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Item 7. Management’s Discussion and Analysis

2026-02-17 compared with 2025-02-18 · 117 added, 111 removed, 319 unchanged (42% of the section changed)

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

See “Special Note Regarding Forward-Looking Statements.”

Executive Summary

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

As of December 31, 2024, we owned interests in 71 apartment communities consisting of 13,012 homes as detailed in Item 2 - Properties.

Property owned, as presented in the Consolidated Balance Sheets, was $2.5 billion at December 31, 2024, compared to $2.4 billion at December 31, 2023.

As of December 31, 2025, we owned 61 apartment communities consisting of 12,262 homes as detailed in Item 2 - Properties.

Property owned, as presented in the Consolidated Balance Sheets, was $2.5 billion at December 31, 2025 and 2024.

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

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For the year ended December 31, 2025, our highlights included the following:

• Net Loss was $1.27 per diluted share for the year ended December 31, 2024, compared to Net Income of $2.32 per diluted share for the year ended December 31, 2023;

• Core funds from operations (“CFFO”) per diluted share, a non-GAAP measure, increased 2.1% (refer to reconciliations of Funds from Operations and Core Funds from Operations beginning on page 32 for additional detail) to $4.88 from $4.78;

• Operating income decreased to $20.5 million for the year ended December 31, 2024 compared to $84.5 million for the prior year;

• Net Income was $1.02 per diluted share for the year ended December 31, 2025, compared to Net Loss of $1.27 per diluted share for the year ended December 31, 2024;

• Core funds from operations (“CFFO”) per diluted share, a non-GAAP measure, increased 1.0% to $4.93 from $4.88 (refer to reconciliations of Funds from Operations and Core Funds from Operations beginning on page 32 for additional detail);

• Operating income increased to $64.5 million for the year ended December 31, 2025 compared to $20.5 million for the prior year;

• Same-store year-over-year net operating income growth of 3.5% driven by same-store revenue growth of 2.4% (refer to Reconciliation of Operating Income (Loss) to Net Operating Income beginning on page 29 for additional detail).

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During the year ended December 31, 2025, we completed the following transactions in furtherance of our strategic plan:

• Disposed of two non-core apartment communities for an aggregate sales price of $19.0 million;

• Acquired The Lydian, a 129 home apartment community in Denver, Colorado for an aggregate purchase price of $54 million.

The acquisition was financed through the assumption of mortgage debt, issuance of common operating partnership units, and cash.

• Disposed of twelve non-core apartment communities throughout Minnesota and one corporate office building for an aggregate sales price of $215.5 million;

• Acquired Railway Flats in Loveland, Colorado, an apartment community consisting of 420 homes for an aggregate purchase price of $132.2 million, which included the assumption of $76.5 million in mortgage debt;

• Acquired Sugarmont, our first apartment community in Salt Lake City, Utah, consisting of 341 homes for an aggregate purchase price of $149.0 million.

Financing Transactions.

During the year ended December 31, 2025, we completed the following financing transactions:

• Issued approximately 1.6 million common shares for net consideration of $112.6 million and an average price of $71.66 per share under our ATM Program, compared to 87,722 shares repurchased at an average price of $53.62 per share, excluding commissions.

We used the issuance proceeds to redeem all of the outstanding Series C preferred shares for $97.0 million.

• Repurchased 62,973 shares at an average price of $54.86 per share, including commissions.

We intend to continue our focus on maximizing the financial performance of the communities in our existing portfolio.

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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.

Management believes 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.

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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 years ended December 31, 2024 and 2023, 69 apartment communities were classified as same-store and two apartment communities were non-same-store.

For the comparison of the years ended December 31, 2025 and 2024, 57 apartment communities were classified as same-store and four apartment communities and two apartment communities, respectively, were non-same-store.

See Item 2 - Properties for the list of communities classified as same-store and 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 years ended December 31, 2024 and 2023, we disposed of two and thirteen apartment communities, respectively, consisting of 205 and 2,279 apartment homes, respectively.

During the years ended December 31, 2025 and 2024, we disposed of twelve and two apartment communities, respectively, consisting of 1,511 and 205 apartment homes, respectively.

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

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Depreciation and amortization 113,231 106,450 6,781 6.4 %

Impairment of real estate investments — 5,218 (5,218) (100.0) %

Impairment of real estate investments 37,719 — 37,719 N/A

General and administrative expenses 20,918 17,802 3,116 17.5 %

(Gain) loss on sale of real estate and other investments (79,470) 577 (80,047) *

Loss on litigation settlement — 3,864 (3,864) (100.0) %

Net operating income $ 167,389 $ 157,739 $ 9,650 6.1 %

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Depreciation and amortization (113,231) (106,450) 6,781 6.4 %

Impairment of real estate investments — (5,218) (5,218) (100.0) %

Impairment of real estate investments (37,719) — 37,719 N/A

General and administrative expenses (20,918) (17,802) 3,116 17.5 %

Gain (loss) on sale of real estate and other investments 79,470 (577) 80,047 *

Loss on litigation settlement — (3,864) (3,864) (100.0) %

Interest expense (44,884) (37,280) 7,604 20.4 %

Loss on extinguishment of debt (98) — 98 N/A

Interest and other income 3,409 2,613 796 30.5 %

NET INCOME (LOSS) $ 22,964 $ (14,192) $ 37,156 261.8 %

Dividends to Series D preferred unitholders (640) (640) — —

Distributions to Series D preferred unitholders (486) (640) 154 (24.1)

Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units (2,969) 3,635 (6,604) (181.7) %

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Net income (loss) attributable to controlling interests 17,101 (11,328) 28,429 251.0 %

Dividends to preferred shareholders (4,821) (6,428) 1,607 (25.0) %

Redemption of preferred shares (3,511) — (3,511) N/A

Distributions to Series C preferred shareholders — (4,821) 4,821 (100.0) %

Redemption of Series C preferred shares — (3,511) 3,511 (100.0) %

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 17,101 $ (19,660) $ 36,761 187.0 %

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We believe that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate.

Weighted average occupancy may not

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

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

Number of Homes 2025 2024

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Approximately 2.0% of the increase was due to higher average monthly revenue per occupied home and 0.3% from an increase in occupancy as weighted average occupancy increased from 95.4% to 95.7% for the years ended December 31, 2024 and 2025, respectively.

Property operating expenses at same-store communities increased by 2.7% or $2.6 million in the year ended December 31, 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 $2.1 million, primarily due to increased repairs and maintenance, technology costs related to smart home technology, and compensation costs, offset by decreased utilities and turnover costs.

Non-controllable expenses at same-store communities increased by $438,000 primarily due to insurance premiums and deductibles on claims offset by a decrease in real estate taxes resulting from successful real estate tax appeals.

Property operating expenses at same-store communities increased by 0.6% or $541,000 in the year ended December 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 $417,000, primarily due to increased utilities, turnover expense, and compensation costs, offset by decreased repairs and maintenance and marketing expense.

Non-controllable expenses at same-store communities increased by $124,000 primarily due to an increase in real estate taxes primarily due to fewer tax appeal refunds in 2025 compared to the prior year, offset by a decrease in insurance premiums.

Same-store NOI increased by $4.8 million to $143.7 million for the year ended December 31, 2025 compared to $138.9 million in the same period in the prior year.

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Net operating income from non-same-store communities increased by $6.7 million.

The increase in revenue, property operating expenses, and NOI from non-same-store communities is primarily due to the addition of apartment communities during the fourth quarter of 2023 and 2024.

Other and dispositions analysis.

Revenue from other, which encompasses our commercial and mixed use activity, decreased by 0.4% or $11,000 while revenue from dispositions decreased by $14.7 million.

Property operating expenses from other increased by 21.5% or $171,000 while property operating expenses from dispositions decreased by $7.5 million due to sold properties.

We disposed of two apartment communities during the year ended December 31, 2024 and 13 apartment communities and associated commercial space during the year ended December 31, 2023.

The increase in revenue, property operating expenses, and NOI from non-same-store communities is primarily due to the addition of three apartment communities, one during the fourth quarter of 2024, one during the second quarter of 2025, and one during the third quarter of 2025, offset by a $978,000 decrease in NOI from repositioning a community by making full unit upgrades, resulting in lower occupancy, and requiring relocation of residents.

Other properties and dispositions analysis.

Revenue from other properties, which encompasses our commercial and mixed use activity, increased by 40.8% or $1.0 million while revenue from dispositions decreased by $5.1 million.

Property operating expenses from other properties increased by 17.5% or $164,000 while property operating expenses from dispositions decreased by $2.4 million due to sold properties.

The increase in NOI on other properties is driven by the acquisition of an apartment community with commercial space during the fourth quarter of 2024.

We disposed of 12 apartment communities during the year ended December 31, 2025 and two apartment communities during the year ended December 31, 2024, resulting in $2.8 million less NOI over the prior year.

Property management expense.

Property management expense, consisting of property management overhead and property management fees paid to third parties decreased by 2.4% to $9.1 million in the year ended December 31, 2024, compared to $9.4 million in the year ended December 31, 2023.

The decrease was primarily due to decreased headcount with fewer properties due to dispositions and a decrease in third party management fees.

Property management expense, consisting of property management overhead and property management fees paid to third parties increased by 5.6% to $9.6 million in the year ended December 31, 2025, compared to $9.1 million in the year ended December 31, 2024.

The increase was primarily due to increased compensation costs compared to the prior year and third party management fees for management of an apartment community we acquired in the second quarter of the current year.

Casualty loss.

Casualty loss increased to $3.3 million in the year ended December 31, 2024, compared to $2.1 million in the year ended December 31, 2023.

The increase was primarily due to increased insurance claims activity throughout 2024 compared to the prior year period.

Refer to Involuntary Conversion of Assets in Note 2 of the Notes to the Consolidated Financial Statements in the report for more details.

Casualty loss decreased to $816,000 in the year ended December 31, 2025, compared to $3.3 million in the year ended December 31, 2024.

The decrease was primarily due to decreases in insurance claims activity and increases in insurance recoveries throughout 2025 compared to the prior year period.

Refer to Involuntary Conversion of Assets in Note 2 of the Notes to the Consolidated Financial Statements in this Report for more details.

Depreciation and amortization.

Depreciation and amortization increased by 4.7% to $106.5 million in the year ended December 31, 2024, compared to $101.7 million in the year ended December 31, 2023, attributable to an increase of $5.6 million from same-store communities and $3.8 million from non-same-store communities driven by the addition of an apartment community in the fourth quarter of both 2024 and 2023 along with value add and acquisition capital projects, offset by a decrease of $5.1 million from dispositions.

Depreciation and amortization increased by 6.4% to $113.2 million in the year ended December 31, 2025, compared to $106.5 million in the year ended December 31, 2024, attributable to an increase of $14.0 million from non-same-store communities driven by the addition of three apartment communities, one in the fourth quarter of 2024 and two in 2025, offset by a decrease of $5.9 million from dispositions of 12 apartment communities during the year and $695,000 from same store communities.

Impairment of real estate investments.

There was no impairment of real estate investments in the year ended December 31, 2024, compared to $5.2 million in 2023.

These impairments were the result of two apartment communities that were written down to estimated fair value based on the receipt and acceptance of market offers to purchase the apartment communities.

Refer to Real Estate Investments in Note 2 of the Notes to the Consolidated Financial Statements in the report for more details.

There was $37.7 million of impairment on real estate investments in the year ended December 31, 2025, compared to no such impairment in 2024.

The impairment was the result of six apartment communities that were written down to estimated fair value based in connection with market offers for communities that were held for sale and subsequently sold during 2025 and one apartment community written down to fair value based upon an independent appraisal.

Refer to Real Estate Investments in Notes 2 and 9 of the Notes to the Consolidated Financial Statements in this Report for more details.

General and administrative expenses.

General and administrative expenses decreased by 11.3% to $17.8 million in the year ended December 31, 2024, compared to $20.1 million in the year ended December 31, 2023, primarily attributable to $3.2 million in executive severance and transition costs related to the CEO departure in 2023 and lower legal fees due to a litigation settlement from 2023 both of which did not occur in 2024, offset by $1.2 million in increased incentive related compensation.

General and administrative expenses increased by 17.5% to $20.9 million in the year ended December 31, 2025, compared to $17.8 million in the year ended December 31, 2024, primarily attributable to $1.3 million in one-time professional fees associated with a shareholder relations matter and $1.2 million in incentive compensation.

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

In the years ended December 31, 2024 and 2023, we recorded a loss on the sale of real estate and other investments of $577,000 and a gain on the sale of real estate and other investments of $71.2 million, respectively.

The decrease was due to the sale of two apartment communities for a loss in 2024 compared to the sale of 13 apartment communities for a gain and associated commercial space during 2023.

In the years ended December 31, 2025 and 2024, we recorded a gain on the sale of real estate and other investments of $79.5 million and a loss on the sale of real estate and other investments of $577,000, respectively.

The increase was due to the sale of 12 apartment communities for a net gain in 2025 compared to the sale of two apartment communities for a loss in the prior year.

Refer to Note 9 in the Notes to the Consolidated Financial Statements.

Loss on Litigation Settlement.

There was no loss on litigation settlement for the year ended December 31, 2024 compared to $3.9 million in the year ended December 31, 2023 due to a trial judgment against Centerspace for property damage and monetary losses to a neighboring property.

Refer to Litigation Settlement in Note 2 of the Notes to the Consolidated Financial Statements.

Operating income.

Operating income decreased by 75.8% to $20.5 million in the year ended December 31, 2024, compared to $84.5 million in the year ended December 31, 2023.

Operating income increased to $64.5 million in the year ended December 31, 2025, compared to $20.5 million in the year ended December 31, 2024.

Interest expense.

Interest expense increased 2.3% to $37.3 million in the year ended December 31, 2024, compared to $36.4 million in the year ended December 31, 2023, primarily due to the assumption of mortgages upon acquisition of The Lydian in the fourth quarter of 2024 and Lake Vista in the fourth quarter of 2023, offset by lower interest on lines of credit in 2024 and a higher rate term loan that was paid off early in 2023.

Interest expense increased 20.4% to $44.9 million in the year ended December 31, 2025, compared to $37.3 million in the year ended December 31, 2024, primarily due to an increase in the average daily balance on our lines of credit in order to fund acquisitions of apartment communities, the assumption of mortgages upon acquisition of The Lydian in the fourth quarter of 2024 and Railway Flats in the third quarter of 2025, and amortization of debt discounts for assumed mortgages.

Loss on extinguishment of debt.

Loss on extinguishment of debt was $98,000 in the current year compared to no such loss in the prior year.

The increase was due to prepayment of two mortgage loans in connection with the disposition of the related apartment communities.

Interest and other income.

Interest and other income increased to $2.6 million in the year ended December 31, 2024, compared to $1.2 million in the same period of the prior year, primarily due to interest income on two real estate related notes receivable, offset by a decrease from interest received on escrow funds in 2023 that did not occur in 2024.

One of the notes receivable originated in December 2023 and the other was acquired during the fourth quarter of 2024 in connection with the acquisition of The Lydian.

Interest and other income increased to $3.4 million in the year ended December 31, 2025, compared to $2.6 million in the same period of the prior year, primarily due to interest income on two real estate related notes receivable and interest from funds held in escrow.

Net income (loss) available to common shareholders.

Net income (loss) available to common shareholders decreased to a net loss of $19.7 million compared to a net income of $34.9 million in 2023.

Net income (loss) available to common shareholders increased to a net income of $17.1 million compared to a net loss of $19.7 million in 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 or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure.

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 the ability to service indebtedness or make distributions to shareholders.

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By further adjusting for items that are not considered part of core business operations, we believe that Core FFO provides investors with additional information to compare core operating and financial performance between periods.

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

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

Core 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 the ability to service indebtedness or make distributions to shareholders.

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 year ended December 31, 2024 decreased to $19.7 million compared to a net income of $34.9 million for the year ended December 31, 2023.

FFO applicable to common shares and Units for the year ended December 31, 2024, increased to $83.3 million compared to $77.3 million for the year ended December 31, 2023, a change of 7.8%, primarily due to $3.2 million in severance and transition expenses related to the departure of our former CEO in 2023 and a $3.9 million loss on litigation settlement in 2023, both of which did not occur in 2024, along with increased NOI from same-store and non-same-store communities in the in the year ended December 31, 2024, offset by the redemption of our Series C preferred shares during 2024 and increased casualty loss claim and decreased NOI from dispositions.

Net income available to common shareholders for the year ended December 31, 2025 increased to $17.1 million compared to a net loss of $19.7 million for the year ended December 31, 2024.

FFO applicable to common shares and Units for the year ended December 31, 2025, increased to $93.4 million compared to $83.3 million for the year ended December 31, 2024, a change of 12.1%, primarily due to increased NOI from same-store and non-same-store communities along with distributions to preferred shareholders that occurred in the prior year that did not occur in the year ended December 31, 2025, offset by increased interest expense and general and administrative expense and decreased NOI from dispositions.

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

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(Gain) loss on sale of real estate (79,470) 577

Less gain on sale of real estate - partially owned entities 2,252 —

Add loss on sale of non real estate assets (50) —

FFO applicable to common shares and Units $ 93,374 $ 83,307

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Non-cash casualty loss $ 537 $ 2,432

Loss on extinguishment of debt 98 —

Interest rate swap amortization 407 712

Amortization of assumed debt 1,958 1,206

Severance and transition related costs — 3,170

Loss on litigation settlement and associated trial costs (1)

Redemption of preferred shares 3,511 —

Legal and other costs related to strategic review 1,336 —

Redemption of Series C preferred shares — 3,511

Other miscellaneous items (1)

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FFO applicable to common shares and Units $ 93,374 $ 83,307

Dividends to Series D preferred unitholders 640 640

Distributions to Series D preferred unitholders 486 640

FFO applicable to common shares and Units - diluted $ 93,860 $ 83,947

Core FFO applicable to common shares and Units $ 97,203 $ 90,679

Dividends to Series D preferred unitholders 640 640

Distributions to Series D preferred unitholders 486 640

Core FFO applicable to common shares and Units - diluted $ 97,689 $ 91,319

Per Share Data

Income (loss) per common share - diluted $ (1.27) $ 2.32

Net income (loss) per common share - diluted (2)

$ 1.02 $ (1.27)

FFO per share and Unit - diluted $ 4.74 $ 4.49

Core FFO per share and Unit - diluted $ 4.93 $ 4.88

Weighted average shares - basic 15,504 14,994

Effect of redeemable operating partnership units 870 925

Effect of Series D preferred units 228 228

Effect of Series E preferred units 2,056 2,100

Effect of dilutive restricted stock units and stock options 36 24

Weighted average shares and Units - diluted 18,694 18,271

(1) Consists of $37,000 in associated trial costs related to the litigation matter for the year ended December 31, 2024.

Consists of $3.9 million loss on litigation settlement for a trial judgment entered against the Company and $406,000 in associated trial costs related to the litigation matter during the year ended December 31, 2023.

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

Weighted average shares - basic for net income (loss) 16,728 15,504

Effect of operating partnership Units for FFO and Core FFO 966 870

Effect of Series D preferred units, as converted, for FFO and Core FFO 173 228

Effect of Series E preferred units, as converted, for FFO and Core FFO 1,901 2,056

Effect of dilutive restricted stock units and stock options for FFO and Core FFO 47 36

Weighted average shares and Units for FFO and Core FFO - diluted 19,815 18,694

(1) Consists of (gain) loss on investments.

(2) Refer to Note 3 of the Notes to the Consolidated Financial Statements for additional details on net income (loss) per share.

LIQUIDITY AND CAPITAL RESOURCES

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

As of December 31, 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 December 31, 2024, the additional borrowing availability was $206.0 million beyond the $44.0 million drawn.

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

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 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.

As of December 31, 2025, we had access to the Unsecured Credit Facility.

In May 2025, we exercised the accordion feature of the Facility, expanding the borrowing capacity by $150.0 million to $400.0 million.

Prior to the exercise of the accordion feature, the line of credit had total commitments and borrowing capacity of up to $250.0 million, based on the value of unencumbered properties.

As of December 31, 2025, the additional borrowing availability was $246.0 million beyond the $154.0 million drawn, priced at an interest rate of 5.12%.

As of December 31, 2024, the Company had additional borrowing availability of $206.0 million beyond the $44.0 million drawn under the Facility, priced at an interest rate of 5.81%.

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

general corporate purposes.

This Facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods.

SOFR is the benchmark alternative reference rate under the Facility.

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 daily or term 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.

We have 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 2026 and is designed to enhance treasury management activities and more effectively manage cash balances.

As of December 31, 2024, there was $3.4 million outstanding on this line of credit.

We previously had a $6.0 million operating line of credit with Wells Fargo Bank, N.A.

with pricing based on SOFR that matured on August 31, 2024.

As of December 31, 2023, there was no outstanding balance on this line of credit.

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 have issued $175.0 million in unsecured senior promissory notes (“Unsecured Shelf Notes”).

As of December 31, 2025, there was $925,000 outstanding on this line of credit, priced at an interest rate of 5.91%, compared to $3.4 million outstanding as of December 31, 2024, priced at an interest rate of 6.56%.

We have a private shelf agreement with PGIM under which we have issued $175.0 million in 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.

We issued $125.0 million of Unsecured Club Notes under a separate private note purchase agreement with PGIM and certain other lenders.

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

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Series 2021-D $ 15,000 September 17, 2034 2.78 %

We have a $198.9 million Fannie Mae Credit Facility Agreement (“FMCF”).

We have a $198.9 million FMCF.

The FMCF is currently secured by mortgages on 7 apartment communities.

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Refer to Item 7A in this Report for additional information on our market and interest rate risk.

On August 30, 2024, we delivered notice to holders of our 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 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

Our borrowings are subject to customary covenants and limitations.

We believe we were in compliance with all such covenants and limitations as of December 31, 2025.

We have entered into an 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.

The maximum aggregate offering price of common shares available for offer and sale thereunder is $500.0 million.

Under the ATM Program, we may enter into separate forward sale agreements.

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Year ended December 31, 2025

1,587 $ 112,613 $ 71.66

Year ended December 31, 2024 (2)

1,587 $ 112,613 $ 71.66

(1) Total consideration is net of $1.1 million in commissions for the year ended December 31, 2024.

(2) Includes 869,000 shares sold on a forward basis for $62.7 million which were physically settled during the year ended December 31, 2024.

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.

We had a share repurchase program, providing for the repurchase of up to an aggregate of $50.0 million of our outstanding common shares.

This program expired on March 10, 2025.

Effective July 31, 2025, the Board of Trustees authorized a new share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $100 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.

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(1) Amount includes commissions.

We had 1.6 million and 1.7 million Series E preferred units outstanding on December 31, 2024 and 2023, respectively.

We had 1.6 million Series E preferred units (noncontrolling interests) outstanding on December 31, 2025 and 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.

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

The Series E preferred units had an aggregate liquidation preference of $157.0 million and $158.2 million as of December 31, 2025 and 2024, respectively The holders of the Series E preferred units do not have voting rights.

We had 59,400 and 165,600 Series D preferred units outstanding as of December 31, 2025 and 2024, respectively.

The Series D preferred units have a par value of $100 per preferred unit.

The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year and have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issuance price.

During the year ended December 31, 2025, the Company redeemed 106,200 Series D preferred units for an aggregate redemption price of $10.6 million.

Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 common Units.

The Series D preferred units had an aggregate liquidation value of $5.9 million and $16.6 million as of December 31, 2025 and 2024, respectively.

Changes in Cash, Cash Equivalents, and Restricted Cash

As of December 31, 2025, we had cash and cash equivalents of $12.8 million and restricted cash consisting of $2.8 million of escrows held by lenders and security deposits.

The escrows held by lenders are 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.

As of December 31, 2023, we had cash and cash equivalents of $8.6 million and restricted cash consisting of $639,000 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 our Consolidated Statements of Cash Flows in Item 15 of this report.

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

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

• Receiving $17.4 million on our line of credit, net of repayments;

• Issuing approximately 1.6 million common shares for consideration of $112.1 million, net of commissions and issuance costs;

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

• Receiving $212.2 million in net proceeds from the sale of twelve apartment communities and corporate office space;

• Receiving $107.6 million in net draws on our lines of credit.

During the year ended December 31, 2025, we used capital for various activities, including:

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

• Funding $13.6 million on a mezzanine loan for the development of an apartment community;

• Funding acquisitions of real estate assets of $206.3 million;

• Repaying approximately $96.8 million of mortgage principal;

• Repurchasing of 87,722 common shares for $4.7 million, net of fees and expenses;

• Paying distributions on common shares, Series E preferred units, Units, and Series C preferred shares of $59.7 million;

• Redeeming 106,200 Series D preferred units for $10.6 million;

• Repurchasing 62,973 common shares for $3.5 million, net of fees and expenses;

• Paying distributions to noncontrolling interests in consolidated real estate entities of $4.5 million;

• Paying distributions on common shares, Units, and Series E preferred units of $60.2 million;

• Funding capital improvements for apartment communities of approximately $34.2 million.

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Our primary line of credit had a $154.0 million balance outstanding at December 31, 2025 and matures in July 2028.

Our operating line of credit had a $3.4 million balance outstanding at December 31, 2024 and matures in September 2025.

Our operating line of credit had a $925,000 balance outstanding at December 31, 2025 and matures in September 2026.

Our unsecured senior notes had an aggregate balance of $300.0 million at December 31, 2025 with varying maturities from September 2028 through September 2034.

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The amounts of these expenditures can vary from year to year depending on the age of the apartment community, timing of planned improvements, and lease turnover.

As of December 31, 2024, we had no significant off-balance-sheet arrangements.

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

Inflation and Supply Chain

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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.

We also continue to monitor pressures surrounding supply chain challenges, including the impact of tariffs.

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

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Depreciation requires an estimate by management of the useful life of each asset as well as an allocation of the costs associated with a property to its various components.

As described further below, the process of allocating property costs to its components requires a considerable amount of subjective judgments to be made by management.

As described further below, the process of allocating property costs to its

components requires a considerable amount of subjective judgments to be made by management.

If we do not allocate these costs appropriately or incorrectly estimate the useful lives of our real estate, depreciation expense may be misstated.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets.

We use a 10-37 year estimated

life for buildings and improvements and a 5-10 year estimated life for furniture, fixtures, and equipment.

We use a 10-37 year estimated life for buildings and improvements and a 5-10 year estimated life for furniture, fixtures, and equipment.

Maintenance and repairs are charged to operations as incurred.

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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-K

Item 7. Management’s Discussion and Analysis