What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-09 · 163 added, 102 removed, 376 unchanged (41% of the section changed)

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

As of 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;

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

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

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

excluding units classified as held for sale and down/renovation units, our consolidated operating investments were approximately 93.2% occupied.

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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.

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.

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.

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In addition, these residential communities typically have onsite property management.

Inflation and Related Economic Volatility

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

In addition, 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.

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

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

Such tariffs, and any additional tariffs imposed by the current administration or other countries, may cause further inflationary pressures in the economy, uncertainty and volatility of debt and equity markets, and a slowdown in the U.S.

and global economies.

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Investment Activity Summary

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

Sale of Consolidated Operating Units

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

Acquisition of Southern Pines Reserve

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

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

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

Sales of Consolidated Operating Units

We closed on the following sales:

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.

17 units in the ILE portfolio, 12 units in the Indy-Springfield portfolio, 19 units in the Peak JV 2 portfolio, and 37 units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sale agreements.

The 85 units were all previously classified as held for sale and sold for an aggregate of approximately $15.1 million, subject to certain closing costs, prorations and adjustments typical in such real estate transactions.

After deducting the paydown of existing mortgage indebtedness encumbering 16 units in the ILE portfolio of approximately $3.0 million, the sales of the 85 units generated net proceeds of approximately $10.7 million and a gain on sales of approximately $1.7 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.

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

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

Unconsolidated Real Estate Fund Summary

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

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

Preferred Equity Investment Summary

Our preferred equity investment activity was as follows:

(i) we increased our original capital commitment for preferred equity interests in Wayford at Innovation Park by $2.0 million, increasing our total investment to $15.4 million, 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.

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

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

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

Held for Sale

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:

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

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

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

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

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Series A Redeemable 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.

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

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

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

Series A Preferred Stock Redemption Safeguard Policy

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Stockholders’ Equity

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.

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

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

Results of Operations

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

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

Excluding Held

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Jacksonville, FL

Southern Pines Reserve

Villas at Huffmeister

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

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

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

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

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

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

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

Three Months Ended March 31,

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

Three Months Ended June 30,

Six Months Ended June 30,

Rental and other property revenues

Scattered single-family homes

Residential communities

Scattered single-family homes

Total rental and other property revenues

Property operating expenses

Scattered single-family homes

Residential communities

Scattered single-family homes

Total property operating expenses

Net operating income

Scattered single-family homes

Residential communities

Total net operating income

Scattered single-family homes

Total net operating income

Residential communities

Average occupancy percentage (1)(2)

Scattered single-family homes

Average occupancy percentage (1)(2)

Residential communities

Scattered single-family homes

Average rental rate (2)(3)

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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 March 31, 2025:

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

Total Actual /

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Cost Per Unit

Willow Park, TX

The Cottages at Myrtle Beach

Myrtle Beach, SC

Wayford at Innovation Park

Charlotte, NC

Total Lease-up Units

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Brunswick, GA

Sanford Marketplace

Canvas at Wildwood

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The Cottage of Port St.

Wayford at Pringle

Wayford at Innovation Park

Charlotte, NC

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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.

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

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

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

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

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) 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.

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

Our average rent per occupied unit increased $74, or 4.6%, to $1,689 as compared to $1,615 during the prior year period.

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

Interest income from loan investments amounted to $0.5 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other Income and Expense

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

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

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

Income Tax Expense

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

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

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

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

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.

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.

(i) the acquisition of 1,524 units at five residential communities, which was partially offset by sales of 176 units at one residential community and 183 single-family units in our portfolio since January 1, 2024, and (ii) rental rate improvement from our active management and organic market rent growth.

Our average rent per occupied unit increased $84, or 5.2%, to $1,692 as compared to $1,608 during the prior year period.

Average occupancy decreased 70 basis points from 92.4% to 91.7% on a year over year basis.

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

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

The increase was primarily due to the acquisition of 1,524 units at five residential communities, which was partially offset by sales of 176 units at one residential community and 183 single-family units in our portfolio since January 1, 2024.

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

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.

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

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

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

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.

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

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

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

Depreciation and amortization expenses were $7.5 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.

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

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

Other Income and Expense

Other income and expense amounted to expense of $1.3 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.

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

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

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

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.

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

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

Net Operating Income

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Three Months Ended

Six Months Ended

Net loss attributable to common stockholders

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Corporate operating expenses

Weather-related losses, net

Loss on extinguishment of debt costs

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Preferred stock accretion

Other expense (income), net

Other expense, net

Income tax expense

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

Gain on sale of available-for-sale investments

Total property income

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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, 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 94.1% 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.

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

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

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

As of 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.

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

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

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

● $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;

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

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

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

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

The following table summarizes our contractual obligations as of 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):

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

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

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

Mortgages Payable (Principal)

Amended DB Credit Facility

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

Estimated Interest Payments on Mortgages Payable

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

At 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.

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

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

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

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

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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.

On February 28, 2025, our Board authorized a new stock repurchase plan for the repurchase, from time to time, of up to an aggregate of $5 million of our outstanding shares of Class A common stock, with such repurchases to be conducted in accordance with the requirements of Rule 10b-18 of the Exchange Act and subject to Rule 10b-5 of the Exchange Act.

The repurchase plan has a term of one year and may be discontinued at any time.

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

As of March 31, 2025, we had not made any repurchases of our Class A common stock.

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

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

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

As we did in the 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.

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

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

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

At March 31, 2025, we were in compliance with all covenants under our credit facility.

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

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

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

While our distributions through 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.

To date, these investments have been structured as senior loans, and in the future, we may also provide mezzanine financing to these types of projects.

The notes receivable provide a current stated return and require repayment based on a fixed maturity date.

If the property does not repay the notes receivable upon maturity, our income, FFO, CFFO and cash flows could be reduced below the stated returns currently being recognized if the property does not produce sufficient cash flow to pay its operating expenses and debt service, or to refinance its debt obligations.

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

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

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

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

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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 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.

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

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

Cash Flows from Operating Activities

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:

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

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

● non-cash items of $11.6 million;

● an increase in accounts payable and other accrued liabilities of $1.4 million;

● distributions of income and income from preferred equity investments of $10.7 million;

● an increase in accounts payable and other accrued liabilities of $4.7 million;

● an increase in due to affiliates of $1.8 million;

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

● an increase in accounts receivable, prepaids and other assets of $1.3 million.

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

Cash Flows from Investing Activities

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

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

● $58.7 million used in the acquisition of real estate investments;

● $25.0 million used in an investment in an unconsolidated real estate fund;

● $8.9 million used on capital expenditures;

● $8.1 million used in investments in preferred equity investments;

● $1.6 million used in purchase of rate caps;

● $31.7 million of repayments on notes receivable;

● $30.8 million of proceeds from the sale and redemption of preferred equity investments;

● $13.7 million of proceeds from the sales of real estate investments.

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

● $3.8 million used on capital expenditures.

Cash Flows from Financing Activities

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;

● $1.7 million of repayments on mortgages payable;

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

● $41.5 million of contributions from noncontrolling interests;

● borrowings of $30.7 million on mortgages payable;

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

● proceeds of $20.0 million from borrowings on revolving credit facilities;

● $81.0 million of repayments on revolving credit facilities;

● $4.1 million of cash distributions paid to preferred stockholders;

● $4.0 million of repayments on mortgages payable;

● $1.7 million in deferred financing costs;

● $1.1 million of distributions to noncontrolling interests;

● $0.5 million of distributions to partially owned properties’ noncontrolling interests;

● $0.5 million of cash distributions paid to common stockholders;

● $0.2 million paid for the redemption of Series A Preferred Stock.

Capital Expenditures

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

Three Months Ended

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

Six Months Ended

New development

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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 months ended March 31, 2025 and 2024 ($ in thousands):

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

Three Months Ended

Six Months Ended

Net loss attributable to common stockholders

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

Gain on sale of available-for-sale investments

Adjustment for partially owned properties’ noncontrolling interests

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Loss on extinguishment of debt costs

Weather-related losses, net

Non-real estate depreciation and amortization

Other income, net

Other income/expense, net

Non-cash equity compensation

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April 4, 2025

April 15, 2025

April 25, 2025

April 15, 2025

June 25, 2025

Series A Preferred Enhanced Special Dividend (2)

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April 4, 2025

April 15, 2025

April 25, 2025

April 15, 2025

June 25, 2025

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

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Subsequent Events

Other than the items disclosed in Note 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.

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis