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;
● adverse economic trends and changes in economic conditions, including slower growth or recession, changes to fiscal and monetary policy, inflation, changing interest rates, tariffs and international trade policies and disputes, geopolitical conditions, structural shifts and regulatory changes to the commercial banking systems of the U.S. and Western Europe, labor shortages, currency fluctuations, challenges in global supply chains, and the effects of international conflicts on global markets;
● 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;
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● 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;
● 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, 2025 as filed with the Securities and Exchange Commission (“SEC”) on February 27, 2026, and subsequent filings by us with the SEC, or “Risk Factors”.
Overview
We own and operate a portfolio of institutional residential properties including apartments, build-to-rent communities, single-family homes, 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 current investment strategy is focused on growing our portfolio of residential communities. 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.
We have no employees and are supported by a related-party service agreement with the Manager (the “Management Agreement”). We are externally managed by the Manager, which manages our day-to-day operations under the Management Agreement. The current term of the Management Agreement expires October 6, 2026 and will be automatically renewed for a one-year term each year on October 6, unless previously terminated in accordance with the terms of the Management Agreement. The Manager is responsible for managing our affairs on a day-to-day basis and for identifying and making real estate investments on our behalf. Substantially all our business is conducted through our Operating Partnership, of which we are the sole general partner.
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As of June 30, 2026, we held twenty-four real estate investments, consisting of eighteen consolidated investments, five preferred equity investments, and one unconsolidated real estate fund investment. The twenty-three consolidated and preferred equity investments represent an aggregate of 5,420 residential units, comprised of 4,271 consolidated units, of which 410 units are under development or in lease-up, and 1,149 units through preferred equity investments, which includes planned units and those under development. As of June 30, 2026, our consolidated operating investments were approximately 90.2% occupied; excluding units classified as held for sale and down/renovation units, our consolidated operating investments were approximately 92.3% occupied.
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 ownership, management, and renovation of scattered single-family homes, which are, generally, detached homes with no onsite property management.
Inflation and Related Economic Volatility
During the first half of 2026, economic uncertainty and stock market volatility continued due to a number of factors, including persistent inflation, interest rate uncertainty, concerns about tariffs, supply chain or trade disruptions and geopolitical conflict. While these factors did not have a significant adverse impact on us during the first half of 2026, they may adversely impact us in the future. 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. We continue to monitor increases in inflation and rising interest rates and resulting economic changes in credit and capital markets, as well as direct and indirect impacts resulting from the uncertainty related to, or changes to, the overall regulatory and economic environment and from geopolitical conditions and the effects of international conflicts on global markets.
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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.
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 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. In response to a February 2026 U.S. Supreme Court holding that the administration may not rely on the International Emergency Economic Powers Act, or IEEPA, to impose broad-based tariffs, the administration has since turned to alternative temporary statutory authorities to maintain certain surcharges and has indicated that it intends to preserve a broader tariff regime through other trade rules and legal authorities. Such U.S. tariffs, together with actual and potential additional tariffs imposed by the current administration or other countries, contributed to increased volatility in financial markets and interest rates during 2025 and 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 in the future. Such 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 six months ended June 30, 2026.
Parkside at Summers Corner
We acquired, with full ownership interest, an additional 40 units at Parkside at Summers Corner located in Summerville, South Carolina for an aggregate purchase price of $10.3 million. Units are to be acquired in tranches as construction is completed, and as of June 30, 2026, we acquired 52 of the total 100 units we have committed to purchase.
Sale of Consolidated Operating Units
We closed on the following sales: 35 units in the Ballast portfolio, 47 units in the Golden Pacific portfolio, 29 units in the ILE portfolio, 8 units in the Indy-Springfield portfolio, 31 units in the Peak JV 2 portfolio, and the remaining 42 units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sale agreements. The 192 units, including 92 units classified as held for sale as of December 31, 2025, were all previously classified as held for sale and sold for an aggregate of approximately $39.8 million, subject to certain closing costs, prorations and adjustments typical in such real estate transactions. After deducting the paydown of existing mortgage indebtedness encumbering 27 units in the ILE portfolio of approximately $3.8 million, the sales of the 192 units generated net proceeds of approximately $33.0 million and a gain on sales of approximately $0.9 million. The gain on sales is included in gain on sale of real estate investments, net on our consolidated statements of operations and comprehensive income (loss).
Preferred Equity Investment Summary
We increased our original capital commitment for preferred equity interests in Canvas at Wildwood by $1.5 million, increasing our total investment to $16.1 million. As of June 30, 2026, we funded $40.0 million of our $48.8 million aggregate commitment to fund capital for preferred equity interests in Archer at RiverBlue, Canvas at Wildwood, River Ford, and Sanford Marketplace.
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Held for Sale
As of June 30, 2026 and December 31, 2025, we classified an aggregate of 81 units and 107 units, respectively, as held for sale on our consolidated balance sheets, with all units reported in our scattered single-family homes segment. The 81 units classified as held for sale at June 30, 2026 are included in the following portfolios: 16 units of Ballast, 45 units of Golden Pacific, 8 units of ILE, 10 units of Indy-Springfield, and 2 units of Peak JV 2. As of June 30, 2025, we classified an aggregate of 94 units as held for sale, with all units reported in our scattered single-family homes segment. For the three and six months ended June 30, 2026 and 2025, we recorded impairments of $0.5 million and $0.1 million, and $1.1 million and $0.2 million, respectively, related to held for sale units which is included in impairment of real estate investments on our consolidated statements of operations and comprehensive income (loss).
Units classified as held for sale 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. Real estate assets classified as held for sale generally represent assets that are actively marketed or contracted for sale with the closing expected to occur within one year.
Series A Redeemable Preferred Stock
In 2023, we filed a prospectus supplement to the registration statement on Form S-11 (File No. 333-269415) (the “2023 Registration Statement”) offering a maximum of 20,000,000 shares of 6.0% Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $25.00 per share (the “Stated Value”), for a maximum offering amount of $500 million in Series A Preferred Stock (the “Series A Preferred Offering”).
During the three months ended March 31, 2026, we issued 190,200 shares of Series A Preferred Stock pursuant to the Series A Preferred Offering with net proceeds of approximately $4.2 million after commissions, dealer manager fees, sales discounts and costs related to establishing the offering of Series A Preferred Stock.
On March 20, 2026, we made the final issuance of Series A Preferred Stock pursuant to the Series A Preferred Offering, and on March 31, 2026, the SEC declared effective our post-effective amendment to the 2023 Registration Statement to terminate the effectiveness of the 2023 Registration Statement and remove all unsold shares of Series A Preferred Stock from registration pursuant to the 2023 Registration Statement. We issued a total of 6,527,513 shares of Series A Preferred Stock pursuant to the Series A Preferred Offering, with total net proceeds of approximately $141.8 million after commissions, dealer manager fees, sales discounts and offering costs.
As of June 30, 2026, we, at the request of holders, 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 58,855 shares of Series A Preferred Stock for $1.4 million in cash.
Series B Redeemable Preferred Stock
In December 2025, we filed a prospectus supplement to the registration statement on Form S-11 (File No. 333-290772) offering a maximum of 14,000,000 shares of 7.5% Series B Redeemable Preferred Stock (the “Series B Preferred Stock”) at $25.00 per share, for a maximum offering amount of $350 million in Series B Preferred Stock (the “Series B Preferred Offering”), and on February 20, 2026, we made the initial issuances of Series B Preferred Stock pursuant to the Series B Preferred Offering.
As of June 30, 2026, we issued 351,304 shares of Series B Preferred Stock pursuant to the Series B Preferred Offering with net proceeds of approximately $6.9 million after commissions, dealer manager fees, sales discounts and costs related to establishing the offering of Series B Preferred Stock. As of June 30, 2026, we had not redeemed any shares of Series B Preferred Stock.
Stockholders’ Equity
Our total stockholders’ equity decreased $7.8 million from $128.7 million as of December 31, 2025 to $120.9 million as of June 30, 2026. The decrease in our total stockholders’ equity is primarily attributable to net loss attributable to common stockholders of $6.9 million and common stock dividends declared of $1.0 million.
