace the NYC with other commercial tenants at comparable rent rates or at all, may incur substantial costs to improve the vacated space or may have to offer significant inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow. Our dependency on a commercial lease with certain NYC agencies, as a single government tenant at our 141 Livingston Street property, which lease expired on December 27, 2025 and our inability to finalize the previously agreed five-year extension of that lease could have a material adverse effect on us, including our financial condition, results of operations and cash flow. Our rental revenue depends on entering into leases with and collecting rents from tenants. As of June 30, 2026, Kings County Court, the Human Resources Administration, and the Department of Environmental Protection, all of which are agencies of the City of New York, (i) occupied all 206,084 of rentable square feet at 141 Livingston Street, subject to hold-over rent provisions in the lease that expired on December 27, 2025. The expired lease provided for $10,300 in rent per annum. NYC continues to occupy that space and is paying holdover rent in accordance with the terms of the expired lease, and we and the NYC continue to finalize a previously agreed five-year extension of that lease. There can be no assurance that those negotiations will conclude with an agreement. We may continue to be unable to enter into a new lease with the NYC or replace the NYC agencies with other commercial tenants at comparable rent rates or at all, we may incur substantial costs to improve the vacated space or may have to offer significant inducements to fill the space, all of which may have an adverse effect on our financial condition, results of operations and cash flow. See Note 4, Notes Payable, to Condensed Consolidated Financial Statements (Unaudited) included in Part I of this Form 10-Q for information related to 141 Livingston Street property. The New York City Rent Guidelines Board's adoption of a rent freeze on our rent-stabilized units may adversely affect our financial condition and results of operations. On June 25, 2026, the New York City Rent Guidelines Board (the “RGB”) adopted 0% rent adjustments for both one-year and two-year renewals of rent-stabilized leases commencing between October 1, 2026, and September 30, 2027. As a result, we would not be able to increase rents on our rent-stabilized units to offset rising real estate taxes, insurance, utilities, payroll or debt service costs during this period, which could compress operating margins and adversely affect our net operating income, cash flow and ability to make distributions. Because the RGB is required to set new adjustment percentages annually, we cannot predict whether limited or no increases will be adopted in future years, or whether litigation challenging these determinations will alter their effect.