What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-13 · 181 added, 126 removed, 413 unchanged (43% of the section changed)

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● oversupply of rental housing or a reduction in demand for real estate in the markets in which our properties are located;

● development, redevelopment, and construction risks that could affect our profitability;

● costs and time period required to convert acquisitions to rental properties;

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Our Value-Add strategy focuses on repositioning lower-quality, less current assets to drive rent growth and expand margins to increase net operating income and maximize our return on investment.

As of June 30, 2025, we held twenty-one real estate investments, consisting of fifteen consolidated investments and six preferred equity investments.

The twenty-one investments represent an aggregate of 5,038 residential units, comprised of 3,640 consolidated units, of which 170 units are under development, and 1,398 units through preferred equity investments, which includes planned units and those under development.

As of June 30, 2025, our consolidated operating investments were approximately 91.4% occupied;

As of September 30, 2025, we held twenty-two real estate investments, consisting of seventeen consolidated investments and five preferred equity investments.

The twenty-two investments represent an aggregate of 5,282 residential units, comprised of 4,170 consolidated units, of which 358 units are under development, and 1,112 units through preferred equity investments, which includes planned units and those under development.

As of September 30, 2025, our consolidated operating investments were approximately 91.8% occupied;

excluding units classified as held for sale and down/renovation units, our consolidated operating investments were approximately 93.7% occupied.

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Other weakened economic conditions, including job losses, high unemployment levels, stock market volatility, and uncertainty about the future, could adversely affect rental rates and occupancy levels.

In addition, during the six months ended June 30, 2025, the current U.S.

In addition, during the nine months ended September 30, 2025, the current U.S.

administration has introduced tariffs on imports from a broad set of countries, including Canada, Mexico, European Union member states, Japan and China, in response to which global trading partners have imposed or may impose their own tariffs.

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Investment Activity Summary

Provided below is a summary of our investment activity during the six months ended June 30, 2025.

Provided below is a summary of our investment activity during the nine months ended September 30, 2025.

Acquisition of Southern Pines Reserve

On April 28, 2025, we, through a Delaware statutory trust (the “Southern Pines DST”), acquired a 272-unit residential community located in Aberdeen, North Carolina known as Southern Pines Reserve, aka Hawthorne.

The purchase price of $56.6 million was funded with (i) a $30.7 million senior loan secured by Southern Pines Reserve, (ii) borrowings of $20.0 million on the KeyBank Credit Facility, and (iii) cash of $8.9 million funded by us, inclusive of certain adjustments typical in such real estate transactions.

Southern Pines Reserve is the second property acquired by us through a Delaware statutory trust to be part of a private placement offering through which interests in the Southern Pines DST will be issued to third party accredited investors therein.

The purchase price of $56.6 million was funded with (i) a $30.7 million senior loan secured by Southern Pines Reserve, (ii) borrowings of $20.0 million through our existing credit facility with KeyBank National Association (the “KeyBank Credit Facility”), and (iii) cash of $8.9 million funded by us, inclusive of certain adjustments typical in such real estate transactions.

Acquisition of Skytop Apartments

On September 29, 2025, we, through a Delaware statutory trust (the “Skytop DST”), acquired a 361-unit residential community located in Cincinnati, Ohio known as Skytop Apartments.

The purchase price of $88.5 million was funded with (i) a $57.5 million senior loan secured by Skytop Apartments, (ii) borrowings of $22.0 million through the KeyBank Credit Facility, and (iii) cash of $13.0 million funded by the us, inclusive of certain adjustments typical in such real estate transactions.

Southern Pines Reserve and Skytop Apartments are the second and third properties, respectively, that we have acquired through Delaware statutory trusts (each, a “DST”) to be part of private placement offerings through which interests in each DST will be issued to third party accredited investors therein.

Harmony at Clear Creek Development

On September 30, 2025, we, through a joint venture with an unaffiliated third party (the “Harmony JV”), in which we hold an 85% interest, acquired land located in Shawnee, Kansas for a purchase price of $2.3 million for the development of an approximately 188-unit residential community to be known as Harmony at Clear Creek.

In connection with the acquisition and planned development, the Harmony JV entered into a construction loan agreement providing for borrowings of up to $46.5 million.

At September 30, 2025, the outstanding balance under the construction loan was negligible and is included in mortgages payable on our consolidated balance sheets.

The interest rate cap associated with the construction loan, and any capitalized interest, is recorded within construction in process on the consolidated balance sheets.

We account for Harmony at Clear Creek as a consolidated investment.

Acquisition of Additional Interests in Investments

On July 11, 2025, we purchased the noncontrolling partner’s interest in each of the Peak JV 2 and Peak JV 3 portfolios for $0.2 million and $0.9 million, respectively.

We increased our interest in (i) the Peak JV 2 portfolio from 80% to 100% and (ii) the Peak JV 3 portfolio from 56% to 100%.

Sales of Consolidated Operating Units

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Our two remaining loan investments were paid off in full, including any accrued but unpaid interest amounts, as follows:

(i) Wayford at Pringle in the aggregate amount of $23.0 million, which included our principal investment of $22.3 million and accrued interest of $0.7 million, and (ii) Willow Park in the aggregate amount of $9.4 million, which included our principal investment of $9.4 million and a nominal amount of accrued interest.

Unconsolidated Real Estate Fund Summary

On April 25, 2025, we closed on the acquisition of a limited partnership interest in Marble Capital Income and Impact Fund, LP (the “Marble Fund”) for a purchase price of $25.0 million.

We account for our investment in the Marble Fund under the equity method as we consider our degree of influence to be more than minor.

The Marble Fund owns a diversified portfolio of multifamily assets and build-to-rent multifamily investments located in the United States.

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Our preferred equity investment activity was as follows:

(i) we increased our original capital commitment for preferred equity interests in Wayford at Innovation Park by $2.0 million, increasing our total investment to $15.4 million, (ii) we entered into a joint venture agreement with an unaffiliated third party, and made a commitment to invest $16.2 million for preferred equity interests, to develop an approximately 300 unit residential community located in Sanford, North Carolina known as Sanford Marketplace, and (iii) had our preferred equity investment in The Cottages at Myrtle Beach fully redeemed in the aggregate amount of $28.1 million, which included our principal investment of $17.9 million, and accrued preferred return and outstanding amounts of $10.2 million.

(i) we increased our original capital commitment for preferred equity interests in Wayford at Innovation Park by $2.0 million, increasing our total investment to $15.4 million, (ii) we entered into a joint venture agreement with an unaffiliated third party and made a commitment to invest $16.2 million for preferred equity interests in the development of an approximately 300-unit residential community located in Sanford, North Carolina known as Sanford Marketplace, and (iii) had our preferred equity investments in two joint ventures with unaffiliated third parties fully redeemed as follows:

(a) The Cottages at Myrtle Beach redeemed in the aggregate amount of $28.1 million, which included our principal investment of $17.9 million, and accrued preferred return and outstanding amounts of $10.2 million, and (b) The Cottages of Port St.

Lucie redeemed in the aggregate amount of $30.0 million, which included our principal investment of $18.8 million, and accrued preferred return and outstanding amounts of $11.2 million.

In addition, we sold our preferred equity interests in Indigo Cove and Wayford at Pringle to a joint venture, with such joint venture including an affiliate of Bluerock Homes Manager, LLC (our “Manager”), in the aggregate amounts of $4.2 million and $9.2 million, respectively, which included our outstanding principal investments and accrued preferred returns, net of any reimbursements.

As of June 30, 2025, we had funded $11.6 million of our $37.8 million aggregate commitment to fund capital for preferred equity interests in Canvas at Wildwood, River Ford, and Sanford Marketplace.

As of September 30, 2025, we had funded $14.6 million of our $37.8 million aggregate commitment to fund capital for preferred equity interests in Canvas at Wildwood, River Ford, and Sanford Marketplace.

Held for Sale

At June 30, 2025 and December 31, 2024, we classified an aggregate of 94 units and 167 units, respectively, as held for sale in our consolidated balance sheets.

For the three and six months ended June 30, 2025 and 2024, we recorded an impairment of $0.1 million and $1.1 million, and $0.2 million and $1.2 million, respectively, related to held for sale units which is included in gain on sale and (impairment) of real estate investments, net in our consolidated statements of operations and comprehensive income.

The 94 units classified as held for sale at June 30, 2025 are all reported in our scattered single-family homes segment and are included in the following portfolios:

3 units of ILE, 25 units of Indy-Springfield, 13 units of Peak JV 2, and all 53 units of Peak JV 3.

At September 30, 2025 and December 31, 2024, we classified an aggregate of 84 units and 167 units, respectively, as held for sale on our consolidated balance sheets.

For the three and nine months ended September 30, 2025 and 2024, we recorded an impairment of $0.4 million and $0.9 million, and $0.6 million and $2.1 million, respectively, related to held for sale units which is included in (impairment) and gain on sale of real estate investments, net on our consolidated statements of operations and comprehensive income.

The 84 units classified as held for sale at September 30, 2025 are all reported in our scattered single-family homes segment and are included in the following portfolios:

4 units of Golden Pacific, 5 units of ILE, 23 units of Indy-Springfield, 10 units of Peak JV 2, and all 42 units of Peak JV 3.

These units were identified based on submarket analysis and individual unit-level operational review.

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Series A Redeemable Preferred Stock

During the six months ended June 30, 2025, we issued 1,201,235 shares of 6.0% Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $25.00 per share (the “Stated Value”) under a continuous registered offering with net proceeds of approximately $26.0 million after (i) commissions, dealer manager fees and sales discounts, and (ii) costs related to establishing the offering of Series A Preferred Stock.

As of June 30, 2025, we had issued a total of 5,834,520 shares of Series A Preferred Stock with total net proceeds of approximately $127.1 million after commissions, dealer manager fees, sales discounts and offering costs.

Additionally, as of June 30, 2025, we, at the request of holders, had redeemed a total of 10,960 shares of Series A Preferred Stock through the issuance of 18,653 shares of Class A common stock and redeemed a total of 8,008 shares of Series A Preferred Stock in cash.

During the nine months ended September 30, 2025, we issued 1,493,372 shares of 6.0% Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $25.00 per share (the “Stated Value”) under a continuous registered offering with net proceeds of approximately $32.3 million after commissions, dealer manager fees and sales discounts, and costs related to establishing the offering of Series A Preferred Stock.

As of September 30, 2025, we have issued a total of 6,126,657 shares of Series A Preferred Stock with total net proceeds of approximately $133.4 million after commissions, dealer manager fees, sales discounts and offering costs.

Additionally, as of September 30, 2025, we, at the request of holders, had redeemed a total of 10,960 shares of Series A Preferred Stock through the issuance of 18,653 shares of Class A common stock and redeemed a total of 27,868 shares of Series A Preferred Stock in cash.

Series A Preferred Stock Redemption Safeguard Policy

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Stockholders’ Equity

Our total stockholders’ equity decreased $3.8 million from $139.1 million as of December 31, 2024 to $135.3 million as of June 30, 2025.

The decrease in our total stockholders’ equity is primarily attributable to dividends declared of $5.3 million and preferred stock accretion of $1.8 million, partially offset by a net adjustment of $1.2 million for noncontrolling interests, net income of $1.0 million, comprehensive income of $0.7 million, and $0.3 million from Class A common stock issuances.

Our total stockholders’ equity decreased $7.4 million from $139.1 million as of December 31, 2024 to $131.7 million as of September 30, 2025.

The decrease in our total stockholders’ equity is primarily attributable to dividends declared of $8.2 million, preferred stock accretion of $3.4 million, and a net adjustment of $0.7 million for noncontrolling interests, partially offset by the acquisitions of noncontrolling interests for $2.7 million, net income of $1.4 million, Class A common stock issuances, net of forfeitures, of $0.5 million, and comprehensive income of $0.2 million.

Results of Operations

The following is a summary of our consolidated real estate investments as of June 30, 2025:

The following is a summary of our consolidated real estate investments as of September 30, 2025:

Excluding Held

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All Units (3)

Scattered Single-Family Homes

Golden Pacific

Indy-Springfield

Dallas-Fort Worth, TX

Total Scattered Single-Family Homes / Average

Residential Communities

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Jacksonville, FL

Skytop Apartments (6)

Cincinnati, OH

Southern Pines Reserve (6)

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Total Residential Communities Units / Average

Scattered Single-Family Homes

Golden Pacific

Indy-Springfield

Dallas-Fort Worth, TX

Total Scattered Single-Family Homes / Average

Total Operating Units / Average

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Residential Communities

Abode Wendell Fall (5)

Abode Wendell Falls

Harmony at Clear Creek

Total Development Units

Total operating units includes an aggregate of 84 units classified as held for sale, with such units included in the following portfolios:

3 units of ILE, 25 units of Indy-Springfield, 13 units of Peak JV 2, and all 53 units of Peak JV 3.

Represents the average of the ending average effective rent per occupied unit as of the last day of each month in the three months ended June 30, 2025.

Percent occupied is calculated as (i) the number of units occupied as of June 30, 2025 divided by (ii) total number of units, expressed as a percentage.

Percent occupied is calculated as (i) the number of units occupied as of June 30, 2025 divided by (ii) total number of units, expressed as a percentage, and excludes 94 units classified as held for sale and an aggregate of 10 down/renovation units.

Abode Wendell Falls is a build-to-rent development project that commenced construction in 2024.

The following is a summary of our consolidated operational results by reportable segment for the three and six months ended June 30, 2025 and 2024 ($ in thousands, except average rental rates):

Three Months Ended June 30,

Six Months Ended June 30,

4 units of Golden Pacific, 5 units of ILE, 23 units of Indy-Springfield, 10 units of Peak JV 2, and all 42 units of Peak JV 3.

Represents the average of the ending average effective rent per occupied unit as of the last day of each month in the three months ended September 30, 2025.

Percent occupied is calculated as (i) the number of units occupied as of September 30, 2025 divided by (ii) total number of units, expressed as a percentage.

Percent occupied is calculated as (i) the number of units occupied as of September 30, 2025 divided by (ii) total number of units, expressed as a percentage, and excludes 84 units classified as held for sale and an aggregate of 10 down/renovation units.

Amira at Westly is held through our DST Program (refer to Note 9 of our consolidated financial statements for further information).

The Amira at Westly DST has been fully subscribed with equity from individual investors.

Skytop Apartments and Southern Pines Reserve are held through our DST Program.

Represents build-to-rent development projects.

Abode Wendell Falls commenced construction in 2024 and Harmony at Clear Creek is anticipated to commence construction in 2026.

The following is a summary of our consolidated operational results by reportable segment for the three and nine months ended September 30, 2025 and 2024 ($ in thousands, except average rental rates):

Three Months Ended September 30,

Nine Months Ended September 30,

Rental and other property revenues

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Represents the average of the ending occupancy as of the last day of each month in the period presented for all units in our consolidated portfolio.

The amount presented for 2024 includes Navigator Villas which was sold in August 2024.

The amounts presented for 2024 include Navigator Villas which was sold in August 2024.

Represents the average of the ending average effective rent per occupied unit as of the last day of each month in the period presented.

The following is a summary of our preferred equity investments as of June 30, 2025:

The following is a summary of our preferred equity investments as of September 30, 2025:

Total Actual /

Lease-up Investment Name

Location / Market

Development Investment Name (1)

Number of Units

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Cost Per Unit

Total Lease-up Units

Development Investment Name (2)

Brunswick, GA

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Total Development Units

Lease-up Investment Name

Total Lease-up Units

Operating Investment Name (3)

The Cottage of Port St.

Wayford at Innovation Park

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Total Units/Average

None of the development investments had commenced lease-up as of September 30, 2025.

Represents the average pro forma effective monthly rent per occupied unit for all expected occupied units during the first full quarter of stabilization.

None of the development investments had commenced lease-up as of June 30, 2025.

Operating investments represent stabilized operating properties.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Rental and other property revenues increased $4.8 million, or 40%, to $16.7 million for the three months ended June 30, 2025 as compared to $11.9 million for the same prior year period.

