Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report. Historical results and trends which might appear in the consolidated financial statements should not be interpreted as being indicative of future operations.
Discussion of our year-to-date comparisons between 2025 and 2024 is presented below. Year-to-date comparisons between 2024 and 2023 can be found in "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
We consider portions of this report to be "forward-looking" within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Exchange Act, both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions, or other items relating to the future; forward-looking statements are not guarantees of future performance, results, or events. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance our expectations will be achieved. Any statements contained herein which are not statements of historical fact should be deemed forward-looking statements. Reliance should not be placed on these forward-looking statements as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.
Factors which may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include, but are not limited to, the following:
• Volatility in capital and credit markets, cost increases, or other unfavorable changes in economic conditions, either nationally or regionally in one or more of the markets in which we operate, could adversely impact us;
• Short-term leases could expose us to the effects of declining market rents;
• We could be negatively impacted by the risks associated with land holdings and related activities;
• Development, repositions, redevelopment and construction risks could impact our profitability;
• Our acquisition strategy may not produce the cash flows expected;
• Changes in rent control or rent stabilization laws and regulations could adversely affect our operations and property values;
• Failure to qualify as a REIT could have adverse consequences;
• Tax laws may continue to change at any time and any such legislative or other actions could have a negative effect on us;
• A cybersecurity incident and other technology disruptions could negatively impact our business;
• We have significant debt, which could have adverse consequences;
• Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders;
• Issuances of additional debt may adversely impact our financial condition;
• We may be unable to renew, repay, or refinance our outstanding debt;
• Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets;
• Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders;
• The form, timing, and amount of dividend distributions in future periods may vary and be impacted by economic and other considerations;
• Litigation risks could affect our business;
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• Damage from catastrophic weather and other natural events could result in losses;
• Competition could adversely affect our ability to acquire properties;
• We could be adversely impacted due to our share price fluctuations; and
• Rising interest rates could increase our borrowing costs, lower the value of our real estate, and decrease our share price, leading investors to seek higher yields through other investments.
These forward-looking statements represent our estimates and assumptions as of the date of this report, and we assume no obligation to update or supplement forward-looking statements because of subsequent events.
Executive Summary
We are primarily engaged in the ownership, management, development, reposition, redevelopment, acquisition, and construction of multifamily apartment communities. Overall, we focus on investing in markets characterized by high-growth economic conditions, strong employment, and attractive quality of life which we believe leads to higher demand and retention of our apartments. As of December 31, 2025, we owned interests in, operated, or were developing 175 multifamily properties comprised of 59,921 apartment homes across the United States as detailed in the Property Portfolio table below. In addition, we own other land holdings which we may develop into multifamily apartment communities in the future.
Business Environment and Current Outlook
Our results for the year ended December 31, 2025, reflect an increase in same store revenues of approximately 0.8% as compared to the same period in 2024. The increase was primarily driven by higher revenues from other income and favorable changes in occupancy, which we believe was primarily attributable to favorable demographics with a higher propensity to rent versus buy and continued demand for multifamily housing in our markets.
We believe the levels of new multifamily supply in the submarkets and asset classes in which we operate are manageable and moderating levels of new supply should be met with continued demand to absorb these new deliveries. However, if this were to change or other economic conditions were to worsen, our operating results could be adversely affected.
Consolidated Results
Net income attributable to common shareholders was $384.5 million and $163.3 million for the years ended December 31, 2025 and 2024, respectively. The increase during the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to an increase in gains on sales of operating properties and a lower impairment charge associated with land development activities in 2025 as compared to 2024. The increase was partially offset by higher depreciation expense and amortization of in-place leases relating to the acquisition of four operating properties completed in 2025. See further discussion of our 2025 operations as compared to 2024 in "Results of Operations," below.
Construction and Development Activity
At December 31, 2025, we had a total of three projects under construction to be comprised of 1,162 apartment homes. Initial occupancy for these projects is expected to begin within the next two years. As of December 31, 2025, we estimated the remaining cost to complete the construction of these properties to be approximately $213.8 million.
We review our long-lived assets on an annual basis or whenever events or circumstances indicate the carrying amount of an asset may not be recoverable and our impairment evaluations take into consideration the current and anticipated economic climate. In the fourth quarter of 2025, we recorded an impairment charge of approximately $12.9 million related to two undeveloped land parcels as the estimated fair value was less than its book value. We currently have two other land parcels held for future development we plan to develop, and the commencement of future developments may be impacted by macroeconomic issues, multifamily market conditions, and other factors. We will continue to evaluate future development starts based on market, economic, and capital market conditions. There can be no assurance we will not have impairment charges in the future.
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Acquisitions
In 2025, we acquired four operating properties, consisting of a 352-apartment home community in Leander, Texas in January, a 435-apartment home community in Nashville, Tennessee in February, a 360-apartment home community in Clearwater, Florida in May, and a 322-apartment home community in Orlando, Florida in December for approximately $422.9 million.
Dispositions
In 2025, we completed five dispositions consisting of one operating property in Houston, Texas in June, one dual-phased operating property in Houston, Texas and one operating property in Irving, Texas in July, and one dual-phased operating property in Houston, Texas and one operating property in Phoenix, Arizona in November for a total of approximately $374.5 million and recognized a total gain of approximately $260.9 million.
Capital Market Highlights
In February 2025, we established a commercial paper program (the "Program") under which we may issue the commercial paper notes (the "Notes") under the exemption from registration contained in Section (4)(1) of the Securities Act. Amounts available under the Program may be borrowed, repaid, and reborrowed from time to time, with the aggregate face or principal amount of the Notes outstanding under the Program at any time not to exceed $600.0 million. At December 31, 2025, we had an aggregate of $590.0 million principal amount of Notes outstanding under the Program which had a weighted average interest rate of 3.84%.
In 2025, we repurchased 2,531,018 common shares at an average price of $106.92 per share for approximately $270.7 million.
Subsequent Events
In January 2026, we repurchased 1,096,807 common shares at an average price of $110.03 per share for approximately $120.7 million. In February 2026, our Board of Trust Managers authorized a new $600.0 million share repurchase plan which allows for the repurchase of our common equity securities through open-market purchases, block purchases, and privately negotiated transactions. This new plan terminated and replaced our previous share repurchase plan, which had approximately $58.6 million remaining for repurchases at the time it was terminated. As of the date of this filing, the full $600.0 million authorized under the new plan remained available for repurchases.
Future Outlook
Subject to market conditions, we intend to continue to seek opportunities to acquire operating communities, develop new communities, and to redevelop and reposition existing communities. We also intend to evaluate our operating property and land development portfolios and plan to continue our practice of selective dispositions and redeploying capital as market conditions warrant and opportunities arise. We expect to maintain a strong balance sheet and preserve our financial flexibility by continuing to focus on our core fundamentals which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our short-term and long-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured revolving credit facility and commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2023 at-the-market ("ATM") program, other unsecured borrowings, or secured mortgages.
As of December 31, 2025, we had approximately $1.2 billion available under our unsecured revolving credit facility, which we have at our option, the ability to extend to August 2027 and the ability to increase the facility up to $500 million subject to certain conditions. We currently plan to use our unsecured revolving credit facility as a liquidity backstop for borrowings under our commercial paper program. At December 31, 2025, we had $590.0 million outstanding under our commercial paper program. Over the next 12 months, contractual debt maturities include these commercial paper borrowings as well as other debt obligations of $567.8 million. Additionally, as of December 31, 2025, and through the date of this filing, we also had common shares having an aggregate offering price of up to $500.0 million remaining available for sale under our 2023 ATM program. We believe we are well-positioned with a strong balance sheet and sufficient liquidity to fund future acquisitions, new development, redevelopment, and other capital funding requirements. We will, however, continue to assess and take further actions we believe are prudent to meet our objectives and capital requirements.
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Property Portfolio
Our multifamily property portfolio is summarized as follows:
December 31, 2025
December 31, 2024
Number of
Homes
Properties
Number of
Homes
Properties
Operating Properties
Houston, Texas
Washington, D.C. Metro
Dallas/Fort Worth, Texas
Orlando, Florida
Atlanta, Georgia
Phoenix, Arizona
Raleigh, North Carolina
Austin, Texas
Charlotte, North Carolina
Tampa/St. Petersburg, Florida
Southeast Florida
Denver, Colorado
Los Angeles/Orange County, California
San Diego/Inland Empire, California
Nashville, Tennessee
Total Operating Properties
Properties Under Construction
Charlotte, North Carolina
Nashville, Tennessee
Raleigh, North Carolina
Total Properties Under Construction
Total Properties
Stabilized Communities
We generally consider a property stabilized once it reaches 90% occupancy. During the year ended December 31, 2025, stabilization was achieved at three operating properties as follows:
Properties and Locations
Number of Homes
Date of Construction Completion
Date of Stabilization
Operating Properties
Camden Woodmill Creek
Spring, TX
Camden Durham
Durham, NC
Camden Long Meadow Farms
Richmond, TX
Total
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Completed Construction in Lease-Up
At December 31, 2025, there was one completed operating property in lease-up as follows:
($ in millions)
Property and Location
Number of
Homes
Cost
Incurred (1)
% Leased at 1/31/2026
Date of Construction Completion
Estimated Date of Stabilization
Operating Property
Camden Village District
Raleigh, NC
Consolidated total
(1) Excludes leasing costs, which are expensed as incurred.
Properties Under Development and Land
Our consolidated balance sheet at December 31, 2025 included approximately $419.2 million related to properties under development and land. Of this amount, approximately $278.2 million related to our projects currently under construction. In addition, we had approximately $141.0 million primarily invested in land held for future development and land holdings, which included approximately $96.1 million related to land held for future development and $44.9 million invested in land which we may develop in the future.
Properties Under Construction. At December 31, 2025, we had three properties in various stages of construction as follows:
($ in millions)
Properties and Locations
Number of
Homes
Estimated
Cost
Cost
Incurred
Included in
Properties
Under
Development
Estimated
Date of
Construction
Completion
Estimated
Date of
Stabilization
Communities Under Construction
Camden South Charlotte
Charlotte, NC
Camden Blakeney
Charlotte, NC
Camden Nations
Nashville, TN
Total
Development Pipeline Communities . At December 31, 2025, we had the following communities undergoing development activities:
($ in millions)
Properties and Locations
Projected
Homes
Total Estimated
Cost (1)
Cost to Date
Camden Baker
Denver, CO
Camden Gulch
Nashville, TN
(1) Represents our estimate of total costs we expect to incur on these projects. However, forward-looking statements are not guarantees of future performance, results, or events. Although we believe these expectations are based upon reasonable assumptions, future events rarely develop exactly as forecasted and estimates routinely require adjustment.
Land Holdings . At December 31, 2025, we also had four undeveloped land tracts with a valuation of approximately $44.9 million.
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Geographic Diversification
At December 31, 2025 and 2024, the book value of our real estate assets by various markets, excluding depreciation, were as follows:
($ in thousands)
Houston, Texas
Washington, D.C. Metro
Dallas, Texas
Atlanta, Georgia
Charlotte, North Carolina
Orlando, Florida
Tampa, Florida
Phoenix, Arizona
Austin, Texas
Raleigh, North Carolina
Southeast Florida
Los Angeles/Orange County, California
Denver, Colorado
Nashville, Tennessee
San Diego/Inland Empire, California
Total
Results of Operations
Changes in revenues and expenses related to our operating properties from period-to-period are due primarily to the performance of stabilized properties in the portfolio, the lease-up of newly-constructed properties, and the impact of acquisitions and dispositions.
Management considers property net operating income ("NOI") to be an appropriate supplemental measure of operating performance to net income because it reflects the operating performance of our communities without an allocation of corporate level property management overhead or general and administrative costs. We define NOI as total property revenue less total property operating expenses. NOI is further detailed in the Property-Level NOI table as seen below, and is not defined by accounting principles generally accepted in the United States of America ("GAAP") and should not be considered an alternative to net income as an indication of our operating performance. Additionally, NOI as disclosed by other REITs may not be comparable to our calculation.
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Reconciliations of net income to NOI for the year ended December 31, 2025 and 2024 are as follows:
(in thousands)
Net income
Less: Fee and asset management income
Less: Interest and other income
Less: Income on deferred compensation plans
Plus: Property management expense
Plus: Fee and asset management expense
Plus: General and administrative expense
Plus: Interest expense
Plus: Depreciation and amortization expense
Plus: Expense on deferred compensation plans
Plus: Impairment associated with land development activities
Plus: Loss on early retirement of debt
Less: Gain on sale of operating properties
Plus: Income tax expense
Net operating income
Property-Level NOI (1)
Property NOI, as reconciled above, is detailed further into the categories below for the year ended December 31, 2025 as compared to 2024:
Number of
Homes at
Year Ended
December 31,
Change
($ in thousands)
Property revenues:
Same store communities
Non-same store communities
Development and lease-up communities
Dispositions/other
Total property revenues
Property expenses:
Same store communities
Non-same store communities
Development and lease-up communities
Dispositions/other
Total property expenses
Property NOI:
Same store communities
Non-same store communities
Development and lease-up communities
Dispositions/other
Total property NOI
* Not a meaningful percentage.
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(1) For 2025, same store communities are communities we owned and were stabilized since January 1, 2024, excluding communities under redevelopment and properties held for sale. Non-same store communities are stabilized communities not owned or stabilized since January 1, 2024, including communities under redevelopment and excluding properties held for sale. We define communities under redevelopment as communities with capital expenditures that improve a community's cash flow and competitive position through extensive unit, exterior building, common area, and amenity upgrades. Management believes same store information is useful as it allows both management and investors to determine financial results over a particular period for the same set of communities. Development and lease-up communities are non-stabilized communities we have developed since January 1, 2024, excluding properties held for sale. Dispositions/other includes those communities disposed of or held for sale which are not classified as discontinued operations, non-multifamily rental properties, expenses related to land holdings not under active development, and other miscellaneous revenues and expenses, including net above or below market leases, casualty-related expenses net of recoveries, and severance related costs.
Same Store Analysis
Same store property NOI increased approximately $2.4 million for the year ended December 31, 2025 as compared to the same period in 2024. The increase was due to an increase of approximately $11.0 million in same store property revenues, partially offset by an increase of approximately $8.6 million in same store property expenses, for the year ended December 31, 2025, as compared to the same period in 2024.
The $11.0 million increase in same store property revenues for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to an increase of approximately $4.5 million from our utility and ancillary income programs, approximately $3.6 million due to favorable changes in occupancy, $1.9 million of lower uncollectible revenues, and approximately $0.8 million increase from other rental income.
The $8.6 million increase in same store property expenses for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to higher salaries and benefits of $3.0 million, higher general and administrative and marketing and leasing expenses of approximately $2.8 million, higher utilities of approximately $2.3 million, and higher repair and maintenance expense of approximately $0.5 million.
Non-same Store and Development and Lease-up Analysis
Property NOI from non-same store and development and lease-up communities increased approximately $21.7 million for the year ended December 31, 2025, as compared to the same period in 2024.
The increase was related to higher NOI from our non-same store communities of approximately $21.0 million for the year ended December 31, 2025, as compared to the same period in 2024. The increase was primarily due to the acquisition of four operating properties completed in 2025, and the stabilization of one operating property in 2024 and three additional properties in 2025.
The increase was also related to higher NOI from our development and lease-up communities of $0.7 million for the year ended December 31, 2025, as compared to the same period in 2024. The increase was primarily due to the timing of lease-up for one operating property which finished construction in 2025.
The following table details the changes, described above, relating to non-same store and development and lease-up NOI:
For the year ended December 31,
(in millions)
2025 compared to 2024
Property Revenues:
Revenues from acquisitions
Revenues from non-same store stabilized properties
Revenues from development and lease-up properties
Other non-same store
Property Expenses:
Expenses from acquisitions
Expenses from non-same store stabilized properties
Expenses from development and lease-up properties
Other non-same store
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For the year ended December 31,
(in millions)
2025 compared to 2024
Property NOI:
NOI from acquisitions
NOI from non-same store stabilized properties
NOI from development and lease-up properties
Other non-same store
Dispositions/Other Property Analysis
Dispositions/other property NOI decreased approximately $2.3 million for the year ended December 31, 2025 as compared to the same period in 2024. The decrease was due to lower NOI of approximately $8.0 million related to five dispositions completed in 2025, partially offset by higher other property NOI of approximately $5.7 million, primarily driven by lower storm-related expenses during the year ended December 31, 2025. The other property NOI increase was partially offset by lower revenues due to higher business interruption insurance proceeds received during the year ended December 31, 2024.
Non-Property Income
Year Ended
December 31,
Change
($ in thousands)
Fee and asset management
Interest and other income
Income on deferred compensation plans
Total non-property income
*Not a meaningful percentage.
Fee and asset management income from construction and development activities at our third-party construction projects increased approximately $5.8 million for the year ended December 31, 2025 as compared to 2024. The increase was primarily related to higher fees earned on the completion of third-party construction projects during 2025 as compared to the same period in 2024.
Interest and other income decreased approximately $4.2 million for the year ended December 31, 2025, as compared to the same period in 2024. The decrease was primarily due to having lower average cash balances during the year ended December 31, 2025 as compared to 2024.
Our deferred compensation plans recognized income of approximately $19.3 million and $12.6 million in 2025 and 2024, respectively. The change was related to the performance of the investments held in deferred compensation plans for participants and was directly offset by the expense related to these plans, as discussed below.
Other Expenses
Year Ended
December 31,
Change
($ in thousands)
Property management
Fee and asset management
General and administrative
Interest
Depreciation and amortization
Expense on deferred compensation plans
Total other expenses
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Property management expenses, which represent regional supervision and accounting costs related to property operations, decreased approximately $0.9 million for the year ended December 31, 2025 as compared to the same period in 2024. The decrease was primarily related to lower advocacy contributions during the year ended December 31, 2025 as compared to the same period in 2024, partially offset by higher salaries, benefits, and incentive compensation costs. Property management expenses were 2.4% and 2.5% of total property revenues for the years ended December 31, 2025 and 2024, respectively.
Fee and asset management expense from construction and development activities at our third-party projects increased approximately $0.9 million for the year ended December 31, 2025 as compared to 2024 primarily due to the increase in third-party construction activity in 2025.
General and administrative expense increased approximately $7.0 million for the year ended December 31, 2025 as compared to 2024. The increase was primarily related to higher legal expenses and higher acquisition pursuit costs. Excluding income on deferred compensation plans, general and administrative expense was 5.0% and 4.7% of total revenues for the years ended December 31, 2025 and 2024, respectively.
Interest expense increased approximately $8.4 million for the year ended December 31, 2025 as compared to 2024. The increase was primarily due to increases in interest expense of $16.5 million relating to having higher average balances on our commercial paper program entered into in February 2025 and decreases in capitalized interest expense of $3.8 million due to having lower average balances in assets under construction during the year ended December 31, 2025 as compared to the same period in 2024. The increase was partially offset by lower interest expense of $11.9 million relating to debt repayments during 2024, including $250 million, 3.68% senior unsecured notes in September, and a $300 million, 6.21% unsecured term loan and $250.0 million of 4.36% senior unsecured notes in January, as well as lower variable rate interest expense recognized on the $500 million senior unsecured notes during the year ended December 31, 2025 as compared to the same period in 2024.
Depreciation and amortization expense increased approximately $29.0 million for the year ended December 31, 2025 as compared to 2024. The increase was primarily due to higher depreciation expense and amortization of in-place leases of $31.4 million related to the acquisition of operating properties in January, February, May, and December 2025. The increase was partially offset by lower depreciation expense of $3.5 million related to the dispositions of an operating property and a dual-phased operating property in November 2025, an operating property and a dual-phased operating property in July 2025, and an operating property in each of June 2025 and February 2024.
Our deferred compensation plans incurred an expense of approximately $19.3 million and $12.6 million in 2025 and 2024, respectively. The change was related to the performance of the investments held in deferred compensation plans for participants and were directly offset by the income related to these plans, as discussed in the Non-Property Income section above.
Other
Year Ended
December 31,
Change
(in thousands)
Impairment associated with land development activities
Loss on early retirement of debt
Gain on sale of operating properties
Income tax expense
We review our long-lived assets on an annual basis or whenever events or circumstances indicate the carrying amount of an asset may not be recoverable and our impairment evaluations take into consideration the current and anticipated economic climate. During the year ended December 31, 2025, we recognized an impairment charge of approximately $12.9 million on two undeveloped land parcels, as the estimated fair value was less than its book value. The impairment associated with land development activities for the year ended December 31, 2024 of approximately $41.0 million related to three projects for which development activities had been discontinued. These charges reflect the difference between the estimated fair value of each parcel and its carrying amount. The 2024 impairments included the original purchase price as well as other capitalized development costs.
The $0.9 million loss on early retirement of debt during the year ended December 31, 2024 was due to the write-off of unamortized loan costs related to the early retirement of our $300 million unsecured term loan in January 2024, which was scheduled to mature in August 2024.
In 2025, we recognized a total gain of $260.9 million from the dispositions of one operating property in Houston, Texas in June, one dual-phased operating property in Houston, Texas and one operating property in Irving, Texas in July, and one dual-phased operating property in Houston, Texas and one operating property in Phoenix, Arizona in November. The $43.8 million gain recognized in 2024 was due to the disposition of one operating property in Atlanta, Georgia in February.
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Income tax expense increased approximately $1.1 million for the year ended December 31, 2025 as compared to the same period in 2024. The increase was primarily due to higher taxable income resulting from increased third-party construction activities within a taxable REIT subsidiary. The increase was also due to higher state and franchise income taxes for the year ended December 31, 2025 as compared to the same period in 2024 primarily due to tax legislation changes enacted in certain state jurisdictions in 2024.
Funds from Operations ("FFO"), Core FFO, and Core Adjusted FFO ("Core AFFO")
Management considers FFO, Core FFO, and Core AFFO to be appropriate supplementary measures of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and adjustments for unconsolidated joint ventures to reflect FFO on the same basis. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains and losses on dispositions of real estate, impairment write-downs of certain real estate assets, and depreciation, FFO can assist in the comparison of the operating performance of a company's real estate investments between periods or to different companies.
Core FFO represents FFO as further adjusted for items not considered part of our core business operations. We consider Core FFO to be a helpful supplemental measure of operating performance as it also excludes certain items which, by nature, are not comparable period over period and therefore tends to obscure actual operating performance. Our definition of Core FFO may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.
Core AFFO is calculated utilizing Core FFO less recurring capitalized expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. We also consider Core AFFO to be a useful supplemental measure because it is frequently used by analysts and investors to evaluate a REIT's operating performance between periods or to different companies. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.
To facilitate a clear understanding of our consolidated historical operating results, we believe FFO, Core FFO, and Core AFFO should be examined in conjunction with net income attributable to common shareholders as presented in the consolidated statements of income and comprehensive income and data included elsewhere in this report. FFO, Core FFO, and Core AFFO are not defined by GAAP and should not be considered alternatives to net income attributable to common shareholders as an indication of our operating performance. Additionally, FFO, Core FFO, and Core AFFO as disclosed by other REITs may not be comparable to our calculation.
Reconciliations of net income attributable to common shareholders to FFO, Core FFO, and Core AFFO for the years ended December 31, 2025 and 2024 are as follows:
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($ in thousands)
Funds from operations
Net income attributable to common shareholders
Real estate depreciation and amortization
Impairment associated with land development activities
Gain on sale of operating properties
Income allocated to non-controlling interests
Funds from operations
Casualty-related expenses, net of (recoveries)
Severance
Legal costs and settlements
Loss on early retirement of debt
Expensed transaction, development, and other pursuit costs
Advocacy contributions
Other miscellaneous items
Core funds from operations
Less: recurring capitalized expenditures
Core adjusted funds from operations
Weighted average shares – basic
Incremental shares issuable from assumed conversion of:
Share awards granted
Common units
Weighted average shares – diluted
Liquidity and Capital Resources
Financial Condition and Sources of Liquidity
We intend to maintain a strong balance sheet and preserve our financial flexibility, which we believe should enhance our ability to identify and capitalize on investment opportunities as they become available. We intend to maintain what management believes is a conservative capital structure by:
• extending and sequencing the maturity dates of our debt where practicable;
• managing interest rate exposure using what management believes to be prudent levels of fixed and floating rate debt;
• maintaining what management believes to be conservative coverage ratios; and
• using what management believes to be a prudent combination of debt and equity.
Our interest expense coverage ratio, net of capitalized interest, was approximately 6.6 and 6.9 times for the years ended December 31, 2025 and 2024, respectively. This ratio is a method for calculating the amount of operating cash flows available to cover interest expense and is calculated by dividing interest expense for the period into the sum of property revenues and expenses, non-property income, and other expenses after adding back depreciation, amortization, and interest expense. Approximately 90.1% and 89.9% of our properties were unencumbered at December 31, 2025 and 2024, respectively. Our weighted average maturity of debt was approximately 4.5 years at December 31, 2025.
We also intend to maintain or strengthen our capital and liquidity positions by continuing to focus on our core fundamentals, which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.
Our primary source of liquidity is cash flows generated from operations. Other sources may include one or more of the following: availability under our unsecured revolving credit facility and commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2023 ATM program, and other unsecured borrowings or secured mortgages. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash needs over the next 12 months from our filing date including:
• normal recurring operating expenses;
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• current debt service requirements, including scheduled debt maturities;
• recurring and non-recurring capital expenditures;
• funding of property developments, repositions, redevelopments, and acquisitions;
• the minimum dividend payments required to maintain our REIT qualification under the Internal Revenue Code; and
• funding share repurchases.
Factors which could increase or decrease our future liquidity include but are not limited to volatility in capital and credit markets, changes in costs, changes in governmental regulations, including tariffs and rent control or rent stabilization laws, sources of financing, the minimum REIT dividend requirements, our ability to complete asset purchases, sales, or developments, the effect our debt level and changes in credit ratings could have on our cost of funds, and our ability to access capital markets.
Cash Flows
The following is a discussion of our cash flows for the years ended December 31, 2025 and 2024.
Net cash from operating activities was approximately $826.6 million for the year ended December 31, 2025, compared to approximately $774.9 million for the year ended December 31, 2024. The increase was primarily due to the growth in both our same store and non-same store communities, including the impact of acquiring four operating properties during 2025 and the completion of construction on four operating properties in 2024 and 2025. The increase was also due to the timing of real estate tax payments in 2025 as compared to 2024. See further discussions of our 2025 operations as compared to 2024 in "Results of Operations."
Net cash used in investing activities during the year ended December 31, 2025 totaled approximately $499.5 million as compared to $285.2 million during the year ended December 31, 2024. Cash outflows during 2025 primarily related to the acquisition of four operating properties for approximately $419.2 million and amounts paid for property development and capital improvements of approximately $440.4 million. These outflows were partially offset by net proceeds from the sale of two dual-phased operating properties and three other operating properties of approximately $365.9 million. Cash outflows during 2024 primarily related to the amounts paid for property development and capital improvements of approximately $393.7 million, partially offset by net proceeds from the sale of one operating property of approximately $114.5 million. The increase in property development and capital improvements for 2025, as compared to the same period in 2024, was primarily due to higher expenditures for new development, as well as higher capital expenditures in 2025 as compared to 2024. The property development and capital improvements during 2025 and 2024, included the following:
December 31,
(in millions)
Expenditures for new development, including land
Capital expenditures
Reposition expenditures
Direct real estate taxes and capitalized interest and other indirect costs
Total
Net cash used in financing activities totaled approximately $322.0 million during the year ended December 31, 2025 as compared to approximately $725.5 million during the year ended December 31, 2024. Cash outflows during the year ended December 31, 2025 primarily related to $461.0 million used for distributions to common shareholders and non-controlling interest holders, $270.7 million used for common share repurchases, and net payments of $178.0 million of borrowings from our unsecured revolving credit facility. These outflows were partially offset by net proceeds of approximately $588.1 million of borrowings from our commercial paper program. Cash outflows during 2024 primarily related to the repayment of our $250 million senior unsecured notes in September 2024 and the repayment of our $300 million unsecured term loan and the $250 million senior unsecured notes in January 2024. Cash outflows also related to $451.0 million used for distributions to common shareholders and non-controlling interest holders, and $50.0 million used for common share repurchases. These outflows were partially offset by net proceeds of approximately $396.0 million from the issuance of $400.0 million senior unsecured notes in January 2024, and net proceeds of $178.0 million of borrowings from our unsecured revolving credit facility.
Financial Flexibility
We have a $1.2 billion unsecured revolving credit facility which matures in August 2026, with two options to extend the facility at our election for two consecutive six-month periods and to expand the facility up to three times by up to an additional $500 million upon satisfaction of certain conditions. The interest rate on our unsecured revolving credit facility is based upon, at our option, (a) the daily or the one-, three-, or six- months Secured Overnight Financing Rate ("SOFR") plus, in each case, a
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spread based on our credit rating, or (b) a base rate equal to the higher of: (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America, N.A.'s prime rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%. Advances under our unsecured revolving credit facility may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of 180 days or less and may not exceed the lesser of $600 million or the remaining amount available under our unsecured revolving credit facility. Our unsecured revolving credit facility is subject to customary financial covenants and limitations. We believe we are in compliance with all such financial covenants and limitations as of December 31, 2025 and through the date of this filing.
Our unsecured revolving credit facility provides us with the ability to issue up to $50 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our unsecured revolving credit facility, it does reduce the amount available. At December 31, 2025, we had no outstanding letters of credit issued under our unsecured revolving credit facility , and had approximately $1.2 billion available under our unsecured revolving credit facility. Subsequent to year end, we borrowed approximately $216.0 million against the unsecured revolving credit facility.
In February 2025, we established a commercial paper program under which we may issue short-term, unsecured Notes under the exemption from registration contained in Section (4)(a) of the Securities Act. Amounts available under the commercial paper program may be borrowed, repaid, and reborrowed from time to time, with the aggregate face or principal amount of the Notes outstanding under the commercial paper program at any time not to exceed $600 million. The Notes will have maturities of up to 397 days from the date of issue. The Notes will rank at least equal in priority to all of the Company's other unsecured and unsubordinated indebtedness. The net proceeds of the issuances of the Notes are expected to be used for general corporate purposes, which may include property acquisitions and development in the ordinary course of business, capital expenditures, and working capital. We currently plan to use our unsecured revolving credit facility as a liquidity backstop for borrowings under our commercial paper program. At December 31, 2025, we had $590.0 million outstanding under our commercial paper program.
We currently have an automatic shelf registration statement which allows us to offer, from time to time, common shares, preferred shares, debt securities, or warrants. Our Amended and Restated Declaration of Trust provides we may issue up to 185 million shares of beneficial interest, consisting of 175 million common shares and 10 million preferred shares. At December 31, 2025, we had approximately 104.3 million common shares outstanding, net of treasury shares and shares held in our deferred compensation arrangements, and no preferred shares outstanding.
We believe our ability to access the capital markets is enhanced by our senior unsecured debt ratings by Fitch, Moody's, and Standard and Poor's, which were A- with stable outlook, A3 with stable outlook, and A- with stable outlook, respectively, as of December 31, 2025. We believe our ability to access the capital markets is also enhanced by our ability to borrow on a secured basis from various institutions including banks, Fannie Mae, Freddie Mac, or life insurance companies. However, we may not be able to maintain our current credit ratings and may not be able to borrow on a secured or unsecured basis in the future.
In May 2023, we created the 2023 ATM share offering program through which we can, but have no obligation to, sell common shares and we may also enter into separate forward sale agreements with forward purchasers for an aggregate offering amount of up to $500.0 million, in amounts and at times as we determine, into the existing trading market at current market prices as well as through negotiated transactions. Actual sales from time to time may depend on a variety of factors including, among others, market conditions, the trading price of our common shares, and determinations by management of the appropriate sources of funding for us. We intend to use the proceeds from any sale of our common shares under the 2023 ATM program for general corporate purposes, which may include reducing future borrowings under our unsecured revolving credit facility, the repayment of other indebtedness, the redemption or other repurchase of outstanding debt or equity securities, funding for development activities, and financing for acquisitions. As of the date of this filing, we have not entered into any forward sales agreements and have common shares having an aggregate offering amount of up to $500.0 million remaining available for sale under the 2023 ATM program.
Future Cash Requirements and Contractual Obligations
One of our principal long-term liquidity requirements includes the repayment of maturing debt, including any future borrowings under our unsecured revolving credit facility and commercial paper program. At December 31, 2025, we had $590.0 million outstanding under our commercial paper program. Over the next 12 months, contractual debt maturities include these commercial paper borrowings as well as other debt obligations of $567.8 million. See Note 8. "Notes Payable," in the notes to Consolidated Financial Statements for further discussion of our scheduled maturities.
As of December 31, 2025, we estimate the additional cost to complete the construction of the three projects to be approximately $213.8 million. Of this amount, we expect to incur costs between approximately $135 million and $155 million during 2026 and to incur the remaining costs during 2027 and 2028. Additionally, we expect to incur costs between approximately $50 million and $60 million related to the start of new development activities, between approximately $77
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million and $81 million of repositions, redevelopment, repurposes, and revenue enhancing expenditures and between approximately $113 million and $117 million of additional recurring capital expenditures during 2026.
During the year ended December 31, 2025, we entered into an operating lease agreement for our corporate headquarters in Houston, Texas. The lease commenced on October 1, 2025 with a twelve-year lease term and future minimum lease payments totaling approximately $29.6 million. See Note 13. "Commitments and Contingencies" in the notes to Consolidated Financial Statements for further discussion of this operating lease.
We anticipate meeting our short-term and long-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured revolving credit facility and through our commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM programs, and other unsecured borrowings or secured mortgages. We continue to evaluate our portfolio and plan to continue our practice of selective dispositions and redeploying capital as market conditions warrant and opportunities arise.
As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute current dividends to our shareholders equal to a minimum of 90% of our annual taxable income. In order to reduce the amount of income taxes, our general policy is to distribute at least 100% of our taxable income. In December 2025, we announced our Board of Trust Managers had declared a quarterly dividend of $1.05 per common share to our common shareholders of record as of December 17, 2025. This dividend was subsequently paid on January 16, 2026, and we paid equivalent amounts per unit to holders of common operating partnership units. When aggregated with previous 2025 dividends, this distribution to common shareholders and holders of the common operating partnership units equates to an annual dividend rate of $4.20 per share or unit for the year ended December 31, 2025.
In the first quarter of 2026, the Company's Board of Trust Managers declared a first quarter dividend of $1.06 per common share to our common shareholders of record as of March 31, 2026. Future dividend payments are paid at the discretion of the Board of Trust Managers and a number of factors are considered, including the Company's past performance and future prospects, which may be deemed relevant by our Board of Trust Managers. Assuming similar dividend distributions for the remainder of 2026, our annualized dividend rate for 2026 would be $4.24.
Critical Accounting Estimates
The preparation of our financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date, and the amounts of revenues and expenses recognized during the reporting period. These estimates are based on historical experience and other assumptions believed to be reasonable under the circumstances. The following is a discussion of our critical accounting policies. For a discussion of all of our significant accounting policies, see Note 2. "Summary of Significant Accounting Policies and Recent Accounting Pronouncements," to the accompanying consolidated financial statements.
Valuation of Assets . Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment may exist if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to recover the carrying value of such assets. We consider projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. While we believe our estimates of future cash flows are reasonable, different assumptions regarding a number of factors, including market rents, economic conditions, and occupancies, could significantly affect these estimates. When impairment exists, the long-lived asset is adjusted to its fair value. In estimating fair value, management uses appraisals, comparable sales, management estimates, and discounted cash flow calculations which utilize inputs from a marketplace participant’s perspective. During the year ended December 31, 2025, we recorded an impairment of approximately $12.9 million related to two undeveloped land parcels.
The value of our properties under development depends on market conditions, including estimates of the project start date, projected construction costs, as well as estimates of demand for multifamily communities. We have reviewed market trends and other marketplace information and have incorporated this information as well as our current outlook into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the impairment analyses, it is possible actual results could differ substantially from those estimated.
We believe the carrying value of our operating real estate assets, properties under development, and land is currently recoverable. However, if market conditions deteriorate or if changes in our development strategy significantly affect any key assumptions used in our fair value estimates, we may need to take material charges in future periods for impairments related to existing assets. Any such material non-cash charges could have an adverse effect on our consolidated financial position and results of operations and therefore could reduce net income.
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