What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-21 · 117 added, 100 removed, 683 unchanged (24% of the section changed)

4 unchanged sentences

Our operating results are subject to risks generally incident to the ownership and rental of residential real estate, many of which are beyond our control, including, without limitation:

• unfavorable global and United States economic conditions (including inflation and interest rates), uncertainty in financial markets, and geopolitical tensions;

• fluctuating global and United States economic conditions, uncertainty in financial markets, and geopolitical tensions;

• bank failures or other liquidity constraints affecting financial institutions;

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• the short-term nature of most residential leases and the costs and potential delays in re-leasing;

• changes in laws, including those that increase operating expenses or limit our ability to increase rental rates.

• changes in laws and regulations, including those that increase operating expenses or limit our ability to increase rental rates.

See “Legal and Regulatory Related Risks — Eviction, tenant rights, rent control, and rent stabilization laws, and other similar laws and/or regulations that limit our ability to collect rent, enforce remedies for failure to pay rent, or increase rental rates may negatively impact our rental income and profitability ;

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A softening of the rental market in our core areas would reduce our rental revenue and profitability.

Inflation could adversely affect our business and financial results.

Inflation, which continued to increase during 2023, has adversely affected us by increasing the costs of products, materials, and labor needed to operate our business and could continue to adversely affect us in future periods.

Inflation and other macroeconomic factors could adversely affect our business and financial results.

General economic conditions in the United States have fluctuated in recent quarters, and concerns persist regarding adverse macroeconomic conditions, such as fluctuating global and United States economic conditions (including elevated interest rates, political dissension, and labor shortfalls).

Persistent inflation has adversely affected us by increasing the costs of products, materials, and labor needed to operate our business and could continue to adversely affect us in future periods.

The effects of inflation on our financial condition and results of operations over the past few years are primarily related to increased operating costs for the procurement of goods and service, compensation of our associates, including benefits, and financing costs in the form of interest expense.

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Actions by the government to stimulate the economy may increase the risk of significant inflation, which may also have an adverse impact on our business or financial results.

Additionally, volatility in the financial markets and elevated interest rates could affect our ability to access the capital markets at a time when we desire, or need, to do so which could have an impact on our flexibility to pursue additional growth opportunities and maintain our desired level of revenue growth in the future.

Mandated and proposed tariffs to be imposed by the United States on imports from certain countries and potential counter-tariffs in response could lead to increased costs and supply chain disruptions.

If we are not able to navigate any such changes, they could have a material adverse effect on our business and results of operations, as well as on the price of our common stock.

Increasing property taxes, insurance costs, and HOA fees may negatively affect our financial results.

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If we fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale.

Current and potential impacts of climate change along with the increased risk of extreme weather events and natural disasters have caused significant increases in our property insurance premiums and may adversely affect the availability and terms of coverage in the future.

See “Risks Related to our Business and Operations — We may suffer losses that are not covered by insurance.

” Additionally, “social inflation” caused the cost of general liability claims to rise at a rate above general economic inflation, primarily due to a trend in increasing litigation costs related to unpredictable jury verdicts for plaintiffs seeking large monetary relief for their injuries.

In general, these factors have put pressure on insurance premiums

and made it more challenging to obtain appropriate insurance coverage at reasonable rates without the assumption of increasingly higher levels of self-retained risk.

In addition, a significant portion of our properties are located within HOAs, and we are subject to HOA rules and regulations.

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We may not be able to effectively manage our growth, and any failure to do so may have an adverse effect on our business and operating results.

Since commencing operations in 2012, we have grown rapidly, assembling a portfolio of approximately 85,000 owned homes as of December 31, 2023 and providing property and asset management services to portfolio owners of single-family residential properties.

Since commencing operations in 2012, we have grown rapidly, assembling a portfolio of 85,138 owned homes as of December 31, 2024 and providing property and asset management services to portfolio owners of single-family residential

Our future operating results may depend on our ability to effectively manage our growth, which is dependent, in part, upon our ability to:

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Some components of our fixed assets depreciate more rapidly and require ongoing capital expenditures.

Our expenses and ongoing capital expenditures are also affected by inflationary increases, and certain of our cost increases may exceed the rate of inflation in any given period or market.

Our expenses and ongoing capital expenditures are also affected by continued inflationary pressures, and certain of our cost increases may exceed the rate of inflation in any given period or market.

Our rental income is affected by many factors beyond our control, such as the availability of alternative rental housing and economic conditions in our markets.

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Competition for highly skilled managerial, investment, financial, and operational associates is intense.

As additional large real estate investors enter into and expand their scale within the single-family rental business, we have faced increased

challenges in hiring and retaining associates, and we cannot assure our stockholders that we will be successful in attracting and retaining such skilled associates.

As additional large real estate investors enter into and expand their scale within the single-family rental business, we have faced increased challenges in hiring and retaining associates, and we cannot assure our stockholders that we will be successful in attracting and retaining such skilled associates.

If we are unable to hire and retain qualified associates as required, our growth and operating results could be adversely affected.

