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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-28 · 165 added, 214 removed, 212 unchanged (64% of the section changed)

Management’s Discussion and Analysis of Financial Conditions and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (the “Report”), the audited financial statements for the year ended December 31, 2023, which are included in our Annual Report on Form 10-K filed with the SEC on February 20, 2024, and the risk factors in Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2023.

the SEC on February 18, 2025, and the risk factors in Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2024.

This discussion and analysis and other sections of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the expectations for future periods.

Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future.

Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,”

“may,” “projects,” “outlook,” “future,” and variations of those words and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are typically identified by the use of terms such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,” “may,” “projects,” “outlook,” “future,” and variations of those words and similar expressions.

These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial condition, or plans expressed or implied by the forward-looking statements.

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The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:

• price volatility in the global economy;

• inflation and price volatility in the global economy;

• uncertain global macro-economic and political conditions;

• deteriorating economic conditions, including rising unemployment rates, energy costs, and inflation, in the markets where we own apartment communities or in which we may invest in the future;

• rental conditions in our markets, including occupancy levels and rental rates, potential inability to renew residents or obtain new residents upon expiration of existing leases, changes in tax and housing laws, include rent control laws, or other factors;

• rental conditions in our markets, including occupancy levels and rental rates, our potential inability to renew residents or obtain new residents upon expiration of existing leases, changes in tax and housing laws, including rent control laws, or other factors;

• timely access to material and labor required to renovate and maintain apartment communities;

• adverse changes in our markets, including future demand for apartment homes in those markets, barriers of entry into new markets, limitations on the ability to increase rental rates, our inability to identify and consummate attractive acquisitions and dispositions on favorable terms, our ability to reinvest sales proceeds successfully, and inability to accommodate any significant decline in the market value of real estate serving as collateral for debt and mortgage obligations;

• pandemics or epidemics, including the COVID-19 pandemic, and any effects on our business, financial condition, and results of operation;

• the impact of the conflicts between Russia and Ukraine, as well as Israel, Gaza, and Iran, on inflation, trade, and general economic conditions;

• adverse changes in our markets, including future demand for apartment homes in those markets, barriers of entry into new markets, limitations on our ability to increase rental rates, our ability to identify and consummate attractive acquisitions and dispositions on favorable terms, our ability to reinvest sales proceeds successfully, and inability to accommodate any significant decline in the market value of real estate serving as collateral for our debt and mortgage obligations;

• pandemics or epidemics and any effects on our employees, residents and commercial tenants, third party vendors and suppliers, and apartment communities, as well as our cash flow, business, financial condition, and results of operations;

• the impact of conflicts in Ukraine and the Middle East, including sanctions imposed by the U.S.

and other countries, on inflation, trade, and general economic conditions;

• reliance on a single asset class (multifamily) and certain geographic areas (Midwest and Mountain West regions) of the U.S.;

• inability to expand operations into new or existing markets successfully;

• inability to expand our operations into new or existing markets successfully;

• failure of new acquisitions to achieve anticipated results or be efficiently integrated;

• inability to complete lease-up of projects on schedule and on budget;

• inability to complete lease-up of our projects on schedule and on budget;

• inability to sell our non-core properties on terms that are acceptable;

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• inability to fund capital expenditures out of cash flow;

• inability to pay, or need to reduce, dividends on common shares;

• inability to pay, or need to reduce, dividends on our common shares;

• inability to raise additional equity capital, if needed;

• financing risks, including the potential inability to meet existing covenants in existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all;

• financing risks, including our potential inability to meet existing covenants in existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all;

• level and volatility of interest or capitalization rates or capital market conditions;

• uninsured losses due to insurance deductibles, uninsured claims or casualties or losses in excess of applicable coverage;

• loss contingencies and the availability and cost of casualty insurance for losses;

• inability to continue to satisfy complex tax rules in order to maintain status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, and the risk of changes in laws affecting REITs;

• uninsured losses due to insurance deductibles, uninsured claims or casualties or losses in excess of applicable coverage;

• inability to continue to satisfy complex tax rules in order to maintain our status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for tax purposes, and the risk of changes in laws affecting REITs;

• inability to attract and retain qualified personnel;

• cyber liability or potential liability for breaches of privacy or information security systems;

• cyber liability or potential liability for breaches of our privacy or information security systems;

• recent developments in artificial intelligence, including software used to price rent in apartment communities;

• inability to address catastrophic weather, natural events, and climate change;

• inability to comply with laws and regulations, including those related to the environment, applicable to the business and any related investigations or litigation;

• other risks identified in this Report, in other SEC reports, or in other documents that we publicly disseminate.

• inability to comply with laws and regulations, including those related to the environment, applicable to our business and any related investigations or litigation;

• other risks identified in this Report, in our other SEC reports, or in other documents that we publicly disseminate.

New factors may also arise from time to time that could have an adverse effect on our business and results of operations.

Except as otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances, or changes in expectations after the date on which this Report is filed.

Except as otherwise required by law, we undertake no obligation to publicly update or revise any forward-looking statements to reflect events, circumstances, or changes in expectations after the date on which this Report is filed.

Readers also should review the risks and uncertainties detailed from time to time in filings with the SEC, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2024.

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We primarily focus on investing in markets characterized by stable and growing economies, strong employment, and an attractive quality of life that we believe, in combination, lead to higher demand for apartment homes and retention of our residents.

As of September 30, 2024, we owned interests in 70 apartment communities consisting of 12,883 apartment homes.

Property owned, as presented in our Condensed Consolidated Balance Sheets at historical cost, was $2.4 billion at September 30, 2024 and December 31, 2023.

As of March 31, 2025, we owned interests in 71 apartment communities consisting of 13,012 apartment homes.

Property owned, as presented in our Condensed Consolidated Balance Sheets at historical cost, was $2.5 billion at March 31, 2025 and December 31, 2024.

Renting apartment homes is our primary source of revenue, and our business objective is to provide great homes.

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We have paid quarterly distributions continuously since our first distribution in 1971.

Overview of the Three Months Ended September 30, 2024

• For the three months ended September 30, 2024, revenue increased by $457,000 or 0.7% to $65.0 million, compared to $64.6 million for the three months ended September 30, 2023, due to increased revenue from same-store and non-same-store communities, offset by decreased revenue from dispositions.

• Same-store revenues increased by 3.0% for the three months ended September 30, 2024, compared to the same period of the prior year, driving a 2.8% increase in same-store NOI compared to the same period of the prior year.

• During the three months ended September 30, 2024, we issued approximately 1.5 million common shares for $105.1 million, net of commissions, and an average net price of $71.12 per share under our at-the-market offering program (the “ATM Program”) and used the proceeds to redeem all outstanding Series C preferred shares for $97.0 million.

• Net loss was $0.40 per diluted share for the three months ended September 30, 2024, compared to net income of $0.41 per diluted share for the same period of the prior year.

• Non-GAAP Core Funds from Operations (“Core FFO”) applicable to common shares and Units for the three months ended September 30, 2024 increased by $245,000 or 1.1% to $22.0 million compared to $21.7 million for the three months ended September 30, 2023.

See the description of Core FFO on pages 31 and 32 and the reconciliation of net income (loss) available to common shareholders to FFO and Core FFO on page 33.

This increase was primarily due to increased NOI from same-store and non-same-store communities and interest income on a real estate related note receivable that did not exist in the same period of the prior year, offset by decreased NOI from dispositions.

Overview of the Three Months Ended March 31, 2025

• For the three months ended March 31, 2025, revenue increased by $2.6 million or 4.0% to $67.1 million, compared to $64.5 million for the three months ended March 31, 2024, due to increased revenue from same-store and non-same-store communities, offset by decreased revenue from dispositions.

• Same-store revenues increased by 3.5% for the three months ended March 31, 2025, compared to the same period of the prior year, driving a 2.1% increase in same-store NOI compared to the same period of the prior year.

• Net loss was $0.22 per diluted share for the three months ended March 31, 2025, compared to net loss of $0.37 per diluted share for the same period of the prior year.

• Non-GAAP Core Funds from Operations (“Core FFO”) per diluted share decreased 1.6% to $1.21 for the three months ended March 31, 2025, compared to $1.23 for the three months ended March 31, 2024.

See the description of Core FFO on page 25 and the reconciliation of net loss available to common shareholders to FFO and Core FFO on page 26.

This decrease was primarily due to a one-time property tax refund that occurred in the prior year that did not occur in the current year.

The drivers of these changes are discussed in more detail in the “Results of Operations” section below.

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We have provided certain information on a same-store and non-same-store basis.

Same-store apartment communities are owned or in service for substantially all of the periods being compared, and, in the case of newly-constructed properties, have achieved a target level of physical occupancy of 90%.

On the first day of each calendar year, we determine the composition of our same-

store pool for that year as well as adjust the previous year, which allows us to evaluate the performance of existing apartment communities and their contribution to net income (loss).

Same-store apartment communities are owned or stabilized for substantially all of the periods being compared and, in the case of newly-acquired or constructed communities, have achieved a target level of physical occupancy of 90%, or re-positioned communities when they have achieved stabilized operations.

We define re-positioned communities as having significant development and construction activity on existing buildings pursuant to an authorized plan, which has an impact on current operating results, occupancy and the ability to lease space with the intended result of improved community cash flow and competitive position through extensive unit and amenity upgrades.

We categorize a re-positioned community as same-store when the development and construction activity has been completed, and operations have stabilized.

This is typically reaching an overall occupancy of 90%.

Not all communities undergoing value add are considered a re-positioned community.

Non-same-store communities are communities not owned or stabilized as of the beginning of the previous year, including re-positioned communities, and excluding communities held for sale and the non-multifamily components of mixed-use properties.

On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate the performance of existing apartment communities and their contribution to net income (loss).

We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of communities are performing year-over-year.

We use this measure to assess whether or not we have been successful in increasing NOI, raising average rental revenue, renewing the leases with existing residents, controlling operating costs, and making prudent capital improvements.

The discussion below focuses on the main factors affecting real estate revenue and expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store apartment communities are generally due to the addition of those properties to the real estate portfolio, and accordingly provide less useful information for evaluating ongoing operational performance of the real estate portfolio.

For the comparison of the nine months ended September 30, 2024 and 2023, one apartment community was non-same-store.

The discussion below focuses on the main factors affecting real estate revenue and real estate expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store communities are generally due to the addition of those communities to our real estate portfolio, and accordingly provide less useful information for evaluating the ongoing operational performance of our real estate portfolio.

For the comparison of the three months ended March 31, 2025 and 2024, two apartment communities and one apartment community, respectively, were non-same-store.

Sold communities are included in “Dispositions,” for all periods presented, while “Other properties” includes non-multifamily properties and the non-multifamily components of mixed-use properties.

During the nine months ended September 30, 2024 and 2023, we disposed of two and thirteen apartment communities, respectively, consisting of 205 and 2,279 apartment homes, respectively.

During the three months ended March 31, 2024, we disposed of two apartment communities, consisting of 205 apartment homes.

Reconciliation of Operating Income to Net Operating Income (non-GAAP)

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(in thousands, except percentages)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 $ Change % Change 2024 2023 $ Change % Change

Three Months Ended March 31,

2025 2024 $ Change % Change

Operating income

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Property management expenses 2,433 2,330 103 4.4 %

Casualty (gain) loss

Casualty loss

532 820 (288) (35.1) %

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General and administrative expenses 4,997 4,623 374 8.1 %

(Gain) loss on sale of real estate and other investments

Loss on sale of real estate and other investments

— 577 (577) (100.0) %

Loss on litigation settlement — — — N/A — 2,864 (2,864) (100.0) %

Net operating income $ 40,362 $ 39,437 $ 925 2.3 %

The following consolidated results of operations, including GAAP and non-GAAP metrics, cover the three and nine months ended September 30, 2024 and 2023.

The following consolidated results of operations, including GAAP and non-GAAP metrics, cover the three months ended March 31, 2025 and 2024.

(in thousands, except percentages)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 $ Change % Change 2024 2023 $ Change % Change

Three Months Ended March 31,

2025 2024 $ Change % Change

Same-store (1)

Non-same-store 1,847 — 1,847 N/A 5,517 — 5,517 N/A

$ 64,258 $ 62,097 $ 2,161 3.5 %

Non-same-store (1)

1,986 1,242 744 *

Other properties (1)

849 638 211 33.1 %

Dispositions (1)

— 529 (529) *

Total 67,093 64,506 2,587 4.0 %

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Same-store (1)

Non-same-store 605 — 605 N/A 1,707 — 1,707 N/A

25,380 24,000 1,380 5.8 %

Non-same-store (1)

1,011 561 450 *

Other properties (1)

340 182 158 86.8 %

Dispositions (1)

— 326 (326) *

Total 26,731 25,069 1,662 6.6 %

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Same-store (1)

Non-same-store 1,242 — 1,242 N/A 3,810 — 3,810 N/A

38,878 38,097 781 2.1 %

Non-same-store (1)

975 681 294 *

Other properties (1)

509 456 53 11.6 %

Dispositions (1)

— 203 (203) *

Total $ 40,362 $ 39,437 $ 925 2.3 %

Property management expenses (2,433) (2,330) 103 4.4 %

Casualty gain (loss)

Casualty loss

(532) (820) (288) (35.1) %

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General and administrative expenses (4,997) (4,623) 374 8.1 %

Gain (loss) on sale of real estate and other investments

Loss on sale of real estate and other investments

— (577) 577 100.0 %

Loss on litigation settlement — — — — — (2,864) 2,864 (100.0) %

Interest expense (9,635) (9,207) 428 4.6 %

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708 340 368 108.2 %

NET INCOME (LOSS)

$ (4,181) $ (4,792) $ 611 (12.8) %

Dividends to Series D preferred unitholders (160) (160) — — %

Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units

Net loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units

643 1,079 (436) 40.4 %

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(36) (32) (4) 12.5 %

Net income (loss) attributable to controlling interests

Net loss attributable to controlling interests

(3,734) (3,905) 171 (4.4) %

Dividends to preferred shareholders — (1,607) 1,607 (100.0) %

Redemption of Preferred Shares (3,511) — (3,511) N/A (3,511) — (3,511) N/A

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

NET LOSS AVAILABLE TO COMMON SHAREHOLDERS

$ (3,734) $ (5,512) $ 1,778 (32.3) %

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* Not a meaningful percentage.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Weighted Average Occupancy (1)

2024 2023 2024 2023

Same-store 95.8 % 94.6 %

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Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs and other real estate companies.

Number of Apartment Homes as of September 30, 2024 as of September 30, 2023

Number of Apartment Homes as of March 31, 2025 as of March 31, 2024

Same-store 12,595 12,595

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Same-store analysis.

Revenue from same-store communities increased 3.0%, or $1.8 million, in the three months ended September 30, 2024, compared to the same period in the prior year.

The increase was attributable to 2.2% growth in average monthly revenue per occupied home for the three months ended September 30, 2024 and an increase of 0.7% in occupancy as weighted average occupancy increased from 94.6% for the three months ended September 30, 2023 to 95.3% for the three months ended September 30, 2024.

Property operating expenses, including real estate taxes, at same-store communities increased by 3.2% or $807,000 in the three months ended September 30, 2024, compared to the same period in the prior year.

At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $124,000, primarily due to increases in administrative and marketing costs and utilities, offset by decreases in compensation and repairs and maintenance.

Non-controllable expenses at same-store communities increased by $683,000, due to higher insurance premiums and real estate taxes.

Same-store NOI increased by $1.0 million to $36.8 million for the three months ended September 30, 2024 compared to $35.8 million in the same period of the prior year.

Revenue from same-store communities increased 3.3%, or $6.0 million, in the nine months ended September 30, 2024, compared to the same period in the prior year.

The increase was attributable to 3.1% growth in average monthly revenue per occupied home for the nine months ended September 30, 2024 and an increase of 0.2% in occupancy as weighted average occupancy increased from 94.9% for the nine months ended September 30, 2023 to 95.1% for the nine months ended September 30, 2024.

Property operating expenses, including real estate taxes, at same-store communities increased by 2.0% or $1.5 million in the nine months ended September 30, 2024, compared to the same period in the prior year.

At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $711,000, primarily due to increased administrative and marketing expense, compensation costs, and repairs and maintenance, offset by lower utilities costs.

Non-controllable expenses at same-store communities increased by $754,000, due to increased insurance premiums, offset by lower real estate taxes from successful real estate tax appeals.

Same-store NOI increased by $4.5 million to $112.5 million for the nine months ended September 30, 2024 compared to $108.0 million in the same period of the prior year.

Revenue from same-store communities increased 3.5%, or $2.2 million, in the three months ended March 31, 2025, compared to the same period in the prior year.

The increase was attributable to 2.2% growth in average monthly revenue per occupied home for the three months ended March 31, 2025 and an increase of 1.2% in occupancy as weighted average occupancy increased from 94.6% for the three months ended March 31, 2024 to 95.8% for the three months ended March 31, 2025.

Property operating expenses, including real estate taxes, at same-store communities increased by 5.8% or $1.4 million in the three months ended March 31, 2025, compared to the same period in the prior year.

At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $316,000, primarily due to an increase in utilities, offset by decreases in repairs and maintenance and administrative and marketing expenses.

Non-controllable expenses at same-store communities increased by $1.1 million, due to real estate taxes, including a refund resulting from a tax appeal in the first quarter of 2024 that did not occur in the first quarter of 2025.

Same-store NOI increased by $781,000 to $38.9 million for the three months ended March 31, 2025, compared to $38.1 million in the same period of the prior year.

Non-same-store analysis.

Revenue from non-same-store communities increased by $1.8 million in the three months ended September 30, 2024, compared to the same period in the prior year.

Revenue from non-same-store communities increased by $744,000 in the three months ended March 31, 2025, compared to the same period in the prior year.

Property operating expenses, including real estate taxes at non-same-store communities increased by $450,000.

NOI at non-same-store communities increased by $1.2 million for the three months ended September 30, 2024 compared to the same period of the prior year.

The increase in revenue, property operating expenses, and NOI from non-same-store communities is due to the addition of an apartment community during the fourth quarter of the prior year.

Revenue from non-same-store communities increased by $5.5 million in the nine months ended September 30, 2024, compared to the same period in the prior year.

Property operating expenses, including real estate taxes at non-same-store communities increased by $1.7 million.

NOI at non-same-store communities increased by $3.8 million for the nine months ended September 30, 2024 compared to the same period of the prior year.

The increase in revenue, property operating expenses, and NOI from non-same-store communities is due to the addition of an apartment community during the fourth quarter of the prior year.

NOI at non-same-store communities increased by $294,000 for the three months ended March 31, 2025, compared to the same period of the prior year.

The increase in revenue, property operating expenses, and NOI from non-same-store communities is due to the addition of an apartment community during the fourth quarter of the prior year, offset by a $104,000 decrease in NOI from a community going through repositioning with lower occupancy resulting from full unit upgrades requiring relocation of residents.

Other properties and dispositions analysis.

Revenue from dispositions decreased by $3.1 million while revenue from other properties decreased by $108,000 in the three months ended September 30, 2024, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, at other properties decreased by $42,000 while such expenses decreased by $1.5 million for dispositions, compared to the same period in the prior year.

NOI at other properties decreased by $66,000 and NOI on dispositions decreased $1.6 million, compared to the same period in the prior year.

We disposed of four apartment communities and associated commercial space in the third quarter of 2023 and two apartment communities in the first quarter of 2024.

Revenue from dispositions decreased by $13.9 million while revenue from other properties decreased by $231,000 in the nine months ended September 30, 2024, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, at other properties increased by $101,000 while such expenses decreased by $7.1 million for dispositions, compared to the same period in the prior year.

NOI at other properties decreased by $332,000 and NOI on dispositions decreased $6.9 million, compared to the same period in the prior year.

We disposed of nine apartment communities in the first quarter of 2023, an additional four apartment communities and associated commercial space in the third quarter of 2023, and two apartment communities in the first quarter of 2024.

Revenue from other properties, which encompasses our commercial and mixed-use activity, increased by $211,000 while revenue from dispositions decreased by $529,000 in the three months ended March 31, 2025, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, at other properties increased by $158,000 while such expenses decreased by $326,000 for dispositions, compared to the same period in the prior year.

NOI at other properties increased by $53,000 and NOI on dispositions decreased $203,000, compared to the same period in the prior year.

We disposed of two apartment communities in the first quarter of 2024.

Property management expenses .

Property management expense, consisting of property management overhead and property management fees paid to third parties was comparable at $2.2 million in the three months ended September 30, 2024 and 2023.

Property management expense, consisting of property management overhead and property management fees paid to third parties decreased by 3.1% to $6.8 million in the nine months ended September 30, 2024, compared to $7.0 million in the same period of the prior year.

The decrease is primarily due to fewer properties and a lower number of apartment homes due to dispositions.

Casualty gain (loss).

Casualty gain (loss) was a gain of $412,000 in the three months ended September 30, 2024, compared to a loss of $937,000 in the same period of the prior year.

The decrease is primarily due to increased claim activity with losses in excess of our deductibles resulting in higher estimated recoveries in the current period compared to prior year combined with revised loss estimates from previous casualty events.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.

Casualty loss was $918,000 in the nine months ended September 30, 2024, compared to $1.2 million in the same period of the prior year.

The decrease is primarily due to increased claim activity with losses in excess of our deductibles resulting in estimated recoveries in the current period compared to prior year combined with revised loss estimates from previous casualty events.

Property management expense, consisting of property management overhead and property management fees paid to third parties, increased by 4.4% to $2.4 million in the three months ended March 31, 2025, compared to $2.3 million in the same period of the prior year.

The increase was primarily due to higher compensation costs resulting from new positions and increased pay rates compared to the same period of the prior year.

Casualty loss.

Casualty loss was $532,000 in the three months ended March 31, 2025, compared to $820,000 in the same period of the prior year.

The decrease is primarily due to less claim activity in the current period compared to the same period of the prior year.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.

Depreciation and amortization.

Depreciation and amortization increased by 5.6% to $26.1 million in the three months ended September 30, 2024, compared to $24.7 million in the same period of the prior year, primarily attributable to an increase in depreciation on same-store and non-same-store apartment communities driven by the addition of an apartment community in the fourth quarter of the prior year along with value add and acquisition capital projects, offset by a decrease in depreciation from sold properties.

Depreciation and amortization increased by 5.0% to $78.8 million in the nine months ended September 30, 2024, compared to $75.1 million in the same period of the prior year, primarily attributable to an increase in depreciation on same-store and non-same-store apartment communities driven by the addition of an apartment community in the fourth quarter of the prior year with in-place lease amortization along with value add and acquisition capital projects;

offset by a decrease in depreciation from sold properties.

Depreciation and amortization increased by 2.4% to $27.7 million in the three months ended March 31, 2025, compared to $27.0 million in the same period of the prior year, primarily attributable to an increase in depreciation on apartment communities driven by the addition of an apartment community in the fourth quarter of the prior year along with value add and acquisition capital projects, offset by a decrease in amortization of in-place leases and a decrease in depreciation from sold properties.

General and administrative expenses.

General and administrative expenses increased by $270,000 to $4.1 million in the three months ended September 30, 2024, compared to $3.8 million in the same period of the prior year.

Compensation costs, legal and consulting fees increased in the three months ended September 30, 2024 compared to the same period of the prior year.

General and administrative expenses decreased by 17.7% to $12.9 million in the nine months ended September 30, 2024, compared to $15.7 million in the same period of the prior year, primarily attributable to $3.2 million in severance and related costs from the CEO transition in the prior year that did not occur in the nine months ended September 30, 2024 and legal expenses in the nine months ended September 30, 2024 compared to the same period of the prior year due to a litigation settlement in the prior year that did not occur in the current quarter, offset by higher incentive compensation costs.

Gain (loss) on sale of real estate and other investments.

There was no gain (loss) on sale of real estate and other investments in the three months ended September 30, 2024, compared to a gain of $11.2 million in the same period of the prior year.

General and administrative expenses increased by $374,000 to $5.0 million in the three months ended March 31, 2025, compared to $4.6 million in the same period of the prior year.

Compensation costs from higher share-based compensation and consulting fees increased in the three months ended March 31, 2025, compared to the same period of the prior year.

Loss on sale of real estate and other investments.

There was no gain or loss on the sale of real estate and other investments in the three months ended March 31, 2025, compared to a loss of $577,000 in the same period of the prior year.

Refer to Note 8 in the Condensed Consolidated Financial Statements for more information.

Gain (loss) on sale of real estate and other investments decreased to a loss of $577,000 in the nine months ended September 30, 2024, compared to a gain of $71.3 million in the same period of the prior year.

The decrease was primarily due to the sale of two apartment communities in the current year for a loss compared to the sale of 13 apartment communities and associated commercial space for a gain in the prior year.

Refer to Note 8 in the Notes to the Condensed Consolidated Financial Statements.

Loss on Litigation Settlement.

There was no loss on litigation settlement in the nine months ended September 30, 2024, compared to a $2.9 million loss on litigation settlement for the nine months ended September 30, 2023 due to a trial judgment against Centerspace for property damage and monetary losses to a neighboring property in the prior year that did not occur in the current year.

Refer to Note 10 in the Condensed Consolidated Financial Statements.

Interest expense.

Interest expense increased by 4.6% to $8.9 million in the three months ended September 30, 2024, compared to $8.6 million in the same period of the prior year, primarily due to higher mortgage interest and amortization of debt discount resulting from the assumption of a mortgage in connection with an acquisition in the fourth quarter of the prior year, offset by lower interest on our line of credit due to lower average outstanding balance.

Interest expense was comparable at $27.5 million in the nine months ended September 30, 2024 and 2023.

Interest expense increased by 4.6% to $9.6 million in the three months ended March 31, 2025, compared to $9.2 million in the same period of the prior year, primarily due to higher mortgage interest and amortization of debt discount resulting from the assumption of a mortgage in connection with an acquisition in the fourth quarter of the prior year.

Interest and other income.

Interest and other income increased to $645,000 in the three months ended September 30, 2024, compared to $330,000 in the same period of the prior year.

The increase was primarily due to interest income on a real estate related note receivable in the current period that did not exist in the same period of the prior year.

Interest and other income increased to $1.5 million in the nine months ended September 30, 2024, compared to $674,000 in the same period of the prior year.

The increase was primarily due to interest income on a real estate related note receivable in the current period that did not exist in the same period of the prior year, offset by a decrease from interest received on escrow funds in the prior year that did not occur in the nine months ended September 30, 2024.

Net income (loss) available to common shareholders.

Net loss available to common shareholders decreased to $6.2 million for the three months ended September 30, 2024, compared to a net income of $6.2 million in the three months ended September 30, 2023.

Net loss available to common shareholders decreased to $14.6 million for the nine months ended September 30, 2024, compared to a net income of $44.7 million in the nine months ended September 30, 2023.

Interest and other income increased to $708,000 in the three months ended March 31, 2025, compared to $340,000 in the same period of the prior year.

The increase was primarily due to interest income on a real estate related note receivable in the current period that was not fully funded by the end of first quarter of 2024.

Net loss available to common shareholders.

Net loss available to common shareholders was $3.7 million for the three months ended March 31, 2025, compared to a net loss of $5.5 million in the three months ended March 31, 2024.

Funds from Operations and Core Funds from Operations .

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• gains and losses from the sale of certain real estate assets;

• gains and losses from change in control;

• impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity;

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Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies.

FFO should not be considered as an alternative to net income (loss) or any other GAAP measurement of

performance, but rather should be considered as an additional, supplemental measure.

FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash flow needs, including our ability to service indebtedness or make distributions to shareholders.

FFO should not be considered as an alternative to net income (loss) or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure.

FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash needs, including our ability to service indebtedness or make distributions to shareholders.

Core Funds from Operations (“Core FFO”), a non-GAAP measure, is FFO adjusted for non-routine items or items not considered core to business operations.

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Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.

Net loss available to common shareholders for the three months ended September 30, 2024, decreased to $6.2 million compared to net income of $6.2 million for the same period of the prior year.

FFO applicable to common shares and Units for the three months ended September 30, 2024, decreased to $18.7 million compared to $20.8 million for the comparable period of the prior year, representing a decrease of 9.8%.

This FFO decrease was primarily due to the redemption of our Series C preferred shares during the current period, increased general and administrative expense and interest expense, and decreased NOI from dispositions, offset by increased NOI from same-store communities and non-same-store communities and casualty gain activity.

Net loss available to common shareholders for the nine months ended September 30, 2024, decreased to $14.6 million compared to net income of $44.7 million for the same period of the prior year.

FFO applicable to common shares and Units for the nine months ended September 30, 2024, increased to $61.7 million compared to $57.2 million for the comparable period of the prior year, representing an increase of 8.0%.

This FFO increase was primarily due to increased NOI from same-store communities and non-same-store communities and increased interest on a new real estate related note receivable, decreases in general and administrative expense related to the departure of Mark Decker, former CEO, and a litigation settlement in the prior year that did not occur in the current year, offset by decreased NOI from dispositions and the redemption of our Series C preferred shares.

Net loss available to common shareholders for the three months ended March 31, 2025, was $3.7 million compared to net loss of $5.5 million for the same period of the prior year.

FFO applicable to common shares and Units for the three months ended March 31, 2025, increased to $23.2 million compared to $20.9 million for the comparable period of the prior year, representing an increase of 10.9%.

This FFO increase was primarily due to dividends to preferred shareholders that occurred in the prior year that did not occur in the same period of the current year along with increased NOI from same-store communities and non-same-store communities, lower casualty loss activity, and an increase in interest in other income, offset by decreased NOI from dispositions and increased general and administrative expense and interest expense.

Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds from Operations and Core Funds from Operations

(in thousands, except per share and unit amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Funds from Operations:

Net income (loss) available to common shareholders

Net loss available to common shareholders

$ (3,734) $ (5,512)

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Less depreciation – partially owned entities (22) (24)

(Gain) loss on sale of real estate and other assets

— (11,235) 577 (71,323)

Loss on sale of real estate

FFO applicable to common shares and Units $ 23,172 $ 20,889

Adjustments to Core FFO:

Non-cash casualty (recovery) loss

(632) 854 261 815

Non-cash casualty loss

Interest rate swap amortization 175 197

Amortization of assumed debt 417 263

Severance and transition related costs — — — 3,180

Loss on litigation settlement and associated trial costs (1)

— 34 37 3,235

Redemption of preferred shares 3,511 — 3,511 —

Other miscellaneous items (1)

(61) (129) (72) (97)

Core FFO applicable to common shares and Units $ 23,979 $ 22,046

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Per Share Data

Net income (loss) per common share - diluted (3)

Net loss per common share - basic and diluted (2)

$ (0.22) $ (0.37)

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Core FFO per share and Unit - diluted $ 1.21 $ 1.23

Weighted average shares - basic 15,528 14,989 15,143 14,988

Effect of redeemable operating partnership Units for FFO and Core FFO

Weighted average shares - basic and diluted for net loss

16,727 14,922

Effect of redeemable operating partnership Units for FFO and Core FFO

Effect of Series D preferred units for FFO and Core FFO

228 228 228 228

Effect of Series E preferred units for FFO and Core FFO

2,053 2,093 2,064 2,105

Effect of dilutive restricted stock units and stock options for FFO and Core FFO

Weighted average shares and Units for FFO and Core FFO - diluted 18,676 18,246 18,303 18,287

(1) Consists of $37,000 in associated trial costs related to the litigation matter for the nine months ended September 30, 2024.

Consists of a $2.9 million loss on litigation settlement for a trial judgment entered against the Company and $371,000 in associated trial costs related to the litigation matter for the nine months ended September 30, 2023

Weighted average shares and Units for FFO and CFFO - diluted 19,876 18,102

(1) Consists of (gain) loss on investments and one-time professional fees.

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Acquisitions and Dispositions

During the nine months ended September 30, 2024, we disposed of two apartment communities located in Minnesota in two transactions for an aggregate sales price of $19.0 million.

We had no acquisitions during the nine months ended September 30, 2024.

We had no acquisitions or dispositions during the three months ended March 31, 2025.

Distributions Declared

Distributions of $0.75 and $0.73 per common share and Unit were declared during the three months ended September 30, 2024 and 2023, respectively.

Distributions of $2.25 and $2.19 were declared during the nine months ended September 30, 2024 and 2023, respectively.

Distributions of $0.4140625 per Series C preferred share were declared during the three months ended September 30, 2024 and 2023 and $1.2421875 per Series C preferred share for the nine months ended September 30, 2024 and 2023.

Distributions of $0.9655 per Series D preferred unit were declared during the three months ended September 30, 2024 and 2023 and $2.8965 per Series D preferred unit for the nine months ended September 30, 2024 and 2023.

Distributions of $0.96875 per Series E preferred unit were declared during the three months ended September 30, 2024 and 2023 and $2.90625 per Series E preferred unit for the nine months ended September 30, 2024 and 2023.

Distributions of $0.77 and $0.75 per common share and Unit were declared during the three months ended March 31, 2025 and 2024, respectively.

Distributions of $0.4140625 per Series C preferred share were declared during the three months ended March 31, 2024.

Distributions of $0.9655 per Series D preferred unit were declared during the three months ended March 31, 2025 and 2024.

Distributions of $0.96875 per Series E preferred unit were declared during the three months ended March 31, 2025 and 2024.

Liquidity and Capital Resources

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Our primary sources of liquidity are cash and cash equivalents on hand and cash flows generated from operations.

Other sources include availability under the unsecured lines of credit, proceeds from property dispositions, including restricted cash related to net tax deferred proceeds, offerings of preferred and common shares, including offerings of common shares under the ATM Program, and long-term unsecured debt and secured mortgages.

Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to communities, distributions to the holders of preferred shares, common shares, Series D and Series E preferred units, and Units, value-add redevelopment, common and preferred share buybacks and Unit redemptions, funding of mezzanine loans or real estate related notes, and acquisitions of additional communities.

Although we believe that our financial condition and liquidity are sufficient to meet our reasonably anticipated liquidity demands, factors that could impact our future liquidity include, but are not limited to, volatility in capital and credit markets, interest rate increases, the ability to access capital and credit markets, the minimum REIT dividend requirements, and our ability to complete asset purchases, sales, or developments.

As of September 30, 2024, we had total liquidity of approximately $235.5 million, which included $221.0 million available on the lines of credit based on the value of unencumbered properties and $14.5 million of cash and cash equivalents.

Other sources include availability under our unsecured lines of credit, proceeds from property dispositions, including restricted cash related to net tax deferred proceeds, offerings of preferred and common shares under our shelf registration statement, including offerings of common shares under our ATM Program, and long-term unsecured debt and secured mortgages.

Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to our communities, distributions to the holders of our preferred shares, common shares, Series D and Series E preferred units, and Units, value-add redevelopment, common and preferred share buybacks and Unit redemptions, funding of mezzanine loans or real estate related notes, and acquisitions of additional communities.

Although we believe that our financial condition and liquidity are sufficient to meet our reasonably anticipated liquidity demands, factors that could increase or decrease our future liquidity include, but are not limited to, changes in interest rates or sources of financing, general volatility in capital and credit markets, changes in minimum REIT dividend requirements, and our ability to access the capital markets on favorable terms, or at all.

As a result of the foregoing conditions or general economic conditions in our markets that affect our ability to attract and retain residents, we may not generate sufficient cash flow from operations.

If we are unable to obtain capital from other sources, we may not be able to pay the distribution required to maintain our status as a REIT, make required principal and interest payments, make strategic acquisitions or make necessary routine capital improvements or undertake value add renovation opportunities with respect to our existing portfolio of operating assets.

As of March 31, 2025, we had total liquidity of approximately $223.2 million, which included $211.3 million available on the lines of credit based on the value of unencumbered properties and $11.9 million of cash and cash equivalents.

As of December 31, 2024, we had total liquidity of approximately $224.6 million, which included $212.6 million available on the lines of credit based on the value of unencumbered properties and $12.0 million of cash and cash equivalents.

As of September 30, 2024, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties, (the “Unsecured Credit Facility”).

As of September 30, 2024, there was $39.0 million outstanding on this line of credit and additional borrowing availability was $211.0 million.

At December 31, 2023, the line of credit borrowing capacity was $250.0 million based on the value of unencumbered properties, of which $30.0 million was drawn on the line.

As of March 31, 2025, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties, (the “Unsecured Credit Facility” or “Facility”).

As of March 31, 2025, there was $46.0 million outstanding on this line of credit and additional borrowing availability was $204.0 million.

At December 31, 2024, the line of credit borrowing capacity was $250.0 million based on the value of unencumbered properties, of which $44.0 million was outstanding and additional borrowing availability was $206.0 million.

The line of credit is utilized to refinance existing indebtedness, to finance property acquisitions, to finance capital expenditures, and for general corporate purposes.

On July 26, 2024, the Unsecured Credit Facility was amended to extend maturity and to modify the leverage-based margin ratios applicable to borrowings.

As amended, this credit facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods and has an accordion option to increase borrowing capacity up to $400.0 million.

As amended, the interest rates on the line of credit are based on the consolidated leverage ratio, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 20-80 basis points, or the daily or term Secured Overnight Financing Rate (“SOFR”), plus a margin that ranges from 120-180 basis points, with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.

In September 2024, we entered into a line of credit agreement with borrowing capacity of up to $10.0 million and pricing based on SOFR.

As amended, this Facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods and has an accordion option to increase borrowing capacity up to $400.0 million.

As amended, the interest rates on the line of credit are based on the consolidated leverage ratio, at our option, on either the lender’s base rate plus a margin, ranging from 20-80 basis points, or the daily or term Secured Overnight Financing Rate (“SOFR”), plus a margin that ranges from 120-180 basis points, with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.

In September 2024, we entered into an operating line of credit agreement with US Bank, N.A.

which has a borrowing capacity of up to $10.0 million and pricing based on SOFR.

This operating line of credit terminates in September 2025 and is designed to enhance treasury management activities and more effectively manage cash balances.

We had a $6.0 million operating line of credit with pricing based on SOFR that matured on August 31, 2024.

As of September 30, 2024 and December 31, 2023, there was no outstanding balance on these lines of credit.

As of March 31, 2025 and December 31, 2024, there was $2.7 million and $3.4 million outstanding on this line of credit, respectively.

We had a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc.

(collectively, “PGIM”) under which we issued $175.0 million in unsecured senior promissory notes (“Unsecured Shelf Notes”).

(collectively, “PGIM”) under which we have issued $175.0 million in unsecured senior promissory notes (“Unsecured Shelf Notes”).

On October 28, 2024, the shelf agreement was amended to extend the period of time during which we may borrow money to October 2027 and to increase the borrowing capacity to $300.0 million.

We also had a separate private note purchase agreement with PGIM and certain other lenders for the issuance of $125.0 million of senior unsecured promissory notes (“Unsecured Club Notes”, and collectively with the Unsecured Shelf Notes, the “unsecured senior notes”), of which all $125.0 million was issued in September 2021.

The following table shows the notes issued under both agreements as of September 30, 2024 and December 31, 2023.

million was issued in September 2021.

The following table shows the notes issued under both agreements as of March 31, 2025 and December 31, 2024.

(in thousands)

Amount Maturity Date Interest Rate

Amount Maturity Date Fixed Interest Rate

Series A $ 75,000 September 13, 2029 3.84 %

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The FMCF is currently secured by mortgages on 11 apartment communities.

The notes are interest-only, have varying maturity dates of 7, 10, and 12 years, and a blended, weighted average interest rate of 2.78%.

As of September 30, 2024 and December 31, 2023, the FMCF had a balance of $198.9 million.

The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, and a blended, weighted average fixed interest rate of 2.78%.

As of March 31, 2025 and December 31, 2024, the FMCF had a balance of $198.9 million.

The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.

Mortgage loan indebtedness, excluding the FMCF and unamortized premiums and discounts, was $387.3 million and $392.3 million at September 30, 2024 and December 31, 2023, respectively, on 14 apartment communities.

Mortgage loan indebtedness, excluding unamortized premiums and discounts and the FMCF, was $418.5 million and $420.4 million at March 31, 2025 and December 31, 2024, respectively, on 15 apartment communities.

All of our mortgage debt is collateralized by apartment communities and is non-recourse at fixed rates of interest, with staggered maturities.

This decreases the exposure to changes in interest rates, which reduces the effect of interest rate fluctuations on our results of operations and cash flows.

As of September 30, 2024 and December 31, 2023, the weighted average interest rate on mortgage debt was 4.05%.

This reduces the exposure to changes in interest rates, which minimizes the effect of interest rate fluctuations on our results of operations and cash flows.

As of March 31, 2025 and December 31, 2024, the weighted average interest rate on mortgage debt was 4.02%.

Further information can be found in Note 5 - Debt in the Condensed Consolidated notes.

On August 21, 2024, our Board of Trustees authorized the redemption of all of our outstanding Series C preferred shares.

On August 30, 2024, we delivered notice to holders of the Series C preferred shares that we intended to redeem all 3.9 million Series C preferred shares at a redemption price equal to $25 per share plus any accrued but unpaid distributions per share up to and including the redemption date of September 30, 2024.

On September 30, 2024, we completed the redemption of the Series C preferred shares for an aggregate redemption price of $97.0 million, excluding distributions, and such shares are no longer deemed outstanding as of such date and were delisted from trading on the NYSE.

We amended our equity distribution agreement in connection with the ATM Program through which we may offer and sell common shares in amounts and at times determined by management.

We amended our equity distribution agreement in connection with the at the market offering (“ATM Program”) through which we may offer and sell common shares in amounts and at times determined by management.

The amendment increased the maximum aggregate offering price of common shares available for offer and sale thereunder from $250.0 million to $500.0 million.

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The proceeds from the sale of common shares under the ATM Program may be used for general corporate purposes, including the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness.

The table below provides details on the shares sold during the three and nine months ended September 30, 2024.

As of September 30, 2024, common shares having an aggregate offering price of up to $262.9 million remained available under the ATM Program.

Further information can be found in Note 4 - Equity and Mezzanine Equity in the Condensed Consolidated notes.

(in thousands, except per share amounts)

Three Months Ended September 30, Number of Common Shares

Net Consideration (1)

Average Net Price Per Share

2024 1,477 $ 105,052 $ 71.12

Nine Months Ended September 30,

2024 1,587 $ 112,613 $ 71.66

(1) Includes 869,000 shares sold on a forward basis for $62.7 million which were physically settled during the three months ended September 30, 2024.

(2) Total consideration is net of $1.0 million and $1.1 million in commissions during the three and nine months ended September 30, 2024, respectively.

We have a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $50.0 million of our outstanding common shares.

Under the Share Repurchase Program, we are authorized to repurchase common shares through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities and Exchange Act of 1934, as amended.

The repurchases have no time limit and may be suspended or discontinued completely at any time.

The specific timing and amount of repurchases will vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors.

There were no shares repurchased under this program during the three months ended September 30, 2024 and 2023.

The table below provides details on the common shares repurchased under this program during the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, we had $4.7 million remaining authorized for purchase under this program.

There were no sales of common shares under the ATM program during the three months ended March 31, 2025.

As of March 31, 2025, common shares having an aggregate offering price of up to $262.9 million remained available under the ATM Program.

Further information can be found in Note 4 - Mezzanine Equity and Equity in the Condensed Consolidated notes.

We had a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $50.0 million of our outstanding common shares which expired on March 10, 2025.

Under the Share Repurchase Program, we were authorized to repurchase common shares through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities and Exchange Act of 1934, as amended.

The specific timing and amount of repurchases varied based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors.

There were no common shares repurchased during the three months ended March 31, 2025.

The table below provides details on the common shares repurchased under this program during the three months ended March 31, 2024.

(in thousands, except per share amounts)

Nine Months Ended September 30, Number of Common Shares Aggregate Cost (1)

Three Months Ended March 31, Number of Common Shares Aggregate Cost (1)

Average Price Per Share (1)

2024 88 $ 4,703 $ 53.62

2023 124 $ 6,718 $ 54.19

(1) Amount includes commissions.

We had 1.6 million Series E preferred units outstanding on March 31, 2025 and December 31, 2024.

Each Series E preferred unit has a par value of $100.

The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year.

Each Series E preferred unit is convertible, at the holder’s option, into 1.20482 Units.

The Series E preferred units have an aggregate liquidation preference of $158.2 million.

The holders of the Series E preferred units do not have voting rights.

Changes in Cash, Cash Equivalents, and Restricted Cash

As of September 30, 2024, we had cash and cash equivalents of $14.5 million and restricted cash consisting of $2.8 million of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

As of March 31, 2025, we had cash and cash equivalents of $11.9 million and restricted cash consisting of $6.1 million of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

As of December 31, 2024, we had cash and cash equivalents of $12.0 million and restricted cash consisting of $1.1 million of escrows held by lenders for real estate taxes, insurance, and capital additions.

The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash which are presented in the Condensed Consolidated Statements of Cash Flows in Part I, Item 1 above.

In addition to cash flow from operations, during the nine months ended September 30, 2024, we generated capital from various activities, including:

• Receiving $18.3 million in net proceeds from the sale of two apartment communities;

In addition to cash flows from operations, during the three months ended March 31, 2025, we generated capital from various activities, including:

• Receiving $1.4 million in net draws on the lines of credit.

• Receiving $112.2 million in net proceeds from the issuance of common shares;

• Receiving $1.9 million in net insurance proceeds primarily due to one large casualty event that was settled.

During the nine months ended September 30, 2024, we used capital for various activities, including:

• Redeeming all of our outstanding Series C preferred shares for $97.0 million;

• Funding of mezzanine loan of $13.6 million;

• Repaying $5.0 million of mortgage principal;

• Paying distributions on common shares, Series E preferred units, Units, and Series C preferred shares of $45.1 million;

• Repurchasing 87,722 common shares for $4.7 million;

During the three months ended March 31, 2025, we used capital for various activities, including:

• Funding capital improvements for apartment communities of approximately $5.0 million;

• Repaying $1.9 million of mortgage principal;

• Paying distributions on common shares, Series E preferred units, and Units of $14.7 million.

Contractual Obligations and Other Commitments

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There have been no material changes to our contractual obligations and other commitments since that report was filed.

Inflation, Supply Chain, and Capital Markets

Inflation and Supply Chain

Our apartment leases generally have terms of one year or less, which means that, in an inflationary environment, we would have the ability, subject to market conditions, to increase rents upon the commencement of new leases or renewal of existing leases to manage the impact of inflation on our business.

However, the cost to operate and maintain communities could increase

at a rate greater than our ability to increase rents, which could adversely affect our results of operations.

However, the cost to operate and maintain communities could increase at a rate greater than our ability to increase rents, which could adversely affect our results of operations.

High inflation could have a negative impact on our residents and their ability to absorb rent increases.

We also continue to monitor pressures surrounding supply chain challenges.

Supply chain and inflationary pressures are likely to result in increasing operating expenses, specifically, increases in energy costs, labor related costs, and construction materials for repairs and maintenance or capital projects.

Supply chain and inflationary pressures are likely to result in increased operating expenses, specifically, increases in energy costs, labor related costs, and construction materials for repairs and maintenance or capital projects.

A worsening of the current environment could contribute to delays in obtaining construction materials and result in higher than anticipated costs, which could prevent us from obtaining expected returns on value add projects.

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Off-Balance Sheet Arrangements

As of September 30, 2024, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

As of March 31, 2025, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Critical Accounting Policies

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A summary of critical accounting policies is included in our Form 10-K for the year ended December 31, 2024, filed with the SEC on February 18, 2025, under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this report for additional information.

There have been no other significant changes to the critical accounting policies during the nine months ended September 30, 2024.

There have been no other significant changes to the critical accounting policies during the three months ended March 31, 2025.

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