CENTERSPACE 10-Q

Item 2. 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 March 31, 2026 (the “Report”), the audited financial statements for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on February 17, 2026, and the risk factors in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2025. 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. 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. Although we believe the expectations reflected in these forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from actual results and performance. The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements: • inflation and price volatility in the global economy; • uncertain global macro-economic and political conditions, the impact of actual or threatened wars or other international conflicts, such as in Ukraine, the Middle East, and South America, including sanctions imposed by the U.S. and other countries, on inflation, trade, and general economic conditions; • deteriorating economic conditions and 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, our potential inability to renew residents or obtain new residents upon expiration of existing leases, our ability to identify and consummate attractive acquisitions and dispositions on favorable terms, our ability to reinvest sales proceeds successfully, our inability to accommodate any significant decline in the market value of real estate serving as collateral for our debt and mortgage obligations; 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 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 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 process and results of our review of strategic alternatives; • reliance on a single asset class (multifamily) and certain geographic areas (Midwest and Mountain West regions) of the U.S.; • 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 our projects on schedule and on budget; • failure to reinvest proceeds from sales of properties into tax-deferred exchanges, which could necessitate special distribution and/or tax protection payments; • inability to fund capital expenditures out of cash flow; • inability to pay, or need to reduce, distributions on our common shares; • inability to raise additional equity capital, if needed; • financing risks, including our potential inability to meet existing covenants in our existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all; 20 Table of Contents • level and volatility of interest or capitalization rates or capital market conditions; • loss contingencies and the availability and cost of casualty insurance for losses; • 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 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 our business and any related investigations or litigation; and • 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause our actual results to differ materially from those contemplated in any forward-looking statements included in this Report should not be construed as exhaustive. Readers also should carefully review our financial statements and the notes thereto as well as 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, 2025. Executive Summary We are a real estate investment trust, or REIT, that owns, manages, acquires, redevelops, and develops apartment communities. 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 March 31, 2026, we owned 61 apartment communities containing 12,263 apartment homes. Property owned, as presented in our Condensed Consolidated Balance Sheets at historical cost was $2.5 billion at March 31, 2026 and December 31, 2025. Renting apartment homes is our primary source of revenue, and our business objective is to provide great homes. We strive to maximize resident satisfaction and retention by investing in high-quality assets in desirable locations and creating vibrant apartment communities through resident-centered operations. We believe that delivering superior resident experiences will enhance resident satisfaction while also driving profitability for our business and shareholders. We have paid quarterly distributions continuously since our first distribution in 1971. Overview of the Three Months Ended March 31, 2026 • For the three months ended March 31, 2026, revenue decreased by $2.0 million or 3.0% to $65.1 million, compared to $67.1 million for the three months ended March 31, 2025, primarily due to the sale of 12 apartment communities in the prior year, offset by increased revenue from non-same-store communities. • Same-store revenues remained consistent year over year, while property operating expenses increased, driving a 1.1% decrease in same-store NOI compared to the same period of the prior year. • Net loss was $0.77 per diluted share for the three months ended March 31, 2026, compared to net loss of $0.22 per diluted share for the same period of the prior year. • Non-GAAP Core Funds from Operations (“Core FFO”) per diluted share decreased to $1.12 for the three months ended March 31, 2026, compared to $1.21 for the three months ended March 31, 2025. See the description of Core FFO on pages 25 and 26 and the reconciliation of net loss available to common shareholders to FFO and Core FFO on page 27. This decrease was primarily due to decreased NOI due to dispositions and same-store communities, along with increases in general and administrative expenses and interest expense, offset by increased NOI on non-same-store communities. The drivers of these changes are discussed in more detail in the “Results of Operations” section below. 21 Table of Contents Results of Operations GAAP and Non-GAAP Financial Measures Net operating income (“NOI”) is a non-GAAP financial measure, which we define as total real estate revenues less property operating expenses, including real estate taxes and is reconciled to operating income (loss) below. We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by sales of real estate and other investments, impairment, depreciation, amortization, financing costs, property management expenses, casualty losses net of recoveries, loss on litigation settlement, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance. We have provided certain information on a same-store and non-same-store basis. 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 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, 2026 and 2025, 58 apartment communities were same-store and three apartment communities and one apartment community were non-same-store, respectively. 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. Reconciliation of Operating Income (Loss) to Net Operating Income (non-GAAP) The following table provides a reconciliation of operating income (loss) to NOI (non-GAAP), which is defined above. (in thousands, except percentages) Three Months Ended March 31, 2026 2025 $ Change % Change Operating income (loss) $ (5,393) $ 4,746 $ (10,139) (213.6) % Adjustments: Property management expenses 2,379 2,433 (54) (2.2) % Casualty loss, net of recoveries (21) 532 (553) (103.9) % Depreciation and amortization 26,498 27,654 (1,156) (4.2) % Impairment of real estate investments 9,700 — 9,700 N/A General and administrative expenses 6,332 4,997 1,335 26.7 % Net operating income $ 39,495 $ 40,362 $ (867) (2.1) % * Not a meaningful percentage. 22 Table of Contents The following consolidated results of operations, including GAAP and non-GAAP metrics, cover the three months ended March 31, 2026 and 2025. (in thousands, except percentages) Three Months Ended March 31, 2026 2025 $ Change % Change Revenue Same-store (1) $ 58,198 $ 58,193 $ 5 — % Non-same-store (1) 5,958 1,210 4,748 * Other properties (1) 921 817 104 12.7 % Dispositions (1) (8) 6,873 (6,881) * Total 65,069 67,093 (2,024) (3.0) % Property operating expenses, including real estate taxes Same-store (1) 22,929 22,536 393 1.7 % Non-same-store (1) 2,367 632 1,735 * Other properties (1) 305 332 (27) (8.1) % Dispositions (1) (27) 3,231 (3,258) * Total 25,574 26,731 (1,157) (4.3) % Net operating income Same-store (1) 35,269 35,657 (388) (1.1) % Non-same-store (1) 3,591 578 3,013 * Other properties (1) 616 485 131 27.0 % Dispositions (1) 19 3,642 (3,623) * Total $ 39,495 $ 40,362 $ (867) (2.1) % Property management expenses (2,379) (2,433) (54) (2.2) % Casualty loss, net of recoveries 21 (532) (553) (103.9) % Depreciation and amortization (26,498) (27,654) (1,156) (4.2) % Impairment of real estate investments (9,700) — 9,700 N/A General and administrative expenses (6,332) (4,997) 1,335 26.7 % Interest expense (10,470) (9,635) 835 8.7 % Interest and other income 890 708 182 25.7 % NET LOSS $ (14,973) $ (4,181) $ (10,792) 258.1 % Distributions to Series D preferred unitholders (57) (160) 103 (64.4) % Net loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units 2,141 643 1,498 233.0 % Net income attributable to noncontrolling interests – consolidated real estate entities — (36) 36 (100.0) % NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $ (12,889) $ (3,734) $ (9,155) 245.2 % (1) This is a non-GAAP financial measure which is a component of NOI (non-GAAP), as defined above. Refer to the Reconciliation of Operating Income (Loss) to Net Operating Income above. Non-GAAP financial measures should not be considered an alternative to net income (loss), net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance. * Not a meaningful percentage. 23 Table of Contents Three Months Ended March 31, Weighted Average Occupancy (1) 2026 2025 Same-store 95.4 % 95.8 % Non-same-store 92.0 % 86.4 % Total 95.1 % 95.5 % (1) Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue. Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. Centerspace believes 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 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 March 31, 2026 as of March 31, 2025 Same-store 11,214 11,213 Non-same-store 1,049 288 Dispositions — 1,511 Total 12,263 13,012 Same-store analysis. Revenue from same-store communities remained consistent in the three months ended March 31, 2026, compared to the same period in the prior year. The average monthly revenue per occupied home for the three months ended March 31, 2026 remained consistent with comparable periods while weighted average occupancy decreased 0.4% from 95.8% for the three months ended March 31, 2025 to 95.4% for the three months ended March 31, 2026. Property operating expenses, including real estate taxes, at same-store communities increased by 1.7% or $393,000 in the three months ended March 31, 2026, compared to the same period in the prior year. At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $490,000, primarily due to an increase in repairs and maintenance, utilities, and administrative and marketing expenses. Non-controllable expenses at same-store communities decreased by $97,000, due to a decrease in real estate taxes. Same-store NOI decreased by $388,000 to $35.3 million for the three months ended March 31, 2026, compared to $35.7 million in the same period of the prior year. Non-same-store analysis. Revenue from non-same-store communities increased by $4.7 million in the three months ended March 31, 2026, 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 $3.0 million for the three months ended March 31, 2026, 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 two apartment communities, one during the second quarter of the prior year and one during the third quarter of the prior year, offset by a $149,000 decrease in NOI from a community that experienced an increase in expenses resulting from the cancellation of contracts and uninsured loss events. Other properties analysis. Revenue from other properties, which encompasses our commercial and mixed-use activity, increased by $104,000 in the three months ended March 31, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes, at other properties decreased by $27,000, compared to the same period in the prior year. NOI at other properties increased by $131,000, compared to the same period in the prior year. The increase in revenue and NOI on other properties is primarily due to increased occupancy in the current period. Dispositions analysis. Revenue from dispositions decreased by $6.9 million in the three months ended March 31, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes, decreased by $3.3 million on dispositions, compared to the same period in the prior year. NOI on dispositions decreased $3.6 million, compared to the same period in the prior year. We disposed of five apartment communities during the third quarter of 2025 and seven apartment communities in the fourth quarter 2025. Property management expenses . Property management expenses, consisting of property management overhead and property management fees paid to third parties, decreased by 2.2% to $2.4 million in the three months ended March 31, 2026. The decrease was primarily due to reduced compensation related costs resulting from a reduction in headcount compared to the same period of the prior year, offset by an increase in fees paid to third parties for management of an apartment community we acquired in the second quarter of 2025. 24 Table of Contents Casualty loss, net of recoveries. Casualty activity was a net recovery of $21,000 in the three months ended March 31, 2026, compared to a net loss of $532,000 in the same period of the prior year. The change is primarily due to claim activity in excess of our deductible along with increases in insurance recoveries and subrogation proceeds compared to 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 decreased by 4.2% to $26.5 million in the three months ended March 31, 2026, compared to $27.7 million in the same period of the prior year, primarily attributable to a decrease of $3.0 million in depreciation from dispositions that occurred in the prior year and a decrease of $861,000 on same-store communities primarily due to amortization of in-place leases in the prior year that did not occur in the current year, offset by an increase of $3.1 million on non-same-store driven by the addition of two apartment communities, one during the second quarter of the prior year and one in the third quarter of the prior year, along with value add and acquisition capital projects and amortization of in-place leases. General and administrative expenses. General and administrative expenses increased by $1.3 million to $6.3 million in the three months ended March 31, 2026, compared to $5.0 million in the same period of the prior year. The increase was primarily due to $977,000 in fees related to strategic review and increased compensation costs from higher share-based compensation and other compensation related costs in the three months ended March 31, 2026, compared to the same period of the prior year. Interest expense. Interest expense increased by 8.7% to $10.5 million in the three months ended March 31, 2026, compared to $9.6 million in the same period of the prior year, primarily due to a higher outstanding balance on our lines of credit resulting from the acquisitions of two apartment communities, one in the second quarter and one in the third quarter of the prior year, along with higher mortgage interest and amortization of debt discount resulting from the assumption of mortgages in connection with an acquisition in the third quarter of the prior year. Interest and other income. Interest and other income increased to $890,000 in the three months ended March 31, 2026, compared to $708,000 in the same period of the prior year. The increase was primarily due to an unrealized gain on investments and interest income from a real estate related note receivable which has a higher principal balance in the current period compared to the same period of the prior year. Net loss available to common shareholders. Net loss available to common shareholders was $12.9 million for the three months ended March 31, 2026, compared to a net loss of $3.7 million in the three months ended March 31, 2025. Funds from Operations and Core Funds from Operations . We believe that Funds from Operations (“FFO”), which is a non-GAAP financial measure used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding operating performance, primarily because its calculation does not assume the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation and amortization. We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding: • depreciation and amortization related to real estate; • 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; and • similar adjustments for partially owned consolidated real estate entities. The exclusion in Nareit’s definition of FFO of gains and losses from the sale of real estate assets and impairment write-downs helps to identify the operating results of the long-term assets that form the base of investments and assists management and investors in comparing those operating results between periods. Due to limitations of the Nareit FFO definition, we have made certain interpretations in applying this definition. We believe that all such interpretations not specifically provided for in the Nareit definition are consistent with this definition. Nareit’s FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT’s main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business. While FFO is widely used by us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO the same way. 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 25 Table of Contents 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. 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 (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 flow 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 three months ended March 31, 2026, was $12.9 million compared to net loss of $3.7 million for the same period of the prior year. FFO applicable to common shares and Units for the three months ended March 31, 2026, decreased to $21.1 million compared to $23.2 million for the comparable period of the prior year, representing a decrease of 8.9%. This FFO decrease was primarily due to decreased NOI from dispositions and same-store communities along with increases in general and administrative expenses and interest expense, offset by increased NOI from non-same-store communities. 26 Table of Contents Reconciliation of Net 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 March 31, 2026 2025 Funds from Operations: Net loss available to common shareholders $ (12,889) $ (3,734) Adjustments: Noncontrolling interests – Operating Partnership and Series E preferred units (2,141) (643) Depreciation and amortization 26,498 27,654 Less depreciation – non real estate (67) (83) Less depreciation – partially owned entities — (22) Impairment of real estate investments 9,700 — FFO applicable to common shares and Units $ 21,101 $ 23,172 Adjustments to Core FFO: Non-cash casualty (recovery) loss (193) 282 Interest rate swap amortization — 175 Amortization of assumed debt 365 417 Legal and other costs related to strategic review 977 — Other miscellaneous items (1) (209) (67) Core FFO applicable to common shares and Units $ 22,041 $ 23,979 FFO applicable to common shares and Units $ 21,101 $ 23,172 Distributions to Series D preferred unitholders 57 160 FFO applicable to common shares and Units - diluted $ 21,158 $ 23,332 Core FFO applicable to common shares and Units $ 22,041 $ 23,979 Distributions to Series D preferred unitholders 57 160 Core FFO applicable to common shares and Units - diluted $ 22,098 $ 24,139 Per Share Data Net loss per common share - basic and diluted (2) $ (0.77) $ (0.22) FFO per share and Unit - diluted $ 1.07 $ 1.17 Core FFO per share and Unit - diluted $ 1.12 $ 1.21 Weighted average shares - basic and diluted for net income (loss) 16,775 16,727 Effect of operating partnership Units for FFO and Core FFO 914 980 Effect of Series D preferred units for FFO and Core FFO 82 228 Effect of Series E preferred units for FFO and Core FFO 1,892 1,906 Effect of dilutive restricted stock units and stock options for FFO and Core FFO 29 35 Weighted average shares and Units for FFO and Core FFO - diluted 19,692 19,876 (1) Consists of (gain) loss on investments. (2) Refer to Note 3 of the Notes to the Condensed Consolidated Financial Statements for additional details on net income (loss) per share. Acquisitions and Dispositions We did not acquire or dispose of real estate during the three months ended March 31, 2026 and 2025. Distributions Declared Distributions of $0.77 per common share and Unit were declared during the three months ended March 31, 2026 and 2025. Distributions of $0.9655 per Series D preferred unit were declared during the three months ended March 31, 2026 and 2025. Distributions of $0.96875 per Series E preferred unit were declared during the three months ended March 31, 2026 and 2025. 27 Table of Contents Liquidity and Capital Resources Overview We strive to maintain a strong balance sheet and preserve financial flexibility, which we believe should enhance our ability to capitalize on appropriate investment opportunities as they may arise. We intend to continue to focus on core fundamentals, which include generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. Our primary sources of liquidity are cash and cash equivalents on hand and cash flows generated from operations. Other sources include availability under our unsecured lines of credit, proceeds from property dispositions, including restricted cash related to net tax deferred proceeds, real estate deposits, 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 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 distribution 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, 2026, we had total liquidity of approximately $267.1 million, which included $259.6 million available on the lines of credit based on the value of unencumbered properties and $7.6 million of cash and cash equivalents. As of December 31, 2025, we had total liquidity of approximately $267.9 million, which included $255.1 million available on the lines of credit based on the value of unencumbered properties and $12.8 million of cash and cash equivalents. Debt As of March 31, 2026, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $400.0 million, based on the value of unencumbered properties, (the “Unsecured Credit Facility” or “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 March 31, 2026, there was $150.0 million outstanding on this line of credit, bearing interest at a rate of 4.88%, and additional borrowing availability was $250.0 million. As of December 31, 2025, there was $154.0 million outstanding, bearing interest at a rate of 5.12%, and additional borrowing availability was $246.0 million. The line of credit is utilized to refinance existing indebtedness, to finance property acquisitions, to finance capital expenditures, and for general corporate purposes. This Facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods. The Secured Overnight Financing Rate (“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 the 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 March 31, 2026 there was $429,000 outstanding balance on this line of credit, bearing interest at a rate of 5.88%, compared to $925,000 outstanding as of December 31, 2025, bearing interest at a rate of 5.91%. We have 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 28 Table of Contents 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 issued $125.0 million of senior unsecured promissory notes (the “Unsecured Club Notes”, and collectively with the Unsecured Shelf Notes, the “unsecured senior 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 March 31, 2026 and December 31, 2025. (in thousands) Amount Maturity Date Fixed Interest Rate Series A $ 75,000 September 13, 2029 3.84 % Series B $ 50,000 September 30, 2028 3.69 % Series C $ 50,000 June 6, 2030 2.70 % Series 2021-A $ 35,000 September 17, 2030 2.50 % Series 2021-B $ 50,000 September 17, 2031 2.62 % Series 2021-C $ 25,000 September 17, 2032 2.68 % Series 2021-D $ 15,000 September 17, 2034 2.78 % We have a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”). The FMCF is currently secured by mortgages on 7 apartment communities. 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, 2026 and December 31, 2025, 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 unamortized premiums and discounts and the FMCF, was $398.6 million on 10 apartment communities at March 31, 2026 and $400.1 million on 10 apartment communities at December 31, 2025. All of our mortgage debt is collateralized by apartment communities and is non-recourse at fixed rates of interest, with staggered maturities. 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, 2026 and December 31, 2025, the weighted average interest rate on mortgage debt was 3.88%. Further information, including principal payments due on our mortgage indebtedness and other tabular information, can be found in Note 5 - Debt in the Condensed Consolidated notes. Our borrowings are subject to customary covenants and limitations. We believe that we were in compliance with all such covenants and limitations as of March 31, 2026. Equity We have an at the market offering (“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. 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. There were no sales of common shares under the ATM program during the three months ended March 31, 2026 and 2025. As of March 31, 2026, 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. 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 $100.0 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 specific timing and amount of repurchases may vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors. As of March 31, 2026, the Company had $96.5 million remaining authorized for purchase under the Share Repurchase Program. We had 1.6 million Series E preferred units (noncontrolling interests) outstanding on March 31, 2026 and December 31, 2025. 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 had an aggregate liquidation preference of $156.3 million and $157.0 million as of March 31, 2026 and December 31, 2025, respectively. The holders of the Series E preferred units do not have voting rights. 29 Table of Contents We had 59,400 Series D preferred units outstanding on March 31, 2026 and December 31, 2025. 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. Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units. The Series D preferred units had an aggregate liquidation value of $5.9 million at March 31, 2026 and December 31, 2025. Changes in Cash, Cash Equivalents, and Restricted Cash As of March 31, 2026, we had cash and cash equivalents of $7.6 million and restricted cash consisting of $2.7 million of security deposits and escrows held by lenders for real estate taxes, insurance, and capital additions. As of December 31, 2025, we had cash and cash equivalents of $12.8 million and restricted cash consisting of $2.8 million of security deposits and 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. We generated cash flows from operations of $21.4 million, during the three months ended March 31, 2026. During the three months ended March 31, 2026, we used capital for various activities, including: • Funding capital improvements for apartment communities of approximately $5.3 million; • Repaying $4.5 million of principal, net of draws, on our lines of credit; • Repaying $1.6 million of mortgage principal; and • Paying distributions on common shares, Series E preferred units, and Units of $15.1 million. Contractual Obligations and Other Commitments Contractual obligations and other commitments were disclosed in our Form 10-K for the year ended December 31, 2025. Refer to Note 10 of the Notes to the Condensed Consolidated Financial Statements in this report for additional details. There have been no material changes to our contractual obligations and other commitments since that report was filed. 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. 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, including the impact of tariffs. 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. We continue to have access to the financial markets; however, a prolonged disruption of the markets or a decline in credit and financing conditions could negatively affect our ability to access capital necessary to fund our operations or refinance maturing debt in the future. Additionally, rising interest rates could negatively impact our borrowing costs for any variable rate borrowings or refinancing activity. Off-Balance Sheet Arrangements As of March 31, 2026, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. Critical Accounting Policies In preparing the Condensed Consolidated Financial Statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. A summary of critical accounting policies is included in our Form 10-K for the year ended December 31, 2025, filed with the SEC on February 17, 2026, under the section titled “Management’s Discussion and Analysis of Financial 30 Table of Contents 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 three months ended March 31, 2026. 31 Table of Contents