Operating investment represents a stabilized operating property.

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Rental and other property revenues increased $4.6 million, or 38%, to $16.6 million for the three months ended September 30, 2025 as compared to $12.0 million for the same prior year period.

The increase was primarily due to:

(i) the acquisition of 1,230 units at four residential communities, which was partially offset by sales of 176 units at one residential community and 159 single-family units in our portfolio since April 1, 2024, and (ii) rental rate improvement from our active management and organic market rent growth.

(i) the acquisition of 1,230 units at four residential communities, which was partially offset by sales of 176 units at one residential community and 165 single-family units in our portfolio since July 1, 2024, and (ii) rental rate improvement from our active management and organic market rent growth.

Our average rent per occupied unit increased $60, or 3.7%, to $1,695 as compared to $1,635 during the prior year period.

Average occupancy decreased 70 basis points from 92.3% to 91.6% on a year over year basis.

Interest income from loan investments amounted to $0.1 million for the three months ended June 30, 2025 as compared to $0.6 million for the same prior year period due to the full payoff of three loan investments since the third quarter of 2024.

Property operating expenses increased $2.2 million, or 37%, to $8.2 million for the three months ended June 30, 2025 as compared to $6.0 million for the same prior year period.

The increase was primarily due to the acquisition of 1,230 units at four residential communities, which was partially offset by sales of 176 units at one residential community and 159 single-family units in our portfolio since April 1, 2024.

Property management and asset management fee expenses were $1.3 million for the three months ended June 30, 2025 as compared to $1.2 million in the same prior year period.

Average occupancy increased 30 basis points from 90.9% to 91.2% on a year over year basis.

Interest income from loan investments amounted to zero for the three months ended September 30, 2025 as compared to $0.7 million for the same prior year period due to the full payoff of three loan investments prior to the third quarter of 2025.

We did not have any loan investments during the three months ended September 30, 2025.

Property operating expenses increased $2.3 million, or 36%, to $8.7 million for the three months ended September 30, 2025 as compared to $6.4 million for the same prior year period.

The increase was primarily due to the acquisition of 1,230 units at four residential communities, which was partially offset by sales of 176 units at one residential community and 165 single-family units in our portfolio since July 1, 2024.

Property management and asset management fee expenses were $1.3 million for the three months ended September 30, 2025 as compared to $1.2 million in the same prior year period.

Property management fees are based on a stated percentage of property revenues and asset management fees are based on a stated percentage of capital contributions or assets under management, where applicable.

General and administrative expenses amounted to $2.7 million for the three months ended June 30, 2025 as compared to $2.4 million for the same prior year period.

General and administrative expenses amounted to $2.7 million for the three months ended September 30, 2025 as compared to $2.5 million for the same prior year period.

Of the $2.7 million total expense in the second quarter 2025, $1.7 million related to direct costs incurred by us, while the remaining $1.0 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses.

Management fees to related party amounted to $2.6 million for the three months ended June 30, 2025 as compared to $2.2 million for the same prior year period.

Management fees to related party amounted to $2.6 million for the three months ended September 30, 2025 as compared to $2.4 million for the same prior year period.

The increase was due to an increase in equity primarily from our continuous registered offering of Series A Preferred Stock.

For the second quarter of 2025, we will pay $0.2 million of the base management fee in C-LTIP Units with the remainder in cash.

For the third quarter of 2025, we will pay $0.2 million of the base management fee in C-LTIP Units with the remainder in cash.

Prior to the fourth quarter 2024, we paid the base management fee to the Manager as one half (50%) in C-LTIP Units and the remainder in cash.

Acquisition and other transaction costs amounted to $0.1 million for the three months ended June 30, 2025 and zero for the same prior year period.

Weather-related losses were negligible for the three months ended September 30, 2025 as compared to $0.2 million for the same prior year period.

The 2024 expense primarily relates to hurricane damage in Texas.

Acquisition and other transaction costs amounted to $0.1 million for the three months ended September 30, 2025 and were negligible for the same prior year period.

Acquisition costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.

Depreciation and amortization expenses were $7.2 million for the three months ended June 30, 2025 as compared to $4.8 million for the same prior year period, with the increase primarily due to the acquisition of four residential communities since April 1, 2024.

The increase was partially offset by (i) the sales of one residential community and single-family units in our portfolio since April 1, 2024 and (ii) in-place leases being fully amortized at one residential community prior to the second quarter 2025.

Depreciation and amortization expenses were $6.8 million for the three months ended September 30, 2025 as compared to $4.9 million for the same prior year period, with the increase primarily due to the acquisition of four residential communities since July 1, 2024.

The increase was partially offset by (i) the sales of one residential community and single-family units in our portfolio since July 1, 2024 and (ii) in-place leases being fully amortized at two residential communities prior to the third quarter 2025.

Other Income and Expense

Other income and expense amounted to income of $0.2 million for the three months ended June 30, 2025 as compared to expense of $1.2 million for the same prior year period.

This was primarily due to a $1.5 million gain on the sale of one preferred equity investment, a $1.0 million decrease in impairment on real estate, and a $0.6 million increase in gain on sales of real estate investments.

These income sources were partially offset by a $1.6 million increase in interest expense primarily attributable to an increase in the outstanding debt to $347.3 million at June 30, 2025 as compared to $228.0 million at June 30, 2024.

Other income and expense amounted to expense of $3.9 million for the three months ended September 30, 2025 as compared to income of $8.4 million for the same prior year period.

This was primarily due to a $10.0 million decrease in gain on sales of real estate investments, a $3.2 million increase in impairment on real estate, a decrease in preferred returns of $0.9 million as funding to our preferred equity investments decreased to $45.0 million at September 30, 2025 as compared to $73.3 million at September 30, 2024.

These changes were partially offset by a $1.8 million gain on the sale of one preferred equity investment.

Income Tax Expense

Income tax expense amounted to income of $0.6 million for the three months ended June 30, 2025 as compared to zero for the same prior year period.

The 2025 expense primarily relates to Amira at Westly and three preferred equity investments.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Rental and other property revenues increased $9.9 million, or 44%, to $32.6 million for the six months ended June 30, 2025 as compared to $22.7 million for the same prior year period.

Income tax expense amounted to $0.4 million for the three months ended September 30, 2025 as compared to zero for the same prior year period.

The 2025 expense primarily relates to income earned on certain taxable REIT subsidiaries for Amira at Westly, Southern Pines Reserve, and one preferred equity investment.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Rental and other property revenues increased $14.5 million, or 42%, to $49.2 million for the nine months ended September 30, 2025 as compared to $34.7 million for the same prior year period.

The increase was primarily due to:

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Average occupancy decreased 30 basis points from 91.9% to 91.6% on a year over year basis.

Interest income from loan investments amounted to $0.6 million for the six months ended June 30, 2025 as compared to $1.0 million for the same prior year period due to the full payoff of three loan investments since the third quarter of 2024.

Property operating expenses increased $4.8 million, or 44%, to $15.8 million for the six months ended June 30, 2025 as compared to $11.0 million for the same prior year period.

Interest income from loan investments amounted to $0.6 million for the nine months ended September 30, 2025 as compared to $1.7 million for the same prior year period due to the full payoff of three loan investments since the third quarter of 2024.

Property operating expenses increased $7.2 million, or 41%, to $24.6 million for the nine months ended September 30, 2025 as compared to $17.4 million for the same prior year period.

The increase was primarily due to the acquisition of 1,524 units at five residential communities, which was partially offset by sales of 176 units at one residential community and 202 single-family units in our portfolio since January 1, 2024.

Property management and asset management fee expenses were $2.7 million for the six months ended June 30, 2025 as compared to $2.3 million in the same prior year period.

Property management and asset management fee expenses were $4.0 million for the nine months ended September 30, 2025 as compared to $3.5 million in the same prior year period.

General and administrative expenses amounted to $5.7 million for the six months ended June 30, 2025 as compared to $5.3 million for the same prior year period.

Of the $5.7 million total expense for the six months ended June 30, 2025, $3.7 million related to direct costs incurred by us, while the remaining $2.0 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses.

Management fees to related party amounted to $5.1 million for the six months ended June 30, 2025 as compared to $4.2 million for the same prior year period.

General and administrative expenses amounted to $8.4 million for the nine months ended September 30, 2025 as compared to $7.8 million for the same prior year period.

Of the $8.4 million total expense for the nine months ended September 30, 2025, $5.4 million related to direct costs incurred by us, while the remaining $3.0 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses.

Management fees to related party amounted to $7.8 million for the nine months ended September 30, 2025 as compared to $6.6 million for the same prior year period.

The increase was due to an increase in equity primarily from our continuous registered offering of Series A Preferred Stock.

For the six months ended June 30, 2025, we will pay $0.4 million of the base management fee in C-LTIP Units with the remainder in cash.

For the nine months ended September 30, 2025, we will pay $0.6 million of the base management fee in C-LTIP Units with the remainder in cash.

Prior to the fourth quarter 2024, we paid the base management fee to the Manager as one half (50%) in C-LTIP Units and the remainder in cash

Acquisition and other transaction costs amounted to $0.2 million for the six months ended June 30, 2025 and were minimal for the same prior year period.

Weather-related losses amounted to $0.1 million for the nine months ended September 30, 2025 as compared to $0.2 million for the same prior year period.

The 2025 expense relates to weather damage at two residential communities and the 2024 expense primarily relates to hurricane damage in Texas.

Acquisition and other transaction costs amounted to $0.3 million for the nine months ended September 30, 2025 and were negligible for the same prior year period.

Acquisition costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.

Depreciation and amortization expenses were $14.7 million for the six months ended June 30, 2025 as compared to $8.8 million for the same prior year period, with the increase primarily due to the acquisition of five residential communities since January 1, 2024.

Depreciation and amortization expenses were $21.4 million for the nine months ended September 30, 2025 as compared to $13.7 million for the same prior year period, with the increase primarily due to the acquisition of five residential communities since January 1, 2024.

The increase was partially offset by (i) the sales of one residential community and single-family units in our portfolio since January 1, 2024 and (ii) in-place leases being fully amortized at one residential community prior to 2025.

Other Income and Expense

Other income and expense amounted to expense of $1.1 million for the six months ended June 30, 2025 as compared to expense of $0.4 million for the same prior year period.

This was primarily due to a $4.3 million increase in interest expense primarily attributable to an increase in the outstanding debt to $347.3 million at June 30, 2025 as compared to $166.7 million at December 31, 2023.

This expense was partially offset by a $1.5 million gain on the sale of one preferred equity investment, a $1.1 million increase in gain on sale of real estate investments, and a $1.0 million decrease in impairment on real estate.

Other income and expense amounted to expense of $5.0 million for the nine months ended September 30, 2025 as compared to income of $8.0 million for the same prior year period.

This was primarily due to (i) a $9.0 million decrease in gain on sales of real estate investments, (ii) a $4.7 million increase in interest expense primarily attributable to an increase in the outstanding debt to $426.0 million at September 30, 2025 as compared to $166.7 million at December 31, 2023, (iii) a $2.2 million increase in impairment on real estate, and (iv) a decrease in preferred returns of $1.1 million as funding to our preferred equity investments decreased to $45.0 million at September 30, 2025 as compared to $81.3 million at December 31, 2023.

These changes were partially offset by a $3.2 million gain on the sale of two preferred equity investments and $0.7 million income from the investment in one unconsolidated real estate fund.

Income Tax Expense

Income tax expense amounted to income of $1.0 million for the six months ended June 30, 2025 as compared to zero for the same prior year period.

The 2025 expense primarily relates to Amira at Westly and three preferred equity investments.

Income tax expense amounted to $1.4 million for the nine months ended September 30, 2025 as compared to zero for the same prior year period.

The 2025 expense primarily relates to income earned on certain taxable REIT subsidiaries for Amira at Westly, Southern Pines Reserve, and three preferred equity investments.

Net Operating Income

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However, NOI should only be used as a supplemental measure of our financial performance.

The following table reflects net loss attributable to common stockholders together with a reconciliation to NOI, as computed in accordance with GAAP for the periods presented (amounts in thousands):

The following table reflects net (loss) income attributable to common stockholders together with a reconciliation to NOI, as computed in accordance with GAAP for the periods presented (amounts in thousands):

Three Months Ended

Six Months Ended

Net loss attributable to common stockholders

Net loss attributable to Operating Partnership Units

Net loss attributable to common stockholders and unit holders

Nine Months Ended

September 30,

Net (loss) income attributable to common stockholders

Net (loss) income attributable to Operating Partnership Units

Net (loss) income attributable to common stockholders and unit holders

Net loss attributable to partially owned properties’ noncontrolling interests

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Unrealized loss on derivatives

(Recovery of) provision for credit losses

Provision for (recovery of) credit losses

Property management and asset management fees

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Preferred stock accretion

Other expense, net

Other expense (income), net

Income tax expense

Income from preferred equity investments

Income from investments in unconsolidated real estate funds

Interest income from loan investments

(Gain on sale) and impairment of real estate investments, net

Impairment and (gain on sale) of real estate investments, net

Gain on sale of available-for-sale investments

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Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our short-term liquidity needs could be affected by various risks and uncertainties, including the risks detailed in Part I, Item 1A titled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 20, 2025.

While consolidated occupancy excluding units classified as held for sale and down/renovation units remains strong at 93.2% as of June 30, 2025, in future periods we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants.

In addition, in October 2024, we launched a program to sponsor and raise capital through private placement offerings of Delaware statutory trusts (each, a “DST”) holding residential properties (collectively, the “DST Program”).

While consolidated occupancy excluding units classified as held for sale and down/renovation units remains strong at 93.7% as of September 30, 2025, in future periods we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants.

In addition, in October 2024, we launched a program (collectively, the “DST Program”) to sponsor and raise capital in private placement offerings of beneficial interests in specific Delaware statutory trusts (each, a “DST”) holding real properties (each, a “DST Property”).

We expect that the DST Program will give us the opportunity to expand and diversify our capital raise strategies by offering what we believe to be an attractive investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions and create future pipeline acquisition opportunities.

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As compensation for the Operating Partnership’s obligations under the Master Leases, we will share in the rent paid by the tenants of the underlying properties in accordance with the waterfall set forth in the applicable Master Lease.

As of June 30, 2025, we had two properties (Amira at Westly and Southern Pines Reserve) in our DST Program and had raised net offering proceeds of $45.5 million, issued demand notes of $1.1 million, and had $160.3 million in total net real estate investments associated with the DST Program.

As of September 30, 2025, we had three DST Properties (Amira at Westly, Skytop Apartments and Southern Pines Reserve) in our DST Program and had raised net offering proceeds of $75.5 million, issued demand notes of $1.8 million, and had $243.9 million in total net real estate investments associated with the DST Program.

The Amira at Westly DST had been fully subscribed with equity from individual investors as of September 30, 2025.

In conjunction with sponsoring of the DST Program, our Operating Partnership is granted an option to acquire DST interests from the DST Program’s beneficial owners at a later date for an aggregate value equal to such beneficial owner’s pro rata share of the appraised value of the properties, as determined by an independent appraisal firm, less any indebtedness encumbering such beneficial owner’s DST interest or the beneficial owner’s pro rata share of any indebtedness encumbering the properties, which will be assumed or paid off by our Operating Partnership.

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We believe we will be able to meet our primary liquidity requirements going forward through, among other sources:

● $127.6 million in cash available at June 30, 2025;

● capacity of $50 million, all of which was available on the KeyBank Credit Facility at June 30, 2025 for use in our DST Program;

● $162.7 million in cash available at September 30, 2025;

● capacity of $50 million on the KeyBank Credit Facility, of which $28 million was available at September 30, 2025 for use in our DST Program;

● proceeds from future mortgage debt financings for acquisition and/or development projects;

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● proceeds from the offering of our Series A Preferred Stock and potential offerings of common and preferred stock, as well as issuances of units of limited partnership interest in our Operating Partnership (“OP Units”).

The following table summarizes our contractual obligations as of June 30, 2025 related to our mortgage notes secured by our properties.

