What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-08 · 110 added, 76 removed, 218 unchanged (46% of the section changed)

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• Owning a portfolio of stabilized core and core plus real estate

We own a geographically diversified portfolio of 24 apartment communities (20 consolidated properties and four unconsolidated properties) with average rents in line with local market averages (generally defined as B class), including our suburban Boston portfolio of five consolidated properties under contract to be sold.

We also own an apartment building and its adjacent office building, Yacht Club Apartments and 1001 Brickell Bay Drive (together referred to as the “Brickell Assemblage”), in a land assemblage that is under contract to be sold.

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When warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage our equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.

Results for the three months ended March 31, 2025

The results from the execution of our business plan during the three months ended March 31, 2025 are described below.

Results for the three and six months ended June 30, 2025

The results from the execution of our business plan during the three and six months ended June 30, 2025 are described below.

Financial Results and Highlights

• For the three months ended March 31, 2025, net loss attributable to Aimco common stockholders per share, on a fully dilutive basis, was ($0.10).

• For the three months ended March 31, 2025, net operating income from our Operating segment was $25.1 million, up 2.7% year-over-year, due primarily to higher average monthly revenue per apartment home of $2,309, up $60 year-over-year.

• For the three and six months ended June 30, 2025, net loss attributable to Aimco common stockholders per share, on a fully dilutive basis, was ($0.14) and $(0.24), respectively.

• For the three and six months ended June 30, 2025, net operating income from our Operating segment was $24.2 million, up 1.1%, and $49.3 million, up 1.9% year-over-year, respectively.

• Subsequent to quarter end, in August, we agreed to sell our suburban Boston portfolio of five properties located in Massachusetts, New Hampshire, and Rhode Island for $740.0 million.

Four of the five asset sales are expected to close during the third quarter of 2025, with the closing of the final asset expected in the fourth quarter 2025.

• Subsequent to quarter end, in July, the buyer with which we are under agreement to sell the Brickell Assemblage for $520.0 million exercised the final contractual closing extension option that required its non-refundable deposit to be increased by $7.0 million, bringing the total non-refundable deposit to $50.0 million.

Closing is now scheduled for the fourth quarter of 2025.

• Strathmore Square, Upton Place, and Oak Shore, our Development and Redevelopment segment properties in lease-up, remain on plan to reach stabilized occupancy in 2025.

• In March, the buyer, with whom we are under agreement to sell the Brickell Assemblage for $520.0 million, exercised a contractual closing extension option which required its non-refundable deposit to be increased by $5.0 million, from $38.0 million to $43.0 million.

Closing is subject to terms described later in this document.

• In January, we paid a special cash dividend of $0.60 per share to distribute the net proceeds resulting from our 2024 asset sales to stockholders.

The special cash dividend was declared on December 19, 2024, to stockholders of record on January 14, 2025, and was accrued in Dividends payable in our Condensed Consolidated Balance Sheets as of December 31, 2024.

• In May, we purchased our development partner's interest in the first phase of development at Strathmore Square.

We also borrowed on our revolving credit facility to pay off a higher interest rate mezzanine loan used to fund construction of Strathmore Square.

Operating Property Results

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markets with average rents in line with local market averages (generally defined as B class).

Highlights for the three months ended March 31, 2025 include:

• Revenue for our Operating segment was $35.6 million, up 2.7% year-over-year, resulting from a $60 increase in average monthly revenue per apartment home to $2,309.

• Expenses for our Operating segment were $10.5 million, up 2.7% year-over-year primarily due to higher real estate taxes from 2025 property assessments.

Highlights for the three months ended June 30, 2025 include:

• Revenue for our Operating segment was $35.4 million, up 1.9% year-over-year, resulting from a $57 increase in average monthly revenue per apartment home to $2,349 and occupancy of 95.8%, down 50 basis points year-over-year.

Revenue was negatively impacted by approximately 35 bps in the quarter due to a commercial tenant vacancy in New York City.

• Expenses for our Operating segment were $11.2 million, up 3.9% year-over-year primarily due to higher real estate taxes from a multi-year property assessment at our Nashville property, which assessment is being appealed.

• Net operating income for our Operating segment was $24.2 million, up 1.1% year-over-year.

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Our Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.

As of March 31, 2025, we had one multifamily development project under construction, three multifamily communities that have been substantially completed and are now in lease-up.

As of June 30, 2025, we had one multifamily development project under construction, two multifamily communities that have been substantially completed and are now in lease-up, and one that completed lease-up and is stabilizing operations.

In addition to our core multifamily developments, The Benson Hotel was completed in 2023 and remains in the stabilization process.

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Metro Area, and Colorado's Front Range.

During the three months ended March 31, 2025, we invested $20.3 million in development and redevelopment activities compared to $42.8 million during the same period in 2024.

Highlights for the three months ended March 31, 2025 include:

During the three and six months ended June 30, 2025, we invested $22.1 million and $42.4 million, respectively, in development and redevelopment activities, primarily funded through construction loan and preferred equity, compared to $29.8 million and $72.6 million, respectively, during the same period in 2024.

Highlights for the three months ended June 30, 2025 include:

• In Upper Northwest Washington, D.C., all 689 apartment homes at Upton Place were delivered in 2024 and construction is substantially complete.

As of March 31, 2025, 375 units were leased or pre-leased and 331 were occupied.

Additionally, as of March 31, 2025, 92% of the project’s 105,000 square feet of retail space has been leased.

As of June 30, 2025, 473 (69%) units were leased or pre-leased and 386 (56%) were occupied.

Additionally, as of June 30, 2025, 92% of the project’s 105,000 square feet of retail space has been leased.

• In Bethesda, Maryland, all 220 of the highly tailored apartment homes at the first phase of Strathmore Square were delivered in 2024 and construction is substantially complete.

As of March 31, 2025, 117 units had been leased and 99 were occupied.

• In Corte Madera, California, construction is complete at Oak Shore with all 16 ultra-luxury single-family rental homes and eight accessory dwelling units delivered.

As of March 31, 2025, the community was 83% leased or pre-leased.

As of June 30, 2025, 164 (75%) units had been leased and 139 (63%) were occupied.

• In Corte Madera, California, construction is complete at Oak Shore.

As of June 30, 2025, the ultra-luxury single-family rental community was 96% leased with 23 (96%) of the 24 homes occupied.

• In Miami’s Edgewater neighborhood, construction remains on schedule and budget at 34th Street, an ultra-luxury waterfront residential tower that will include rental homes averaging more than 2,500 square feet, with oversized private terraces, top-of-the-line finishes, and unobstructed views of Biscayne Bay.

We expect to welcome the first residents in 3Q 2027 and stabilize occupancy in 4Q 2028.

• In the first quarter of 2025, we invested $1.4 million into programming, design, documentation, and entitlement efforts primarily at our 901 North (Flagler Village Phase I) project in Fort Lauderdale, Florida.

• In the second quarter of 2025, we invested $2.5 million into programming, design, documentation, and entitlement efforts primarily at our 901 North development site, located in Fort Lauderdale, Florida.

Investment and Disposition Activity

We are focused on prudently allocating capital and delivering strong investment returns.

Consistent with our capital allocation philosophy, we monetize the value within our assets when accretive uses of the proceeds are identified and invest when the risk adjusted returns are superior to other uses of capital.

Consistent with our capital allocation philosophy, we aim to monetize the value within our assets when accretive uses of the proceeds are identified and invest when the risk adjusted returns are superior to other uses of capital.

• Subsequent to quarter end, in August 2025, we entered into a definitive agreement to sell our portfolio of five apartment properties, including 2,719 units, located in suburban Boston for $740.0 million.

The buyer has completed

due diligence and made a $20.0 million non-refundable deposit.

Four of the five asset sales are expected to close during the third quarter of this year, with closing of the final asset expected in the fourth quarter of 2025 to accommodate the assumption of the property loan.

• In December 2024, we entered into an agreement to sell, during 2025, the Brickell Assemblage for a gross price of $520.0 million.

o The buyer’s initial non-refundable deposit of $38.0 million was increased in March 2025 to $43.0 million in exchange for the buyer extending closing to August of 2025, as allowed under the terms of the contract.

o The sale, remains subject to certain closing conditions and one remaining extension option which would extend closing at the buyer’s option to the fourth quarter of 2025, with such extension requiring the buyer to further increase its non-refundable deposit.

o Prior to closing, the buyer has the right to exercise an option to finance, for a period of 18 months, up to $115.0 million of the purchase price with a transferable seller financing note from Aimco.

If exercised, the purchase price increases by $20.0 million, to $540.0 million, and the note would carry an annual interest rate of 12%.

o Net proceeds from the transaction, accounting for the associated property-level debt and deferred tax liability, are estimated to range from $300.0 to $320.0 million depending on the buyer’s election regarding seller financing.

Upon receipt, we intend to return the majority of the net proceeds from the transaction to stockholders.

Subsequent to quarter end, in July 2025, the buyer exercised its final closing extension option and increased its non-refundable deposit by $7.0 million, bringing the total non-refundable deposit to $50.0 million.

Closing is now scheduled for the fourth quarter of 2025.

• In May, we purchased, for $2.1 million, our development partner's 5% common equity interest in Strathmore Square.

In addition, we purchased the same development partner's subordinated interest for $2.9 million, a value representing approximately 60% of its expected future obligation.

Balance Sheet and Financing Activities

We are highly focused on maintaining a strong balance sheet, including having at all times ample liquidity.

As of March 31, 2025, we had access to $225.2 million in liquidity, including $49.1 million of cash on hand, $27.6 million of restricted cash, and the capacity to borrow up to $148.5 million on our revolving credit facility.

As of June 30, 2025, we had access to $173.5 million in liquidity, including $41.4 million of cash on hand, $26.4 million of restricted cash, and the capacity to borrow up to $105.7 million on our $150.0 million revolving credit facility.

Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.

• In May 2025, we borrowed $42.8 million on our revolving credit facility to pay off the mezzanine loan used to fund the construction of the first phase of Strathmore Square.

The mezzanine loan carried an interest rate of 13.0%, approximately 650 basis points higher than the average rate on the revolving credit facility borrowings during the second quarter 2025.

• Our Boston portfolio, which is under contract to sell, serves as collateral for our revolving credit facility.

As such, at the sale closing, the balance borrowed in May 2025 will be repaid and the facility will be retired.

We plan to maintain prudent liquidity following the facility's retirement.

Financial Results of Operations

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.

Results of Operations for the three months ended March 31, 2025 and 2024

Net income attributable to Aimco common stockholders decreased by $3.7 million, respectively, for the three months ended March 31, 2025, compared to the same period in 2024, as described more fully below.

Results of Operations for the three and six months ended June 30, 2025 and 2024

Net loss attributable to Aimco common stockholders decreased by $41.2 million and $37.5 million, respectively, for the three and six months ended June 30, 2025, compared to the same period in 2024, as described more fully below.

Property Results

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Our Development and Redevelopment segment consists of rental communities that are under construction or have not achieved stabilization, as well as land held for development.

As of March 31, 2025, our Development and Redevelopment segment consists of 9 properties, including one under construction and three substantially completed and in lease-up.

As of June 30, 2025, our Development and Redevelopment segment consists of 9 properties, including one under construction, two substantially completed and in lease-up, and one that has completed lease-up and is stabilizing operations.

Our Operating segment includes 20 residential apartment communities with 5,243 apartment homes that have achieved a stabilized level of operations as of January 1, 2024 and maintained it throughout the current year and comparable period.

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Property Net Operating Income

The results of our segments for the three months ended March 31, 2025 and 2024, as presented below, are based on segment classifications as of March 31, 2025 ( dollars in thousands ).

Three Months Ended March 31,

The results of our segments for the three months ended June 30, 2025 and 2024, as presented below, are based on segment classifications as of June 30, 2025 ( dollars in thousands ).

Three Months Ended June 30,

Rental and other property revenues, before utility reimbursements:

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Development and Redevelopment

For the three months ended March 31, 2025, compared to the same period in 2024:

For the three months ended June 30, 2025, compared to the same period in 2024:

• Development and Redevelopment property net operating income increased by $3.2 million, due primarily to the lease-up of Upton Place, Strathmore Square, and Oak Shore.

• Operating property net operating income increased by $0.3 million, or 1.1%.

The increase was attributable primarily to a $0.9 million, or 2.7% increase in rental and other property revenues due to a $60 increase in average monthly revenue per apartment home to $2,309.

• Other property net operating income decreased by $0.1 million, or 11.8% primarily due to higher real estate taxes.

The increase was attributable primarily to a $0.7 million, or 1.9% increase in rental and other property revenues due to a $57 increase in average monthly revenue per apartment home to $2,349, offset by higher real estate taxes, primarily due to a multi-year property assessment at our Nashville property, which assessment is being appealed.

• Other property net operating income decreased by $0.5 million, due primarily to higher real estate taxes from a 2025 property assessment, which assessment is being appealed.

The results of our segments for the six months ended June 30, 2025 and 2024, as presented below, are based on segment classifications as of June 30, 2025 ( dollars in thousands ).

Six Months Ended June 30,

Rental and other property revenues, before utility reimbursements:

Development and Redevelopment

Property operating expenses, net of utility reimbursements:

Development and Redevelopment

Proportionate property net operating income:

Development and Redevelopment

For the six months ended June 30, 2025, compared to the same period in 2024:

• Development and Redevelopment property net operating income increased by $5.5 million, due primarily to the lease-up of Upton Place, Strathmore Square, and Oak Shore.

• Operating property net operating income increased by $0.9 million, or 1.9%.

The increase was attributable primarily to a $1.6 million, or 2.3% increase in rental and other property revenues due to a $59 increase in average monthly revenue per apartment home to $2,329, offset by higher real estate taxes, primarily due to a multi-year property assessment at our Nashville property, which assessment is being appealed.

• Other property net operating income decreased by $0.6 million, due primarily to higher real estate taxes from a 2025 property assessments, which assessment is being appealed.

Non-Segment Real Estate Operations

Operating income amounts not attributed to our segments include property management costs, casualty losses, and, if applicable, the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our segments for purposes of evaluating segment performance.

For the three months ended March 31, 2025 and 2024, other property operating expenses not allocated to segments were $1.5 million and $1.9 million, respectively.

For the three months ended March 31, 2025 and 2024, properties that were sold or classified as held for sale generated property net operating income of $4.6 million and $7.7 million, respectively.

For the three months ended June 30, 2025 and 2024, other property operating expenses not allocated to segments were $1.8 million and $2.0 million, respectively.

For the three months ended June 30, 2025 and 2024, properties that were sold or classified as held for sale generated property net operating income of $4.5 million and $6.6 million, respectively.

For the six months ended June 30, 2025 and 2024, other property operating expenses not allocated to segments were $3.3 million and $3.9 million, respectively.

For the six months ended June 30, 2025 and 2024, properties that were sold or classified as held for sale generated property net operating income of $9.1 million and $14.3 million, respectively.

Depreciation and Amortization

For the three months ended March 31, 2025, compared to the same period in 2024, Depreciation and amortization expense decreased by $3.0 million, or 15.7% due primarily to the disposition of The Hamilton and the classification of the Brickell Assemblage as held for sale in December 2024, partially offset by the substantial completion of Upton Place, Strathmore Square, and Oak Shore in 2024.

For the three and six months ended June 30, 2025, compared to the same periods in 2024, Depreciation and amortization expense decreased by $5.7 million, or 26.0%, and $8.8 million, or 21.2%, respectively, due primarily to the disposition of The Hamilton and the classification of the Brickell Assemblage as held for sale in December 2024, partially offset by the substantial completion of Upton Place, Strathmore Square, and Oak Shore in 2024.

General and Administrative Expenses

For the three months ended March 31, 2025, compared to the same periods in 2024, General and administrative expenses decreased by $0.4 million, or 4.3%.

For the three months ended June 30, 2025, compared to the same period in 2024, General and administrative expenses increased by $0.2 million, or 2.9%.

For the six months ended June 30, 2025, compared to the same period in 2024, General and administrative expenses decreased by $0.1 million, or 0.9%.

Interest Income

For the three months ended March 31, 2025, compared to the same period in 2024, Interest income decreased by $0.6 million, or 21.0%, due primarily to a decrease earned on amounts of invested cash.

For the three and six months ended June 30, 2025, compared to the same periods in 2024, Interest income decreased by $1.0 million, or 39.0%, and $1.5 million, or 29.8%, respectively, due primarily to a decrease earned on amounts of invested cash.

Interest Expense

For the three months ended March 31, 2025, compared to the same periods in 2024, Interest expense increased by $4.1 million, or 30.4%, due primarily to increased non-recourse construction loan draws and reduced capitalization as development projects are advanced and completed, partially offset by the repayment of certain non-recourse construction loans in December 2024 .

For the three and six months ended June 30, 2025, compared to the same periods in 2024, Interest expense increased by $1.2 million, or 7.0%, and $5.3 million, or 17.4%, respectively, due primarily to increased non-recourse construction loan draws and reduced capitalization due to the substantial completion of Upton Place, Strathmore Square, and Oak Shore in 2024, partially offset by the repayment of certain non-recourse construction loans in December 2024 and use of the revolving credit facility to pay off a higher interest rate non-recourse construction loan in May 2025.

Realized and Unrealized Gains (Losses) on Interest Rate Contracts

We are required to adjust our interest rate contracts to fair value on a quarterly basis.

As a result of the mark-to-market adjustments, we recorded unrealized losses of $0.6 million for the three months ended March 31, 2025, compared to unrealized losses of $0.2 million for the same period in 2024.

In addition, we realized gains of $0.3 million for the three months ended March 31, 2025, compared to realized gains of $1.9 million, respectively, for the same periods in 2024.

As a result of the mark-to-market adjustments, we recorded unrealized losses of $0.3 million for the three months ended June 30, 2025, and unrealized losses of $0.8 million for the six months ended June 30, 2025.

We recorded unrealized losses of $1.3 million and $1.5 million, respectively, for the same periods in 2024.

In addition, we realized gains of $0.2 million for the three months ended June 30, 2025, and realized gains of $0.5 million for the six months ended June 30, 2025, respectively, compared to realized gains of $1.9 million and $3.8 million, respectively, for the same periods in 2024.

Realized and Unrealized Gains (Losses) on Equity Investments

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In addition, we measure our investment in IQHQ at cost, less impairment if any needed, with subsequent adjustments for observable price changes of identical or similar investments of the same issuer since it does not have a readily determinable fair value.

As a result of changes in the values of these investments, we recorded unrealized losses of $0.4 million for the three months ended March 31, 2025.

For the same period in 2024, we recorded unrealized losses of $0.3 million.

As a result of changes in the values of these investments, we recorded unrealized losses of $0.2 million and $0.6 million, respectively, for the three and six months ended June 30, 2025.

For the same periods in 2024, we recorded unrealized losses of $47.3 million and $47.5 million, respectively, primarily due to a $47.0 million non-cash impairment recognized on our investment in IQHQ.

Other Income (Expense), Net

Other income (expense), net , includes costs associated with our risk management activities, partnership administration expenses, fee income, and certain non-recurring items, as well as activity related to our Mezzanine Investment and unconsolidated real estate partnerships.

For the three months ended March 31, 2025, compared to the same period in 2024, Other income (expense), net changed by $1.1 million, or 69.9%, primarily due to the cessation of amortization of transaction costs associated with the partial sale of the Mezzanine Investment.

For the three and six months ended June 30, 2025, compared to the same periods in 2024, Other income (expense), net changed by $1.2 million, or 94.4%, and by $2.3 million, or 80.8%, respectively, primarily due to an increase in income related to our Mezzanine Investment, offset by costs associated with our ongoing strategic review.

Income Tax Benefit (Expense)

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Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and, income and gains retained by the REIT.

For the three months ended March 31, 2025, we had consolidated net losses subject to tax of $2.3 million compared to consolidated net losses subject to tax of $6.6 million, for the same period in 2024.

For the three months ended March 31, 2025, we recognized an income tax benefit of $0.1 million, compared to an income tax benefit of $2.7 million for the same period in 2024.

The decrease is due primarily to the tax effect of reduced depreciation in 2025 associated with properties owned by, and activities of, our TRS entities.

For the three and six months ended June 30, 2025, we had consolidated net losses subject to tax of $0.9 million and $3.2 million, respectively, compared to consolidated net losses subject to tax of $5.3 million and $11.9 million, respectively, for the same period in 2024.

For the three and six months ended June 30, 2025, we recognized income tax expense of $5.6 million and $5.5 million, respectively, compared to an income tax benefit of $2.2 and $4.9 million, respectively, during the same periods in 2024.

The change in income tax expense is due primarily to the recognition of a non-cash partial valuation allowance against the deferred tax assets of our TRS entities and the tax effect of reduced depreciation in 2025 associated with properties owned by, and activities of, our TRS entities.

On July 4, 2025, legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

Significant provisions of the OBBBA include the permanent extension of certain provisions of the 2017 Tax Cuts and Jobs Act and the restoration of favorable tax treatment for certain business provisions.

We are currently evaluating the tax consequences of the OBBBA.

Critical Accounting Estimates

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• realized and unrealized (gains) losses on interest rate contracts, which we believe allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry;

• the non-cash (income) loss recognized on our Mezzanine Investment;

• the (income) loss recognized on our Mezzanine Investment;

• the unrealized (gains) losses recognized on our passive equity investments.

The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2025 and 2024, is as follows ( in thousands ):

Three Months Ended March 31,

The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the three and six months ended June 30, 2025 and 2024, is as follows ( in thousands ):

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

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Liquidity is the ability to meet present and future financial obligations.

Our primary sources of liquidity are cash flows from operations and borrowing capacity under our loan agreements.

As of March 31, 2025, our available liquidity was $225.2 million, which consisted of:

As of June 30, 2025, our available liquidity was $173.5 million, which consisted of:

• $41.4 million in cash and cash equivalents;

• $26.4 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for capital additions, property taxes, and insurance;

• $148.5 million of available capacity to borrow under our revolving secured credit facility.

As of March 31, 2025, we had sufficient capacity on our non-recourse construction loans to cover our remaining commitments on development and redevelopment projects of approximately $138.0 million.

• $105.7 million of available capacity to borrow under our revolving secured credit facility, after the consideration of outstanding borrowings of $42.8 million and $1.5 million of letters of credit backed by the facility.

As of June 30, 2025, we had sufficient capacity on our non-recourse construction loans to cover our remaining commitments on development and redevelopment projects of approximately $125.1 million.

We also have unfunded commitments in the amount of $1.2 million related to our investments in entities that develop technology related to the real estate industry.

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Those commitments generally have terms of one year or less and reflect expenditure levels comparable to historical levels.

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 twelve months.

In the event that our cash and cash equivalents, revolving secured credit facility, and cash provided by operating activities are not sufficient to cover our liquidity needs, we have the means to generate additional liquidity, such as from additional property financing activity and proceeds from apartment community sales.

We believe, based on the information available at this time, cash and cash equivalents, cash generated from operations, proceeds from planned dispositions, and borrowing capacity are sufficient sources of liquidity to meet our operational needs for the next twelve months.

In the event that these sources of liquidity are not sufficient to cover our liquidity needs, we have the means to generate additional liquidity, such as from additional property financing activity and proceeds from apartment community sales.

We expect to meet our long-term liquidity requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily through property financing activity, cash generated from operations, and the recycling of our equity.

Our revolving secured credit facility matures in December 2025.

Our revolving secured credit facility, which matures in December 2025, will be retired upon the sale of the Boston portfolio.

Please refer to Note 9 to the condensed consolidated financial statements in Item 1 for further information.

Leverage and Capital Resources

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However, if property or development financing options become unavailable, we may consider alternative sources of liquidity, such as reductions in capital spending or apartment community dispositions.

As of March 31, 2025, all of our outstanding non-recourse property debt had a fixed interest rate.

As of June 30, 2025, all of our outstanding non-recourse property debt had a fixed interest rate.

In addition, the weighted-average contractual rate on our non-recourse debt was 4.4%, and the average remaining term to maturity was 6.3 years.

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Our primary sources of leverage are non-recourse property-level debt and non-recourse construction loans.

We also have a secured $150.0 million credit facility with a syndicate of financial institutions with $148.5 million of available capacity at March 31, 2025.

We also have a secured $150.0 million credit facility with a syndicate of financial institutions.

As of June 30, 2025, we had $42.8 million of outstanding borrowing under our revolving loan commitments, as well as $1.5 million in letters of credit backed by the facility.

Our revolving secured credit facility requires that we maintain a fixed charge coverage ratio of 1.25X, minimum tangible net worth of $625.0 million, and maximum leverage of 60.0% as defined in the credit agreement.

We are currently in compliance and expect to remain in compliance with these covenants through the credit facility's maturity.

We are currently in compliance and expect to remain in compliance with these covenants through the credit facility's maturity date in December 2025 or its retirement upon the sale of the Boston portfolio.

Please refer to Note 9 to the condensed consolidated financial statements in Item 1 for further information.

Changes in Cash, Cash Equivalents, and Restricted Cash

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Operating Activities

For the three months ended March 31, 2025, net cash provided by operating activities was $3.8 million.

For the six months ended June 30, 2025, net cash provided by operating activities was $13.5 million.

Our operating cash flow is primarily affected by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities and general and administrative costs.

Cash provided by operating activities for the three months ended March 31, 2025, decreased by $17.9 million compared to the same period in 2024, due primarily to the timing of balance sheet position changes and increased interest expense, partially offset by increased net operating income driven by higher rents.

Cash provided by operating activities for the six months ended June 30, 2025, decreased by $16.2 million compared to the same period in 2024, due primarily to the timing of changes in operating assets and operating liabilities and increased interest expense, partially offset by increased net operating income driven by higher rents.

Investing Activities

For the three months ended March 31, 2025, net cash used in investing activities of $19.7 million consisted primarily of capital expenditures.

Net cash used in investing activities for the three months ended March 31, 2025, decreased by $21.3 million compared to the same period in 2024, due primarily to decreased capital expenditures.

For the six months ended June 30, 2025, net cash used in investing activities of $45.7 million consisted primarily of capital expenditures.

Net cash used in investing activities for the six months ended June 30, 2025, decreased by $31.7 million compared to the same period in 2024, due primarily to decreased capital expenditures.

Financing Activities

For the three months ended March 31, 2025, net cash used in financing activities of $79.8 million consisted primarily of the payment of dividends on common stock and OP Units, offset by proceeds from non-recourse construction loans and contributions from redeemable noncontrolling interests.

Net cash used in financing activities for the three months ended March 31, 2025, changed by $100.3 million compared to the same period in 2024, due primarily to the payment of dividends and decreased proceeds from non-recourse construction loans, partially offset by increased contributions from redeemable noncontrolling interests.

For the six months ended June 30, 2025, net cash used in financing activities of $72.4 million consisted primarily of the payment of dividends on common stock and OP Units, offset by proceeds from non-recourse construction loans and contributions from redeemable noncontrolling interests.

Proceeds from our revolving credit facility offset the payoff of a non-recourse construction loan.

Net cash used in financing activities for the six months ended June 30, 2025, changed by $90.3 million compared to the same period in 2024, due primarily to the payment of dividends and decreased proceeds from non-recourse construction loans, partially offset by increased contributions from redeemable noncontrolling interests.

Future Capital Needs

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We use derivative financial instruments as a risk management tool and do not use them for trading or other speculative purposes.

As of March 31, 2025, on a consolidated basis, we had no variable-rate property-level debt outstanding and $142.3 million of variable-rate construction loans outstanding.

The impact of rising interest rates is mitigated by our use of interest rate caps, which as of March 31, 2025, provided protection for our variable interest rate debt.

As of June 30, 2025, on a consolidated basis, we had no variable-rate property-level debt outstanding and $155.8 million of variable-rate construction loans outstanding.

The impact of rising interest rates is mitigated by our use of interest rate caps, which as of June 30, 2025, provided protection for our variable interest rate debt.

Our use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on forecasted interest rates.

As of March 31, 2025, we estimate an increase or decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would have no material impact on interest expense.

As of March 31, 2025, we held interest rate caps with a maximum notional value of $370.3 million.

These instruments were acquired for $3.8 million and at March 31, 2025, were valued at $0.6 million.

As of March 31, 2025, we had $76.7 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.

As of June 30, 2025, we estimate an increase or decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would have no material impact on interest expense.

As of June 30, 2025, we held interest rate caps with a maximum notional value of $464.3 million.

These instruments were acquired for $3.6 million and at June 30, 2025, were valued at $0.5 million.

As of June 30, 2025, we had $67.8 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis