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What changed in NexPoint Residential Trust, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NexPoint Residential Trust, Inc.'s 2023 and 2024 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 2024 report.

+339 added−365 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-27)

Top changes in NexPoint Residential Trust, Inc.'s 2024 10-K

339 paragraphs added · 365 removed · 289 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFor our 2022-2023 Same Store properties, we recorded the following operating metrics for the year ended December 31, 2023 as compared to the year ended December 31, 2022: Operating Metric 2023 2022 % Change Occupancy (1) 94.7 % 94.1 % 0.6 % Average Effective Monthly Rent Per Unit (2) $ 1,509 $ 1,508 0.1 % Rental income (in thousands) $ 229,801 $ 214,664 7.1 % Other income (in thousands) $ 5,661 $ 5,271 7.4 % NOI (in thousands) $ 144,999 $ 134,020 8.2 % (1) Occupancy is calculated as the number of units occupied as of December 31 for the respective year, divided by the total number of units, expressed as a percentage.
Biggest changeFor our 2023-2024 Same Store properties, we recorded the following operating metrics for the year ended December 31, 2024 as compared to the year ended December 31, 2023: Operating Metric 2024 2023 % Change Occupancy (1) 94.7 % 94.7 % 0.0 % Average Effective Monthly Rent Per Unit (2) $ 1,491 $ 1,516 -1.6 % Rental income (in thousands) $ 246,688 $ 241,188 2.3 % Other income (in thousands) $ 5,320 $ 5,773 -7.8 % NOI (in thousands) $ 154,050 $ 152,730 0.9 % (1) Occupancy is calculated as the number of units occupied as of December 31 for the respective year, divided by the total number of units, expressed as a percentage. 6 (2) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of December 31 for the respective year minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31 for the respective year. • Corporate Credit Facility: On March 5, 2024, the Company made a $17.0 million principal payment on the Corporate Credit Facility, constituting payment in full.
The agreement requires our Adviser to provide us with all services necessary or appropriate to conduct our business, including the following: • locating, presenting and recommending to us real estate investment opportunities consistent with our investment policies, acquisition and disposition strategies and objectives, including our conflicts of interest policies; 10 • structuring the terms and conditions of transactions pursuant to which acquisitions and dispositions of properties will be made; • acquiring and disposing properties on our behalf in compliance with our investment objectives, strategies and applicable tax regulations; • arranging for the financing and refinancing of properties; • administering our bookkeeping and accounting functions; • serving as our consultant in connection with policy decisions to be made by our Board, managing our properties or causing our properties to be managed by another party; • monitoring our compliance with regulatory requirements, including the Securities Act of 1933, as amended, (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, the New York Stock Exchange (“NYSE”) rules and regulations of the Code to maintain our status as a REIT; • performing administrative services; and • rendering other services as our Board deems appropriate.
The agreement requires our Adviser to provide us with all services necessary or appropriate to conduct our business, including the following: • locating, presenting and recommending to us real estate investment opportunities consistent with our investment policies, acquisition and disposition strategies and objectives, including our conflicts of interest policies; • structuring the terms and conditions of transactions pursuant to which acquisitions and dispositions of properties will be made; • acquiring and disposing properties on our behalf in compliance with our investment objectives, strategies and applicable tax regulations; • arranging for the financing and refinancing of properties; • administering our bookkeeping and accounting functions; • serving as our consultant in connection with policy decisions to be made by our Board, managing our properties or causing our properties to be managed by another party; • monitoring our compliance with regulatory requirements, including the Securities Act of 1933, as amended, (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, the New York Stock Exchange (“NYSE”) rules and regulations of the Code to maintain our status as a REIT; • performing administrative services; and • rendering other services as our Board deems appropriate.
Due to a lack of reinvestment by many prior owners, we believe these types of properties provide us the opportunity to make relatively modest capital expenditures that result in a significant increase in rents, thereby generating NOI growth, and thus higher yields and capital appreciation for our stockholders. • Prudently Using Leverage to Increase Stockholder Value.
Due to a lack of reinvestment by many prior owners, we believe these types of properties provide us the opportunity to make relatively modest capital expenditures that result in a significant increase in rents, thereby generating NOI growth, and thus higher yields and capital appreciation for our stockholders. 7 • Prudently Using Leverage to Increase Stockholder Value.
There are certain losses (including, but not 16 limited to, losses arising from environmental conditions, acts of war or certain kinds of terrorist attacks) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage.
There are certain losses (including, but not limited to, losses arising from environmental conditions, acts of war or certain kinds of terrorist attacks) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage.
We have obtained coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. These policies include limits and terms we consider commercially reasonable.
We have obtained coverage for losses incurred in connection with both domestic and foreign terrorist-related 16 activities. These policies include limits and terms we consider commercially reasonable.
As of December 31, 2023, there were 26,053,988 common units in the OP (“OP Units”) outstanding, of which 25,951,154, or 99.6%, were owned by the Company and 102,834, or 0.4%, were owned by noncontrolling limited partners (see Note 9 to our consolidated financial statements).
As of December 31, 2024, there were 26,053,988 common units in the OP (“OP Units”) outstanding, of which 25,951,154, or 99.6%, were owned by the Company and 102,834, or 0.4%, were owned by noncontrolling limited partners (see Note 9 to our consolidated financial statements).
As of December 31, 2023, we have renovated the exteriors and common areas at a majority of the properties in our portfolio. We expect interior renovations, along with organic growth in rents, to be the primary drivers of rent and NOI growth at our properties.
As of December 31, 2024, we have renovated the exteriors and common areas at a majority of the properties in our Portfolio. We expect interior renovations, along with organic growth in rents, to be the primary drivers of rent and NOI growth at our properties.
On or about March 1, 2022, through our operating partnership, we sent an offer to acquire two properties from Advised DSTs. One property was a Class B apartment community consisting of 232 units located in the Atlanta, Georgia MSA (“Adair”). The other property was a Class A apartment community consisting of 330 units located in the Phoenix, Arizona MSA (“Estates”).
On or about March 1, 2022, through our OP, we sent an offer to acquire two properties from Advised DSTs. One property was a Class B apartment community consisting of 232 units located in the Atlanta, Georgia MSA (“Adair”). The other property was a Class A apartment community consisting of 330 units located in the Phoenix, Arizona MSA (“Estates”).
Under the exchange rights, the owners of the Advised DSTs were permitted to elect to receive either units of the Operating Partnership or cash for their proportionate share of the consideration. The transaction closed in the second quarter of 2022. Our Adviser’s investment approach includes active management of each property acquired.
Under the exchange rights, the owners of the Advised DSTs were permitted to elect to receive either units of the OP or cash for their proportionate share of the consideration. The transaction closed in the second quarter of 2022. Our Adviser’s investment approach includes active management of each property acquired.
Human Capital Disclosure As of December 31, 2023, we had three employees. We endeavor to maintain workplaces that are free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law.
Human Capital Disclosure As of December 31, 2024, we had two employees. We endeavor to maintain workplaces that are free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law.
The Company is externally managed by the Adviser, through an agreement dated March 16, 2015, as amended, and renewed on February 26, 2024 for a one-year term (the “Advisory Agreement”), by and among the Company, the OP and the Adviser. The Adviser conducts substantially all of the Company’s operations and provides asset management services for its real estate investments.
The Company is externally managed by the Adviser, through an agreement dated March 16, 2015, as amended, and renewed on February 24, 2025 for a one-year term (the “Advisory Agreement”), by and among the Company, the OP and the Adviser. The Adviser conducts substantially all of the Company’s operations and provides asset management services for its real estate investments.
The Operating Partnership acquired Adair and Estates through exchange rights granted to the Operating Partnership in the respective trust agreements for Adair and Estates. The total consideration for Adair was $65.5 million. The total consideration for Estates was $77.9 million.
The OP acquired Adair and Estates through exchange rights granted to the OP in the respective trust agreements for Adair and Estates. The total consideration for Adair was $65.5 million. The total consideration for Estates was $77.9 million.
We believe BH provides the following benefits: • manages approximately 104,000 multifamily units in 27 states and has managed multifamily communities for 31 years; • brings a scale of operations we could not otherwise achieve for approximately 3% of gross income, which is the contracted amount we pay for its property management services; • has operations in all of our current and desired markets, allowing us greater scale when entering new markets or make investments in non-core markets without making substantial investments in management infrastructure in those markets; • has a construction management operation and substantial experience in renovating Class B multifamily units; • its scale allows it to obtain highly competitive pricing as it pertains to the costs of our value-add program, increasing our return on investment for renovations; • helps us source and underwrite opportunities as well as assist in due diligence of properties prior to closing; • assists in locating potential buyers for our properties; • its size, scale and experience allows it to keep costs low and maximize rents and occupancy; and • has proved successful in driving other revenue growth at properties it manages. 9 Our Structure The following chart shows our ownership structure. An affiliate of BH Equities, LLC is the property manager for all of our properties.
We believe BH provides the following benefits: • manages approximately 91,000 multifamily units in 24 states and has managed multifamily communities for 32 years; • brings a scale of operations we could not otherwise achieve for approximately 3% of gross income, which is the contracted amount we pay for its property management services; • has operations in all of our current and desired markets, allowing us greater scale when entering new markets or make investments in non-core markets without making substantial investments in management infrastructure in those markets; • has a construction management operation and substantial experience in renovating Class B multifamily units; • its scale allows it to obtain highly competitive pricing as it pertains to the costs of our value-add program, increasing our return on investment for renovations; • helps us source and underwrite opportunities as well as assist in due diligence of properties prior to closing; 9 • assists in locating potential buyers for our properties; • its size, scale and experience allows it to keep costs low and maximize rents and occupancy; and • has proved successful in driving other revenue growth at properties it manages.
On February 26, 2024, our Board, including the independent directors, unanimously approved the renewal of the Advisory Agreement with the Adviser for a one-year term.
On February 24, 2025, our Board, including the independent directors, unanimously approved the renewal of the Advisory Agreement with the Adviser for a one-year term.
Our Real Estate Portfolio As of December 31, 2023, we owned 38 properties representing 14,133 units that we lease in seven states that were approximately 94.7% occupied with a weighted average monthly effective rent per occupied apartment unit of $1,502. For additional information regarding our portfolio, see Item 2, “Properties” and Notes 3 and 4 to our consolidated financial statements.
Our Real Estate Portfolio As of December 31, 2024, we owned 35 properties representing 12,984 units that we lease in seven states that were approximately 94.7% occupied with a weighted average monthly effective rent per occupied apartment unit of $1,491. For additional information regarding our Portfolio, see Item 2, “Properties” and Notes 3 and 4 to our consolidated financial statements.
(2) Represents sales price, net of closing costs. 5 • Renovations: For the properties in our portfolio as of December 31, 2023, we completed full and partial renovations on 2,073 units at an average cost of $12,303 per renovated unit.
(2) Represents sales price, net of closing costs. • Renovations: For the properties in our Portfolio as of December 31, 2024, we completed full and partial renovations on 388 units at an average cost of $12,268 per renovated unit.
Site assessments are intended to discover and evaluate information regarding the environmental condition of the assessed property and surrounding properties. These assessments do not generally include soil samplings, subsurface investigations or an asbestos survey.
Phase I Site assessments are intended to identify and evaluate known and reasonably ascertainable information regarding the environmental condition of the assessed property and surrounding properties. These assessments do not generally include soil samplings, subsurface investigations or an asbestos survey.
Since inception, for the properties in our portfolio as of December 31, 2023, we have completed full and partial renovations on 8,534 units at an average cost of $9,715 per renovated unit that has been leased as of December 31, 2023.
Since inception, for the properties in our Portfolio as of December 31, 2024, we have completed full and partial renovations on 8,348 units at an average cost of $10,123 per renovated unit that has been leased as of December 31, 2024.
During the fourth quarter of 2023, we increased our quarterly dividend for the sixth time since the Spin-Off (as defined below) to $0.46242 per share, which was an increase of $0.04242 per share, or a 10.1% increase, over our previous quarterly dividends declared in 2023.
During the fourth quarter of 2024, we increased our quarterly dividend for the seventh time since the Spin-Off (as defined below) to $0.51 per share, which was an increase of $0.04758 per share, or a 10.3% increase, over our previous quarterly dividends declared in 2024.
We have achieved average rent growth of 14.5%, or a $169 average monthly rental increase per unit, on all units renovated and leased as of December 31, 2023, resulting in a return on investment on capital expended for interior renovations of 20.9%. • Dividends: We declared dividends totaling $45.2 million, or $1.722 per share for the year ended December 31, 2023.
We have achieved average rent growth of 15.0%, or a $175 average monthly rental increase per unit, on all units renovated and leased as of December 31, 2024, resulting in a return on investment on capital expended for interior renovations of 20.8%. • Dividends: We declared dividends totaling $49.8 million, or $1.90 per share for the year ended December 31, 2024.
Since inception, for the properties in our portfolio as of December 31, 2023, we have completed full and partial renovations on 8,534 units out of our 14,133 total units with an average monthly rental increase per unit of $169 and an average cost of $9,715 per renovated unit that has been leased as of December 31, 2023.
Since inception, for the properties in our Portfolio as of December 31, 2024, we have completed full and partial renovations on 8,348 units out of our 12,984 total units with an average monthly rental increase per unit of $175 and an average cost of $10,123 per renovated unit that has 8 been leased as of December 31, 2024.
The increase in our quarterly dividend to $0.46242 per share is an increase of $0.26 per share, or a 124.5% increase, over our quarterly dividends declared from the Spin-Off.
The increase in our quarterly dividend to $0.51 per share is an increase of $0.30 per share, or a 147.6% increase, over our quarterly dividends declared from the Spin-Off.
Our Adviser’s investment approach combines its management team’s experience with a structure that emphasizes thorough market research, local market knowledge, underwriting discipline and risk management in evaluating potential investments with a goal of maximizing long-term stockholder value and a philosophy of thoughtful capital allocation and balance sheet management. 7 Acquisition and Operating Strategy We seek primarily Class B multifamily properties that are priced at a discount to replacement cost.
Our Adviser’s investment approach combines its management team’s experience with a structure that emphasizes thorough market research, local market knowledge, underwriting discipline and risk management in evaluating potential investments with a goal of maximizing long-term stockholder value and a philosophy of thoughtful capital allocation and balance sheet management.
We evaluate our operating performance on an individual property level and view our real estate assets as one industry segment and, accordingly, our properties are aggregated into one reportable segment.
We view our real estate assets as one industry segment and, accordingly, our properties are aggregated into one reportable segment.
On December 15, 2023, the Company made a $17.0 million principal payment on the Corporate Credit Facility, reducing the outstanding principal balance to $24.0 million as of December 31, 2023. • Cash Position: At December 31, 2023, we had $45.3 million of cash on our balance sheet, of which $2.9 million was reserved for future renovations, and $30.0 million was reserved for lender-required escrows and security deposits.
As of December 31, 2024, there is no outstanding principal balance on the Corporate Credit Facility. • Cash Position: At December 31, 2024, we had $53.9 million of cash on our balance sheet, of which $3.2 million was reserved for future renovations, and $27.6 million was reserved for lender-required escrows and security deposits.
Our Adviser We are externally managed by our Adviser pursuant to the Advisory Agreement, by and among the OP, our Adviser, and us. Our Adviser was organized on September 5, 2014 and is an affiliate of our Sponsor. Our Adviser has contractual and fiduciary responsibilities to us and our stockholders as further described under “—Our Advisory Agreement” below.
Our Adviser was organized on September 5, 2014 and is an affiliate of our Sponsor. Our Adviser has contractual and fiduciary responsibilities to us and our stockholders as further described under “—Our Advisory Agreement” below. The members of our Adviser’s management team are James Dondero, Paul Richards, Matt McGraner and D.C.
The members of our Adviser’s management team are Jim Dondero, Brian Mitts, Matt McGraner and D.C. Sauter, all of whom are employed by our Adviser or its affiliates. Our Advisory Agreement Below is a summary of the terms of our Advisory Agreement: Duties of Our Adviser .
Sauter, all of whom are employed by our Adviser or its affiliates. 10 Our Advisory Agreement Below is a summary of the terms of our Advisory Agreement: Duties of Our Adviser .
(3) Prior year NOI was updated to include current year NOI add backs. • Same Store Growth: There are 33 properties encompassing 12,378 units of apartment space in our same store pool for the years ended December 31, 2023 and 2022 (our “2022-2023 Same Store” properties).
(3) Prior year NOI, Core FFO attributable to common stockholders and AFFO attributable to common stockholders were updated to conform to current year presentation. • Same Store Growth: There are 35 properties encompassing 12,948 units of apartment space in our same store pool for the years ended December 31, 2024 and 2023 (our “2023-2024 Same Store” properties).
As of December 31, 2023, we had reserved approximately $2.9 million for our planned capital expenditures and other expenses to implement our value-add program, which will complete approximately 13,209 planned interior rehabs, eliminating the need for us to raise additional capital in order to carry out our currently planned value-add program. 8 Disposition Strategy In general, we intend to hold our multifamily properties for production of rental income for a period of at least three years from the date of acquisition.
As of December 31, 2024, we had reserved approximately $3.2 million for our planned capital expenditures and other expenses to implement our value-add program, which will complete approximately 12,984 planned interior rehabs, eliminating the need for us to raise additional capital in order to carry out our currently planned value-add program.
As of December 31, 2023, the Company, through the OP and the wholly owned TRS, owned 38 properties representing 14,133 units in seven states, as further described under Item 2, “Properties” and Notes 3 and 4 to our consolidated financial statements. 2023 Highlights Key highlights and transactions completed in 2023 include the following: • Dispositions: We sold two properties totaling 994 units in 2023.
As of December 31, 2024, the Company, through the OP and the wholly owned TRS, owned 35 properties representing 12,984 units in seven states, as further described under Item 2, “Properties” and Notes 3 and 4 to our consolidated financial statements. 2024 Highlights Key highlights and transactions completed in 2024 include the following: • Refinancing: We completed a 34 property refinance on property mortgage debt of approximately $1,429.0 million, increasing the outstanding mortgage debt to approximately $1,469.4 million.
Independent environmental consultants have conducted Phase I Environmental Site Assessments at all of the properties in our portfolio using the American Society for Testing and Materials Standard E 1527-05. A Phase I Environmental Site Assessment is a report that identifies potential or existing environmental contamination liabilities.
Independent environmental consultants have conducted Phase I Environmental Site Assessments at all of the properties in our Portfolio using the applicable version of American Society for Testing and Materials Standard E 1527 in effect at the time of their commission A Phase I Environmental Site Assessment is a report that reviews various publicly available information and includes a site visit to identify recognized environmental conditions.
Our fourth quarter dividend equates to a 5.4% annualized yield based on our closing share price of $34.43 on December 31, 2023. • Results of Operations and Non-GAAP Measures: We reported the following net income (loss), net operating income (“NOI”), funds from operations (“FFO”), core funds from operations (“Core FFO”) and adjusted funds from operations (“AFFO”) for the year ended December 31, 2023 as compared to the year ended December 31, 2022 (dollars in thousands): For the Year Ended December 31, 2023 2022 $ Change % Change Net income (loss) $ 44,433 $ (9,291 ) $ 53,724 (1) -578.2 % NOI (2) 167,404 (3) 157,424 9,980 6.3 % FFO attributable to common stockholders (2) 71,420 73,397 (1,977 ) -2.7 % Core FFO attributable to common stockholders (2) 73,534 81,796 (8,262 ) -10.1 % AFFO attributable to common stockholders (2) 84,404 91,366 (6,962 ) -7.6 % (1) The change in our net income (loss) between the periods primarily relates to an increase in gain on sales of real estate of $53.2 million and increases in property operating expenses of $0.4 million and depreciation and amortization expense of $2.4 million, partially offset by an increase in total revenues of $13.5 million.
Our fourth quarter dividend equates to a 4.9% annualized yield based on our closing share price of $41.75 on December 31, 2024. • Share Repurchases: We repurchased and subsequently retired 438,678 of our shares for a weighted average price of $33.19 per share. • Results of Operations and Non-GAAP Measures: We reported the following net income, net operating income (“NOI”), funds from operations (“FFO”), core funds from operations (“Core FFO”) and adjusted funds from operations (“AFFO”) for the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands): For the Year Ended December 31, 2024 2023 $ Change % Change Net income $ 1,114 $ 44,433 $ (43,319 ) (1) -97.5 % NOI (2) 157,035 (3) 167,404 (10,369 ) -6.2 % FFO attributable to common stockholders (2) 44,454 71,420 (26,966 ) -37.8 % Core FFO attributable to common stockholders (2) 73,130 76,630 (3,500 ) -4.6 % AFFO attributable to common stockholders (2) 83,631 85,882 (2,251 ) -2.6 % (1) The change in our net income between the periods primarily relates to decreases in gain on sales of real estate and rental income of $13.7 million and $18.2 million, respectively, in addition to an increase in loss on extinguishment of debt and modification costs of $21.6 million.
Our 2022-2023 Same Store properties exclude the following 5 properties in our portfolio as of December 31, 2023: Old Farm, Stone Creek at Old Farm, The Adair, Estates on Maryland and Radbourne Lake as well as the 45 units that are currently down (see Note 4 to our consolidated financial statements).
Our 2023-2024 Same Store properties exclude 36 down units in our Portfolio as of December 31, 2024 (see Note 4 to our consolidated financial statements).
Economic and market conditions may influence us to hold our investments for different periods of time.
Disposition Strategy In general, we intend to hold our multifamily properties for production of rental income for a period of at least three years from the date of acquisition. Economic and market conditions may influence us to hold our investments for different periods of time.
Details of the dispositions are in the table below (in thousands): Property Name Location Date of Sale Sales Price Outstanding Principal (1) Net Cash Proceeds (2) Gain on Sale of Real Estate Silverbrook Grand Prairie, Texas September 22, 2023 $ 70,000 $ 46,088 $ 69,431 $ 43,107 Timber Creek Charlotte, North Carolina December 13, 2023 49,000 24,100 48,348 24,819 $ 119,000 $ 70,188 $ 117,779 $ 67,926 (1) Represents the outstanding principal balance when the loan was repaid.
Details of the dispositions are in the table below (in thousands): Property Name Location Date of Sale Sales Price Outstanding Principal (1) Net Cash Proceeds (2) Gain on Sale of Real Estate Old Farm Houston, Texas March 1, 2024 $ 103,000 $ 52,886 $ 102,704 $ 31,548 Radbourne Lake Charlotte, North Carolina April 30, 2024 39,250 20,000 38,904 18,847 Stone Creek at Old Farm Houston, Texas October 1, 2024 24,500 15,274 24,095 3,851 $ 166,750 $ 88,160 $ 165,703 $ 54,246 5 (1) Represents the outstanding principal balance when the loan was repaid at the time the property sold.
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(2) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of December 31 for the respective year minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31 for the respective year. 6 • Corporate Credit Facility: On February 2, 2023, the Company made a $17.5 million principal payment on the Corporate Credit Facility.
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We completed the refinancings with a 1.09% spread on 30-Day Average Secured Overnight Financing Rate ("SOFR") and maturity dates ranging from October 1, 2031 to December 1, 2031. • Dispositions: We sold three properties totaling 1,149 units in 2024.
Removed
On September 25, 2023, the Company made a $16.0 million principal payment on the Corporate Credit Facility.
Added
Acquisition and Operating Strategy We seek primarily Class B multifamily properties that are priced at a discount to replacement cost.
Added
Our Structure The following chart shows our ownership structure.  An affiliate of BH Equities, LLC is the property manager for all of our properties. Our Adviser We are externally managed by our Adviser pursuant to the Advisory Agreement, by and among the OP, our Adviser, and us.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

87 edited+23 added−14 removed319 unchanged
Biggest changeCurrently, the maximum tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for this reduced rate. Distributions from REITs that are treated as dividends but are not designated as qualified dividends or capital gain dividends are treated as ordinary income.
Biggest changeHowever, dividends payable by REITs to their stockholders generally are not eligible for the reduced rates for qualified dividends and are taxed at ordinary income rates (but U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of ordinary dividends from a REIT for taxable years beginning before January 1, 2026 (subject to certain limitations)).
Our 27 level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • require us to dedicate a substantial portion of cash flow from operations to the payment of principal, and interest on, indebtedness, thereby reducing the funds available for other purposes; • make it more difficult for us to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; • force us to dispose of one or more of our properties, possibly on unfavorable terms (including the possible application of the 100% tax on income from prohibited transactions, discussed below in “—Risks Related to Our Structure”) or in violation of certain covenants to which we may be subject; • subject us to increased sensitivity to an increase in or high interest rate; • make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events; • limit our ability to withstand competitive pressures; • limit our ability to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • reduce our flexibility in planning for or responding to changing business, industry and economic conditions; and/or • place us at a competitive disadvantage to competitors that have relatively less debt than we have.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • require us to dedicate a substantial portion of cash flow from operations to the payment of principal, and interest on, indebtedness, thereby reducing the funds available for other purposes; • make it more difficult for us to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; 27 • force us to dispose of one or more of our properties, possibly on unfavorable terms (including the possible application of the 100% tax on income from prohibited transactions, discussed below in “—Risks Related to Our Structure”) or in violation of certain covenants to which we may be subject; • subject us to increased sensitivity to an increase in or high interest rate; • make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events; • limit our ability to withstand competitive pressures; • limit our ability to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • reduce our flexibility in planning for or responding to changing business, industry and economic conditions; and/or • place us at a competitive disadvantage to competitors that have relatively less debt than we have.
During such time as we qualify as a REIT, we intend to avoid the 100% prohibited transaction tax by (1) conducting activities that may otherwise be considered prohibited transactions through a TRS (but such TRS will incur corporate rate income taxes with respect to any income or gain recognized by it), (2) conducting our operations in such a manner so that no sale or other disposition of an asset we own or hold an interest in, directly or through any subsidiary, will be treated as a prohibited transaction, or (3) structuring certain dispositions of our properties to comply with the requirements of the prohibited transaction safe harbor available under the Code for properties that, among other requirements, have been held for at least two years.
During such time as we qualify as a REIT, we intend to avoid the 100% prohibited transaction tax by (1) conducting activities that may otherwise be considered prohibited transactions through a TRS (but such TRS will incur income taxes at the corporate rate with respect to any income or gain recognized by it), (2) conducting our operations in such a manner so that no sale or other disposition of an asset we own or hold an interest in, directly or through any subsidiary, will be treated as a prohibited transaction, or (3) structuring certain dispositions of our properties to comply with the requirements of the prohibited transaction safe harbor available under the Code for properties that, among other requirements, have been held for at least two years.
You should read this summary together with the more detailed description of each risk factor contained below. • unfavorable changes in market and economic conditions in the United States and globally and in the specific markets where our properties are located; 17 • macroeconomic trends including inflation and high interest rates may adversely affect our financial conditions and results of operations; • risks associated with the ownership of real estate; • limited ability to dispose of assets because of the relative illiquidity of real estate investments; • our multifamily properties are concentrated in certain geographic markets in the Southeastern and Southwestern United States, which makes us more susceptible to adverse developments in those markets; • increased risks associated with our strategy of acquiring value enhancement multifamily properties rather than more conservative investment strategies; • failure to succeed in new markets may have adverse consequences on our performance; • competition for attractive investment opportunity and any increased affordability of residential homes could limit our ability to lease our apartments or increase or maintain rents; • high costs associated with the compliance with various accessibility, environmental, building and health and safety laws and regulations; • risks associated with buying owning and selling apartment communities, including contingent or unknown liabilities related to the properties and the risk that we may not be able to yield anticipated results or sell certain properties; • risks associated with operating through joint ventures and funds; • our dependence on information systems; • risks associated with breaches of our data security; • costs associated with being a public company, including compliance with securities laws; • the risk that our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting; • risks associated with our substantial current indebtedness and indebtedness we may incur in the future; • risks associated with derivatives or hedging activity; • risks associated with representations and warranties made by us in connection with sales of our properties may subject us to liability that could result in losses and could harm our operating results and, therefore, distributions we make to our stockholders; • loss of key personnel of our Sponsor, our Adviser and our property manager; • the risk that we may not replicate the historical results achieved by other entities managed or sponsored by affiliates of our Adviser, members of our Adviser’s management team or by our Sponsor or its affiliates; • risks associated with our Adviser’s ability to terminate the Advisory Agreement (as defined below); • our ability to change our major policies, operations and targeted investments without stockholder consent; • the substantial fees and expenses we pay to our Adviser and its affiliates; • risks associated with any potential internalization of our management functions; • conflicts of interest and competing demands for time faced by our Adviser, our Sponsor and their officers and employees; • the risk that we may compete with other entities affiliated with our Sponsor or property manager for properties and residents; • failure to maintain our status as a REIT; • failure of our operating partnership to be taxable as a partnership for U.S. federal income tax purposes, possibly causing us to fail to qualify for or to maintain REIT status; • compliance with REIT requirements, which may limit our ability to hedge our liabilities effectively and cause us to forgo otherwise attractive opportunities, liquidate certain of our investments or incur tax liabilities; • risks associated with our ownership of interests in TRSs; 18 • the recognition of taxable gains from the sale of properties as a result of the inability to complete certain like-kind exchanges in accordance with Section 1031 of the Code • the risk that the IRS may consider certain sales of properties to be prohibited transactions, resulting in a 100% penalty tax on any taxable gain; • the risk that we may be subject to other tax liabilities that may reduce our cash flows and distributions on our shares; • the ineligibility of dividends payable by REITs for the reduced tax rates available for some dividends; • risks associated with the stock ownership restrictions of the Code for REITs and the stock ownership limit imposed by our charter; • the ability of our board of directors to revoke our REIT qualification without stockholder approval; • recent and potential legislative or regulatory tax changes or other actions affecting REITs; • foreign investors may be subject to U.S. federal income tax or withholding tax on distributions received from us or on proceeds and the disposition of our current common stock; • risks associated with the market for our common stock and the general volatility of the capital and credit markets; • failure to generate sufficient cash flows to service our outstanding indebtedness or pay distributions at expected levels; • risks associated with limitations of liability for and our indemnification of our directors and officers; • the risk that legal proceedings we become involved in from time to time could adversely affect our business; and • the risk that acts of violence could decrease the value of our assets and have an adverse effect on our business and results of operations.
You should read this summary together with the more detailed description of each risk factor contained below. • unfavorable changes in market and economic conditions in the United States and globally and in the specific markets where our properties are located; 17 • macroeconomic trends including inflation and high interest rates may adversely affect our financial condition and results of operations; • risks associated with the ownership of real estate; • limited ability to dispose of assets because of the relative illiquidity of real estate investments; • our multifamily properties are concentrated in certain geographic markets in the Southeastern and Southwestern United States, which makes us more susceptible to adverse developments in those markets; • increased risks associated with our strategy of acquiring value enhancement multifamily properties rather than more conservative investment strategies; • failure to succeed in new markets may have adverse consequences on our performance; • competition for attractive investment opportunity and any increased affordability of residential homes could limit our ability to lease our apartments or increase or maintain rents; • high costs associated with the compliance with various accessibility, environmental, building and health and safety laws and regulations; • risks associated with buying owning and selling apartment communities, including contingent or unknown liabilities related to the properties and the risk that we may not be able to yield anticipated results or sell certain properties; • risks associated with operating through joint ventures and funds; • our dependence on information systems; • risks associated with breaches of our data security; • costs associated with being a public company, including compliance with securities laws; • the risk that our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting; • risks associated with our substantial current indebtedness and indebtedness we may incur in the future; • risks associated with derivatives or hedging activity; • risks associated with representations and warranties made by us in connection with sales of our properties may subject us to liability that could result in losses and could harm our operating results and, therefore, distributions we make to our stockholders; • loss of key personnel of our Sponsor, our Adviser and our property manager; • the risk that we may not replicate the historical results achieved by other entities managed or sponsored by affiliates of our Adviser, members of our Adviser’s management team or by our Sponsor or its affiliates; • risks associated with our Adviser’s ability to terminate the Advisory Agreement (as defined below); • our ability to change our major policies, operations and targeted investments without stockholder consent; • the substantial fees and expenses we pay to our Adviser and its affiliates; • risks associated with any potential internalization of our management functions; • conflicts of interest and competing demands for time faced by our Adviser, our Sponsor and their officers and employees; • the risk that we may compete with other entities affiliated with our Sponsor or property manager for properties and residents; • failure to maintain our status as a REIT; • failure of our OP to be taxable as a partnership for U.S. federal income tax purposes, possibly causing us to fail to qualify for or to maintain REIT status; • compliance with REIT requirements, which may limit our ability to hedge our liabilities effectively and cause us to forgo otherwise attractive opportunities, liquidate certain of our investments or incur tax liabilities; • risks associated with our ownership of interests in TRSs; 18 • the recognition of taxable gains from the sale of properties as a result of the inability to complete certain like-kind exchanges in accordance with Section 1031 of the Code; • the risk that the IRS may consider certain sales of properties to be prohibited transactions, resulting in a 100% penalty tax on any taxable gain; • the risk that we may be subject to other tax liabilities that may reduce our cash flows and distributions on our shares; • the ineligibility of dividends payable by REITs for the reduced tax rates available for some dividends; • risks associated with the stock ownership restrictions of the Code for REITs and the stock ownership limit imposed by our charter; • the ability of our board of directors to revoke our REIT qualification without stockholder approval; • recent and potential legislative or regulatory tax changes or other actions affecting REITs; • foreign investors may be subject to U.S. federal income tax or withholding tax distributions received from us or on proceeds and the disposition of our current common stock; • risks associated with the market for our common stock and the general volatility of the capital and credit markets; • failure to generate sufficient cash flows to service our outstanding indebtedness or pay distributions at expected levels; • risks associated with limitations of liability for and our indemnification of our directors and officers; • the risk that legal proceedings we become involved in from time to time could adversely affect our business; and • the risk that acts of violence could decrease the value of our assets and have an adverse effect on our business and results of operations.
Certain provisions of the MGCL may have the effect of inhibiting a third party from acquiring us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding shares of voting stock or an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation) or an affiliate of any interested stockholder and us for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes two super-majority stockholder voting requirements on these combinations; and • “control share” provisions that provide that holders of “control shares” of us (defined as voting shares of stock that, if aggregated with all other shares of stock owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares.
Certain provisions of the MGCL may have the effect of inhibiting a third party from acquiring us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding shares of voting stock or an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation) or an affiliate of any interested stockholder and us for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes two super-majority stockholder voting requirements on these combinations; and • “control share” provisions that provide that holders of “control shares” of us (defined as voting shares of stock that, if aggregated with all other shares of stock owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares”) have no voting rights with respect to such control shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares.
Some of the factors that could affect our stock price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our quarterly operating results; • changes in our operations or earnings estimates or publication of research reports about us or the real estate industry; • changes in market valuations of similar companies; • increases in or high interest rates that lead purchasers of our shares to demand a higher yield; • adverse market reaction to any increased indebtedness we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • the realization of any of the other risk factors presented in this Annual Report; • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; 37 • our underlying asset value; • investor confidence in the stock and bond markets, generally; • changes in tax laws; • future equity issuances; • failure to meet income estimates; and • failure to meet and maintain REIT qualifications.
Some of the factors that could affect our stock price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our quarterly operating results; • changes in our operations or earnings estimates or publication of research reports about us or the real estate industry; • changes in market valuations of similar companies; • increases in or high interest rates that lead purchasers of our shares to demand a higher yield; • adverse market reaction to any increased indebtedness we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • the realization of any of the other risk factors presented in this Annual Report; • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • our underlying asset value; • investor confidence in the stock and bond markets, generally; • changes in tax laws; • future equity issuances; • failure to meet income estimates; and • failure to meet and maintain REIT qualifications.
We are also subject to the following risks in connection with sales of our apartment communities: • a significant portion of the proceeds from our overall property sales may be held by intermediaries in order for some sales to qualify as an exchange under Section 1031 of the Code (“1031 Exchanges”) so that any related capital gain can be deferred for U.S. federal income tax purposes.
We are also subject to the following risks in connection with sales of our apartment communities: • a significant portion of the proceeds from our overall property sales may be held by intermediaries in order for some sales to qualify as a tax deferred exchange under Section 1031 of the Code (“1031 Exchanges”) so that any related capital gain can be deferred for U.S. federal income tax purposes.
If a Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to U.S. federal income tax and (ii) the Subsidiary REIT’s failure to qualify could have an adverse effect on 32 our ability to comply with the REIT income and asset tests, and thus could impair our ability to qualify as a REIT unless we could avail ourselves of certain relief provisions.
If a Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to U.S. federal income tax and (ii) the Subsidiary REIT’s failure to qualify could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus could impair our ability to qualify as a REIT unless we could avail ourselves of certain relief provisions.
Any convertible preferred units would have, and any series or class of our 38 preferred stock would likely have, a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders. Existing stockholders do not have preemptive rights to any shares we issue in the future.
Any convertible preferred units would have, and any series or class of our preferred stock would likely have, a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders. Existing stockholders do not have preemptive rights to any shares we issue in the future.
If we internalize our management functions, the percentage of our outstanding common stock owned by our other stockholders could be reduced, and we could incur other significant costs associated with being self-managed. In the future, our Board may consider internalizing the functions performed for us by our Adviser by, among other methods, acquiring our Adviser’s assets.
If we internalize our management functions, the percentage of our outstanding common stock owned by our other stockholders could be reduced, and we could incur other significant costs associated with being self-managed. 30 In the future, our Board may consider internalizing the functions performed for us by our Adviser by, among other methods, acquiring our Adviser’s assets.
Our Adviser, our Sponsor and their officers and employees and their respective affiliates are key personnel, general partners, sponsors, managers, owners and advisers of other real estate investment programs, including investment products sponsored by affiliates of our Adviser, some of which have investment objectives and legal and financial obligations similar to ours and may have other business interests as well.
Our Adviser, our Sponsor and their officers and employees and their respective affiliates are key personnel, general partners, sponsors, managers, owners and advisers of other real estate investment programs, including investment products sponsored by affiliates of our Adviser, some of which have investment objectives and legal and financial obligations similar to ours and may have other business 31 interests as well.
A change in our targeted investments or investment guidelines, which may occur without notice to you or without your consent, may increase our exposure to interest rate risk, default risk and real 30 estate market fluctuations, all of which could adversely affect the value of our common stock and our ability to make distributions to you.
A change in our targeted investments or investment guidelines, which may occur without notice to you or without your consent, may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the value of our common stock and our ability to make distributions to you.
These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of the stockholders. The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
These ownership limits could also delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of the stockholders. The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
Gain recognized by a non-U.S. stockholder upon the sale or exchange of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA. Our common stock will not constitute a USRPI so long as we are a “domestically-controlled” REIT.
Gain recognized by a non-U.S. stockholder upon the sale or exchange of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA. Our common stock will not constitute a USRPI so 36 long as we are a “domestically-controlled” REIT.
In addition, the adverse effects that actual or threatened terrorist attacks could have on national economic conditions, as well as economic conditions in the markets in which we operate, could similarly have a material adverse effect on our business and results of operations. 41 The direct and indirect impacts of climate change may adversely affect our business.
In addition, the adverse effects that actual or threatened terrorist attacks could have on national economic conditions, as well as economic conditions in the markets in which we operate, could similarly have a material adverse effect on our business and results of operations. The direct and indirect impacts of climate change may adversely affect our business.
These potential difficulties in selling real estate in our markets may limit our ability to change or reduce the number of multifamily properties in our portfolio promptly in response to changes in economic or other conditions. Our multifamily properties are concentrated in certain geographic markets, which makes us more susceptible to adverse developments in those markets.
These potential difficulties in selling real estate in our markets may limit our ability to change or reduce the number of multifamily properties in our Portfolio promptly in response to changes in economic or other conditions. 20 Our multifamily properties are concentrated in certain geographic markets, which makes us more susceptible to adverse developments in those markets.
In the event such a claim were made against us under a “bad boy” carve out guarantee, following foreclosure on mortgages or related loans, and such claim were successful, our business and financial results could be materially adversely affected. 28 Derivatives and hedging activity could adversely affect cash flow.
In the event such a claim were made against us under a “bad boy” carve out guarantee, following foreclosure on mortgages or related loans, and such claim were successful, our business and financial results could be materially adversely affected. Derivatives and hedging activity could adversely affect cash flow.
For example, if circumstances make it not profitable or otherwise uneconomical for us to remain in certain states or geographical markets, the 100% tax could delay our ability to exit those states or markets by selling our assets in those states or markets other than through a TRS, which could harm our operating profits.
For example, if circumstances make it not profitable or otherwise uneconomical for us to remain in certain states or geographical markets, 34 the 100% tax could delay our ability to exit those states or markets by selling our assets in those states or markets other than through a TRS, which could harm our operating profits.
Unless the Company consents in writing to the selection of an alternative forum, the 40 federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our inability to sell our properties on favorable terms or at all could have a material adverse effect on our sources of working capital and our 20 ability to satisfy our debt obligations. In addition, real estate can at times be difficult to sell quickly at prices we find acceptable.
Our inability to sell our properties on favorable terms or at all could have a material adverse effect on our sources of working capital and our ability to satisfy our debt obligations. In addition, real estate can at times be difficult to sell quickly at prices we find acceptable.
However, because our 31 Adviser is entitled to receive substantial compensation regardless of performance, our Adviser’s interests are not wholly aligned with those of our stockholders. In that regard, our Adviser could be motivated to recommend riskier or more speculative investments that would entitle our Adviser to the highest fees.
However, because our Adviser is entitled to receive substantial compensation regardless of performance, our Adviser’s interests are not wholly aligned with those of our stockholders. In that regard, our Adviser could be motivated to recommend riskier or more speculative investments that would entitle our Adviser to the highest fees.
Prospective investors should consult their tax advisors regarding the application and effect of state and local income and other tax laws on an investment in our stock. Risks Related to the Ownership of our Common Stock Our common stock is listed on the NYSE and broad market fluctuations could negatively affect the market price of our stock.
Prospective investors should consult their tax advisors regarding the application and effect of state, local and foreign income and other tax laws on an investment in our stock. Risks Related to the Ownership of our Common Stock Our common stock is listed on the NYSE and broad market fluctuations could negatively affect the market price of our stock.
In addition, individuals with whom the senior professionals of our Adviser and our property manager have relationships are not obligated to provide us with investment opportunities. Therefore, we can offer no assurance that such relationships will generate investment opportunities for us.
In 29 addition, individuals with whom the senior professionals of our Adviser and our property manager have relationships are not obligated to provide us with investment opportunities. Therefore, we can offer no assurance that such relationships will generate investment opportunities for us.
We also cannot assure you that we will replicate the historical results achieved by entities managed by affiliates of our Adviser or members of the management team, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods.
We cannot assure you that we will replicate the historical results achieved by entities managed by affiliates of our Adviser or members of the management team, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods.
In addition, these actions by the Federal Reserve, as well as efforts by other central banks globally to combat inflation and restore price stability and other global events, may raise the prospect or severity of a recession.
In addition, actions by the Federal Reserve, as well as efforts by other central banks globally to combat inflation and restore price stability and other global events, may raise the prospect or severity of a recession.
Additionally, at least 100 persons must beneficially own shares of our common stock during at least 335 days of a taxable year for each taxable year, other than the first year for which a REIT election is made.
Additionally, at least 100 persons must beneficially own shares of our common stock during at least 335 days of a taxable year for each taxable year, other than the first year for which a REIT 35 election is made.
The sale of certain properties could result in significant tax liabilities unless we are able to defer the taxable gain through 1031 Exchanges. In general, we structure asset sales for possible inclusion in 1031 Exchanges.
The sale of certain properties could result in significant tax liabilities unless we are able to defer the taxable gain through 1031 Exchanges. In general, we may structure asset sales for possible inclusion in 1031 Exchanges.
At the current maximum ordinary income tax rate of 37% applicable for taxable 35 years beginning before January 1, 2026, the maximum tax rate on ordinary REIT dividends for non-corporate stockholders is 29.6%.
At the current maximum ordinary income tax rate of 37% applicable for taxable years beginning before January 1, 2026, the maximum tax rate on ordinary REIT dividends for non-corporate stockholders is 29.6%.
Pursuant to the Maryland Business Combination Act, our Board by resolution exempted from the provisions of the Maryland Business Combination Act all business combinations (1) between our Adviser, Jim Dondero and certain of his affiliates or their respective affiliates and us and (2) between any other person and us, provided that such business combination is first approved by our Board (including a majority of our directors who are not affiliates or associates of such person).
Pursuant to the Maryland Business Combination Act, our Board by resolution exempted from the provisions of the Maryland Business Combination Act all business combinations (1) between our Adviser, James Dondero and certain of his affiliates or their respective affiliates and us and (2) between any other person and us, provided that such business combination is first approved by our Board (including a majority of our directors who are not affiliates or associates of such person).
Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules.
Internal control over financial reporting is complex 40 and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules.
Kirschner, as litigation trustee of a litigation subtrust formed pursuant to the Plan, filed a lawsuit (the “Bankruptcy Trust Lawsuit”) against various persons and entities, including our Sponsor and James Dondero. The Bankruptcy Trust Lawsuit does not include claims related to our business or our assets or operations. On March 27, 2023, Marc S.
Kirschner, as litigation trustee of a litigation subtrust formed pursuant to the Plan, filed a lawsuit (the “Bankruptcy Trust Lawsuit”) against various persons and entities, including our Sponsor and James Dondero. The Bankruptcy Trust Lawsuit does not include claims related to our business or our assets or operations. On March 24, 2023, Marc S.
Our Board may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of the 6.2% ownership limit would result in our failing to qualify as a REIT. Our Board granted a waiver from the ownership limits for Jim Dondero and certain of his affiliates, and may grant additional waivers in the future.
Our Board may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of the 6.2% ownership limit would result in our failing to qualify as a REIT. Our Board granted a waiver from the ownership limits for James Dondero and certain of his affiliates, and may grant additional waivers in the future.
To the extent our exposure to increases in or high interest rates on any of our debt is not eliminated through interest rate swaps and interest rate protection agreements that we may utilize for hedging purposes, such increases will result in higher debt service costs which will adversely affect our cash flows.
To the extent our exposure to increases in or high interest rates on any of our debt is not eliminated through interest rate swaps and interest rate protection agreements that we may utilize for hedging purposes, increases in prevailing interest rates will result in higher debt service costs which will adversely affect our cash flows.
For these and other reasons, we cannot assure you that we will realize growth in the value of our value-enhancement multifamily properties, and as a result, our ability to make distributions to our stockholders could be adversely affected. Potential reforms or changes to Freddie Mac and Fannie Mae could adversely affect our business.
For these and other reasons, we cannot assure you that we will realize growth in the value of our value-enhancement multifamily properties, and as a result, our ability to make distributions to our stockholders could be adversely affected. Potential reforms or changes to Freddie Mac could adversely affect our business.
Our TRS is and any TRS we acquire in the future will be subject to corporate income tax at the U.S. federal, state and local levels, (including on the gain realized from the sale of property held by it, as well as on income earned while such property is operated by the TRS).
Our TRSs are and any TRS we acquire in the future will be subject to corporate income tax at the U.S. federal, state and local levels, (including on the gain realized from the sale of property held by it, as well as on income earned while such property is operated by the TRS).
In addition, our TRS and any TRS we form in the future will be 33 subject to corporate U.S. federal, state and local taxes. State, local and non-U.S. income tax laws may differ substantially from the corresponding U.S. federal income tax laws. Any of these taxes would decrease cash available for distributions to stockholders.
In addition, our TRSs and any TRS we form in the future will be subject to corporate U.S. federal, state and local taxes. State, local and non-U.S. income tax laws may differ substantially from the corresponding U.S. federal income tax laws. Any of these taxes would decrease cash available for distributions to stockholders.
We cannot assure you, however, that the IRS will not challenge the status of our operating partnership or any other subsidiary partnership in which we own an interest as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge.
We cannot assure you, however, that the IRS will not challenge the status of our OP or any other subsidiary partnership in which we own an interest as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge.
However, our operating partnership would be treated as a corporation for U.S. federal income tax purposes if it was a “publicly traded partnership,” unless at least 90% of its income was qualifying income as defined in the Code.
However, our OP would be treated as a corporation for U.S. federal income tax purposes if it was a “publicly traded partnership,” unless at least 90% of its income was qualifying income as defined in the Code.
Under applicable provisions of the Code regarding prohibited transactions by REITs, while we qualify as a REIT, we will be subject to a 100% penalty tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own or hold an interest in, directly or indirectly through any 34 subsidiary entity, including our operating partnership, but generally excluding TRSs, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of a trade or business.
Under applicable provisions of the Code regarding prohibited transactions by REITs, while we qualify as a REIT, we will be subject to a 100% penalty tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own or hold an interest in, directly or indirectly through any subsidiary entity, including our OP, but generally excluding TRSs, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of a trade or business.
If our operating partnership failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT. Our operating partnership intends to qualify as a partnership for U.S. federal income tax purposes, and intends to take that position for all income tax reporting purposes.
If our OP failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT. Our OP intends to qualify as a partnership for U.S. federal income tax purposes, and intends to take that position for all income tax reporting purposes.
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.
These laws and the common law may impose liability for release of ACMs into the environment and may allow third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs.
As of December 31, 2023, approximately $1.5 billion of our total debt outstanding bears interest at variable rates, and we may also borrow additional money at variable interest rates in the future.
As of December 31, 2024, approximately $1.5 billion of our total debt outstanding bears interest at variable rates, and we may also borrow additional money at variable interest rates in the future.
We depend to a significant degree on the diligence, skill and network of business contacts of the management team and other key personnel of our Adviser and of our property manager to achieve our investment objectives, including Messrs. Dondero, Mitts, McGraner and Sauter, all of whom may be difficult 29 to replace.
We depend to a significant degree on the diligence, skill and network of business contacts of the management team and other key personnel of our Adviser and of our property manager to achieve our investment objectives, including Messrs. Dondero, Richards, McGraner and Sauter, all of whom may be difficult to replace.
As of December 31, 2023, substantially all of our investments are concentrated in the multifamily apartment sector. As a result, we are subject to risks inherent in investments in a single type of property.
As of December 31, 2024, substantially all of our investments are concentrated in the multifamily apartment sector. As a result, we are subject to risks inherent in investments in a single type of property.
We can provide no assurance that we will not incur any material liabilities as a result of vapor intrusion at our communities. We face risks relating to mold growth. Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time.
We can provide no assurance that we will not incur any material liabilities as a result of vapor intrusion at our communities. Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time.
Qualifying income for the 90% test generally includes passive income, such as real property rents, dividends and interest. The income requirements applicable to REITs and the definition of qualifying income for purposes of this 90% test are similar in most respects. Our operating partnership may not meet this qualifying income test.
Qualifying income for the 90% test generally includes passive income, such as real property rents, dividends and interest. The income requirements applicable to REITs and the definition of qualifying income for purposes of this 90% test are similar in most respects. Our OP may not meet this qualifying income test.
If our operating partnership were to be taxed as a corporation, it would incur substantial tax liabilities, and we would then fail to qualify as a REIT for U.S. federal income tax purposes, unless we qualified for relief under certain statutory savings provisions, and our ability to raise additional capital and pay distributions to our stockholders would be impaired.
If our OP were to be taxed as a corporation, it would incur substantial tax liabilities, and we could then fail to qualify as a REIT for U.S. federal income tax purposes, unless we qualified for relief under certain statutory savings provisions, and our ability to raise additional capital and pay distributions to our stockholders could be impaired.
To the extent general economic conditions worsen in one or more of these markets, or if any of these areas experience a natural disaster, the value of our portfolio and our market rental rates could be adversely affected.
To the extent general economic conditions, job growth or unemployment worsen in one or more of these markets, or if any of these areas experience a natural disaster, the value of our Portfolio and our market rental rates could be adversely affected.
We have a substantial amount of indebtedness, which may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs. As of December 31, 2023, there was $1.6 billion of mortgage debt outstanding related to our portfolio.
We have a substantial amount of indebtedness, which may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs. As of December 31, 2024, there was $1.5 billion of mortgage debt outstanding related to our Portfolio.
If classified as a partnership, our operating partnership generally will not be a taxable entity and will not incur any U.S. federal income tax liability. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income.
If classified as a partnership, our OP generally will not be a taxable entity and will not incur any U.S. federal income tax liability. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of our OP’s income.
Our Board granted a waiver from the ownership limits applicable to holders of our common stock 39 to Jim Dondero and certain of his affiliates and may grant additional waivers in the future.
Our Board granted a waiver from the ownership limits applicable to holders of our common stock to James Dondero and certain of his affiliates and may grant additional waivers in the future.
In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and mortgage-backed securities.
In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities, stock in REITs and other qualified real estate assets, including certain mortgage loans and mortgage-backed securities.
Although our operating partnership’s partnership units are not traded on an established securities market, the operating partnership’s units could be viewed as readily tradable on a secondary market (or the substantial equivalent thereof), and our operating partnership may not qualify for one of the “safe harbors” under the applicable tax regulations.
Although our OP’s partnership units are not traded on an established securities market, the OP’s units 32 could be viewed as readily tradable on a secondary market (or the substantial equivalent thereof), and our OP may not qualify for one of the “safe harbors” under the applicable tax regulations.
A REIT is “domestically controlled” if less than 50% of the REIT’s stock, by value, has been owned directly or indirectly by persons who are not qualifying U.S. persons during a continuous five-year period ending on the date of disposition or, if shorter, during the entire period of the REIT’s existence.
A REIT is “domestically controlled” if less than 50% of the REIT’s stock, by value, has been owned directly or indirectly by persons who are not qualifying U.S. persons, including through a foreign-controlled domestic corporation, during a continuous five-year period ending on the date of disposition or, if shorter, during the entire period of the REIT’s existence.
Should Freddie Mac and Fannie Mae have their mandates changed or reduced, be disbanded or reorganized by the government, privatized or otherwise discontinue providing liquidity to our sector, it could significantly reduce our access to debt capital and/or increase borrowing costs and could significantly reduce our sales of assets and/or the values realized upon sale.
Should Freddie Mac have its mandate changed or reduced, be disbanded or reorganized by the government, privatized or otherwise discontinue providing liquidity to our sector, it could significantly reduce our access to debt capital and/or increase borrowing costs and could significantly reduce our sales of assets and/or the values realized upon sale.
Pandemics, epidemics or other health crises, including the novel coronavirus (“COVID-19”), have and could in the future disrupt our business. Both global and locally targeted health events could materially affect areas where our properties, corporate offices or major service providers are located.
Pandemics, epidemics or other health crises have and could in the future disrupt our business. Both global and locally targeted health events could materially affect areas where our properties, corporate offices or major service providers are located.
Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.
Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock, and could be detrimental to our ability to raise additional funds through the future sale of our common stock.
These events have and could in the future have an adverse effect on our business, results of operations, financial condition and liquidity in a number of ways, including, but not limited to: • The deterioration of global economic conditions as a result of such a crisis could ultimately decrease occupancy levels and pricing across our portfolio and/or increase concessions, reduce or defer our residents’ spending, result in changes in resident preferences (including changes resulting from increased employer flexibility to work from home) or negatively impact our residents’ ability to pay their rent on time or at all; • Local and national authorities expanding or extending certain measures that impose restrictions on our ability to enforce residents’ contractual rental obligations (such as eviction moratoriums or rental forgiveness) and limit our ability to raise rents or charge certain fees; 26 • The risk of a prolonged outbreak and/or multiple waves of an outbreak could cause long-term damage to economic conditions, which in turn could diminish our access to capital at attractive terms and/or cause material declines in the fair value of our assets, leading to asset impairment charges; and • The potential inability to maintain adequate staffing at our properties and corporate offices due to an outbreak and/or changes in employee preferences causing them to leave their jobs.
These events have and could in the future have an adverse effect on our business, results of operations, financial condition and liquidity in a number of ways, including, but not limited to: • The deterioration of global economic conditions as a result of such a crisis could ultimately decrease occupancy levels and pricing across our Portfolio and/or increase concessions, reduce or defer our residents’ spending, result in changes in resident preferences (including changes resulting from increased employer flexibility to work from home) or negatively impact our residents’ ability to pay their rent on time or at all; • Local and national authorities expanding or extending certain measures that impose restrictions on our ability to enforce residents’ contractual rental obligations (such as eviction moratoriums or rental forgiveness) and limit our ability to raise rents or charge certain fees; • The risk of a prolonged outbreak and/or multiple waves of an outbreak could cause long-term damage to economic conditions, which in turn could diminish our access to capital at attractive terms and/or cause material declines in the fair value of our assets, leading to asset impairment charges; and • The potential inability to maintain adequate staffing at our properties and corporate offices due to an outbreak and/or changes in employee preferences causing them to leave their jobs. 26 To the extent a pandemic, epidemic or other health crisis adversely affects our business, results of operations, cash flows and financial condition, it may also continue to heighten many of the other risks described elsewhere in this Item 1A, Risk Factors .
In addition, some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination. We face risks relating to asbestos.
In addition, some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination.
As of December 31, 2023, 10 interest rate swap agreements, with a combined notional amount of $1.2 billion and terms expiring in 2024, 2025 and 2026, effectively fix the interest rate on $1.2 billion, or 76%, of our $1.5 billion of floating rate debt outstanding.
As of December 31, 2024, 8 interest rate swap agreements, with a combined notional amount of $1.1 billion and terms expiring in 2025 and 2026, effectively fix the interest rate on $1.1 billion, or 73%, of our $1.5 billion of floating rate debt outstanding.
We can provide no assurance that we will not incur any material liabilities as a result of the presence of ACMs at our communities. We face risks relating to lead-based paint. Some of our communities may have lead-based paint and we may have to implement an operations and maintenance program at some of our communities.
We can provide no assurance that we will not incur any material liabilities as a result of the presence of ACMs at our communities. Some of our communities may have lead-based paint and we may have to implement an operations and maintenance program at some of our communities. Communities that we acquire in the future may also have lead-based paint.
As of December 31, 2023, the interest rate cap agreements we have entered into effectively cap the applicable reference rate on $1.3 billion of our floating rate mortgage debt outstanding at a weighted average rate of 5.90% for the term of the agreements, which is generally 3-4 years.
As of December 31, 2024, the interest rate cap agreements we have entered into effectively cap the applicable reference rate on $2.5 billion of our floating rate mortgage debt outstanding at a weighted average rate of 6.31% for the term of the agreements, which is generally 2-3 years.
In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain.
In order to maintain our qualification as a REIT, among other requirements, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gains.
No assurance can be given that any particular property that we own or hold an interest in, directly or through any subsidiary entity, including our operating partnership, but generally excluding TRSs, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business.
However, no assurance can be given that any particular property that we own or hold an interest in, directly or through any subsidiary entity, including our OP, but generally excluding TRSs, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business and that we will not be subject to the 100% prohibited transactions tax.
Hedging arrangements, which can include a number of counterparties, may expose us to additional risks, including failure of any of our counterparties to perform under these contracts, and may involve extensive costs, such as transaction fees or, if we terminate them, breakage costs. No strategy can completely insulate us from the risks associated with interest rate fluctuations.
Hedging arrangements, which can include a number of counterparties, may expose us to additional risks, including failure of any of our counterparties to perform under these contracts, and may involve extensive costs, such as transaction fees or, if we terminate them, breakage costs.
We will be required to pay a 100% tax on any “redetermined rents,” “redetermined deductions,” “excess interest” or “redetermined TRS service income.” In general, redetermined rents are rents from real property that are overstated as a result of services furnished to any of our residents by a TRS of ours.
We currently own interests in TRSs and may acquire securities in additional TRSs in the future. 33 We will be required to pay a 100% tax on any “redetermined rents,” “redetermined deductions,” “excess interest” or “redetermined TRS service income.” In general, redetermined rents are rents from real property that are overstated as a result of services furnished to any of our residents by a TRS of ours.
There can be no assurance that future changes to the U.S. federal income tax laws or regulatory changes will not be proposed or enacted that could impact our business and financial results. If enacted, certain of such changes could have an adverse impact on our business and financial results.
There can be no assurance that future changes to the U.S. federal income tax laws or regulatory changes will not be proposed or enacted that could adversely impact our business and financial results.
In addition, the UBS Lawsuit may be both time consuming and disruptive to our operations and cause significant diversion of management attention and resources which may materially and adversely affect our business, financial condition and results of operations.
In addition, the UBS Lawsuit may be both time consuming and disruptive to our operations and cause significant diversion of management attention and resources which may materially and adversely affect our business, financial condition and results of operations. We depend upon key personnel of our Adviser and its affiliates and our property manager.
As of December 31, 2023, we had approximately $1.4 billion and $119.5 million of outstanding consolidated indebtedness under our Freddie Mac and Fannie Mae mortgage loans, respectively. We rely on national and regional institutions, including Freddie Mac and Fannie Mae, to provide financing for our acquisitions and permanent financing on properties we may develop in the future.
As of December 31, 2024, we had approximately $1.5 billion of outstanding consolidated indebtedness under our Freddie Mac mortgage loans. We rely on national and regional institutions, including Freddie Mac, to provide financing for our acquisitions and permanent financing on properties we may develop in the future. Currently, there is uncertainty regarding the future of Freddie Mac.
As a result, our Board may establish a series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders.
As a result, our Board may establish a series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders. 39 Certain provisions of Maryland law may limit the ability of a third party to acquire control of us.
Risks Related to Our Structure The Chapter 11 bankruptcy filing by Highland Capital Management, L.P. (“Highland”) may have materially adverse consequences on our business, financial condition and results of operations.
No strategy can completely insulate us from the risks associated with interest rate fluctuations. 28 Risks Related to Our Structure The Chapter 11 bankruptcy filing by Highland Capital Management, L.P. (“Highland”) may have materially adverse consequences on our business, financial condition and results of operations.
Subject to certain exceptions, distributions received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits.
Foreign investors may be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on distributions received from us and upon disposition of shares of our common stock. Subject to certain exceptions, distributions received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits.
We cannot predict whether, when or to what extent any new U.S. federal tax laws, regulations, interpretations or rulings will impact the real estate investment industry or REITs.
We cannot predict whether, when or to what extent any new U.S. federal tax laws, regulations, interpretations or rulings will impact the real estate investment industry or REITs. Prospective investors are urged to consult their tax advisors regarding potential future changes to the U.S. federal tax laws on an investment in our stock.
Communities that we acquire in the future may also have lead-based paint. We can provide no assurance that we will not incur any material liabilities as a result of the presence of lead-based paint at our communities. We face risks relating to chemical vapors and subsurface contamination.
We can provide no assurance that we will not incur any material liabilities as a result of the presence of lead-based paint at our communities.
Our primary focus in making investments generally differs from that of existing investment funds, accounts or other investment vehicles that are or have been managed by affiliates of our Adviser, members of our Adviser’s management team or sponsored by our former affiliate Highland or its affiliates.
We may not replicate the historical results achieved by other entities managed or sponsored by affiliates of our Adviser, members of our Adviser’s management team Our primary focus in making investments generally differs from that of existing investment funds, accounts or other investment vehicles that are or have been managed by affiliates of our Adviser or members of our Adviser’s management team Past performance is not a guarantee of future results.
These requirements could cause us to distribute amounts that otherwise would be spent on investments in real estate assets and it is possible that we might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these distributions.
However, these requirements could cause us to distribute amounts that otherwise would be spent on investments in real estate assets and it is possible that we might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these distributions.Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, and our current and potential future earnings.
This competition could increase prices for properties of the type we would likely pursue and adversely affect our profitability and impede our growth. 21 Competition and any increased affordability of residential homes could limit our ability to lease our apartments or increase or maintain rents.
This competition could increase prices for properties of the type we would likely pursue and adversely affect our profitability and impede our growth.
Dondero and a number of other persons and entities seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the “UBS Lawsuit”). The UBS Lawsuit does not include claims related to our business or our assets.
Dondero and a number of other persons and entities seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the “UBS Lawsuit”). On February 26, 2024, the respondents, including Mr. Dondero, filed motions to dismiss the UBS Lawsuit. A hearing was held on July 8, 2024.
General Risks We depend on information systems, and systems failures could significantly disrupt our business, which may, in turn, negatively affect our ability to pay dividends to our stockholders. Our business depends on the communications and information systems of our Sponsor, to which we have access through our Adviser.
General Risks We are highly dependent on information technology and security breaches or systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our securities and our ability to pay dividends. Our business is highly dependent on information technology.
There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, any pending or future legal proceedings to which we become subject. Item 1B. Unresolv ed Staff Comments None.
There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, any pending or future legal proceedings to which we become subject. 42 Our business could be harmed if we are unable to effectively integrate and use artificial intelligence.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeHowever, the risk of cybersecurity threats could be significant if the cyber-attack disrupts the Company’s critical operations, service or financial systems. See “ Risk Factors - We depend on information systems, and systems failures could significantly disrupt our business, which may, in turn, negatively affect our ability to pay dividends to our stockholders ” . 43
Biggest changeSee “ Risk Factors - We are highly dependent on information technology and security breaches or systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our securities and our ability to pay dividends. ” 44
The results of the annual assessments are reported to the Audit Committee and the Board, and our Adviser adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments and ongoing testing. The Audit Committee oversees the Company’s risk management policies, including the management of risks arising from cybersecurity threats.
The results of the annual assessments are reported to the Audit Committee and the Board, and our Adviser adjusts its 43 cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments and ongoing testing. The Audit Committee oversees the Company’s risk management policies, including the management of risks arising from cybersecurity threats.
Item 1C. Cybersecurity The Company’s Board of Directors (the “Board”) recognizes the critical importance of maintaining the trust and confidence of our customers, clients, business partners and employees. The Board is actively involved in oversight of the Company’s risk management program, and cybersecurity represents an important component of the Company’s overall approach to risk management.
Item 1C. Cybersecurity The Company’s Board recognizes the critical importance of maintaining the trust and confidence of our customers, clients, business partners and employees. The Board is actively involved in oversight of the Company’s risk management program, and cybersecurity represents an important component of the Company’s overall approach to risk management.
As one of the critical elements of the Company’s overall risk management, our Adviser’s cybersecurity program is focused on the following key areas: Governance: The Board’s oversight of cybersecurity risk management is supported by the Audit Committee of the Board (the “Audit Committee”), which interacts with our Adviser’s Director of Information Technology and Chief Compliance Officer and other members of management of our Adviser that implement and oversee our Adviser’s cybersecurity program.
As one of the critical elements of the Company’s overall risk management, our cybersecurity program is focused on the following key areas: Governance: The Board’s oversight of cybersecurity risk management is supported by the Audit Committee of the Board (the “Audit Committee”), which interacts with our Adviser’s Director of Information Technology and other members of management of our Adviser that implement and oversee our Adviser’s cybersecurity program.
Our Adviser maintains cybersecurity policies, standards, processes and practices that are based on recognized security frameworks such as the National Institute of Standards and Technology cybersecurity framework (the “NIST CF”) and the Azure Security Benchmark.
Our Adviser maintains cybersecurity policies, standards, processes and practices that are based on recognized security frameworks such as the National Institute of Standards and Technology cybersecurity framework and the Azure Security Benchmark.
Technical Safeguards: Our Adviser deploys technical safeguards that are designed to protect the Company’s and our Adviser’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. 42 Incident Response and Recovery Planning: Our Adviser has established and maintains comprehensive business continuity plans that address potential impacts should the information or technology systems become compromised, and such plans are tested and evaluated on a regular basis.
Technical Safeguards: Our Adviser deploys technical safeguards that are designed to protect the Company’s and our Adviser’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
Combined, our Adviser’s information technology team has over 50 years of experience covering all major aspects of network architecture and management. Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition.
Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected , and we do not believe are reasonably likely to materially affect, us, including our business strategy, results of operations or financial condition.
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Incident Response and Recovery Planning: Our Adviser has established and maintains comprehensive business continuity plans that address potential impacts should the information or technology systems become compromised, and the technological components of such plans are tested and evaluated on a regular basis.
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Combined, our Adviser’s information technology team has over 50 years of experience covering all major aspects of network architecture and management.
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However, the risk of cybersecurity threats could be significant if a cyber-attack disrupts the Company’s critical operations, service or financial systems.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides a summary of the properties in our portfolio as of December 31, 2023: (44 ) As of December 31, 2023 Properties by State Location Number of Units Date Acquired Purchase Price (in thousands) Average Effective Monthly Rent Per Unit (1) % Occupied (2) Number of Units Rehabbed (3) Rehab Expenditures per Unit (4) 2022-2023 Same Store Properties Texas Arbors on Forest Ridge Bedford, Texas 210 1/31/2014 $ 12,805 $ 1,187 94.3 % 155 $ 4,388 Cutter's Point Richardson, Texas 196 1/31/2014 15,845 1,442 93.9 % 269 3,059 Versailles Dallas, Texas 388 2/26/2015 26,165 1,262 92.3 % 296 6,164 Venue at 8651 Fort Worth, Texas 333 10/30/2015 19,250 1,175 91.0 % 284 6,982 Atera Apartments Dallas, Texas 380 10/25/2017 59,200 1,476 96.3 % 214 3,420 Versailles II Dallas, Texas 242 9/26/2018 24,680 1,181 90.6 % 56 5,632 Summers Landing Fort Worth, Texas 196 6/7/2019 19,396 1,223 93.4 % 53 11,075 Florida The Summit at Sabal Park Tampa, Florida 252 8/20/2014 19,050 1,460 95.2 % 207 5,854 Courtney Cove Tampa, Florida 324 8/20/2014 18,950 1,327 95.4 % 249 4,974 Sabal Palm at Lake Buena Vista Orlando, Florida 400 11/5/2014 49,500 1,753 94.5 % 69 12,984 Cornerstone Orlando, Florida 430 1/15/2015 31,550 1,445 96.0 % 448 4,905 Seasons 704 Apartments West Palm Beach, Florida 222 4/15/2015 21,000 1,828 96.4 % 188 7,836 Parc500 West Palm Beach, Florida 217 7/27/2016 22,421 1,914 93.1 % 209 14,668 Avant at Pembroke Pines Pembroke Pines, Florida 1,520 8/30/2019 322,000 2,150 95.6 % 539 17,453 Residences at West Place Orlando, Florida 342 7/17/2019 55,000 1,559 92.1 % 117 11,892 Nevada Bella Solara Las Vegas, Nevada 320 11/22/2019 66,500 1,337 92.6 % 113 11,232 Bloom Las Vegas, Nevada 528 11/22/2019 106,500 1,298 94.9 % 141 14,199 Torreyana Apartments Las Vegas, Nevada 316 11/22/2019 68,000 1,461 95.9 % 52 13,435 Georgia The Preserve at Terrell Mill Marietta, Georgia 752 2/6/2015 58,000 1,271 96.7 % 717 11,376 Rockledge Apartments Marietta, Georgia 708 6/30/2017 113,500 1,557 95.5 % 440 11,091 Tennessee Brandywine I & II Nashville, Tennessee 632 9/26/2018 79,800 1,222 93.7 % 515 10,755 Arbors of Brentwood Nashville, Tennessee 346 9/10/2019 62,250 1,494 92.2 % 135 10,346 Residences at Glenview Reserve Nashville, Tennessee 360 7/17/2019 45,000 1,307 95.3 % 233 13,431 Arizona Madera Point Mesa, Arizona 256 8/5/2015 22,525 1,312 94.9 % 255 4,535 The Venue on Camelback Phoenix, Arizona 415 10/11/2016 44,600 1,065 95.2 % 264 10,269 Bella Vista Phoenix, Arizona 248 1/28/2019 48,400 1,774 96.4 % 197 10,516 The Enclave Tempe, Arizona 204 1/28/2019 41,800 1,820 94.6 % 162 10,392 The Heritage Phoenix, Arizona 204 1/28/2019 41,900 1,698 96.6 % 173 9,609 Fairways at San Marcos Chandler, Arizona 352 11/2/2020 84,480 1,580 94.9 % 135 13,665 North Carolina The Verandas at Lake Norman Charlotte, North Carolina 264 6/30/2021 63,500 1,354 95.8 % 30 1,408 Creekside at Matthews Charlotte, North Carolina 240 6/30/2021 58,000 1,431 95.8 % 15 4,083 Six Forks Station Raleigh, North Carolina 323 9/10/2021 74,760 1,409 92.4 % 83 1,281 High House at Cary Cary, North Carolina 302 12/7/2021 93,250 1,464 95.0 % — — Total 2022-2023 Same Store Properties (5) 12,422 $ 1,889,577 $ 1,509 94.7 % 7,013 $ 46,581 Non-Same Store Properties Texas Old Farm Houston, Texas 734 12/29/2016 $ 84,721 $ 1,322 93.9 % — $ — Stone Creek at Old Farm Houston, Texas 190 12/29/2016 23,332 1,299 94.7 % — — Arizona Estates on Maryland Phoenix, Arizona 330 4/1/2022 77,900 1,435 95.2 % — — North Carolina Radbourne Lake Charlotte, North Carolina 225 9/30/2014 24,250 1,450 95.6 % 329 2,841 Georgia The Adair Sandy Springs, Georgia 232 4/1/2022 65,500 1,968 96.6 % — — Total Non-Same Store Properties 1,711 $ 275,703 $ 7,474 94.8 % 329 $ 21,244 Total 14,133 $ 2,165,280 $ 1,502 95.3 % 7,342 $ 45,820 (1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of December 31, 2023 minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31, 2023.
Biggest changeThe following table provides a summary of the properties in our Portfolio as of December 31, 2024: As of December 31, 2024 Properties by State Location Number of Units Date Acquired Purchase Price (in thousands) Average Effective Monthly Rent Per Unit (1) % Occupied (2) Number of Units Rehabbed (3) Rehab Expenditures per Unit (4) Texas Arbors on Forest Ridge Bedford, Texas 210 1/31/2014 $ 12,805 $ 1,121 98.6 % 157 $ 4,402 Cutter's Point Richardson, Texas 196 1/31/2014 15,845 1,370 98.5 % 131 6,732 Versailles Dallas, Texas 388 2/26/2015 26,165 1,130 96.1 % 296 6,164 Venue at 8651 Fort Worth, Texas 333 10/30/2015 19,250 1,160 95.5 % 286 7,009 Atera Apartments Dallas, Texas 380 10/25/2017 59,200 1,487 95.0 % 215 3,419 Versailles II Dallas, Texas 242 9/26/2018 24,680 1,064 96.7 % 56 5,632 Summers Landing Fort Worth, Texas 196 6/7/2019 19,396 1,198 95.4 % 58 11,415 Florida The Summit at Sabal Park Tampa, Florida 252 8/20/2014 19,050 1,370 94.4 % 209 5,864 Courtney Cove Tampa, Florida 324 8/20/2014 18,950 1,249 92.9 % 249 4,974 Sabal Palm at Lake Buena Vista Orlando, Florida 400 11/5/2014 49,500 1,671 94.0 % 77 13,114 Cornerstone Orlando, Florida 430 1/15/2015 31,550 1,435 94.4 % 452 4,950 Seasons 704 Apartments West Palm Beach, Florida 222 4/15/2015 21,000 1,818 95.0 % 188 7,836 Parc500 West Palm Beach, Florida 217 7/27/2016 22,421 1,879 96.3 % 212 14,650 Avant at Pembroke Pines Pembroke Pines, Florida 1,520 8/30/2019 322,000 2,199 95.3 % 580 17,848 Residences at West Place Orlando, Florida 342 7/17/2019 55,000 1,586 95.0 % 117 11,892 Nevada Bella Solara Las Vegas, Nevada 320 11/22/2019 66,500 1,328 93.1 % 113 11,232 Bloom Las Vegas, Nevada 528 11/22/2019 106,500 1,276 94.7 % 142 14,115 Torreyana Apartments Las Vegas, Nevada 316 11/22/2019 68,000 1,444 95.9 % 52 13,435 Georgia The Preserve at Terrell Mill Marietta, Georgia 752 2/6/2015 58,000 1,282 94.3 % 719 11,370 Rockledge Apartments Marietta, Georgia 708 6/30/2017 113,500 1,488 94.3 % 440 11,091 The Adair Sandy Springs, Georgia 232 4/1/2022 65,500 1,995 91.4 % 140 11,904 Tennessee Brandywine I & II Nashville, Tennessee 632 9/26/2018 79,800 1,204 94.6 % 525 10,808 Arbors of Brentwood Nashville, Tennessee 346 9/10/2019 62,250 1,458 93.1 % 141 10,251 Residences at Glenview Reserve Nashville, Tennessee 360 7/17/2019 45,000 1,248 95.3 % 259 13,544 Arizona Madera Point Mesa, Arizona 256 8/5/2015 22,525 1,311 93.8 % 255 4,535 The Venue on Camelback Phoenix, Arizona 415 10/11/2016 44,600 981 92.8 % 271 10,266 Bella Vista Phoenix, Arizona 248 1/28/2019 48,400 1,712 89.9 % 198 10,537 The Enclave Tempe, Arizona 204 1/28/2019 41,800 1,782 93.6 % 162 10,392 The Heritage Phoenix, Arizona 204 1/28/2019 41,900 1,676 94.6 % 174 9,637 Fairways at San Marcos Chandler, Arizona 352 11/2/2020 84,480 1,574 95.7 % 136 13,667 Estates on Maryland Phoenix, Arizona 330 4/1/2022 77,900 1,430 95.5 % 110 13,250 North Carolina The Verandas at Lake Norman Charlotte, North Carolina 264 6/30/2021 63,500 1,343 98.1 % 66 12,376 Creekside at Matthews Charlotte, North Carolina 240 6/30/2021 58,000 1,423 95.8 % 83 10,957 Six Forks Station Raleigh, North Carolina 323 9/10/2021 74,760 1,359 93.2 % 123 12,784 High House at Cary Cary, North Carolina 302 12/7/2021 93,250 1,498 92.1 % 107 13,517 Total 12,984 $ 2,032,977 $ 1,491 94.7 % 7,499 $ 10,123 (1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of December 31, 2024 minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31, 2024.
(2) Percent occupied is calculated as the number of units occupied as of December 31, 2023, divided by the total number of units, expressed as a percentage. (3) Inclusive of all full and partial interior upgrades completed. (4) Inclusive of all full and partial interior upgrades completed and leased as of December 31, 2023.
(2) Percent occupied is calculated as the number of units occupied as of December 31, 2024, divided by the total number of units, expressed as a percentage. (3) Inclusive of all full and partial interior upgrades completed. (4) Inclusive of all full and partial interior upgrades completed and leased as of December 31, 2024.
(5) Includes the 45 downed units excluded from our 2022-2023 Same Store pool (see Note 4 to our consolidated financial statements). For additional information regarding our portfolio, see Notes 3 and 4 to our consolidated financial statements. 44
(5) Includes the 36 downed units excluded from our 2023-2024 Same Store pool (see Note 4 to our consolidated financial statements). For additional information regarding our Portfolio, see Notes 3 and 4 to our consolidated financial statements.
Item 2. Pr operties As of December 31, 2023, our portfolio consisted of 38 properties representing 14,133 units in seven states.
Item 2. Pr operties As of December 31, 2024, our Portfolio consisted of 35 properties representing 12,984 units in seven states.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeManagement is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government agencies. Item 4. Mine Saf ety Disclosures Not applicable. 45 PART II
Biggest changeManagement is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government agencies. 45 Item 4. Mine Saf ety Disclosures Not applicable. 46 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSince the inception of the Share Repurchase Program through December 31, 2023, the Company had repurchased 2,550,628 shares of its common stock, par value $0.01 per share, at a total cost of approximately $72.4 million, or $28.36 per share as shown in the table below: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs (in millions) Beginning Total 2,550,628 $ 28.36 2,550,628 $ 100.0 October 1 – October 31 — — — 100.0 November 1 – November 30 — — — 100.0 December 1 – December 31 — — — 100.0 Total as of December 31, 2023 2,550,628 $ 28.36 2,550,628 $ 100.0 46 PERFORMANCE GRAPH On April 1, 2015, our common stock commenced trading on the NYSE.
Biggest changeSince the inception of the Share Repurchase Program in June 2016 through December 31, 2024, the Company had repurchased 2,989,306 shares of its common stock, par value $0.01 per share, at a total cost of approximately $86.9 million, or $29.07 per share as shown in the table below: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs (in millions) Beginning Total 2,989,306 $ 29.07 2,989,306 $ 85.5 October 1 – October 31 — — — 85.5 November 1 – November 30 — — — 85.5 December 1 – December 31 — — — 85.5 Total as of December 31, 2024 2,989,306 $ 29.07 2,989,306 $ 85.5 47 PERFORMANCE GRAPH On April 1, 2015, our common stock commenced trading on the NYSE.
If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities. Item 6. [R eserved] 47
If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities. Item 6. [R eserved] 48
On October 24, 2022, the Board authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $100.0 million during a two-year period that will expire on October 24, 2024. This authorization replaced the Board’s prior authorization of the Share Repurchase Program.
On October 28, 2024, the Board authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $100.0 million during a two-year period that will expire on October 28, 2026. This authorization replaced the Board’s prior authorization of the Share Repurchase Program.
The following graph compares the cumulative total stockholder return on our common shares for the measurement period commencing December 31, 2017 and ending December 31, 2023 with the cumulative total returns of the Russell 3000 Index, the MSCI U.S. REIT Index (^RMZ) and the Standard & Poor’s U.S. REIT Index.
The following graph compares the cumulative total stockholder return on our common shares for the measurement period commencing December 31, 2019 and ending December 31, 2024 with the cumulative total returns of the Russell 3000 Index, the MSCI U.S. REIT Index (^RMZ) and the Standard & Poor’s U.S. REIT Index.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the ticker symbol “NXRT.” Stockholder Information On February 27, 2024, we had 25,774,730 shares of common stock outstanding held by a total of approximately 815 record holders.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the ticker symbol “NXRT.” Stockholder Information On February 26, 2025, we had 25,466,105 shares of common stock outstanding held by a total of approximately 764 record holders.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On June 15, 2016, we announced that our Board authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $30.0 million during a two-year period that was set to expire on June 15, 2018 (the “Share Repurchase Program”).
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On October 24, 2022, the Board authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $100.0 million during a two-year period that expired on October 24, 2024 (the “Share Repurchase Program”).
Removed
On April 30, 2018, our Board increased the Share Repurchase Program from $30.0 million to up to $40.0 million and extended it by an additional two years to June 15, 2020. On March 13, 2020, our Board further increased the Share Repurchase Program from $40.0 million to up to $100.0 million and extended it to March 12, 2023.
Added
During the year ended December 31, 2024, the Company repurchased 438,678 shares of its common stock, par value of $0.01 per share, at a total cost of approximately $14.6 million, or $33.19 per share on average.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe following table reconciles our calculations of FFO, Core FFO and AFFO to net income, the most directly comparable GAAP financial measure, for the years ended December 31, 2023, 2022 and 2021 (in thousands, except per share amounts): For the Year Ended December 31, 2023 2022 2021 % Change 2023 - 2022 % Change 2023 - 2021 Net income (loss) $ 44,433 $ (9,291 ) $ 23,106 -578.2 % N/M Depreciation and amortization 95,186 97,648 86,878 -2.5 % 9.6 % Gain on sales of real estate (67,926 ) (14,684 ) (46,214 ) 362.6 % 47.0 % Adjustment for noncontrolling interests (273 ) (276 ) (191 ) -1.1 % 42.9 % FFO attributable to common stockholders 71,420 73,397 63,579 -2.7 % 12.3 % FFO per share - basic $ 2.78 $ 2.87 $ 2.53 -3.0 % 10.0 % FFO per share - diluted $ 2.72 $ 2.81 $ 2.47 -3.0 % 10.3 % Loss on extinguishment of debt and modification costs 2,409 8,734 912 -72.4 % 164.1 % Casualty-related expenses/(recoveries) (2,214 ) 1,119 (199 ) N/M 1012.6 % Casualty losses (gains) 856 (2,506 ) (2,595 ) N/M N/M Gain on forfeited deposits (250 ) — — 0.0 % 0.0 % Amortization of deferred financing costs - acquisition term notes 1,321 1,083 737 22.0 % 79.2 % Adjustment for noncontrolling interests (8 ) (31 ) 4 -74.2 % -300.0 % Core FFO attributable to common stockholders 73,534 81,796 62,438 -10.1 % 17.8 % Core FFO per share - basic $ 2.87 $ 3.19 $ 2.48 -10.3 % 15.5 % Core FFO per share - diluted $ 2.80 $ 3.13 $ 2.42 -10.4 % 15.6 % Amortization of deferred financing costs - long term debt 1,624 1,696 1,460 -4.3 % 11.2 % Equity-based compensation expense 9,287 7,911 6,997 17.4 % 32.7 % Adjustment for noncontrolling interests (41 ) (37 ) (25 ) 10.8 % 64.0 % AFFO attributable to common stockholders 84,404 91,366 70,870 -7.6 % 19.1 % AFFO per share - basic $ 3.29 $ 3.57 $ 2.82 -7.8 % 16.9 % AFFO per share - diluted $ 3.22 $ 3.49 $ 2.75 -8.0 % 16.9 % Weighted average common shares outstanding - basic 25,654 25,610 25,170 0.2 % 1.9 % Weighted average common shares outstanding - diluted (1) 26,245 26,151 25,760 0.4 % 1.9 % Dividends declared per common share $ 1.72242 $ 1.56 $ 1.40375 10.4 % 22.7 % Net income (loss) Coverage - diluted (2) 0.98x -0.23x 0.63x -525.2 % 54.8 % FFO Coverage - diluted (2) 1.58x 1.80x 1.76x -12.2 % -10.1 % Core FFO Coverage - diluted (2) 1.63x 2.01x 1.73x -18.9 % -5.8 % AFFO Coverage - diluted (2) 1.87x 2.24x 1.96x -16.6 % -4.7 % 63 (1) The Company uses actual diluted weighted average common shares outstanding when in a dilutive position for FFO, Core FFO and AFFO.
Biggest changeFurther, our computation of FFO, Core FFO and AFFO may not be comparable to FFO, Core FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define Core FFO or AFFO differently than we do. 61 The following table reconciles our calculations of FFO, Core FFO and AFFO to net income, the most directly comparable GAAP financial measure, for the years ended December 31, 2024 and 2023 (in thousands, except per share amounts): For the Year Ended December 31, 2024 2023 % Change 2024 - 2023 Net income $ 1,114 $ 44,433 N/M Depreciation and amortization 97,762 95,186 2.7 % Gain on sales of real estate (1) (54,246 ) (67,926 ) -20.1 % Adjustment for noncontrolling interests (176 ) (273 ) -35.5 % FFO attributable to common stockholders 44,454 71,420 -37.8 % FFO per share - basic $ 1.74 $ 2.78 -37.3 % FFO per share - diluted $ 1.69 $ 2.72 -37.8 % Loss on extinguishment of debt and modification costs 24,004 2,409 N/M Casualty-related expenses/(recoveries) 1,389 (2,214 ) N/M Casualty losses (gains) 626 856 -26.9 % Gain on forfeited deposits — (250 ) N/M Amortization of deferred financing costs 3,364 2,945 14.2 % Mark-to-market adjustments of interest rate caps (593 ) 1,484 N/M Adjustment for noncontrolling interests (114 ) (20 ) N/M Core FFO attributable to common stockholders 73,130 76,630 -4.6 % Core FFO per share - basic $ 2.87 $ 2.99 -4.1 % Core FFO per share - diluted $ 2.79 $ 2.92 -4.6 % Equity-based compensation expense 10,543 9,287 13.5 % Adjustment for noncontrolling interests (42 ) (35 ) 20.0 % AFFO attributable to common stockholders 83,631 85,882 -2.6 % AFFO per share - basic $ 3.28 $ 3.35 -2.1 % AFFO per share - diluted $ 3.19 $ 3.27 -2.6 % Weighted average common shares outstanding - basic 25,516 25,654 -0.5 % Weighted average common shares outstanding - diluted (2) 26,246 26,245 0.0 % Dividends declared per common share $ 1.89726 $ 1.72242 $ 0.10151 Net income Coverage - diluted (3) 0.02x 0.98x N/M FFO Coverage - diluted (3) 0.89x 1.58x -43.5 % Core FFO Coverage - diluted (3) 1.47x 1.70x -13.4 % AFFO Coverage - diluted (3) 1.68x 1.90x -11.6 % (1) $31.5 million with a related party for the year ended December 31, 2024.
(2) Fees incurred to an unaffiliated third party that is an affiliate of a noncontrolling limited partner of the OP.
(2) Fees incurred to an unaffiliated third party that is an affiliate of a noncontrolling limited partner of the OP.
Subject to conditions provided in the Corporate Credit Facility, the commitments under Corporate Credit Facility may be increased up to an additional $150.0 million if the lenders agree to increase their commitments or if the lenders agree for the increase to be funded by any additional lender proposed by the Company, through the OP.
Subject to conditions provided in the Corporate Credit Facility, the commitments under Corporate Credit Facility may be increased up to an additional $150.0 million if the lenders agree to increase their commitments or if the lenders agree for the increase to be funded by any additional lender proposed by the Company, through the OP.
As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.
As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.
As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.
As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.
Entity level general and administrative expenses incurred at the properties and pandemic expenses are eliminated as they are specific to the way in which we have chosen to hold our properties and are the result of our ownership structuring. Gain of forfeited deposits is eliminated because such gains are not part of our core operations for the properties.
Entity level general and administrative expenses incurred at the properties are eliminated as they are specific to the way in which we have chosen to hold our properties and are the result of our ownership structuring. Gain of forfeited deposits is eliminated because such gains are not part of our core operations for the properties.
The success of our business strategy will depend, in part, on our ability to access these various capital sources. In addition to our value-add program, our multifamily properties will require periodic capital expenditures and renovation to remain competitive. Also, acquisitions, redevelopments, or expansions of our multifamily properties will require significant capital outlays.
The success of our business strategy will depend, in part, on our ability to access these various capital sources. 63 In addition to our value-add program, our multifamily properties will require periodic capital expenditures and renovation to remain competitive. Also, acquisitions, redevelopments, or expansions of our multifamily properties will require significant capital outlays.
See Notes 5 and 6 for additional information. We have entered into and expect to continue to enter into interest rate swap and cap agreements with various third parties to fix or cap the floating interest rates on a majority of our floating rate mortgage debt outstanding.
See Notes 5 and 6 for additional information. 65 We have entered into and expect to continue to enter into interest rate swap and cap agreements with various third parties to fix or cap the floating interest rates on a majority of our floating rate mortgage debt outstanding.
(2) Adjustment to net income to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax.
(2) Adjustment to net income to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.
When applicable, we recognize interest and/or penalties related to uncertain tax positions on our consolidated statements of operations and comprehensive income (loss). 71 Dividends We intend to make regular quarterly dividend payments to holders of our common stock.
When applicable, we recognize interest and/or penalties related to uncertain tax positions on our consolidated statements of operations and comprehensive income (loss). Dividends We intend to make regular quarterly dividend payments to holders of our common stock.
Also included are utility reimbursements, late fees, pet fees, and other rental fees charged to tenants. 48 Other income. Other income includes ancillary income earned from tenants such as non-refundable fees, application fees, laundry fees, cable TV income, and other miscellaneous fees charged to tenants. Expenses Property operating expenses.
Also included are utility reimbursements, late fees, pet fees, and other rental fees charged to tenants. Other income. Other income includes ancillary income earned from tenants such as non-refundable fees, application fees, laundry fees, cable TV income, and other miscellaneous fees charged to tenants. Expenses Property operating expenses.
Property general and administrative expenses include the costs of marketing, professional fees, general office supplies, and other administrative related costs of each property. Depreciation and amortization. Depreciation and amortization costs primarily include depreciation of our multifamily properties and amortization of acquired in-place leases. Other Income and Expense Interest expense.
Property general and administrative expenses include the costs of marketing, professional fees, general office supplies, and other administrative related costs of each property. 50 Depreciation and amortization. Depreciation and amortization costs primarily include depreciation of our multifamily properties and amortization of acquired in-place leases. Other Income and Expense Interest expense.
As of December 31, 2023, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk with future effective dates (dollars in thousands): Effective Date Termination Date Counterparty Notional Amount Fixed Rate (1) September 1, 2026 January 1, 2027 KeyBank $ 92,500 1.7980 % (1) The floating rate option for the interest rate swaps is Adjusted SOFR.
As of December 31, 2024, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk with future effective dates (dollars in thousands): Effective Date Termination Date Counterparty Notional Amount Fixed Rate (1) September 1, 2026 January 1, 2027 KeyBank $ 92,500 1.7980 % (1) The floating rate option for the interest rate swaps is Adjusted SOFR.
We believe that our available cash, expected operating cash flows, and potential debt or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following December 31, 2023. We believe that our sources of long-term cash will be sufficient for our needs thereafter.
We believe that our available cash, expected operating cash flows, and potential debt or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following December 31, 2024. We believe that our sources of long-term cash will be sufficient for our needs thereafter.
NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is calculated by adjusting net income (loss) to add back (1) interest expense (2) advisory and administrative fees, (3) the impact of: (a) depreciation and amortization expenses and (b) gains or losses from the sale of operating real estate assets that are included in net income (loss) computed in accordance with GAAP, (4) corporate general and administrative expenses, (5) other gains and losses that are specific to us including loss on extinguishment of debt and modification costs, (6) casualty-related expenses/(recoveries) and casualty gains (losses), (7) gain on forfeited deposits, (8) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on behalf of the Company at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees and (9) equity in earnings of affiliates. 54 The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints.
NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is calculated by adjusting net income (loss) to add back (1) interest expense, (2) advisory and administrative fees, (3) depreciation and amortization expenses, (4) gains or losses from the sale of operating real estate assets that are included in net income (loss) computed in accordance with GAAP, (5) corporate income and corporate general and administrative expenses that are not reflective of operations of the properties, (6) other gains and losses that are specific to us including gain (loss) on extinguishment of debt and modification costs, (7) casualty-related expenses/(recoveries) and casualty gains (losses), (8) gain on forfeited deposits, (9) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on behalf of the Company at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees and (10) equity in earnings of affiliates. 53 The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints.
Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement. We had no material unrecognized tax benefit or expense, accrued interest or penalties as of December 31, 2023.
Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement. We had no material unrecognized tax benefit or expense, accrued interest or penalties as of December 31, 2024.
Off-Balance Sheet Arrangements As of December 31, 2023, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off-Balance Sheet Arrangements As of December 31, 2024, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The Corporate Credit Facility is guaranteed by the Company and the obligations under the Corporate Credit Facility are, subject to some exceptions, secured by a continuing security interest in substantially all of the assets of the Company. As of December 31, 2023 and 2022, the Company is in compliance with all of the covenants required in its Corporate Credit Facility.
The Corporate Credit Facility is guaranteed by the Company and the obligations under the Corporate Credit Facility are, subject to some exceptions, secured by a continuing security interest in substantially all of the assets of the Company. As of December 31, 2024 and 2023, the Company is in compliance with all of the covenants required in its Corporate Credit Facility.
FFO, Core FFO and AFFO do not purport to be indicative of 62 cash available to fund our future cash requirements.
FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements.
We have allocated the total impact of expected settlements on the $1.2 billion notional amount of interest rate swaps to “Operating Properties Mortgage Debt.” We used Adjusted SOFR as of December 31, 2023 to determine our expected settlements through the terms of the interest rate swaps.
We have allocated the total impact of expected settlements on the $1.2 billion notional amount of interest rate swaps to “Operating Properties Mortgage Debt.” We used Adjusted SOFR as of December 31, 2024 to determine our expected settlements through the terms of the interest rate swaps.
We and our subsidiaries are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. The 2022, 2021 and 2020 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject.
We and our subsidiaries are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. The 2023, 2022 and 2021 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject.
As of December 31, 2023, there were 26,053,988 OP Units outstanding, of which 25,951,154, or 99.6%, were owned by us and 102,834, or 0.4%, were owned by an unaffiliated limited partners (see Note 9 to our consolidated financial statements).
As of December 31, 2024, there were 26,053,988 OP Units outstanding, of which 25,951,154, or 99.6%, were owned by us and 102,834, or 0.4%, were owned by unaffiliated limited partners (see Note 9 to our consolidated financial statements).
As of December 31, 2023, the Company believes it is compliant with all provisions. As of December 31, 2023, there was $24.0 million in principal outstanding on the Corporate Credit Facility. For additional information regarding our Corporate Credit Facility, see Note 5 to our consolidated financial statements.
As of December 31, 2024, the Company believes it is compliant with all provisions of the Corporate Credit Facility. As of December 31, 2024, there was $0.0 million in principal outstanding on the Corporate Credit Facility. For additional information regarding our Corporate Credit Facility, see Note 5 to our consolidated financial statements.
For the years ended December 31, 2023 and 2022, the Company incurred advisory and administrative fees of $7.6 million and $7.5 million, respectively. NLMF Holdco, LLC The Company’s agreement with NLMF Holdco, LLC may result in additional funding requirements to cover future project costs. The maximum exposure of potential commitments is expected to be no more than $4.0 million.
For the years ended December 31, 2024 and 2023, the Company incurred advisory and administrative fees of $6.9 million and $7.6 million, respectively. NLMF Holdco, LLC The Company’s agreement with NLMF Holdco, LLC may result in additional funding requirements to cover future project costs. The maximum exposure of potential commitments is expected to be no more than $4.0 million.
We used SOFR as of December 31, 2023 to calculate interest expense due by period on our floating rate debt and net interest expense due by period on our interest rate swaps.
We used SOFR as of December 31, 2024 to calculate interest expense due by period on our floating rate debt and net interest expense due by period on our interest rate swaps.
As of December 31, 2023, interest rate cap agreements covered $1.3 billion of our $1.5 billion of floating rate mortgage debt outstanding, which effectively cap SOFR on $1.3 billion of our floating rate mortgage debt at a weighted average rate of 5.90%. LIBOR ceased publication on June 30, 2023.
As of December 31, 2024, interest rate cap agreements covered $1.3 billion of our $1.5 billion of floating rate mortgage debt outstanding, which effectively cap SOFR on $1.3 billion of our floating rate mortgage debt at a weighted average rate of 6.31%. LIBOR ceased publication on June 30, 2023.
On October 24, 2022, the Company exercised its option to extend the Corporate Credit Facility with respect to the revolving commitments for a single one-year term resulting in a maturity date of June 30, 2025. As of December 31, 2023, there was $326.0 million available for borrowing under the Corporate Credit Facility.
On October 24, 2022, the Company exercised its option to extend the Corporate Credit Facility with respect to the revolving commitments for a single one-year term resulting in a maturity date of June 30, 2025. As of December 31, 2024, there was $350.0 million available for borrowing under the Corporate Credit Facility.
We expect that these actions will provide faster, more reliable and lower cost internet to our residents. As of December 31, 2023, the Company has funded approximately $0.3 million to NLMF Holdco, LLC which is included in prepaid and other assets on the consolidated balance sheet of the Company.
We expect that these actions will provide faster, more reliable and lower cost internet to our residents. As of December 31, 2024, the Company has funded approximately $0.7 million to NLMF Holdco, LLC which is included in prepaid and other assets on the consolidated balance sheet of the Company.
(3) For the years ended December 31, 2023 and 2022, excludes approximately $2,909,000 and $2,914,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.
(3) For the years ended December 31, 2024 and 2023, excludes approximately $3,746,000 and $2,909,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.
As of December 31, 2022, our 2022-2023 Same Store properties were approximately 94.1% leased with a weighted average monthly effective rent per occupied apartment unit of $1,508. For our 2022-2023 Same Store properties, we recorded the following operating results for the year ended December 31, 2023 as compared to the year ended December 31, 2022: Revenues Rental income .
As of December 31, 2023, our 2022-2024 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,509. For our 2022-2024 Same Store properties, we recorded the following operating results for the year ended December 31, 2024 as compared to the year ended December 31, 2023: Revenues Rental income .
The interest rate swap agreements involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of December 31, 2023, interest rate swap agreements effectively covered 77% of our $1.5 billion of floating rate mortgage debt outstanding.
The interest rate swap agreements involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of December 31, 2024, interest rate swap agreements effectively covered 73% of our $1.5 billion of floating rate mortgage debt outstanding.
Corporate general and administrative expenses are eliminated because they do not reflect continuing operating costs of the property owner.
Advisory and administrative fees and corporate general and administrative expenses are eliminated because they do not reflect continuing operating costs of the property owner.
We believe AFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.
We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.
The change in our AFFO between the periods primarily relates to a decrease in Core FFO of $8.3 million partially offset by an increase in equity-based compensation expense of $1.4 million.
The change in our AFFO between the periods primarily relates to a decrease in Core FFO of $3.5 million partially offset by an increase in equity-based compensation expense of $1.3 million.
During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.0682%, on a weighted average basis, on the notional amounts, while the Counterparties are obligated to make monthly floating rate payments based on Adjusted SOFR to us referencing the same notional amounts.
During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 0.98%, on a weighted average basis, on the notional amounts, while the Counterparties are obligated to make monthly floating rate payments based on Adjusted SOFR to us referencing the same notional amounts.
We intend to employ targeted management and a value-add program at a majority of our properties in an attempt to improve rental rates and the net operating income (“NOI”) at our properties and achieve long-term capital appreciation for our stockholders. We are externally managed by the Adviser through the Advisory Agreement, by and among the OP, the Adviser and us.
We intend to employ targeted management and a value-add program at a majority of our properties in an attempt to improve rental rates and the NOI at our properties and achieve long-term capital appreciation for our stockholders. We are externally managed by the Adviser through the Advisory Agreement, by and among the OP, the Adviser and us.
For the years 50 ended December 31, 2023 and 2022, our Adviser elected to voluntarily waive advisory and administrative fees of approximately $21.7 million and $21.0 million and are considered permanently waived. Our Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion.
For the years ended December 31, 2024 and 2023, our Adviser elected to voluntarily waive advisory and administrative fees of approximately $21.3 million and $21.7 million and are considered permanently waived. Our Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion.
Interest Rate Swap Agreements In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into six interest rate swap transactions with KeyBank and four with Truist Bank (collectively the “Counterparties”) with a combined notional amount of $1.2 billion which are effective as of December 31, 2023.
Interest Rate Swap Agreements In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into five interest rate swap transactions with KeyBank and three with Truist Bank (collectively the “Counterparties”) with a combined notional amount of $1.1 billion which are effective as of December 31, 2024.
Insurance includes the cost of commercial, general liability, and other needed insurance for each property. Property management fees. Property management fees include fees paid to BH, our property manager, or other third party management companies for managing each property (see Note 9 to our consolidated financial statements). Advisory and administrative fees.
Insurance includes the cost of commercial, general liability, and other needed insurance for each property. Property management fees. Property management fees include fees paid to BH, our property manager, for managing each property (see Note 9 to our consolidated financial statements). Advisory and administrative fees.
For purposes of calculating the adjusted weighted average interest rate of our mortgage debt outstanding, we have included the weighted average fixed rate of 1.0682% for Adjusted SOFR on our combined $1.2 billion notional amount of interest rate swap agreements, which effectively fix the interest rate on $1.2 billion of our floating rate mortgage debt.
For purposes of calculating the adjusted weighted average interest rate of our mortgage debt outstanding, we have included the weighted average fixed rate of 0.98% for Adjusted SOFR on our combined $1.1 billion notional amount of interest rate swap agreements, which effectively fix the interest rate on $1.1 billion of our floating rate mortgage debt.
Advisory and administrative fees may increase in future periods as we acquire additional properties, which will be classified as New Assets. Corporate general and administrative expenses. Corporate general and administrative expenses were $17.1 million for the year ended December 31, 2023 compared to $14.7 million for the year ended December 31, 2022, which was an increase of approximately $2.4 million.
Advisory and administrative fees may increase in future periods as we acquire additional properties, which will be classified as New Assets. Corporate general and administrative expenses. Corporate general and administrative expenses were $19.4 million for the year ended December 31, 2024 compared to $17.1 million for the year ended December 31, 2023, which was an increase of approximately $2.3 million.
Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the years ended December 31, 2023, 2022 and 2021.
Taxable income from certain non-REIT activities is managed through TRSs and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRSs for the years ended December 31, 2024, 2023 and 2022.
Miscellaneous income. Miscellaneous income was $1.2 million for the year ended December 31, 2023 compared to $1.3 million for the year ended December 31, 2022, which was a decrease of approximately $0.1 million. The decrease between the periods was primarily due to business interruption proceeds received from casualty events (see Note 4). 51 Gain on sales of real estate.
Miscellaneous income was $0.5 million for the year ended December 31, 2024 compared to $1.2 million for the year ended December 31, 2023, which was a decrease of approximately $0.7 million. The decrease between the periods was primarily due to business interruption proceeds received from casualty events (see Note 4). Gain on sales of real estate.
Property management fees were $6.8 million for the year ended December 31, 2023 compared to $6.3 million for the year ended December 31, 2022, which was an increase of approximately $0.5 million, or 7.7%. The majority of the increase is related to an increase in total revenues, which the fee is primarily based on. Property general and administrative expenses.
Property management fees were $7.3 million for the year ended December 31, 2024 compared to $7.1 million for the year ended December 31, 2023, which was an increase of approximately $0.2 million, or 1.8%. The majority of the increase is related to an increase in total revenues, which the fee is primarily based on. Property general and administrative expenses.
As of December 31, 2022, our 2021-2023 Same Store properties were approximately 94.1% leased with a weighted average monthly effective rent per occupied apartment unit of $1,520. For our 2021-2023 Same Store properties, we recorded the following operating results for the year ended December 31, 2023 as compared to the year ended December 31, 2022: Revenues Rental income .
As of December 31, 2023, our 2023-2024 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,516. For our 2023-2024 Same Store properties, we recorded the following operating results for the year ended December 31, 2024 as compared to the year ended December 31, 2023: Revenues Rental income .
(5) For the years ended December 31, 2023, 2022 and 2021, excludes approximately $1,082,000, $963,000 and $843,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees. 60 See reconciliation of net income (loss) to NOI above under “NOI and 2021-2023 Same Store NOI for the Years Ended December 31, 2023, 2022 and 2021.” 2021-2023 Same Store Results of Operations for the Years Ended December 31, 2023 and 2022 As of December 31, 2023, our 2021-2023 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,520.
(5) For the years ended December 31, 2024 and 2023, excludes approximately $252,000 and $792,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees. 59 See reconciliation of net income (loss) to NOI above under “NOI and 2022-2024 Same Store NOI for the Years Ended December 31, 2024 and 2023.” 2022-2024 Same Store Results of Operations for the Years Ended December 31, 2024 and 2023 As of December 31, 2024, our 2022-2024 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,483.
Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the years ended December 31, 2023, 2022 and 2021.
Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the years ended December 31, 2024, 2023 and 2022. The macroeconomic environment remains challenging.
(5) For the years ended December 31, 2023 and 2022, excludes approximately $792,000 and $686,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.
(3) For the years ended December 31, 2024 and 2023, excludes approximately $3,944,000 and $3,004,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.
Overview As of December 31, 2023, our portfolio consisted of 38 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 14,133 units of apartment space that was approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,502. Substantially all of our business is conducted through the OP.
Overview As of December 31, 2024, our Portfolio consisted of 35 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 12,984 units of apartment space that was approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,491. Substantially all of our business is conducted through the OP.
In many cases, we reserve cash at the closing of each acquisition to fund these planned capital expenditures and value-add improvements. As of December 31, 2023, we had approximately $2.9 million of renovation value-add reserves for our planned capital expenditures and other expenses to implement our value-add program, which will complete approximately 13,209 planned interior rehabs.
In many cases, we reserve cash at the closing of each acquisition to fund these planned capital expenditures and value-add improvements. As of December 31, 2024, we had approximately $3.2 million of renovation value-add reserves for our planned capital expenditures and other expenses to implement our value-add program, which will complete approximately 12,984 planned interior 69 rehabs.
Property management fees were $6.2 million for the year ended December 31, 2023 compared to $5.7 million for the year ended December 31, 2022, which was an increase of approximately $0.5 million, or 7.8%. The majority of the increase is related to an increase in total revenues, which the fee is primarily based on. Property general and administrative expenses.
Property management fees were $6.9 million for the year ended December 31, 2024 compared to $6.8 million for the year ended December 31, 2023, which was an increase of approximately $0.1 million. The majority of the increase is related to an increase in total revenues, which the fee is primarily based on. Property general and administrative expenses.
Net Operating Income for Our 2022-2023 Same Store and Non-Same Store Properties for the Years Ended December 31, 2023 and 2022 There are 33 properties encompassing 12,378 units of apartment space in our 2022-2023 Same Store properties.
Net Operating Income for Our 2022-2024 Same Store and Non-Same Store Properties for the Years Ended December 31, 2024 and 2023 There are 33 properties encompassing 12,386 units of apartment space in our same store pool for the years ended December 31, 2024, 2023 and 2022 (our “2022-2024 Same Store” properties).
Loans that transitioned from the London Inter-Bank Offered Rate ("LIBOR") to SOFR include a 0.11448% adjustment to SOFR for the all-in rate ("Adjusted SOFR"). As of December 31, 2023, our subsidiaries had aggregate mortgage debt outstanding to third parties of approximately $1.6 billion at a weighted average interest rate of 6.90% and an adjusted weighted average interest rate of 3.60%.
Loans that transitioned from the London Inter-Bank Offered Rate ("LIBOR") to SOFR include a 0.11448% adjustment to SOFR for the all-in rate ("Adjusted SOFR"). As of December 31, 2024, our subsidiaries had aggregate mortgage debt outstanding to third parties of approximately $1.5 billion at a weighted average interest rate of 5.56% and an adjusted weighted average interest rate of 2.96%.
The following table contains summary information regarding our outstanding interest rate swaps (dollars in thousands): Effective Date Termination Date Counterparty Notional Fixed Rate (1) June 1, 2019 June 1, 2024 KeyBank $ 50,000 2.002 % June 1, 2019 June 1, 2024 Truist 50,000 2.002 % September 1, 2019 September 1, 2026 KeyBank 100,000 1.462 % September 1, 2019 September 1, 2026 KeyBank 125,000 1.302 % January 3, 2020 September 1, 2026 KeyBank 92,500 1.609 % March 4, 2020 June 1, 2026 Truist 100,000 0.820 % June 1, 2021 September 1, 2026 KeyBank 200,000 0.845 % June 1, 2021 September 1, 2026 KeyBank 200,000 0.953 % March 1, 2022 March 1, 2025 Truist 145,000 0.573 % March 1, 2022 March 1, 2025 Truist 105,000 0.614 % $ 1,167,500 1.068 % (2) (1) The floating rate option for the interest rate swaps is Adjusted SOFR.
See Notes 5 and 6 for additional information. 67 The following table contains summary information regarding our outstanding interest rate swaps (dollars in thousands): Effective Date Termination Date Counterparty Notional Fixed Rate (1) September 1, 2019 September 1, 2026 KeyBank 100,000 1.462 % September 1, 2019 September 1, 2026 KeyBank 125,000 1.302 % January 3, 2020 September 1, 2026 KeyBank 92,500 1.609 % March 4, 2020 June 1, 2026 Truist 100,000 0.820 % June 1, 2021 September 1, 2026 KeyBank 200,000 0.845 % June 1, 2021 September 1, 2026 KeyBank 200,000 0.953 % March 1, 2022 March 1, 2025 Truist 145,000 0.573 % March 1, 2022 March 1, 2025 Truist 105,000 0.614 % $ 1,067,500 0.981 % (2) (1) The floating rate option for the interest rate swaps is Adjusted SOFR.
During the year ended December 31, 2023, net cash provided by operating activities was $96.6 million compared to net cash provided by operating activities of $79.1 million for the year ended December 31, 2022.
During the year ended December 31, 2024, net cash provided by operating activities was $73.6 million compared to net cash provided by operating activities of $96.6 million for the year ended December 31, 2023.
For the years ended December 31, 2023, 2022 and 2021, we completed full and partial interior rehabs on 2,073, 2,409 and 1,264 units, respectively.
For the years ended December 31, 2024, 2023 and 2022, we completed full and partial interior rehabs on 388, 2,073 and 2,409 units, respectively.
To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our “REIT taxable income,” as defined by the Code, to our stockholders.
To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income to our stockholders.
As of December 31, 2023, the interest rate swaps we have entered into effectively replace the floating interest rate (SOFR) with respect to $1.5 billion of our floating rate 68 mortgage debt outstanding with a weighted average fixed rate of 1.0682%.
As of December 31, 2024, the interest rate swaps we have entered into effectively replace the floating interest rate (SOFR) with respect to $1.1 billion of our floating rate mortgage debt outstanding with a weighted average fixed rate of 0.98%.
Property operating expenses were $57.8 million for the year ended December 31, 2023 compared to $58.2 million for the year ended December 31, 2022, which was a decrease of approximately $0.4 million. The decrease between the periods was primarily due to our acquisition and disposition activity in 2022 and 2023 and the timing of the transactions, as described above.
Property operating expenses were $56.6 million for the year ended December 31, 2024 compared to $57.8 million for the year ended December 31, 2023, which was a decrease of approximately $1.2 million. The decrease between the periods was primarily due to our disposition activity in 2023 and 2024 and the timing of the transactions, as described above.
The following table sets forth a summary of our capital expenditures related to our value-add program for the years ended December 31, 2023, 2022 and 2021 (in thousands): For the Year Ended December 31, Rehab Expenditures 2023 2022 2021 Interior (1) $ 25,504 $ 26,229 $ 11,278 Exterior and common area 11,730 9,957 7,773 Total rehab expenditures $ 37,234 $ 36,186 $ 19,051 (1) Includes total capital expenditures during the period on completed and in-progress interior rehabs.
The following table sets forth a summary of our capital expenditures related to our value-add program for the years ended December 31, 2024, 2023 and 2022 (in thousands): For the Year Ended December 31, Rehab Expenditures 2024 2023 2022 Interior (1) $ 4,760 $ 25,504 $ 26,229 Exterior and common area 2,202 11,730 9,957 Total rehab expenditures $ 6,962 $ 37,234 $ 36,186 (1) Includes total capital expenditures during the period on completed and in-progress interior rehabs.
For purposes of hedge accounting under FASB ASC 815, Derivatives and Hedging, we have designated these interest rate swaps as cash flow hedges of interest rate risk. See Notes 5 and 6 for additional information.
For purposes of hedge accounting under FASB ASC 815, Derivatives and Hedging, we have designated these interest rate swaps as cash flow hedges of interest rate risk.
The increase between the periods was primarily due to a $2.2 million increase in internet and tech income, partially offset by a decrease in cable income of $1.7 million and an increase in all other other income of approximately $0.8 million. Expenses Property operating expenses.
The increase between the periods was primarily due to a $0.1 million increase in internet and tech income, in addition to an increase in cable income of $0.2 million and an increase in all other income of approximately $0.1 million. Expenses Property operating expenses.
Real estate taxes and insurance costs were $30.7 million for the year ended December 31, 2023 compared to $29.4 million for the year ended December 31, 2022, which was an increase of approximately $1.3 million, or 4.4%. The majority of the increase is related to a $1.2 million increase in property tax expense. Property management fees.
Real estate taxes and insurance costs were $31.3 million for the year ended December 31, 2024 compared to $30.7 million for the year ended December 31, 2023, which was an increase of approximately $0.6 million. The majority of the increase is related to a $0.7 million increase in property insurance expense. Property management fees.
Liquidity and Capital Resources Our short-term cash requirements consist primarily of funds necessary to pay for debt maturities, operating expenses and other expenditures directly associated with our multifamily properties, including: • capital expenditures to continue our value-add program and to improve the quality and performance of our multifamily properties; • interest expense and scheduled principal payments on outstanding indebtedness (see “—Obligations and Commitments” below); • recurring maintenance necessary to maintain our multifamily properties; • distributions necessary to qualify for taxation as a REIT; • acquisition of additional properties; • advisory and administrative fees payable to our Adviser; • general and administrative expenses; • reimbursements to our Adviser; and • property management fees payable to BH. 64 We expect to meet our short-term cash requirements generally through net cash provided by operations and existing cash balances and any unused capacity on the Corporate Credit Facility.
Liquidity and Capital Resources Our short-term cash requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our multifamily properties, including: • capital expenditures to continue our value-add program and to improve the quality and performance of our multifamily properties; • interest expense and scheduled principal payments on outstanding indebtedness (see “—Obligations and Commitments” below); • recurring maintenance necessary to maintain our multifamily properties; • distributions necessary to qualify for taxation as a REIT; • acquisition of additional properties; • advisory and administrative fees payable to our Adviser; • general and administrative expenses; • reimbursements to our Adviser; and • property management fees payable to BH.
Property operating expenses were $44.4 million for the year ended December 31, 2023 compared to $42.0 million for the year ended December 31, 2022, which was an increase of approximately $2.3 million, or 5.6%. The majority of the increase is related to increases in maintenance and administrative salaries of $2.0 million. Real estate taxes and insurance.
Property operating expenses were $53.5 million for the year ended December 31, 2024 compared to $51.3 million for the year ended December 31, 2023, which was an increase of approximately $2.2 million, or 4.2%. The majority of the increase is related to increases in repairs and maintenance expenses of $1.6 million. Real estate taxes and insurance.
Property general and administrative expenses were $4.7 million for the year ended December 31, 2023 compared to $4.5 million for the year ended December 31, 2022, which was an increase of approximately $0.2 million, or 3.7%. The majority of the increase is related to a $0.2 million increase in computer software expense.
Property general and administrative expenses were $5.0 million for the year ended December 31, 2024 compared to $4.9 million for the year ended December 31, 2023, which was an increase of approximately $0.1 million, or 2.0%. The majority of the increase is related to a $0.1 million increase in education and training expense.
Property operating expenses were $49.2 million for the year ended December 31, 2023 compared to $46.4 million for the year ended December 31, 2022, which was an increase of approximately $2.8 million, or 6.1%. The majority of the increase is related to increases in maintenance and administrative salaries of $2.1 million. Real estate taxes and insurance.
Property operating expenses were $51.1 million for the year ended December 31, 2024 compared to $49.2 million for the year ended December 31, 2023, which was an increase of approximately $1.9 million, or 3.9%. The majority of the increase is related to increases in repairs and maintenance expenses of $1.4 million. Real estate taxes and insurance.
Debt, Derivatives and Hedging Activity Mortgage Debt Interest rates for mortgage debt is based on a reference rate plus an applicable margin, except for fixed rate mortgage debt. The reference rate used in our Portfolio is 30-Day Average Secured Overnight Financing Rate (“SOFR”).
Debt, Derivatives and Hedging Activity Mortgage Debt Interest rates for mortgage debt is based on a reference rate plus an applicable margin, except for fixed rate mortgage debt. The reference rate used in our Portfolio is SOFR.
Real estate taxes and insurance costs were $27.9 million for the year ended December 31, 2023 compared to $26.9 million for the year ended December 31, 2022, which was an increase of approximately $1.0 million, or 3.7%. The majority of the increase is related to a $1.0 million increase in property taxes. Property management fees.
Real estate taxes and insurance costs were $32.7 million for the year ended December 31, 2024 compared to $31.9 million for the year ended December 31, 2023, which was an increase of approximately $0.8 million, or 2.4%. The majority of the increase is related to a $0.7 million increase in insurance expense. Property management fees.
(4) For the years ended December 31, 2023 and 2022, excludes approximately $54,000 and $(2,136,000), respectively, of casualty-related expenses/(recoveries).
(4) For the years ended December 31, 2024 and 2023, excludes approximately $2,013,000 and ($2,268,000), respectively, of casualty-related expenses/(recoveries).
(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of December 31, 2023 and December 31, 2022, respectively, minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31, 2023 and December 31, 2022, respectively. 66 (2) Percent occupied is calculated as the number of units occupied as of December 31, 2023 and 2022, divided by the total number of units, expressed as a percentage.
(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of December 31, 2024 and December 31, 2023, respectively, minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31, 2024 and December 31, 2023, respectively.
Property general and administrative expenses were $9.5 million for the year ended December 31, 2023 compared to $9.3 million for the year ended December 31, 2022, which was an increase of approximately $0.2 million. The increase between the periods was primarily due to increases in apartment listing fees of $0.3 million. Depreciation and amortization.
Property general and administrative expenses were $9.2 million for the year ended December 31, 2024 compared to $9.5 million for the year ended December 31, 2023, which was a decrease of approximately $0.3 million. The decrease between the periods was primarily due to decreases in audit fees of $0.3 million. Depreciation and amortization.
Property management fees were $8.1 million for the year ended December 31, 2023 compared to $7.6 million for the year ended December 31, 2022, which was an increase of approximately $0.5 million. The increase between the periods was primarily due to an increase in total revenues, which the fee is primarily based on. Advisory and administrative fees.
The decrease between the periods was primarily due to a decrease in total revenues, which the fee is primarily based on. Advisory and administrative fees. Advisory and administrative fees were $6.9 million for the year ended December 31, 2024 compared to $7.6 million for the year ended December 31, 2023, which was a decrease of approximately $0.7 million.
The Advisory Agreement was renewed on February 26, 2024 for a one-year term. The Adviser is wholly owned by NexPoint Advisors, L.P. On March 4, 2020, the Company, the OP and the Adviser entered into separate equity distribution agreements with each the ATM Sales Agents, pursuant to the 2020 ATM Program. See Note 7 to our consolidated financial statements.
The Advisory Agreement was renewed on February 24, 2025 for a one-year term. The Adviser is wholly owned by NexPoint Advisors, L.P. On March 4, 2020, the Company, the OP and the Adviser entered into separate equity distribution agreements with each of the 2020 ATM Sales Agents, pursuant to the 2020 ATM Program (as defined below).
As of December 31, 2023, Adjusted SOFR was 5.459%. (2) Represents the weighted average fixed rate of the interest rate swaps.
As of December 31, 2024, Adjusted SOFR was 4.65%. (2) Represents the weighted average fixed rate of the interest rate swaps.
During the year ended December 31, 2023, net cash provided by investing activities was $51.9 million compared to net cash used in investing activities of $162.3 million for the year ended December 31, 2022.
During the year ended December 31, 2024, net cash provided by investing activities was $130.6 million compared to net cash provided by investing activities of $51.9 million for the year ended December 31, 2023.
During the year ended December 31, 2023, net cash used in financing activities was $155.0 million compared to net cash provided by financing activities of $46.3 million for the year ended December 31, 2022.
During the year ended December 31, 2024, net cash used in financing activities was $195.6 million compared to net cash used in financing activities of $155.0 million for the year ended December 31, 2023.
Real Estate Investments Statistics As of December 31, 2023, the Company was invested in a total of 38 multifamily properties, as listed below: Average Effective Monthly Rent Per Unit as of December 31,*(1) % Occupied as of December 31,*(2) Property Name Rentable Square Footage (in thousands)* Number of Units*(3) Date Acquired 2023 2022 2023 2022 Arbors on Forest Ridge 155 210 1/31/2014 $ 1,187 $ 1,180 94.3 % 92.4 % Cutter's Point 198 196 1/31/2014 1,442 1,497 93.9 % 93.9 % The Summit at Sabal Park 205 252 8/20/2014 1,460 1,503 95.2 % 94.0 % Courtney Cove 225 324 8/20/2014 1,327 1,490 95.4 % 94.4 % Radbourne Lake (4) 247 225 9/30/2014 1,450 1,385 95.6 % 93.3 % Sabal Palm at Lake Buena Vista 371 400 11/5/2014 1,753 1,786 94.5 % 95.5 % Cornerstone 318 430 1/15/2015 1,445 1,453 96.0 % 90.0 % The Preserve at Terrell Mill 692 752 2/6/2015 1,271 1,321 96.7 % 91.9 % Versailles 301 388 2/26/2015 1,262 1,261 92.3 % 93.0 % Seasons 704 Apartments 217 222 4/15/2015 1,828 1,837 96.4 % 94.1 % Madera Point 193 256 8/5/2015 1,312 1,345 94.9 % 95.7 % Venue at 8651 289 333 10/30/2015 1,175 1,182 91.0 % 91.6 % Parc500 266 217 7/27/2016 1,914 1,927 93.1 % 95.9 % The Venue on Camelback 256 415 10/11/2016 1,065 1,080 95.2 % 91.8 % Old Farm (4) 697 734 12/29/2016 1,322 1,326 93.9 % 95.2 % Stone Creek at Old Farm (4) 186 190 12/29/2016 1,299 1,343 94.7 % 93.2 % Rockledge Apartments 802 708 6/30/2017 1,557 1,550 95.5 % 92.7 % Atera Apartments 334 380 10/25/2017 1,476 1,524 96.3 % 96.1 % Versailles II 199 242 9/26/2018 1,181 1,252 90.6 % 95.0 % Brandywine I & II 414 632 9/26/2018 1,222 1,252 93.7 % 94.5 % Bella Vista 243 248 1/28/2019 1,774 1,791 96.4 % 98.0 % The Enclave 194 204 1/28/2019 1,820 1,851 94.6 % 96.6 % The Heritage 199 204 1/28/2019 1,698 1,653 96.6 % 95.1 % Summers Landing 139 196 6/7/2019 1,223 1,203 93.4 % 93.9 % Residences at Glenview Reserve 344 360 7/17/2019 1,307 1,233 95.3 % 95.8 % Residences at West Place 345 342 7/17/2019 1,559 1,586 92.1 % 93.0 % Avant at Pembroke Pines 1,442 1520 8/30/2019 2,150 2,106 95.6 % 95.1 % Arbors of Brentwood 325 346 9/10/2019 1,494 1,423 92.2 % 89.0 % Torreyana Apartments 309 316 11/22/2019 1,461 1,557 95.9 % 93.7 % Bloom 498 528 11/22/2019 1,298 1,315 94.9 % 89.8 % Bella Solara 271 320 11/22/2019 1,337 1,371 92.6 % 88.8 % Fairways at San Marcos 340 352 11/2/2020 1,580 1,576 94.9 % 93.5 % The Verandas at Lake Norman 241 264 6/30/2021 1,354 1,316 95.8 % 94.3 % Creekside at Matthews 263 240 6/30/2021 1,431 1,397 95.8 % 94.6 % Six Forks Station 360 323 9/10/2021 1,409 1,416 92.4 % 92.6 % High House at Cary 293 302 12/7/2021 1,464 1,636 95.0 % 95.4 % The Adair 328 232 4/1/2022 1,968 1,807 96.6 % 94.4 % Estates on Maryland 324 330 4/1/2022 1,435 1,459 95.2 % 92.7 % 13,023 14,133 * Information is unaudited.
The change in cash flows from financing activities was mainly due to increases in deferred financing cost paid, prepayment penalties on extinguished debt and repurchases of common stock of $6.4 million, $13.1 million and $14.6 million, respectively. 64 Real Estate Investments Statistics As of December 31, 2024, the Company was invested in a total of 35 multifamily properties, as listed below: Average Effective Monthly Rent Per Unit as of December 31,*(1) % Occupied as of December 31,*(2) Property Name Rentable Square Footage (in thousands)* Number of Units*(3) Date Acquired 2024 2023 2024 2023 Arbors on Forest Ridge 155 210 1/31/2014 $ 1,121 $ 1,187 98.6 % 94.3 % Cutter's Point 198 196 1/31/2014 1,370 1,442 98.5 % 93.9 % The Summit at Sabal Park 205 252 8/20/2014 1,370 1,460 94.4 % 95.2 % Courtney Cove 225 324 8/20/2014 1,249 1,327 92.9 % 95.4 % Sabal Palm at Lake Buena Vista 371 400 11/5/2014 1,671 1,753 94.0 % 94.5 % Cornerstone 318 430 1/15/2015 1,435 1,445 94.4 % 96.0 % The Preserve at Terrell Mill 692 752 2/6/2015 1,282 1,271 94.3 % 96.7 % Versailles 301 388 2/26/2015 1,130 1,262 96.1 % 92.3 % Seasons 704 Apartments 217 222 4/15/2015 1,818 1,828 95.0 % 96.4 % Madera Point 193 256 8/5/2015 1,311 1,312 93.8 % 94.9 % Venue at 8651 289 333 10/30/2015 1,160 1,175 95.5 % 91.0 % Parc500 266 217 7/27/2016 1,879 1,914 96.3 % 93.1 % The Venue on Camelback 256 415 10/11/2016 981 1,065 92.8 % 95.2 % Rockledge Apartments 802 708 6/30/2017 1,488 1,557 94.3 % 95.5 % Atera Apartments 334 380 10/25/2017 1,487 1,476 95.0 % 96.3 % Versailles II 199 242 9/26/2018 1,064 1,181 96.7 % 90.6 % Brandywine I & II 414 632 9/26/2018 1,204 1,222 94.6 % 93.7 % Bella Vista 243 248 1/28/2019 1,712 1,774 89.9 % 96.4 % The Enclave 194 204 1/28/2019 1,782 1,820 93.6 % 94.6 % The Heritage 199 204 1/28/2019 1,676 1,698 94.6 % 96.6 % Summers Landing 139 196 6/7/2019 1,198 1,223 95.4 % 93.4 % Residences at Glenview Reserve 344 360 7/17/2019 1,248 1,307 95.3 % 95.3 % Residences at West Place 345 342 7/17/2019 1,586 1,559 95.0 % 92.1 % Avant at Pembroke Pines 1,442 1520 8/30/2019 2,199 2,150 95.3 % 95.6 % Arbors of Brentwood 325 346 9/10/2019 1,458 1,494 93.1 % 92.2 % Torreyana Apartments 309 316 11/22/2019 1,444 1,461 95.9 % 95.9 % Bloom 498 528 11/22/2019 1,276 1,298 94.7 % 94.9 % Bella Solara 271 320 11/22/2019 1,328 1,337 93.1 % 92.6 % Fairways at San Marcos 340 352 11/2/2020 1,574 1,580 95.7 % 94.9 % The Verandas at Lake Norman 241 264 6/30/2021 1,343 1,354 98.1 % 95.8 % Creekside at Matthews 263 240 6/30/2021 1,423 1,431 95.8 % 95.8 % Six Forks Station 360 323 9/10/2021 1,359 1,409 93.2 % 92.4 % High House at Cary 293 302 12/7/2021 1,498 1,464 92.1 % 95.0 % The Adair 328 232 4/1/2022 1,995 1,968 91.4 % 96.6 % Estates on Maryland 324 330 4/1/2022 1,430 1,435 95.5 % 95.2 % 11,893 12,984 * Information is unaudited.
If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.
If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities. 70 We will make dividend payments based on our estimate of taxable earnings per share of common stock, but not earnings calculated pursuant to GAAP.
Rental income was $229.8 million for the year ended December 31, 2023 compared to $214.7 million for the year ended December 31, 2022, which was an increase of approximately $15.1 million, or 7.1%.
Rental income was $234.9 million for the year ended December 31, 2024 compared to $229.8 million for the year ended December 31, 2023, which was an increase of approximately $5.1 million, or 2.2%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed6 unchanged
Biggest changeWe also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and floating rates for our indebtedness. 73 In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into eleven interest rate swap transactions with the Counterparties with a combined notional amount of $1.2 billion.
Biggest changeIn order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into nine interest rate swap transactions with the Counterparties with a combined notional amount of $1.1 billion.
Until our interest rates reach the caps provided by our interest rate cap agreements, each quarter point change in SOFR would result in an approximate increase to annual interest expense costs on our floating rate indebtedness, reduced by any payments due from the Counterparties under the terms of the interest rate swap agreements we had entered into as of December 31, 2023, of the amounts illustrated in the table below for our indebtedness as of December 31, 2023 (dollars in thousands): Change in Interest Rates Annual Increase to Interest Expense 0.25% $ 930 0.50% 1,860 0.75% 2,790 1.00% 3,720 There is no assurance that we would realize such expense as such changes in interest rates could alter our liability positions or strategies in response to such changes.
Until our interest rates reach the caps provided by our interest rate cap agreements, each quarter point change in SOFR would result in an approximate increase to annual interest expense costs on our floating rate indebtedness, reduced by any payments due from the Counterparties under the terms of the interest rate swap agreements we had entered into as of December 31, 2024, of the amounts illustrated in the table below for our indebtedness as of December 31, 2024 (dollars in thousands): Change in Interest Rates Annual Increase to Interest Expense 0.25% $ 1,000 0.50% 2,000 0.75% 3,000 1.00% 4,000 There is no assurance that we would realize such expense as such changes in interest rates could alter our liability positions or strategies in response to such changes.
In order to minimize counterparty credit risk, we enter into and expect to enter into hedging arrangements only with major financial institutions that have high credit ratings. As of December 31, 2023, we had total indebtedness of $1.6 billion at a weighted average interest rate of 6.91%, of which $1.5 billion was debt with a floating interest rate.
In order to minimize counterparty credit risk, we enter into and expect to enter into hedging arrangements only with major financial institutions that have high credit ratings. As of December 31, 2024, we had total indebtedness of $1.5 billion at a weighted average interest rate of 5.56%, of which $1.5 billion was debt with a floating interest rate.
During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.0682%, on a weighted average basis, on the notional amounts, while the Counterparties are obligated to make monthly floating rate payments based on Adjusted SOFR to us referencing the same notional amounts.
During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 0.98%, on a weighted average basis, on the notional amounts, while the Counterparties are obligated to make monthly floating rate payments based on Adjusted SOFR to us referencing the same notional amounts.
For purposes of calculating the adjusted weighted average interest rate of the total indebtedness, we have included the weighted average fixed rate of 1.0682% for Adjusted SOFR on the $1.2 billion notional amount of interest rate swap agreements that we have entered into as of December 31, 2023, which effectively fix the interest rate on $1.2 billion of our floating rate mortgage debt outstanding.
For purposes of calculating the adjusted weighted average interest rate of the total indebtedness, we have included the weighted average fixed rate of 0.98% for Adjusted SOFR on the $1.1 billion notional amount of interest rate swap agreements that we have entered into as of December 31, 2024, which effectively fix the interest rate on $1.1 billion of our floating rate mortgage debt outstanding.
The interest rate swaps we have entered into effectively replace the floating interest rate (SOFR) with respect to that amount with a weighted average fixed rate of 1.0682%.
The interest rate swaps we have entered into effectively replace the floating interest rate (SOFR) with respect to that amount with a weighted average fixed rate of 0.98%.
As of December 31, 2023, the interest rate cap agreements we have entered into effectively cap SOFR on $1.3 billion of our floating rate mortgage debt at a weighted average rate of 5.90% for the term of the agreements, which is generally three to four years.
As of December 31, 2024, the interest rate cap agreements we have entered into effectively cap SOFR on $2.6 billion of our floating rate mortgage debt at a weighted average rate of 6.31% for the term of the agreements, which is generally three to four years.
The interest rate swap agreements we have entered into effectively fix the interest rate on 77% of our $1.5 billion of floating rate mortgage debt outstanding (see below). As of December 31, 2023, the adjusted weighted average interest rate of our total indebtedness was 3.59%.
The interest rate swap agreements we have entered into effectively fix the interest rate on 73% of our $1.5 billion of floating rate mortgage debt outstanding (see below). As of December 31, 2024, the adjusted weighted average interest rate of our total indebtedness was 2.90%.
Added
We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and floating rates for our indebtedness.

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