Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the accompanying financial statements of Bluerock Homes Trust, Inc., and the notes thereto. As used herein, the terms “the Company”, “we”, “our”, and “us” refer to Bluerock Homes Trust, Inc., a Maryland corporation formed on December 16, 2021, and, as required by context, Bluerock Residential Holdings, L.P., a Delaware limited partnership, which we refer to as our “Operating Partnership,” and to their subsidiaries. We refer to Bluerock Homes Manager, LLC, a Delaware limited liability company, and an entity affiliated with the Company, as our “Manager”. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements.
Forward-Looking Statements
All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and may be identified by words such as “will,” “expect,” “believe,” “plan,” “anticipate,” “intend,” “goal,” “future,” “outlook,” “guidance,” “target,” “estimate” and similar words or expressions, including the negative version of such words and expressions. These forward-looking statements are based upon our present expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management involve uncertainty that could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements and are not guaranteed to occur. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon these forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in these forward-looking statements due to numerous factors.
Additional factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:
● The impact of volatility in capital and credit markets, or unfavorable changes in economic conditions, including those caused by inflation and rising interest rates, in the markets in which we operate;
● The impact of epidemics, pandemics, or other outbreaks of illness, disease or virus (such as the outbreak of novel coronavirus (“COVID-19”) and its variants) and the actions taken by government authorities and other related thereto, including the ability of our company, our properties and our tenants to operate;
● the factors included in this Quarterly Report on Form 10-Q, including those set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
● use of proceeds of our securities offerings;
● changes in national, regional and local economic conditions, which may be negatively impacted by concerns about inflation, deflation, tariffs and global trade tensions, government deficits, high unemployment rates, decreased consumer confidence and liquidity concerns, particularly in markets in which we have a high concentration of properties;
● fluctuations and relative increases in interest rates, which could adversely affect our ability to obtain financing on favorable terms or at all;
● the inability of tenants to pay rent;
● the existence and quality of the competition, such as the attractiveness of our properties as compared to our competitors’ properties based on considerations such as convenience of location, rental rates and safety record;
● increased operating costs, including increased real property taxes, homeowners association (“HOA”) fees, maintenance, insurance and utilities costs;
● weather conditions that may increase or decrease energy costs and other weather-related expenses;
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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;
● a favorable interest rate environment that may result in a significant number of potential residents of our properties deciding to purchase homes instead of renting;
● rules, regulations and/or policy initiatives by government and private actors, including HOAs, to discourage or deter the purchase of residential properties by entities owned or controlled by institutional investors;
● our ability to lease newly acquired or newly constructed residential properties;
● changes in, or increased costs of compliance with, laws and/or governmental regulations, including those governing usage, zoning, the environment and taxes;
● rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs;
● the board of directors’ determination as to timing and payment of dividends, and our ability to pay future distributions at the dividend rates we have paid (if any);
● our ability to qualify and maintain our qualification as a real estate investment trust (“REIT”); and
● litigation, including costs associated with prosecuting or defending claims and any adverse outcomes.
Any of the assumptions underlying forward-looking statements could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statements included in this report. All forward-looking statements are made as of the date of this report and the risk that actual results will differ materially from the expectations expressed in this report will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this report, whether as a result of new information, future events, changed circumstances or any other reason. The forward-looking statements should be read in light of the risk factors set forth in Item 1A of this Quarterly Report on Form 10-Q, in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission (“SEC”) on March 20, 2025, and subsequent filings by us with the SEC, or “Risk Factors”.
Overview
We own and operate a portfolio of institutional residential properties including single-family homes, build-to-rent communities, and other residential communities located in attractive markets with a focus on the knowledge-economy and high-quality of life growth markets of the Sunbelt and Western United States. Our principal objective is to generate attractive risk-adjusted returns on investments where we believe we can drive growth in funds from operations and net asset value by acquiring residential units, developing residential communities, and through Value-Add renovations. 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 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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We have elected to be treated, and currently qualify, as a REIT for federal income tax purposes. As a REIT, we generally are not subject to corporate-level income taxes. To maintain our REIT status, we are required, among other requirements, to distribute annually at least 90% of our “REIT taxable income,” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), to our stockholders. If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax on our taxable income at regular corporate tax rates and we would not be permitted to qualify as a REIT for four years following the year in which we lost our qualification. Such an event could materially and adversely affect our net income and results of operations. We intend to continue to organize and operate in such a manner as to remain qualified as a REIT.
Industry Segments
We own and operate residential real estate assets that generate rental and other property-related income through the leasing of residential units to a diverse base of tenants. We view our residential real estate assets as two reportable segments, consisting of (i) residential communities and (ii) scattered single-family homes. Our Chief Operating Decision Makers, which are our Chief Executive Officer, Chief Investment Officer and Chief Financial Officer, do not distinguish or group operations on a geographic, tenant or other basis when assessing the financial performance of our portfolio of properties/investments.
Residential communities segment includes the acquisition, ownership, management, renovation, construction, and development of residential communities, which include both detached single-family home communities and attached unit communities such as apartments, townhouses, and duplexes. Each residential community is, generally, located on a single, contiguous land parcel and has amenities including clubhouses, gyms, pools and common areas. In addition, these residential communities typically have onsite property management.
Scattered single-family homes segment includes the acquisition, ownership, management, and renovation of scattered single-family homes, which are, generally, detached homes with no onsite property management.
Inflation and Related Economic Volatility
While inflationary pressures have shown signs of moderation, we continue to monitor increases in inflation and rising interest rates and resulting economic changes in credit and capital markets. Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our residents’ ability to pay rents and our results of operations. Substantially all our leases are for a term of one year or less, which we believe mitigates our exposure to inflation, by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance). Inflation could outpace any increases in rent and adversely affect us. We may not be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation, and any such related adverse effects on our results of operations and financial condition are unknown at this time. Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so. Inflation may also increase the costs to complete our development projects, including costs of materials, labor and services from third-party contractors and suppliers. Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development projects.
Additionally, developments in the banking industry in early 2023 caused uncertainty and concern regarding the strength of the banking system. As a result, the cost of obtaining debt from credit and capital markets increased as many lenders increased interest rates, enacted tighter lending standards, and reduced and, in some cases, ceased to provide funding to borrowers. Although our banking relationships are primarily with large national banks, a significant disruption to the banking system could lead to market-wide liquidity problems which could adversely affect our access to capital and our cost of capital. If we need to incur debt from a source other than our revolving credit facilities, we cannot be certain the additional financing will be available to the extent required and on acceptable terms. If debt financing on acceptable terms is not available, we may be unable to fully execute our growth strategy, otherwise take advantage of business opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our results of operations and financial condition.
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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 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. Such tariffs, and any additional tariffs imposed by the current administration or other countries, may cause further inflationary pressures in the economy, uncertainty and volatility of debt and equity markets, and a slowdown in the U.S. and global economies. The announced tariffs are likely to increase construction costs and further reduce already constrained new supply starts, which could adversely impact the timing of actual completion and/or stabilization of our build-to-rent communities, including potential delays due to supply shortages and labor shortages. Any of these factors could depress economic activity and have a material adverse effect on our business, financial condition, cash flows, and our results of operations.
Other Significant Developments
Investment Activity Summary
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 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%.
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Sales of Consolidated Operating Units
We closed on the following sales: 20 units in the ILE portfolio, 14 units in the Indy-Springfield portfolio, 22 units in the Peak JV 2 portfolio, and 48 units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sale agreements. The 104 units were all previously classified as held for sale and sold for an aggregate of approximately $18.4 million, subject to certain closing costs, prorations and adjustments typical in such real estate transactions. After deducting the paydown of existing mortgage indebtedness encumbering 19 units in the ILE portfolio of approximately $3.5 million, the sales of the 104 units generated net proceeds of approximately $13.3 million and a gain on sales of approximately $2.0 million.
Loan Investment Activity
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 negligible 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.
Preferred Equity Investment Summary
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 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 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.
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Held for Sale
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. Real estate assets classified as held for sale are reported at the lower of their carrying value or estimated fair value less costs to sell and are presented separately within operating real estate held for sale, net on our consolidated balance sheets.
Series A Redeemable Preferred Stock
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
On February 6, 2025, we implemented a new Series A Preferred Stock Redemption Safeguard Policy (the “Policy”) with respect to our Series A Preferred Stock. The Policy is applicable in the event of any redemption of shares of Series A Preferred Stock in shares of our Class A common stock rather than in cash (each, a “Preferred Redemption in common stock”). The Policy provides that if, within 10 business days of any such Preferred Redemption in common stock, any such shares of Class A common stock are sold at a loss (i.e. a lower price than the Aggregate Redemption Value), the holder can apply to us for a cash payment to the holder in an amount equal to the difference between (i) the Aggregate Redemption Value of the Class A common stock so issued, and (ii) the Aggregate Sale Price at which such shares of Class A common stock were sold, subject to certain conditions and requirements as set forth in the Policy. The Policy applies both retroactively, and on a go-forward basis, to holders of our Series A Preferred Stock.
Stockholders’ Equity
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.
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Results of Operations
The following is a summary of our consolidated real estate investments as of September 30, 2025:
Occupancy –
Excluding Held
Number of
Average
Ownership
Average
Occupancy –
for Sale/Reno
Operating Investment Name
Market / Location
Units (1)
Year Built
Interest
Rent (2)
All Units (3)
Units (4)
Residential Communities
Allure at Southpark
Charlotte, NC
350
2014
98
%
$
1,705
90.3
%
90.5
%
Amira at Westly
Tampa, FL
408
1999/2023
(5)
1,868
93.1
%
93.4
%
Avenue at Timberlin Park
Jacksonville, FL
200
2001
100
%
1,604
95.5
%
96.0
%
Skytop Apartments (6)
Cincinnati, OH
361
2024
100
%
1,722
95.0
%
95.5
%
Southern Pines Reserve (6)
Aberdeen, NC
272
2000/2003
54
%
1,492
95.6
%
95.9
%
Villas at Huffmeister
Houston, TX
294
2007
95
%
1,598
95.6
%
95.9
%
Wayford at Concord
Concord, NC
150
2019
83
%
2,169
92.7
%
93.3
%
Yauger Park Villas
Olympia, WA
80
2010
95
%
2,475
98.8
%
98.8
%
Total Residential Communities Units / Average
2,115
$
1,754
94.0
%
94.4
%
Scattered Single-Family Homes
Ballast
AZ / CO / WA
84
1998
95
%
$
2,100
89.3
%
89.3
%
Golden Pacific
IN / KS / MO
169
1977
97
%
1,810
90.5
%
92.7
%
ILE
TX / SE US
458
1991
95
%
1,866
91.3
%
92.3
%
Indy-Springfield
IN / MO
309
1999
100
%
1,416
92.6
%
96.2
%
Peak JV 2
Various / TX
551
1982
100
%
1,373
88.9
%
90.9
%
Peak JV 3
Dallas-Fort Worth, TX
42
1960
100
%
1,192
19.0
%
—
Savannah-84
Savannah, GA
84
2022
100
%
1,880
97.6
%
97.6
%
Total Scattered Single-Family Homes / Average
1,697
$
1,626
89.1
%
92.7
%
Total Operating Units / Average
3,812
$
1,695
91.8
%
93.7
%
Development Investment Name (7)
Residential Communities
Abode Wendell Falls
Wendell, NC
170
—
100
%
—
—
—
Harmony at Clear Creek
Shawnee, KS
188
—
85
%
—
—
—
Total Development Units
358
Total Units
4,170
(1)
Total operating units includes an aggregate of 84 units classified as held for sale, with such units 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.
(2)
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.
(3)
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.
(4)
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.
(5)
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.
(6)
Skytop Apartments and Southern Pines Reserve are held through our DST Program.
(7)
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.
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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,
2025
2024
Variance
2025
2024
Variance
Rental and other property revenues
Residential communities
$
9,082
$
3,946
130.2
%
$
26,106
$
10,335
152.6
%
Scattered single-family homes
7,528
8,030
(6.3)
%
23,121
24,335
(5.0)
%
Total rental and other property revenues
16,610
11,976
38.7
%
49,227
34,670
42.0
%
Property operating expenses
Residential communities
4,416
1,836
140.5
%
11,813
4,356
171.2
%
Scattered single-family homes
4,313
4,598
(6.2)
%
12,745
13,035
(2.2)
%
Total property operating expenses
8,729
6,434
35.7
%
24,558
17,391
41.2
%
Net operating income
Residential communities
4,666
2,110
121.1
%
14,293
5,979
139.1
%
Scattered single-family homes
3,215
3,432
(6.3)
%
10,376
11,300
(8.2)
%
Total net operating income
$
7,881
$
5,542
42.2
%
$
24,669
$
17,279
42.8
%
Residential communities
93.2
%
95.7
%
(250)
bps
93.3
%
95.4
%
(210)
bps
Scattered single-family homes
89.0
%
88.9
%
10
bps
89.8
%
90.6
%
(80)
bps
Average occupancy percentage (1)(2)
91.2
%
90.9
%
30
bps
91.6
%
91.9
%
(30)
bps
Residential communities
$
1,754
$
1,780
(1.5)
%
$
1,776
$
1,800
(1.3)
%
Scattered single-family homes
1,626
1,570
3.6
%
1,608
1,549
3.8
%
Average rental rate (2)(3)
$
1,695
$
1,635
3.7
%
$
1,693
$
1,617
4.7
%
(1)
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.
(2)
The amounts presented for 2024 include Navigator Villas which was sold in August 2024.
(3)
Represents the average of the ending average effective rent per occupied unit as of the last day of each month in the period presented.
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The following is a summary of our preferred equity investments as of September 30, 2025:
Total Actual /
Actual /
Actual /
Actual /
Actual /
Estimated
Estimated
Estimated
Estimated
Estimated
Planned
Construction
Cost to Date
Construction
Initial
Construction
Average
Development Investment Name (1)
Location
Number of Units
Cost (in millions)
(in millions)
Cost Per Unit
Occupancy
Completion
% Occupied
Rent (2)
River Ford
Brunswick, GA
170
$
51.6
$
15.4
$
303,529
1Q 2026
1Q 2027
—
$
2,004
Sanford Marketplace
Sanford, NC
300
59.6
9.7
198,667
4Q 2026
2Q 2027
—
1,587
Canvas at Wildwood
Wildwood, FL
224
60.3
14.7
269,196
4Q 2026
4Q 2027
—
1,937
Total Development Units
694
Lease-up Investment Name
Chandler
Chandler, AZ
208
48.2
48.2
231,731
2Q 2024
3Q 2024
87.5
%
1,920
Total Lease-up Units
208
Operating Investment Name (3)
Wayford at Innovation Park
Charlotte, NC
210
94.3
%
2,295
Total Operating Units
210
Total Units/Average
1,112
$
1,918
(1)
None of the development investments had commenced lease-up as of September 30, 2025.
(2)
Represents the average pro forma effective monthly rent per occupied unit for all expected occupied units during the first full quarter of stabilization.
(3)
Operating investment represents a stabilized operating property.
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenue
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 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 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.
Expenses
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 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.
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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 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.
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 $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 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 $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
Revenue
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: (i) 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, and (ii) rental rate improvement from our active management and organic market rent growth. Our average rent per occupied unit increased $76, or 4.7%, to $1,693 as compared to $1,617 during the prior year period. 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 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.
Expenses
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 $4.0 million for the nine months ended September 30, 2025 as compared to $3.5 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.
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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 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
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 $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 $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 $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
We believe that net operating income (“NOI”) is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. NOI also is a computation made by analysts and investors to measure a real estate company’s operating performance.
We believe that this measure provides an operating perspective not immediately apparent from operating income or net income prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). NOI allows us to evaluate the operating performance of our properties because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses.
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However, NOI should only be used as a supplemental measure of our financial performance. 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
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
Net (loss) income attributable to common stockholders
$
(3,608)
$
921
$
(8,621)
$
(1,731)
Add back: Net (loss) income attributable to Operating Partnership Units
(8,074)
2,010
(19,302)
(3,695)
Net (loss) income attributable to common stockholders and unit holders
(11,682)
2,931
(27,923)
(5,426)
Net loss attributable to partially owned properties’ noncontrolling interests
(2,270)
(796)
(5,245)
(1,776)
Real estate depreciation and amortization
6,740
4,851
21,392
13,604
Non-real estate depreciation and amortization
14
35
43
118
Non-cash interest expense
573
450
1,979
1,116
Unrealized loss on derivatives
494
1,888
1,728
3,444
Provision for (recovery of) credit losses
—
48
(104)
214
Property management and asset management fees
1,305
1,181
3,966
3,472
Management fees to related party
2,643
2,377
7,789
6,621
Acquisition and other transaction costs
107
17
318
21
Corporate operating expenses
2,705
2,448
8,427
7,746
Weather-related losses, net
37
178
82
178
Loss on extinguishment of debt costs
3
118
12
118
Interest income
(1,522)
(1,585)
(3,808)
(3,918)
Preferred dividends
2,417
1,412
6,681
2,227
Preferred stock accretion
1,574
—
3,370
181
Other expense (income), net
45
(166)
119
(106)
Income tax expense
400
—
1,372
—
Income from preferred equity investments
(1,783)
(2,721)
(7,199)
(8,308)
Income from investments in unconsolidated real estate funds
(717)
—
(717)
—
Interest income from loan investments
—
(730)
(598)
(1,735)
Impairment and (gain on sale) of real estate investments, net
3,944
(9,304)
2,383
(8,770)
Gain on sale of available-for-sale investments
(1,762)
—
(3,212)
—
Total property income
3,265
2,632
10,855
9,021
Add back: Interest expense
4,616
2,910
13,814
8,258
Net operating income
$
7,881
$
5,542
$
24,669
$
17,279
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements, both short- and long-term. Our primary short-term liquidity requirements historically have related to (i) our operating expenses and other general business needs, (ii) investment in real estate, (iii) distributions to stockholders, (iv) committed investments and capital requirements to fund development and renovations at existing properties, and (v) ongoing commitments to repay borrowings, including our maturing debt and the KeyBank Credit Facility.
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 93.7% 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.
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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. In conjunction with the DST Program, our Operating Partnership has issued certain non-interest bearing demand notes in relation to its role as the master tenant (the “Master Tenant”) under certain master leases (the “Master Leases”) related to the DST Program (the “Demand Notes”), which could be called upon if the net operating cash flow is insufficient to pay the rent required under the Master Leases (subject to limited deferral rights) or satisfy its other obligations under the Master Leases. 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 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.
In general, we believe our available cash balances, cash flows from operations, proceeds from the offering of our Series A Preferred Stock, proceeds from the KeyBank Credit Facility (as hereinafter defined, the “revolving credit facility”), proceeds from our DST Program, proceeds from future mortgage debt financings for acquisitions and/or development projects, and other financing arrangements will be sufficient to fund our liquidity requirements with respect to our existing portfolio for the next 12 months. In general, we expect that our results related to our existing portfolio will improve in future periods as a result of anticipated future investments in and acquisitions of residential properties and build-to-rent communities.
We believe we will be able to meet our primary liquidity requirements going forward through, among other sources:
● $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;
● cash generated from operating activities; and
● 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 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):
Total
2025
2026-2027
2028-2029
Thereafter
Mortgages Payable (Principal)
$
404,000
$
459
$
117,308
$
86,153
$
200,080
Revolving Credit Facility
22,000
—
22,000
—
—
Estimated Interest Payments on Mortgages Payable and Revolving Credit Facility
113,835
5,282
41,218
27,866
39,469
Total
$
539,835
$
5,741
$
180,526
$
114,019
$
239,549
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.
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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. Given the significant volatility in the trading price of REIT equities and our otherwise stable financial condition and liquidity position, we cannot provide assurances that these offerings are a likely source of capital to meet short-term liquidity needs.
On February 13, 2024, our board of directors (the “Board”) authorized a stock repurchase plan for the repurchase of up to an aggregate of $5 million of our outstanding shares of Class A common stock. The repurchase plan had a term of one year and ended in February 2025. We made no repurchases of our Class A common stock under the plan.
On February 28, 2025, our Board authorized a new stock repurchase plan for the repurchase, from time to time, of up to an aggregate of $5 million of our outstanding shares of Class A common stock, with such repurchases to be conducted in accordance with the requirements of Rule 10b-18 of the Exchange Act and subject to Rule 10b-5 of the Exchange Act. The repurchase plan has a term of one year and may be discontinued at any time. The extent to which we repurchase shares of our Class A common stock under the repurchase plan, and the timing of any such repurchases, depends on a variety of factors including general business and market conditions and other corporate considerations. We expect that any repurchases of our Class A common stock will be through open market transactions, subject to market conditions, certain price limitations and other conditions established under the plan. 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 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.
We intend to finance our long-term liquidity requirements with net proceeds of additional issuances of common and preferred stock, including issuances in connection with the continuous registered offering of our Series A Preferred Stock, our revolving credit facility, as well as future acquisition or project-based borrowings. Our success in meeting these requirements will therefore depend upon our ability to access capital. 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 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. We believe our revolving credit facility will serve as our primary debt source that will continue to enable us to deploy our capital more efficiently and provide capital structure flexibility as we grow our asset base. In addition to restrictive covenants, our revolving credit facility contains material financial covenants. 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.
If we are unable to obtain financing on favorable terms or at all, we would likely need to curtail our investment activities, including acquisitions and improvements to and developments of real properties, which could limit our growth prospects. This, in turn, could reduce cash available for distribution to our stockholders and may hinder our ability to raise capital by issuing more securities or borrowing more money. We also may be forced to dispose of assets at inopportune times to maintain REIT qualification and Investment Company Act exemption.
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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 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. Upon redemption of the preferred equity interests, our income, FFO, CFFO and cash flows could be reduced below the preferred returns currently being recognized. Alternatively, if the joint ventures do not redeem our preferred membership interest when required, our income, FFO, CFFO and cash flows could be reduced if the development project does not produce sufficient cash flow to pays its operating expenses, debt service and preferred return obligations. We previously held notes receivable investments that were structured as senior loans. In the future, we may make additional notes receivable investments structured as senior loans or through mezzanine financing. The notes receivable provided a current stated return and required repayment based on a fixed maturity date. If the property did not repay the notes receivable upon maturity, our income, FFO, CFFO and cash flows could have been reduced below the stated returns if the property did not produce sufficient cash flow to pay its operating expenses and debt service, or to refinance its debt obligations. As we evaluate our capital position and capital allocation strategy, we may consider alternative means of financing our development loan and preferred equity investment activities at the subsidiary level.
Off-Balance Sheet Arrangements
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 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;
● an increase in due to affiliates of $1.8 million;
● a decrease in notes and accrued interest receivable of $0.5 million; and
● distributions from investments in unconsolidated real estate funds of $0.3 million; offset by:
● an increase in accounts receivable, prepaids and other assets of $1.7 million.
Cash Flows from Investing Activities
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;
● $25.0 million used in an investment in an unconsolidated real estate fund;
● $13.7 million used on capital expenditures;
● $11.1 million used in investments in preferred equity investments; and
● $1.6 million used in the purchase of rate caps; offset by:
● $49.6 million of proceeds from the sale and redemption of preferred equity investments;
● $31.7 million of repayments on notes receivable; and
● $16.8 million of proceeds from the sales of real estate investments.
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Cash Flows from Financing Activities
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;
● $72.4 million of contributions from noncontrolling interests;
● proceeds of $42.0 million from borrowings on revolving credit facilities; and
● net proceeds of $32.3 million from the issuance of shares of Series A Preferred Stock; offset by:
● $81.0 million of repayments on revolving credit facilities;
● $6.5 million of cash distributions paid to preferred stockholders;
● $4.9 million of repayments on mortgages payable;
● $3.6 million in deferred financing costs;
● $2.3 million of distributions to noncontrolling interests;
● $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; and
● $0.6 million paid for the redemption of Series A Preferred Stock.
Capital Expenditures
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,
2025
2024
New development
$
6,035
$
346
Redevelopment/renovations
4,203
2,222
Routine capital expenditures
3,132
2,939
Normally recurring capital expenditures
875
470
Total capital expenditures
$
14,245
$
5,977
New development represents the expenditures for the planning, land development, and construction of residential homes and communities. Redevelopment and renovation costs are non-recurring capital expenditures for significant projects, such as preparing a unit for rental. The renovation work varies, but may include flooring, cabinetry, paint, plumbing, appliances and other items required to make the unit rent ready. Routine capital expenditures are necessary non-revenue generating improvements that extend the useful life of the property and that are less frequent in nature, such as roof repairs and concrete work/asphalt resurfacing. Normally recurring capital expenditures are necessary non-revenue generating improvements that occur on a regular ongoing basis, such as flooring and appliances.
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Funds from Operations and Core Funds from Operations Attributable to Common Stockholders and Unit Holders
We believe that funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and core funds from operations (“CFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.
FFO attributable to common stockholders and unit holders is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the NAREIT definition, as net income (loss), computed in accordance with GAAP, excluding gains or losses on sales of depreciable real estate property, plus depreciation and amortization of real estate assets, plus impairment write-downs of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. 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, 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. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.
Our calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition and other transaction costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO and CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and CFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs.
Neither FFO nor CFFO is equivalent to net income (loss), including net income (loss) attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. 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.
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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
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
Net (loss) income attributable to common stockholders
$
(3,608)
$
921
$
(8,621)
$
(1,731)
Add back: Net (loss) income attributable to Operating Partnership Units
(8,074)
2,010
(19,302)
(3,695)
Net (loss) income attributable to common stockholders and unit holders
(11,682)
2,931
(27,923)
(5,426)
Real estate depreciation and amortization
6,740
4,851
21,392
13,604
Impairment and (gain on sale) of real estate investments, net
3,944
(9,304)
2,383
(8,770)
Gain on sale of available-for-sale investments
(1,762)
—
(3,212)
—
Adjustment for partially owned properties’ noncontrolling interests
(1,113)
(573)
(2,654)
(1,500)
FFO attributable to common stockholders and unit holders
(3,873)
(2,095)
(10,014)
(2,092)
Acquisition and other transaction costs
107
17
318
21
Non-cash interest expense
573
450
1,979
1,116
Unrealized loss on derivatives
494
1,888
1,728
3,444
Provision for (recovery of) credit losses
—
48
(104)
214
Non-cash returns on unconsolidated real estate funds
(447)
—
(447)
—
Loss on extinguishment of debt costs
3
118
12
118
Weather-related losses, net
37
178
82
178
Non-real estate depreciation and amortization
14
35
43
118
Other expense (income), net
39
(166)
295
(106)
Non-cash equity compensation
1,117
2,068
3,551
5,747
Non-recurring income tax expense
187
—
933
—
Preferred stock accretion
1,574
—
3,370
181
Adjustment for partially owned properties’ noncontrolling interests
(253)
(112)
(666)
(244)
CFFO attributable to common stockholders and unit holders
$
(428)
$
2,429
$
1,080
$
8,695
Per Share and Unit Information:
FFO attributable to common stockholders and unit holders - diluted
$
(0.31)
$
(0.17)
$
(0.79)
$
(0.17)
CFFO attributable to common stockholders and unit holders - diluted
$
(0.03)
$
0.20
$
0.09
$
0.71
Weighted average common shares and units outstanding - diluted
12,689,829
12,324,022
12,614,111
12,180,721
Operating cash flow, FFO and CFFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO and CFFO.
Presentation of this information is intended to assist the reader in comparing the sustainability of the operating performance of different REITs, although it should be noted that not all REITs calculate FFO or CFFO the same way, so comparisons with other REITs may not be meaningful. FFO or CFFO should not be considered as an alternative to net income (loss) attributable to common stockholders or as an indication of our liquidity, nor is either indicative of funds available to fund our cash needs, including our ability to make distributions. Both FFO and CFFO should be reviewed in connection with other GAAP measurements.
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Distributions
Declaration Date
Record Date
Amount
Paid / Payable Date
Class A common stock
March 11, 2025
March 25, 2025
$
0.125
April 4, 2025
March 11, 2025
June 25, 2025
0.125
July 3, 2025
March 11, 2025
September 25, 2025
0.125
October 3, 2025
March 11, 2025
December 24, 2025
0.125
January 5, 2026
Class C common stock
March 11, 2025
March 25, 2025
$
0.125
April 4, 2025
March 11, 2025
June 25, 2025
0.125
July 3, 2025
March 11, 2025
September 25, 2025
0.125
October 3, 2025
March 11, 2025
December 24, 2025
0.125
January 5, 2026
Series A Preferred Stock (1)
October 14, 2024
December 24, 2024
$
0.125
January 3, 2025
January 15, 2025
January 24, 2025
0.125
February 5, 2025
January 15, 2025
February 25, 2025
0.125
March 5, 2025
January 15, 2025
March 25, 2025
0.125
April 4, 2025
April 15, 2025
April 25, 2025
0.125
May 5, 2025
April 15, 2025
May 23, 2025
0.125
June 5, 2025
April 15, 2025
June 25, 2025
0.125
July 3, 2025
July 15, 2025
July 25, 2025
0.125
August 5, 2025
July 15, 2025
August 25, 2025
0.125
September 5, 2025
July 15, 2025
September 25, 2025
0.125
October 3, 2025
Series A Preferred Enhanced Special Dividend (2)
October 14, 2024
December 24, 2024
$
0.010417
January 3, 2025
January 15, 2025
January 24, 2025
0.010417
February 5, 2025
January 15, 2025
February 25, 2025
0.010417
March 5, 2025
January 15, 2025
March 25, 2025
0.010417
April 4, 2025
April 15, 2025
April 25, 2025
0.010417
May 5, 2025
April 15, 2025
May 23, 2025
0.010417
June 5, 2025
April 15, 2025
June 25, 2025
0.010417
July 3, 2025
July 15, 2025
July 25, 2025
0.010417
August 5, 2025
July 15, 2025
August 25, 2025
0.010417
September 5, 2025
July 15, 2025
September 25, 2025
0.010417
October 3, 2025
(1)
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.
(2)
Holders of record of Series A Preferred Stock shares are entitled to an enhanced special dividend equal to the amount by which (i) the Stated Value of the Series A Preferred Stock multiplied by (a) the sum of (I) the average of the one-month Term SOFR for each day commencing on the 26 th of the prior month to the 25 th of the applicable month, plus (II) two percent, divided by (b) twelve, exceeds (ii) the standard monthly dividend of $0.125 per share of Series A Preferred Stock. The enhanced special dividend will be aggregated with the standard monthly dividend so as to effect a dividend rate on the Series A Preferred Stock that is subject to a 6.5% minimum and 8.5% maximum annual rate.
A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that we will continue to declare dividends or at this rate. Holders of OP Units, LTIP Units and C-LTIP Units are entitled to receive “distribution equivalents” at the same time as dividends are paid to holders of our Class A common stock.
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Our Board will determine the amount of dividends to be paid to our stockholders. The determination of our Board will be based on several factors, including funds available from operations, our capital expenditure requirements and the annual distribution requirements necessary to maintain our REIT status for federal income tax purposes. As a result, our distribution rate and payment frequency may vary from time to time. However, to maintain our REIT status for tax purposes, we must make distributions equal to at least 90% of our “REIT taxable income”, as defined by the Internal Revenue Code of 1986, determined without regard to the dividends paid deduction and excluding net capital gains, to our stockholders each year. While our policy is generally to pay distributions from cash flow from operations, we may declare distributions in excess of funds from operations.
Significant Accounting Policies and Critical Accounting Estimates
Our significant accounting policies and critical accounting estimates are disclosed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” of our Consolidated Financial Statements.
Subsequent Events
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.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.