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Results of Operations
The following is a summary of our consolidated real estate investments as of June 30, 2026:
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
%
$
1,672
95.4
%
95.7
%
Amira at Westly
Tampa, FL
408
1999/2023
(5)
1,820
92.9
%
93.1
%
Avenue at Timberlin Park
Jacksonville, FL
200
2001
100
%
1,571
97.5
%
98.0
%
District at Parkview (6)
Stone Mountain, GA
264
2023
39
%
1,901
95.8
%
96.2
%
Skytop Apartments
Cincinnati, OH
361
2024
(5)
1,718
93.9
%
94.4
%
Southern Pines Reserve (6)
Aberdeen, NC
272
2000/2003
2
%
1,467
94.1
%
94.5
%
Villas at Huffmeister
Houston, TX
294
2007
95
%
1,595
93.9
%
94.2
%
Wayford at Concord
Concord, NC
150
2019
83
%
2,151
97.3
%
97.3
%
Yauger Park Villas
Olympia, WA
80
2010
95
%
2,506
96.3
%
96.3
%
Total Residential Communities Units / Average
2,379
$
1,748
94.8
%
95.1
%
Scattered Single-Family Homes
Ballast
AZ / CO / WA
49
1998
95
%
$
2,117
51.0
%
75.8
%
(7)
Golden Pacific
IN / KS / MO
114
1978
97
%
1,778
15.8
%
26.1
%
(7)
ILE
TX / SE US
421
1990
95
%
1,871
92.6
%
94.4
%
Indy-Springfield
IN / MO
296
1999
100
%
1,459
89.5
%
91.6
%
Peak JV 2
Various / TX
518
1982
100
%
1,404
87.6
%
88.0
%
Savannah-84
Savannah, GA
84
2022
100
%
1,890
90.5
%
90.5
%
Total Scattered Single-Family Homes / Average
1,482
$
1,621
82.9
%
87.4
%
Total Operating Units / Average
3,861
$
1,702
90.2
%
92.3
%
Development / Lease-up Investment Name
Residential Communities
Abode Wendell Falls (8)
Wendell, NC
170
—
100
%
—
—
—
Harmony at Clear Creek (8)
Shawnee, KS
188
—
85
%
—
—
—
Parkside at Summers Corner (9)
Summerville, SC
52
2025/2026
100
%
$
2,325
36.5
%
—
Total Development Units
410
Total Units
4,271
(1)
Total operating units includes an aggregate of 81 units classified as held for sale, with such units included in the following portfolios: 16 units of Ballast, 45 units of Golden Pacific, 8 units of ILE, 10 units of Indy-Springfield, and 2 units of Peak JV 2.
(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 June 30, 2026.
(3)
Percent occupied is calculated as (i) the number of units occupied as of June 30, 2026 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 June 30, 2026 divided by (ii) total number of units, expressed as a percentage, and excludes 81 units classified as held for sale and an aggregate of 8 down/renovation units.
(5)
Amira at Westly and Skytop Apartments are held through our DST Program (refer to Note 9 of our consolidated financial statements for further information). The Amira at Westly DST and Skytop Apartments DST have been fully subscribed with equity from individual investors.
(6)
District at Parkview and Southern Pines Reserve are held through our DST Program.
(7)
Percent occupied lower at Ballast and Golden Pacific due to units intentionally held vacant in preparation for sale.
(8)
Represents a development project with no units delivered as of June 30, 2026. Abode Wendell Falls and Harmony at Clear Creek commenced construction in 2024 and 2026, respectively.
(9)
Parkside at Summers Corner represents a development project with units to be acquired in tranches as construction is completed. Of the total 100 units that we have committed to acquire, 52 units had been acquired as of June 30, 2026. Of the 52 units acquired, 19 units were occupied as of June 30, 2026.
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The following is a summary of our consolidated operational results by reportable segment for the three and six months ended June 30, 2026 and 2025 ($ in thousands, except average rental rates):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
Variance
2026
2025
Variance
Rental and other property revenues
Residential communities
$
12,857
$
8,915
44.2
%
$
25,608
$
17,024
50.4
%
Scattered single-family homes
6,470
7,792
(17.0)
%
13,420
15,593
(13.9)
%
Total rental and other property revenues
19,327
16,707
15.7
%
39,028
32,617
19.7
%
Property operating expenses
Residential communities
5,570
3,895
43.0
%
10,834
7,397
46.5
%
Scattered single-family homes
4,202
4,282
(1.9)
%
8,019
8,432
(4.9)
%
Total property operating expenses
9,772
8,177
19.5
%
18,853
15,829
19.1
%
Net operating income
Residential communities
7,287
5,020
45.2
%
14,774
9,627
53.5
%
Scattered single-family homes
2,268
3,510
(35.4)
%
5,401
7,161
(24.6)
%
Total net operating income
$
9,555
$
8,530
12.0
%
$
20,175
$
16,788
20.2
%
Residential communities
94.9
%
92.7
%
220
bps
94.9
%
93.4
%
150
bps
Scattered single-family homes
84.6
%
90.5
%
(590)
bps
86.0
%
90.2
%
(420)
bps
Average occupancy percentage (1)
90.9
%
91.6
%
(70)
bps
91.4
%
91.7
%
(30)
bps
Residential communities
$
1,748
$
1,766
(1.0)
%
$
1,750
$
1,789
(2.2)
%
Scattered single-family homes
1,621
1,609
0.7
%
1,625
1,599
1.6
%
Average rental rate (2)
$
1,702
$
1,689
0.8
%
$
1,704
$
1,692
0.7
%
(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)
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 June 30, 2026:
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)
Sanford Marketplace
Sanford, NC
300
$
59.6
$
25.6
$
198,667
4Q 2026
2Q 2027
—
$
1,587
Canvas at Wildwood
Wildwood, FL
224
60.3
21.2
269,196
4Q 2026
4Q 2027
—
1,937
Archer at RiverBlue
Asheville, NC
245
71.8
17.7
293,061
1Q 2028
2Q 2028
—
2,113
Total Development Units
769
Lease-up Investment Name
River Ford
Brunswick, GA
170
51.6
32.4
303,529
2Q 2026
1Q 2027
4.1
%
2,004
Total Lease-up Units
170
Operating Investment Name (3)
Wayford at Innovation Park
Charlotte, NC
210
92.4
%
2,340
Total Operating Units
210
Total Units/Average
1,149
$
1,964
(1)
None of the development investments had commenced lease-up as of June 30, 2026.
(2)
For development and lease-up investments, represents the average pro forma effective monthly rent per occupied unit for all expected occupied units during the first full quarter of stabilization. For the operating investment, represents the average effective monthly rent per occupied unit.
(3)
Operating investment represents a stabilized operating property.
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Revenue
Rental and other property revenues increased $2.6 million, or 16%, to $19.3 million for the three months ended June 30, 2026 as compared to $16.7 million for the same prior year period. The increase was primarily due to: (i) the acquisition of 897 units at three residential communities, which was partially offset by sales of 280 single-family units in our portfolio since April 1, 2025. We also benefitted from a 2.2% increase in average occupancy in our residential communities, which was 94.9% during the three months ended June 30, 2026, compared to 92.7% during the second quarter of 2025. This was partially offset by a 5.9% decrease in average occupancy in our single-family homes, which was 84.6% during the three months ended June 30, 2026, compared to 90.5% during the second quarter of 2025. The decrease in average occupancy in our single-family homes was lower due to units at Ballast and Golden Pacific intentionally held vacant in preparation for sale.
Interest income from loan investments amounted to zero for the three months ended June 30, 2026 as compared to $0.1 million for the same prior year period due to the full payoff of a loan investment in the second quarter of 2025.
Expenses
Property operating expenses increased $1.6 million, or 20%, to $9.8 million for the three months ended June 30, 2026 as compared to $8.2 million for the same prior year period. The increase was primarily due to the acquisition of 897 units at three residential communities, which was partially offset by sales of 280 single-family units in our portfolio since April 1, 2025.
Property management and asset management fee expenses were $1.3 million for the three months ended June 30, 2026 as compared to $1.3 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 $2.5 million for the three months ended June 30, 2026 as compared to $2.7 million for the same prior year period. Of the $2.5 million total expense in the second quarter 2026, $1.5 million relates to direct costs incurred by us, while the remaining $1.0 million relates to the operating expense reimbursement to our Manager, which includes rent, utilities, accounting and legal services, and IT expenses.
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Management fees to related party amounted to $2.7 million for the three months ended June 30, 2026 as compared to $2.6 million for the same prior year period. The increase was due to an increase in equity primarily from our Series B Preferred Offerings. For the second quarter of 2026, we will pay $0.2 million of the base management fee in C-LTIP Units with the remainder in cash.
Acquisition and other transaction costs were $0.6 million for the three months ended June 30, 2026 and amounted to $0.1 million 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
Weather-related losses amounted to $0.2 million for the three months ended June 30, 2026 as compared to less than $0.1 million for the same prior year period. The 2026 expense relates to damage at two of our scattered single-family home investments.
Impairment of real estate investments amounted to $0.5 million for the three months ended June 30, 2026 as compared to $0.1 million for the same prior year period. An impairment loss is recognized when we determine that the carrying value of operating and/or held for sale real estate, and related intangible assets, exceeds their estimated fair value. Impairment amounts recorded during the three months ended June 30, 2026 and 2025 relate to held for sale single-family units.
Depreciation and amortization expenses were $7.9 million for the three months ended June 30, 2026 as compared to $7.2 million for the same prior year period, with the increase primarily due to the acquisition of two residential communities since the second quarter of 2025. The increase was partially offset by (i) the sales of single-family units in our portfolio since the second quarter of 2025 and (ii) in-place leases being fully amortized at three residential communities prior to the second quarter of 2026.
Other Income and Expense
Other income and expense amounted to expense of $2.8 million for the three months ended June 30, 2026 as compared to income of $0.2 million for the same prior year period. This was primarily due a $1.5 million gain on the sale of one preferred equity investment during the second quarter of 2025 and a decrease of $0.6 million in gain on sales of real estate investment from the second quarter of 2025. In addition, during the second quarter of 2026 we had increased interest expense of $0.9 million.
Income Tax Expense
Income tax expense amounted to zero for the three months ended June 30, 2026 as compared to $0.6 million for the same prior year period. The decrease was primarily due to lower income tax expense related to our preferred equity investments.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Revenue
Rental and other property revenues increased $6.4 million, or 20%, to $39.0 million for the six months ended June 30, 2026 as compared to $32.6 million for the same prior year period. The increase was primarily due to the acquisition of 897 units at three residential communities, which was partially offset by sales of 319 single-family units in our portfolio since January 1, 2025. We also benefitted from a 1.5% increase in average occupancy in our residential communities, which was 94.9% during the six months ended June 30, 2026, compared to 93.4% during the same prior year period. This was partially offset by a 4.2% decrease in average occupancy in our single-family homes, which was 86.0% during the six months ended June 30, 2026, compared to 90.2% during the same prior year period. The decrease in average occupancy in our single-family homes was lower due to units at Ballast and Golden Pacific intentionally held vacant in preparation for sale.
Interest income from loan investments amounted to zero for the six months ended June 30, 2026 as compared to $0.6 million for the same prior year period due to the full payoff of two loan investments in early-2025.
Expenses
Property operating expenses increased $3.1 million, or 19%, to $18.9 million for the six months ended June 30, 2026 as compared to $15.8 million for the same prior year period. The was primarily due to the acquisition of 897 units at three residential communities, which was partially offset by sales of 319 single-family units in our portfolio since January 1, 2025.
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Property management and asset management fee expenses were $2.9 million for the six months ended June 30, 2026 as compared to $2.7 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 $5.6 million for the six months ended June 30, 2026 as compared to $5.7 million for the same prior year period. Of the $5.6 million total expense for the six months ended June 30, 2026, $3.6 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, accounting and legal services, and IT expenses.
Management fees to related party amounted to $5.4 million for the six months ended June 30, 2026 as compared to $5.1 million for the same prior year period. The increase was due to an increase in equity primarily from our Series A and Series B Preferred Stock Offerings. For the six months ended June 30, 2026, we will pay $0.4 million of the base management fee in C-LTIP Units with the remainder in cash.
Acquisition and other transaction costs amounted to $0.6 million for the six months ended June 30, 2026 compared to $0.2 million 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.
Weather-related losses amounted to $0.4 million for the six months ended June 30, 2026 compared to less than $0.1 million for the same prior year period. The 2026 expenses relates to damage at three of our scattered single-family home investments and one residential community.
Impairment of real estate investments amounted to $1.1 million for the six months ended June 30, 2026 compared to $0.2 million for the same prior year period.
Depreciation and amortization expenses were $16.7 million for the six months ended June 30, 2026 as compared to $14.7 million for the same prior year period, with the increase primarily due to higher depreciation expense and amortization of in-place lease costs at two residential communities that were acquired since June 30, 2025, offset by lower amortization of in-place lease costs at two residential communities that had expense in the prior year and none in the current year.
Other Income and Expense
Other income and expense amounted to expense of $6.6 million for the six months ended June 30, 2026 as compared to expense of $0.9 million for the same prior year period. This was primarily due to a decrease in preferred returns of $1.9 million as investments in our preferred equity investments decreased to $55.6 million at June 30, 2026 as compared to $60.7 million at June 30, 2025 due to the redemption and/or sale of five preferred equity investments partially offset by two new preferred equity investments. In addition, during the six months ended June 30, 2026 we had increased interest expense of $1.1 million compared to the prior year period and during the six months ended June 30, 2025 we recorded a $1.5 million gain on the sale of one preferred equity investment.
Income Tax Expense
Income tax expense amounted to $0.1 million for the six months ended June 30, 2026 as compared to $1.0 million for the same prior year period. The decrease was primarily due to lower income tax expense related to our 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.
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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.
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):
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
Net loss attributable to common stockholders
$
(3,482)
$
(2,484)
$
(6,915)
$
(5,013)
Add back: Net loss attributable to Operating Partnership Units
(7,951)
(5,567)
(15,775)
(11,228)
Net loss attributable to common stockholders and unit holders
(11,433)
(8,051)
(22,690)
(16,241)
Net loss attributable to partially owned properties’ noncontrolling interests
(1,816)
(1,302)
(4,458)
(2,975)
Real estate depreciation and amortization
7,869
7,176
16,713
14,652
Non-real estate depreciation and amortization
14
13
28
29
Non-cash interest expense
833
648
1,604
1,406
Unrealized loss on derivatives
36
456
200
1,234
Recovery of credit losses
—
(2)
—
(104)
Property management and asset management fees
1,324
1,336
2,895
2,661
Management fees to related party
2,703
2,606
5,391
5,146
Acquisition and other transaction costs
563
135
606
211
Corporate operating expenses
2,520
2,665
5,634
5,722
Weather-related losses, net
160
45
410
45
Loss on extinguishment of debt costs
1
5
37
9
Interest income
(1,264)
(1,182)
(2,540)
(2,286)
Preferred dividends
2,722
2,254
5,331
4,264
Preferred stock accretion
1,568
1,273
2,561
1,796
Other expense, net
278
15
1,160
74
Income tax expense
—
626
76
972
Income from preferred equity investments
(2,033)
(2,306)
(3,564)
(5,416)
Share of net earnings of equity method investment
(307)
—
(603)
—
Interest income from loan investments
—
(95)
—
(598)
Impairment of real estate investments
520
71
1,121
196
Gain on sale of real estate investments, net
(318)
(929)
(902)
(1,757)
Gain on sale of available-for-sale investments
—
(1,450)
—
(1,450)
Total property income
3,940
4,007
9,010
7,590
Add back: Interest expense
5,615
4,523
11,165
9,198
Net operating income
$
9,555
$
8,530
$
20,175
$
16,788
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) investments in real estate, (iii) distributions to stockholders, (iv) committed investments and capital requirements to fund development and renovations at existing properties, (v) ongoing commitments to repay borrowings, including our maturing debt and KeyBank Credit Facility (as hereinafter defined, the “revolving credit facility”), and (vi) Class A common stock repurchases under our stock repurchase plan.
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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, 2025 as filed with the SEC on February 27, 2026. While consolidated occupancy excluding units classified as held for sale and down/renovation units remains strong at 92.3% as of June 30, 2026, in future periods we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants.
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 June 30, 2026, we had four DST Properties (Amira at Westly, District at Parkview, Skytop Apartments and Southern Pines Reserve) in our DST Program and raised net offering proceeds of $149.8 million, issued demand notes of $2.3 million, and had $305.8 million in total net real estate investments associated with the DST Program. The Amira at Westly DST and Skytop Apartments DST had been fully subscribed with equity from individual investors as of June 30, 2026.
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 B Preferred Stock, proceeds from 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:
● $172.1 million in cash available at June 30, 2026;
● capacity of $50 million on the revolving credit facility, all of which was available as of June 30, 2026 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 B 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, and estimated future required payments on these obligations, related to our mortgage notes secured by our properties as of June 30, 2026 (amounts in thousands). The revolving credit facility had no outstanding balance at the end of the period.
Total
2026
2027-2028
2029-2030
Thereafter
Mortgages Payable (Principal)
$
433,481
$
13,608
$
81,522
$
140,262
$
198,089
Estimated Interest Payments on Mortgages Payable
121,526
11,483
39,824
26,083
44,136
Total
$
555,007
$
25,091
$
121,346
$
166,345
$
242,225
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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As of June 30, 2026, we had contractual commitments to fund future cash obligations in certain of our preferred equity investments in the aggregate of $8.8 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 June 30, 2026, we estimate that the remaining costs associated with the completion of construction for these two residential communities will be approximately $107.9 million. We intend to finance these costs through a combination of available cash, proceeds from construction loans, and preferred equity capital contributions. We also committed to acquire an aggregate of 100 residential community units known as Parkside at Summers Corner. We expect acquisitions to occur in tranches as construction is completed, and as of June 30, 2026, 48 units remain to be acquired, representing an aggregate purchase price of $12.3 million. During the second quarter of 2026, two of our scattered single-family home portfolios incurred weather-related losses related to hailstorms in Illinois and Missouri. An assessment of the damage is ongoing. As of June 30, 2026, we expect that the total cost to repair all damage, which primarily includes roof and siding replacement, will be approximately $1.5 million, of which $0.2 million was incurred and recognized during the second quarter. A portion of the future costs are expected to be recognized as repair costs in weather-related losses with the remainder capitalized within buildings and improvements.
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 28, 2025, 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 2026. We made no repurchases of our Class A common stock under this plan.
On February 10, 2026, the Board authorized a new stock repurchase plan, effective March 1, 2026, for the repurchase, from time to time, of up to an aggregate of $10 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 of 1934 (the “Exchange Act”) and subject to Rule 10b-5 of the Exchange Act. The repurchase plan has a term of one year and ends on February 28, 2027, 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 June 30, 2026, 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 projects, (ii) repayment of long-term debt and our revolving credit facility, (iii) capital expenditures, and (iv) cash redemption requirements related to our Series A Preferred Stock and our Series B Preferred Stock, (v) cash requirements related to our Series A Safeguard Policy and our Series B Safeguard Policy, and (v) 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 B Preferred Stock, our revolving credit facility, our DST Program, 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 in general, 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, 2026, 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. In October 2024, we entered into a credit agreement related to our DST Program with KeyBank National Association and a syndicate of other lenders which provides for a revolving loan with a maximum commitment amount of $50 million. We believe this 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. The revolving credit facility contains certain financial and operating covenants. As of June 30, 2026, we were in compliance with all covenants under our 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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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.
We expect to maintain distributions paid on our Series A Preferred Stock and Series B Preferred Stock in accordance with the terms which require monthly dividends. While our distributions through June 30, 2026 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 B Preferred Stock, proceeds from the DST Program, 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 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, funds from operations (“FFO”), core funds from operations (“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 June 30, 2026, 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. As of June 30, 2026, we entered into five joint venture agreements which are classified as available-for-sale debt securities.
Cash Flows from Operating Activities
As of June 30, 2026, we held twenty-four real estate investments, consisting of eighteen consolidated investments, five preferred equity investments, and one unconsolidated real estate fund investment, with the twenty-three consolidated and preferred equity investments representing an aggregate of 5,420 residential units. During the six months ended June 30, 2026, net cash used in operating activities was $5.7 million after net loss of $19.3 million was adjusted for the following:
● an increase in accounts receivable, prepaids and other assets of $3.2 million; and
● an increase in due from affiliates of $2.4 million; offset by:
● non-cash items of $17.6 million;
● an increase in accounts payable and other accrued liabilities of $1.1 million; and
● distributions from investments in unconsolidated real estate funds of $0.5 million.
Cash Flows from Investing Activities
During the six months ended June 30, 2026, net cash used in investing activities was $3.4 million due to the following:
● $19.7 million used in investments in preferred equity investments;
● $10.7 million used in the acquisition of real estate investments;
● $9.1 million used on capital expenditures; and
● $0.7 million used on the purchase of rate caps; offset by:
● $36.8 million of proceeds from the sales of real estate investments.
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Cash Flows from Financing Activities
During the six months ended June 30, 2026, net cash provided by financing activities was $9.4 million due to the following:
● $19.9 million of contributions from noncontrolling interests;
● borrowings of $19.2 million on mortgages payable;
● net proceeds of $7.4 million from the issuance of shares of Series B Preferred Stock; and
● net proceeds of $4.2 million from the issuance of shares of Series A Preferred Stock; offset by:
● $26.5 million of repayments on mortgages payable;
● $5.3 million of cash distributions paid to preferred stockholders;
● $4.8 million of distributions to partially owned properties’ noncontrolling interests;
● $2.3 million of distributions to noncontrolling interests;
● $1.0 million of cash distributions paid to common stockholders;
● $0.6 million in deferred financing costs;
● $0.5 million paid for the redemption of Series A Preferred Stock; and
● $0.3 million for shares withheld for employee taxes upon vesting of awards.
Capital Expenditures
The following table summarizes our total capital expenditures for the six months ended June 30, 2026 and 2025 (amounts in thousands):
Six Months Ended
June 30,
2026
2025
New development
$
5,109
$
4,162
Redevelopment/renovations
1,328
2,950
Routine capital expenditures
2,127
1,999
Normally recurring capital expenditures
614
438
Total capital expenditures
$
9,178
$
9,549
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 six months ended June 30, 2026 and 2025 ($ in thousands):
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
Net loss attributable to common stockholders
$
(3,482)
$
(2,484)
$
(6,915)
$
(5,013)
Add back: Net loss attributable to Operating Partnership Units
(7,951)
(5,567)
(15,775)
(11,228)
Net loss attributable to common stockholders and unit holders
(11,433)
(8,051)
(22,690)
(16,241)
Real estate depreciation and amortization
7,869
7,176
16,713
14,652
Impairment of real estate investments
520
71
1,121
196
Gain on sale of real estate investments, net
(318)
(929)
(902)
(1,757)
Gain on sale of available-for-sale investments
—
(1,450)
—
(1,450)
Adjustment for partially owned properties’ noncontrolling interests
(2,834)
(847)
(6,313)
(1,541)
FFO attributable to common stockholders and unit holders
(6,196)
(4,030)
(12,071)
(6,141)
Acquisition and other transaction costs
563
135
606
211
Non-cash interest expense
833
648
1,604
1,406
Unrealized loss on derivatives
36
456
200
1,234
Recovery of credit losses
—
(2)
—
(104)
Non-cash returns on unconsolidated real estate funds
(27)
—
(63)
—
Loss on extinguishment of debt costs
1
5
37
9
Weather-related losses, net
160
45
410
45
Non-real estate depreciation and amortization
14
13
28
29
Other expense, net
312
272
1,218
256
Non-cash equity compensation
862
1,061
2,367
2,434
Non-recurring income tax expense
3
578
3
746
Preferred stock accretion
1,568
1,273
2,561
1,796
Adjustment for partially owned properties’ noncontrolling interests
(308)
(235)
(648)
(413)
CFFO attributable to common stockholders and unit holders
$
(2,179)
$
219
$
(3,748)
$
1,508
Per Share and Unit Information:
FFO attributable to common stockholders and unit holders - diluted
$
(0.48)
$
(0.32)
$
(0.94)
$
(0.49)
CFFO attributable to common stockholders and unit holders - diluted
$
(0.17)
$
0.02
$
(0.29)
$
0.12
Weighted average common shares and units outstanding - diluted
12,939,771
12,627,545
12,872,714
12,581,451
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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Table of Contents
Distributions
Declaration Date
Record Date
Amount
Paid / Payable Date
Class A common stock
March 11, 2025
December 24, 2025
$
0.125
January 5, 2026
March 10, 2026
March 25, 2026
0.125
April 2, 2026
June 12, 2026
June 25, 2026
0.125
July 2, 2026
Class C common stock
March 11, 2025
December 24, 2025
$
0.125
January 5, 2026
March 10, 2026
March 25, 2026
0.125
April 2, 2026
June 12, 2026
June 25, 2026
0.125
July 2, 2026
Series A Preferred Stock
October 15, 2025
December 24, 2025
$
0.125
January 5, 2026
January 15, 2026
January 23, 2026
0.125
February 5, 2026
January 15, 2026
February 25, 2026
0.125
March 5, 2026
January 15, 2026
March 25, 2026
0.125
April 2, 2026
April 13, 2026
April 24, 2026
0.125
May 5, 2026
April 13, 2026
May 22, 2026
0.125
June 5, 2026
April 13, 2026
June 25, 2026
0.125
July 2, 2026
Series A Preferred Enhanced Special Dividend (1)
October 15, 2025
December 24, 2025
$
0.010417
January 5, 2026
January 15, 2026
January 23, 2026
0.010417
February 5, 2026
January 15, 2026
February 25, 2026
0.010417
March 5, 2026
January 15, 2026
March 25, 2026
0.010417
April 2, 2026
April 13, 2026
April 24, 2026
0.010417
May 5, 2026
April 13, 2026
May 22, 2026
0.010417
June 5, 2026
April 13, 2026
June 25, 2026
0.010417
July 2, 2026
Series B Preferred Stock (2)
January 15, 2026
January 23, 2026
$
0.15625
February 5, 2026
January 15, 2026
February 25, 2026
0.15625
March 5, 2026
January 15, 2026
March 25, 2026
0.15625
April 2, 2026
April 13, 2026
April 24, 2026
0.15625
May 5, 2026
April 13, 2026
May 22, 2026
0.15625
June 5, 2026
April 13, 2026
June 25, 2026
0.15625
July 2, 2026
(1)
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.
(2)
Holders of record of newly issued Series B 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 B Preferred Stock was outstanding.
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 restricted stock, 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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Table of Contents
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 June 30, 2026, 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.