Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K ("report") contains information that is forward-looking, including, without limitation, statements regarding: the payment of distributions in the future; our ability to maintain current or meet projected occupancy, rental rate and property operating results; expectations regarding consumer demand, growth in revenue and strength of other performance metrics and models; the effect of and expectations regarding dispositions and the use of proceeds thereof; the availability and cost of debt; our ability to comply with debt covenants; and risks related to the provision of property management services to third parties and our ability to collect property management and asset management related fees.
These forward-looking statements are based on management’s current expectations, estimates and assumptions and are subject to risks and uncertainties, that could cause actual results to differ materially from such forward-looking statements, including, but not limited to: real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including inflation, the pace of job growth, the level of unemployment, recession, and trade policies; the amount, location, and quality of competitive new housing supply, which may be impacted by global supply chain disruptions; the timing and effects of dispositions; changes in operating costs, including energy costs; negative economic conditions in our geographies of operation; the ability of the AIR Operating Partnership to hire and retain key personnel; the AIR Operating Partnership's ability to maintain current or meet projected occupancy, rental rate, and property operating results; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; financing risks, including interest rate changes and the availability and cost of financing; the risk that cash flows from operations may be to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants; legal and regulatory risks, including costs associated with or and any outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; possible environmental liabilities, including costs, , or that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by AIR Operating Partnership; and of events, including but not limited to acts of terrorism, outbreaks of war or hostilities or a pandemic, as well as management’s response to any of the aforementioned factors; and those other risks and uncertainties are described in the section entitled “Risk Factors” described in Item 1A of this report and subsequent filings with the SEC.
The forward-looking statements relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this annual report that could cause actual results to differ. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect the AIR Operating Partnership.
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PART I
ITEM 1. BUSINESS
The Company
The AIR Operating Partnership is focused on the ownership and operation of stabilized multi-family properties located in top markets including eight important geographic concentrations: Boston; Philadelphia; Washington, D.C.; Miami; Denver; the San Francisco Bay Area; Los Angeles; and San Diego. Please refer to Note 13 to the consolidated financial statements in Item 8 for discussion regarding our segments.
On June 28, 2024, AIR completed the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”) by and among Apartment Income REIT Corp., Apex Purchaser LLC, a Delaware limited liability company (“Buyer 1”), Aries Purchaser LLC, a Delaware limited liability company (“Buyer 2”), Astro Purchaser LLC, a Delaware limited liability company (“Buyer 3” and, together with Buyer 1 and Buyer 2, collectively, the “Parent Entities”), and Astro Merger Sub, Inc., a Maryland corporation and a wholly owned subsidiary of the Parent Entities (“Merger Sub” and, together with the Parent Entities, the “Parent Parties”). The Parent Parties are affiliates of Blackstone Real Estate Partners X L.P., which is an affiliate of Blackstone Inc. (“Blackstone”). At the closing of the transactions contemplated by the Merger Agreement on June 28, 2024 (the “Closing”), Merger Sub merged with and into Apartment Income REIT Corp., which converted into a Delaware limited liability company with the name “Apartment Income REIT LLC” and continues to be managed by a Board of Directors (the “Merger”).
As a result of the Merger, as a subsidiary of Apartment Income REIT LLC, AIR Operating Partnership became a subsidiary of the Parent Entities and thereby, the General Partner and Special Limited Partner of the Operating Partnership are controlled, indirectly through the Parent Parties, by affiliates of Blackstone.
Business Overview
We own and operate a portfolio of stabilized apartment communities, diversified by both geography and price point. As of December 31, 2025, our portfolio included 70 apartment communities with 25,743 apartment homes.
Our business activities are defined by a commitment to our core values of integrity, respect, collaboration, performance, and a focus on our customers. These values and our corporate mission, “to consistently provide quality apartment homes in a respectful environment delivered by a team of people who care,” shape our culture. In all of our interactions with residents, teammates, business partners, lenders, and partners, we aim to be the best owner and operator of apartment communities, inspired by a talented team committed to exceptional customer service, strong financial performance, and outstanding corporate citizenship.
We continuously seek to improve our best-in-class property operations platform, the "AIR Edge". We seek teams that are more cohesive, better compensated, and more productive. We seek customers that make better neighbors and stay longer. Our high customer retention is driven by delivering world-class customer service; taking advantage of real-time analytics and artificial intelligence; increasing automation; centralizing operational tasks where efficient to do so; standardizing business processes, and operational measurements; and enhancing financial controls over field operations.
Competition
In attracting and retaining residents to occupy our apartment communities, we compete with numerous other housing providers. Our apartment communities compete directly with other rental apartments, as well as condominiums and single-family homes that are available for rent or purchase in the markets in which our apartment communities are located. Principal factors of competition include rent or price charged, attractiveness of the location and apartment community, and the quality and breadth of services. The number of competitive apartment communities relative to demand in a particular area has a material effect on our ability to lease apartment homes at our apartment communities and on the rents we charge. In certain markets, there exists a high supply of newly-constructed apartment homes, single-family homes, and condominiums relative to consumer demand, which affects the pricing and occupancy of our rental apartments. See Item 1A , Risk Factors, for additional information with respect to competition.
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Taxation
The AIR Operating Partnership is treated as a partnership for United States federal income tax purposes and is not subject to United States federal income taxation. The state and local tax laws may not conform to the United States federal income tax treatment, and the Operating Partnership may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business. Any taxes imposed on us reduce our operating cash flow and net income (loss).
Partners in the AIR Operating Partnership, however, are subject to tax on their allocable share of partnership income, gains, losses, deductions, and credits, regardless of whether the partners receive any actual distributions of cash or other property from the AIR Operating Partnership during the taxable year. Generally, the characterization of any particular item is determined by the AIR Operating Partnership rather than at the partner level, and the amount of a partner’s allocable share of such item is governed by the terms of the Partnership Agreement.
Certain of our operations, or a portion thereof, including certain property management and risk management activities, are conducted through taxable real estate investment trust (“REIT”) subsidiaries, which are subsidiaries of the AIR Operating Partnership, and each of which we refer to as a “TRS.” A TRS is a corporate subsidiary that has elected to be a TRS instead of a REIT and, as such, is subject to United States federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents and investment partners that cannot be offered directly by a REIT.
Regulation
General
Apartment communities and their owners are subject to various laws, ordinances, and regulations. Existing rent control laws, as well as future enactment of rent control or rent stabilization laws, “just cause” evictions, or other laws regulating multi-family housing (such as resident screening requirements or limitations on fees) may reduce rental revenue, increase operating and compliance costs, require modification of resident screening requirements, or affect the stability of our communities. In addition, apartment communities and their owners are subject to numerous other requirements, including those related to fee disclosures, real estate broker licensing and regulations relating to recreational facilities such as swimming pools, activity centers, and other common areas. Changes in laws increasing the potential liability for environmental conditions existing on communities or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting development, construction, and safety requirements, may result in significant unanticipated expenditures, which would adversely affect our net income (loss) and cash flows from operating activities.
Environmental
Various federal, state, and local laws subject apartment community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present at an apartment community. These materials may include lead-based paint, asbestos, and petroleum-based fuels. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the release or presence of such materials. In connection with the ownership, operation, and management of apartment communities, we could potentially be liable for environmental liabilities or costs associated with our current communities, communities we acquire or manage in the future, or communities we previously owned or operated in the past. These and other risks related to environmental matters are described in more detail in Item 1A , Risk Factors.
Insurance
Our primary lines of insurance coverage are property, general liability, workers’ compensation, business interruption, pollution, and cybersecurity. We believe that our insurance coverages adequately insure our apartment communities against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, terrorism, and other perils, and adequately insure us against other risk. Our coverage includes deductibles, retentions, and limits that are customary in the industry. We have established loss prevention, loss mitigation, claims handling, and litigation management procedures to manage our exposure.
Corporate Responsibility
Corporate responsibility is a longstanding AIR Operating Partnership priority and a key part of our culture. We offer benefits reinforcing our value of respect and caring for each other, including an opportunity to manage one’s life through flexible work schedules, paid time for parental leave, retirement plans for all, financial support for our teammates who are becoming United States citizens, and a bonus structure at all levels of the organization. We also pay full compensation and benefits for teammates who are actively deployed by the United States military.
We are committed to transparency and continuous improvement. In 2025, we received a Global Real Estate Sustainability Benchmark (GRESB) score of 85 out of 100 and 4 stars out of 5, marking the company's fifth year of participation in the global benchmark. The achievement placed AIR in the top 25% of all participating residential entities in the Americas, ranking 33rd out of 145. AIR received top scores of 95 or higher out of 100 in five key categories: Leadership, Building Certifications, Stakeholder Engagement, Tenants and Community, and Data Monitoring & Review.
Human Capital
We strive to provide a great place to work for teammates. Our intentional focus on a collaborative and productive culture based on respect for others and personal responsibility is reinforced by a preference for promotion from within. We focus on succession planning and talent development to produce a strong, stable team that is the enduring foundation of our success.
Our focus on our team and culture is widely recognized. We have received the following awards:
• AIR is a Great Place To Work Certified company based on the 2025 Annual Engagement Survey
• 2025 Top Workplaces USA Award for the fourth consecutive year
• 2025 Top Workplace in Real Estate (by Energage)
• 2025 Top Workplace Culture Excellence Award for Purpose & Values, Work-Life Flexibility, Innovation, Leadership, Women-Led, Professional Development, Employee Well-Being, and Employee Appreciation
• 2025 Top Workplace in Colorado (by the Denver Post), a 12-time winner
• 2025 Top Workplace in Philadelphia (by The Philadelphia Inquirer) for the third consecutive year
• 2025 Top Workplace in South Florida (by the Sun Sentinel) for the third consecutive year
• 2025 Top Workplace in Los Angeles (greater Los Angeles County) for the second consecutive year
Approximately 71% of all open manager level positions were filled internally in 2025, and approximately 50% of all open positions were filled internally. We provide both formal and informal training and coaching for teammates at every level of the organization. In 2025, 43% of our teammates voluntarily took part in our leadership and professional development training.
As of December 31, 2025, we had approximately 810 teammates, of whom approximately 660 were at the apartment community level performing on-site functions, with the remainder performing off-site functions. As of December 31, 2025, unions represented 27 of our teammates. We have never experienced a work stoppage and we believe we maintain satisfactory relations with our teammates.
Available Information
Our Annual Reports on Form 10-K, the Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any amendments to any of those reports that are filed with the Securities and Exchange Commission are available free of charge through our website at www.aircommunities.com and the SEC’s website at www.sec.gov. We may use our website as a channel of distribution of business information and the information we post through this channel may be deemed material. Accordingly, investors should monitor our website, in addition to following our press releases and SEC filings. The contents of our website are not, however, a part of this report.
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ITEM 1A. RISK FACTORS
The risk factors noted in this section, and other factors noted throughout this report, describe certain risks and uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement.
Risks Related to Our Business
Failure to generate sufficient net operating income may adversely affect our liquidity or limit our ability to fund necessary capital expenditures.
Our net operating income and liquidity may be adversely affected by events or conditions beyond our control, including:
• the general economic climate, including the impact of international hostilities and unrest;
• an inflationary environment in which the costs to operate and maintain our communities increase at a rate greater than our ability to increase rents, which we can only do upon renewal of existing leases or at the inception of new leases;
• competition from other apartment communities and other housing options;
• local conditions, such as loss of jobs, unemployment rates, recession, or an increase in the supply of apartments, which might adversely affect apartment occupancy or rental rates;
• changes in governmental regulations and the related cost of compliance;
• changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing; and
• changes in interest rates and the availability of financing.
Our ability to fund necessary capital expenditures on our communities depends on, among other things, our ability to generate net operating income in excess of required debt payments. If we are unable to fund capital expenditures on our communities, we may not be able to preserve the competitiveness of our communities, which could adversely affect their net operating income and long-term value.
Competition could limit our ability to lease apartment homes or increase or maintain rents.
Our apartment communities compete for residents with other housing alternatives, including other rental apartments and condominiums, and, to a lesser degree, single-family homes that are available for rent, as well as new and existing condominiums, and single-family homes for sale. Competitive residential housing, as well as household formation and job creation in a particular area, could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.
We depend on our senior management.
Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our senior management team, who have extensive market knowledge and relationships, and exercise substantial influence over our operational activities. Pursuant to certain arrangements with Blackstone affiliated companies, members of our management team will manage certain aspects of the business of such vehicles without any minimum time allocation, which may divert attention from operating our business. The loss of services of one or more members of our senior management team, or our inability to attract and retain similarly qualified personnel, could adversely affect our business, which could adversely affect our financial condition, results of operations, and cash flow. See also “—Risks Related to Our Organization and Structure” and “—Risks Related to Conflicts of Interest.”
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We may experience various increased costs, including increased property taxes.
Real property taxes on our properties may increase as our properties are reassessed by tax assessors or as property tax rates change. A California law commonly referred to as Proposition 13 (“Prop 13”) limits annual real estate tax assessment increases on California properties to 2% of assessed value while guaranteeing a base tax rate of 1%. However, under Prop 13, property tax reassessment at market value occurs as a result of a "change in ownership" of a property. Additionally, the base tax rate of 1% for all taxing authorities guaranteed under Prop 13 does not include additional property tax levies for approved voter indebtedness or non-ad valorem tax increases. Various initiatives to repeal or amend Prop 13, to eliminate its application to commercial and residential property, to increase the permitted annual real estate tax increases, and/or to introduce split tax roll legislation could increase the assessed value and/or tax rates applicable to commercial property in California. Further, changes in U.S. federal tax law could cause state and local governments to alter their taxation of real property.
Rent control laws and other regulations that limit our ability to select residents, increase rental rates or limit our ability to evict residents to limited circumstances may negatively impact our rental income and profitability.
State and local governmental agencies continue to introduce and enact rent control laws or other regulations that limit our ability to select residents, increase rental rates, or limit our ability to evict residents (known as “just cause” evictions), which may affect our rental income. Especially in times of recession and economic slowdown, rent control initiatives can acquire significant political support. If rent controls unexpectedly became applicable to certain of our properties, our revenue from and the value of such properties could be adversely affected. In addition, resident selection is a key component of our operating model – selecting for residents who pay rent and rent increases, stay with us longer, and make good neighbors. Certain jurisdictions limit our ability to consider the rental history, credit history, eviction history, and criminal backgrounds of potential residents. We intend to comply with resident screening laws that apply to our communities, and our failure to comply could our business or our reputation.
Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty events may affect our financial condition and results of operations.
The availability and cost of insurance are determined by the quality of our properties and their maintenance and our operating procedures, as well as by market conditions outside our control. No assurance can be made that we will be able to obtain and maintain insurance at the same levels and on the same terms as we do today. If we are not able to obtain or maintain insurance in amounts we consider appropriate for our business, or if the cost of obtaining such insurance increases materially, we may prefer to retain a larger portion of the potential loss associated with our exposures to risks. We are insured for a portion of our consolidated apartment communities’ exposure to casualty losses resulting from fire, earthquake, hurricane, tornado, flood, and other perils, which insurance is subject to deductibles and self-insurance retention that exceed expected losses. We recognize casualty losses or gains based on the net book value of the affected apartment community and the amount of any related insurance proceeds. In many instances, the actual cost to repair or replace the apartment community may exceed its net book value and any insurance proceeds. We recognize the portion of as casualty in the periods in which they are incurred. In addition, we are self-insured for a portion of our exposure to third-party related to our teammate health insurance plans, workers’ compensation coverage, and general liability exposure. With respect to our exposure to of third parties, we establish reserves at levels that reflect our known and estimated . The ultimate cost of and the impact of events may vary materially from recorded reserves, and variances may affect our operating results and financial condition. We purchase insurance to reduce our exposure to and limit our financial on large individual risks.
Investments through joint ventures introduce governance risks even where the business of the joint venture adds no further business risks.
We have in the past contributed or sold properties to joint ventures with other persons or entities when we believe circumstances warrant the use of such structures.
These investments involve risks including, but not limited to, the possibility the other partners may have business, economic, or other objectives which are inconsistent with ours. In addition, the other partners may have the ability to take or force action (or withhold consent that may be required to take actions) contrary to our requests. In general, we structure such agreements with our partners so that we have full authority to use our expertise to make operating decisions.
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Also, our partners might become insolvent or fail to make capital contributions when due, which may require us to contribute additional capital. In such event, the additional capital contributed is most often on favorable terms. In general, we and our partners may each have the right to trigger a buy-sell or other similar arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction and may result in the valuation of our interest in the joint venture (if we are the seller) or of the other partner’s interest in the joint venture (if we are the buyer) at levels which may not be representative of the valuation that would result from an arm’s length marketing process and could cause us to recognize unanticipated capital gains or losses or the loss of fee income. Each joint venture agreement is individually negotiated and our ability to operate, finance, or dispose of properties and interests in such joint ventures in our sole discretion may be limited to varying degrees depending on the terms of the applicable joint venture agreement. We are also subject to other risks in connection with joint ventures, including (i) a if we and our partner are to agree upon certain major and other decisions (which could result in or disposing of an asset at a time at which we otherwise would not sell the asset), and (ii) on our ability to our position in the joint venture without the consent of the other partner.
Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection.
Information technology, communication networks, and related systems are essential to the operation of our business. We use these systems to manage our resident and vendor relationships, internal communications, accounting and record-keeping systems, and many other key aspects of our business. Our operations rely on the secure processing, storage, and transmission of confidential and other information in our computer systems and networks, which also depend on the strength of our procedures and the effectiveness of our internal controls. Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyberattacks.
Despite system redundancy, risk transfer, insurance, indemnification, the implementation of security measures, our required teammate awareness training, and the existence of a disaster recovery plan for our internal information technology systems, our systems, and systems maintained by third-party vendors with which we do business, are vulnerable to damage from any number of sources. We face risks associated with energy blackouts, natural disasters, terrorism, war, telecommunication failures, and cyberattacks and intrusions, such as computer viruses, malware, attachments to emails, intrusion, and unauthorized access, including from persons inside our organization or from persons outside our organization with access to our systems. We expend financial resources to protect against threats and cyberattacks and may be required to expend additional financial and other resources to address caused by . Although we make efforts to maintain the security and of our systems and have implemented various measures to manage the risk of a security or , there can be no assurance that our security efforts and measures will be or that attempted security or would not be or . Any compromise of our security could also result in a of applicable privacy and other laws, significant legal and financial exposure, to our reputation, or of the information (which may be confidential, proprietary, or commercially sensitive in nature), and a of confidence in our security measures, which could our business. Additionally, if our information systems , or , we could experience in our financial results and we may revenue as a result of our to collect payments from residents.
We also are subject to laws, rules, and regulations in the United States, such as the California Consumer Protection Act ("CCPA"), relating to the collection, use, and security of employee and other data. Evolving compliance and operational requirements under the CCPA and the privacy and data security laws of other jurisdictions in which we operate impose significant costs that are likely to increase over time. Our failure to comply with laws, rules, and regulations related to privacy and data protection could harm our business or reputation.
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Potential liability or other expenditures associated with potential environmental contamination may be costly.
Various federal, state, and local laws subject apartment community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present in the land or buildings of an apartment community. Potentially hazardous materials may include petroleum-based fuels, lead-based paint, or asbestos, among other materials. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such apartment communities as well as the ability to sell or finance such apartment communities. In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions, damages to natural resources, and for potential fines or penalties in connection with such damage or with respect to the management of materials. Moreover, private may potentially make for and remediation costs they incur, or personal , disease, disability, or other infirmities related to the presence of materials at an apartment community. In addition to potential environmental liabilities or costs associated with our current apartment communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or apartment communities we no longer own or operate.
Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.
Under the Americans with Disabilities Act of 1990 (“ADA”), all places intended to be used by the public are required to meet certain federal requirements related to access and use by disabled persons. The Fair Housing Amendments Act of 1988 (“FHAA”) requires apartment communities first occupied after March 13, 1991, to comply with design and construction requirements for disabled access. For those apartment communities receiving federal funds, the Rehabilitation Act of 1973 also has requirements regarding disabled access. These and other federal, state, and local laws may require structural modifications to our apartment communities or changes in policy/practice or affect renovations of the communities. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although we believe that our apartment communities are substantially in compliance with legal requirements, we may incur unanticipated expenses to comply with the ADA, the FHAA, the Rehabilitation Act of 1973, and related state and local legal requirements in connection with the ongoing operation of our apartment communities and the apartment communities we manage.
Adverse economic and geopolitical conditions, local, regional, national, or international health crises and dislocations in the credit markets could negatively impact our residents and our operations.
Factors that could negatively impact our operations or those of entities in which we hold a partial interest during an adverse economic or geopolitical event, or dislocation in the credit market or pandemic or another health crisis include:
• our ability to raise rents or collect rents and late fees on a timely basis or at all, without reductions or other concessions;
• our ability to evict residents for non-payment and for other reasons;
• our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption;
• fluctuations in regional and local economies, local real estate conditions, and rental rates;
• our ability to control incremental costs associated with such factors;
• our ability to dispose of communities at all or on terms favorable to us; and
• potential litigation.
In addition, the recent political shifts has led to, and may continue to lead to, new legislative and regulatory initiatives or the roll-back of initiatives of the previous presidential administration in a variety of areas, which may result in wide-ranging and unpredictable macroeconomic effects that impact our business.
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We are subject to evolving sustainability disclosure standards and expectations that expose us to numerous risks.
In recent years, advocacy groups, government agencies and the general public have raised concerns regarding sustainability matters and increasingly regulators, customers, investors, and employees are focusing on sustainability matters and related disclosures. Such governmental, investor and societal attention to sustainability matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital management, labor and risk oversight, could expand the nature, scope, and complexity of matters that we are required to manage, assess and report.
We may also communicate certain initiatives regarding environmental, human capital management, and other sustainability-related matters in our SEC filings or in other disclosures. These initiatives could be difficult and expensive to implement, the personnel, processes and technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we may not be able to accomplish them within the timelines we announce or at all. We could, for example, determine that it is not feasible or practical to implement or complete certain of such initiatives based on cost, timing or other considerations. Furthermore, we could be criticized for the accuracy, adequacy or completeness of the disclosure related to our sustainability-related policies, practices and initiatives (and progress on those initiatives), which disclosure may be based on frameworks and standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. In addition, we could be criticized for the scope or nature of such initiatives, or for any revisions to these initiatives. Further, as part of our sustainability practices, we rely from time to time on third-party data, services and methodologies and such services, data and methodologies could prove to be or . If our or such third parties’ sustainability-related data, processes or reporting are or , or if we to on a timely basis, or at all, we may be subject to enforcement action and our reputation could be affected, particularly if in connection with such matters we were to be of or statements regarding sustainability-related matters, either because we (often referred to as “greenwashing”) or the extent to which we are engaging in sustainability-related practices.
Moreover, there is regulatory interest across jurisdictions in improving transparency regarding the definition, measurement and disclosure of sustainability factors in order to allow investors to validate and better understand sustainability claims, and we are subject to changing rules and regulations promulgated by a number of governmental and regulatory organizations. These rules and regulations continue to evolve in scope and complexity and new requirements may be created, making compliance more difficult and uncertain. There has been increased regulatory focus on sustainability-related matters and the accuracy of statements made regarding such matters, including whether such statements are greenwashing. If we are perceived as, or accused of, greenwashing or understating the extent to which we are engaging in sustainability-related practices, such perception or accusation could damage our reputation, result in litigation or regulatory actions and adversely impact our ability to raise capital.
These changing rules and regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations. If we or our residents fail or are perceived to fail to comply with or meet applicable rules and regulations, it could negatively impact our reputation and our business results. Further, our business could become subject to additional regulations, penalties and/or risks of regulatory scrutiny and enforcement in the future. We cannot guarantee that our current sustainability practices will meet future regulatory requirements, reporting frameworks or best practices, increasing the risk of related enforcement. Compliance with new requirements may lead to increased management burdens and costs.
Conversely, some regulators have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability initiatives. This divergence increases the risk that any action or lack thereof with respect to sustainability matters could be perceived negatively and adversely impact our reputation and business.
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Technological developments in artificial intelligence could disrupt the markets in which we operate and subject us to increased competition, legal and regulatory risks and compliance costs.
Technological developments in artificial intelligence, including machine learning technology and generative artificial intelligence (collectively, “AI Technologies”) and their current and potential future applications, including in the private investment and financial sectors, as well as the legal and regulatory frameworks within which they operate, are rapidly evolving. The full extent of current or future risks related thereto is not possible to predict and we may not be able to anticipate, prevent, mitigate or remediate all of the potential risks, challenges or impacts of such changes. AI Technologies could significantly disrupt the business models, investment strategies, operational processes, and markets in which we operate and subject us to increased competition, legal and regulatory risks and compliance costs, which could have a material adverse effect on our business, financial condition and results of operations. Advancements in computing and AI Technologies, including efficiency improvements, without related increases in the adoption and development of such technologies, could also negatively impact demand for, and the valuation of, digital infrastructure assets, a sector to which certain of our investment strategies have significant exposure.
Through our use of AI technologies, we avail ourselves of the potential benefits, insights and efficiencies resulting from these technologies. For example, our employees can use internal generative AI-powered applications to help summarize, search or translate documents or gather information on a wide variety of topics. However, these technologies also present a number of potential risks that cannot be fully mitigated. If the data we, or third parties whose services we rely on, use in connection with the possible development or deployment of AI Technologies is incomplete, inadequate or biased in some way, the performance of our products, services, and businesses could suffer. Data in models that AI Technologies use are likely to contain a degree of inaccuracy and error, which could result in flawed algorithms. This could reduce the effectiveness of AI Technologies and adversely impact us and our operations to the extent we rely on the work product of such AI Technologies in such operations. The volume and reliance on data and algorithms also make AI Technologies more susceptible to cybersecurity , including the compromise of underlying models, training data, or other intellectual property. We could be to risks to the extent third-party service providers, or any counterparties use AI Technologies in their business activities. There is also a risk that AI Technologies may be or by our employees and/or third parties engaged by us. For example, a user may input confidential information, including material non-public information or personal identifiable information, into AI Technology applications, resulting in such information becoming part of a dataset that is accessible by third-party AI Technology applications and users, including our competitors. Such actions could subject us to legal and regulatory and/or actions. In addition, we may not be to control how third-party AI Technologies that we choose to use are developed or maintained, or how data we input is used or , even where we have sought contractual protections with respect to these matters. We may be subject to legal and regulatory and/or actions related to our use of AI Technologies, including as related to or of our data. This could also have an impact on our reputation. We may also communicate externally regarding AI Technology-related initiatives, including our development and use of AI Technologies, which subjects us to the risk of being of making or statements regarding our ability to avail ourselves of the potential benefits of AI Technology.
Natural disasters and severe weather may affect our financial condition and results of operations.
Natural disasters such as earthquakes and severe weather such as hurricanes may result in significant damage to our apartment communities. The extent of our casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of exposures, a single catastrophe (such as an earthquake) or destructive weather event (such as a hurricane) affecting a region may have a significant adverse effect on our financial condition and results of operations. We cannot accurately predict natural disasters or severe weather, or the number and type of such events that will affect us. As a result, our operating and financial results may vary significantly from one period to the next. Although we anticipate and plan for losses, there can be no assurance that our financial results will not be affected by our exposure to arising from natural or weather in the future that exceed our previous experience and assumptions.
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Moisture infiltration and resulting mold remediation may be costly.
Although we are proactively engaged in managing moisture intrusion and preventing the presence of mold at our apartment communities, it is not unusual for periodic moisture intrusion to cause mold in isolated locations within an apartment community. We have implemented policies, procedures, and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will manage mold exposure at our apartment communities and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. We have only limited insurance coverage for property damage claims arising from the presence of mold and for personal injury claims related to mold exposure.
Risks Related to Our Indebtedness and Financing
Increases in interest rates would increase our interest expense and reduce our profitability.
As of December 31, 2025, we had approximately $4.1 billion of variable-rate indebtedness outstanding, before consideration of floating-to-fixed-rate interest rate swaps and interest rate cap derivatives. After consideration of these derivatives, we estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would increase or decrease interest expense by $3.6 million or $6.6 million, respectively, on an annual basis.
As of December 31, 2025, we had $372.4 million in cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates, which may partially mitigate the effect of an increase in variable rates on our variable-rate indebtedness discussed above.
Our debt financing could result in foreclosure resulting in a loss of income and value, prevent us from making distributions on our equity, or otherwise adversely affect our liquidity.
We have fixed-rate and variable-rate property debt, maturing at various times over the next few years, which are secured by assets of certain subsidiaries of the AIR Operating Partnership. Over time, we may become party to one or more additional financing arrangements, including credit facilities or other bank debt, and bonds.
In connection with such financing arrangements, we are subject to the risk that: (i) our cash flow from operations will be insufficient to make required payments of principal and interest; (ii) our indebtedness may not be refinanced; or (iii) the terms of any refinancing will not be as favorable as the terms of then-existing indebtedness. If we are unable to make required payments of principal and interest or are unable to refinance at maturity on favorable terms, or at all, the lenders could foreclose on the collateral securing that debt, resulting in the loss to us of income and asset value.
We also anticipate that certain of our subsidiaries will maintain a certain amount of non-recourse property-level indebtedness. If we fail to make required payments of principal and interest on our mortgage debt, our lenders could foreclose on the apartment communities and other collateral securing such debt, resulting in the loss to us of income and asset value.
Our organizational documents do not limit the amount of debt that we may incur.
Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and could adversely affect our liquidity.
Our ability to obtain financing and the cost of such financing depends on the overall condition of the United States credit markets. During periods of economic uncertainty, the United States credit markets may experience significant liquidity disruptions, which may cause the cost on debt financings to widen considerably and make obtaining financing, both non-recourse property debt and corporate borrowings such as those under a credit facility, more difficult. In particular, apartment borrowers have benefited from the historic willingness of the Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), to make substantial amounts of loans secured by multi-family properties, even in times of economic distress. These two lenders are federally chartered and subject to federal regulation, which is subject to change, making uncertain their prospects and ability to provide liquidity in a future downturn.
If our ability to obtain financing is adversely affected, we may be unable to satisfy scheduled maturities on existing financing through other sources of liquidity, which could result in lender foreclosure, resulting in loss of income and asset value, both of which would adversely affect our liquidity.
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Because real estate investments are relatively illiquid, we may not be able to sell apartment communities when appropriate.
Real estate investments are relatively illiquid and generally cannot be sold quickly. Thus, we may not be able to change our portfolio promptly in response to changes in economic or other market conditions. Our ability to dispose of apartment communities in the future will depend on prevailing economic and market conditions, including the cost and availability of financing. This could have a material adverse effect on our financial condition or results of operations.
Failure to hedge effectively against interest rate changes may adversely affect our results of operations.
From time to time, we may enter into interest rate hedge agreements to manage some of our exposure to interest rate volatility. Interest rate hedge agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to changes in interest rates. These risk factors may lead to failure to hedge effectively against changes in interest rates and therefore could adversely affect our results of operations.
We may increase leverage, which could further exacerbate the risks associated with our indebtedness.
We may decide to increase our leverage. We will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the issuance, or placement, of new indebtedness, including the estimated market value of our assets and the ability of particular assets, and our company as a whole, to generate cash flow to cover the expected debt service. We may incur additional indebtedness from time to time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our indebtedness could intensify.
Risks Related to Our Organization and Structure
We are controlled by Blackstone and its interests may conflict with ours or yours in the future.
Following the Merger, affiliates of Blackstone control the General Partner and AIR Operating Partnership is a subsidiary of the Parent Entities. Accordingly, Blackstone has significant influence with respect to our management, business plans and policies, including the election and removal of AIR's officers and directors. Blackstone and its affiliates engage in a broad spectrum of activities, including investments in real estate generally. In the ordinary course of their business activities, Blackstone and its affiliates may engage in activities where their interests conflict with our interests or those of our common unitholders. Blackstone also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, Blackstone may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.
Risks Related to Conflicts of Interest
Various potential and actual conflicts of interest will arise, and these conflicts may not be identified or resolved in a manner favorable to us.
Blackstone has conflicts of interest, or conflicting loyalties, as a result of the numerous activities and relationships of Blackstone and its affiliates, partners, members, shareholders, officers, directors and employees, some of which are described herein. However, not all potential, apparent and actual conflicts of interest are included herein, and additional conflicts of interest could arise as a result of new activities, transactions or relationships commenced in the future. If any matter arises that we and our affiliates determine in our good faith judgment constitutes an actual and material conflict of interest, we and our affiliates will take such actions as we determine appropriate to mitigate the conflict.
The personnel of Blackstone are not required to dedicate a specific portion of their time to the management of our business.
Blackstone affiliates are not obligated to dedicate any specific personnel exclusively to us, nor are they or their personnel obligated to dedicate any specific portion of their time to the management of our business. Affiliates of Blackstone and its portfolio companies may provide services to us, but we cannot provide any assurances regarding the amount of time that such affiliates will dedicate to the management of our business and such affiliates may have conflicts in allocating time, resources and services among our business and any other investment vehicles and accounts.
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We and Blackstone vehicles have competed, and in the future will likely compete, with or enter into transactions with existing and future private and public investment vehicles established and/or managed by Blackstone or its affiliates, which may present various conflicts of interest that restrict our ability to pursue certain investment opportunities or take other actions that are beneficial to our business and/or result in decisions that are not in the best interests of our unitholders.
We are subject to conflicts of interest arising out of our relationship with Blackstone, including the General Partner and its affiliates. Certain Blackstone employees serve on AIR's Board of Directors. If any matter arises that Blackstone determines in its good faith judgment constitutes an actual and material conflict of interest, Blackstone and relevant affiliates will take the actions they determine appropriate to mitigate the conflict. There is no guarantee that the policies and procedures adopted by us, or the policies and procedures adopted by Blackstone and its affiliates, will enable us to identify, adequately address or mitigate these conflicts of interest in a way that is favorable to us, which could result in increased costs to our unitholders. Some examples of conflicts of interest that may arise by virtue of our relationship with Blackstone include:
• Broad and Wide-Ranging Activities . Blackstone and its affiliates engage in a broad spectrum of activities, including a broad range of activities relating to investments in the real estate industry, and have invested or committed billions of dollars in capital through various investment funds, managed accounts and other vehicles affiliated with Blackstone. In the ordinary course of their business activities, Blackstone and its affiliates may engage in activities where the interests of certain divisions of Blackstone and its affiliates, or the interests of their clients may conflict with the interests of our unitholders. Certain of these divisions and entities affiliated with Blackstone have or may have an investment strategy similar to our investment strategy and therefore will likely compete with us.
• Blackstone’s Policies and Procedures . Specified policies and procedures implemented by Blackstone and its affiliates to mitigate potential conflicts of interest and address certain regulatory requirements and contractual restrictions may reduce the advantages across Blackstone’s and its affiliates’ various businesses that Blackstone expects to draw on for purposes of pursuing attractive investment opportunities. Because Blackstone has many different businesses, it is subject to a number of actual and potential conflicts of interest, greater regulatory oversight and more legal and contractual restrictions than that to which it would otherwise be subject if it had just one line of business. In addressing these conflicts and regulatory, legal and contractual requirements across its various businesses, Blackstone has implemented certain policies and procedures (e.g., information walls) that may reduce the benefits that Blackstone could otherwise expect to use for purposes of identifying and managing our real estate investments. For example, Blackstone may come into possession of material non-public information with respect to companies that are clients of Blackstone or its affiliates, in which the General Partner may be considering making an investment. As a consequence, that information, which could be of to us, might become restricted to those other businesses and otherwise be to us, and could also restrict our activities. Additionally, the terms of confidentiality or other agreements with or related to companies in which any investment vehicle of Blackstone has or has considered making an investment or which is otherwise a client of Blackstone and its affiliates may restrict or otherwise limit the ability of Blackstone or its affiliates, to engage in businesses or activities competitive with such companies.
• Assignment and Sharing or Limitation of Rights . In the future, we may invest alongside other Blackstone vehicles and in connection therewith have and may, for legal, tax, regulatory or other reasons which may be unrelated to us, share with or assign to such other Blackstone vehicles certain of our rights, in whole or in part, or to limit our rights, including certain control- and/or foreclosure-related rights with respect to such shared investments and/or otherwise agree to implement certain procedures to mitigate conflicts of interest which typically involve maintaining a noncontrolling interest in any such investment and a forbearance of our rights, including certain non-economic rights, subject to certain limitations. While it is expected that our participation in connection with any such investments and transactions would be negotiated by third parties on market prices, such investments and transactions will give rise to potential or actual conflicts of interest. We cannot make assurances that any such conflict will be resolved in our favor. Such sharing or assignment of rights could make it more difficult for us to protect our interests and could give rise to a (which may be in the case of financial ) and could result in another Blackstone vehicle exercising such rights in a way to us.
• Entering into Financing Transactions with Other Blackstone Vehicles . We may from time to time engage in financing transactions with Blackstone vehicles. We and/or Blackstone may face conflicts of interest in connection with any borrowings or disputes related to such financing agreement(s) which may adversely impact us.
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• Underwriting and Other Relationships . As part of its regular business, Blackstone provides a broad range of underwriting, investment banking, placement agent services and other services. In connection with selling investments by way of a public offering, a Blackstone broker-dealer may act as the managing underwriter or a member of the underwriting syndicate on a firm commitment basis and purchase securities on that basis. Blackstone may retain any commissions, remuneration, or other profits and receive compensation from such underwriting activities, which have the potential to create conflicts of interest. Blackstone may also participate in underwriting syndicates from time to time with respect to us or portfolio companies/entities of Blackstone vehicles, or may otherwise be involved in the private placement of debt or equity securities issued by us or such portfolio companies/entities, or otherwise in arranging financings with respect thereto or advising on such transactions. Subject to applicable law, Blackstone may receive underwriting fees, placement commissions, or other compensation with respect to such activities, which will not be shared with us or our unitholders.
In the regular course of its investment banking business, Blackstone represents potential purchasers, sellers and other involved parties, including corporations, financial buyers, management, shareholders and institutions, with respect to assets that are suitable for investment by us. In such case, Blackstone’s client would typically require Blackstone to act exclusively on its behalf, thereby precluding us from acquiring such assets. Blackstone is under no obligation to decline any such engagement to make the investment opportunity available to us.
Blackstone has long-term relationships with a significant number of corporations and their senior management. In determining whether to invest in a particular transaction, we may consider those relationships, which may result in certain transactions that we will not undertake in view of such relationships.
• Service Providers . Certain of our service providers, or their affiliates (including accountants, administrators, lenders, brokers, attorneys, consultants, title agents, loan servicing and administration providers, property managers and investment banking or commercial banking firms) also provide goods or services to or have business, personal or other relationships with Blackstone. For example, Blackstone may hold equity or other investments in companies or businesses in the real estate industry and other industries that may provide products or services to or otherwise contract with us or other Blackstone vehicles. In connection with any such investment, Blackstone or other Blackstone vehicles (or their respective portfolio companies/entities) may make referrals or introductions to other portfolio companies/entities in an effort, in part, to increase the customer base of such companies or businesses, and therefore the value of the investment, or because such referrals or introductions may result in financial incentives (including additional equity ownership) and/or milestones benefiting the referring or introducing party that are tied or related to participation by portfolio companies/entities. We will not share in any fees, economics or equity accruing to Blackstone or such other Blackstone vehicles as a result of these relationships. In addition, we may enter into agreements regarding group procurement (such as a group purchasing organization), benefits management, purchase of title and/or other insurance policies (which will from time to time be pooled and discounted due to scale) from a third party or a Blackstone affiliate, and other similar operational, administrative, or management related initiatives that result in commissions, discounts or similar payments to Blackstone or its affiliates (including personnel), including related to a portion of the savings that may result in higher costs than historically incurred. Such service providers may be sources of investment or co-investors or commercial counterparties. Such relationships may influence the General Partner in deciding whether to select such service provider. In certain circumstances, service providers, or their affiliates, may charge different rates (including below-market rates or at no cost) or have different arrangements for services provided to Blackstone or its affiliates as compared to services provided to us, which in certain circumstances may result in more rates or arrangements than those payable by us.
In addition, certain advisors and service providers (including law firms) may temporarily provide their personnel to Blackstone, us or other Blackstone vehicles or their portfolio companies pursuant to various arrangements including at cost or at no cost. While often we and such other Blackstone-advised funds and their portfolio companies are the beneficiaries of these types of arrangements, Blackstone is from time to time a beneficiary of these arrangements as well, including in circumstances where the advisor or service provider also provides services to us in the ordinary course. Such personnel may provide services in respect of multiple matters, including in respect of matters related to Blackstone, its affiliates and/or portfolio companies and any costs of such personnel may be allocated accordingly.
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• Transactions with Blackstone Vehicles and Blackstone-Affiliated Portfolio Entities . From time to time, we may enter into transactions for the provision of goods and services, purchase and sale of assets and other matters with Blackstone vehicles and other portfolio entities of investment funds, vehicles, accounts, products and/or other similar arrangements sponsored, advised, and/or managed by Blackstone or its affiliates. In particular, we may engage Blackstone-affiliated portfolio entities or be engaged by Blackstone-affiliated entities to provide various services, including, but not limited to property management, corporate support services, account management, administrative support, data management finance/budgeting and forecasting, financing management, fundraising support, human resources and recruiting, communications and public affairs, information and data security support, information technology and software systems support, corporate governance and entity management and risk management. These agreements, transactions and other arrangements may involve payment of fees and other amounts, as well as reimbursement of amounts related to compensation of executive officers. Such transactions will be conducted in accordance with our internal corporate policies and applicable laws and regulations to ensure fairness to the Operating Partnership.
• Possible Future Activities . Blackstone and their affiliates continue to develop relationships with a significant number of companies, financial sponsors and their senior managers, including relationships with clients who may hold or may have held investments similar to those intended to be made by us. These clients may themselves represent appropriate investment opportunities for us or may compete with us for investment opportunities. In addition, Blackstone may enter into one or more strategic relationships in certain regions or with respect to certain types of investments that, although intended to provide greater opportunities for us, may require us to share such opportunities or otherwise limit the amount of an opportunity we can otherwise take.
• Material Non-Public Information . We, directly or through Blackstone, the General Partner or certain of their respective affiliates may come into possession of material non-public information. Disclosure of such information to the personnel responsible for management of our business may be on a need-to-know basis only, and we may not be free to act upon any such information. Therefore, we may not have access to material non-public information in the possession of Blackstone which might be relevant to an investment decision to be made by the General Partner on our behalf, and the General Partner may initiate a transaction or purchase or sell an investment which, if such information had been known to it, may not have been undertaken. Due to these restrictions, the General Partner may not be able to initiate a transaction on our behalf that it otherwise might have initiated and may not be able to purchase or sell an investment that it otherwise might have purchased or sold, which could negatively affect our operations.
• Family Relationships . Certain personnel and other professionals of Blackstone have family members or relatives that are actively involved in the industries and sectors in which we invest and/or have business, personal, financial or other relationships with companies in the real estate industry, which gives rise to potential or actual conflicts of interest. For example, such family members or relatives might be officers, directors, personnel or owners of companies or assets which are actual or potential investments of us or our other counterparties. Moreover, in certain instances, we may transact with companies that are owned by such family members or relatives or in respect of which such family members or relatives have other involvement. In most such circumstances, we will not be precluded from undertaking any of these investment activities or transactions. To the extent Blackstone determines appropriate, it may put in place conflict mitigation strategies with respect to a particular circumstance, such as internal information barriers or recusal, disclosure or other steps determined appropriate by Blackstone or the General Partner.
Risks Related to Valuation
Redemptions of our units are generally based on our most recent quarter-end calculations of NAV per common OP unit, which calculations are not current as of a future date.
Generally, the price at which we make redemptions of our common OP Units will equal the NAV (as defined in our Valuation Policy) per common OP Unit as of the last day of the prior calendar quarter. The NAV per common OP Unit, if calculated as of the date on which you deliver a Notice of Redemption (as defined in our Partnership Agreement), may be significantly different than the redemption price you receive. Certain of our investments or liabilities could change in value significantly between the end of the prior calendar quarter as of which our NAV per common OP Unit is determined and the date that you deliver a Notice of Redemption. Because the price at which your common OP Units may be redeemed by us is generally based on our prior calendar quarter’s NAV per common OP Unit, you may receive less than realizable value for your investment.
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The General Partner has discretion to determine whether a Material Event (as defined in our Valuation Policy) has occurred, and whether and in what amount to make adjustments to the Value of a REIT Share (as defined in our Valuation Policy), prior to the end of the then-current calendar quarter.
The General Partner may, in its sole discretion, but is not obligated to, determine the Value of a REIT Share as of any particular Valuation Date (as referenced in our Valuation Policy) to be an amount that it believes is more appropriate than the most recently determined NAV per common OP Unit (including by updating a previously determined NAV per common OP Unit) where it believes there has been a Material Change (as defined in our Valuation Policy) (positive or negative) to our NAV per common OP Unit since the end of the prior calendar quarter. If the General Partner determines that a Material Event has not occurred, or determines that one has occurred but does not adjust the Value of a REIT Share to account for such Material Change, you may receive less than realizable value for your investment. On the other hand, if the General Partner determines that a Material Event has occurred and adjusts the Value of a REIT Share to account for such Material Change, the amount of the adjustment may not fully and accurately reflect the impact of the Material Event. As a result, you may receive less than realizable value for your investment. See “ -It may be difficult to reflect, fully and accurately, material events that may impact our quarterly NAV per common OP Unit” below.
Valuations and appraisals of our real estate are estimates of fair value and may not necessarily correspond to realizable value.
The General Partner calculates NAV by valuing our properties quarterly, based on current material market data and other information deemed relevant, with review for reasonableness each quarter by an independent valuation advisor. Each property will be valued by an independent third-party appraisal firm annually. Annual appraisals may be delayed for a short period in certain circumstances. Concurrent with the appraisal process, the General Partner will value each property and, taking into account the appraisal, among other factors, will determine the appropriate valuation within the range provided by the independent third-party appraisal firm.
Although quarterly valuations of each of our real properties will be reviewed for reasonableness by an independent valuation advisor, such reviews are based on asset- and portfolio-level information provided by the General Partner, including historical operating revenues and expenses of the properties, lease agreements on the properties, revenues and expenses of the properties, information regarding recent or planned capital expenditures and any other information relevant to valuing the real property, which information will not be independently verified by the independent valuation advisor. While the independent valuation advisor is responsible for reviewing our property valuations as set forth in our Valuation Policy, the independent valuation advisor is not responsible for, and does not calculate, our NAV per common OP Unit, and the General Partner is ultimately and solely responsible for the determination of our NAV per common OP Unit.
Within the parameters of our Valuation Policy, the valuation methodologies used to value our properties and certain of our investments will involve subjective judgments and projections with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond its control and our control, as well as certain factual matters, and may not be accurate. For example, our independent valuation advisor and other independent third-party appraisal firms will assume that we have clear and marketable title to each real estate property valued, that no title defects exist unless specifically informed to the contrary, that improvements were made in accordance with law, that no hazardous materials are present or were present previously, that no deed restrictions exist, and that no changes to zoning ordinances or regulations governing use, density or shape are pending or being considered. Furthermore, our independent valuation advisor’s review, opinions and conclusions will necessarily be based upon market, economic, financial and other circumstances and conditions existing prior to the valuation, and any material change in such circumstances and conditions may affect our independent valuation advisor’s review and conclusions. Our independent valuation advisor’s review reports may contain other assumptions, qualifications and limitations set forth in the respective appraisal reports that qualify the review, opinions and conclusions set forth therein. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller.
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As such, valuations and appraisals of our properties will be only estimates of fair value, and the carrying value of our real properties may not reflect the price at which the properties could be sold in the market. Our NAV per common OP Unit does not represent the amount of our assets less our liabilities in accordance with GAAP. The difference between carrying value and the ultimate sales price could be material. In addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the appraisal. There will be no retroactive adjustment in the valuation of such assets or the price we paid to redeem common OP Units to the extent such valuations prove to not accurately reflect the realizable value of our assets. Because the price at which your common OP Units may be redeemed by us is generally based on our prior calendar quarter’s NAV per common OP Unit, you may receive less than realizable value for your investment.
Our NAV per common OP Unit may change materially if the appraised values of our properties materially change from prior appraisals, the actual operating results for a particular calendar quarter differ from what we originally budgeted for that quarter or if the value of a liability (contingent or otherwise) is determined to be different than initially anticipated.
Each of our properties will be appraised at least once per year. When these appraisals are considered by the General Partner for purposes of valuing the relevant property, there may be a material change in our NAV per common OP Unit from the value previously reported. In addition, actual operating results for a given calendar quarter may differ from what we originally budgeted for that quarter. It is also possible that we determine that we underestimated or overestimated the value of our existing liabilities (contingent or otherwise) in a prior calendar quarter. Any of the foregoing may cause a material increase or decrease in the NAV per common OP Unit for a subsequent calendar quarter. We will not retroactively adjust the NAV per common OP Unit reported for a previous calendar quarter. Therefore, because a new annual appraisal may differ materially from the prior appraisal, the actual results from operations may be better or worse than what we previously budgeted for a particular calendar quarter or because the value of our liabilities may be different than originally anticipated, the adjustment to take into consideration the new appraisal, actual operating results or new valuation of liabilities may cause the NAV per common OP Unit to increase or decrease, and such increase or decrease will occur only as of the end of the calendar quarter in which the adjustment is made.
It may be difficult to reflect, fully and accurately, material events that may impact our quarterly NAV per common OP Unit.
The General Partner’s determination of our quarterly NAV per common OP Unit will be based in part on appraisals of each of our properties provided annually by independent third-party appraisal firms and reviewed by an independent valuation advisor, each in accordance with Valuation Policy. As a result, our published NAV per common OP Unit in any given calendar quarter may not fully reflect any or all changes in value that may have occurred since the most recent appraisal or valuation. The General Partner will review appraisal reports and is responsible for notifying the applicable independent valuation advisor of the occurrence of any property-specific or market-driven event it believes may cause a material valuation change in the real estate valuation, but it may be difficult to reflect fully and accurately rapidly changing market conditions or material events that may impact the value of our real estate or liabilities between valuations, or to obtain complete information regarding any such events in a timely manner. For example, an unexpected termination or renewal of a material lease, a material increase or decrease in vacancies or an unanticipated structural or environmental event at a property may cause the value of a property to change materially, yet obtaining sufficient relevant information after the occurrence has come to light and/or analyzing fully the financial impact of such an event may be to do and may require some time. As a result, the NAV per common OP Unit may not reflect a material event until such time as sufficient information is available and analyzed, and the financial impact is fully evaluated, such that our NAV per common OP Unit may be appropriately adjusted in accordance with our Valuation Policy. Depending on the circumstance, the resulting potential in our NAV per common OP Unit may be in favor or to the of either unitholders who deliver a Notice of Redemption, or other existing unitholders.
NAV calculations are not governed by governmental or independent securities, financial or accounting rules or standards.
While we believe our NAV calculation methodologies are consistent with standard industry practices, there is no SEC or other regulatory agency rule or regulation that requires we calculate NAV, or the components used in calculation NAV, in a certain way. As a result, other companies in the real estate industry may use different methodologies or assumptions to determine NAV.
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Further, there are no accounting rules or standards that prescribe which components should be used in calculating NAV, and our NAV per common OP Unit is not audited by our independent registered public accounting firm. We calculate and publish NAV per common OP Unit quarterly solely for purposes of establishing the Value of a REIT Share and similar terms as set forth in our Partnership Agreement, including for purposes of redeeming common OP Units in accordance with the Partnership Agreement. You should not view our quarterly NAV per common OP Unit, on its own, as a measure of our historical or future financial condition or performance. The components and methodology used in calculating our NAV per common OP Unit may differ from those used by other companies now or in the future.
In addition, calculations of our NAV per common OP Unit, to the extent that they incorporate valuations of our assets and liabilities, are not prepared in accordance with GAAP. These valuations may differ from liquidation values that could be realized in the event that we were forced to sell assets.
Additionally, errors may occur in calculating our NAV per common OP Unit, which could impact the price at which we redeem common OP Units. If such errors were to occur, the General Partner, depending on the circumstances surrounding each error and the extent of any impact the error has on the price at which common OP Units are redeemed, may determine in its sole discretion to take certain corrective actions in response to such errors, including making adjustments to prior NAV calculations. You should carefully review the disclosure of our Valuation Policy as described above and how NAV per common OP Unit will be calculated.
We may need to adjust the methodologies used in calculating NAV per common OP Unit in certain situations.
While the methodologies contained in our Valuation Policy are designed to operate reliably within a wide variety of circumstances, it is possible that in certain unanticipated situations or after the occurrence of certain extraordinary events (such as a significant disruption in relevant markets, a terrorist attack or an act of nature), our ability to calculate NAV per common OP unit may be impaired or delayed, including, without limitation, circumstances where there is a delay in accessing or receiving information from vendors or other reporting agents upon which we may rely upon in determining the quarterly value of our NAV. In these circumstances, a more accurate valuation of our NAV per common OP unit could be obtained by using different assumptions or methodologies. Accordingly, in special situations when, in the General Partner’s reasonable judgment, the administration of the Valuation Policy would result in a valuation that does not represent a fair and accurate estimate of the value of our investment, alternative methodologies may be applied.
Our independent valuation advisor and/or independent third-party appraisers may have conflicts of interests and other relationships with us and our affiliates.
To the extent engaged, we expect to pay fees to our independent valuation advisor upon its delivery to us of its review reports. We also expect to agree to indemnify any independent valuation advisor against certain liabilities arising out of its engagement.
We expect that any independent valuation advisor and certain of the independent third-party appraisers we engage will have provided, and will be expected to continue to provide, real estate appraisal, appraisal management and real estate valuation advisory services to Blackstone and its affiliates and will have received, and would be expected to continue to receive, fees in connection with such services. We also expect that any independent valuation advisor and certain of the independent third-party appraisers we may engage, and their respective affiliates, may from time to time in the future perform other commercial real estate and financial advisory services for Blackstone and its affiliates, or in transactions related to the properties that are the subjects of the valuations being performed for us, or otherwise, so long as such other services do not adversely affect the independence of the independent valuation advisor or the applicable appraiser as certified in the applicable appraisal report.
We do not make any representations, warranties or guarantees regarding the accuracy of our NAV.
As described above, valuations and appraisals of our real estate are estimates of fair value and may not necessarily correspond to realizable value. Accordingly, we do not represent, warrant or guarantee that:
• a unitholder would be able to realize the NAV per common OP unit for the common OP Units a unitholder owns if the unitholder attempts to sell its common OP Units;
• a unitholder would ultimately realize distributions per common OP unit equal to the NAV per common OP unit for the common OP Units it owns upon liquidation of our assets and settlement of our liabilities or a sale of our company;
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• our common OP Units would trade at their NAV per common OP unit on a national securities exchange;
• a third party would offer the NAV per common OP Unit in an arm’s-length transaction to purchase all or substantially all of our common OP Units; or
• the NAV per Common OP Unit would equate to a market price of an open-ended real estate fund.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
The AIR Operating Partnership takes a risk-based approach to cybersecurity and has implemented cybersecurity policies throughout its operations that are designed to address cybersecurity threats and incidents . We regularly assesses risks from cybersecurity threats, monitors its information systems for potential vulnerabilities, and tests those systems according to our cybersecurity policies, standards, processes, and practices, which are integrated into our overall approach to enterprise risk management. To protect its information systems from cybersecurity threats, We use various security tools that help it identify, escalate, investigate, resolve, and recover from security incidents in a timely manner. Our cybersecurity program is designed to align with the National Institute of Technology Standards Cybersecurity Framework 2.0, which provides a structured approach for governing, assessing, identifying, and managing material risks from cybersecurity threats.
The AIR Operating Partnership’s technology team, under the leadership of our Executive Vice President of Technology and Chief Technology Officer, who has over 30 years of technology management experience, defines an annual work plan designed to maintain strong cybersecurity maturity, set improvement objectives of key controls and systems, including feedback from third-party assessments, and identify and implement on-going investments to replace or upgrade systems or technologies and proactively maintain strong security. As part of our annual planning, management conducts regular tabletop testing of our incident response plan to increase awareness, establish key decision-making criteria, ensure effective communication, and comply with our disclosure obligations. We also partner with third-party experts to assess the effectiveness of our cybersecurity prevention and response systems and processes (e.g., periodic penetration testing and assessments of IT general controls). We also engage vendors to enhance cybersecurity safeguards and improve response and updates or replaces systems and applications as appropriate to data processing and storage management and security. To further protect our information systems, we structure and monitor our relationships with third-party service providers and periodically conduct due diligence on their cybersecurity architecture and process design .
To date, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us and we believe are not reasonably likely to have a material adverse effect on us, including its business strategy, results of operations, or financial condition. For additional information on cybersecurity risks and potential related impacts on AIR Operating Partnership, refer to “Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection.” in Part I , Item 1A , Risk Factors.
Governance
Our Executive Vice President of Technology and Chief Technology Officer, in coordination with other members of AIR Operating Partnership’s management , is responsible for leading the assessment and management of cybersecurity threats. AIR Operating Partnership has implemented a governance program for its cybersecurity efforts. This includes regularly updating privacy notices, terms of use, and lease documents, as well as identifying responsible teammates to facilitate the implementation of cybersecurity priorities. These teammates report regularly to senior management on risk identification, safeguards, and mitigation steps. AIR Operating Partnership has developed and implemented policies to identify and mitigate cybersecurity risks and provides training to teammates at onboarding and annually thereafter. Updates are communicated to all teammates, and actionable guidance is provided when new risks arise. Our Board of Directors (i.e., the Board of Directors of Apartment Income REIT LLC, with Apartment Income REIT LLC as the sole member of the sole member of the General Partner) will receive updates on the AIR Operating Partnership’s cybersecurity profile risk assessment and technology environment and the broader technology landscape as and when appropriate.
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ITEM 2. PROPERTIES
Additional information about our consolidated real estate, including property debt, is contained in “ Schedule III – Real Estate and Accumulated Depreciation ” in this Annual Report on Form 10-K.
Our portfolio is diversified by both geography and price point, with a mix of urban and suburban submarkets, and consists of market rate apartment communities in which we own a substantial interest. Our portfolio includes garden style, mid-rise, and high-rise apartment communities located in nine states and the District of Columbia. Our portfolio strategy seeks predictable rent growth from a portfolio of apartment communities diversified among some of the largest markets in the United States. The following table sets forth information on the apartment communities in our portfolio as of December 31, 2025:
Number of
Apartment
Communities
Number of
Apartment
Homes
Average
Economic
Ownership
Bay Area
Boston
Denver
Los Angeles
Miami
Philadelphia
San Diego
Washington, D.C.
Other markets
Total portfolio (1)
(1) Total portfolio represents the number of apartment communities in which we owned an equity interest.
As of December 31, 2025, on a consolidated basis, our apartment communities contained, on average, 368 apartment homes, with the largest community containing 2,113 apartment homes. These apartment communities offer residents a range of amenities, including resort pools with cabanas, grills, clubhouses, spas, fitness centers, package lockers, dog parks, and large open spaces. Many of the apartment homes offer features such as granite countertops, wood flooring, stainless steel appliances, fireplaces, spacious closets, washer and dryer connections, balconies, and patios.
As of December 31, 2025, on a consolidated basis, apartment communities in our portfolio were encumbered by, in aggregate, $5.7 billion of property debt with a weighted-average interest rate of 5.8% and a weighted-average maturity of 4.4 years. The apartment communities collateralizing this non-recourse property debt have an aggregate net book value of $4.8 billion.
ITEM 3. LEGAL PROCEEDINGS
Information regarding legal matters included in Note 7 to our consolidated financial statements in Item 8 of this report on Form 10-K is incorporated by reference into this Item 3 . In addition to the matters referred to in Note 7 , we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Interests in the AIR Operating Partnership that are held by limited partners are referred to as OP Units. OP Units include common partnership units (“common OP Units”) and partnership preferred units (“preferred OP Units”). There is no public market for OP Units, and we have no intention of listing them on any securities exchange. In addition, the Partnership Agreement restricts the transferability of OP Units.
On March 6, 2026, there were 153,585,782 common partnership units and equivalents outstanding (144,568,877 of which were held by the General Partner and Special Limited Partner) that were held by 1,509 unitholders of record.
Unregistered Sales of Equity Securities
The AIR Operating Partnership did not issue any unregistered OP units during the three months ended December 31, 2025.
Repurchases of Equity Securities
The Partnership Agreement generally provides that after holding common OP Units for one year, limited partners have the right to redeem their common OP Units for cash. The following table summarizes the AIR Operating Partnership’s repurchases or redemptions of common OP Units in exchange for cash:
Fiscal period
Total
Number of
Units
Repurchased
Average
Price Paid
per Unit (1)
Total Number of
Units Repurchased as Part
of Publicly Announced
Plans or Programs
Maximum Number
of Units that May Yet
Be Repurchased Under
Plans or Programs (2)
October 1 – October 31, 2025
November 1 – November 30, 2025
December 1 – December 31, 2025
Total
(1) December price represents the average price paid after consideration of the December 2025 distribution.
(2) The terms of the Partnership Agreement of AIR Operating Partnership do not provide for a maximum number of OP Units that may be repurchased, and other than the express terms of its Partnership Agreement, we have no publicly announced plans or programs of repurchase.
For additional information regarding the calculation of NAV, please refer to Management's Discussion And Analysis of Financial Condition and Results of Operations included in Item 7.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Because our operating results depend primarily on income from our apartment communities, the supply of and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our apartment communities and the pace and price at which we dispose of our apartment communities affects our operating results.
The following discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2025, compared to 2024, should be read in conjunction with the accompanying consolidated financial statements in Item 8 . For discussion of the year ended December 31, 2024, compared to 2023, please refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the subheading “Results of Operations for the Year Ended December 31, 2024, Compared to 2023” included in the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2024.
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Financial Highlights
Net income (loss) attributable to our common unitholders per unit, on a dilutive basis, was $1.17 for the year ended December 31, 2025, compared to a net loss of ($2.38) for the year ended December 31, 2024. The increase in net income (loss) was driven by higher gains on dispositions of real estate, a decrease in loss on extinguishment of debt, and non-recurring costs in the prior year, including Merger-related costs, project cost write-offs, separation expenses, and accelerated share-based compensation due to executive departures in 2024. This was offset by an increase in interest expense and the change in (loss) gain on derivative instruments.
Results of Operations for the Year Ended December 31, 2025, Compared to 2024
Real Estate Operations
Real Estate Operations includes proportionate property NOI for two business segments: Same Store and Other Real Estate. Please see Note 1 3 to the consolidated financial statements for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.
We use proportionate property NOI to assess the operating performance of our communities. We believe proportionate information benefits the users of our financial information by providing the amount of revenues, expenses, assets, liabilities, and other items attributable to our unitholders.
Proportionate Property NOI reflects our share of rental and other property revenues, less property management and operating expenses. Revenues include utility reimbursements. Property management and operating expenses include property management fees charged to the properties, cash ground lease expense, real estate taxes, and insurance.
We do not include indirect offsite costs associated with centralized property support services billed to the properties, corporate property management expense, or casualty gains or losses in our assessment of segment performance. Accordingly, these items are included within Corporate and Other results discussed below.
In 2025, we focused on maximizing value creation by prioritizing higher rental rates aligned with the acceleration of seasonal demand. As part of this strategy, we intentionally accepted a lower Average Daily Occupancy (ADO) compared to 2024. This strategic pivot drove an improvement in the proportionate NOI relative to the comparable period in 2024.
For the year ended December 31, 2025, compared to 2024, our proportionate property NOI increased by $14.8 million, or 3.1%, which was primarily driven by Same Store NOI growth of $11.9 million, or 2.5%. Within Same Store NOI, revenues increased by $17.8 million, or 2.5%, primarily attributable to a 1.7% increase in residential revenue driven by a 260-basis point increase in residential rents offset partially by a 110-basis point decrease in ADO. The remaining revenue growth was attributable to increased utility reimbursements and growth in ancillary revenues. Same Store property operating expenses increased by $5.9 million, or 2.4%, primarily attributable to higher real estate taxes, insurance costs, and utility expenses in the current year, offset partially by lower property management expenses billed to the properties.
Corporate & Other
Total Income (loss) before income tax benefit (expense) for the Corporate and Other contains the results from our apartment communities sold or held for sale, which we do not allocate to our operating segments for purposes of evaluating performance. Also included in this section are third-party property management revenues, the financial impacts of any casualty losses, indirect offsite costs associated with property G&A, total company depreciation and amortization, and interest expense and income.
Total Revenues and Property Management and Operating Expenses
Operating income includes property management revenue, the results of apartment communities sold or held for sale, corporate property management expenses, and indirect offsite costs.
For the year ended December 31, 2025, compared to 2024, non-segment real estate operations decreased by $10.7 million, due primarily to a reduction in NOI from sold properties and a change in methodology related to the allocation of human resources and information technology costs from property management expenses to general and administrative expenses, offset partially by an increase in property management revenue.
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General and Administrative Expenses
For the year ended December 31, 2025, compared to 2024, general and administrative expenses increased by $1.5 million, due to a change in methodology related to the allocation of human resources and information technology costs from property management expenses to general and administrative expenses, offset partially by public company costs that were eliminated as a result of the Merger.
Other Expenses, Net
Other expenses, net, includes costs associated with our risk management activities, partnership administration expenses, ground leases and certain non-recurring items.
For the year ended December 31, 2025, compared to 2024, other expenses, net decreased by $39.9 million, due to the prior year write-off of costs associated with pre-development, development, and redevelopment projects, decreased separation costs, including the acceleration of share-based compensation expense due to the departure of certain executives in 2024, and a decrease in non-recurring costs related to a business transformation project and certain one-time legal matters in the prior year.
Interest Income
For the year ended December 31, 2025, compared to 2024, interest income increased by $9.8 million, due primarily to higher cash on hand invested in short-term liquid investments.
Interest Expense
For the year ended December 31, 2025, compared to 2024, interest expense increased by $108.7 million, due primarily to debt placed as a result of the Merger in 2024.
Loss on Extinguishment of Debt
For the year ended December 31, 2025, compared to 2024, loss on extinguishment of debt decreased by $33.8 million, due primarily to the non-cash write-off of deferred issuance costs and prepayment penalties incurred from the early payment of debt in connection with the Merger in 2024.
Gain on Dispositions of Real Estate and Impairments of Real Estate, Net
During the year ended December 31, 2025, we recognized $445.1 million of gain on dispositions of real estate due to the sale of seven apartment communities.
During the year ended December 31, 2024, we recognized $4.0 million of gain on dispositions of real estate due to the contribution of one property to the Core JV in 2024.
Gain (Loss) on Derivative Instruments, Net
During the year ended December 31, 2025, we recognized a loss of $2.8 million due primarily to the mark-to-market valuation changes in interest rate swaps and interest rate caps, net during the period.
During the year ended December 31, 2024, we recognized $11.2 million of gains due primarily to the mark-to-market valuation changes in interest rate swaps and interest rate caps, net during the period.
Loss from Unconsolidated Real Estate Partnerships
For the year ended December 31, 2025, loss from unconsolidated real estate partnerships decreased $3.4 million, compared to 2024 primarily due to an increase in NOI from our unconsolidated joint ventures and a reduction in amortization expense of intangible assets.
Merger-Related Costs
During the year ended December 31, 2024, we incurred $169.4 million of costs associated with the Merger.
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Net Asset Value
The net asset value (“NAV”) of the common OP Unit is determined by the General Partner in good faith on the basis of such information as it considers, in its reasonable judgment, appropriate based on the valuation policy furnished as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on July 1, 2024.
During the quarter ended December 31, 2025, the NAV of the common OP Units for purposes of redemption, as adjusted for a special distribution, was $31.04. As of December 31, 2025, the NAV of the common OP Units for purposes of redemption was determined to be $30.83 per common OP Unit, which will be the basis for the NAV through the quarter ending March 31, 2026, adjusted for any distributions or material changes.
Liquidity and Capital Resources
Liquidity
Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flows from operations and funding from our General Partner and Special Limited Partner. Additional sources are proceeds from dispositions of apartment communities, proceeds from refinancing existing property debt and borrowings under new property debt. As of December 31, 2025, our cash and cash equivalents and restricted cash was $372.4 million.
Subsequent to December 31, 2025, we paid distributions to holders of record of common OP Units and LTIP units in the amount of $104.6 million and $45.8 million, refer to Note 3 to the consolidated financial statements in Item 8 . After these distributions, our remaining cash on hand, without consideration for additional operating cash flows, would be $221.4 million.
We have $199.2 million remaining in outstanding non-recourse property debt maturing through 2027. Based on current market conditions, we expect to refinance the maturing debt with new non-recourse property debt; however, if unforeseen market conditions occur, we have sufficient cash and cash equivalents on hand to repay all debt with a maturity date through the second quarter of 2027.
For further information on our liquidity requirements related to our contractual obligations and commitments, refer to Note 4 , Note 5 , Note 7 , and Note 8 to the consolidated financial statements in Item 8 . In addition to the commitments outlined in the aforementioned notes, we also anticipate interest payments, net of the impact of our economic hedges, for the years ending December 31, 2026 through 2030 and thereafter of approximately $296.0 million, $282.0 million, $265.0 million, $198.0 million, $28.0 million and $51.0 million, respectively, in the aggregate thereafter based on balances outstanding as of December 31, 2025.
Leverage and Capital Resources
The availability of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing. Any adverse changes in the lending environment could negatively affect our liquidity. If financing options become unavailable for our future debt needs, we may consider alternative sources of liquidity, such as reductions in capital spending, or proceeds from the sale of apartment communities.
The combination of non-recourse debt, preferred OP Units, and redeemable noncontrolling interests in a consolidated real estate partnership comprise our total leverage. The weighted-average remaining term to maturity for our total leverage was 4.5 years as of December 31, 2025, inclusive of extension options, with a weighted-average interest rate of 5.8%, after consideration of our interest rate swaps and interest rate caps.
Changes in Cash, Cash Equivalents and Restricted Cash
The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing, and financing activities, which are presented in our consolidated statements of cash flows in Item 8 of this report.
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Operating Activities
For the year ended December 31, 2025, net cash provided by operating activities was $141.9 million. Our operating cash flow is affected primarily by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities, and changes in working capital items. Cash provided by operating activities for the year ended December 31, 2025, increased by $30.8 million compared to 2024, due primarily to merger-related costs paid in the prior year in connection with the Merger, partially offset by higher cash paid for interest in the current year due to higher average debt balances outstanding throughout the year.
Investing Activities
For the year ended December 31, 2025, our net cash provided by investing activities of $457.6 million consisted primarily of proceeds from dispositions of real estate, partially offset by capital expenditures.
For the year ended December 31, 2024, our net cash used in investing activities of $385.1 million consisted primarily of purchases of real estate and capital expenditures.
Capital expenditures totaled $119.9 million and $147.3 million during the years ended December 31, 2025 and 2024, respectively. Of these amounts, expenditures anticipated to increase our rental revenues, which include kitchen and bath remodeling, energy conservation projects, and investments in more durable, longer-lived materials, were $54.9 million and $61.0 million, respectively.
For the years ended December 31, 2025 and 2024, we capitalized $6.7 million and $13.3 million of indirect costs, respectively.
Financing Activities
Net cash used in financing activities of $871.7 million for the year ended December 31, 2025, consisted primarily of net principal repayments on non-recourse property debt, payment of distributions to the holders of common OP, and distributions to noncontrolling interests from dispositions.
Net cash provided by financing activities of $801.0 million for the year ended December 31, 2024, consisted primarily of net proceeds from debt transactions, offset partially by merger-related distributions.
Future Capital Needs
We expect to fund any future acquisitions, debt maturities, and other capital spending principally with proceeds from apartment community sales, additional borrowings, operating cash flows, and funding from our General Partner and Special Limited Partner. We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for the next 12 months.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the following critical accounting estimates involve our more significant judgments used in the preparation of our consolidated financial statements.
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Impairment of Long-Lived Assets
Real estate and other long-lived assets to be held and used are individually evaluated for impairment when conditions exist that may indicate the carrying amount of a long-lived asset may not be recoverable. We use the held for sale impairment model for properties classified as held for sale, whereby an impairment charge is recognized if the carrying amount of the long-lived asset classified as held for sale exceeds its fair value less cost to sell. Upon determination that an impairment has occurred, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the community. The measurement of the impairment loss is based on the fair value of the communities and incorporates various estimates, assumptions, and market data, the most significant being market rental rates, operating expense assumptions, expected hold period, capitalization rates, and purchase and sale agreements. We project future rental revenue growth rates using forecasted rates from third-party market research analytics. Property expense growth rates and capitalization rates are based on the apartment communities’ historical, current, and expected future operating results, existing operating expense assumptions, and operational strategies. These projections are adjusted to reflect current economic conditions and require considerable management judgment. We did not recognize any such during the years ended December 31, 2025 and 2024. We recognized an on real estate of $23.6 million under the held for sale model during the year ended December 31, 2023.
