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 June 30, 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. 24 Table of Contents 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 ability of the Company to complete its proposed dispositions on a timely basis, or at all; • risks that the Company’s recently completed or proposed dispositions disrupt current plans and operations; • the anticipated costs related to the Company’s recently completed and proposed dispositions; • the ability of the Company to realize the anticipated benefits of its recently completed and proposed dispositions and the intended use of proceeds therefrom, as well as the Company’s strategic review; • 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; • 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; 25 Table of Contents • 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 June 30, 2026, we owned 60 apartment communities containing 12,090 apartment homes. Property owned, as presented in our Condensed Consolidated Balance Sheets at historical cost and excluding assets held for sale, was $2.3 billion at June 30, 2026 and $2.5 billion at 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 June 30, 2026 • Disposed of an apartment community consisting of 176 homes in Denver, Colorado for an aggregate sales price of $30.0 million. • For the three months ended June 30, 2026, revenue decreased by $2.8 million or 4.0% to $65.8 million, compared to $68.5 million for the three months ended June 30, 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 and expenses remained relatively unchanged with a 0.3% increase in same-store NOI compared to the same period of the prior year. • Net loss was $0.07 per diluted share for the three months ended June 30, 2026, compared to net loss of $0.87 per diluted share for the same period of the prior year. • Non-GAAP Core Funds from Operations (“Core FFO”) per diluted share decreased to $1.27 for the three months ended June 30, 2026, compared to $1.28 for the three months ended June 30, 2025. See the description of Core FFO on page 32 and the reconciliation of net loss available to common shareholders to FFO and Core FFO on page 33. This decrease was primarily due to decreased NOI as a result of dispositions, along with increases in general and administrative expenses, 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. • Repurchased 45,310 common shares for an average of $55.54 per share. 26 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 excludes gain (loss) on the sale of real estate and other investments, impairment, depreciation and amortization, financing costs, including interest and other income, losses on extinguishment of debt, and interest expense, 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 (loss), 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 repositioned 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, excluding 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 six months ended June 30, 2026 and 2025, 44 apartment communities were same-store and three apartment communities and two apartment community were non-same-store, respectively. Communities designated as held for sale are included in “Non-same-store and held for sale.” For the six months ended June 30, 2026, 13 apartment communities were designated as held for sale and included in “Non-same-store and held for sale.” 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 three and six months ended June 30, 2026, we disposed of one apartment community consisting of 176 apartment homes. During the year ended December 31, 2025, we disposed of 12 apartment communities consisting of 1,511 apartment homes. 27 Table of Contents 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 June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Operating income (loss) $ 8,784 $ (6,796) $ 15,580 (229.3) % $ 3,391 $ (2,050) $ 5,441 (265.4) % Adjustments: Property management expenses 2,094 2,393 (299) (12.5) % 4,473 4,826 (353) (7.3) % Casualty loss, net of recoveries (206) 399 (605) (151.6) % (227) 931 (1,158) (124.4) % Depreciation and amortization 25,075 27,097 (2,022) (7.5) % 51,573 54,751 (3,178) (5.8) % Impairment of real estate investments — 14,543 (14,543) (100.0) % 9,700 14,543 (4,843) (33.3) % General and administrative expenses 5,659 4,382 1,277 29.1 % 11,991 9,379 2,612 27.8 % Gain on sale of real estate and other investments (271) — (271) N/A (271) — (271) N/A Net operating income $ 41,135 $ 42,018 $ (883) (2.1) % $ 80,630 $ 82,380 $ (1,750) (2.1) % The following consolidated results of operations, including GAAP and non-GAAP metrics, cover the three and six months ended June 30, 2026 and 2025. (in thousands, except percentages) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Revenue Same-store (1) $ 49,996 $ 49,931 $ 65 0.1 % $ 99,426 $ 99,464 $ (38) — % Non-same-store and held for sale (1) 14,212 9,909 4,303 * 28,137 18,823 9,314 * Other properties (1) 917 779 138 17.7 % 1,828 1,580 248 15.7 % Dispositions (1) 657 7,930 (7,273) * 1,460 15,775 (14,315) * Total 65,782 68,549 (2,767) (4.0) % 130,851 135,642 (4,791) (3.5) % Property operating expenses, including real estate taxes Same-store (1) 18,790 18,809 (19) (0.1) % 38,437 37,685 752 2.0 % Non-same-store and held for sale (1) 5,190 3,797 1,393 * 10,467 7,617 2,850 * Other properties (1) 295 237 58 24.5 % 596 564 32 5.7 % Dispositions (1) 372 3,688 (3,316) * 721 7,396 (6,675) * Total 24,647 26,531 (1,884) (7.1) % 50,221 53,262 (3,041) (5.7) % Net operating income Same-store (1) 31,206 31,122 84 0.3 % 60,989 61,779 (790) (1.3) % Non-same-store and held for sale (1) 9,022 6,112 2,910 * 17,670 11,206 6,464 * Other properties (1) 622 542 80 14.8 % 1,232 1,016 216 21.3 % Dispositions (1) 285 4,242 (3,957) * 739 8,379 (7,640) * Total $ 41,135 $ 42,018 $ (883) (2.1) % $ 80,630 $ 82,380 $ (1,750) (2.1) % Property management expenses (2,094) (2,393) (299) (12.5) % (4,473) (4,826) (353) (7.3) % Casualty loss, net of recoveries 206 (399) (605) (151.6) % 227 (931) (1,158) (124.4) % Depreciation and amortization (25,075) (27,097) (2,022) (7.5) % (51,573) (54,751) (3,178) (5.8) % Impairment of real estate investments — (14,543) (14,543) (100.0) % (9,700) (14,543) (4,843) (33.3) % General and administrative expenses (5,659) (4,382) 1,277 29.1 % (11,991) (9,379) 2,612 27.8 % Gain on sale of real estate and other investments 271 — 271 N/A 271 — 271 N/A Interest expense (10,623) (10,724) (101) (0.9) % (21,093) (20,359) 734 3.6 % Interest and other income 709 735 (26) (3.5) % 1,599 1,443 156 10.8 % NET LOSS $ (1,130) $ (16,785) $ 15,655 (93.3) % $ (16,103) $ (20,966) $ 4,863 (23.2) % Distributions to Series D preferred unitholders (58) (160) 102 (63.8) % (115) (320) 205 (64.1) % Net loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units 168 2,483 (2,315) (93.2) % 2,309 3,126 (817) (26.1) % Net income attributable to noncontrolling interests – consolidated real estate entities — (53) 53 (100.0) % — (89) 89 (100.0) % NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $ (1,020) $ (14,515) $ 13,495 (93.0) % $ (13,909) $ (18,249) $ 4,340 (23.8) % (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. 28 Table of Contents Three Months Ended June 30, Six Months Ended June 30, Weighted Average Occupancy (1) 2026 2025 2026 2025 Same-store 96.0 % 95.9 % 95.7 % 95.9 % Non-same-store and held for sale 95.9 % 94.0 % 95.0 % 94.0 % Total 96.0 % 95.6 % 95.6 % 95.6 % (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 June 30, 2026 as of June 30, 2025 Same-store 9,407 9,406 Non-same-store 1,049 629 Held for sale (1) 1,634 1,631 Dispositions — 1,687 Total 12,090 13,353 (1) Number of apartment homes related to properties classified as held for sale as of June 30, 2026 . Same-store analysis. Revenue from same-store communities remained consistent in the three months ended June 30, 2026, compared to the same period in the prior year. The average monthly revenue per occupied home for the three months ended June 30, 2026 remained consistent with comparable periods while weighted average occupancy increased 0.1% from 95.9% for the three months ended June 30, 2025 to 96.0% for the three months ended June 30, 2026. Property operating expenses, including real estate taxes, at same-store communities decreased by 0.1% or $19,000 in the three months ended June 30, 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 $23,000, primarily due to an increase in utilities, on-site compensation, and administrative and marketing expenses, offset by a decrease in repairs and maintenance. Non-controllable expenses at same-store communities decreased by $42,000, due to a decrease in real estate taxes, offset by an increase in insurance-related losses. Same-store NOI increased by $84,000 to $31.2 million for the three months ended June 30, 2026, compared to $31.1 million in the same period of the prior year. Revenue from same-store communities remained consistent in the six months ended June 30, 2026, compared to the same period in the prior year. The average monthly revenue per occupied home for the six months ended June 30, 2026 remained consistent with comparable periods while weighted average occupancy decreased from 95.9% for the six months ended June 30, 2025 to 95.7% for six months ended June 30, 2026. Property operating expenses, including real estate taxes, at same-store communities increased by 2.0% or $752,000 in the six months ended June 30, 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 $665,000, primarily due to an increase in administrative and marketing costs, utilities, and repairs and maintenance. Non-controllable expenses at same-store communities increased by $87,000, due to insurance-related losses and offset by real estate taxes. Same-store NOI decreased by $790,000 to $61.0 million for the six months ended June 30, 2026, compared to $61.8 million in the same period of the prior year. Non-same-store and held for sale analysis. Revenue from non-same-store and held for sale communities increased by $4.3 million in the three months ended June 30, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes at non-same-store and held for sale communities increased by $1.4 million. NOI at non-same-store and held for sale communities increased by $2.9 million for the three months ended June 30, 2026, compared to the same period of the prior year. The increase in revenue, property operating expenses, and NOI from non-same-store and held for sale communities is primarily 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. Revenue from non-same-store and held for sale communities increased by $9.3 million in the six months ended June 30, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes at non-same-store and held for sale communities increased by $2.9 million for the six months ended June 30, 2026, compared to the same period in the prior year. NOI at non-same-store and held for sale communities increased by $6.5 million for the six months ended June 30, 2026, compared to the same period of the prior year. The increase in revenue, property operating expenses, and NOI from non- 29 Table of Contents same-store and held for sale communities is primarily 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. Other properties analysis. Revenue from other properties, which encompasses our commercial and mixed-use activity, increased by $138,000 in the three months ended June 30, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes, at other properties increased by $58,000, compared to the same period in the prior year. NOI at other properties increased by $80,000, 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. Revenue from other properties increased by $248,000 in the six months ended June 30, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes, at other properties increased by $32,000, compared to the same period in the prior year. NOI at other properties increased by $216,000, 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 $7.3 million in the three months ended June 30, 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 $4.0 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 compared to one apartment community in the second quarter of 2026. Revenue from dispositions decreased by $14.3 million in the six months ended June 30, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes, decreased by $6.7 million on dispositions, compared to the same period in the prior year. NOI on dispositions decreased by $7.6 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 compared to one apartment community in the second quarter of 2026. Property management expenses . Property management expenses, consisting of property management overhead and property management fees paid to third parties, decreased by 12.5% to $2.1 million in the three months ended June 30, 2026. The decrease was primarily due to reduced compensation related costs and administrative costs resulting from a reduction in headcount and number of communities compared to the same period of the prior year. Property management expenses, consisting of property management overhead and property management fees paid to third parties, decreased by $353,000 to $4.5 million in the six months ended June 30, 2026, compared to $4.8 million in the same period of the prior year. 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. Casualty loss, net of recoveries. Casualty activity was a net recovery of $206,000 in the three months ended June 30, 2026, compared to a net casualty loss of $399,000 in the same period of the prior year. The change is primarily due to fewer large loss claims, 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. Casualty activity was a net recovery of $227,000 in the six months ended June 30, 2026, compared to a net casualty loss of $931,000 in the same period of the prior year. The change is primarily due to fewer large losses in the current period, settlement of multi-year claims in excess of our deductible along with subrogation proceeds compared to the same period of the prior year. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details. Depreciation and amortization. Depreciation and amortization decreased by 7.5% to $25.1 million in the three months ended June 30, 2026, compared to $27.1 million in the same period of the prior year, primarily attributable to a decrease of $3.3 million in depreciation from dispositions that occurred in the prior year and a decrease of $455,000 on communities classified as held for sale during the current period, offset by an increase of $1.2 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. Depreciation and amortization decreased by $3.2 million to $51.6 million in the six months ended June 30, 2026, compared to $54.8 million in the same period of the prior year, primarily attributable to a decrease of $6.3 million in depreciation from dispositions that occurred in the prior year, a decrease of $1.0 million on same-store communities primarily due to amortization of in-place leases in the prior year that did not occur in the current year, and $410,000 from communities classified as held for sale during the current period, offset by an increase of $4.3 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. 30 Table of Contents Impairment of real estate investments. There was no impairment of real estate investments in the three months ended June 30, 2026, compared to $14.5 million in the three months ended June 30, 2025. Impairment during the three months ended June 30, 2025 was the result of five apartment communities that were written down to estimated fair value in connection with their reclassification to assets held for sale. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details. Impairment of real estate investments was $9.7 million in the six months ended June 30, 2026, compared to $14.5 million in the six months ended June 30, 2025. Impairment during the six months ended June 30, 2026, was due to one apartment community written down to estimated fair value and the impairment during the six months ended June 30, 2025 was the result of five apartment communities that were written down to estimated fair value in connection with their reclassification to assets held for sale. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details. General and administrative expenses. General and administrative expenses increased by $1.3 million to $5.7 million in the three months ended June 30, 2026, compared to $4.4 million in the same period of the prior year. The increase was primarily due to $835,000 from severance and related costs, $278,000 in professional and legal fees, and increased compensation costs from higher share-based compensation costs in the three months ended June 30, 2026, compared to the same period of the prior year. General and administrative expenses increased by $2.6 million to $12.0 million in the six months ended June 30, 2026, compared to $9.4 million in the same period of the prior year. The increase was primarily due to $1.1 million in fees related to strategic review, $835,000 from severance and related costs, increased compensation costs from higher share-based compensation costs, and $172,000 in professional and legal fees in the six months ended June 30, 2026, compared to the same period of the prior year. Gain (loss) on sale of real estate. Gain on sale of real estate for the three and six months ended June 30, 2026 was $271,000 compared to no gain or loss in the same periods of the prior year. The gain on sale was due to the disposition of one apartment community and associated commercial space in the current period compared to no dispositions in the same periods of the prior year. See Note 8 of the Notes to the Condensed Consolidated Financial Statements in the report for more details. Interest expense. Interest expense decreased by 0.9% to $10.6 million in the three months ended June 30, 2026, compared to $10.7 million in the same period of the prior year, primarily due to a reduction in interest on mortgages payable, offset by an increase in interest on our lines of credit due to higher outstanding balances resulting from the acquisitions of two apartment communities in the prior year, one in the second quarter and one in the third quarter of the prior year, along with use of the line of credit to payoff mortgages and higher amortization of debt discount resulting from the assumption of mortgages in connection with an acquisition in the third quarter of the prior year. Interest expense increased by $734,000 to $21.1 million in the six months ended June 30, 2026, compared to $20.4 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 use of the line of credit to payoff mortgages and amortization of debt discount resulting from the assumption of mortgages in connection with an acquisition in the third quarter of the prior year, offset by a reduction in mortgage interest. Interest and other income. Interest and other income decreased to $709,000 in the three months ended June 30, 2026, compared to $735,000 in the same period of the prior year. The decrease was primarily due to lower interest income on cash balances in the current period compared to the same period of the prior year. Interest and other income increased to $1.6 million in the six months ended June 30, 2026, compared to $1.4 million 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 $1.0 million for the three months ended June 30, 2026, compared to a net loss of $14.5 million in the three months ended June 30, 2025. Net loss available to common shareholders was $13.9 million for the six months ended June 30, 2026, compared to a net loss of $18.2 million for the six months ended June 30, 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 31 Table of Contents 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 identified 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 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 June 30, 2026, was $1.0 million compared to net loss of $14.5 million for the same period of the prior year. FFO applicable to common shares and Units for the three months ended June 30, 2026, decreased to $23.5 million compared to $24.5 million for the comparable period of the prior year, representing a decrease of 4.0%. This FFO decrease was primarily due to decreased NOI from dispositions along with an increase in general and administrative expense, offset by increased NOI from non-same-store communities and decreased casualty loss, net of recoveries. Net loss available to common shareholders for the six months ended June 30, 2026, was $13.9 million compared to net loss of $18.2 million for the same period of the prior year. FFO applicable to common shares and Units for the six months ended June 30, 2026, decreased to $44.7 million compared to $47.7 million for the comparable period of the prior year, representing a decrease of 6.4%. 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 and decreased casualty loss, net of recoveries. 32 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 Funds from Operations: Net loss available to common shareholders $ (1,020) $ (14,515) $ (13,909) $ (18,249) Adjustments: Noncontrolling interests – Operating Partnership and Series E preferred units (168) (2,483) (2,309) (3,126) Depreciation and amortization 25,075 27,097 51,573 54,751 Less depreciation – non real estate (67) (84) (134) (167) Less depreciation – partially owned entities — (21) — (43) Impairment of real estate investments — 14,543 9,700 14,543 Gain on sale of real estate (271) — (271) — FFO applicable to common shares and Units $ 23,549 $ 24,537 $ 44,650 $ 47,709 Adjustments to Core FFO: Non-cash casualty (recovery) loss (65) 149 (258) 431 Interest rate swap amortization — 174 — 349 Amortization of assumed debt 489 418 854 835 Severance and related costs 880 — 880 — Legal and other costs related to strategic review 127 — 1,104 — Other miscellaneous items (1) — 19 (209) (48) Core FFO applicable to common shares and Units $ 24,980 $ 25,297 $ 47,021 $ 49,276 FFO applicable to common shares and Units $ 23,549 $ 24,537 $ 44,650 $ 47,709 Distributions to Series D preferred unitholders 58 160 115 320 FFO applicable to common shares and Units - diluted $ 23,607 $ 24,697 $ 44,765 $ 48,029 Core FFO applicable to common shares and Units $ 24,980 $ 25,297 $ 47,021 $ 49,276 Distributions to Series D preferred unitholders 58 160 115 320 Core FFO applicable to common shares and Units - diluted $ 25,038 $ 25,457 $ 47,136 $ 49,596 Per Share Data Net loss per common share - basic and diluted (2) $ (0.07) $ (0.87) $ (0.83) $ (1.09) FFO per share and Unit - diluted $ 1.20 $ 1.24 $ 2.27 $ 2.42 Core FFO per share and Unit - diluted $ 1.27 $ 1.28 $ 2.39 $ 2.50 Weighted average shares - basic and diluted for net income (loss) 16,810 16,741 16,792 16,734 Effect of operating partnership Units for FFO and Core FFO 895 971 905 975 Effect of Series D preferred units for FFO and Core FFO 82 228 82 228 Effect of Series E preferred units for FFO and Core FFO 1,883 1,905 1,888 1,906 Effect of dilutive restricted stock units and stock options for FFO and Core FFO 29 25 29 25 Weighted average shares and Units for FFO and Core FFO - diluted 19,699 19,870 19,696 19,868 (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 new real estate during the six months ended June 30, 2026. During the six months ended June 30, 2026, we disposed of one apartment community in one transaction for a sales price of $30.0 million. Refer to Note 8 in the Condensed Consolidated Financial Statements for more information. Distributions Declared Distributions of $0.77 and $1.54 per common share and Unit were declared during the three and six months ended June 30, 2026 and 2025. Distributions of $0.9655 and $1.931 per Series D preferred unit were declared during the three and six months ended June 30, 2026 and 2025. Distributions of $0.96875 and $1.9375 per Series E preferred unit were declared during the three and six months ended June 30, 2026 and 2025. 33 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 June 30, 2026, we had total liquidity of approximately $242.6 million, which included $234.0 million available on the lines of credit based on the value of unencumbered properties and $8.6 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 June 30, 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 June 30, 2026, there was $176.0 million outstanding on this line of credit, bearing interest at a rate of 4.87%, and additional borrowing availability was $224.0 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 June 30, 2026 the interest rate on this line of credit was 5.87% and there was no outstanding balance, 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 34 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 June 30, 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 between September 2028 and September 2033, and a blended, weighted average fixed interest rate of 2.78%. As of June 30, 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 $346.3 million on 9 apartment communities at June 30, 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 June 30, 2026 and December 31, 2025, the weighted average interest rate on mortgage debt was 3.94% and 3.88%, respectively. 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 June 30, 2026. Equity We have entered into an equity distribution agreement in connection with an at-the-market offering program (“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 and six months ended June 30, 2026 and 2025. As of June 30, 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 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. The table below provides details on the shares repurchased under this program during the three and six months ended June 30, 2026. There were no shares repurchased during the three and six months ended June 30, 2025. As of June 30, 2026, the Company had $94.0 million remaining authorized for purchase under the Share 35 Table of Contents Repurchase Program. (in thousands, except per share amounts) Three Months Ended June 30, Number of Common Shares Aggregate Cost (1) Average Price Per Share (1) 2026 45 $ 2,516 $ 55.54 Six Months Ended June 30, 2026 45 $ 2,516 $ 55.54 (1) Amount includes commissions. We had 1.6 million Series E preferred units (noncontrolling interests) outstanding on June 30, 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 $155.9 million and $157.0 million as of June 30, 2026 and December 31, 2025, respectively. The holders of the Series E preferred units do not have voting rights. We had 59,400 Series D preferred units outstanding on June 30, 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 June 30, 2026 and December 31, 2025. Changes in Cash, Cash Equivalents, and Restricted Cash As of June 30, 2026, we had cash and cash equivalents of $8.6 million and restricted cash consisting of $1.9 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. In addition to cash flows from operations of $44.1 million during the six months ended June 30, 2026, we generated capital from various activities, including: • Receiving $29.5 million in net proceeds from the sale of one apartment community; and • Receiving $21.1 million in net draws on our lines of credit. During the six months ended June 30, 2026, we used capital for various activities, including: • Repaying $53.8 million of mortgage principal; • Funding capital improvements for apartment communities of approximately $13.0 million; • Paying distributions on common shares, Series E preferred units, and Units of $30.3 million; and • Repurchasing 45,310 common shares for an average of $55.54 per share. 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 and geopolitical risk. Supply chain and inflationary pressures are likely to result in increased operating expenses, specifically, increases in 36 Table of Contents 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 June 30, 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 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 six months ended June 30, 2026. 37 Table of Contents