At June 30, 2025, the KeyBank Credit Facility had no outstanding balance.

Our estimated future required payments on these obligations as of June 30, 2025 were as follows (amounts in thousands):

The following table summarizes our contractual obligations as of September 30, 2025 related to our mortgage notes secured by our properties and revolving credit facility.

Our estimated future required payments on these obligations as of September 30, 2025 were as follows (amounts in thousands):

Mortgages Payable (Principal)

Estimated Interest Payments on Mortgages Payable

Revolving Credit Facility

Estimated Interest Payments on Mortgages Payable and Revolving Credit Facility

Estimated interest payments are based on the stated rates for mortgage notes payable assuming the interest rate in effect for the most recent quarter remains in effect through the respective maturity dates.

At June 30, 2025, we had contractual commitments to fund future cash obligations in certain of our preferred equity investments in the aggregate of $26.2 million.

In addition, we made a commitment to fund the total estimated project costs of $56.9 million for the development of Abode Wendell Falls, a 170-unit build-to-rent development project in Wendell, North Carolina.

At June 30, 2025, the remaining estimated project costs to complete Abode Wendell Falls was $45.3 million.

At September 30, 2025, we had contractual commitments to fund future cash obligations in certain of our preferred equity investments in the aggregate of $23.2 million.

In addition, we have two consolidated residential communities (Abode Wendell Falls and Harmony at Clear Creek) under construction comprised of an aggregate of 358 units.

As of September 30, 2025, we estimate that the remaining costs associated with the completion of construction for these two residential communities will be approximately $121.4 million.

We intend to finance these costs through a combination of available cash, proceeds from construction loans, and preferred equity capital contributions.

As equity capital market conditions permit, we may supplement our capital for short-term liquidity needs with proceeds of potential offerings of our common and preferred stock, as well as the issuance of OP Units.

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Open market repurchases will be structured to occur in conformity with the method, timing, price and volume requirements of Rule 10b-18 of the Exchange Act.

As of June 30, 2025, we had not made any repurchases of our Class A common stock.

As of September 30, 2025, we had not made any repurchases of our Class A common stock.

Our primary long-term liquidity requirements relate to (i) costs for additional residential investments, including development properties, (ii) repayment of long-term debt and our revolving credit facility, (iii) capital expenditures, (iv) cash redemption requirements related to our Series A Preferred Stock, (v) cash requirements related to our Series A Preferred Stock Safeguard Policy, and (vi) Class A common stock repurchases under our stock repurchase plan.

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Further, our ability to access equity capital is dependent upon, among other things, general market conditions for REITs and the capital markets generally, market perceptions about us and our asset class, and current trading prices of our securities.

As we did in the six months ended June 30, 2025, we may also selectively sell consolidated operating assets at appropriate times, which would be expected to generate cash sources for both our short-term and long-term liquidity needs.

As we did in the nine months ended September 30, 2025, we may also selectively sell consolidated operating assets at appropriate times, which would be expected to generate cash sources for both our short-term and long-term liquidity needs.

We may also meet our long-term liquidity needs through borrowings from a number of sources, either at the corporate or project level.

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In addition to restrictive covenants, our revolving credit facility contains material financial covenants.

At June 30, 2025, we were in compliance with all covenants under our revolving credit facility.

At September 30, 2025, we were in compliance with all covenants under our revolving credit facility.

We will continue to monitor the debt markets, including Fannie Mae and Freddie Mac, and as market conditions permit, access borrowings that are advantageous to us.

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We expect to maintain a distribution on our Series A Preferred Stock in accordance with the terms which require monthly dividends.

While our distributions through June 30, 2025 have been paid from cash flow from operations and in accordance with our policy, distributions in the future may be paid from cash flow from operations, proceeds from the offering of our Series A Preferred Stock, the sales of assets and additional sources, such as from borrowings.

We have preferred equity interests in properties that are in various stages of development and in lease-up, and our preferred equity investments are structured to provide a current and/or accrued preferred return during all phases.

While our distributions through September 30, 2025 have been paid from cash flow from operations and in accordance with our policy, distributions in the future may be paid from cash flow from operations, proceeds from the offering of our Series A Preferred Stock, the sales of assets, and additional sources, such as from borrowings.

We have preferred equity interests in properties that are in various stages of development, in lease-up and operating, and our preferred equity investments are structured to provide a current and/or accrued preferred return during all phases.

Each joint venture in which we own a preferred equity interest is required to redeem our preferred equity interests, plus any accrued preferred return, based on a fixed maturity date, generally in relation to the property’s construction loan or mortgage loan maturity.

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Off-Balance Sheet Arrangements

As of June 30, 2025, we have off-balance sheet arrangements that may have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

At June 30, 2025, we hold preferred equity interests in six joint ventures that are accounted for as available-for-sale debt securities.

As of September 30, 2025, we have off-balance sheet arrangements that may have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

At September 30, 2025, we hold preferred equity interests in five joint ventures that are accounted for as available-for-sale debt securities.

Cash Flows from Operating Activities

As of June 30, 2025, we held twenty-one real estate investments, consisting of fifteen consolidated investments and six preferred equity investments, with the twenty-one investments representing an aggregate of 5,038 residential units.

During the six months ended June 30, 2025, net cash provided by operating activities was $14.8 million after net loss of $13.2 million was adjusted for the following:

● non-cash items of $11.6 million;

As of September 30, 2025, we held twenty-two real estate investments, consisting of seventeen consolidated investments and five preferred equity investments, with the twenty-two investments representing an aggregate of 5,282 residential units.

During the nine months ended September 30, 2025, net cash provided by operating activities was $28.3 million after net loss of $23.1 million was adjusted for the following:

● distributions of income and income from preferred equity investments of $22.0 million;

● non-cash items of $20.3 million;

● an increase in accounts payable and other accrued liabilities of $8.2 million;

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● a decrease in notes and accrued interest receivable of $0.5 million;

● distributions from investments in unconsolidated real estate funds of $0.3 million;

● an increase in accounts receivable, prepaids and other assets of $1.7 million.

Cash Flows from Investing Activities

During the six months ended June 30, 2025, net cash used in investing activities was $26.0 million, primarily due to the following:

During the nine months ended September 30, 2025, net cash used in investing activities was $109.0 million, due to the following:

● $155.7 million used in the acquisition of real estate investments;

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● $11.1 million used in investments in preferred equity investments;

● $1.6 million used in purchase of rate caps;

● $31.7 million of repayments on notes receivable;

● $1.6 million used in the purchase of rate caps;

● $49.6 million of proceeds from the sale and redemption of preferred equity investments;

● $31.7 million of repayments on notes receivable;

● $16.8 million of proceeds from the sales of real estate investments.

Cash Flows from Financing Activities

During the six months ended June 30, 2025, net cash provided by financing activities was $25.0 million, primarily due to the following:

● $41.5 million of contributions from noncontrolling interests;

During the nine months ended September 30, 2025, net cash provided by financing activities was $132.8 million, primarily due to the following:

● borrowings of $88.3 million on mortgages payable;

● net proceeds of $26.0 million from the issuance of shares of Series A Preferred Stock;

● $72.4 million of contributions from noncontrolling interests;

● proceeds of $42.0 million from borrowings on revolving credit facilities;

● net proceeds of $32.3 million from the issuance of shares of Series A Preferred Stock;

● $81.0 million of repayments on revolving credit facilities;

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● $1.2 million of distributions to partially owned properties’ noncontrolling interests;

● $1.1 million used in the purchase of interests from noncontrolling interests;

● $1.0 million of cash distributions paid to common stockholders;

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Capital Expenditures

The following table summarizes our total capital expenditures for the six months ended June 30, 2025 and 2024 (amounts in thousands):

Six Months Ended

The following table summarizes our total capital expenditures for the nine months ended September 30, 2025 and 2024 (amounts in thousands):

Nine Months Ended

September 30,

New development

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Adjustments for notes receivable, preferred equity investments and joint ventures will be calculated to reflect FFO on the same basis.

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as acquisition and other transaction costs, non-cash interest, unrealized gains or losses on derivatives, provision for (recovery of) credit losses, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), one-time weather-related costs, equity compensation expense, non-recurring income tax, and preferred stock accretion.

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as acquisition and other transaction costs, non-cash interest, unrealized gains or losses on derivatives, provision for (recovery of) credit losses, non-cash returns on unconsolidated real estate funds, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), one-time weather-related costs, equity compensation expense, non-recurring income tax, and preferred stock accretion.

We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations.

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Neither FFO nor CFFO should be considered as an alternative to net income, including net income (loss) attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

The table below presents our calculation of FFO and CFFO for the three and six months ended June 30, 2025 and 2024 ($ in thousands):

The table below presents our calculation of FFO and CFFO for the three and nine months ended September 30, 2025 and 2024 ($ in thousands):

Three Months Ended

Six Months Ended

Net loss attributable to common stockholders

Net loss attributable to Operating Partnership Units

Net loss attributable to common stockholders and unit holders

Nine Months Ended

September 30,

Net (loss) income attributable to common stockholders

Net (loss) income attributable to Operating Partnership Units

Net (loss) income attributable to common stockholders and unit holders

Real estate depreciation and amortization

(Gain on sale) and impairment of real estate investments, net

Impairment and (gain on sale) of real estate investments, net

Gain on sale of available-for-sale investments

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Unrealized loss on derivatives

(Recovery of) provision for credit losses

Provision for (recovery of) credit losses

Non-cash returns on unconsolidated real estate funds

Loss on extinguishment of debt costs

1 unchanged sentence

Non-real estate depreciation and amortization

Other income/expense, net

Other expense (income), net

Non-cash equity compensation

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June 25, 2025

July 15, 2025

July 25, 2025

August 5, 2025

July 15, 2025

August 25, 2025

September 5, 2025

July 15, 2025

September 25, 2025

October 3, 2025

Series A Preferred Enhanced Special Dividend (2)

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June 25, 2025

July 15, 2025

July 25, 2025

August 5, 2025

July 15, 2025

August 25, 2025

September 5, 2025

July 15, 2025

September 25, 2025

October 3, 2025

Holders of record of newly issued Series A Preferred Stock shares that are held only a portion of the applicable monthly dividend period will receive a prorated dividend based on the actual number of days in the applicable dividend period during which each such share of Series A Preferred Stock was outstanding.

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Subsequent Events

Other than the items disclosed in Note 18 “Subsequent Events” to our interim Consolidated Financial Statements for the period ended June 30, 2025, no material events have occurred that required recognition or disclosure in these financial statements.

Other than the items disclosed in Note 18 “Subsequent Events” to our interim Consolidated Financial Statements for the period ended September 30, 2025, no material events have occurred that required recognition or disclosure in these financial statements.

Refer to Note 18 of our interim Consolidated Financial Statements for discussion.

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