Our ability to meet our labor needs while controlling our labor costs is subject to numerous external factors, including unemployment levels, prevailing wage rates, rising inflation, changing demographics, and changes in employment legislation.

High unemployment levels and federal unemployment subsidies may adversely affect the labor force available to us or increased labor costs.

Our ability to meet our labor needs while controlling our labor costs is subject to numerous external factors, including unemployment levels, prevailing wage rates, persisting inflation, changing demographics, and changes in employment legislation.

High unemployment levels and federal unemployment subsidies may adversely affect the labor force available to

us or increased labor costs.

In addition, we continue to experience disruptions from workforce turnover due to a scarcity of talent, as businesses compete for personnel, and rising labor costs.

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Our properties have infrastructure and appliances of varying ages and conditions.

Consequently, we routinely retain independent contractors and trade professionals to perform physical repair work and are exposed to all of the risks inherent in property renovation and maintenance, including potential cost overruns, increases in labor and materials costs, delays by contractors in completing work, delays in the timing of receiving necessary work permits, delays in receiving materials,

fixtures, or appliances, certificates of occupancy, and poor workmanship.

Labor shortages and supply chain disruptions, among other challenges, continue to affect the ability of our associates, suppliers, and other business partners to carry out their assigned tasks, provide services, or supply materials at ordinary levels of performance relative to the conduct of our business.

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Many of our positions require specialized skill sets resulting in a longer than average time period to fill position vacancies.

If our assumptions regarding the costs or timing of renovation and maintenance across our properties prove to be materially inaccurate, our operating results and ability to make distributions to our stockholders may be adversely affected.

If our assumptions regarding the costs or

timing of renovation and maintenance across our properties prove to be materially inaccurate, our operating results and ability to make distributions to our stockholders may be adversely affected.

We face significant competition in the leasing market for quality residents, which may limit our ability to lease the single-family homes we own and manage on favorable terms.

We depend on rental income from residents for substantially all of our revenues.

As a result, our success depends in large part upon our ability to attract and retain qualified residents for our properties.

As a result, our success depends in large part upon our ability to attract and retain qualified residents for our owned and managed properties.

We face competition for residents from other lessors of single-family properties, apartment buildings, and condominium units.

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In addition, increases in unemployment levels and other adverse changes in economic conditions in our markets may adversely affect the creditworthiness of potential residents, which may decrease the overall number of qualified residents for our properties within such markets.

Unfavorable global and United States economic conditions (including inflation and interest rates), uncertainty in financial markets (including due to bank failures), may materially negatively impact our residents, such as being unable to access their existing cash to fulfill their payment obligations to us due to future bank failures, and our business could be negatively impacted.

Fluctuating global and United States economic conditions, uncertainty in financial markets (including due to bank failures), may materially negatively impact our residents, such as being unable to access their existing cash to fulfill their payment obligations to us due to future bank failures, and our business could be negatively impacted.

We could also be adversely affected by overbuilding or high vacancy rates of homes in our markets, which could result in an excess supply of homes and reduce occupancy and rental rates.

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• tax or other government incentives that encourage homeownership.

A general decline in business activity and demand for real estate transactions could adversely affect our ability to acquire or dispose of single-family homes on terms that are attractive or at all, which may be impacted in periods of rising interest rates.

We plan to continue acquiring properties as long as we believe such properties offer an attractive total return opportunity.

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We depend on rental income from residents for substantially all of our revenues.

As a result, our success depends in large part upon our ability to attract and retain qualified residents for our properties.

As a result, our success depends in large part upon our ability to attract and retain qualified residents for our owned and managed properties.

Our reputation, financial performance, and ability to make distributions to our stockholders would be adversely affected if a significant number of our residents fail to meet their lease obligations or fail to renew their leases.

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We are authorized to follow a broad investment policy established by our board of directors and subject to implementation by our management.

Our board of directors periodically reviews and updates the investment policy and also reviews our portfolio of residential real estate, but it generally does not review or approve specific property acquisitions.

Our board of directors periodically reviews and updates the investment policy and also

reviews our portfolio of residential real estate, but it generally does not review or approve specific property acquisitions.

Our success depends on our ability to acquire properties that can be quickly possessed, renovated, repaired, upgraded, and rented with minimal expense and maintained in quality condition.

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When we purchase properties in bulk or through an auction process, we often do not have the opportunity to conduct interior inspections or conduct more than cursory exterior inspections on a portion of the properties, if at all.

Such inspection processes may fail to reveal major defects associated with such properties, which may cause the amount of time and cost required to renovate and/or maintain such properties to substantially exceed our estimates.

Such inspection processes may fail to reveal major defects associated with

such properties, which may cause the amount of time and cost required to renovate and/or maintain such properties to substantially exceed our estimates.

The costs involved in locating and performing due diligence (when feasible) on portfolios of homes as well as negotiating and entering into transactions with potential portfolio sellers could be significant, and there is a risk that either the seller may withdraw from the entire transaction for failure to come to an agreement or the seller may not be willing to sell us the bulk portfolio on terms that we view as favorable.

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Further, poor performance by homebuilder counterparties may reflect poorly on us and could damage our reputation.

Additionally, governmental laws, regulations, and zoning requirements may be imposed that restrict our ability to purchase homes from third-party homebuilders that are intended for rental purposes in areas where we would like to invest.

Governmental laws, regulations, and zoning requirements may be imposed that restrict our ability to purchase homes from third-party homebuilders that are intended for rental purposes in areas where we would like to invest.

Managing newly constructed communities presents specific risks to our business, such as the inability to lease newly-constructed rental homes at anticipated rates, resulting in underperformance of investment returns.

Factors such as adverse site selection, inclement weather delaying construction or occupancy, and other risks can exacerbate these challenges.

Failure to achieve occupancy or rental income targets for newly constructed communities may adversely impact our growth and results of operations.

Unoccupied homes could be difficult to lease, which could adversely affect our revenues.

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In particular, a number of our properties are located in areas that are known to be subject to increased earthquake activity, fires, or wind and/or flood risk.

For example, in 2024, various parts of the United States and our properties in Texas, Florida, Atlanta, and the Carolinas were impacted by Hurricanes Beryl, Debby, Helene, and Milton, as well as by wildfires in California and other geographies.

Any and all such severe weather events may be exacerbated by global climate change, resulting in increased insurance premiums and deductibles, or a decrease in the availability of coverage.

See “Risks Related to Environmental, Social, and Governance Issues — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather .” While we have annual policies for earthquakes, hurricane, and/or flood risk, our properties may nonetheless incur casualty losses that are not fully covered by insurance.

In such an event, the value of the affected properties would be reduced by the amount of any such uninsured loss, and we could experience a significant loss of capital invested and potential revenues in such properties and could potentially remain obligated under any recourse debt associated with such properties.

Inflation, changes in building codes and ordinances, environmental considerations, and other factors might also keep us from using insurance proceeds to replace or renovate a

particular property after it has been damaged or destroyed.

See “Risks Related to Sustainability, Corporate Responsibility, and Governance — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather .” While we have annual policies for earthquakes, hurricane, and/or flood risk, our properties may nonetheless incur casualty losses that are not fully covered by insurance.

remain obligated under any recourse debt associated with such properties.

Inflation, changes in building codes and ordinances, environmental considerations, and other factors might also keep us from using insurance proceeds to replace or renovate a particular property after it has been damaged or destroyed.

Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position in the damaged or destroyed property.

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For all these reasons, it is possible that providing professional property and asset management services could result in the distraction of our management or inconsistencies in our operations, services, standards, controls, policies, and procedures, any of which could adversely affect our business and financial results.

We are employing a business model with a limited track record, which may make our business difficult to evaluate.

Until recently, the single-family rental business was comprised primarily of private and individual investors in local markets and was managed individually or by small, non-institutional owners and property managers.

Our business strategy involves purchasing, renovating, maintaining, and managing a large number of residential properties and leasing them to qualified residents.

Entry into this market by large, well-capitalized investors is a relatively recent trend, so few peer companies exist and none have yet established long-term track records that might assist us in predicting whether our business model and investment strategy can be implemented and sustained over an extended period of time.

It may be difficult to evaluate our potential future performance without the benefit of established long-term track records from companies implementing a similar business model.

We may encounter unanticipated problems as we continue to refine our business model, which may adversely affect our results of operations and ability to make distributions to our stockholders and cause our stock price to decline significantly.

We have a limited operating history and may not be able to operate our business successfully or generate sufficient cash flows to make or sustain distributions to our stockholders.

We have a limited operating history.

As a result, an investment in our common stock may entail more risk than an investment in the common stock of a real estate company with a substantial operating history.

We may not be able to operate our business successfully or generate sufficient cash flows to make or sustain distributions to our stockholders.

If we are unable to operate our business successfully, we would not be able to generate sufficient cash flow to make or sustain distributions to our stockholders, and stockholders could lose all or a portion of the value of their ownership in our common stock.

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Legal and Regulatory Related Risks

and zoning requirements, may adversely affect our ability to make future acquisitions, renovations, or dispositions, result in significant costs, delays, or losses, and adversely affect our growth strategy.

Rental homes are subject to various federal, state, and local laws and regulatory requirements, including permitting, licensing, and zoning requirements.

Compliance with existing governmental laws, regulations, and covenants (or those that may be enacted in the future) that are applicable to the properties we own and manage on behalf of others, including affordability covenants, permit, license, and zoning requirements, may adversely affect our ability to make future acquisitions, renovations, or dispositions, result in significant costs, delays, or losses, and adversely affect our growth strategy.

Rental homes are subject to various federal, state, and local laws and regulatory requirements, including permitting, licensing, and zoning requirements, some of which may conflict with one another or have limited judicial or regulatory interpretations.

In light of the recent change in administration in the United States, there is considerable uncertainty and potential conflict regarding and among existing laws, judicial orders and bans, new presidential executive orders, regulatory frameworks, leadership changes, and enforcement priorities and strategies, further complicating regulatory compliance.

A disparity between federal and state regulations increases the likelihood of heightened state regulatory risk, as compliance with federal standards may not fully align with more stringent or divergent state-level requirements.

Brokerage of real estate leasing transactions and the provision of property management services require us and our associates to maintain applicable licenses in each state in which we perform these services.

If we and our associates fail to maintain our licenses, conduct these activities without a license, or violate any of the regulations covering our licenses, we may be required to pay fines or return commissions received or have our licenses suspended or revoked.

Local regulations, including municipal or local ordinances, restrictions, and restrictive covenants imposed by community developers may restrict our or the use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring any of our properties or when undertaking renovations of any of our existing properties.

organizations at any time with respect to our properties, including prior to acquiring any of our properties or when undertaking renovations of any of our existing properties.

Among other things, these restrictions may relate to fire and safety, seismic, asbestos-cleanup, or hazardous material abatement requirements.

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We cannot anticipate what form such legal actions might take or what remedies they may seek.

Although we are not involved in any legal or regulatory proceedings that we expect would have a material adverse effect on our business, results of operations, or financial condition, such proceedings may impose on us significant litigation expenses, including settlements to avoid continued litigation or judgments for damages or injunctions.

In August 2021, the Federal Trade Commission (“FTC”) initiated an investigation into certain of our business practices, focusing on our general operations and practices during the COVID-19 pandemic.

After fully cooperating with the inquiry and engaging in extensive negotiations, we entered into a stipulated order with the FTC in September 2024, resolving all aspects of the investigation without any admission of liability and agreeing to $48.0 million in monetary relief.

Separately, in July 2024, we reached a settlement agreement in the legal dispute City of San Diego et al v.

Invitation Homes, Inc ., which fully released INVH without any admission of liability.

In October 2024, $20.0 million from the settlement was disbursed to the plaintiffs.

While we are not currently involved in any legal or regulatory proceedings that we expect to have a material adverse effect on our business, results of operations, or financial condition, such proceedings have imposed, and may in the future impose, on us significant litigation expenses, including settlements to avoid continued litigation or judgments for damages or injunctions.

Contingent or unknown liabilities could adversely affect our financial condition, cash flows, and operating results.

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In particular, under a Florida statutory framework implemented by certain Florida jurisdictions, a violation of the relevant building codes, zoning codes, or other similar regulations applicable to a property may result in a lien on that property and all other properties owned by the same violator and located in the same county as the property with the code violation, even though the other properties might not be in violation of any code.

Until a municipal inspector verifies that the violation has been remedied and any applicable fines have been paid, additional fines accrue on the amount of the lien and the lien may not be released, in each case even at those properties that are not in violation.

Until a municipal inspector verifies that the

violation has been remedied and any applicable fines have been paid, additional fines accrue on the amount of the lien and the lien may not be released, in each case even at those properties that are not in violation.

As a practical matter, it might be possible to obtain a release of these liens without remedying the property in violation through other methods, such as payment of an amount to the relevant county, although no assurance can be given that this option will necessarily be available or how long such a process would take.

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Some HOAs impose limits on the number of property owners who may lease their homes, which, if met or exceeded, would cause us to incur additional costs to sell the property and opportunity costs from lost rental revenue.

Furthermore, residents may violate HOA rules and incur fines for which the owner of the property may be liable and for which we may not, on

behalf of the owner, be able to obtain reimbursement from the resident.

Furthermore, residents may violate HOA rules and incur fines for which the owner of the property may be liable and for which we may not, on behalf of the owner, be able to obtain reimbursement from the resident.

Additionally, the governing bodies of the HOAs in which we own property may not make important disclosures about the properties or may block our access to HOA records, initiate litigation, restrict our ability to sell our properties, impose assessments, or arbitrarily change the HOA rules.

We may be unaware of or unable to review or comply with HOA rules before purchasing a property, and any such excessively restrictive or arbitrary regulations may cause us to sell such property at a loss, prevent us from leasing such property, or otherwise reduce our cash flow from such property, which would have an adverse effect on our returns on these properties.

We may be unaware of or unable to review or comply with HOA rules before purchasing a property, and any such excessively

restrictive or arbitrary regulations may cause us to sell such property at a loss, prevent us from leasing such property, or otherwise reduce our cash flow from such property, which would have an adverse effect on our returns on these properties.

Several states have enacted laws that provide that a lien for unpaid monies owed to an HOA may be senior to or extinguish mortgage liens on properties.

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Implementation of such investments in information technology could exceed estimated budgets, and we may experience challenges that prevent new strategies or technologies from being realized.

If we are unable to maintain current information technology and processes or encounter delays, or fail to exploit new technologies, then the execution of our business plans

may be disrupted.

If we are unable to maintain current information technology and processes or encounter delays, or fail to exploit new technologies, then the execution of our business plans may be disrupted.

Similarly, our associates require effective tools and techniques to perform functions integral to our business.

We currently use limited traditional and generative artificial intelligence (“AI”) solutions for certain marketing, administrative, and other functions.

We currently use limited traditional and generative AI solutions for certain marketing, administrative, and other functions.

We may incorporate additional generative AI solutions into our information systems in the future and these solutions may become important in our operations over time.

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We are subject to numerous, complex, and frequently changing laws, regulations, and contractual obligations designed to protect personal information.

Various federal and state privacy and data security laws, such as the California Consumer Privacy Act, further expanded by the California Privacy Rights Act, and Nevada Privacy Law, or other regulatory standards create data privacy rights for users, including more ability to control how their data is shared with third parties.

Various continuously evolving and new federal and state privacy and data security laws, such as the California Consumer Privacy Act, further expanded by the California Privacy Rights Act, Nevada Privacy Law, the Colorado Privacy Act, the Utah Consumer Privacy Act, and the Texas Data Privacy and Security Act, or other legal and regulatory standards create data privacy rights for users, including more ability to control how their data is shared with third parties.

These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, require significant management time and attention, and subject us to remedies that may harm our business, including fines and other sanctions resulting from any related breaches of data privacy regulations or demands or orders that we modify or cease existing business practices.

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See “— Security breaches and other disruptions could compromise our information systems and expose us to liability, which would cause our business and reputation to suffer.

Risks Related to Environmental, Social, and Governance Issues

Risks Related to Sustainability, Corporate Responsibility, and Governance

Climate change and related environmental issues, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business.

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properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our results of operations.

In October 2023, California enacted the Climate Corporate Data Accountability Act and the Climate Related Financial Risk Act that will require large public and private companies that do business within the state to disclose their Scopes 1, 2, and 3 GHG emissions, with third-party assurance of GHG emissions information for certain entities, and issue public reports on their climate-related financial risk and related mitigation measures.

Unless modified prior to the effective date, both California laws require initial disclosures in 2026.

In 2023, California also enacted the Voluntary Carbon Market Disclosures Act, which requires companies that operate within the state and make certain climate-related claims to provide enhanced disclosures around the achievement of such claims, starting in 2024.

In March 2022, the SEC issued proposed rules on climate change disclosure requirements that, if adopted as proposed, will require disclosure of extensive and detailed climate-related information, by all registrants, including us.

The final rules have not yet been adopted, and the ultimate scope and impact of the proposed rules on our business remain uncertain.

To the extent new rules, if finalized, impose additional reporting obligations on us, we could face substantial increased costs.

Separately, the SEC has also announced that it is scrutinizing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege that our existing climate disclosures are misleading or deficient.

We expect regulatory disclosure requirements related to ESG matters to continue to expand, which has increased, and may continue to increase, our cost and burden of compliance and subject us to increased legal and reputational risk.

Any assessment of the potential impact of future climate change legislation, regulations, or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change.

Experiencing or addressing the various physical, regulatory, and transition risks from climate change may significantly reduce our revenues and profitability or cause us to generate losses.

We are subject to evolving, complex, and sometimes, inconsistent disclosure obligations promulgated by governmental and regulatory organizations relating to sustainability.

In March 2024, the SEC adopted the final rule under SEC Release No.

33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors .

This rule will require registrants to disclose certain climate-related information in registration statements and annual reports.

In April 2024, the SEC issued an order voluntarily staying the effectiveness of the new rules pending the completion of judicial review of certain legal challenges to their validity.

On February 11, 2025, SEC Acting Chairman Mark T.

Uyeda released a public statement and notified the United States Court of Appeals for the Eighth Circuit (where the challenges are consolidated) to hold off scheduling the case for argument to provide time for the SEC to further deliberate and determine next steps.

Therefore, the timing of the effectiveness of these disclosure requirements is uncertain.

We are currently assessing the effect of new rules on our consolidated financial statements and related disclosures.

Additionally, t he State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026, though the Governor of California has directed further consideration of the implementation deadlines for each of the laws.

Both laws have been challenged in federal court.

Unless legal challenges to the foregoing new rules prevail or they are otherwise modified prior to effective dates or the effective dates are delayed, we will become subject to the rules as adopted, and they could significantly increase compliance burdens and associated regulatory costs and complexity.

Regulatory requirements related to sustainability matters continue to evolve and any assessment of the potential impact of future climate change legislation, regulations, or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change.

We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather.

Natural disasters, severe weather such as earthquakes, tornadoes, wind, floods, droughts, and wildfires may result in significant damage to our properties.

Natural disasters, severe weather such as earthquakes, tornadoes, hurricanes, wind, floods, droughts, and wildfires may result in significant damage to our properties.

The extent of our casualty losses and loss of income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area.

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We are subject to risks from events such as natural disasters, severe weather, and wildfires, which may have a significant negative effect on our financial condition and results of operations.

Furthermore, global climate change may impact the effect of any and all of these factors.

Similarly, significant changes in precipitation could lead to increases in droughts or wildfires that could adversely impact demand for our properties.

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Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances.

Even if more than one person may have been responsible for the contamination, each person covered by applicable environmental laws may be held responsible for all of the clean-up costs incurred.

Even if more than one person may have been responsible for the contamination, each person covered by

applicable environmental laws may be held responsible for all of the clean-up costs incurred.

In addition, third parties may sue the owner or operator of a site for damages based on personal injury, natural resources, or property damage or other costs, including investigation and clean-up costs, resulting from the environmental contamination.

The presence of hazardous or toxic substances on one of our properties, or the failure to properly remediate a contaminated property, could give rise to a

lien in favor of the government for costs it may incur to address the contamination or otherwise adversely affect our ability to sell or lease the property or borrow using the property as collateral.

The presence of hazardous or toxic substances on one of our properties, or the failure to properly remediate a contaminated property, could give rise to a lien in favor of the government for costs it may incur to address the contamination or otherwise adversely affect our ability to sell or lease the property or borrow using the property as collateral.

Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated.

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The cost of defending against environmental claims, of compliance with environmental regulatory requirements, or of remediating any contaminated property could materially and adversely affect us.

Compliance with new or more stringent environmental laws or regulations or stricter interpretation of existing laws may require material expenditures by us.

Compliance with evolving environmental laws or regulations or stricter interpretation of such laws may require material expenditures by us.

We are subject to environmental laws or regulations relating to our properties, such as those concerning lead-based paint, mold, asbestos, proximity to power lines, or other issues.

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Failure to comply with applicable laws and regulations could result in fines and/or damages, suspension of personnel, civil liability, or other sanctions.

We are subject to increasing scrutiny from investors and others regarding our environmental, social, governance, or sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate retention, and ability to raise capital from such investors.

Investor advocacy groups, certain institutional investors, investment funds, other market participants, and stakeholders have focused increasingly on the ESG or “sustainability” practices of companies, including those associated with climate change.

We are subject to increasing scrutiny from investors and others regarding our sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate attraction and retention, and ability to raise capital.

Investor advocacy groups, certain institutional investors, investment funds, other market participants, and stakeholders have focused increasingly on sustainability practices of companies, including those associated with climate change.

These parties have placed increased importance on the implications of the social cost of their investments.

If our ESG practices do not meet investor or other industry stakeholder expectations and standards, which continue to evolve, our reputation and associate retention may be negatively impacted based on an assessment of our ESG practices.

Any sustainability disclosures we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental compliance, associate health and safety practices, human capital management, product quality, supply chain management, and workforce inclusion and diversity.

It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.

We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices.

In addition, investors may decide to refrain from investing in us as a result of their assessment of our approach to and consideration of the ESG factors.

Conversely, anti-ESG sentiment has gained some momentum across the United States.

ESG detractors may criticize our sustainability initiatives or take actions against us like boycotts or adverse media campaigns.

If our sustainability practices do not meet investor or other industry stakeholder expectations and standards (including any third-party ratings used by stakeholders), which continue to evolve, our reputation, our ability to attract or retain associates, our ability to access capital, and our attractiveness as an investment or business partner could be negatively affected.

Any sustainability disclosures we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental initiatives, associate health and safety practices, human capital management, product quality, and supply chain management.

If our sustainability practices do not meet investor or other stakeholder expectations and standards, we could also incur additional costs and require additional resources to monitor, report, and comply with various sustainability practices.

Conversely, “anti-ESG” sentiment has gained momentum across the United States.

We could be criticized by “anti-ESG” stakeholders for our sustainability initiatives or become the subject of adverse media campaigns.

Moreover, several states have enacted or proposed “anti-ESG” policies or legislation.

For example, (i) boycott bills in certain states target financial institutions that are perceived as “boycotting” or “discriminating against” companies in certain industries and prohibit state entities from doing business with such institutions and/or investing the state’s assets (including pension plan assets) through such institutions;

and (ii) ESG investment prohibitions in certain states require that relevant state entities or managers/administrators of state investments make investments based solely on pecuniary factors without consideration of ESG factors.

Failure to successfully manage divergent ESG-related expectations across stakeholders could erode stakeholder trust, impact our reputation, and adversely affect our business.

For example, boycott bills in certain states target financial institutions that are perceived as “boycotting” or “discriminating against” companies in certain industries and prohibit state entities from doing business with such institutions and/or investing the state’s assets (including pension plan assets) through such institutions.

In addition, certain states now require that relevant state entities or managers/administrators of state investments make investments based solely on pecuniary factors without consideration of environmental, social, and governance factors.

Failure to successfully manage divergent expectations across stakeholders could erode stakeholder trust, impact our reputation, and adversely affect our business.

Risks Related to Our Indebtedness

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(1) our cash flow may not be sufficient to satisfy required payments of principal and interest;

(2) we may not be able to refinance existing indebtedness or the terms of any refinancing may be less favorable to us than the terms of existing debt;

(2) we may not be able to refinance existing indebtedness or

the terms of any refinancing may be less favorable to us than the terms of existing debt;

(3) required debt payments are not reduced if the economic performance of any property declines;

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(5) any default on our indebtedness could result in acceleration of those obligations and possible loss of property to foreclosure;

(6) the risk that necessary capital expenditures

cannot be financed on favorable terms;

(6) the risk that necessary capital expenditures cannot be financed on favorable terms;

and (7) the value of the collateral securing our indebtedness may fluctuate and fall below the amount of indebtedness it secures.

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Our access to additional third-party sources of financing will depend, in part, on:

• unfavorable global and United States economic conditions (including inflation and interest rates), uncertainty in financial markets (including due to bank failures), and geopolitical tensions;

• fluctuating global and United States economic conditions, uncertainty in financial markets (including due to bank failures), and geopolitical tensions;

• the market’s perception of our growth potential;

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Potential lenders may be unwilling or unable to provide us with financing that is attractive to us or may charge us prohibitively high fees in order to obtain financing.

Consequently, there is uncertainty regarding our ability to access the

credit markets in order to attract financing on reasonable terms.

Consequently, there is uncertainty regarding our ability to access the credit markets in order to attract financing on reasonable terms.

Investment returns on our assets and our ability to make acquisitions could be adversely affected by our inability to secure financing on reasonable terms, if at all.

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Moreover, we cannot be assured that we will be able to access the securitization market in the future, or be able to do so at favorable rates.

Current adverse macroeconomic conditions, including inflation, rising interest rates, slower growth, economic uncertainty, and a general decline in business activity, have caused dislocations, il liquidity, and volatility in the market for asset-backed securities and mortgage-backed securities, as well as disruption in the wider global financial markets, including a significant reduction of investor demand for, and purchases of, asset-backed securities and structured financial products.

Disruptions of the securitization market could

preclude our ability to use mortgage loans as a financing source or could render it an inefficient source of financing, making us more dependent on alternative sourcing of financing that might not be as favorable as mortgage loans in otherwise favorable markets.

Current fluctuating macroeconomic conditions, including inflation, elevated interest rates, slower growth, economic uncertainty, and a general decline in business activity, have caused dislocations, il liquidity, and volatility in the market for asset-backed securities and mortgage-backed securities, as well as disruption in the wider global financial markets, including a significant reduction of investor demand for, and purchases of, asset-backed securities and structured financial products.

Disruptions of the securitization market could preclude our ability to use mortgage loans as a financing source or could render it an inefficient source of financing, making us more dependent on alternative sourcing of financing that might not be as favorable as mortgage loans in otherwise favorable markets.

In addition, in the United States and elsewhere, there is now increased political and regulatory scrutiny of the asset-backed securities industry.

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Borrowings under our debt instruments totaling $3,045.0 million as of December 31, 2024, bear interest at variable rates and expose us to interest rate risk.

In response to increasing inflation, the United States Federal Reserve began to raise short-term interest rates in March 2022 for the first time in over three years and continued raising rates throughout the first half of 2023.

Recently, the Federal Reserve has signaled it expects to hold rates steady.

Rising interest rates could lead to the increases in debt service obligations on our variable rate indebtedness even though the amount borrowed remained the same, and our earnings and cash flows could correspondingly decrease.

Following a series of increases to combat inflation beginning in March 2022, the United States Federal Reserve began reducing short-term interest rates in September 2024.

However, despite these reductions, long-term interest rates have remained elevated, driven by broader market factors.

Elevated interest rates could lead to the increases in debt service obligations on our variable rate indebtedness even though the amount borrowed remained the same, and our earnings and cash flows could correspondingly decrease.

After giving effect to our interest rate swap agreements (see Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for more information), each 100 bps increase or decrease on our floating rate indebtedness would result in an estimated increase or decrease of $0.5 million in annual interest expense.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and

Capital Resources” for more information), each 100 bps increase or decrease on our floating rate indebtedness would result in an estimated increase or decrease of $7.2 million in annual interest expense.

In connection with our debt instruments, we have obtained interest rate caps and swaps, and subject to complying with the requirements for REIT qualification, we may obtain in the future one or more additional forms of interest rate protection (in the form of swap agreements, interest rate cap contracts, or similar agreements) to hedge against the possible negative effects of interest rate fluctuations.

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In addition, the “unsolicited takeover” provisions of Title 3, Subtitle 8 of the MGCL permit our board of directors, without stockholder approval and regardless of what is provided in our charter or bylaws, to implement certain takeover defenses, including adopting a classified board or increasing the vote required to remove a director.

Such takeover defenses may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring, or preventing a change in control of us under the circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-current market price.

Such takeover defenses

may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring, or preventing a change in control of us under the circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-current market price.

Our charter provides that, without the affirmative vote of a majority of the votes cast on the matter by our stockholders entitled to vote generally in the election of directors, we may not elect to be subject to certain provisions of Subtitle 8, including the provisions relating to adopting a classified board or increasing the vote required to remove a director.

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Our board of directors may also classify or reclassify any unissued stock and set or change the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption of any such stock, which rights may be superior to those of our common stock.

of our outstanding common stock might receive a premium for their shares of stock over the then current market price of our common stock.

Thus, our board of directors could authorize the issuance of shares of a class or series of stock with terms and conditions which could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our outstanding common stock might receive a premium for their shares of stock over the then current market price of our common stock.

Our rights and the rights of our stockholders to take action against our directors and officers are limited.

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Our charter also provides that, to the maximum extent permitted from time to time by Maryland law, in the event that any of our non-employee directors, or any of their respective affiliates, acquires knowledge of a potential transaction or other business opportunity, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and may take any such opportunity for itself, himself, or herself or offer it to another person or entity unless the business opportunity is expressly offered to such person in his or her capacity as our director.

trading price of our common stock, and our ability to satisfy our debt service obligations and to pay dividends to our stockholders.

These provisions may limit our ability to pursue business or investment opportunities that we might otherwise have had the opportunity to pursue, which could have an adverse effect on our financial condition, our results of operations, our cash flow, the per share trading price of our common stock, and our ability to satisfy our debt service obligations and to pay dividends to our stockholders.

Risks Related to our REIT Status and Certain Other Tax Items

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For instance, at the end of each calendar quarter, at least 75% of the value of our assets must consist of cash, cash items, government securities, and qualified REIT real estate assets.

The remainder of our investments in securities (other than

qualified real estate assets and government securities) generally cannot include more than 10% of the outstanding voting securities of any one issuer or 10% of the total value of the outstanding securities of any one issuer unless we and such issuer jointly elect for such issuer to be treated as a TRS under the Code.

The remainder of our investments in securities (other than qualified real estate assets and government securities) generally cannot include more than 10% of the outstanding voting securities of any one issuer or 10% of the total value of the outstanding securities of any one issuer unless we and such issuer jointly elect for such issuer to be treated as a TRS under the Code.

The total value of all of our investments in TRSs cannot exceed 20% of the value of our total assets.

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Even if we qualify to be subject to United States federal income tax as a REIT, we could be subject to tax on any unrealized net built-in gains in certain assets.

As part of our pre-IPO reorganization transactions, we acquired certain appreciated assets that were held (directly or indirectly) in part by one or more C corporations in transactions in which the adjusted tax basis of the assets in our hands is

determined by reference to the adjusted basis of such assets in the hands of such C corporations.

If we dispose of any such appreciated assets during the five-year period following the date we acquired those assets, we will be subject to United States federal income tax on the portion of such gain attributable to such C corporations at the highest corporate tax rates to the extent of the excess of the fair market value of such assets on the date that we acquired those assets over the adjusted tax basis of such assets on such date, which are referred to as built-in gains.

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There can be no assurance that our board of directors, as permitted in the charter, will not decrease this ownership limit in the future, and any decision to grant a waiver from the ownership limit in any particular instance is at the sole discretion of our board of directors.

Any attempt to own or transfer shares of our common stock in excess of the ownership limit without the consent of our board of directors will result either in the shares of stock in excess of the limit being transferred by operation of the charter to a charitable trust, and the person who attempted to acquire such excess shares of stock will not have any rights in such excess shares of stock, or in the transfer being void.

Any attempt to own or transfer shares of our common stock in excess of the ownership limit without

the consent of our board of directors will result either in the shares of stock in excess of the limit being transferred by operation of the charter to a charitable trust, and the person who attempted to acquire such excess shares of stock will not have any rights in such excess shares of stock, or in the transfer being void.

The ownership limit may have the effect of precluding a change in control of us by a third party, even if such change in control would be in the best interests of our stockholders or would result in receipt of a premium to the price of our common stock (and even if such change in control would not reasonably jeopardize our REIT status).

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Furthermore, if such cash available for distribution decreases in future periods from expected levels, our inability to make the expected distributions could result in a decrease in the market price of our common stock.

In addition, our charter

allows us to issue preferred stock that could have a preference over our common stock as to distributions.

In addition, our charter allows us to issue preferred stock that could have a preference over our common stock as to distributions.

All distributions will be made at the sole discretion of our board of directors and will depend upon a number of factors, including our actual and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other obligations, debt covenants, contractual prohibitions or other limitations, and applicable law and such other matters as our board of directors may deem relevant from time to time.

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We cannot predict whether, when or to what extent new United States federal tax laws, regulations, interpretations, or rulings will be adopted.

Any legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect our taxation or our stockholders.

Any legislative action may

prospectively or retroactively modify our tax treatment and, therefore, may adversely affect our taxation or our stockholders.

Any such changes could have an adverse effect on an investment in our stock or on the market value or the resale potential of our assets.

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There can be no assurance that we will be able to comply with the TRS limitations or avoid application of the 100% excise tax.

We may face risks in connection with Section 1031 exchanges.

We may dispose of real property in a transaction intended to qualify as a like-kind exchange under Section 1031 of the Code (“Section 1031 Exchange”).

As a result, we may not have immediate access to the cash proceeds that are required to be held by an intermediary.

In addition, if a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of real property on a tax-deferred basis.

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

What changed 10-K

Item 1A. Risk Factors