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What changed in AvalonBay Communities's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of AvalonBay Communities's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+388 added−358 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-27)

Top changes in AvalonBay Communities's 2025 10-K

388 paragraphs added · 358 removed · 298 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe believe direct involvement in construction enables us to achieve higher construction quality, greater control over construction schedules and cost savings. Our development, property management and construction teams monitor construction progress to ensure quality workmanship and a smooth and timely transition into the leasing and operating phase.
Biggest changeOur development, property management and construction teams monitor construction progress to ensure quality workmanship and a smooth and timely transition into the leasing and operating phase. Throughout this report, the term "development" is used to refer to the entire property development cycle, including pursuit of zoning approvals, procurement of architectural and engineering designs and the construction process.
We undertake our development and redevelopment activities primarily through in-house development and redevelopment teams, and buy and dispose of assets through our in-house investments platform. We believe that our organizational structure, which includes dedicated development and operational teams, and strong culture are key differentiators.
We undertake our development and redevelopment activities primarily through in-house development and redevelopment teams, and we buy and dispose of assets through our in-house investments platform. We believe that our organizational structure, which includes dedicated development and operational teams, and strong culture are key differentiators.
While we emphasize equity real estate investments in rental apartment communities, we have the ability to invest in other activities and to make non-equity investments, including the following: • Structured Investment Program : while we generally invest in multifamily real estate through fee simple ownership or an equity investment in a joint venture, we operate an investment platform through which we provide mezzanine loans or preferred equity to third-party multifamily developers in our existing regions. • Commercial space : we develop, own and lease commercial space at our communities when either (i) the highest and best use of the space is for commercial (e.g., street level in an urban area); (ii) we believe the commercial space will enhance the attractiveness of the community to residents; or (iii) some component of commercial space is required to obtain entitlements to build apartment homes. • Property technology and environmentally focused companies and investment management funds : we have also invested, either through a wholly-owned TRS, or in an investment vehicle that has elected to be treated as a TRS, in companies (and in venture funds that invest in companies) that provide technology services to the real estate industry, and we have invested, through a TRS, in environmentally focused companies and investment management funds to further our sustainability efforts and learning. • For-sale real estate development : we may also develop a property in conjunction with another real estate company that will own and operate the commercial or for-sale residential components of a mixed-use building or project that we help develop.
While we emphasize equity real estate investments in rental apartment communities, we have the ability to invest in other activities and to make non-equity investments, including the following: • Structured Investment Program : while we generally invest in multifamily real estate through fee simple ownership or an equity investment in a joint venture, we operate an investment platform through which we provide mezzanine loans or preferred equity to third-party multifamily developers in our existing regions. 4 Table of Contents • Commercial space : we develop, own and lease commercial space at our communities when either (i) the highest and best use of the space is for commercial (e.g., street level in an urban area); (ii) we believe the commercial space will enhance the attractiveness of the community to residents; or (iii) some component of commercial space is required to obtain entitlements to build apartment homes. • Third-party property technology and sustainability focused companies and investment management funds : we have also invested, either through a wholly-owned TRS, or in an investment vehicle that has elected to be treated as a TRS, in companies (and in venture funds that invest in companies) that provide technology services to the real estate industry, and we have invested, through a TRS, in environmentally focused companies and investment management funds to further our sustainability efforts and learning. • For-sale real estate development : we may also develop a property in conjunction with another real estate company that will own and operate the commercial or for-sale residential components of a mixed-use building or project that we help develop.
Our principal strategies to maximize operating income include: • focusing on associate engagement and resident satisfaction; • employing an innovative and continually evolving operating model that combines effective onsite associates with the capabilities of our centralized shared services center, technology platform and digital offerings and various automation technologies including the use of artificial intelligence ("AI"); • utilizing data science and our operating experience to optimize Net Operating Income ("NOI") from the portfolio, including making operating decisions that reduce customer acquisition, transaction and retention costs; • staggering lease terms such that lease expirations are matched with seasonal demand; and • delivering high occupancy with premium pricing for various customer segments.
Our principal strategies to maximize operating income include: • focusing on associate engagement and resident satisfaction; • employing an innovative and continually evolving operating model that combines effective onsite associates with the capabilities of our centralized shared services center, technology platform and digital offerings and various automation technologies, including the use of AI; • utilizing data science and our operating experience to optimize Net Operating Income ("NOI") from the portfolio, including making operating decisions that reduce customer acquisition, transaction and retention costs; • staggering lease terms such that lease expirations are matched with seasonal demand; and • delivering high occupancy with premium pricing for various customer segments.
From an operating perspective, we seek to deliver seamless, personalized experiences for our residents on an efficient and effective basis by our resident-focused on-site associates that are supported by our centralized shared services operating organization and flexible technology platform that incorporates automation and artificial intelligence.
From an operating perspective, we seek to deliver seamless, personalized experiences for our residents on an efficient and effective basis by our resident-focused on-site associates that are supported by our centralized shared services operating organization and flexible technology platform that incorporates automation and artificial intelligence ("AI").
In addition, the charters of our Board's Nominating, Governance and Corporate Responsibility Committee, Audit Committee and Compensation Committee, as well as our Director Independence Standards, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Policy Regarding Shareholder Rights Agreements, Policy Regarding Shareholder Approval of Future Severance Agreements, Senior Officer Stock Ownership Guidelines, Policy on Political Contributions and Government Relations, Compensation Recovery Policy, Insider Trading Policy, AvalonBay Sanctions Compliance and Anti-Corruption Policy and Environmental, Social, and Governance Reports, are available free of charge in that section of our website or by writing to AvalonBay Communities, Inc., 4040 Wilson Blvd., Suite 1000, Arlington, Virginia 22203, Attention: Chief Financial Officer.
In addition, the charters of our Board's Nominating, Governance and Corporate Responsibility Committee, Audit Committee and Compensation Committee, as well as our Director Independence Standards, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Policy Regarding Shareholder Rights Agreements, Policy Regarding Shareholder Approval of Future Severance Agreements, Senior Officer Stock Ownership Guidelines, Policy on Political Contributions and Government Relations, Compensation Recovery Policy, Insider Trading Policy, AvalonBay Sanctions Compliance and Anti-Corruption Policy and Corporate Responsibility Reports, are available free of charge in that section of our website or by writing to AvalonBay Communities, Inc., 4040 Wilson Blvd., Suite 1000, Arlington, Virginia 22203, Attention: Chief Financial Officer.
We use and continuously seek ways to improve technology applications to help manage our communities, believing that technology applications can improve the delivery and efficiency of our services and aid in the accurate collection of financial and resident data, which will enable us to maximize revenue and control costs through careful leasing decisions, maintenance decisions and financial management.
We use and continuously seek ways to improve technology applications to help manage our communities, believing that such tools can improve the delivery and efficiency of our services and aid in the accurate collection of financial and resident data, which will enable us to maximize revenue and control costs through careful leasing decisions, maintenance decisions and financial management.
The construction, operation and leasing of our communities is subject to federal, state and local laws and regulations, include zoning laws, building codes, requirements that our communities be accessible to persons with disabilities, fair housing laws, and, depending on the jurisdiction, regulations regarding the charging of rents and fees and increases in such amounts upon renewal of leases.
The construction, operation and leasing of our communities is subject to federal, state and local laws and regulations, including zoning laws, building codes, requirements that our communities be accessible to persons with disabilities, fair housing laws, and, depending on the jurisdiction, regulations regarding the charging of rents and fees and increases in such amounts upon renewal of leases.
We constrain growth in operating expenses in a variety of ways, which include, but are not limited to, the following: • purchase order controls, including acquiring goods and services from pre-approved vendors; • national negotiated contracts and bulk purchases where possible; • bidding third-party contracts on a volume basis; • retaining residents through high levels of service, which reduces apartment turnover costs, marketing and vacant apartment utility costs; • performing turnover work in-house or hiring third parties, generally considering the most cost-effective approach as well as expertise needed to perform the work; • regular preventive maintenance to maximize resident safety and satisfaction and property and equipment life; • centralization of lease renewal activity, as well as many community administration and support tasks at our shared service center; • pursuing real estate tax appeals; • installing high efficiency lighting and water fixtures, cogeneration systems and solar panels; and • implementing technology for resident and prospect services such as package lockers and self-guided or virtual tours.
We constrain growth in operating expenses in a variety of ways, which include, but are not limited to, the following: • purchase order controls, including acquiring goods and services from pre-approved vendors; • national negotiated contracts and bulk purchases where possible; • bidding third-party contracts on a volume basis; 3 Table of Contents • retaining residents through high levels of service, which reduces apartment turnover costs, marketing and vacant apartment utility costs; • performing turnover work in-house or hiring third parties, generally considering the most cost-effective approach as well as expertise needed to perform the work; • regular preventive maintenance to maximize resident safety and satisfaction and property and equipment life; • centralization of lease renewal activity, as well as many community administration and support tasks at our shared service center; • pursuing real estate tax appeals; • installing high efficiency lighting and water fixtures, cogeneration systems and solar panels; and • implementing technology for resident and prospect services such as smart locks, package lockers, bulk internet and self-guided or virtual tours.
From time to time, we may engage a third party to manage leasing and/or maintenance activity at one or more of our communities, such as in our expansion regions where we may have limited resources or scale. 4 Table of Contents From time to time we also pursue or arrange ancillary services for our residents to provide additional revenue sources or increase resident satisfaction.
From time to time, we may engage a third party to manage leasing and/or maintenance activity at one or more of our communities, such as in our expansion regions where we may have limited resources or scale. From time to time we also pursue or arrange ancillary services for our residents to provide additional revenue sources or increase resident satisfaction.
We estimate that our short-term liquidity needs will be met from cash on hand, borrowings under our $2,250,000,000 revolving variable rate unsecured credit facility (the "Credit Facility") and our $500,000,000 unsecured commercial paper ("CP") note program (the "Commercial Paper Program") which is backstopped by our commitment to maintain available capacity under the Credit Facility for any amounts of CP outstanding, sales of current operating communities and/or issuance of additional debt or equity securities.
We estimate that our short-term liquidity needs will be met from cash on hand; borrowings under our $2,500,000,000 revolving variable rate unsecured credit facility (the "Credit Facility"); borrowings under our $1,000,000,000 unsecured commercial paper note program (the "Commercial Paper Program"), which is backstopped by our commitment to maintain available capacity under the Credit Facility for any amounts of commercial paper notes outstanding; sales of current operating communities; and/or issuance of additional debt or equity securities.
We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, antitrust laws, privacy laws, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 and related laws and regulations.
We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, antitrust laws, privacy laws, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 and related laws and regulations, and laws and regulations relating to tenant rights and consumer protections.
We also seek to generate additional shareholder value from investments in other real estate-related ventures, including through our Structured Investment Program ("SIP"), our platform to provide mezzanine loans or preferred equity to third-party multifamily developers in our existing regions.
We also seek to generate additional shareholder value from investments in other real estate-related ventures, including through our Structured Investment Program ("SIP"), our platform to provide mezzanine loans or preferred equity to third-party apartment community developers in our existing regions.
We take workplace safety seriously at our construction sites, our operating communities and our offices. Through our Construction Site Safety Observation program and our dedicated safety team, we monitor project-level safety performance metrics at our construction sites, and elements of compensation for our construction group and our CEO are based on safety compliance performance.
Safety. We take workplace safety seriously at our construction sites, our operating communities and our offices. Through our Construction Site Safety Observation program and our dedicated safety team, we monitor project-level safety performance metrics at our construction sites, and elements of compensation for our construction group and our CEO are based on safety 6 Table of Contents compliance performance.
The information posted on our website is not incorporated into this Annual Report on Form 10-K. 8 Table of Contents
The information posted on our website is not incorporated into this Annual Report on Form 10-K. 7 Table of Contents
We focus on leading metropolitan areas that we believe are generally characterized by growing employment in high wage sectors of the economy, higher cost of home ownership and a diverse and vibrant quality of life.
We focus on markets that we believe are generally characterized by growing employment in high wage sectors of the economy, higher cost of home ownership, and a diverse and vibrant quality of life.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various 6 Table of Contents constituencies to consider new or modified rent control regulations, rent stabilization, or other laws that may limit or delay our ability to charge market rents, increase rents, use algorithmic pricing tools, charge ancillary fees, or evict tenants.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider new or modified rent control regulations, rent stabilization, or other laws that may limit or delay our ability to charge market rents, increase rents, screen tenants, use algorithmic pricing tools, charge non-rent fees, or evict tenants.
Competition We face competition from other real estate investors, including insurance companies, pension and investment funds, REITs both in the multifamily as well as other sectors, and other well capitalized investors, to acquire and develop apartment communities and acquire land for future development.
Competition We face competition from other real estate investors, including insurance companies, pension and investment funds, private equity, sovereign wealth funds and REITs (both in the multifamily as well as other sectors), to acquire and develop apartment communities and acquire land for future development.
We generally act as our own development manager, general contractor and construction manager directly (although we may use a wholly-owned subsidiary), and will elect to use a third-party developer or general contractor where we believe it is beneficial to do so, such as in our expansion regions where we may have limited resources or scale.
"Properties" in this report. 2 Table of Contents We generally act as our own development manager, general contractor and construction manager directly (although we may use a wholly-owned subsidiary), and will elect to use a third-party developer or general contractor where we believe it is beneficial to do so, such as in our expansion regions where we may have limited resources or scale.
The actual renovation work is referred to as "reconstruction," which is only one element of the redevelopment cycle. 3 Table of Contents Disposition Strategy.
The actual renovation work is referred to as "reconstruction," which is only one element of the redevelopment cycle. Disposition Strategy.
Some laws relating to the setting of rents apply broadly, such as in California, where residential rent increases at renewal in communities older than fifteen years are limited to the lesser of 10% or 5% plus local consumer price index (CPI), and in New York, where laws regulate increases on those units that are subject to rent-control or rent-stabilization.
Some laws relating to the setting of rents apply broadly, such as in California, where residential rent increases at renewal in communities older than fifteen years are limited to the lesser of 10% or 5% plus local consumer price index ("CPI"), the State of Washington, which has similar rules limiting rent increases to the lesser of 10% or 7% plus local CPI for communities older than 12 years, and in New York, where laws regulate increases on those units that are subject to rent-control or rent-stabilization.
We monitor the engagement of our associates, receive feedback from our associates, and benchmark our performance by having a third party firm conduct anonymous associate perspective surveys each year. The results are discussed and presented both on a company-wide basis and within each functional group. Safety.
At January 31, 2026, 60% of our associates self-identified as male and 40% as female. Associate Engagement. We monitor the engagement of our associates, receive feedback from our associates, and benchmark our performance by having a third party firm conduct anonymous associate perspective surveys. The results are discussed and presented both on a company-wide basis and within each functional group.
For further discussion of our Development Rights, refer to Item 2. "Properties" in this report.
For further discussion of our Development Rights, refer to Item 2.
Environmental Regulations. As a current or prior owner, operator and developer of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances and also could be liable to third parties resulting from environmental contamination or noncompliance at our communities.
As a current or prior owner, operator and developer of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances that govern, among other things, the presence, handling, storage, disposal and remediation of hazardous or toxic substances, and we also could be liable to third parties resulting from environmental contamination or noncompliance at our communities.
At January 31, 2025, we owned or held a direct or indirect ownership interest in: • 284 operating apartment communities containing 86,111 apartment homes in 11 states and the District of Columbia, of which 275 communities containing 83,389 apartment homes were consolidated for financial reporting purposes and nine communities containing 2,722 apartment homes were held by unconsolidated entities in which we hold an ownership interest. • 21 wholly-owned development apartment communities that are under construction or completed and in lease-up and are expected to contain an aggregate of 7,305 apartment homes when completed. • Rights to develop an additional 30 communities that, if developed as expected, will contain 9,336 apartment homes.
At January 31, 2026, we owned or held a direct or indirect ownership interest in: • 292 operating apartment communities containing 88,768 apartment homes in 11 states and the District of Columbia, of which 284 communities containing 86,374 apartment homes were consolidated for financial reporting purposes and eight communities containing 2,394 apartment homes were held by unconsolidated entities in which we hold an ownership interest. • 27 wholly-owned development apartment communities that are under construction or completed and in lease-up and are expected to contain an aggregate of 9,692 apartment homes when completed. • Rights to develop an additional 33 communities that, if developed as expected, will contain 10,532 apartment homes.
After selecting a site for development, we usually negotiate for the right to acquire the site either through an option or a long-term conditional contract. Options and long-term conditional contracts generally allow us to acquire an interest in the site after the completion of entitlements and shortly before the start of construction, which reduces development-related risks and preserves capital.
Options and long-term conditional contracts generally allow us to acquire an interest in the site after the completion of entitlements and shortly before the start of construction, which reduces development-related risks and preserves capital.
Our learning management system, Workday Learning, offers approximately 600 courses providing functional, technical, management, ethics, compliance, cyber-awareness and safety training. 7 Table of Contents Available Information We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC").
Our learning management system, Workday Learning, offers approximately 700 courses providing functional, technical, management, ethics, compliance, cyber-awareness and safety training. Available Information We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). You may obtain copies of our SEC filings, free of charge, from the SEC's website at www.sec.gov.
For some Development Communities, we undertake extensive environmental remediation to prepare the site for construction, which could be a significant portion of our total construction cost. Environmental remediation efforts could expose us to possible liabilities for accidents or improper handling of contaminated materials during construction. Regulations Relating to the Construction, Operation and Leasing of Our Communities .
Environmental remediation efforts could expose us to possible liabilities for accidents or improper handling of contaminated materials during construction. Regulations Relating to the Construction, Operation and Leasing of Our Communities .
We believe these market characteristics have offered, and will continue to offer, the opportunity for superior risk-adjusted returns over the long-term on apartment community investments relative to other markets that do not have these characteristics.
We use the term apartment communities to refer to properties that consist of apartment homes or townhomes or a combination of both. We focus on leading metropolitan areas that we believe have offered, and will continue to offer, the opportunity for superior risk-adjusted returns over the long-term on apartment community investments relative to other markets.
At all times we intend to make investments in a manner so as to qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code of 1986, as amended (the "Code") (or the Treasury Regulations thereunder), our Board of Directors determines that it is no longer in our best interest to qualify as a REIT. 5 Table of Contents We conduct many of the administrative functions associated with our property operations (including billing, collections, and response to resident inquiries) through an internally operated shared services center, rather than having on-site associates conduct such activities.
At all times we intend to make investments in a manner so as to qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code of 1986, as amended (the "Code") (or the Treasury Regulations thereunder), our Board of Directors determines that it is no longer in our best interest to qualify as a REIT.
During the three years ended December 31, 2024, we: • acquired 13 apartment communities, excluding unconsolidated investments; • disposed of 21 apartment communities, excluding unconsolidated investments; • realized our pro rata share of the gain from the sale of three communities owned by unconsolidated real estate entities; and • completed the development of 22 apartment communities, including unconsolidated investments, and the redevelopment of two apartment communities.
During the three years ended December 31, 2025, we: • acquired 22 apartment communities, excluding unconsolidated investments; • disposed of 21 apartment communities, excluding unconsolidated investments; and • completed the development of 20 apartment communities, including unconsolidated investments, and the redevelopment of one apartment community.
Throughout this report, the term "development" is used to refer to the entire property development cycle, including pursuit of zoning approvals, procurement of architectural and engineering designs and the construction process. References to "construction" refer to the actual construction of the property, which is only one element of the development cycle. Redevelopment Strategy.
References to "construction" refer to the actual construction of the property, which is only one element of the development cycle. Redevelopment Strategy.
At January 31, 2025, 36% of our associates self-identified as White, 29% as Hispanic, 17% as Black, 7% as Asian, and 11% as other ethnicities, two or more ethnicities or did not respond. At January 31, 2025, 60% of our associates self-identified as male and 40% as female. Associate Engagement.
Approximately 61% of our associates work on-site at our operating communities. None of our associates are represented by a union. At January 31, 2026, 36% of our associates self-identified as White, 30% as Hispanic, 17% as Black, 7% as Asian, and 10% as other ethnicities, two or more ethnicities or did not respond.
Regulatory Matters Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
Although we often compete against large, sophisticated developers and operators for development opportunities and for prospective residents, real estate developers and operators of any size can provide effective competition for both real estate assets and potential residents. 5 Table of Contents Regulatory Matters Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
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We focus on markets that are characterized by growing employment in high wage sectors of the economy, higher home prices and a diverse and vibrant quality of life.
Added
In addition to our principal executive office in Arlington, Virginia, we also have regional offices, administrative offices or specialty offices, all of which are located in the United States. After selecting a site for development, we usually negotiate for the right to acquire the site either through an option or a long-term conditional contract.
Removed
In addition to our principal executive office in Arlington, Virginia, we also have regional offices, administrative offices or specialty offices, including offices that are in or near the following cities: 2 Table of Contents • Austin, Texas; • Bellevue, Washington; • Boston, Massachusetts; • Durham, North Carolina; • Denver, Colorado; • Fort Lauderdale, Florida; • Irvine, California; • Los Angeles, California; • New York, New York; • San Antonio, Texas; • San Francisco, California; • San Jose, California; • Virginia Beach, Virginia; and • Westfield, New Jersey.
Added
Certain communities are developed through our DFP, which utilizes third-party multifamily developers to source and construct communities which we own and operate. We believe direct involvement in construction enables us to achieve higher construction quality, greater control over construction schedules and cost savings.
Removed
We also compete against condominiums and single-family homes that are for sale or rent, including those offered through online platforms. Although we often compete against large, sophisticated developers and operators for development opportunities and for prospective residents, real estate developers and operators of any size can provide effective competition for both real estate assets and potential residents.
Added
We conduct many of the administrative functions associated with our property operations (including billing, collections, and response to resident inquiries) through an internally operated shared services center, rather than having on-site associates conduct such activities.
Removed
Human Capital Attracting, motivating, developing, and retaining talented associates is important to our long-term success.
Added
We also compete against other housing options such as single-family homes that are for sale or rent.
Removed
We engage with our associates to understand our purpose, "Creating a Better Way to Live," our core values (a commitment to integrity, a spirit of caring and a focus on continuous improvement) and our cultural norms (we collaborate, excel, innovate, act like owners, are thoughtful and thorough, show appreciation, and champion inclusion and diversity).
Added
Under certain environmental laws, such liability may be imposed without regard to fault or knowledge of the contamination. For some Development Communities, we undertake extensive environmental remediation to prepare the site for construction, which could be a significant portion of our total construction cost.
Removed
At January 31, 2025, we had 2,988 employees, of which approximately 98% were employed on a full-time basis. Approximately 63% of our associates work on-site at our operating communities and the balance work on other matters. None of our associates are represented by a union. We consider the following aspects of human capital management to be important: Inclusion and Diversity.
Added
Human Capital Attracting, motivating, developing, and retaining talented associates is important to our long-term success. We engage with our associates to understand our purpose, "Creating a Better Way to Live," our core values and our cultural norms. At January 31, 2026, we had 3,041 employees, of which approximately 99% were employed on a full-time basis.
Removed
We value workforce diversity and an inclusive culture and believe that a diverse workplace will produce a variety of perspectives, motivate associates and help us understand and better serve our customers and the communities in which we do business.
Removed
You may obtain copies of our SEC filings, free of charge, from the SEC's website at www.sec.gov. We maintain a website at www.avalonbay.com.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurthermore, we may be subject to a 100% penalty tax, to the extent dealings between us and 16 Table of Contents our TRSs are not deemed to be arm’s-length in nature. We intend that our dealings with our TRSs will be on an arm’s-length basis. No assurances can be given, however, that the IRS will not assert a contrary position.
Biggest changeWe intend that our dealings with our TRSs will be on an arm’s-length basis. No assurances can be given, however, that the IRS will not assert a contrary position. Failure of one or more of our subsidiaries to qualify as a REIT could adversely affect our ability to qualify as a REIT.
Declines in the value of the underlying properties may prevent us from realizing an amount equal to our investment upon foreclosure or other remedies even if we make substantial improvements or repairs to maximize such properties' investment potential.
Declines in the value of the underlying properties may also prevent us from realizing an amount equal to our investment upon foreclosure or other remedies even if we make substantial improvements or repairs to maximize such properties' investment potential.
Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so.
Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost, timing, or terms at which we are able to do so.
Legislation, regulatory initiatives, litigation, legal opinions, federal executive orders and increased scrutiny related to CR matters could expose the Company to additional compliance obligations, costs, and potential liabilities. 13 Table of Contents Risks related to operations of our communities Laws, regulations and orders imposing rent control or rent stabilization, or limiting our rights as a landlord, could adversely affect our operations and revenue.
Legislation, regulatory initiatives, litigation, legal opinions, federal executive orders and increased scrutiny related to CR matters could expose the Company to additional compliance obligations, costs, and potential liabilities. 12 Table of Contents Risks related to operations of our communities Laws, regulations and orders imposing rent control or rent stabilization, or limiting our rights as a landlord, could adversely affect our operations and revenue.
Most of our apartment leases are for a term of one year or less, which we believe mitigates our exposure to inflation by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance).
Most of our residential leases are for a term of one year or less, which we believe mitigates our exposure to inflation by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance).
"Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion. 12 Table of Contents A substantial portion of our debt is subject to prepayment penalties or premiums that we will be obligated to pay in the event that we elect to prepay the debt prior to the earlier of (i) its stated maturity or (ii) another stated date.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion. 11 Table of Contents A substantial portion of our debt is subject to prepayment penalties or premiums that we will be obligated to pay in the event that we elect to prepay the debt prior to the earlier of (i) its stated maturity or (ii) another stated date.
Subsequently, on November 1, 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc. and 14 owners and/or operators of multifamily housing in the District of Columbia, including the Company, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data (the “D.C.
Subsequently, on November 1, 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc. and a number of owners and/or operators of multifamily housing in the District of Columbia, including the Company, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data (the “D.C.
Joint venture investments (including investments through partnerships or limited liability companies) involve risks, including the possibility that our partner might become insolvent or otherwise refuse to make capital contributions when due; that we may be responsible to our partner for indemnifiable losses or the debt and obligations of an investment; that our investments may lose all or some of their value; that our partner might have business goals that are inconsistent with ours which may result in the venture or investment being unable to implement certain decisions that we consider beneficial; that our partner may be in a position to take action or withhold consent contrary to our instructions or requests; that, in cases where we are the general partner or managing member, our partners holding a majority of the equity interests may remove us from such role in certain cases involving cause; and that we may be liable and/or our status as a REIT may be jeopardized if either the investments, or the REIT entities associated with the investments, fail to comply with various tax or other regulatory matters.
Joint venture investments involve risks, including the possibility that our partner might become insolvent or otherwise refuse to make capital contributions when due; that we may be responsible to our partner for indemnifiable losses or the debt and obligations of an investment; that our investments may lose all or some of their value; that our partner might have business goals that are inconsistent with ours which may result in the venture or investment being unable to implement certain decisions that we consider beneficial; that our partner may be in a position to take action or withhold consent contrary to our instructions or requests; that, in cases where we are the general partner or managing member, our partners holding a majority of the equity interests may remove us from such role in certain cases involving cause; and that we may be liable and/or our status as a REIT may be jeopardized if either the investments, or the REIT entities associated with the investments, fail to comply with various tax or other regulatory matters.
If the financial institution defaults in its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur and the community could be foreclosed upon if we do not redeem the tax exempt bonds. Risks related to indebtedness.
If the financial institution defaults on its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur and the community could be foreclosed upon if we do not redeem the tax exempt bonds. Risks related to indebtedness.
Inflation and related volatility in the economy could negatively impact our residents and our results of operations. Although it has declined from its 2022 peak, inflation has remained elevated in 2023 and 2024 compared to pre-pandemic years, and may continue at the present level or increase.
Inflation and related volatility in the economy could negatively impact our residents and our results of operations. Although it has declined from its 2022 peak, inflation has remained elevated in 2024 and 2025 compared to pre-pandemic years, and may continue at the present level or increase.
Changing practices have in the past and may in the future include expanded mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, inclusion and diversity, labor, and risk oversight, and these could expand the nature, scope, and complexity of matters that we are required to control, assess and report on, which may prove difficult, expensive and time consuming.
Changing practices have in the past and may in the future include expanded mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, greenhouse gas emissions, human capital, inclusion and diversity, labor, and risk oversight, and these could expand the nature, scope, and complexity of matters that we are required to control, assess and report on, which may prove difficult, expensive and time consuming.
For example, the State of California has statewide rent control for communities older than fifteen years, limiting rent increases to the lesser of 10% or 5% plus local CPI, and the State of New York has rules for rent-controlled and rent-stabilized units that limit the way rent increases are calculated for renewal leases, basing increases solely on rent actually paid and eliminating the ability to increase the renewal rent to a higher "registered rent." Furthermore, in California the Governor has the ability to enact local or statewide states of emergency which limit our ability to increase new and renewal rents more than 10% over the rent in place on the date such state of emergency was declared, which has impacted some of our California communities.
For example, the State of California has statewide rent control for communities older than fifteen years, limiting rent increases to the lesser of 10% or 5% plus local CPI, the State of Washington has similar rules (limiting rent increases to the lesser of 10% or 7% plus local CPI for communities older than 12 years) and the State of New York has rules for rent-controlled and rent-stabilized units that limit the way rent increases are calculated for renewal leases, basing increases solely on rent actually paid and eliminating the ability to increase the renewal rent to a higher "registered rent." Furthermore, in California the Governor has the ability to enact local or statewide states of emergency which limit our ability to increase new and renewal rents more than 10% over the rent in place on the date such state of emergency was declared, which has impacted some of our California communities.
We have a Credit Facility and Commercial Paper Program with a syndicate of commercial banks as well as secured and unsecured notes. Our organizational documents do not limit the amount or percentage of indebtedness that may be incurred.
We have a Credit Facility and Commercial Paper Program with a syndicate of commercial banks as well as a Term Loan and secured and unsecured notes. Our organizational documents do not limit the amount or percentage of indebtedness that may be incurred.
Disruptions and uncertainty with respect to financial institutions, including as a result of bank failures and liquidity concerns, may negatively impact our ability to refinance existing indebtedness and access additional financing at reasonable terms or at all or may cause us or our transactional counterparties to be unable to complete transactions as intended, all of which could have a material adverse effect on our financial condition and results of operations. 11 Table of Contents Insufficient cash flow could affect our debt financing and create refinancing risk.
Disruptions and uncertainty with respect to financial institutions, including as a result of bank failures, credit downgrades and liquidity concerns, may negatively impact our ability to refinance existing indebtedness and access additional financing at reasonable terms or at all, or may cause us or our transactional counterparties to be unable to complete transactions as intended, all of which could have a material adverse effect on our financial condition and results of operations. 10 Table of Contents Insufficient cash flow could affect our debt financing and create refinancing risk.
To maintain this qualification, and/or to address other concerns about concentrations of ownership of our stock, our charter generally prohibits ownership (directly, indirectly by virtue of the attribution provisions of the Code, or beneficially as defined in Section 13 of the Exchange Act) by any single stockholder of more than 9.8% of the issued and outstanding shares of any class or series of our stock.
To maintain this qualification, and/or to address other concerns about concentrations of ownership of our stock, our charter generally prohibits ownership (directly, indirectly by virtue of the attribution provisions of the Code, or beneficially as defined in Section 13 of the Exchange Act) by any single stockholder of more than 9.8% of the issued and outstanding shares of any 18 Table of Contents class or series of our stock.
We may experience physical climate change impacts including extreme weather, sea level rise, the effects of declines in available water supplies and changes in precipitation, temperature and wildfire exposure, all of which may result in damage to, disruption of services at, and/or a decrease in demand for properties located in areas affected by these conditions.
We may experience physical climate change impacts, including from extreme weather, sea level rise, declines in available water supplies and changes in precipitation, temperature and wildfire exposure, all of which may result in damage to, disruption of services at, and/or a decrease in demand for properties located in areas affected by these conditions.
Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements or 14 Table of Contents other conditions, or (ii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements or other conditions, or (ii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
These laws and the common law may impose liability for release of ACMs and may allow third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs. We are not aware that any ACMs were used in the construction of the communities we developed.
These laws and the common law may impose liability for release of ACMs and may allow third parties to seek recovery from owners or operators of real 17 Table of Contents properties for personal injury associated with exposure to ACMs. We are not aware that any ACMs were used in the construction of the communities we developed.
Acquisitions may not yield anticipated results. Our business strategy of acquiring communities involves the following risks, among others: (i) acquisitions may not perform as we expected; (ii) our estimate of the costs of operating, repositioning or redeveloping an acquisition may be inaccurate; and (iii) acquisitions may subject us to unknown liabilities.
Our business strategy of acquiring communities involves the following risks, among others: (i) acquisitions may not perform as we expected; (ii) our estimate of the costs of operating, repositioning or redeveloping an acquisition may be inaccurate; and (iii) acquisitions may subject us to unknown liabilities.
We may be unsuccessful at developing real estate with the intent to sell or in selling condominiums at originally underwritten values, or at all, as a disposition strategy for an asset, which could have an adverse effect on our results of operations.
We may be unsuccessful at developing real estate with the intent to sell or in selling condominiums at originally underwritten values, within anticipated timeframes, or at all, as a disposition strategy for an asset, which could have an adverse effect on our results of operations.
Our properties compete with other properties with commercial space. If our commercial tenants experience financial distress or bankruptcy, they may fail to comply with their contractual obligations, seek concessions in order to continue operations or cease their operations, which could adversely impact our results of operations and financial condition.
Our properties compete with other properties with commercial space. If our commercial tenants experience financial 14 Table of Contents distress or bankruptcy, they may fail to comply with their contractual obligations, seek concessions in order to continue operations or cease their operations, which could adversely impact our results of operations and financial condition.
Mezzanine debt and preferred equity investments could cause us to incur expenses, which could adversely affect our results of operations. We make mezzanine loans to borrowers and obtain preferred equity interests in projects owned by third party sponsors as part of our SIP.
Mezzanine debt and preferred equity investments could cause us to incur expenses and experience delays in recovery, which could adversely affect our results of operations. We make mezzanine loans to borrowers and obtain preferred equity interests in projects owned by third-party sponsors as part of our SIP.
In periods when the capital and credit markets experience significant volatility, the amounts, sources and cost of capital available to us may be adversely affected. We use external financing as one source of capital to fund construction and to refinance indebtedness as it matures.
In periods when the capital and credit markets experience significant volatility or prolonged tightening, the amounts, sources and cost of capital available to us may be adversely affected. We use external financing as one source of capital to fund construction and to refinance indebtedness as it matures.
As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law which restricts some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, 19 Table of Contents which may delay or prevent offers to acquire us even if they are in our stockholders' best interests.
As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law (the "MGCL"), which restricts some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, which may delay or prevent offers to acquire us even if they are in our stockholders' best interests.
Short-term leases expose us to the effects of declining market rents. Most of our apartment leases are for a term of one year or less.
Short-term leases expose us to the effects of declining market rents. Most of our residential leases are for a term of one year or less.
Accordingly, we may be unable to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk. These threats, in turn, may lead to increased costs to protect our information systems, detect and respond to threats, and recover from cyber incidents.
Accordingly, we may be unable to implement adequate security 19 Table of Contents barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk. These threats, in turn, may lead to increased costs to protect our information systems, detect and respond to threats, and recover from cyber incidents.
"Properties—Other Land and Real Estate Assets," in the event that the fair market value, less the cost to dispose of a parcel, changes such that it is less than the carrying basis of the parcel, we would be subject to an impairment charge, which would reduce our net income.
As discussed in Item 2. "Properties—Other Land and Real Estate Assets," in the event that the fair market value, less the cost to dispose of a parcel, changes such that it is less than the carrying basis of the parcel, we would be subject to an impairment charge, which would reduce our net income.
Many of our properties are also located in areas, 17 Table of Contents such as Southern California or Texas, that are exposed to risks of drought, wildfire or other natural disasters, including those arising from climate change.
Many of our properties are also located in areas, such as Southern California or Texas, that are exposed to risks of drought, wildfire or other natural disasters, including those arising from climate change.
These activities may expose us to the following risks, among others: • we have recently abandoned, and may in the future abandon, opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs or we may impair land held for development, and as a result, we may fail to recover expenses already incurred in exploring those opportunities; • occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities; • we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy or other required governmental or third party permits and authorizations, which could result in increased costs, or the delay or abandonment of opportunities; • we may incur costs that exceed our original estimates due to increased material, labor or other costs or supply chain disruptions, including as a result of tariffs or changes in immigration laws or their enforcement, which could impact our overall return from our development, redevelopment or construction activity; • we may be unable to complete construction of a community on schedule or for the originally projected cost resulting in increased construction and financing costs; • we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and • we may incur liability if our communities are not constructed in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements.
These activities may expose us to the following risks, among others: • we have abandoned, and may in the future abandon, opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs or we may impair land held for development, and as a result, we may fail to recover expenses already incurred in exploring those opportunities; • occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities; • we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy or other required governmental or third party permits and authorizations, which could result in increased costs, or the delay or abandonment of opportunities; • we may incur costs that exceed our original estimates due to increased material, labor or other costs or supply chain disruptions, including as a result of tariffs or changes in immigration laws or their enforcement, which could impact our overall return from our development, redevelopment or construction activity; • we may be unable to complete construction of a community on schedule or for the originally projected cost resulting in increased construction and financing costs; • we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); • third-party developers, subcontractors, or key suppliers may fail to perform (including due to financial distress, labor shortages or supply chain disruptions), which could result in delays, cost overruns, workmanship defects, litigation, or the inability to complete a community on schedule or on the budget we originally projected; and • we may incur liability if our communities are not constructed in compliance with the accessibility provisions of the Americans with Disabilities Act, the Fair Housing Act or other federal, state or local requirements.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider regulations of the types described above. Additionally, various federal agencies have engaged in efforts aimed at increasing fairness in the rental market.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider regulations of the types described above. Additionally, various federal agencies have engaged in efforts aimed at addressing pricing in the rental market.
State, local, and federal entities may impose restrictions, for varying times and to varying degrees (as experienced during the COVID-19 pandemic), on our ability to enforce residents’ contractual lease obligations, and this may affect our ability to enforce all of our remedies (such as pursuing collections, imposing late fees and seeking evictions) for the failure to pay rent and may result in foregone revenue.
State, local, and federal entities may impose restrictions, for varying times and to varying degrees, on our ability to enforce residents’ contractual lease obligations, and this may affect our ability to enforce all of our remedies (such as pursuing collections, imposing late fees and seeking evictions) for the failure to pay rent and may result in foregone revenue.
These laws and regulations may impose restrictions on how our communities may be developed, and noncompliance with these laws and regulations may subject us to fines and penalties and may subject us to liability in connection with personal injury.
These laws and regulations may impose restrictions on how our communities may be developed, and noncompliance with these laws and regulations may subject us to fines and penalties and may subject us to liability in connection with personal injury or remediation obligations.
Gross rental revenue provided by leased commercial space in our portfolio represented 1.4% of our total revenue in 2024. The long term nature of our commercial leases and characteristics of many of our tenants (small, local businesses) may subject us to certain risks.
Gross rental revenue provided by leased commercial space in our portfolio represented 1.3% of our total revenue in 2025. The long term nature of our commercial leases and characteristics of many of our tenants (small, local businesses) may subject us to certain risks.
Further, laws and regulations at the federal, state and local level requiring climate-related disclosures, including the rules promulgated by the SEC and the legislation recently enacted in the state of California, may increase compliance and data collection costs if, and when, such laws and regulations become effective. We may incur costs due to environmental contamination or non-compliance.
Further, laws and regulations at the federal, state and local level requiring climate-related disclosures, including rules promulgated by the SEC or enacted or proposed at the state or local levels (including in California), may increase compliance and data collection costs if, and when, such laws and regulations become effective. We may incur costs due to environmental contamination or non-compliance.
The Company is also aware that other governmental investigations and lawsuits regarding antitrust matters in the multifamily industry are ongoing, including an antitrust lawsuit brought by the U.S. Department of Justice, along with the attorneys general of ten states, against other multifamily rental providers to which the Company is not a party.
Other governmental investigations and lawsuits regarding antitrust matters in the multifamily industry are ongoing, including an antitrust lawsuit brought by the U.S. Department of Justice, along with the attorneys general of many states, against other multifamily rental providers to which the Company is not a party.
We could face liabilities for failure to comply with these requirements. Privacy laws and 20 Table of Contents regulations, such as the California Consumer Privacy Act as amended by the California Privacy Rights Act and the Texas Data Privacy and Security Act, related regulations and other U.S. state privacy laws, are evolving and may be subject to differing interpretations.
We could face liabilities for failure to comply with these requirements. Privacy laws and regulations, such as the California Consumer Privacy Act as amended by the California Privacy Rights Act, the Colorado Privacy Act, the Texas Data Privacy and Security Act, related regulations and other U.S. state privacy laws, are evolving and may be subject to differing interpretations.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
Also, the law relating to the tax 15 Table of Contents treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
Inflation, either caused by tariffs recently imposed or threatened by the new presidential administration or due to other causes, may also increase the costs to complete our development projects, including costs of materials, labor and services from third-party contractors and suppliers. Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development projects.
Inflation, either caused by tariffs imposed or threatened by the federal government or due to other causes, may also increase the costs to complete our development projects, including costs of materials, labor and services from third-party contractors and suppliers. Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development projects.
Expenses associated with our investment in these communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community. We face risks related to multifamily rental antitrust, regulatory scrutiny and new litigation.
Expenses associated with our investment in these communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community. We face risks related to multifamily rental antitrust lawsuits and regulatory investigations and actions.
Moreover, many of the risk factors set forth in this Form 10-K could be interpreted as heightened risks due to the impact of a pandemic, epidemic or other health crisis.
Moreover, many of the risk factors set forth in this Form 10-K could be interpreted as heightened risks in the event of a pandemic, epidemic or other health crisis.
We may be exposed to a variety of risks when we enter a new market, including an inability to accurately evaluate local apartment market conditions and an inability to obtain land for development or to identify appropriate acquisition opportunities.
We may be exposed to a variety of risks when we enter a 8 Table of Contents new market, including an inability to accurately evaluate local apartment rental housing market conditions and an inability to obtain land for development or to identify appropriate acquisition opportunities.
Consequently, we may be considered to have been an operator of such properties and, therefore, potentially liable for removal or remediation costs or other potential costs which relate to the release or presence of hazardous or toxic substances or petroleum products at such properties.
Consequently, we may be considered to have been an operator of such properties and, therefore, potentially liable for removal or remediation costs or other potential costs which relate to the release or presence of hazardous or toxic substances or petroleum products at such properties, even if we did not cause the contamination.
The development, construction and operation of our communities are subject to environmental, health and safety regulations and permitting under various federal, state and local laws, regulations and ordinances, which regulate matters including wetlands protection, storm water runoff and wastewater discharge.
The development, construction and operation of our communities are subject to environmental, health and safety regulations and permitting under various federal, state and local laws, regulations and ordinances, which regulate matters including wetlands protection, storm water runoff and wastewater discharge, air quality and emissions, and hazardous materials management.
As of December 31, 2024, 4.1% of our apartment homes at current operating communities were under income limitations such as these. These commitments, which may or may not expire, may limit our ability to raise rents, adversely affecting the value of communities subject to these restrictions.
As of December 31, 2025, 4.5% of homes at Current Communities were under income limitations such as these. These commitments, which may or may not expire, may limit our ability to raise rents, adversely affecting the value of communities subject to these restrictions.
We have also invested directly in, and may in the future invest directly in, companies that engage in these activities. While such investments give us a greater understanding of new and emerging technologies, such investments involve risks, including the possibility that our investments will decline substantially in value.
We have also invested directly in, and may in the future invest directly in, companies that engage in these activities. While such investments give us a greater understanding of new and emerging technologies, such investments involve risks, including the possibility that our investments will decline substantially in value or fail to achieve anticipated strategic benefits.
Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our residents’ 15 Table of Contents ability to pay rents or our results of operations.
Inflation and its related impacts, including increased prices for services, goods, insurance, and property taxes, and higher interest rates and wages, and any resulting policy interventions by the U.S. government, could negatively impact our residents’ ability to pay rents or our results of operations.
Risks related to the impact of a pandemic, epidemic or other health crisis on multifamily rental housing. The national and global impacts of a health crisis, such as the COVID-19 pandemic, may present material uncertainty and risk with respect to our financial condition, results of operations and cash flows.
Risks related to the impact of a pandemic, epidemic or other health crisis on multifamily rental housing. The national and global impacts of a health crisis, including a pandemic, epidemic or other public health emergency, may present material uncertainty and risk with respect to our financial condition, results of operations and cash flows.
A default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could materially adversely affect our liquidity and increase our financing costs. Refer to Item 7.
Maintaining compliance with these restrictions could limit our flexibility. A default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could materially adversely affect our liquidity and increase our financing costs. Refer to Item 7.
Information security risks have generally increased in recent years due to the rise in new technologies, such as ransomware and generative artificial intelligence, and the increased sophistication and activities of perpetrators of cyber-attacks, including as a result of the intensification of state-sponsored cybersecurity attacks during periods of geopolitical conflict.
Information security risks have generally increased in recent years due to the rise in new technologies, such as ransomware and generative AI, automation and increased reliance on interconnected systems, and the increased sophistication and activities of perpetrators of cyber-attacks, including as a result of the intensification of state-sponsored cybersecurity attacks during periods of geopolitical conflict.
The mortgages on properties that are subject to secured debt, our Credit Facility, Commercial Paper Program and the indentures under which a substantial portion of our debt was issued contain customary restrictions, requirements and other limitations, as well as certain financial and operating covenants including maintenance of certain financial ratios. Maintaining compliance with these restrictions could limit our flexibility.
The mortgages on properties that are subject to secured debt, our Credit Facility, Term Loan, Commercial Paper Program and the indentures under which a substantial portion of our debt was issued contain customary restrictions, requirements and other limitations, as well as certain financial and operating covenants including maintenance of certain financial ratios.
There are, however, certain types of losses (such as from acts of war) we do not insure, in full or in part, because they are either uninsurable or we believe the cost of insurance is economically impractical. We may incur costs related to climate change.
There are, however, certain types of losses (such as from acts of war) we do not insure, in full or in part, because they are either uninsurable or we believe the cost of insurance is economically impractical. We may be adversely impacted by climate change.
Local conditions in our regions significantly affect occupancy, rental rates and the operating performance of our communities, and may be adversely affected by the following risks: • corporate restructurings and/or layoffs, and industry slowdowns; • an oversupply of, or a reduced demand for, apartment homes; • a decline in household formation or employment or lack of employment growth; • the inability or unwillingness of residents to pay rent increases; and • economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.
Local conditions in our regions significantly affect occupancy, rental rates and the operating performance of our communities, and may be adversely affected by the following risks: • corporate restructurings and/or layoffs, remote or hybrid work trends, and industry slowdowns; • an oversupply of, or a reduced demand for, apartment or other rental homes; • a decline in household formation or employment or lack of employment growth or slower wage growth; • the inability or unwillingness of residents to pay rent increases, including as a result of inflation, higher interest rates or broader cost-of-living pressures; and • economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.
This could allow the Board to issue one or more classes or series of preferred stock that could discourage or delay a tender offer or a change in control.
This could allow the Board to issue one or more classes or series of preferred stock that could discourage or delay a tender offer or a change in control or dilute the voting power of holders of our common stock.
The interest rate derivatives we use, primarily to manage interest rate risk for our anticipated debt issuance activity, could result in a material charge to earnings if we do not issue the anticipated debt, or are otherwise unsuccessful in our hedging activities.
Such hedges may mitigate interest rate volatility. The interest rate derivatives we use to manage interest rate risk for our anticipated debt issuance activity could result in a material impact to earnings if we do not issue the anticipated debt, or are otherwise unsuccessful in our hedging activities.
We have developed and may continue to develop initiatives that are intended to serve our customers better and operate more efficiently, including "smart home" technology; use of AI in correspondence with prospective, current and prior residents; and self-service options that are accessible to residents through smart devices or otherwise.
We have developed and may continue to develop initiatives that are intended to serve our customers better and help us operate more efficiently, including "smart home" and building automation technologies; use of AI in correspondence with prospective, current and prior residents; automation of internal business processes and other applications; and self-service options that are accessible to residents through smart devices or otherwise.
These ownership limits may prevent or delay a change in control and, as a result, could adversely affect our stockholders' ability to realize a premium for their shares of common stock.
These ownership limits may prevent or delay a change in control and, as a result, could adversely affect our stockholders' ability to realize a premium for their shares of common stock or otherwise influence the outcome of matters submitted to stockholders for approval.
Antitrust Litigation, the Maryland Antitrust Litigation or any other lawsuits or becomes the focus of any governmental investigation, the Company may incur substantial costs related to these lawsuits or investigations, whether as a defendant or as a third-party witness.
Antitrust Litigation, the Maryland Antitrust Litigation, the New Jersey Antitrust Litigation or any other lawsuits or governmental investigations, the Company may incur substantial costs related to these matters, whether as a defendant or as a third-party witness.
Lawsuits, government investigations and new legislation related to antitrust matters may, among other things, be costly to comply with, result in negative publicity, require significant management time and attention and subject us to remedies or burdensome requirements that adversely affect our business.
The impact on the Company is difficult to predict. Lawsuits, government investigations and new legislation related to antitrust matters may, among other 13 Table of Contents things, be costly to comply with, result in negative publicity, require significant management time and attention and subject us to remedies or burdensome requirements that adversely affect our business.
For example, in Southern California, a series of wildfires affected the Los Angeles metropolitan area and San Diego in January 2025, forcing over 200,000 people to evacuate and resulting in the destruction or damage of thousands of homes and structures.
For example, in Southern California, a series of wildfires affected the Los Angeles metropolitan area and San Diego in January 2025, forcing a large scale evacuation and resulting in the destruction or damage of thousands of homes and structures.
We rely on information technology, including the internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, personally identifiable information ("PII"), and tenant and lease data.
We rely on information technology, including cloud-based systems and third-party service providers, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, personally identifiable information ("PII"), and tenant and lease data.
Relying on third parties to assist with and/or oversee development and 9 Table of Contents construction creates additional and different risks than when we manage these activities directly, including that the third party may not perform to our standards, may breach contractual arrangements, or may incur liquidity constraints.
Relying on third parties to assist with and/or oversee development and construction creates additional and different risks than when we manage these activities directly, including that the third party may not perform to our standards, may breach contractual arrangements, or may incur liquidity constraints. We also may engage or have an interest in for-sale activity.
We are aware that some of our communities have lead paint and have implemented an operations and maintenance program at each of those communities. 18 Table of Contents All of our stabilized operating communities, and all of the communities that we are currently developing, have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or groundwater sampling.
All of our stabilized operating communities, and all of the communities that we are currently developing, have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or groundwater sampling.
Many of our markets, particularly those located in coastal cities, are exposed to risks associated with inclement or severe weather including those arising from climate change such as hurricanes, severe winter storms and coastal flooding.
Insurance coverage for earthquakes can be costly and in limited supply. • Climate, severe or inclement weather or natural disaster risk. Many of our markets, particularly those located in coastal cities, are exposed to risks associated with inclement or severe weather including those arising from climate change, such as hurricanes, severe winter storms and coastal flooding.
Jurisdictions other than the District of Columbia and Maryland, or additional federal agencies, may also bring suits against multifamily rental providers. Regardless of whether the Company remains named in the D.C.
Jurisdictions other than the District of Columbia, Maryland, New Jersey or additional federal agencies, may also bring suits against multifamily rental providers. Regardless of the outcome of the D.C.
Our properties could also incur significant costs or losses related to shelter-in-place or stay-at-home orders, quarantines, infection, clean-up costs or other related factors, which may cause residents to move to locations other than our markets.
Our properties could also incur significant costs or losses related to shelter-in-place or stay-at-home orders, quarantines, infection, clean-up costs or other related factors, which may cause residents to move to locations other than our markets. Public health crises could also adversely affect labor availability, supply chains, and resident demand across our markets.
While the Company intends to vigorously defend against the D.C. Antitrust Litigation and the Maryland Antitrust Litigation, given the early stage of the lawsuits, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuits.
On July 29, 2025, the Company filed a motion to dismiss. While the Company intends to vigorously defend against the D.C. Antitrust Litigation, the Maryland Antitrust Litigation and the New Jersey Antitrust Litigation, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuits.
In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock. We may use interest rate derivatives to manage our exposure to fluctuations in interest rates, such as by entering into interest rate contracts.
In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock. We use interest rate derivatives to manage our exposure to fluctuations in interest rates in connection with anticipated debt issuances, floating rate debt or refinancing activity.
Furthermore, future regulations could impose restrictions on the use of these technologies or require us to implement costly compliance measures. Competition from companies employing technology-related initiatives more effectively could also negatively impact our business.
Furthermore, future regulatory developments, including data privacy laws, AI governance requirements, cybersecurity standards, or consumer protection protocols could impose restrictions on the use of these technologies or require us to implement costly compliance measures. Competition from companies employing technology-related initiatives more effectively could also negatively impact our business.
If interest rates maintain their existing levels or further increase, our interest costs on variable rate debt will rise, and our interest costs on newly issued fixed rate debt may be higher than on our existing debt, unless in each case we have hedged the risk of rising interest rates.
If interest rates maintain their existing levels or further increase, our interest costs on variable rate debt will rise, and our effective interest costs on newly issued fixed rate debt may be higher than on our existing debt.
General Risk Factors The ability of our stockholders to control our policies and effect a change of control of our company is limited by certain provisions of our charter and bylaws and by Maryland law. There are provisions in our charter and bylaws that may discourage a third party from making a proposal to acquire us.
General Risk Factors The ability of our stockholders to control our policies and effect a change of control of our company is limited by certain provisions of our charter and bylaws and by Maryland law.
Further, emergency orders such as shutting down non-essential businesses, may disrupt our development and construction activity which may increase our construction costs and we may not achieve, on the schedule we originally planned, the cash flows that we expect when we begin leasing a completed property.
Further, emergency orders or other governmental actions taken in response to a public health crisis may disrupt our development and construction activity which may increase our construction costs and we may not achieve, on the schedule we originally planned, the cash flows that we expect when we begin leasing a completed property.
In addition, borrowers and sponsors may seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce their obligations to us.
In addition, borrowers and sponsors may seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce their obligations to us, which could result in significant legal costs, delays, or limitations on our ability to realize the value of our investments.
"Properties—Insurance and Risk of Uninsured Losses"): • Earthquake risk. As further described in Item 2. "Properties—Insurance and Risk of Uninsured Losses," many of our West Coast communities are located in the general vicinity of active earthquake faults. Insurance coverage for earthquakes can be costly and in limited supply. • Climate, severe or inclement weather or natural disaster risk.
"Properties—Insurance and Risk of Uninsured Losses"): 16 Table of Contents • Earthquake risk. As further described in Item 2. "Properties—Insurance and Risk of Uninsured Losses," many of our West Coast communities are located in the general vicinity of active earthquake faults.
These subsidiary REITs were or will be subject to the REIT qualification requirements and other limitations that are applicable to us.
We have owned and may in the future own interests in subsidiaries that have elected (or will elect) to be taxed as REITs under the Code. These subsidiary REITs were or will be subject to the REIT qualification requirements and other limitations that are applicable to us.
We own assets that are subject to long-term ground leases. These ground leases may impose limitations on our use or improvement of the properties, restrict our ability to finance, sell or otherwise transfer our interests or restrict the leasing of the properties.
These ground leases may impose limitations on our use or improvement of the properties, restrict our ability to finance, sell or otherwise transfer our interests or restrict the leasing of the properties. These restrictions may limit our ability to timely sell or exchange the properties, impair the properties’ value or negatively impact our ability to operate the properties.
The ultimate resolutions may differ from our expectation, and we could suffer losses that would have a material adverse effect on our financial performance, the trading price of our securities and our ability to pay dividends and distributions. 10 Table of Contents We are exposed to risks associated with real estate assets that are subject to ground leases that may restrict our ability to finance, sell or otherwise transfer our interests in those assets, limit our use and expose us to loss if such agreements are breached by us or terminated.
We are exposed to risks associated with real estate assets that are subject to ground leases that may restrict our ability to finance, sell or otherwise transfer our interests in those assets, limit our use and expose us to loss if such agreements are breached by us or terminated. We own assets that are subject to long-term ground leases.
While we will attempt to ensure that our dealings with our TRSs do not adversely affect our REIT qualification, we cannot provide assurances that it will successfully achieve that result.
While we attempt to ensure that our dealings with our TRSs do not adversely affect our REIT qualification, we cannot provide assurances that we will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, to the extent dealings between us and our TRSs are not deemed to be arm’s-length in nature.
Risks related to investments through acquisitions, construction, development, and joint ventures Development, redevelopment and construction risks could affect our profitability. We intend to continue to develop and redevelop apartment communities. These activities can include long planning and entitlement timelines and can involve complex and costly activities, including significant environmental remediation or construction work in high-density urban areas.
These activities can include long planning and entitlement timelines and can involve complex and costly activities, including significant environmental remediation or construction work in high-density urban areas.
Further, on January 15, 2025, the Office of the Attorney General of the State of Maryland filed a suit similar to the D.C. Antitrust Litigation in which a number of owners and/or operators of multifamily properties in the State of Maryland, including the Company, have been named (the “Maryland Antitrust Litigation”).
Antitrust Litigation in the Circuit Court for Prince George’s County, Maryland in which RealPage, Inc. and a number of owners and/or operators of multifamily properties in Maryland, including the Company, have been named and alleged to have violated state antitrust law (the “Maryland Antitrust Litigation”). On February 28, 2025, the Company filed a motion to dismiss.
We may also delay the start of construction of additional development communities which, if constructed and leased as originally planned, would have been a source of future additional cash flow. The same factors as described immediately above may also impact our workforce.
We may also delay the start of construction of additional development communities which, if constructed and leased as originally planned, would have been a source of future additional cash flow. Risks related to commercial leasing operations. Although we are primarily in the multifamily rental business, we also own and lease ancillary commercial space.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+1 added−1 removed5 unchanged
Biggest changeWe rely on information technology to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, PII, and resident and lease data. Our business requires us and some of our vendors to use and store PII and other confidential and sensitive information of our residents and associates.
Biggest changeAlthough we have not experienced any material cybersecurity incidents, a future incident could materially affect us. We rely on information technology to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, PII, and resident and lease data.
The Audit Committee and management have adopted a policy that categorizes cybersecurity incidents and sets out incident escalation procedures to the full Board of Directors. 22 Table of Contents
The Audit Committee and management have adopted a policy that categorizes cybersecurity incidents and sets out incident escalation procedures to the full Board of Directors. 21 Table of Contents
You should carefully review Part I, Item 1A. "Risk Factors" of this Form 10-K for a discussion of the risks to the Company related to cybersecurity. Governance Our cybersecurity team is led by our Senior Director of Cybersecurity, who has over 15 years of experience with IT and cybersecurity. The cybersecurity team reports to our Senior Vice President-Information Technology.
You should carefully review Part I, Item 1A. "Risk Factors" of this Form 10-K for a discussion of the risks to the Company related to cybersecurity. Governance Our cybersecurity team is led by our Senior Director of Cybersecurity, who has over 15 years of experience with IT and cybersecurity. The cybersecurity team reports to our Senior Vice President-Chief Digital Officer.
The Audit Committee of our Board of Directors provides Board-level oversight of risks from cybersecurity threats. In addition to providing periodic reports, at least annually the Senior Director of Cybersecurity and the Senior Vice President-Information Technology meet with the Audit Committee regarding cybersecurity risks and assessments and related Company policies and initiatives.
The Audit Committee of our Board of Directors provides Board-level oversight of risks from cybersecurity threats. In addition to providing periodic reports, at least annually the Senior Director of Cybersecurity and the Senior Vice President-Chief Digital Officer meet with the Audit Committee regarding cybersecurity risks and assessments and related Company policies and initiatives.
The Senior Director of Cybersecurity and the Senior Vice President-Information Technology are part of, and work with, a management Cybersecurity Steering Committee ("CSC"), which meets regularly. The CSC works to ensure strategic alignment of the CSP with our 21 Table of Contents business objectives and priorities.
The Senior Director of Cybersecurity and the Senior Vice President-Chief Digital Officer are part of, and work with, a management Cybersecurity Steering Committee ("CSC"), which meets regularly. The CSC works to ensure strategic alignment of the CSP with our business objectives and priorities.
Prior to contracting with an outside vendor that hosts our data, such as Company information, or PII of our associates or residents, or that integrates with our systems, our policy is to conduct a cybersecurity risk assessment, which includes, as appropriate, a due diligence questionnaire completed by the vendor, a System and Organization Controls 1 ("SOC1") report from major vendors and a review of the vendor’s scope of access to our IT systems and data.
Prior to contracting with an outside vendor that hosts our data, such as Company information, or PII of our associates or residents, or that integrates with our systems, our policy is to conduct a cybersecurity risk assessment, which includes, as appropriate, a due diligence questionnaire completed by the vendor, a System and Organization Controls 1 ("SOC1") report from major vendors and a review of the vendor’s scope of access to our IT systems and data. 20 Table of Contents We utilize third-party service providers to enhance our CSP, including engaging them annually to assess our CSP against the NIST CSF.
We utilize third-party service providers to enhance our CSP, including engaging them annually to assess our CSP against the NIST CSF. We use one or more third-party managed security solution providers, who provide us with threat intelligence information and managed threat detection and response capabilities. We have also engaged a third party to assist with associate cybersecurity training.
We use one or more third-party managed security solution providers, who provide us with threat intelligence information and managed threat detection and response capabilities. We have also engaged a third party to assist with associate cybersecurity training. Additionally, we have engaged outside breach response legal counsel to assist the Company with cybersecurity counseling and incident response.
Removed
Additionally, we have engaged outside breach response legal counsel to assist the Company with cybersecurity counseling and incident response. Although we have not experienced any material cybersecurity incidents, a future incident could materially affect us.
Added
Our business requires us and some of our vendors to use and store PII and other confidential and sensitive information of our residents and associates.

Item 2. Properties

Properties — owned and leased real estate

48 edited+21 added−15 removed32 unchanged
Biggest changeWe believe our mission of "Creating a Better Way to Live" helps us achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses. 25 Table of Contents Our Current Communities are located in the following geographic markets: Number of communities at Number of apartment homes at Percentage of total apartment homes at 1/31/2024 1/31/2025 1/31/2024 1/31/2025 1/31/2024 1/31/2025 New England 42 39 10,328 9,697 12.4 % 11.3 % Metro NY/NJ 49 50 14,756 15,089 17.6 % 17.5 % New York City, NY 14 14 5,089 5,089 6.1 % 5.9 % New York Suburban 13 14 3,878 4,216 4.6 % 4.9 % New Jersey 22 22 5,789 5,784 6.9 % 6.7 % Mid-Atlantic 44 44 15,501 15,501 18.5 % 18.0 % Washington Metro 36 35 12,784 12,347 15.3 % 14.3 % Baltimore, MD 8 9 2,717 3,154 3.2 % 3.7 % Southeast Florida 8 9 2,837 3,091 3.4 % 3.6 % Denver, Colorado 6 8 1,539 2,192 1.8 % 2.5 % Pacific Northwest 21 21 5,802 6,118 6.9 % 7.1 % Northern California 41 41 12,446 12,857 14.9 % 14.9 % San Jose, CA 12 12 4,723 4,727 5.7 % 5.5 % Oakland-East Bay, CA 15 15 4,338 4,743 5.2 % 5.5 % San Francisco, CA 14 14 3,385 3,387 4.0 % 3.9 % Southern California 59 60 17,934 18,366 21.4 % 21.4 % Los Angeles, CA 39 39 12,143 12,475 14.5 % 14.5 % Orange County, CA 13 13 4,024 4,024 4.8 % 4.7 % San Diego, CA 7 8 1,767 1,867 2.1 % 2.2 % Other Expansion Regions 9 12 2,512 3,200 3.1 % 3.7 % North Carolina 5 6 963 1,225 1.2 % 1.4 % Texas 4 6 1,549 1,975 1.9 % 2.3 % 279 284 83,655 86,111 100.0 % 100.0 % We manage and operate substantially all of our Current Communities.
Biggest changeWe believe our mission of "Creating a Better Way to Live" helps us achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses. 24 Table of Contents Our Current Communities are located in the following geographic markets: Number of communities at Number of apartment homes at Percentage of total apartment homes at 1/31/2025 1/31/2026 1/31/2025 1/31/2026 1/31/2025 1/31/2026 New England 39 39 9,697 9,697 11.3 % 10.9 % Metro NY/NJ 50 49 15,089 15,052 17.5 % 16.9 % New York City, NY 14 13 5,089 4,909 5.9 % 5.5 % New York Suburban 14 14 4,216 4,216 4.9 % 4.7 % New Jersey 22 22 5,784 5,927 6.7 % 6.7 % Mid-Atlantic 44 40 15,501 14,253 18.0 % 16.0 % Washington Metro 35 31 12,347 11,099 14.3 % 12.4 % Baltimore, MD 9 9 3,154 3,154 3.7 % 3.6 % Southeast Florida 9 10 3,091 3,361 3.6 % 3.8 % Denver, Colorado 8 10 2,192 2,808 2.5 % 3.2 % Pacific Northwest 21 21 6,118 5,992 7.1 % 6.8 % Northern California 41 40 12,857 12,627 14.9 % 14.2 % San Jose, CA 12 12 4,727 4,729 5.5 % 5.3 % Oakland-East Bay, CA 15 15 4,743 4,753 5.5 % 5.4 % San Francisco, CA 14 13 3,387 3,145 3.9 % 3.5 % Southern California 60 60 18,366 18,374 21.4 % 20.7 % Los Angeles, CA 39 39 12,475 12,481 14.5 % 14.1 % Orange County, CA 13 13 4,024 4,024 4.7 % 4.5 % San Diego, CA 8 8 1,867 1,869 2.2 % 2.1 % Other Expansion Regions 12 23 3,200 6,604 3.7 % 7.5 % North Carolina 6 9 1,225 1,928 1.4 % 2.2 % Texas 6 14 1,975 4,676 2.3 % 5.3 % 284 292 86,111 88,768 100.0 % 100.0 % We manage and operate substantially all of our Current Communities.
ITEM 2. PROPERTIES Our real estate investments consist primarily of current operating apartment communities ("Current Communities"), consolidated and unconsolidated communities in various stages of development ("Development" communities and "Unconsolidated Development" communities) and Development Rights (as defined below). Our Current Communities are further classified as Same Store communities, Other Stabilized communities, Redevelopment communities and Unconsolidated communities.
ITEM 2. PROPERTIES Our real estate investments consist primarily of current apartment operating communities ("Current Communities"), consolidated and unconsolidated communities in various stages of development ("Development" communities and "Unconsolidated Development" communities) and Development Rights (as defined below). Our Current Communities are further classified as Same Store communities, Other Stabilized communities, Redevelopment communities and Unconsolidated communities.
The following is a description of each category: Current Communities are categorized as Same Store, Other Stabilized, Redevelopment or Unconsolidated according to the following attributes: • Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the prior year.
The following is a description of each category: Current Communities are categorized as Same Store, Other Stabilized, Redevelopment or Unconsolidated according to the following attributes: • Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the respective prior year.
In addition to our potential liability for the various policy self-insured retentions and deductibles, our captive insurance company is directly responsible for 100% of the first $25,000,000 of losses (per occurrence) and an additional $5,000,000 of losses (per occurrence) incurred by the master property insurance policy.
In addition to our potential liability for the various policy self-insured retentions and deductibles, our captive insurance company is directly responsible for 100% of the first $25,000,000 of losses (per occurrence) excess of deductibles and an additional $5,000,000 of losses (per occurrence) incurred by the master property insurance policy excess of $25,000,000.
A community is considered to have stabilized occupancy at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment. • Other Stabilized is composed of completed consolidated communities that we own and that are not Same Store but which have stabilized occupancy, as defined above, as of January 1, 2024, or which were acquired subsequent to January 1, 2023.
A community is considered to have stabilized occupancy at the earlier of (i) attainment of 90% physical occupancy or (ii) the one year anniversary of completion of development or redevelopment. • Other Stabilized is composed of completed consolidated communities that we own and that are not Same Store but which have stabilized occupancy, as defined above, as of January 1, 2025, or which were acquired subsequent to January 1, 2024.
Collectively, the land held for development and associated costs for deferred development rights relate to 28 Development Rights for which we expect to develop new apartment communities in the future. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately.
Collectively, the land held for development and associated costs for deferred Development Rights relate to 32 Development Rights for which we expect to develop new apartment communities in the future. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately.
Of the Current Communities, as of January 31, 2025, we owned (directly or through wholly-owned subsidiaries): • 275 operating communities, including 268 with a full fee simple or absolute ownership interest, and seven that are on land subject to a land lease.
Of the Current Communities, as of January 31, 2026, we owned (directly or through wholly-owned subsidiaries): • 275 operating communities, including 268 with a full fee simple or absolute ownership interest, and seven that are on land subject to a land lease.
This master property program provides a $400,000,000 limit for any single occurrence and annually in the aggregate, subject to certain sub-limits and exclusions. Under the master property program, we are subject to various deductibles per occurrence, as well as additional self-insured retentions.
This master property program provides a $400,000,000 limit for any single occurrence, subject to certain aggregate sub-limits, per occurrence sub-limits, and exclusions. Under the master property program, we are subject to various deductibles per occurrence, as well as additional self-insured retentions.
The amount or types of insurance we maintain may not be sufficient to cover all losses and we may change our policy limits, coverages, and self-insured retentions or deductibles at any time. 33 Table of Contents
The amount or types of insurance we maintain may not be sufficient to cover all losses and we may change our policy limits, coverages, and self-insured retentions or deductibles at any time. 32 Table of Contents
Changes in the Same Store communities portfolios for the years ended December 31, 2024, 2023 and 2022 were as follows: Number of communities Same Store communities as of December 31, 2021 237 Communities added 8 Communities removed (1) Redevelopment communities (1) Disposed communities (9) Same Store communities as of December 31, 2022 235 Communities added 21 Communities removed (1) Redevelopment communities — Disposed communities (4) Same Store communities as of December 31, 2023 252 Communities added 10 Communities removed (1) Redevelopment communities — Disposed communities (9) Same Store communities as of December 31, 2024 253 _________________________________ (1) Communities were removed from our Same Store portfolio if we believed that planned activity for the upcoming year would result in that community's expected operations not being comparable to the prior year, including (i) when we intended to undertake a significant capital renovation, such that the community was classified as a Redevelopment community; (ii) when we intended to dispose of a community; or (iii) when a significant casualty loss occurred.
Changes in the Same Store communities portfolios for the years ended December 31, 2025, 2024 and 2023 were as follows: Number of communities Same Store communities as of December 31, 2022 235 Communities added 21 Communities removed (1) Redevelopment communities — Disposed communities (4) Same Store communities as of December 31, 2023 252 Communities added 10 Communities removed (1) Redevelopment communities — Disposed communities (9) Same Store communities as of December 31, 2024 253 Communities added 9 Communities removed (1) Redevelopment communities — Disposed communities (11) Same Store communities as of December 31, 2025 251 _________________________________ (1) Communities were removed from our Same Store portfolio if we believed that planned activity for the upcoming year would result in that community's expected operations not being comparable to the prior year, including (i) when we intended to undertake a significant capital renovation, such that the community was classified as a Redevelopment community; (ii) when we intended to dispose of a community; or (iii) when a significant casualty loss occurred.
For further discussion of the risks and our related prevention and remediation activities, please refer to the discussion under Part I, Item 1A. "Risk Factors - We may incur costs due to 32 Table of Contents environmental contamination or non-compliance" elsewhere in this report.
For further discussion of the risks and our related prevention and remediation activities, please refer to the discussion under Part I, Item 1A. "Risk Factors - We may incur costs due to environmental contamination or non-compliance" elsewhere in this report.
If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities.
If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from 31 Table of Contents the affected community and could be exposed to other liabilities.
We estimate that the successful completion of all of these communities would ultimately add approximately 8,801 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own. The Development Rights are in different stages of the due diligence and regulatory approval process.
We estimate that the successful completion of all of these communities would ultimately add approximately 9,032 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own. The Development Rights are in different stages of the due diligence and regulatory approval process.
We cannot provide assurance that we will have coverage under our existing policies for property damage or liability to third parties arising as a result of exposure to mold or a claim of exposure to mold at one of our communities.
We cannot provide assurance that we will have coverage under our existing policies for property damage or liability to third parties arising from exposure to mold or a claim of exposure to mold at one of our communities.
Our communities are insured for terrorism related losses through the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA") program. This coverage extends to most of our casualty exposures (subject to deductibles and insured limits) and certain property insurance policies.
Our communities are insured for terrorism related losses through the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA") program. This coverage extends to most of our casualty exposures (subject to deductibles and insured limits).
The following table presents a summary of the Development Communities. 27 Table of Contents Number of apartment homes Projected total capitalized cost (1) ($ millions) Construction start Initial projected or actual occupancy Estimated completion Estimated stabilized operations (2) 1. Avalon West Windsor (3) West Windsor, NJ 535 $ 210 Q2 2022 Q2 2025 Q2 2026 Q4 2026 2.
The following table presents a summary of the Development Communities under construction. 26 Table of Contents Number of apartment homes Projected total capitalized cost (1) ($ millions) Construction start Initial projected or actual occupancy Estimated completion Estimated stabilized operations (2) 1. Avalon West Windsor (3) West Windsor, NJ 535 $ 210 Q2 2022 Q3 2025 Q4 2026 Q2 2027 2.
Debt (1) Unconsolidated Real Estate Investments Company Ownership Percentage # of Apartment Homes Total Capitalized Cost Principal Amount Type Interest Rate Maturity Date NYTA MF Investors LLC 1. Avalon Bowery Place I—New York, NY 206 $ 217,504 $ 93,800 Fixed 4.01 % Jan 2029 2. Avalon Bowery Place II—New York, NY 90 91,691 39,639 Fixed 4.01 % Jan 2029 3.
Debt (1) Unconsolidated Real Estate Investments Company Ownership Percentage # of Apartment Homes Total Capitalized Cost Principal Amount Type Interest Rate Maturity Date NYTA MF Investors LLC 1. Avalon Bowery Place I—New York, NY 206 $ 218,563 $ 93,800 Fixed 4.01 % Jan 2029 2. Avalon Bowery Place II—New York, NY 90 91,788 39,639 Fixed 4.01 % Jan 2029 3.
During 2024, we incurred a charge of $18,341,000 for expensed transaction, development and other pursuit costs, net of recoveries, which include development pursuits that were not yet probable of future development at the time incurred, or for pursuits that we determined were no longer probable of being developed.
During 2025, we incurred a charge of $10,846,000 for expensed transaction, development and other pursuit costs, net of recoveries, which include development pursuits that were not yet probable of future development at the time incurred, or for pursuits that we determined were no longer probable of being developed.
Pending such redeployment, we will generally use the proceeds from the sale of these communities to reduce amounts outstanding under our Credit Facility or Commercial Paper Program or retain the cash proceeds on our balance sheet until it is redeployed into acquisition, development or redevelopment activity.
Pending such redeployment, we will generally use the proceeds from the sale of these communities to reduce amounts outstanding under our Credit Facility or Commercial Paper Program, repay other indebtedness, or retain the cash proceeds on our balance sheet until they are redeployed into acquisition, development or redevelopment activity.
In addition, we had $43,675,000 in capitalized costs (including legal fees, design fees and related overhead costs) related to (i) 17 Development Rights for which we control the land parcel, typically through a conditional agreement or option to purchase or lease the land, as well as (ii) costs incurred for four Development Rights that we expect to construct as additional phases of our existing stabilized operating communities on land we own.
In addition, we had $73,237,000 in capitalized costs (including legal fees, design fees and related overhead costs) related to pursuits probable of future development including (i) 20 Development Rights for which we control the land parcel, typically through a conditional agreement or option to purchase or lease the land, as well as (ii) costs incurred for five Development Rights that we expect to construct as additional phases of our existing stabilized operating communities on land we own.
"Risk Factors," for a discussion of the risks associated with Development Rights. 30 Table of Contents Land Acquisitions We select land for development and follow established procedures that we believe minimize both the cost and the risks of development. During 2024, we acquired the following land parcels for an aggregate investment of $111,812,000.
"Risk Factors," for a discussion of the risks associated with Development Rights. 29 Table of Contents Land Acquisitions We select land for development and follow established procedures that we believe minimize both the cost and the risks of development. During 2025, we acquired the following land parcels for an aggregate investment of $161,959,000.
For the year ended December 31, 2024, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2023, did not conduct substantial redevelopment activities and are not held for sale as of December 31, 2024.
For the year ended December 31, 2025, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2024, are not conducting or expected to conduct substantial redevelopment activities and are not held for sale as of December 31, 2025.
Avalon Morningside—New York, NY (2) 295 216,153 111,295 Fixed 3.55 % Jan 2029/May 2046 4. Avalon West Chelsea—New York, NY (3) 305 130,143 66,000 Fixed 4.01 % Jan 2029 5.
Avalon Morningside—New York, NY (2) 295 217,301 111,295 Fixed 3.55 % Jan 2029/May 2046 4. Avalon West Chelsea—New York, NY (3) 305 130,721 66,000 Fixed 4.01 % Jan 2029 5.
One of the ventures, the NYTA MF Investors LLC, through subsidiaries owns a fee simple interest in three operating communities and a leasehold interest in two additional operating communities. The other four ventures each hold a fee simple interest in an operating community.
One of the ventures, NYTA MF Investors LLC, through subsidiaries owns a fee simple interest in three operating communities and a leasehold interest in two additional operating communities.
AVA High Line—New York, NY (3) 405 122,839 84,000 Fixed 4.01 % Jan 2029 Total NYTA MF Investors LLC 20.0 % 1,301 778,330 394,734 3.88 % Other Operating Joint Ventures 1. MVP I, LLC - Avalon at Mission Bay II - San Francisco, CA 25.0 % 313 130,073 103,000 Fixed 3.24 % Jul 2025 2.
AVA High Line—New York, NY (3) 405 123,313 84,000 Fixed 4.01 % Jan 2029 Total NYTA MF Investors LLC 20.0 % 1,301 781,686 394,734 3.88 % Other Operating Joint Ventures (7) 1. MVP I, LLC - Avalon at Mission Bay II - San Francisco, CA (4) 25.0 % 313 130,719 — — — — 2.
Kanso Hillcrest (2) San Diego, CA 182 85 November 2024 Total 2,783 $ 990 ____________________________________ (1) Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land and related acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions, net of projected proceeds for any planned sales of associated outparcels and other real estate.
Avalon Somerville Station II Somerville, NJ 171 65 December 2025 Total 2,868 $ 1,138 ____________________________________ (1) Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land and related acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions, net of projected proceeds for any planned sales of associated outparcels and other real estate.
We expect these Development Communities, when completed, to add a total of 6,004 apartment homes and 59,000 square feet of commercial space to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $2,253,000,000.
We expect these Development Communities, when completed, to add a total of 8,572 apartment homes and 69,000 square feet of commercial space to our portfolio for an estimated total capitalized cost, including land acquisition costs, of approximately $3,307,000,000.
Kanso Hillcrest San Diego, CA 182 85 Q4 2024 Q1 2027 Q2 2027 Q4 2027 Total 6,004 $ 2,253 _________________________________ (1) Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
Avalon San Ramon San Ramon, CA 456 250 Q4 2025 Q3 2027 Q3 2028 Q1 2029 Total 8,572 $ 3,307 _________________________________ (1) Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
For joint ventures holding operating apartment communities as of December 31, 2024, detail of the real estate and associated indebtedness underlying our unconsolidated investments is presented in the following table (dollars in thousands).
See Note 5, "Investments," of the Consolidated Financial Statements included elsewhere in this report. For joint ventures holding operating apartment communities as of December 31, 2025, detail of the real estate and associated indebtedness underlying our unconsolidated investments is presented in the following table (dollars in thousands).
Development Rights At December 31, 2024, we had $151,922,000 in acquisition and related capitalized costs for direct interests in seven land parcels we own.
Development Rights At December 31, 2025, we had $123,751,000 in acquisition and related capitalized costs for direct interests in seven land parcels we own and intend to develop.
The amount for 2024 includes a write-off of $8,947,000 related to one Development Right in Northern California that we determined was no longer probable. You should carefully review Item 1A.
The amount for 2025 includes a write-off of $3,668,000 related to one development opportunity that we determined is no longer probable. You should carefully review Item 1A.
We currently lease our corporate headquarters located in Arlington, Virginia, as well as our other regional and administrative offices, under operating leases. 23 Table of Contents As of December 31, 2024, communities that we owned or held a direct or indirect interest in were classified as follows: Number of communities Number of apartment homes Current Communities Same Store: New England 36 9,134 Metro NY/NJ 40 12,540 Mid-Atlantic 42 14,482 Southeast Florida 8 2,837 Denver, CO 6 1,539 Pacific Northwest 18 5,109 Northern California 39 12,045 Southern California 58 17,791 Other Expansion Regions 6 1,381 Total Same Store 253 76,858 Other Stabilized: New England 3 503 Metro NY/NJ 3 689 Mid-Atlantic 1 714 Southeast Florida — — Denver, CO 2 653 Pacific Northwest — — Northern California — — Southern California 1 100 Other Expansion Regions 6 1,819 Total Other Stabilized 16 4,478 Redevelopment — — Unconsolidated 9 2,722 Total Current 278 84,058 Development 28 9,460 Unconsolidated Development — — Total Communities 306 93,518 Development Rights 28 8,801 Our holdings under each of the above categories are discussed on the following pages. 24 Table of Contents We generally establish the composition of our Same Store communities portfolio annually.
We currently lease our corporate headquarters located in Arlington, Virginia, as well as our other regional and administrative offices, under operating leases. 22 Table of Contents As of December 31, 2025, communities that we owned or held a direct or indirect interest in were classified as follows: Number of communities Number of apartment homes Current Communities Same Store: New England 38 9,535 Metro NY/NJ 39 12,236 Mid-Atlantic 38 13,714 Southeast Florida 8 2,837 Denver, CO 6 1,539 Pacific Northwest 17 4,943 Northern California 38 11,807 Southern California 58 17,798 Other Expansion Regions 9 2,512 Total Same Store 251 76,921 Other Stabilized: New England 1 162 Metro NY/NJ 3 966 Mid-Atlantic 1 234 Southeast Florida 2 524 Denver, CO 2 653 Pacific Northwest 4 1,049 Northern California 2 742 Southern California 1 100 Other Expansion Regions 13 3,756 Total Other Stabilized 29 8,186 Redevelopment — — Unconsolidated 8 2,394 Total Current 288 87,501 Development 32 11,193 Unconsolidated Development — — Total Communities 320 98,694 Development Rights 32 9,032 Our holdings under each of the above categories are discussed on the following pages. 23 Table of Contents We generally establish the composition of our Same Store communities portfolio annually.
From January 1, 2024 to January 31, 2025, (i) we acquired six wholly-owned communities containing 1,441 apartment homes for an aggregate purchase price of $460,100,000 and (ii) we sold our interest in nine wholly-owned communities, containing 1,634 apartment homes, with an aggregate gross sales price of $791,300,000. 31 Table of Contents Insurance and Risk of Uninsured Losses We maintain commercial general liability insurance and property insurance with respect to all of our communities, with insurance policies issued by a combination of third party insurers as well as a wholly-owned captive insurance company.
From January 1, 2025 to January 31, 2026, (i) we acquired 12 wholly-owned communities containing 3,378 apartment homes for an aggregate purchase price of $826,029,000, (ii) we acquired our joint venture partner's 50% interest in Avalon Alderwood Place, a 328 apartment home community in Lynnwood, WA for a purchase price of $71,250,000 and (iii) we sold our interest in ten wholly-owned communities, containing 2,345 apartment homes, with an aggregate gross sales price of $916,680,000. 30 Table of Contents Insurance and Risk of Uninsured Losses We maintain commercial general liability insurance and property insurance with respect to all of our communities, with insurance policies issued by a combination of third-party insurers as well as a wholly-owned captive insurance company.
(5) In addition to leasehold assets, there were net other assets of $38,506 as of December 31, 2024 associated with our unconsolidated real estate investments which are primarily cash and cash equivalents. We had an equity interest of 28.6% in the Archstone Multifamily Partners AC LP (the "U.S.
(6) In addition to leasehold assets, there were net other assets of $38,961 as of December 31, 2025 associated with our unconsolidated real estate investments which are primarily cash and cash equivalents.
As of January 31, 2025, our Current Communities consisted of the following: Number of communities Number of apartment homes Garden-style 134 42,206 Mid-rise 122 35,607 High-rise 28 8,298 Total Current Communities 284 86,111 As discussed in Item 1. "Business," we operate under four core brands: Avalon, AVA, e aves by Avalon and Kanso.
As of January 31, 2026, our Current Communities consisted of the following: Number of communities Number of apartment homes Garden-style 145 45,436 Mid-rise 123 36,263 High-rise 24 7,069 Total Current Communities 292 88,768 As discussed in Item 1. "Business," we operate under four core brands: Avalon, AVA, e aves by Avalon and Kanso.
During the year ended December 31, 2024, we completed construction of nine communities containing 2,981 apartment homes, acquired six communities containing 1,441 apartment homes and sold eight operating communities containing 1,532 apartment homes.
During the year ended December 31, 2025, we completed construction of four communities containing 1,320 apartment homes, acquired 12 wholly-owned communities containing 3,378 apartment homes and sold nine operating communities containing 2,102 apartment homes.
The land leases have various expiration dates from July 2046 to May 2123, and three of the land leases are used to support tax advantaged structures that ultimately allow us to purchase the land upon lease expiration. The Company has purchase options for all land leases expiring prior to 2062. • A membership interest in five limited liability companies.
The land leases have various expiration dates from July 2046 to April 2106, and three of the land leases are used to support tax advantaged structures that ultimately allow us to purchase the land upon lease expiration.
Avalon Plano (4) Plano, TX 155 58 Q3 2024 Q2 2026 Q2 2027 Q4 2027 15. Avalon Oakridge I Durham, NC 459 149 Q3 2024 Q4 2026 Q4 2027 Q2 2028 16. AVA Brewer's Hill Baltimore, MD 418 134 Q4 2024 Q4 2026 Q3 2027 Q1 2028 17.
Avalon Oakridge I Durham, NC 459 149 Q3 2024 Q1 2027 Q1 2028 Q3 2028 12. AVA Brewer's Hill Baltimore, MD 418 134 Q4 2024 Q4 2026 Q4 2027 Q1 2028 13. Kanso Hillcrest San Diego, CA 182 85 Q4 2024 Q1 2027 Q2 2027 Q4 2027 14.
We bear no responsibility for the repayment unless otherwise disclosed. (2) Borrowing on this community is comprised of two mortgage loans. The interest rate is the weighted average interest rate as of December 31, 2024. (3) Borrowing on this dual-branded community is comprised of a single mortgage loan.
(2) Borrowing on this community is comprised of two mortgage loans. The interest rate is the weighted average interest rate as of December 31, 2025. (3) Borrowing on this dual-branded community is comprised of a single mortgage loan. This dual-branded community is subject to a leasehold interest which is not included in the total capitalized cost.
(2) Stabilized operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development. (3) Development Communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 square feet) and Avalon South Miami (32,000 square feet).
(2) Stabilized operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
Avalon Quincy Adams Quincy, MA 288 124 Q2 2024 Q1 2026 Q3 2026 Q2 2027 12. Avalon Tech Ridge I Austin, TX 444 120 Q3 2024 Q1 2026 Q1 2027 Q3 2027 13. Avalon Carmel (4) Charlotte, NC 360 123 Q3 2024 Q2 2026 Q3 2026 Q3 2027 14.
Avalon Tech Ridge I (6) Austin, TX 544 153 Q3 2024 Q1 2026 Q2 2027 Q4 2027 9. Avalon Carmel (4) Charlotte, NC 360 123 Q3 2024 Q2 2026 Q4 2026 Q3 2027 10. Avalon Plano (4) Plano, TX 155 58 Q3 2024 Q3 2026 Q2 2027 Q4 2027 11.
The DFP utilizes third-party multifamily developers to source and construct communities which we own and operate. 28 Table of Contents During the year ended December 31, 2024, we completed the development of the following wholly-owned communities: Number of apartment homes Total capitalized cost (1) ($ millions) Approximate rentable area (sq. ft.) Total capitalized cost per sq. ft.
During the year ended December 31, 2025, we completed the development of the following wholly-owned communities: Number of apartment homes Total capitalized cost (1) ($ millions) Approximate rentable area (sq. ft.) Total capitalized cost per sq. ft. Quarter of completion 1. Avalon Princeton on Harrison Princeton, NJ 200 $ 79 190,000 $ 416 Q2 2025 2.
In addition to our Current Communities, we also hold, directly or through wholly-owned subsidiaries, a full fee simple ownership interest in our wholly-owned Development Communities. 26 Table of Contents As part of the Archstone Acquisition in 2013 (as defined in Item 1.
We hold, directly or through wholly-owned subsidiaries, a full fee simple ownership interest in all of our wholly-owned Development Communities, with the exception of one Development Community in which we own a leasehold interest.
Brandywine Apartments of Maryland, LLC - Brandywine - Washington, D.C. 28.7 % 305 20,093 18,368 Fixed 3.40 % Jun 2028 3. Avalon Alderwood MF Member, LLC - Avalon Alderwood Place - Lynnwood, WA 50.0 % 328 111,223 — N/A N/A N/A 4.
Brandywine Apartments of Maryland, LLC - Brandywine - Washington, D.C. 28.6 % 305 20,093 17,651 Fixed 3.40 % Jun 2028 3.
Avalon Annapolis Annapolis, MD 508 199 Q3 2022 Q3 2024 Q3 2025 Q2 2026 3. Avalon Lake Norman (4) Mooresville, NC 345 101 Q1 2023 Q2 2025 Q1 2026 Q3 2026 4. Avalon Hunt Valley West Hunt Valley, MD 322 107 Q2 2023 Q1 2025 Q1 2026 Q3 2026 5.
Avalon Lake Norman (4) Mooresville, NC 345 102 Q1 2023 Q2 2025 Q1 2026 Q4 2026 3. Avalon Wayne Wayne, NJ 473 171 Q4 2023 Q2 2025 Q3 2026 Q1 2027 4. Avalon Parsippany Parsippany, NJ 410 147 Q4 2023 Q3 2025 Q2 2026 Q1 2027 5.
Arts District Joint Venture - AVA Arts District - Los Angeles, CA (4) 25.0 % 475 287,953 155,968 Variable 6.91 % Aug 2025 Total Other Joint Ventures 1,421 549,342 277,336 5.31 % Total Unconsolidated Real Estate Investments (5) 2,722 $ 1,327,672 $ 672,070 4.47 % 29 Table of Contents _________________________________ (1) We have not guaranteed the debt of these unconsolidated investees with the exception of the construction loan associated with the Arts District Joint Venture.
Arts District Joint Venture - AVA Arts District - Los Angeles, CA (5) 25.0 % 475 288,475 162,104 Variable 6.57 % Jul 2028 Total Other Joint Ventures 1,093 439,287 179,755 6.26 % Total Unconsolidated Real Estate Investments (6) 2,394 $ 1,220,973 $ 574,489 4.62 % 28 Table of Contents _________________________________ (1) We have not guaranteed the debt of these unconsolidated investees and bear no responsibility for the repayment other than for the Arts District joint venture as discussed below in footnote 5.
The venture had drawn $155,968 of the $167,147 maximum borrowing capacity of the construction loan as of December 31, 2024. While we guarantee 30% of the venture's construction loan, any amounts payable under the guarantee are obligations of the venture partners in proportion to their ownership interest.
The outstanding borrowing is subject to an interest rate cap, which will limit the interest rate to 8.2%, based on the current borrowing spread. While we guarantee 25% of the new loan, any amounts payable under the guarantee are obligations of the joint venture partners in proportion to their ownership interest.
Unconsolidated Operating Communities As of December 31, 2024, we had investments in the following unconsolidated real estate entities accounted for under the equity method of accounting. See Note 5, "Investments," of the Consolidated Financial Statements included elsewhere in this report.
We generally anticipate incurring additional costs associated with these communities which are customary for new developments. (2) Avalon South Miami includes 32,000 square feet of commercial space. Unconsolidated Operating Communities As of December 31, 2025, we had investments in the following unconsolidated real estate entities accounted for under the equity method of accounting.
Removed
"Business" in the Company's Form 10-K filed with the SEC on February 22, 2019), we acquired, and still own, 14 assets that had previously been contributed by third parties on a tax-deferred basis to an Archstone partnership in which the third parties received ownership interests.
Added
In addition, during the year ended December 31, 2025, we acquired our joint venture partner's 50% interest in Avalon Alderwood Place, a 328 apartment home community in Lynnwood, WA. With the buyout of the joint venture partner's interest, Avalon Alderwood Place is now a wholly owned apartment community and consolidated for financial reporting purposes.
Removed
To protect the tax-deferred nature of the contribution, the third parties are entitled to cash payments if we trigger tax obligations to the third parties by selling, or failing to maintain sufficient levels of secured financing on, the contributed assets.
Added
The Company has purchase options for all land leases expiring prior to 2062. • Eight operating communities held by unconsolidated entities in which we hold an ownership interest, including a membership interest in four unconsolidated limited liability companies.
Removed
Our tax protection payment obligations with respect to these assets don’t expire until the death of a third party who contributed ownership interests to the Archstone partnership.
Added
The other three ventures each hold a fee simple interest in an operating community. 25 Table of Contents • A general partnership interest in one partnership structured as a “DownREIT,” which is consolidated and owns nine communities. In this partnership, one of our wholly-owned subsidiaries is the general partner.
Removed
After review and investigation of Archstone’s tax and accounting records, we estimate that, had we sold or taken other triggering actions in 2024 with respect to all 14 assets, the aggregate amount of the tax protection payments that would have been triggered would have been approximately $43,815,000.
Added
The units representing limited partner interests in the DownREIT (“DownREIT Units”) are entitled to receive distributions at the same rate as dividends on a share of the Company’s common stock.
Removed
At the present time, we do not intend to take actions that would cause us to be required to make tax protection payments with respect to any of these assets. Development Communities As of December 31, 2024, we owned or held a direct interest in 17 Development Communities under construction.
Added
Beginning on April 30, 2026, holders of DownREIT Units may present some or all of their units for redemption, being entitled to receive a cash amount per unit that is related to the then fair market value of the Company’s common stock, except that in lieu of such cash redemption the Company may elect to redeem units in exchange for an equal number of shares of the Company’s common stock.
Removed
Avalon South Miami (3) South Miami, FL 290 186 Q3 2023 Q3 2025 Q1 2026 Q3 2026 6. Avalon Princeton on Harrison Princeton, NJ 200 82 Q3 2023 Q1 2025 Q2 2025 Q1 2026 7. Avalon Wayne Wayne, NJ 473 171 Q4 2023 Q2 2025 Q3 2026 Q1 2027 8.
Added
At January 31, 2026, there were 1,059,995 DownREIT Units outstanding. Development Communities As of December 31, 2025, we owned or held a direct interest in 24 Development Communities under construction.
Removed
Avalon Parsippany Parsippany, NJ 410 147 Q4 2023 Q3 2025 Q2 2026 Q4 2026 9. Avalon Pleasanton I Pleasanton, CA 82 58 Q2 2024 Q3 2025 Q4 2025 Q1 2026 10. Avalon Roseland II Roseland, NJ 533 199 Q2 2024 Q4 2025 Q4 2026 Q2 2027 11.
Added
Avalon Pleasanton (5) Pleasanton, CA 362 218 Q2 2024 Q3 2025 Q3 2027 Q1 2028 6. Avalon at Becker Farm Roseland, NJ 533 192 Q2 2024 Q4 2025 Q4 2026 Q2 2027 7. Avalon Quincy Adams Quincy, MA 288 122 Q2 2024 Q1 2026 Q3 2026 Q2 2027 8.
Removed
(4) Communities being developed through our Developer Funding Program ("DFP").
Added
Avalon Parker Parker, CO 312 122 Q1 2025 Q3 2026 Q2 2027 Q1 2028 15. Avalon North Palm Beach (3) Lake Park, FL 279 118 Q1 2025 Q1 2027 Q3 2027 Q1 2028 16. Avalon Brier Creek Durham, NC 400 127 Q2 2025 Q3 2026 Q3 2027 Q1 2028 17.
Removed
Quarter of completion 1. Avalon Amityville Amityville, NY 338 $ 135 322,103 $ 419 Q2 2024 2. Avalon Montville Montville, NJ 349 127 365,281 $ 348 Q2 2024 3. Avalon Redmond Campus Redmond, WA 214 89 187,175 $ 475 Q2 2024 4. Avalon Bothell Commons I Bothell, WA 467 236 491,661 $ 480 Q3 2024 5.
Added
Avalon Kendall (4) Kendall, FL 224 83 Q2 2025 Q4 2026 Q1 2027 Q4 2027 18. Avalon Mission Valley (3) San Diego, CA 621 302 Q3 2025 Q1 2028 Q1 2029 Q3 2029 19. Avalon Southpoint (4) Durham, NC 394 132 Q3 2025 Q4 2026 Q2 2028 Q3 2028 20.
Removed
Kanso Milford Milford, MA 162 63 179,056 $ 352 Q3 2024 6. Avalon Westminster Promenade Westminster, CO 312 114 269,401 $ 423 Q4 2024 7. Avalon West Dublin Dublin, CA 499 263 461,361 $ 570 Q4 2024 8. Avalon Governor's Park Denver, CO 304 138 244,578 $ 564 Q4 2024 9.
Added
Avalon Northwest Hills Austin, TX 252 87 Q4 2025 Q3 2027 Q1 2028 Q3 2028 21. Kanso Parsippany Parsippany, NJ 280 104 Q4 2025 Q2 2027 Q4 2027 Q3 2028 22. Avalon Billerica Billerica, MA 200 73 Q4 2025 Q2 2027 Q4 2027 Q3 2028 23.
Removed
Avalon Durham (2) Durham, NC 336 121 300,566 $ 403 Q4 2024 Total 2,981 $ 1,286 ____________________________________ (1) Total capitalized cost is as of December 31, 2024. We generally anticipate incurring additional costs associated with these communities that are customary for new developments. (2) Community was developed through our DFP.
Added
Avalon Townhome Collection Arundel Mills (4) Hanover, MD 90 45 Q4 2025 Q4 2026 Q4 2026 Q4 2027 24.
Removed
This dual-branded community is subject to a leasehold interest which is not included in the total capitalized cost. (4) AVA Arts District completed development during the year ended December 31, 2024 and achieved stabilized residential operations. It contains 57,000 square feet of commercial space.
Added
(3) Development communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 sf), Avalon North Palm Beach (10,000 sf), and Avalon Mission Valley (31,000 sf). 27 Table of Contents (4) Communities being developed through our Developer Funding Program ("DFP"). The DFP utilizes third-party multifamily developers to source and construct communities which we own and operate.
Removed
Fund") and because we achieved a threshold return for the fund, during the year ended December 31, 2023, we recognized income of $1,519,000 for our promoted interest, which is included in income from unconsolidated investments on the accompanying Consolidated Statements of Comprehensive Income. The U.S. Fund sold its final three communities in 2022 and completed its dissolution in 2023.
Added
(5) During the year ended December 31, 2025, the Company expanded the Avalon Pleasanton development in Pleasanton, CA, adding an additional 280 apartment homes, and increasing the total estimated capitalized costs by $160,000,000.
Removed
Estimated number of apartment homes Projected total capitalized cost (1) ($ millions) Date acquired 1. Avalon Parsippany (2) Parsippany, NJ 410 $ 148 January 2024 2. AVA Brewer's Hill (2) Baltimore, MD 418 134 March 2024 3. Avalon Brier Creek Raleigh, NC 400 130 April 2024 4. Avalon Roseland II (2) Roseland, NJ 533 199 April 2024 5.
Added
(6) During the year ended December 31, 2025, the Company expanded the Avalon Tech Ridge I development in Austin, TX, adding an additional 100 rental townhomes, and increasing the total estimated capitalized costs by $33,000,000.
Removed
Avalon Parker Parker, CO 312 122 May 2024 6. Avalon Plano (2) (3) Plano, TX 155 58 July 2024 7. Avalon Oakridge II Durham, NC 373 114 September 2024 8.
Added
Avalon Annapolis Annapolis, MD 508 195 437,000 $ 446 Q3 2025 3. Avalon Hunt Valley West Hunt Valley, MD 322 102 309,000 $ 330 Q4 2025 4. Avalon South Miami (2) South Miami, FL 290 185 295,000 $ 627 Q4 2025 Total 1,320 $ 561 ____________________________________ (1) Total capitalized cost is as of December 31, 2025.
Added
(4) In July 2025, MVP I, LLC repaid $103,000 of outstanding secured indebtedness at par upon maturity. The equity investors contributed capital in proportion to their ownership interests to repay the outstanding loan. (5) AVA Arts District completed development during the year ended December 31, 2024 and achieved stabilized residential operations.
Added
In June 2025, the joint venture secured a variable rate loan with a maturity date of July 2028 and used the proceeds to repay the previously existing $158,735 variable rate construction loan which was scheduled to mature in August 2025.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLEGAL PROCEEDINGS As disclosed in Note 7, "Commitments and Contingencies" and Note 12, "Subsequent Events" of the Consolidated Financial Statements in Item 8 of this report, we are engaged in certain legal proceedings, and the disclosure set forth in Note 7, "Commitments and Contingencies" and Note 12, "Subsequent Events" relating to legal and other contingencies is incorporated herein by reference.
Biggest changeITEM 3. LEGAL PROCEEDINGS As disclosed in Note 7, "Commitments and Contingencies" of the Consolidated Financial Statements in Item 8 of this report, we are engaged in certain legal proceedings, and the disclosure set forth in Note 7, "Commitments and Contingencies" relating to legal and other contingencies is incorporated herein by reference. ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 34 Table of Contents PART II
MINE SAFETY DISCLOSURES Not Applicable. 33 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2) October 1 - October 31, 2024 130 $ 222.06 — $ 314,237 November 1 - November 30, 2024 550 $ 218.15 — $ 314,237 December 1 - December 31, 2024 427 $ 235.35 — $ 314,237 Total 1,107 $ 225.24 — _________________________________ (1) Consists of (i) shares surrendered to the Company in connection with exercise of stock options as payment of exercise price, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to shares of common stock and (ii) activity under the Stock Repurchase Program, if any, as indicated under Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs.
Biggest changeIssuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2) (3) October 1 - October 31, 2025 408 $ 190.92 — $ 500,000 November 1 - November 30, 2025 1,379,896 $ 176.93 1,379,789 $ 255,879 December 1 - December 31, 2025 512,483 $ 179.85 512,133 $ 163,769 Total 1,892,787 $ 177.72 1,891,922 _________________________________ (1) Consists of (i) shares surrendered to the Company in connection with exercise of stock options as payment of the exercise price, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to shares of common stock and (ii) shares repurchased under the 2025 Stock Repurchase Program, if any, as indicated under "Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs." (2) On October 28, 2025, the Company terminated its then-existing stock repurchase program (the “2020 Stock Repurchase Program”), approved in July 2020, under which the Company had remaining authority at such time to acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000, and adopted a new stock repurchase program (the “2025 Stock Repurchase Program”), under which the Company was authorized to acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000.
The dividend will be payable on April 15, 2025 to all common stockholders of record as of March 31, 2025.
The dividend will be payable on April 15, 2026 to all common stockholders of record as of March 31, 2026.
The Board of Directors may modify our dividend policy from time to time. In February 2025, we announced that our Board of Directors declared a dividend on our common stock for the first quarter of 2025 of $1.75 per share, a 2.9% increase over the Company's prior quarterly dividend of $1.70 per share.
The Board of Directors may modify our dividend policy from time to time. In February 2026, we announced that our Board of Directors declared a dividend on our common stock for the first quarter of 2026 of $1.78 per share, a 1.7% increase over the Company's prior quarterly dividend of $1.75 per share.
Purchases of common stock under the Stock Repurchase Program may be exercised from time to time in the Company’s discretion and in such amounts as market conditions warrant. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities.
Purchases of common stock under the 2026 Stock Repurchase Program may occur from time to time at the Company’s discretion. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE under the ticker symbol AVB. On January 31, 2025, there were 663 holders of record of an aggregate of 142,254,778 shares of our outstanding common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE under the ticker symbol AVB. On January 30, 2026, there were 637 holders of record of an aggregate of 140,083,473 shares of our outstanding common stock.
The Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice. Information regarding securities authorized for issuance under equity compensation plans is included in the section entitled Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" in this Form 10-K.
The 2026 Stock Repurchase Program has no expiration date and may be suspended or terminated at any time without prior notice. Information regarding securities authorized for issuance under equity compensation plans is included in the section entitled Item 12.
(2) The Board of Directors approved the Stock Repurchase Program in July 2020, under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000.
On February 26, 2026, the Company terminated the 2025 Stock Repurchase Program and adopted a new stock repurchase program under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $1,000,000,000 (the "2026 Stock Repurchase Program").
Added
The 2025 Stock Repurchase Program did not have an expiration date. All share purchases made as part of publicly announced plans or programs in the fourth quarter of 2025 were made pursuant to the 2025 Stock Repurchase Program. (3) Represents remaining repurchase authority as of the indicated month end under the 2025 Stock Repurchase Program.
Added
From January 1, 2026 through February 26, 2026, the Company repurchased 637,958 shares of common stock at an average price of $176.85 per share, including fees, for a total of $112,824,000 of the $163,769,000 of capacity remaining under the 2025 Stock Repurchase Program as of January 1, 2026.
Added
"Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" in this Form 10-K. 34 Table of Contents ITEM 6. [RESERVED] 35 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

106 edited+43 added−28 removed55 unchanged
Biggest changeEffective interest rate (1) Principal maturity date Balance Outstanding (2) Scheduled Maturities Debt 12/31/2023 12/31/2024 2025 2026 2027 2028 2029 Thereafter Tax-exempt bonds Variable rate Avalon Acton 4.66 % Jul-2040 (3) $ 45,000 $ 45,000 $ — $ — $ — $ — $ — $ 45,000 Avalon Clinton North 5.31 % Nov-2038 (3) 126,400 126,400 — — 700 2,800 3,000 119,900 Avalon Clinton South 5.31 % Nov-2038 (3) 104,500 104,500 — — 600 2,300 2,400 99,200 Avalon Midtown West 5.28 % May-2029 (3) 76,600 69,800 8,100 8,100 8,900 9,800 34,900 — Avalon San Bruno I 5.20 % Dec-2037 (3) 57,650 55,250 2,200 2,600 2,700 2,900 3,100 41,750 410,150 400,950 10,300 10,700 12,900 17,800 43,400 305,850 Conventional loans Fixed rate $300 million unsecured notes — % Nov-2024 (4) 300,000 — — — — — — — $525 million unsecured notes 3.55 % Jun-2025 525,000 525,000 525,000 — — — — — $300 million unsecured notes 3.62 % Nov-2025 300,000 300,000 300,000 — — — — — $475 million unsecured notes 3.35 % May-2026 475,000 475,000 — 475,000 — — — — $300 million unsecured notes 3.01 % Oct-2026 300,000 300,000 — 300,000 — — — — $350 million unsecured notes 3.95 % Oct-2046 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 3.50 % May-2027 400,000 400,000 — — 400,000 — — — $300 million unsecured notes 4.09 % Jul-2047 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.32 % Jan-2028 450,000 450,000 — — — 450,000 — — $300 million unsecured notes 3.97 % Apr-2048 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.66 % Jun-2029 450,000 450,000 — — — — 450,000 — $700 million unsecured notes 2.69 % Mar-2030 700,000 700,000 — — — — — 700,000 $600 million unsecured notes 2.65 % Jan-2031 600,000 600,000 — — — — — 600,000 $700 million unsecured notes 2.16 % Jan-2032 700,000 700,000 — — — — — 700,000 $400 million unsecured notes 2.03 % Dec-2028 400,000 400,000 — — — 400,000 — — $350 million unsecured notes 4.38 % Feb-2033 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 5.19 % Dec-2033 400,000 400,000 — — — — — 400,000 $400 million unsecured notes 5.05 % Jun-2034 — 400,000 — — — — — 400,000 47 Table of Contents Effective interest rate (1) Principal maturity date Balance Outstanding (2) Scheduled Maturities Debt 12/31/2023 12/31/2024 2025 2026 2027 2028 2029 Thereafter Avalon Walnut Creek 4.00 % Jul-2066 4,501 4,681 — — — — — 4,681 eaves Los Feliz 3.68 % Jun-2027 41,400 41,400 — — 41,400 — — — eaves Woodland Hills 3.67 % Jun-2027 111,500 111,500 — — 111,500 — — — Avalon Russett 3.77 % Jun-2027 32,200 32,200 — — 32,200 — — — Avalon San Bruno III 2.38 % Mar-2027 51,000 51,000 — — 51,000 — — — Avalon Cerritos 3.34 % Aug-2029 30,250 30,250 — — — — 30,250 — Avalon West Plano 5.97 % May-2029 63,041 62,448 1,065 1,111 1,159 1,202 57,911 — 7,633,892 7,733,479 826,065 776,111 637,259 851,202 538,161 4,104,681 Total indebtedness - excluding Credit Facility and Commercial Paper $ 8,044,042 $ 8,134,429 $ 836,365 $ 786,811 $ 650,159 $ 869,002 $ 581,561 $ 4,410,531 _________________________________ (1) Rates are as of December 31, 2024 and include credit enhancement fees, facility fees, trustees' fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees.
Biggest changeWe are not directly or indirectly (as borrower or guarantor) obligated in any material respect to pay principal or interest on the indebtedness of any unconsolidated entities in which we have an equity or other interest other than as disclosed related to the AVA Arts District loan (see "Unconsolidated Operating Communities" for further discussion of the AVA Arts District loan). 47 Table of Contents Effective interest rate (1) Principal maturity date Balance Outstanding (2) Scheduled Maturities Debt 12/31/2024 12/31/2025 2026 2027 2028 2029 2030 Thereafter Tax-exempt bonds Variable rate Avalon Acton 3.40 % Jul-2040 (3) $ 45,000 $ 45,000 $ — $ — $ — $ — $ — $ 45,000 Avalon Clinton North 4.05 % Nov-2038 (3) 126,400 126,400 — — — — — 126,400 Avalon Clinton South 4.05 % Nov-2038 (3) 104,500 104,500 — — — — — 104,500 Avalon Midtown West 4.05 % May-2029 (3) 69,800 62,500 8,800 8,900 9,800 35,000 — — Avalon San Bruno I 3.94 % Dec-2037 (3) 55,250 52,150 1,900 2,700 2,900 3,100 3,300 38,250 400,950 390,550 10,700 11,600 12,700 38,100 3,300 314,150 Conventional loans Fixed rate $525 Million unsecured notes 3.55 % Jun-2025 (4) 525,000 — — — — — — — $300 million unsecured notes 3.62 % Nov-2025 (4) 300,000 — — — — — — — $475 million unsecured notes 3.35 % May-2026 475,000 475,000 475,000 — — — — — $300 million unsecured notes 3.01 % Oct-2026 300,000 300,000 300,000 — — — — — $350 million unsecured notes 3.95 % Oct-2046 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 3.50 % May-2027 400,000 400,000 — 400,000 — — — — $300 million unsecured notes 4.09 % Jul-2047 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.32 % Jan-2028 450,000 450,000 — — 450,000 — — — $300 million unsecured notes 3.97 % Apr-2048 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.66 % Jun-2029 450,000 450,000 — — — 450,000 — — $700 million unsecured notes 2.69 % Mar-2030 700,000 700,000 — — — — 700,000 — $600 million unsecured notes 2.65 % Jan-2031 600,000 600,000 — — — — — 600,000 $700 million unsecured notes 2.16 % Jan-2032 700,000 700,000 — — — — — 700,000 $400 million unsecured notes 2.03 % Dec-2028 400,000 400,000 — — 400,000 — — — $350 million unsecured notes 4.38 % Feb-2033 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 5.19 % Dec-2033 400,000 400,000 — — — — — 400,000 $400 million unsecured notes 5.05 % Jun-2034 400,000 400,000 — — — — — 400,000 $400 million unsecured notes 5.05 % Aug-2035 — 400,000 — — — — — 400,000 $400 Million unsecured notes 4.52 % Dec-2030 — 400,000 — — — — 400,000 — $550 million Term Loan 4.44 % Apr-2029 (5) — 550,000 — — — 550,000 — — Avalon Walnut Creek 4.00 % Jul-2066 4,681 4,868 — — — — — 4,868 eaves Los Feliz 3.68 % Jun-2027 41,400 41,400 — 41,400 — — — — eaves Woodland Hills 3.67 % Jun-2027 111,500 111,500 — 111,500 — — — — Avalon Russett 3.77 % Jun-2027 32,200 32,200 — 32,200 — — — — Avalon San Bruno III 2.38 % Mar-2027 51,000 51,000 — 51,000 — — — — Avalon Cerritos 3.34 % Aug-2029 30,250 30,250 — — — 30,250 — — Avalon West Plano 5.97 % May-2029 62,448 61,384 1,111 1,159 1,202 57,912 — — 7,733,479 8,257,602 776,111 637,259 851,202 1,088,162 1,100,000 3,804,868 Total indebtedness - excluding Credit Facility and Commercial Paper $ 8,134,429 $ 8,648,152 $ 786,811 $ 648,859 $ 863,902 $ 1,126,262 $ 1,103,300 $ 4,119,018 _________________________________ (1) Rates are as of December 31, 2025 and include credit enhancement fees, facility fees, trustees' fees, the impact of interest rate hedges, offering costs, mark-to-market amortization and other fees.
Early retirement of our unsecured or secured notes could result in gains or losses on extinguishment. We may use capital from a variety of sources to repay debt at maturity, including proceeds received from the dispositions of our operating communities or other direct and indirect investments in real estate and cash from operations.
Early retirement of our unsecured or secured debt could result in gains or losses on extinguishment. We may use capital from a variety of sources to repay debt at maturity, including cash from operations and proceeds received from the dispositions of our operating communities or other direct and indirect investments in real estate.
In addition, to the extent we have amounts outstanding under the Commercial Paper Program, we are obligated to repay the short-term indebtedness at maturity through either current cash on hand or by incurring other indebtedness, including by way of borrowing under our Credit Facility.
In addition, to the extent we have amounts outstanding under the Commercial Paper Program, we are obligated to repay the short-term indebtedness at maturity through either current cash on hand or by incurring other indebtedness, including by way of borrowing under our Credit Facility or Term Loan.
These statements, among other things, address the Company's intent, belief or expectations with respect to: • development, redevelopment, acquisition or disposition of communities; • the timing and cost of completion of communities under development or redevelopment; • the timing of lease-up, occupancy and stabilization of communities; • the pursuit of land for future development; • the anticipated operating performance of our communities; • cost, yield, revenue, NOI and earnings estimates; • the impact of landlord-tenant laws and rent regulations, including rent caps; • our expansion into new regions; • our declaration or payment of dividends; • our joint venture activities; • our policies regarding investments, indebtedness, acquisitions, dispositions, financings and other matters; • our qualification as a REIT under the Code; • the real estate markets in regions where we operate and in general; • the availability of debt and equity financing; • interest rates; • inflation, tariffs and other economic conditions, and their potential impacts; • trends affecting our financial condition or results of operations; • regulatory changes that may affect us; and • the impact of legal proceedings.
These statements, among other things, address the Company's intent, belief or expectations with respect to: • development, redevelopment, acquisition or disposition of communities; • the timing and cost of completion of communities under development or redevelopment; • the timing of lease-up, occupancy and stabilization of communities; • the pursuit of land for future development; • the anticipated operating performance of our communities; • cost, yield, revenue, NOI and earnings estimates; • the impact of landlord-tenant laws and rent regulations, including rent caps; • our expansion into new regions; • our declaration or payment of dividends; • our joint venture activities; • our policies regarding investments, indebtedness, acquisitions, dispositions, financings and other matters; • our qualification as a REIT under the Code; • the real estate markets in regions where we operate and in general; • the availability of debt and equity financing; 52 Table of Contents • interest rates; • inflation, tariffs and other economic conditions, and their potential impacts; • trends affecting our financial condition or results of operations; • regulatory changes that may affect us; and • the impact of legal proceedings.
Some of the factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: • we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals; • we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; • construction costs of a community may exceed original estimates; • we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in expected rental revenues; • occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control; • our cash flows from operations and access to cost-effective capital may be insufficient for the development of our pipeline, which could limit our pursuit of opportunities; • an outbreak of disease or other public health event may affect the multifamily industry and general economy; • our cash flows may be insufficient to meet required payments of principal and interest, and we may be unable to refinance existing indebtedness or the terms of such refinancing may not be as favorable as the terms of existing indebtedness; • we may be unsuccessful in our management of joint ventures and the REIT vehicles that are used with certain joint ventures; 51 Table of Contents • we may experience a casualty loss, natural disaster or severe weather event, including those caused by climate change; • new or existing laws and regulations implementing rent control or rent stabilization, or otherwise limiting our ability to increase rents, charge fees or evict tenants, may impact our revenue or increase our costs; • our expectations, estimates and assumptions as of the date of this filing regarding legal proceedings are subject to change; • the possibility that we may choose to pay dividends in our stock instead of cash, which may result in stockholders having to pay taxes with respect to such dividends in excess of the cash received, if any; and • investments made under the SIP may not be repaid as expected or the development may not be completed on schedule, which could require us to engage in litigation, foreclosure actions, and/or first party project completion to recover our investment, which may not be recovered in full or at all in such event.
Some of the factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: • we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals; • we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; • construction costs of a community may exceed original estimates; • we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in expected rental revenues; • occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control; • our cash flows from operations and access to cost-effective capital may be insufficient for the development of our pipeline, which could limit our pursuit of opportunities; • an outbreak of disease or other public health event may affect the multifamily industry and general economy; • our cash flows may be insufficient to meet required payments of principal and interest, and we may be unable to refinance existing indebtedness or the terms of such refinancing may not be as favorable as the terms of existing indebtedness; • we may be unsuccessful in our management of joint ventures and the REIT vehicles that are used with certain joint ventures; • we may experience a casualty loss, natural disaster or severe weather event, including those caused by climate change; • new or existing laws and regulations implementing rent control or rent stabilization, or otherwise limiting our ability to increase rents, charge non-rent fees or evict tenants, may impact our revenue or increase our costs; • our expectations, estimates and assumptions as of the date of this filing regarding legal proceedings may change; • we may choose to pay dividends in our stock instead of cash, which may result in stockholders having to pay taxes with respect to such dividends in excess of the cash received, if any; and • investments made under the SIP may not be repaid as expected or the development may not be completed on schedule, which could require us to engage in litigation, foreclosure actions, and/or first party project completion to recover our investment, which may not be recovered in full or at all in such event.
Gross potential revenue is determined by valuing occupied homes at contract rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant units at market rents. Economic Occupancy considers that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue.
Gross potential revenue is determined by valuing occupied homes at contract rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant units at current market rents. Economic Occupancy considers that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue.
In 2025, we expect to continue to meet our liquidity needs from one or more of a variety of internal and external sources, which may include (i) settlement of our outstanding equity forward contracts, (ii) real estate dispositions, (iii) cash balances on hand as well as cash generated from our operating activities, (iv) borrowing capacity under the Credit Facility, (v) borrowings under the Commercial Paper Program and (vi) secured and unsecured debt financings.
In 2026, we expect to continue to meet our liquidity needs from one or more of a variety of internal and external sources, which may include (i) settlement of our outstanding equity forward contracts, (ii) real estate dispositions, (iii) cash balances on hand as well as cash generated from our operating activities, (iv) borrowing capacity under the Credit Facility, (v) borrowings under the Commercial Paper Program and (vi) secured and unsecured debt financings.
We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), property management and other indirect operating expenses, net of corporate income, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, depreciation expense, income tax expense (benefit), casualty and impairment loss, gain on sale of communities, other real estate activity and net operating income from real estate assets sold or held for sale.
We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding: • corporate-level income (such as management, development and other fees); • property management and other indirect operating expenses, net of corporate income; • expensed transaction, development and other pursuit costs, net of recoveries; • interest expense, net; • loss on extinguishment of debt, net; • general and administrative expense; • income from unconsolidated investments; • SIP interest income; • depreciation expense; • income tax expense (benefit); • casualty and impairment loss; • gain on sale of communities, net; • other real estate activity; and • net operating income from real estate assets sold or held for sale.
In addition, FFO and Core FFO are not necessarily indicative of cash available to fund cash needs and may not be comparable to FFO and Core FFO as calculated by other REITs. 42 Table of Contents The following is a reconciliation of net income attributable to common stockholders to FFO attributable to common stockholders and to Core FFO attributable to common stockholders for the years ended December 31, 2024 and 2023 (dollars in thousands, except per share amounts).
In addition, FFO and Core FFO are not necessarily indicative of cash available to fund cash needs and may not be comparable to FFO and Core FFO as calculated by other REITs. 42 Table of Contents The following is a reconciliation of net income attributable to common stockholders to FFO attributable to common stockholders and to Core FFO attributable to common stockholders for the years ended December 31, 2025 and 2024 (dollars in thousands, except per share amounts).
The final proceeds will be determined on the date(s) of settlement and are subject to certain customary adjustments for our dividends and a daily interest factor.
The final proceeds will be determined on the date(s) of settlement and are subject to certain customary adjustments for dividends and a daily interest factor.
The following table details our consolidated debt obligations, including the effective interest rate and contractual maturity dates, and principal payments for periodic amortization and maturities for the next five years, excluding our Credit Facility and Commercial Paper Program and amounts outstanding related to communities classified as held for sale at December 31, 2024 and 2023 (dollars in thousands).
The following table details our consolidated debt obligations, including the effective interest rate and contractual maturity dates, and principal payments for periodic amortization and maturities for the next five years, excluding our Credit Facility and Commercial Paper Program and amounts outstanding related to communities classified as held for sale, at December 31, 2025 and 2024 (dollars in thousands).
We were in compliance with these covenants at December 31, 2024. In addition, some of our secured and unsecured borrowings include yield maintenance, defeasance, or prepayment penalty provisions, which could result in us incurring an additional charge in the event of a full or partial prepayment of outstanding principal before the scheduled maturity.
We were in compliance with these covenants at December 31, 2025. In addition, some of our secured and unsecured borrowings include yield maintenance, defeasance, or prepayment penalty provisions, which could result in us incurring an additional charge in the event of a full or partial prepayment of outstanding principal before the scheduled maturity.
This refinancing may be accomplished by uncollateralized private or public debt offerings, equity issuances, including through the settlement of the outstanding equity forwards, additional debt financing that is secured by mortgages on individual communities or groups of communities or borrowings under our Credit Facility or Commercial Paper Program.
This refinancing may be accomplished by uncollateralized private or public debt offerings, equity issuances, including through the settlement of the outstanding equity forwards, additional debt financing that is secured by mortgages on individual communities or groups of communities or borrowings under our Credit Facility, Term Loan or Commercial Paper Program.
We cannot predict the occurrence of future events that may cause an impairment assessment to be performed, or the likelihood of any future impairment charges, if any. You should also review Item 1A. "Risk Factors" in this Form 10-K. 53 Table of Contents
We cannot predict the occurrence of future events that may cause an impairment assessment to be performed, or the likelihood of any future impairment charges, if any. You should also review Item 1A. "Risk Factors" in this Form 10-K. 55 Table of Contents
Although we believe we will have the capacity to meet our currently anticipated liquidity needs, we cannot assure you that capital from additional debt financing or debt or equity offerings will be available or, if available, that they will be on terms we consider satisfactory.
While we believe we will have the capacity to meet our currently anticipated liquidity needs, we cannot assure you that capital from additional debt financing or debt or equity offerings will be available or, if available, that they will be on terms we consider satisfactory.
NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to 38 Table of Contents fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue.
NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue.
Secured and Unsecured Borrowings— Financial Covenants and Early Repayment Provisions We are subject to financial covenants contained in the Credit Facility and the indentures under which our unsecured notes were issued.
Secured and Unsecured Borrowings—Financial Covenants and Early Repayment Provisions We are subject to financial covenants contained in the Credit Facility, the Term Loan and the indentures under which our unsecured notes were issued.
See Note 5, "Investments," of the Consolidated Financial Statements included elsewhere in this report for further discussion. • Arts District Joint Venture was formed to develop, own, and operate AVA Arts District, an apartment community located in Los Angeles, CA, which completed construction in 2024 and contains 475 apartment homes and 57,000 square feet of commercial space when completed.
See Note 5, "Investments," of the Consolidated Financial Statements included elsewhere in this report for further discussion. • Arts District Joint Venture was formed to develop, own, and operate AVA Arts District, an apartment community located in Los Angeles, CA, which completed construction in 2024 and contains 475 apartment homes and 57,000 50 Table of Contents square feet of commercial space.
These costs are included in expensed transaction, development and other pursuit costs, net of recoveries on the accompanying Consolidated Statements of Comprehensive Income. These costs can vary greatly, and the costs incurred in any given period may be significantly different in future years.
These 54 Table of Contents costs are included in expensed transaction, development and other pursuit costs, net of recoveries on the accompanying Consolidated Statements of Comprehensive Income. These costs can vary greatly, and the costs incurred in any given period may be significantly different in future years.
A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," of our Consolidated Financial Statements. Cost Capitalization We capitalize costs during the development of assets.
A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," of our Consolidated Financial Statements. 53 Table of Contents Cost Capitalization We capitalize costs during the development of assets.
See also Part I, Item 1A, "Risk Factors." Discussion of our operating results for 2023 and comparison to 2022 can be found in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K filed with the SEC on February 23, 2024.
See also Part I, Item 1A, "Risk Factors." Discussion of our operating results for 2024 and comparison to 2023 can be found in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K filed with the SEC on February 27, 2025.
In periods of increased acquisition and pursuit activity, periods of economic downturn or when there is limited access to capital, these costs can be volatile and may vary significantly from year to year. In addition, the timing for potential recoveries will not always align with the timing for expensing an abandoned pursuit.
In periods of increased acquisition and pursuit activity, periods of economic downturn or when there is limited access to capital, these costs may vary significantly from year to year. In addition, the timing for recoveries will not always align with the timing for expensing an abandoned pursuit.
Additional sources of liquidity in 2025 may include the issuance of common and preferred equity, including the issuance of additional shares of our common stock under the CEP.
Additional sources of liquidity in 2026 may include the issuance of common and preferred equity, including the issuance of additional shares of our common stock under the CEP.
Indirect project costs, which include personnel and office and administrative costs that are clearly associated with our development and redevelopment efforts, are also capitalized. Capitalized indirect costs associated with our development and redevelopment activities are comprised primarily of compensation related costs for associates dedicated to our development and redevelopment efforts and total $50,343,000 and $50,996,000 for 2024 and 2023, respectively.
Indirect project costs, which include personnel and office and administrative costs that are clearly associated with our development and redevelopment efforts, are also capitalized. Capitalized indirect costs associated with our development and redevelopment activities are comprised primarily of compensation related costs for associates dedicated to our development and redevelopment efforts and total $50,809,000 and $50,343,000 for 2025 and 2024, respectively.
The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases by meeting or missing targets related to environmental sustainability, specifically greenhouse gas emission reductions, with the adjustment determined annually.
The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases related to certain environmental sustainability targets, specifically greenhouse gas emission reductions, with the adjustment determined annually.
We expense costs related to abandoned pursuits, which include the abandonment of Development Rights and costs related to development pursuits not yet considered probable for development, as well as costs incurred in pursuing the acquisition or disposition of assets for which such acquisition and disposition activity did not occur, of which we expensed $18,341,000, $33,479,000 and $16,565,000 of these costs during the years ended December 31, 2024, 2023 and 2022, respectively.
We expense costs related to abandoned pursuits, which include the abandonment of Development Rights and costs related to development pursuits not yet considered probable for development, as well as costs incurred in pursuing the acquisition or disposition of assets for which such acquisition and disposition activity did not occur, of which we expensed $10,846,000, $18,341,000 and $33,479,000 of these costs during the years ended December 31, 2025, 2024 and 2023, respectively.
Cash flows from operations are determined by operating activities and factors including but not limited to (i) the number of apartment homes currently owned, (ii) rental rates, (iii) occupancy levels, (iv) uncollectible lease revenue levels or interruptions in collections caused by market conditions and (v) operating expenses with respect to apartment homes.
Cash flows from operations are determined by operating activities and factors including but not limited to (i) the number of apartment homes owned, (ii) rental rates, (iii) occupancy levels, (iv) uncollectible lease revenue levels or interruptions in collections caused by market conditions, (v) operating expenses and (vi) capital expenditures with respect to our communities.
Before beginning new construction or reconstruction activity, including activity related to communities owned by unconsolidated joint ventures, we plan to source sufficient capital to complete these undertakings, although we cannot assure you that we will be able to obtain such financing.
Before beginning new construction or reconstruction activity, including activity related to communities owned by unconsolidated joint ventures, we plan to source sufficient capital to complete these undertakings, although we cannot assure you that we will be able to obtain such financing on acceptable terms or at all.
Future Financing and Capital Needs—Debt Maturities and Material Obligations 46 Table of Contents One of our principal long-term liquidity needs is the repayment of long-term debt at maturity. For both our unsecured and secured notes, a portion of the principal of these notes may be repaid prior to maturity.
Future Financing and Capital Needs—Debt Maturities and Material Obligations One of our principal long-term liquidity needs is the repayment of long-term debt at maturity. For both our unsecured and secured debt, a portion of the principal of the debt may be repaid prior to maturity.
Estimates of the undiscounted cash flows are sensitive to significant assumptions including future rental revenues, operating expenses, and our intent and ability to hold the related asset, which could be impacted by our expectations about the future.
Estimates of the undiscounted cash flows are sensitive to significant assumptions including future rental revenues, operating expenses, and our intent and ability to hold the related asset, which could be impacted by our expectations about the future economic, market or capital conditions.
NOI reflects the operating performance of a community and allows for an easier comparison of the operating performance of individual assets or groups of assets.
NOI reflects the operating performance of a 38 Table of Contents community and allows for an easier comparison of the operating performance of individual assets or groups of assets.
When we source capital, we take into account both our view of the most cost-effective alternative available and our desire to maintain a balance sheet that provides us with flexibility.
Liquidity and Capital Resources We employ a disciplined approach to our liquidity and capital management. When we source capital, we take into account both our view of the most cost-effective alternative available and our desire to maintain a balance sheet that provides us with flexibility.
The amount of gain realized in a given period depends on many factors, including the number of communities sold, the size and carrying value of the communities sold, expected operating performance of the communities and the market conditions in the local area.
The amount of gain realized in a particular period depends on many factors, including the number of communities sold, expected operating performance of the communities and the market conditions in the local area.
Property taxes increased $20,817,000, or 6.8%, in 2024 compared to the prior year, primarily due to increases for our Same Store Residential portfolio and the addition of newly developed and acquired apartment communities, partially offset by decreased property taxes from dispositions.
Property taxes increased $15,132,000, or 4.6%, in 2025 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities and increases for our Same Store Residential portfolio, partially offset by decreased property taxes from dispositions.
The interest rate that would be applicable to borrowings under the Credit Facility is 5.19% at January 31, 2025 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.805% per annum, which consists of a 0.10% SOFR adjustment plus 0.705% per annum, assuming a daily SOFR borrowing rate.
The interest rate that would be applicable to borrowings under the Credit Facility was 4.39% at January 31, 2026 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the Credit Facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.705% per annum, assuming a daily SOFR borrowing rate.
Same Store Communities — The following table presents the change in Same Store Residential revenue, including the 39 Table of Contents attribution of the change between average revenue per occupied home and Economic Occupancy for the year ended December 31, 2024 (dollars in thousands).
Same Store Communities — The following table presents the change in Same Store Residential revenue, including the attribution of the change between average revenue per occupied home and Economic Occupancy (as defined below) for the year ended December 31, 2025 (dollars in thousands).
(2) Amount is for recognition of our promoted interest in the U.S. Fund. (3) Reflects changes to expected credit losses associated with our lending commitments primarily under the SIP. The timing and amount of actual losses that will be incurred, if any, is to be determined at the maturity of each respective lending agreement.
(2) Reflects changes to expected credit losses associated with our lending commitments primarily under the SIP. The timing and amount of actual losses that will be incurred, if any, is to be determined at the maturity of each respective lending agreement.
Results of Operations Our results of operations are driven by our operating platform and are primarily affected by both overall and individual geographic market conditions and apartment fundamentals and are reflected in changes in Same Store NOI; NOI derived from acquisitions, development completions and development under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity.
Results of Operations Our results of operations are driven by our operating platform and are also affected by national and local market conditions and are reflected in changes in Same Store NOI; NOI derived from acquisitions, development completions and development under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity.
(2) Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $41,216 and $43,848 as of December 31, 2024 and 2023, respectively, deferred financing costs and debt discount associated with secured notes of $15,964 and $18,372 as of December 31, 2024 and 2023, respectively, as reflected on our Consolidated Balance Sheets included elsewhere in this report.
(2) Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured debt of $45,620 and $41,216 as of December 31, 2025 and 2024, respectively, and deferred financing costs and debt discount for the secured notes of $13,588 and $15,964 as of December 31, 2025 and 2024, respectively, as reflected on our Consolidated Balance Sheets included elsewhere in this report.
The borrowing spread to SOFR can vary from SOFR plus 0.63% to SOFR plus 1.38% based upon the rating of our unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the facility, which can vary from 0.095% to 0.295% based upon the rating of our unsecured senior notes.
The borrowing spread to SOFR can vary from SOFR plus 0.65% to SOFR plus 1.40% based upon the rating of our unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the Credit Facility, which can vary from 0.10% to 0.30% based upon the rating of our unsecured senior notes.
As of December 31, 2024, we have invested $58,122,000 and have $62,494,000 of remaining equity commitments to contribute to these investment management funds, with the timing and amount for these commitments to be fulfilled dependent on if, and when, investment opportunities are identified by the respective funds.
As of December 31, 2025, we have invested $72,428,000 and have $46,287,000 of remaining equity commitments to contribute to these investment management funds, with the timing and amount for these commitments to be fulfilled dependent on if, and when, investment opportunities are identified by the respective funds.
We frequently review our liquidity needs, especially in periods with volatile market conditions, as well as the adequacy of cash flows from operations and other expected liquidity sources to meet these needs. We had cash, cash equivalents and restricted cash of $267,076,000 at December 31, 2024, a decrease of $263,884,000 from $530,960,000 at December 31, 2023.
We frequently review our liquidity needs, especially in periods with volatile market conditions, as well as the adequacy of cash flows from operations and other expected liquidity sources to meet these needs. We had cash, cash equivalents and restricted cash of $353,083,000 at December 31, 2025, an increase of $86,007,000 from $267,076,000 at December 31, 2024.
"Risk Factors" of this Form 10-K for a discussion of the risks associated with our investment activity. 50 Table of Contents Forward-Looking Statements This Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.
You should carefully review Part I, Item 1A. "Risk Factors" of this Form 10-K for a discussion of the risks associated with our investment activity. Forward-Looking Statements This Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.
We have an indirect interest in nine of the 306 communities which were owned by entities that were not consolidated for financial reporting purposes. In addition, we held a direct or indirect ownership interest in Development Rights to develop an additional 28 communities that, if developed as expected, will contain an estimated 8,801 apartment homes.
We had an indirect interest in eight of the 320 communities which were owned by entities that were not consolidated for financial reporting purposes. In addition, we held a direct or indirect ownership interest in Development Rights for an additional 32 apartment communities that, if developed as expected, will contain an estimated 9,032 apartment homes.
Same Store communities are consolidated communities that were owned and had stabilized occupancy as of the beginning of the prior year, allowing for a meaningful comparison of operating results between years. Other Stabilized communities are generally all other completed consolidated communities that have stabilized occupancy at the beginning of the current year or were acquired during the year.
Same Store communities are consolidated communities that were owned and had stabilized occupancy as of the beginning of the prior year, allowing for a meaningful comparison of operating results between years.
Our principal focus on near-term and intermediate-term liquidity is to ensure we have adequate capital to fund: • development and redevelopment activity in which we are currently engaged or in which we plan to engage; • the minimum dividend payments on our common stock required to maintain our REIT qualification under the Code; • regularly scheduled principal and interest payments and principal payments either at maturity or opportunistically before maturity; • normal recurring operating and corporate overhead expenses; and • investment in our operating platform, including strategic investments.
Our principal focus on near-term and intermediate-term liquidity is to ensure we have adequate capital to fund: • development and redevelopment activity in which we are currently engaged or in which we plan to engage; • the minimum dividend payments on our common stock required to maintain our REIT qualification under the Code; • regularly scheduled principal and interest payments and principal payments either at maturity or opportunistically before maturity; • normal recurring operating and corporate overhead expenses; and • investment in our operating platform, including strategic investments. 43 Table of Contents Factors affecting our liquidity and capital resources include our cash flows from operations, financing activities and investing activities (including dispositions) as well as general economic and market conditions.
Due to the subjectivity in determining whether a pursuit will result in the development of an apartment community, and therefore should be capitalized, the accounting for pursuit costs is a critical accounting estimate.
Due to the subjectivity in determining whether a pursuit will result in the development of an apartment community, and therefore should be capitalized, the accounting for pursuit costs is a critical accounting estimate. As of December 31, 2025, capitalized pursuit costs associated with Development Rights totaled $73,237,000.
The Commercial Paper Program is backstopped by our commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. As of January 31, 2025, we had $170,000,000 outstanding under the Commercial Paper Program at a weighted average contractual interest rate of 4.55%.
The Commercial Paper Program is backstopped by our commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. As of January 31, 2026, we had $880,000,000 of borrowings outstanding under the Commercial Paper Program.
The annual determination under the sustainability-linked pricing component occurred in July 2024, maintaining reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.
The most recent annual determination under the sustainability-linked pricing component occurred in July 2025, maintaining reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets. On August 1, 2025, the Company amended the Credit Facility to extend the applicability of its sustainability-linked pricing component.
A more detailed description of our reportable segments and other related operating information can be found in Note 8, "Segment Reporting," of our Consolidated Financial Statements.
Unconsolidated communities are communities in which we have an indirect ownership interest in an unconsolidated joint venture. A more detailed description of our reportable segments and other related operating information can be found in Note 8, "Segment Reporting," of our Consolidated Financial Statements.
We generally employ joint ventures to mitigate asset concentration or market risk and secondarily as a source of liquidity. We may also use joint ventures related to mixed-use land development opportunities and new markets where our partners bring development and operational expertise and/or experience to the venture.
We may also use joint ventures related to mixed-use land development opportunities and new markets where our partners bring development and operational expertise and/or experience to the venture.
Consolidated Investments During the year ended December 31, 2024, we acquired the following communities (dollars in thousands). See Note 5, "Investments," of the Consolidated Financial Statements included elsewhere in this report for further discussion.
During the year ended December 31, 2025, we sold the following wholly-owned communities (dollars in thousands). See Note 6, "Real Estate Disposition Activities," of the Consolidated Financial Statements included elsewhere in this report for further discussion.
In the event that financing cannot be obtained, we may abandon Development Rights, write off associated pre-development costs that were capitalized and/or forego reconstruction activity.
In the event that financing cannot be obtained, we may abandon Development Rights, write off associated pre-development costs that were capitalized and/or forego reconstruction activity. In such instances, we will not realize the increased revenues and earnings that we expected from such Development Rights or reconstruction activity and significant losses could be incurred.
(3) Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement. (4) During 2024, we repaid this borrowing at par at its scheduled maturity date.
(3) Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement. (4) During 2025, we repaid this borrowing at par on its scheduled maturity date. (5) The variable rate Term Loan has been swapped to an effective fixed rate using interest rate swaps.
See the discussion under "Liquidity and Capital Resources." 36 Table of Contents Communities Overview As of December 31, 2024, we owned or held a direct or indirect ownership interest in 306 communities containing 93,518 homes in 12 states and the District of Columbia, of which 17 communities were under development.
See the discussion under "Liquidity and Capital Resources." Communities Overview As of December 31, 2025, we owned or held a direct or indirect ownership interest in 320 communities containing 98,694 apartment homes in 11 states and the District of Columbia, of which 24 communities were under construction.
We believe our portfolio management activity through dispositions, development and acquisitions will continue to create long-term value.
We believe that our current capital structure will continue to provide financial flexibility to access capital on attractive terms. We believe our portfolio management activity through dispositions, development and acquisitions will continue to create long-term value.
The notes mature in June 2034 and were issued at a 5.35% interest rate, resulting in a 5.05% effective rate including the impact of offering costs and hedging activity.
The notes mature in August 2035 and were issued at a 5.00% coupon. The effective interest rate of the notes is 5.05%, considering the net proceeds and including the impact of other offering costs and hedging activity.
For the year ended December 31, 2024 2023 Net income attributable to common stockholders $ 1,081,994 $ 928,825 Depreciation - real estate assets, including joint venture adjustments 843,224 811,717 Distributions to noncontrolling interests — 25 Gain on sale of previously depreciated real estate (363,300) (287,424) Casualty loss and impairment on real estate 2,935 9,118 FFO attributable to common stockholders $ 1,564,853 $ 1,462,261 Adjusting items: Unconsolidated entity gains, net (1) (33,137) (4,161) Joint venture promote (2) — (1,519) Structured Investment Program loan reserve (3) (1,057) 1,186 Loss on extinguishment of consolidated debt — 150 Hedge accounting activity 61 566 Advocacy contributions 19,156 1,625 Executive transition compensation costs 304 1,244 Severance related costs 1,787 2,625 Expensed transaction, development and other pursuit costs, net of recoveries (4) 13,649 30,583 Other real estate activity (753) (174) For-sale condominium imputed carry cost (5) 84 602 Legal settlements and costs (6) 3,002 457 Income tax expense (7) 445 10,153 Core FFO attributable to common stockholders $ 1,568,394 $ 1,505,598 Weighted average common shares outstanding - diluted 142,458,604 141,643,788 Earnings per common share - diluted $ 7.60 $ 6.56 FFO per common share - diluted $ 10.98 $ 10.32 Core FFO per common share - diluted $ 11.01 $ 10.63 _________________________________ (1) Amounts consist primarily of net unrealized gains on technology investments.
For the year ended December 31, 2025 2024 Net income attributable to common stockholders $ 1,051,301 $ 1,081,994 Depreciation - real estate assets, including joint venture adjustments 905,701 843,224 Income attributable to noncontrolling interests 5,298 — Gain on sale of previously depreciated real estate, net (335,713) (363,300) Casualty loss and impairment on real estate 1,276 2,935 FFO 1,627,863 1,564,853 Adjusting items: Unconsolidated entity gains, net (1) (39,227) (33,137) Structured Investment Program loan reserve (2) (304) (1,057) Hedge accounting activity 24 61 Advocacy contributions 587 19,156 Executive transition compensation costs — 304 Severance related costs 1,504 1,787 Expensed transaction, development and other pursuit costs, net of recoveries (3) 6,960 13,649 Other real estate activity (4) (4,086) (669) Legal settlements and costs 13,391 3,002 Income tax (benefit) expense (1,135) 445 Core FFO $ 1,605,577 $ 1,568,394 Weighted average common shares outstanding - diluted 142,826,382 142,458,604 Earnings per common share - diluted $ 7.40 $ 7.60 FFO per common share - diluted $ 11.40 $ 10.98 Core FFO per common share - diluted $ 11.24 $ 11.01 _________________________________ (1) Amounts consist primarily of net unrealized gains on property technology and sustainability fund investments.
As of December 31, 2024, capitalized pursuit costs associated with Development Rights totaled $43,675,000. 52 Table of Contents Abandoned Pursuit Costs & Asset Impairment We evaluate our direct and indirect investments in real estate and other long-lived assets for impairment when potential indicators of impairment exist.
Abandoned Pursuit Costs & Asset Impairment We evaluate our direct and indirect investments in real estate and other long-lived assets for impairment when potential indicators of impairment exist.
Interest Rate Swap Agreements The following derivative activity occurred during the year ended December 31, 2024: • In connection with the issuance of our $400,000,000 unsecured notes in May 2024 maturing in 2034, we terminated $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving $16,839,000 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate.
In connection with the issuance of our $400,000,000 unsecured notes, we entered into and terminated $100,000,000 of interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of the unsecured notes, receiving payments of $242,000 in December 2025 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate.
Forward Equity Offering In addition to the CEP, during the year ended December 31, 2024, we completed an underwritten public offering of 3,680,000 shares of our common stock at a discount to the closing price of $226.52 per share, net of offering fees, offered in connection with forward contracts entered into with certain financial institutions acting as forward purchasers.
Forward Equity Offering In addition to the CEP, during the year ended December 31, 2024, we completed an underwritten public offering pursuant to which we entered into forward contracts to sell 3,680,000 shares of common stock at a discount to the closing price of $226.52 per share for approximate net proceeds of $808,606,000 based on the initial forward price (the "September 2024 Equity 45 Table of Contents Offering").
Same Store Residential property taxes increased $13,885,000, or 4.9%, in 2024 compared to the prior year, primarily due to increased assessments across the portfolio, a higher level of successful appeals in the prior year and the expiration of property tax incentive programs primarily at certain of our properties in New York City.
Same Store Residential property taxes increased $2,970,000, or 1.0%, in 2025 compared to the prior year, primarily due to increased assessments across most of the portfolio and the expiration of property tax incentive programs, partially offset by successful tax appeals at certain of our properties in the current year in excess of the prior year.
A presentation of GAAP based cash flow metrics is as follows (dollars in thousands): For the year ended December 31, 2024 2023 Net cash provided by operating activities $ 1,607,878 $ 1,560,029 Net cash used in investing activities $ (996,864) $ (928,955) Net cash used in financing activities $ (874,898) $ (834,359) • Net cash provided by operating activities increased primarily due to increases in NOI. • Net cash used in investing activities was primarily due to (i) the investment of $951,101,000 in the development and redevelopment of communities, (ii) acquisition of six wholly-owned communities for $464,419,000 and (iii) capital expenditures of $198,026,000 for our wholly-owned communities and non-real estate assets.
A presentation of GAAP based cash flow metrics is as follows (dollars in thousands): For the year ended December 31, 2025 2024 Net cash provided by operating activities $ 1,671,105 $ 1,607,878 Net cash used in investing activities $ (1,392,367) $ (996,864) Net cash used in financing activities $ (192,731) $ (874,898) • Net cash provided by operating activities increased primarily due to an increase in NOI from our stabilized operating communities as well as from our Development Communities. • Net cash used in investing activities was primarily due to (i) the investment of $1,209,454,000 in the development and redevelopment of apartment communities, (ii) acquisition of 12 wholly-owned communities and our joint venture partner's 50% interest in Avalon Alderwood Place for a total of $682,163,000 and (iii) capital expenditures of $264,942,000 for our wholly-owned communities and non-real estate assets.
This sale marks the Company's exit from the Connecticut market. Unconsolidated Operating Communities During the year ended December 31, 2024, we had the following investments in and activity for our unconsolidated real estate and property technology and environmentally focused investments.
Unconsolidated Operating Communities During the year ended December 31, 2025, we had the following investments in and activity for our unconsolidated real estate and third-party property technology and sustainability fund investments.
Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential revenue ("Residential"), for the year ended December 31, 2024 was $1,828,266,000, an increase of $48,643,000, or 2.7%, over the prior year.
These decreases were partially offset by increases in NOI from communities over the prior year. Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential ("Residential") revenue, for the year ended December 31, 2025 was $1,860,407,000, an increase of $34,598,000, or 1.9%, over the prior year.
The increase was due to an increase in Same Store Residential revenue of $87,854,000, or 3.4%, partially offset by an increase in Same Store Residential property operating expenses of $39,211,000, or 5.0%, over 2023.
The increase was due to an increase in Residential revenue of $66,107,000, or 2.5%, partially offset by an increase in Residential property operating expenses of $31,509,000, or 3.8%, over 2024.
Commercial Paper Program We have a Commercial Paper Program with the maximum aggregate face or principal amount outstanding at any one time not to exceed $500,000,000. Under the terms of the Commercial Paper Program, we may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year.
Commercial Paper Program We have a Commercial Paper Program in which we may issue unsecured commercial paper notes with maturities of less than one year. In April 2025, we increased the maximum amount of commercial paper notes that can be outstanding under the Commercial Paper Program from $500,000,000 to $1,000,000,000.
These provisions in our borrowings are generally consistent with other similar types of debt instruments issued during the same time period in which our borrowings were issued. 45 Table of Contents Continuous Equity Offering Program Under our continuous equity program (the "CEP"), we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time.
Continuous Equity Offering Program Under our continuous equity program (the "CEP"), we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time.
The gains of $363,300,000 and $287,424,000 in 2024 and 2023, respectively, were primarily due to the sale of eight and four wholly-owned communities in 2024 and 2023, respectively. Income tax expense of $10,153,000 for 2023 was primarily related to The Park Loggia.
The gains of $335,713,000 and $363,300,000 in 2025 and 2024, respectively, were primarily due to the sale of nine and eight wholly-owned communities in 2025 and 2024, respectively. Income tax benefit of $1,135,000 for 2025 was primarily due to the sale of solar tax credits.
Depreciation expense increased $29,888,000, or 3.7%, in 2024 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities, partially offset by dispositions.
Depreciation expense increased $66,523,000, or 7.9%, in 2025 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities, partially offset by dispositions. General and administrative expense increased $8,982,000, or 11.6%, in 2025 as compared to the prior year, primarily due to an increase in legal costs and settlements and higher compensation expense.
We amortize concessions on a straight-line basis over the life of the respective leases (generally one year), reducing the income recognized over the lease term. For the year ended December 31, 2024, amortized concessions increased by $927,000, partially offsetting the increase in revenue as compared to the prior year.
During 2025, concessions granted for our Same Store communities increased over the prior year by $6,976,000 to $24,198,000. We amortize concessions on a straight-line basis over the life of the respective leases (generally one year), reducing the income recognized over the lease term.
Future Financing and Capital Needs—Portfolio and Capital Markets Activity We invest in various real estate and real estate related investments, which include (i) the acquisition, development and redevelopment of communities both wholly-owned and through the formation of joint ventures, (ii) other indirect investments in real estate through the SIP, all as discussed further below and (iii) investments in other real estate-related ventures through direct and indirect investments in property technology and environmentally focused companies and investment management funds.
In addition to consolidated debt, we have scheduled contractual obligations associated with (i) ground leases for land underlying current operating or development communities and commercial and parking facilities and (ii) office leases for our corporate headquarters and regional offices of $16,744,000 for 2026, $16,827,000 for 2027 and $470,689,000 thereafter. 48 Table of Contents Future Financing and Capital Needs—Portfolio and Capital Markets Activity We invest in various real estate and real estate related investments, which include (i) the acquisition, development and redevelopment of communities both wholly-owned and through the formation of joint ventures, (ii) other indirect investments in real estate through the SIP, all as discussed further below and (iii) investments in other real estate-related ventures through direct and indirect investments in third-party property technology and sustainability focused companies and investment management funds.
This category includes interest costs adjusted for capitalized interest related to development and redevelopment activity, amortization of premium/discount on debt, deferred hedging gains and losses from qualifying hedges, interest income and any mark-to-market impact from derivatives not in qualifying hedge relationships.
Interest expense, net increased $32,592,000, or 14.4%, in 2025 compared to the prior year. This category includes interest costs offset by capitalized interest pertaining to development and redevelopment activity, amortization of premium/discount on debt, interest income and any mark-to-market impact from derivatives not in qualifying hedge relationships.
During 2024 and through January 31, 2025, we entered into forward contracts under the CEP to sell 367,113 shares of common stock for approximate proceeds, net of fees, of $80,687,000, based on the gross weighted average price of $223.27 per share, with settlement of the forward contracts to occur on one or more dates not later than December 31, 2025.
During the year ended December 31, 2025, the Company settled the outstanding forward contracts that were entered into under the CEP during the year ended December 31, 2024, selling 367,113 shares of common stock for proceeds, net of fees, of $81,333,000, based on the gross weighted average price per share of $223.27.
Reconciliations of NOI and Residential NOI for the years ended December 31, 2024 and 2023 to net income for each year are as follows (dollars in thousands): For the year ended December 31, 2024 2023 Net income $ 1,082,175 $ 928,438 Property management and other indirect operating expenses, net of corporate income 162,594 134,312 Expensed transaction, development and other pursuit costs, net of recoveries 18,341 33,479 Interest expense, net 226,589 205,992 Loss on extinguishment of debt, net — 150 General and administrative expense 77,697 76,534 Income from unconsolidated investments (50,682) (13,454) Depreciation expense 846,853 816,965 Income tax expense 445 10,153 Casualty and impairment loss 2,935 9,118 Gain on sale of communities (363,300) (287,424) Other real estate activity (753) (174) Net operating income from real estate assets sold or held for sale (28,463) (57,646) NOI 1,974,431 1,856,443 Commercial NOI (1) (33,213) (32,654) Residential NOI $ 1,941,218 $ 1,823,789 _________________________ (1) Represents results attributable to the commercial and other non-residential operations at our communities ("Commercial").
Reconciliations of NOI and Residential NOI for the years ended December 31, 2025 and 2024 to net income for each year are as follows (dollars in thousands): For the year ended December 31, 2025 2024 Net income $ 1,056,599 $ 1,082,175 Property management and other indirect operating expenses, net of corporate income 147,548 162,594 Expensed transaction, development and other pursuit costs, net of recoveries 10,846 18,341 Interest expense, net 259,181 226,589 General and administrative expense 86,679 77,697 Income from unconsolidated investments (39,691) (32,231) Structured Investment Program interest income (27,476) (18,451) Depreciation expense 913,376 846,853 Income tax (benefit) expense (1,135) 445 Casualty and impairment loss 1,276 2,935 Gain on sale of communities, net (335,713) (363,300) Other real estate activity (4,131) (753) Net operating income from real estate assets sold or held for sale (46,410) (92,814) NOI 2,020,949 1,910,080 Commercial NOI (1) (31,903) (32,167) Residential NOI $ 1,989,046 $ 1,877,913 _________________________ (1) Represents results attributable to the retail and other non-residential operations at our communities ("Commercial").
We compute this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by our weighted average unsecured debt effective interest rate. (6) Amount for 2024 includes legal costs associated with various antitrust litigation matters.
Amount for 2024 consists primarily of gains on sale of other non-operating real estate, as well as the imputed carry cost of for-sale residential condominiums at The Park Loggia. We compute this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by the weighted average effective interest rate on our unsecured debt.
We believe that our balance sheet strength, as measured by our current level of indebtedness, our current ability to service interest and other fixed charges, and our current moderate use of financial encumbrances (such as secured financing), provide us with adequate access to liquidity from the capital markets.
During 2025, we i) issued $800,000,000 principal amount of fixed rate unsecured notes, ii) repaid $825,000,000 principal amount of fixed rate unsecured notes, iii) entered into a $550,000,000 variable rate Term Loan, and iv) increased the borrowing capacity under our Credit Facility and Commercial Paper Program to $2,500,000,000 and $1,000,000,000, respectively. 36 Table of Contents We believe that our balance sheet strength, as measured by our current level of indebtedness, our current ability to service interest and other fixed charges, and our current moderate use of financial encumbrances (such as secured financing), provide us with adequate access to liquidity from the capital markets.
Management, development and other fees decreased $641,000, or 8.3%, in 2024, compared to the prior year, primarily due to reduced third-party development fees, partially offset by an increase in fees for third-party back-office, financial administrative support services in the current year. 40 Table of Contents Direct property operating expenses, excluding property taxes, increased $36,818,000, or 6.8%, in 2024 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities as well as increased Residential operating expenses at our Same Store communities as discussed below, partially offset by dispositions.
Direct property operating expenses, excluding property taxes, increased $47,465,000, or 8.2%, in 2025 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities as well as increased Residential operating expenses at our Same Store communities as discussed below.
The availability on the Credit Facility as of January 31, 2025 is as follows (dollars in thousands): January 31, 2025 Credit Facility commitment $2,250,000 Credit Facility outstanding — Commercial paper outstanding (170,000) Letters of credit outstanding (1) (964) Total Credit Facility available $ 2,079,036 _____________________________________ (1) In addition, we had $47,592 outstanding in additional letters of credit unrelated to the Credit Facility as of January 31, 2025.
All other terms of the Credit Facility, including its maturity date of April 2030, remain unchanged. 44 Table of Contents The availability on the Credit Facility as of January 31, 2026 is as follows (dollars in thousands): January 31, 2026 Credit Facility commitment $ 2,500,000 Credit Facility outstanding — Commercial paper outstanding (880,000) Letters of credit outstanding (1) (864) Total Credit Facility available $ 1,619,136 _____________________________________ (1) In addition, we had $52,284 outstanding in additional letters of credit unrelated to the Credit Facility as of January 31, 2026.
The increase in 2024 was primarily due to increases in amounts of unsecured indebtedness and decreases in interest income compared to the prior year due to lower cash amounts invested. The increases in 2024 are also due to decreased capitalized interest compared to the prior year.
The increase in 2025 is primarily due to decreases in interest income compared to the prior year due to lower cash amounts invested and lower rates, increased commercial paper outstanding and increased effective interest expense for our unsecured indebtedness. The increase in 2025 is partially offset by increased capitalized interest compared to the prior year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed4 unchanged
Biggest changeAs of December 31, 2024 and 2023, we had $400,950,000 and $410,150,000, respectively, in variable rate debt outstanding, with no amounts outstanding under our Credit Facility or Commercial Paper Program.
Biggest changeThe variable rate debt outstanding as of December 31, 2025 excludes the fully hedged $550,000,000 term loan and $740,000,000 outstanding under our Commercial Paper Program. We had no amounts outstanding under our Credit Facility.
In addition, changes in interest rates affect the fair value of our fixed rate debt, computed using quoted market prices for our unsecured notes or a discounted cash flow model for our secured notes, considering our current market yields, which impacts the fair value of our aggregate indebtedness.
In addition, changes in interest rates affect the fair value of our fixed rate debt, computed using quoted market prices for our unsecured debt or a discounted cash flow model for our secured notes, considering our current market yields, which impacts the fair value of our aggregate indebtedness.
Our operating results are affected by changes in interest rates, primarily in short-term SOFR and the SIFMA index as a result of borrowings under our Credit Facility and Commercial Paper Program, outstanding bonds and unsecured notes with variable interest rates.
Our operating results are affected by changes in interest rates, primarily in short-term SOFR and the SIFMA index as a result of borrowings under our Credit Facility and Commercial Paper Program, outstanding bonds and unsecured debt with variable interest rates.
In addition, the fair value of our fixed rate unsecured and secured notes are impacted by changes in market interest rates. We currently use interest rate protection agreements in the form of interest rate cap agreements for our risk management objectives, as well as for compliance with the requirements of certain lenders, and not for trading or speculative purposes.
In addition, the fair value of our fixed rate unsecured and secured debt is impacted by changes in market interest rates. We currently use interest rate protection agreements in the form of interest rate cap agreements for our risk management objectives, as well as for compliance with the requirements of certain lenders, and not for trading or speculative purposes.
If interest rates on the variable rate debt had been 100 basis points higher throughout 2024 and 2023, our annual interest incurred would have increased by approximately $4,102,000 and $5,428,000, respectively, based on balances outstanding during the applicable years.
If interest rates on the variable rate debt and commercial paper had been 100 basis points higher throughout 2025 and 2024, our annual interest incurred would have increased by approximately $7,406,000 and $4,102,000, respectively, based on balances outstanding during the applicable years.
If interest rates had been 100 basis points higher as of December 31, 2024, the fair value of this fixed rate debt would have decreased by approximately $403,558,000.
If interest rates had been 100 basis points higher as of December 31, 2025, the fair value of this fixed rate debt would have decreased by approximately $396,398,000.
In addition, we have interest rate caps that serve to effectively limit the amount of interest rate expense we would incur on our outstanding floating rate borrowings. Further discussion of the financial instruments impacted and our exposure is presented below.
In addition, we have interest rate caps that serve to effectively limit the amount of interest rate expense we would incur on our outstanding floating rate borrowings. Further discussion of the financial instruments impacted and our exposure is presented below. As of December 31, 2025 and 2024, we had $390,550,000 and $400,950,000, respectively, in variable rate debt outstanding.
During the year ended December 31, 2024, in connection with the issuance of our $400,000,000 unsecured notes in May 2024 maturing in 2034, we terminated $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving payments of $16,839,000 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate.
During the year ended December 31, 2025, in connection with the issuance of our $400,000,000 unsecured notes in July 2025 maturing in August 2035 and our $400,000,000 unsecured notes in December 2025 maturing in December 2030, we terminated $300,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving payments of $4,341,000 which are being recognized over the life of the unsecured notes as a reduction in the effective interest rate.
As of December 31, 2024, we had outstanding debt of $8,134,429,000 with an estimated aggregate fair value of $7,456,236,000 at December 31, 2024. Contractual fixed rate debt represented $7,104,942,000 of the fair value at December 31, 2024.
As of December 31, 2025, we had outstanding debt of $9,388,152,000 with an estimated aggregate fair value of $8,995,833,000 at December 31, 2025. Contractual fixed rate debt represented $7,893,011,000 of the fair value at December 31, 2025.

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