What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-14 · 208 added, 261 removed, 270 unchanged (63% of the section changed)

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● 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, government deficits, high unemployment rates, decreased consumer confidence and liquidity concerns, particularly in markets in which we have a high concentration of properties;

● 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;

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● weather conditions that may increase or decrease energy costs and other weather-related expenses;

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

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

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

● 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 single-family properties by entities owned or controlled by institutional investors;

● our ability to lease newly acquired or newly constructed single-family units;

● 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;

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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”.

We own and operate high-quality single-family properties 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 pre-existing single-family residential units, developing build-to-rent communities, and through Value-Add renovations.

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, 2024, we held twenty real estate investments, consisting of twelve consolidated investments and eight preferred equity and loan investments.

The twenty investments represent an aggregate of 4,000 residential units, comprised of 2,742 consolidated units, of which 170 units are under development, and 1,258 units through preferred equity and loan investments, which includes planned units and those under development.

As of September 30, 2024, our consolidated operating investments were approximately 90.5% occupied;

As of March 31, 2025, we held twenty-three real estate investments, consisting of fourteen consolidated investments and nine preferred equity and loan investments.

The twenty-three investments represent an aggregate of 5,048 residential units, comprised of 3,414 consolidated units, of which 170 units are under development, and 1,634 units through preferred equity and loan investments, which includes planned units and those under development.

As of March 31, 2025, our consolidated operating investments were approximately 91.9% occupied;

excluding units classified as held for sale and down/renovation units, our consolidated operating investments were approximately 94.1% occupied.

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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) scattered single-family homes, and (ii) residential communities.

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.

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.

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.

Inflation and Related Economic Volatility

While inflationary pressures have shown signs of moderation, including a 50-basis point reduction in interest rates by the Federal Reserve in September 2024, we continue to monitor inflation and interest rates and resulting economic changes in credit and capital markets.

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.

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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.

Unfavorable changes in economic conditions may have a material adverse impact on our cash flows and operating results.

In addition, any 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, 2024:

Acquisition of Villas at Huffmeister

On March 25, 2024, we, through a 95% owned joint venture entity, acquired a 294-unit single-family residential community located in Houston, Texas known as Villas at Huffmeister.

The purchase price of $41.2 million was funded with a $24.3 million senior loan assumption secured by Villas at Huffmeister, along with cash of $18.1 million that we funded, inclusive of certain adjustments typical in such real estate transactions.

Indigo Cove Interests

On June 27, 2024, we entered into a joint venture agreement with an unaffiliated third party (the “Indigo JV”) to develop approximately 82 build-to-rent, single-family residential units in Bluffton, South Carolina.

We made a commitment to invest $5.3 million for preferred equity interests in the Indigo JV, of which $3.0 million had been funded as of September 30, 2024.

We earn an accrued return on our outstanding capital contributions at a rate of 17.0% per annum compounded monthly, subject to a minimum return, with preferred return payments commencing in December 2025 contingent upon the property generating cash flows in excess of operating costs.

Acquisition of Avenue at Timberlin Park

On July 31, 2024, we acquired a 200-unit single-family residential community located in Jacksonville, Florida known as Avenue at Timberlin Park.

We have a full ownership interest in the community, and the purchase price of $33.8 million was funded with a $23.7 million senior loan secured by Avenue at Timberlin Park, along with cash of $12.9 million that we funded, inclusive of certain adjustments typical in such real estate transactions.

Sale of Navigator Villas

Prior to the sale of the property, and to effectuate a tax-deferred exchange under Section 1031 of the Code, we purchased our joint venture partner’s interest in Navigator Villas for $2.9 million, inclusive of estimated post-close adjustments.

On August 7, 2024, we closed on the sale of Navigator Villas located in Pasco, Washington for a sale price of $36.4 million, subject to certain prorations and adjustments typical in such real estate transactions.

After deductions for the payoff of existing mortgage indebtedness encumbering the property in the amount of $19.5 million, the purchase price of the joint venture partner’s interest, the payment of early extinguishment of debt costs, and closing costs and fees, the sale of Navigator Villas generated net proceeds of approximately $12.7 million and a gain on sale of approximately $10.0 million.

We recorded a loss on extinguishment of debt of $0.1 million related to the sale.

Provided below is a summary of our investment activity during the three months ended March 31, 2025.

Sale of Consolidated Operating Units

We closed on the following sales:

one unit in the ILE portfolio, seven units in the Indy-Springfield portfolio, nine units in the Peak JV 2 portfolio, and thirty-four units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sales agreements.

The fifty-one units were sold for an aggregate of approximately $8.9 million, subject to certain prorations and adjustments typical in such real estate transactions, and generated net proceeds of approximately $8.4 million and a gain on sales of approximately $0.9 million.

Loan Investments

We (i) provided funding in the aggregate amount of $24.6 million for the Wayford at Pringle loan investment, with a remaining commitment of $5.5 million to be funded, and (ii) received a full pay off on The Woods at Forest Hill loan investment in the aggregate amount of $8.5 million, which included principal investment of $8.3 million and accrued interest of $0.2 million.

Preferred Equity Investments

Our remaining preferred equity investment in the operating partnership of Peak Housing REIT was fully redeemed in the aggregate amount of $11.2 million, which included our principal investment of $10.6 million and accrued preferred return of $0.6 million.

In addition, our preferred equity investment in The Woods at Forest Hill was partially redeemed in the aggregate amount of $3.8 million, which included principal investment of $2.1 million, accrued preferred return of $1.1 million, and a minimum multiple payment of $0.6 million.

seven units in the ILE portfolio, four units in the Indy-Springfield portfolio, ten units in the Peak JV 2 portfolio, and eighteen units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sale agreements.

The thirty-nine units were sold for an aggregate of approximately $6.9 million, subject to certain closing costs, prorations and adjustments typical in such real estate transactions.

After deducting the paydown of existing mortgage indebtedness encumbering six units in the ILE portfolio of $1.2 million, the sales of the thirty-nine units generated net proceeds of approximately $5.1 million and a gain on sales of approximately $0.8 million.

Loan Investment Activity

Our loan investment in Wayford at Pringle was paid off in full in the aggregate amount of $23.0 million, which included principal investment of $22.3 million and accrued interest of $0.7 million.

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, and (ii) as of March 31, 2025, we had funded $11.8 million of our $26.9 million aggregate commitment to fund capital for preferred equity interests in Canvas at Wildwood, Indigo Cove and River Ford.

Held for Sale

At September 30, 2024, we classified an aggregate of 207 units as held for sale in our consolidated balance sheets, and for the three and nine months ended September 30, 2024, we recorded an impairment of $0.9 million and $2.1 million, respectively, related to held for sale units which is included in gain on sale and impairment of real estate investments, net in our consolidated statements of operations.

The 207 units classified as held for sale are included in the following portfolios:

At March 31, 2025, we classified an aggregate of 138 units as held for sale in our consolidated balance sheets, and for the three months ended March 31, 2025, we recorded an impairment of $0.1 million related to held for sale units which is included in gain on sale and impairment of real estate investments, net in our consolidated statements of operations and comprehensive income.

The 138 units classified as held for sale are all reported in our scattered single-family homes segment and are included in the following portfolios:

11 units of ILE, 33 units of Indy-Springfield, 22 units of Peak JV 2, and all 72 units of Peak JV 3.

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Series A Redeemable Preferred Stock

During the nine months ended September 30, 2024, we issued 3,459,331 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 $76.7 million after (i) commissions, dealer manager fees and sales discounts of approximately $8.7 million, and (ii) costs related to establishing the offering of Series A Preferred Stock of approximately $1.2 million.

As of September 30, 2024, we had issued a total of 3,896,006 shares of Series A Preferred Stock with total net proceeds of approximately $85.0 million after commissions, dealer manager fees, sales discounts and offering costs.

During the nine months ended September 30, 2024, we, at the request of holders, redeemed 6,560 shares of Series A Preferred Stock through the issuance of 9,103 shares of Class A common stock.

In November 2023, we announced the payment of additional contingent special daily dividends with respect to our Series A Preferred Stock.

This dividend was aggregated with the regular monthly dividend so as to effect a dividend rate of two percent over the average 10-Year Daily Treasury Par Yield Curve Rate with a floor of 6% annually, calculated and paid monthly.

Commencing in November 2023, the Series A Preferred Stock additional contingent special dividend was declared for each month for which the Board declared the regular monthly dividend of $0.125 per outstanding share of Series A Preferred Stock.

In May 2024, we announced the payment of an enhanced special dividend replacing the additional contingent special daily dividend.

The enhanced special dividend is aggregated with the regular monthly dividend so as to effect a dividend rate of the average one-month Term SOFR rate plus two percent, subject to a 6.5% minimum and an 8.5% maximum annual rate, calculated and paid monthly.

Commencing in May 2024, the Series A Preferred enhanced special dividend was declared for each month for which the Board declared the regular monthly dividend of $0.125 per outstanding share of Series A Preferred Stock.

During the three months ended March 31, 2025, we issued 651,768 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 $14.1 million after (i) commissions, dealer manager fees and sales discounts, and (ii) costs related to establishing the offering of Series A Preferred Stock.

As of March 31, 2025, we had issued a total of 5,285,053 shares of Series A Preferred Stock with total net proceeds of approximately $115.2 million after commissions, dealer manager fees, sales discounts and offering costs.

Additionally, as of March 31, 2025, we, at the request of holders, had redeemed 6,560 shares of Series A Preferred Stock through the issuance of 9,103 shares of Class A common stock.

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 $4.5 million from $147.4 million as of December 31, 2023 to $142.9 million as of September 30, 2024.

The decrease in our total stockholders’ equity is primarily attributable to $2.2 million related to the acquisition of noncontrolling interests, preferred dividends declared of $2.2 million, and an adjustment of $0.9 million for noncontrolling interest ownership in the Operating Partnership, partially offset by net income of $0.7 million.

Our total stockholders’ equity decreased $2.0 million from $139.1 million as of December 31, 2024 to $137.1 million as of March 31, 2025.

The decrease in our total stockholders’ equity is primarily attributable to dividends declared of $2.5 million and preferred stock accretion of $0.5 million, partially offset by comprehensive income of $0.5 million and a net adjustment of $0.4 million for noncontrolling interests.

Results of Operations

The following is a summary of our consolidated real estate investments as of September 30, 2024:

The following is a summary of our consolidated real estate investments as of March 31, 2025:

Excluding Held

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All Units (3)

Avenue at Timberlin Park

Jacksonville, FL

Scattered Single-Family Homes

Golden Pacific

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Dallas-Fort Worth, TX

Total Scattered Single-Family Homes / Average

Residential Communities

Allure at Southpark

Charlotte, NC

Amira at Westly

Avenue at Timberlin Park

Jacksonville, FL

Villas at Huffmeister

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Yauger Park Villas

Total Residential Communities Units / Average

Total Operating Units / Average

Development Investment Name

Residential Communities

Abode Wendell Fall (5)

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11 units of ILE, 33 units of Indy-Springfield, 22 units of Peak JV 2, and all 72 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, 2024.

(3) Percent occupied is calculated as (i) the number of units occupied as of September 30, 2024 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, 2024 divided by (ii) total number of units, expressed as a percentage, and excludes 207 units classified as held for sale and an aggregate of 11 down/renovation units.

(5) Total average rent includes the ending average effective rent per occupied unit for Navigator Villas as of the last day of July 2024.

Navigator Villas was sold in August 2024.

(6) Abode Wendell Falls is a build-to-rent development project expected to commence construction in the fourth quarter 2024.

The total estimated project cost is $56.9 million, of which $6.9 million had been incurred as of September 30, 2024.

The following is a summary of our consolidated operational results for the three and nine months ended September 30, 2024 and 2023 ($ in thousands, except average rental rates):

Three Months Ended September 30,

Nine Months Ended September 30,

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 March 31, 2025.

Percent occupied is calculated as (i) the number of units occupied as of March 31, 2025 divided by (ii) total number of units, expressed as a percentage.

Percent occupied is calculated as (i) the number of units occupied as of March 31, 2025 divided by (ii) total number of units, expressed as a percentage, and excludes 138 units classified as held for sale and an aggregate of 8 down/renovation units.

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

The following is a summary of our consolidated operational results by reportable segment for the three months ended March 31, 2025 and 2024 ($ in thousands, except average rental rates):

Three Months Ended March 31,

Rental and other property revenues

Scattered single-family homes

Residential communities

Total rental and other property revenues

Property operating expenses

Scattered single-family homes

Residential communities

Total property operating expenses

Net operating income

Scattered single-family homes

Residential communities

Total net operating income

Scattered single-family homes

Residential communities

Average occupancy percentage (1)(2)

Scattered single-family homes

Residential communities

Average rental rate (2)(3)

(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) Amounts presented for the periods ended September 30, 2024 include Navigator Villas through July 2024.

Navigator Villas was sold in August 2024.

(2) The amount presented for 2024 includes 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.

The following is a summary of our preferred equity and loan investments as of September 30, 2024:

The following is a summary of our preferred equity and loan investments as of March 31, 2025:

Total Actual /

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Cost Per Unit

The Woods at Forest Hill (2)

Forest Hill, TX

Willow Park, TX

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Myrtle Beach, SC

The Cottage of Port St.

Wayford at Pringle (4)(5)

Charlotte, NC

Wayford at Innovation Park

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Development Investment Name (3)

Indigo Cove (7)

Brunswick, GA

Canvas at Wildwood

Total Development Units

Operating Investment Name (4)

The Cottage of Port St.

Wayford at Pringle

Charlotte, NC

Total Operating Units

Total Units/Average

(1) Represents the average pro forma effective monthly rent per occupied unit for all expected occupied units upon stabilization.

(2) The Woods at Forest Hill unit count decreased from 76 units at December 31, 2023 to 18 units at September 30, 2024 resulting from the sales of 58 units during the nine months ended September 30, 2024.

Proceeds from the sales of these units were used to fully pay off our loan investment, and partially redeem our preferred equity investment, in The Woods at Forest Hill.

Construction cost amounts shown are based on the initial 76 units.

Refer to Note 6 and Note 7 of our consolidated financial statements for further information.

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

Chandler commenced lease-up in June 2024.

(4) Wayford at Pringle is a loan investment for which we disburse loan proceeds to the borrower for unit acquisitions upon construction completion.

Of the total 102 build-to-rent units that are to be acquired, construction of 85 units was completed during the nine months ended September 30, 2024 for which we provided the borrower with loan proceeds for their acquisition.

The cost to date amount represents outlays related to completed units and those under construction, and we estimate that all units will be completed and acquired, and our loan commitment fully funded, by the end of 2024.

Refer to Note 6 of our consolidated financial statements for further information.

(5) Wayford at Pringle commenced lease-up in February 2024.

(6) Wayford at Innovation Park commenced lease-up in August 2023.

(7) Indigo Cove had not commenced lease-up as of September 30, 2024.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Rental and other property revenues increased $1.8 million, or 18%, to $12.0 million for the three months ended September 30, 2024 as compared to $10.2 million for the same prior year period.

None of the development investments had commenced lease-up as of March 31, 2025.

Operating investments represent stabilized operating properties.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Rental and other property revenues increased $5.1 million, or 48%, to $15.9 million for the three months ended March 31, 2025 as compared to $10.8 million for the same prior year period.

The increase was primarily due to:

(i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024 and 200 units at Avenue at Timberlin Park during the third quarter 2024, and (ii) rental rate improvements from our active management and organic market rent growth.

The increase was partially offset by the sale of 176 units at Navigator Villas and 95 single family units in our portfolio since July 1, 2023.

(i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024, 200 units at Avenue at Timberlin Park during the third quarter 2024, 408 units at Amira at Westly and 350 units at Allure at Southpark during the fourth quarter 2024, and (ii) rental rate improvement from our active management and organic market rent growth.

The increase was partially offset by the sale of 176 units at Navigator Villas and 137 single-family units in our portfolio since January 1, 2024.

Our average rent per occupied unit increased $95, or 5.9%, to $1,695 as compared to $1,600 during the prior year period.

Average occupancy decreased 70 basis points from 92.5% to 91.8% on a year over year basis.

Interest income from loan investments amounted to $0.7 million for the three months ended September 30, 2024 as compared to zero for the same prior year period due to three new loan investments since the fourth quarter 2023.

We did not have any loan investments during the three months ended September 30, 2023.

Property operating expenses increased $1.3 million, or 25%, to $6.4 million for the three months ended September 30, 2024 as compared to $5.1 million for the same prior year period.

The increase was primarily due to:

(i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024 and 200 units at Avenue at Timberlin Park during the third quarter 2024, and (ii) an increase in turnover expenses subsequent to initial renovation completed in previous years.

The increase was partially offset by the sale of 176 units at Navigator Villas and 95 single-family units since July 1, 2023.

Property operating expenses consist of controllable (payroll, repairs and maintenance, turnover, administrative, advertising, and utilities) and non-controllable (real estate taxes and insurance) expenses.

Controllable expenses were $3.5 million and $2.6 million, and non-controllable expenses were $2.9 million and $2.5 million, for the three months ended September 30, 2024 and 2023, respectively.

Property management and asset management fee expenses were $1.2 million for the three months ended September 30, 2024 as compared to $1.1 million for 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 September 30, 2024 as compared to $1.7 million for the same prior year period.

Of the $2.5 million total expense for the three months ended September 30, 2024, $1.5 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.

The expense reimbursement to our Manager also included a $0.7 million reimbursement for accounting and legal services.

Prior to the fourth quarter 2023, the Manager elected to not seek reimbursement for legal and accounting services during our first year of operations.

For the third quarter 2024, we will pay the full operating expense reimbursement of $1.0 million to the Manager in cash;

for the same prior year period, we paid the full operating expense reimbursement of $0.4 million to the Manager through the issuance of C-LTIP Units.

Management fees to related party amounted to $2.4 million for the three months ended September 30, 2024 as compared to $2.0 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, which began in the third quarter of 2023.

For the third quarter 2024, we will pay the base management fee of $2.4 million to the Manager as one half (50%) in C-LTIP Units and the remainder in cash;

for the same prior year period, we paid the full base management fee of $2.0 million to the Manager through the issuance of C-LTIP Units.

Weather-related losses amounted to $0.2 million for the three months ended September 30, 2024 as compared to zero for the same prior year period.

The 2024 expense primarily relates to hurricane damage in Texas.

Depreciation and amortization expenses were $4.9 million for the three months ended September 30, 2024 as compared to $4.1 million for the same prior year period, with the increase primarily attributable to the acquisition of Villas at Huffmeister during the first quarter 2024.

Other Income and Expense

Other income and expense amounted to income of $8.4 million for the three months ended September 30, 2024 as compared to income of $0.2 million for the same prior year period.

This was due to a $10.3 million increase in gain on sales of real estate investments and a $0.6 million increase in interest income from our short-term cash investments.

These income sources were partially offset by a $1.7 million net increase in interest expense primarily attributable to a decrease in the fair value of the interest rate caps and swaps and an increase in the outstanding debt to $231.8 million at September 30, 2024 as compared to $167.1 million at September 30, 2023 and a $1.0 million impairment on real estate.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Rental and other property revenues increased $4.1 million, or 13%, to $34.7 million for the nine months ended September 30, 2024 as compared to $30.6 million for the same prior year period.

The increase was primarily due to:

The increase was partially offset by the sale of 176 units of Navigator Villas and 104 single-family units in our portfolio since January 1, 2023.

Our average rent per occupied unit increased $57, or 3.7%, to $1,617 as compared to $1,560 during the prior year period.

Average occupancy remained consistent at 91.9% on a year over year basis.

Interest income from loan investments amounted to $1.7 million for the nine months ended September 30, 2024 as compared to zero for the same prior year period due to three new loan investments since the fourth quarter 2023.

We did not have any loan investments during the nine months ended September 30, 2023.

Property operating expenses increased $3.2 million, or 23%, to $17.4 million for the nine months ended September 30, 2024 as compared to $14.2 million for the same prior year period.

Interest income from loan investments amounted to $0.5 million for the three months ended March 31, 2025 as compared to $0.4 million for the same prior year period due to (i) an increase in the outstanding balance of one loan investment, which was fully paid off in the first quarter 2025 and (ii) an increase in the return on a second loan investment.

These increases in interest income were partially offset by the full payoff of a third loan investment in the third quarter of 2024.

Property operating expenses increased $2.7 million, or 53%, to $7.7 million for the three months ended March 31, 2025 as compared to $5.0 million for the same prior year period.

The increase was primarily due to:

(i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024, 200 units at Avenue at Timberlin Park during the third quarter 2024, 408 units at Amira at Westly and 350 units at Allure at Southpark during the fourth quarter 2024, and (ii) an increase in turnover expense subsequent to initial renovation completed on units in previous years.

The increase was partially offset by the sale of 176 units at Navigator Villas and 137 single-family units since January 1, 2024.

Controllable expenses were $9.2 million and $6.8 million, and non-controllable expenses were $8.2 million and $7.4 million, for the nine months ended September 30, 2024 and 2023, respectively.

Property management and asset management fee expenses were $3.5 million for the nine months ended September 30, 2024 as compared to $3.3 million for the same prior year period.

Property management and asset management fee expenses were $1.3 million for the three months ended March 31, 2025 as compared to $1.1 million in the same prior year period.

General and administrative expenses amounted to $7.8 million for the nine months ended September 30, 2024 as compared to $5.5 million for the same prior year period.

Of the $7.8 million total expense for the nine months ended September 30, 2024, $4.5 million related to direct costs incurred by us, while the remaining $3.3 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses.

The expense reimbursement to our Manager also included a $2.2 million reimbursement for accounting and legal services.

Prior to the fourth quarter 2023, the Manager elected to not seek reimbursement for legal and accounting services during our first year of operations.

Commencing with the operating expense reimbursement for the first quarter 2024, we paid, and expect to continue to pay, the operating expense reimbursement to the Manager entirely in cash;

prior to the first quarter 2024, we paid the full operating expense reimbursement to the Manager through the issuance of C-LTIP Units.

Management fees to related party amounted to $6.6 million for the nine months ended September 30, 2024 as compared to $5.9 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, which began in the third quarter of 2023.

Commencing with the base management fee for the first quarter 2024, we paid, and expect to continue to pay, the base management fee to the Manager as one half (50%) in C-LTIP Units and the remainder in cash;

prior to the first quarter 2024, we paid the full base management fee to the Manager through the issuance of C-LTIP Units.

Acquisition and other transaction costs amounted to zero for the nine months ended September 30, 2024 as compared to $1.8 million for the same prior year period.

General and administrative expenses amounted to $3.1 million for the three months ended March 31, 2025 as compared to $2.9 million for the same prior year period.

Of the $3.1 million total expense in the first quarter 2025, $2.1 million related to direct costs incurred by us, while the remaining $1.0 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses.

Management fees to related party amounted to $2.5 million for the three months ended March 31, 2025 as compared to $2.1 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 first quarter of 2025, we will pay $0.2 million of the base management fee in C-LTIP Units with the remainder in cash.

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

Acquisition and other transaction costs amounted to $0.1 million for the three months ended March 31, 2025 and were minimal 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.

The 2023 expense primarily relates to the transition of property management services for over 1,000 homes.

Weather-related losses amounted to $0.2 million for the nine months ended September 30, 2024 as compared to zero for the same prior year period.

The 2024 expense primarily relates to hurricane damage in Texas.

Depreciation and amortization expenses were $13.7 million for the nine months ended September 30, 2024 as compared to $12.1 million for the same prior year period, with the increase primarily attributable to the acquisition of Villas at Huffmeister during the first quarter 2024.

Depreciation and amortization expenses were $7.5 million for the three months ended March 31, 2025 as compared to $4.0 million for the same prior year period, with the increase primarily due to the acquisition of Villas at Huffmeister during the first quarter 2024, Avenue at Timberlin Park during the third quarter 2024, and Amira at Westly and Allure at Southpark during the fourth quarter 2024.

The increase was partially offset by the sale of Navigator Villas and single-family units in our portfolio since January 1, 2024.

Other Income and Expense

Other income and expense amounted to income of $8.0 million for the nine months ended September 30, 2024 as compared to income of $2.1 million for the same prior year period.

This was due to a $10.3 million increase in gain on sales of real estate investments and a $2.2 million increase in interest income from our short-term cash investments.

These income sources were partially offset by a $4.1 million net increase in interest expense primarily attributable to a decrease in the fair value of the interest rate caps and swaps and an increase in the outstanding debt to $231.8 million at September 30, 2024 as compared to $153.2 million at December 31, 2022, a $2.2 million impairment on real estate, and a $0.3 million increase in provision for credit losses.

Other income and expense amounted to expense of $1.3 million for the three months ended March 31, 2025 as compared to income of $0.7 million for the same prior year period.

This was primarily due to a $2.7 million increase in interest expense primarily attributable to an increase in the outstanding debt to $343.9 million at March 31, 2025 as compared to $228.7 million at March 31, 2024 and a decrease in the fair value of the interest rate caps and swaps, which was partially offset by a $0.5 million increase in gain on sale of real estate investments.

Income Tax Expense

Income tax expense amounted to income of $0.3 million for the three months ended March 31, 2025 as compared to zero for the same prior year period.

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

Net Operating Income

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

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

The following table reflects net loss 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,

Net income (loss) attributable to common stockholders

Net income (loss) attributable to Operating Partnership Units

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

Net loss attributable to common stockholders

Net loss attributable to Operating Partnership Units

Net loss attributable to common stockholders and unit holders

Net loss attributable to partially owned properties’ noncontrolling interests

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Unrealized loss on derivatives

Provision for credit losses

(Recovery of) provision for credit losses

Property management and asset management fees

2 unchanged sentences

Corporate operating expenses

Weather-related losses, net

Loss on extinguishment of debt costs

Interest income

Preferred stock dividends

Preferred dividends

Preferred stock accretion

Other (income) expense, net

Other expense (income), net

Income tax expense

Income from preferred equity investments

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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, (v) ongoing commitments to repay borrowings, including our revolving credit facilities and our maturing debt, and (vi) Class A common stock repurchases under our stock repurchase plan.

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, the Amended DB Credit Facility and 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 94.3% as of September 30, 2024, in future periods we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants.

In general, we believe our available cash balances, cash flows from operations, proceeds from the offering of our Series A Preferred Stock, proceeds from our revolving credit facilities, 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 single-family residential properties and build-to-rent development properties.

While consolidated occupancy excluding units classified as held for sale and down/renovation units remains strong at 94.1% as of March 31, 2025, in future periods we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants.

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

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 March 31, 2025, we had one offering in our DST Program and had raised net offering proceeds of $29.2 million, issued a demand note of $0.7 million, and had $102.8 million in total net real estate investments associated with the DST Program.

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:

● $155.1 million in cash available at September 30, 2024;

● capacity of $65 million, of which approximately $13 million was available at September 30, 2024, on our revolving credit facilities;

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

● $134.7 million in cash available at March 31, 2025;

● capacity of $50 million, all of which was available on the KeyBank Credit Facility at March 31, 2025 for use in our DST Program;

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

● cash generated from operating activities;

● 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, 2024 related to our mortgage notes secured by our properties and revolving credit facilities.

At September 30, 2024, our estimated future required payments on these obligations were as follows (amounts in thousands):

The following table summarizes our contractual obligations as of March 31, 2025 related to our mortgage notes secured by our properties and the Amended DB Credit Facility.

At March 31, 2025, the KeyBank Credit Facility had no outstanding balance.

At March 31, 2025, our estimated future required payments on these obligations were as follows (amounts in thousands):

Mortgages Payable (Principal)

Revolving Credit Facilities

Estimated Interest Payments on Mortgages Payable and Revolving Credit Facilities

Amended DB Credit Facility

Estimated Interest Payments on Mortgages Payable and the Amended DB Credit Facility

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

As of September 30, 2024, we have contractual commitments to fund future cash obligations in certain of our loan and preferred equity investments in the aggregate of $7.8 million.

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

As of September 30, 2024, the remaining estimated project costs to complete Abode Wendell Falls is $50.0 million.

At March 31, 2025, we had contractual commitments to fund future cash obligations in certain of our preferred equity investments and our loan investment in the aggregate of $15.1 million and zero, respectively.

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

At March 31, 2025, the remaining estimated project costs to complete Abode Wendell Falls was $47.5 million.

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, 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 Securities Exchange Act of 1934 (the “Exchange Act”) and subject to Rule 10b-5 of the Exchange Act.

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 Securities 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 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 to repurchase shares of our Class A common stock through open market transactions subject to market conditions, certain price limitations and other conditions established under the plan.

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, 2024, we had not made any repurchases of our Class A common stock.

Our primary long-term liquidity requirements relate to (i) costs for additional single-family residential investments, including build-to-rent development projects, (ii) repayment of long-term debt and our revolving credit facilities, (iii) capital expenditures, (iv) cash redemption requirements related to our Series A Preferred Stock, 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 A Preferred Stock, our revolving credit facilities, as well as future acquisition or project-based borrowings.

As of March 31, 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 in general, 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, 2024, 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.

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 three months ended March 31, 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 facilities 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 facilities contain material financial covenants.

At September 30, 2024, we were in compliance with all covenants under our credit facilities.

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 March 31, 2025, 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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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, 2024 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.

While our distributions through March 31, 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 notes receivable in conjunction with properties that are in lease-up.

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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 equity 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.

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.

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, 2024, 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, 2024, we own interests in six joint ventures that are accounted for as held to maturity debt securities.

As of March 31, 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 March 31, 2025, we hold preferred equity interests in eight joint ventures that are accounted for as available-for-sale debt securities.

Cash Flows from Operating Activities

As of September 30, 2024, we held twenty real estate investments, consisting of twelve consolidated investments and eight preferred equity and loan investments, with the twenty investments representing an aggregate of 4,000 residential units.

During the nine months ended September 30, 2024, net cash provided by operating activities was $4.1 million after net loss of $4.8 million was adjusted for the following:

As of March 31, 2025, we held twenty-three real estate investments, consisting of fourteen consolidated investments and nine preferred equity and loan investments, with the twenty-three investments representing an aggregate of 5,048 residential units.

During the three months ended March 31, 2025, net cash provided by operating activities was $1.0 million after net loss of $7.3 million was adjusted for the following:

● non-cash items of $6.7 million;

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● distributions of income and income from preferred equity investments of $1.3 million;

● an increase in due to affiliates, net of $0.1 million;

● a decrease in notes and accrued interest receivable of $0.4 million;

● an increase in accounts receivable, prepaids and other assets of $1.2 million;

● an increase in notes and accrued interest receivable of $0.7 million.

● an increase in due to affiliates of $0.3 million.

Cash Flows from Investing Activities

During the nine months ended September 30, 2024, net cash used in investing activities was $22.4 million, primarily due to the following:

● $51.5 million used in acquiring consolidated real estate investments;

● $24.6 million used in investments in notes receivable;

● $5.9 million used on capital expenditures;

During the three months ended March 31, 2025, net cash provided by investing activities was $19.0 million, primarily due to the following:

● $22.3 million of repayments on notes receivable;

● $6.3 million of proceeds from the sales of real estate investments;

● $5.8 million used in investments in preferred equity investments;

● $2.7 million paid for an interest rate cap;

● $44.0 million of proceeds from sales of real estate investments;

● $12.8 million of proceeds from the redemption of preferred equity investments;

● $8.3 million of repayments of notes receivable;

● $0.1 million of insurance proceeds related to real estate investments.

● $3.8 million used on capital expenditures.

Cash Flows from Financing Activities

During the nine months ended September 30, 2024, net cash provided by financing activities was $96.8 million, due to the following:

● net proceeds of $76.7 million from the issuance of shares of Series A Preferred Stock;

● $35.0 million of proceeds from revolving credit facilities;

● $23.7 million of borrowings on mortgages payable;

● $1.0 million of contributions from noncontrolling interests;

● $21.3 million of repayments on our mortgages payable including prepayment penalties;

● $8.5 million of distributions to noncontrolling interests;

● $3.9 million of distributions to common stockholders;

● $2.6 million used in the purchase of interests from noncontrolling interests;

During the three months ended March 31, 2025, net cash used in financing activities was $0.5 million, primarily due to the following:

● $36.0 million of repayments on revolving credit facilities;

● $1.9 million of distributions to preferred stockholders;

● $1.5 million of payments of deferred financing fees;

● $0.1 million of distributions paid to partially owned properties’ noncontrolling interests.

● $1.7 million of repayments on mortgages payable;

● $25.2 million of contributions from noncontrolling interests;

● net proceeds of $14.1 million from the issuance of shares of Series A Preferred Stock.

Capital Expenditures

The following table summarizes our total capital expenditures for the nine months ended September 30, 2024 and 2023 (amounts in thousands):

Nine Months Ended

September 30,

The following table summarizes our total capital expenditures for the three months ended March 31, 2025 and 2024 (amounts in thousands):

Three Months Ended

New development

Redevelopment/renovations

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Total capital expenditures

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.

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

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

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

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

The table below presents our calculation of FFO and CFFO for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):

The table below presents our calculation of FFO and CFFO for the three months ended March 31, 2025 and 2024 ($ in thousands):

Three Months Ended

Nine Months Ended

September 30,

Net income (loss) attributable to common stockholders

Net income (loss) attributable to Operating Partnership Units

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

Net loss attributable to common stockholders

Net loss attributable to Operating Partnership Units

Net loss attributable to common stockholders and unit holders

Real estate depreciation and amortization

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Unrealized loss on derivatives

Provision for credit losses

Weather-related losses, net

(Recovery of) provision for credit losses

Loss on extinguishment of debt costs

Non-real estate depreciation and amortization

Other (income) expense, net

Other income, net

Non-cash equity compensation

Non-recurring income tax expense

Preferred stock accretion

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Paid / Payable Date

Class A common stock Special Dividend

December 19, 2023

Class A common stock

March 11, 2025

March 25, 2025

April 4, 2025

March 11, 2025

June 25, 2025

March 11, 2025

September 25, 2025

October 3, 2025

March 11, 2025

December 24, 2025

January 5, 2026

Class C common stock Special Dividend

December 19, 2023

Class C common stock

March 11, 2025

March 25, 2025

April 4, 2025

March 11, 2025

June 25, 2025

March 11, 2025

September 25, 2025

October 3, 2025

March 11, 2025

December 24, 2025

13 unchanged sentences

April 4, 2025

April 12, 2024

April 25, 2024

April 12, 2024

June 25, 2024

July 12, 2024

July 25, 2024

August 5, 2024

July 12, 2024

August 23, 2024

September 5, 2024

July 12, 2024

September 25, 2024

Series A Preferred Enhanced Special Dividend (2)

October 14, 2024

Series A Preferred Special Dividend (2)

November 7, 2023

Each day of December 1 - 31, 2023

December 24, 2024

January 3, 2025

January 15, 2025

Each day of January 1 - 31, 2024

January 24, 2025

February 5, 2025

January 15, 2025

Each day of February 1 - 29, 2024

February 25, 2025

March 5, 2025

January 15, 2025

Each day of March 1 - 31, 2024

April 5, 2024

March 25, 2025

April 4, 2025

Each day of April 1 - 30, 2024

Series A Preferred Enhanced Special Dividend (3)

June 25, 2024

July 12, 2024

July 25, 2024

August 5, 2024

July 12, 2024

August 23, 2024

September 5, 2024

July 12, 2024

September 25, 2024

October 4, 2024

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 as of the close of business on each day of the applicable month were entitled to additional contingent special daily dividends for each such day, to be aggregated and payable (if at all) on the payable date, in each case equal to the amount (if any) by which (i) the Stated Value of the Series A Preferred Stock multiplied by (a) the sum of (I) the average 10-year Daily Treasury Par Yield Curve Rate for the period from the 26 th of the prior month to the 25 th of the applicable month (as reported by the United States Department of the Treasury), plus (II) two percent, divided by (b) twelve, divided further by (c) the actual number of days in the applicable month, exceeds (ii) the quotient of (a) $0.125 divided by (b) the actual number of days in the applicable month.

(3) Holders of record of Series A Preferred Stock shares are entitled to an enhanced special dividend, which replaces the additional contingent special daily dividends, 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.

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.

10 unchanged sentences

Subsequent Events

Other than the items disclosed in Note 15 “Subsequent Events” to our interim Consolidated Financial Statements for the period ended September 30, 2024, no material events have occurred that required recognition or disclosure in these financial statements.

Other than the items disclosed in Note 16 “Subsequent Events” to our interim Consolidated Financial Statements for the period ended March 31, 2025, no material events have occurred that required recognition or disclosure in these financial statements.

Refer to Note 16 of our interim Consolidated Financial Statements for discussion.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis