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NexPoint Residential Trust, Inc.

NexPoint Residential Trust, Inc.NXRTEarnings & Financial Report

NYSE · Financials · Real Estate Investment Trusts

NexPoint Residential Trust, Inc. is a publicly traded real estate investment trust focused on acquiring, renovating, and operating multifamily residential properties primarily across high-growth Sun Belt markets in the United States. Its portfolio consists mainly of affordable and mid-tier apartment communities, targeting steady rental income growth and long-term asset value appreciation for investors.

What changed in NexPoint Residential Trust, Inc.'s 10-K — 2024 vs 2025

Top changes in NexPoint Residential Trust, Inc.'s 2025 10-K

356 paragraphs added · 388 removed · 305 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

58 edited+8 added−28 removed86 unchanged
The ability of our Adviser to receive shares of our common stock as payment for all or a portion of the advisory and administrative fees due under the terms of our Advisory Agreement will be subject to the following limitations: (1) the ownership of shares of common stock by our Adviser may not violate the ownership limitations set forth in our charter, after giving effect to any exception from such ownership limitations that our Board may grant to our Adviser or its affiliates and (2) compliance with all applicable restrictions under the U.S. federal securities laws and the NYSE rules.
The ability of our Adviser to receive shares of our common stock as payment for all or a portion of the Fees due under the terms of our Advisory Agreement will be subject to the following limitations: (1) the ownership of shares of common stock by our Adviser may not violate the ownership limitations set forth in our charter, after giving effect to any exception from such ownership limitations that our Board may grant to our Adviser or its affiliates and (2) compliance with all applicable restrictions under the U.S. federal securities laws and the NYSE rules.
We will refinance properties during the term of a loan only under certain circumstances, such as when a decline in interest rates makes it beneficial to prepay an existing mortgage, an existing mortgage matures, the value of the property has increased significantly and we can obtain more attractive terms through refinancing the property, or an attractive investment becomes available and the proceeds from the refinancing can be used to purchase such investment.
We will refinance properties during the term of a loan only under certain circumstances, such as when a decline in interest rates makes it beneficial to prepay an existing mortgage, an existing mortgage matures, the value of the property has increased significantly and we can obtain more attractive 8 terms through refinancing the property, or an attractive investment becomes available and the proceeds from the refinancing can be used to purchase such investment.
The entities that own the properties are required to maintain property and liability insurance for each property, and its liability insurance policy must include BH as an “Additional Insured.” BH is required to maintain, at the entities’ expense, workers’ compensation insurance covering all employees of BH employed in, on, or about each property so as to provide statutory benefits required by state and federal laws.
The entities that own the properties are required to maintain property and liability insurance for each property, and its liability insurance policy must include BH as an “Additional Insured.” BH is required to maintain, at the entities’ expense, workers’ 14 compensation insurance covering all employees of BH employed in, on, or about each property so as to provide statutory benefits required by state and federal laws.
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.
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.
Such damages will be equal to the management fee earned by BH for the calendar month immediately 14 preceding the month in which the notice of termination is given, multiplied by the number of months and/or portions thereof remaining from the termination date until the end of the initial term or term year in which the termination occurred.
Such damages will be equal to the management fee earned by BH for the calendar month immediately preceding the month in which the notice of termination is given, multiplied by the number of months and/or portions thereof remaining from the termination date until the end of the initial term or term year in which the termination occurred.
Our Adviser may, at its discretion and at any time, waive its right to reimbursement for eligible out-of-pocket expenses paid on our behalf. Once waived, these expenses are considered permanently waived and become non-recoupable in the future. 12 Expense Cap.
Our Adviser may, at its discretion and at any time, waive its right to reimbursement for eligible out-of-pocket expenses paid on our behalf. Once waived, these expenses are considered permanently waived and become non-recoupable in the future. Expense Cap.
If a Management Agreement is terminated by the entity that owns the property for any reason, or if it is terminated by BH due to our default or due to the destruction, condemnation or taking by eminent domain of a property, the entity that owns the property will be required to pay damages to BH.
If a Management Agreement is terminated by the entity that owns the property for any reason, or by BH due to our default or due to the destruction, condemnation or taking by eminent domain of a property, the entity that owns the property will be required to pay damages to BH.
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.
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.
To the extent that payment of any fee in shares of our common stock would result in a violation of the ownership limits set forth in our charter (taking into account any applicable waiver or any restrictions imposed under the U.S. federal securities laws or NYSE rules), all or a portion of such fee payable to our Adviser will be payable in cash to the extent necessary to avoid such violation.
To the extent that payment of any Fees in shares of our common stock would result in a violation of the ownership limits set forth in our charter (taking into account any applicable waiver or any restrictions imposed under the U.S. federal securities laws or NYSE rules), all or a portion of such Fees payable to our Adviser will be payable in cash to the extent necessary to avoid such violation.
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, 2025, 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).
Adviser Operating Expenses do not include expenses for the advisory and administrative services provided under the Advisory Agreement. We will also reimburse our Adviser for any and all expenses (other than underwriters’ discounts) in connection with an offering, including, without limitation, legal, accounting, printing, mailing and filing fees and other documented offering expenses.
Adviser Operating Expenses do not include expenses for the advisory and administrative services provided under the Advisory Agreement. We will also reimburse our Adviser for any and all expenses (other than underwriters’ discounts) in connection with an offering, including, without limitation, legal, accounting, printing, mailing and filing fees and other documented offering expenses (“Offering Expenses”).
Advisory Fee . Our Advisory Agreement requires that we pay our Adviser an annual advisory fee of 1.00% of our Average Real Estate Assets.
Advisory Fee . Our Advisory Agreement requires that we pay our Adviser an annual advisory fee of 1.00% of our Average Real Estate Assets (the "Advisory Fee").
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.
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; 10 • 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, 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.
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.
As of December 31, 2025, 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.
The Company expects it will only have accounting employees while the Advisory Agreement is in effect. All of the Company’s investment decisions are made by the Adviser, subject to general oversight by the Adviser’s investment committee and the Company’s board of directors (the “Board”). The Adviser is wholly owned by the Sponsor.
The Company expects it will only have an accounting employee while the Advisory Agreement is in effect. All of the Company’s investment decisions are made by the Adviser, subject to general oversight by the Adviser’s investment committee and the Company’s board of directors (the “Board”). The Adviser is wholly owned by the Sponsor.
This cap is intended to limit the fees paid to our Adviser on the Contributed Assets following the Spin-Off to the fees that would have been paid by NHF to its adviser had the Spin-Off not occurred. The administrative fee on New Assets is not subject to this limitation but is subject to the expense cap described below.
This cap is intended to limit the fees paid to our Adviser on the Contributed Assets following the spin-off to the fees that would have been paid by our former parent to its adviser had the spin-off not occurred. The Administrative Fee on New Assets is not subject to this limitation but is subject to the expense cap described below.
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 Company is externally managed by the Adviser, through an agreement dated March 16, 2015, as amended, and renewed on February 23, 2026 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 Expense Cap also does not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation or other events outside our ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets.
The Expense Cap also does not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation or other events outside our ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of Real Estate Assets. 12 Term of the Advisory Agreement .
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.
We believe BH provides the following benefits: • manages approximately 92,000 multifamily units in 23 states and has managed multifamily communities for 33 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.
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.
Human Capital Disclosure As of December 31, 2025, we had one employee. 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.
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, 2025, we had reserved approximately $7.6 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.
The advisory fee is payable monthly in arrears in cash, unless our Adviser elects, in its sole discretion, to receive all or a portion of such fee in shares of our common stock, subject to the limitations set forth below under “—Limitations on Receiving Shares.” The number of shares issued to our Adviser as payment for the advisory fee will be equal to the dollar amount of the portion of such fee that is payable in shares divided by the volume-weighted average closing price of shares of our common stock for the ten trading days prior to the end of the month for which such fee will be paid, which we refer to as the fee VWAP.
The Administrative Fee is payable monthly in arrears in cash, unless our Adviser elects, in its sole discretion, to receive all or a portion of such fee in shares of our common stock, subject to the limitations set forth below under “—Limitations on Receiving Shares.” The number of shares issued to our Adviser as payment for the administrative fee will be equal to the dollar amount of the portion of such fee that is payable in shares divided by the VWAP of our common stock for the ten trading days prior to the end of the month for which such fee will be paid.
A copy of the computations made by our Adviser to calculate such installment is delivered to our Board for informational purposes only. Administrative Fee . Our Advisory Agreement requires that we pay our Adviser an annual administrative fee of 0.20% of the Average Real Estate Assets.
A copy of the computations made by our Adviser to calculate such installment is delivered to our Board for informational purposes only. Administrative Fee . Our Advisory Agreement requires that we pay our Adviser an annual administrative fee of 0.20% of the Average Real Estate Assets (the “Administrative Fee” and together with the Advisory Fee, the “Fees”).
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).
Our 2024-2025 Same Store properties exclude 21 down units in our Portfolio as of December 31, 2025 (see Note 4 to our consolidated financial statements).
Our Adviser believes that active management is critical to creating value. Prior to the purchase of a property, BH Management Services, LLC (“BH”) and our Adviser generally tour each property and develop a business strategy for the property. This includes a forecast of the action items to be taken and the capital needed to achieve the anticipated returns.
Prior to the purchase of a property, BH Management Services, LLC (“BH”) and our Adviser generally tour each property and develop a business strategy for the property. This includes a forecast of the action items to be taken and the capital needed to achieve the anticipated returns.
Our Adviser will be prohibited from taking any action, in its sole judgment, or in the sole judgment of our Board, that: • would adversely affect our qualification as a REIT under the Code, unless our Board had determined that REIT qualification is not in the best interest of us and our stockholders; • would subject us to regulation under the Investment Company Act of 1940 (the “1940 Act”), except to the extent that we and our Adviser have undertaken in the Advisory Agreement and our charter to comply with Section 15 of the 1940 Act in connection with the entry into, continuation of, or amendment of the Advisory Agreement or any advisory agreement; • is contrary to or inconsistent with our investment guidelines; or • would violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over us or our shares of common stock, or otherwise not be permitted by our charter or bylaws.
Our Adviser will be prohibited from taking any action, in its sole judgment, or in the sole judgment of our Board, that: • would adversely affect our qualification as a REIT under the Code, unless our Board had determined that REIT qualification is not in the best interest of us and our stockholders; • would subject us to regulation under the Investment Company Act of 1940 (the “1940 Act”); • is contrary to or inconsistent with our investment guidelines; or • would violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over us or our shares of common stock, or otherwise not be permitted by our charter or bylaws.
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.
Since inception, for the properties in our Portfolio as of December 31, 2025, we have completed full and partial renovations on 9,866 units at an average cost of $9,115 per renovated unit that has been leased as of December 31, 2025.
Our Advisory Agreement requires that we reimburse our Adviser for all of its out-of-pocket expenses in performing its services, including legal, accounting, financial, due diligence and other services performed by our Adviser that outside professionals or outside consultants would otherwise perform and also pay our pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of our Adviser required for our operations (“Adviser Operating Expenses”).
Our Advisory Agreement requires that we reimburse our Adviser for all of its out-of-pocket expenses in performing its services, including legal, accounting, financial, due diligence and other services performed by our Adviser that outside professionals or outside consultants would otherwise perform and also pay our pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of our Adviser required for our operations, and compensation expenses under the NexPoint Residential Trust, Inc. 2016 Long Term Incentive Plan (the “2016 LTIP”) (the foregoing expenses, collectively, “Adviser Operating Expenses”).
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.
We have achieved average rent growth of 13.5%, or a $158 average monthly rental increase per unit, on all units renovated and leased as of December 31, 2025, resulting in a return on investment on capital expended for interior renovations of 20.8%. • Dividends: We declared dividends totaling $53.8 million, or $2.06 per share for the year ended December 31, 2025.
“Real Estate Assets” is defined broadly in the Advisory Agreement to include, among other things, investments in real estate-related securities and mortgages and reserves for capital expenditures (the value-add program). 11 In calculating the advisory fee, we categorize our Average Real Estate Assets into either “Contributed Assets” or “New Assets.” The advisory fee on Contributed Assets may not exceed $4.5 million in any calendar year.
“Real Estate Assets” is defined broadly in the Advisory Agreement to include, among other things, investments in real estate-related securities and mortgages and reserves for capital expenditures (the value-add program). In calculating the Advisory Fee, we categorize our Average Real Estate Assets into either “Contributed Assets” or “New Assets” (each as defined below).
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.
Since inception, for the properties in our Portfolio as of December 31, 2025, we have completed full and partial renovations on 9,866 units out of our 13,305 total units with an average monthly rental increase per unit of $158 and an average cost of $9,115 per renovated unit that has been leased as of December 31, 2025.
We utilize BH for property and construction management services and leasing, paying BH a management fee of approximately 3% of the monthly gross income from each property managed, as well as construction supervision fees and certain other fees described under “—Property Management Agreements” below. 13 Property Management Agreements Under these agreements, BH operates, coordinates and supervises the ordinary and usual business and affairs pertaining to the operation, maintenance, leasing, licensing, and management of each property.
We utilize BH for property and construction management services and leasing, paying BH a management fee of approximately 3% of the monthly gross income from each property managed, as well as construction supervision fees and certain other fees described under “—Property Management Agreements” below.
Term of the Advisory Agreement . The Advisory Agreement has a one-year term. The Advisory Agreement shall continue in full force and effect so long as the Advisory Agreement is approved at least annually by our Board.
The Advisory Agreement has a one-year term. The Advisory Agreement shall continue in full force and effect so long as the Advisory Agreement is approved at least annually by our Board. On February 23, 2026, our Board, including the independent directors, unanimously approved the renewal of the Advisory Agreement with the Adviser for a one-year term.
The following summarizes the terms of the Management Agreements. Term . The terms of the Management Agreements will continue until the last day of the calendar month following the second anniversary of the Management Agreement. Upon the expiration of the original term, the Management Agreements will automatically renew on a month-to-month basis until terminated.
The terms of the Management Agreements will continue until the last day of the calendar month following the second anniversary of the Management Agreement. Upon the expiration of the original term, the Management Agreements will automatically 13 renew on a month-to-month basis until terminated. The Management Agreements may be terminated at any time with 60 days written notice.
As we progress through the real estate life cycle, these opportunities will become more difficult to find. However, we will continue to take a disciplined approach to acquisitions by primarily pursuing these types of opportunities. At times, we may acquire properties from affiliates, including from Delaware statutory trusts managed by affiliates of our Adviser (“Advised DSTs”).
As we progress through the real estate life cycle, these opportunities will become more difficult to find. However, we will continue to take a disciplined approach to acquisitions by primarily pursuing these types of opportunities.
(2) See Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” for a discussion regarding the non-GAAP measures of NOI, FFO, Core FFO and AFFO provided above, including reconciliations to net income in accordance with U.S. generally accepted accounting principles (“GAAP”).
(2) See Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” for a discussion regarding the non-GAAP measures of NOI, FFO, Core FFO and AFFO provided above, including reconciliations to net income in accordance with U.S. generally accepted accounting principles (“GAAP”). • Same Store Growth: There are 35 properties encompassing 12,963 units of apartment space in our same store pool for the years ended December 31, 2025 and 2024 (our “2024-2025 Same Store” properties).
The Management Agreements may be terminated at any time with 60 days written notice. Proposed Management Plans . Each Management Agreement requires that BH prepare and submit a proposed management plan and operating budget for the marketing, operation, repair and maintenance, and renovation of the property for the year the Management Agreement is entered into.
Proposed Management Plans . Each Management Agreement requires that BH prepare and submit a proposed management plan and operating budget for the marketing, operation, repair and maintenance, and renovation of the property for the year the Management Agreement is entered into. BH must submit subsequent proposed management plans 45 days prior to the beginning of the next year.
The administrative fee is payable monthly in arrears in cash, unless our Adviser elects, in its sole discretion, to receive all or a portion of such fee in shares of our common stock, subject to the limitations set forth below under “—Limitations on Receiving Shares.” The number of shares issued to our Adviser as payment for the administrative fee will be equal to the dollar amount of the portion of such fee that is payable in shares divided by the fee VWAP.
New Assets includes proceeds from the sale of a Contributed Asset that are used to purchase a new investment. 11 The Advisory Fee is payable monthly in arrears in cash, unless our Adviser elects, in its sole discretion, to receive all or a portion of such fee in shares of our common stock, subject to the limitations set forth below under “—Limitations on Receiving Shares.” The number of shares issued to our Adviser as payment for the Advisory Fee will be equal to the dollar amount of the portion of such fee that is payable in shares divided by the volume-weighted average closing price (“VWAP”) of shares of our common stock for the ten trading days prior to the end of the month for which such fee will be paid.
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.
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.
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 .
The members of our Adviser’s management team are James Dondero, Paul Richards, 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 .
Reimbursement of Adviser Operating Expenses under the Advisory Agreement, advisory and administrative fees paid to our Adviser and corporate general and administrative expenses such as audit, legal, listing and Board fees and equity-based compensation expense recognized under a long-term incentive plan will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect) (the “Expense Cap”).
Reimbursement of Adviser Operating Expenses under the Advisory Agreement and Fees paid to our Adviser will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect) (the “Expense Cap”). The Expense Cap does not limit the reimbursement by us of Offering Expenses paid by our Adviser.
This cap is intended to limit the fees paid to our Adviser on the Contributed Assets following our Spin-Off (the "Spin-Off") to the fees that would have been paid by NHF to its adviser had the Spin-Off not occurred. The advisory fee on New Assets is not subject to this limitation but is subject to the expense cap mentioned below.
The Advisory Fee on Contributed Assets may not exceed $4.5 million in any calendar year. This cap is intended to limit the fees paid to our Adviser on the Contributed Assets following our spin-off to the fees that would have been paid by our former parent to its adviser had the spin-off not occurred.
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 fourth quarter dividend equates to a 7.0% annualized yield based on our closing share price of $30.10 on December 31, 2025. • 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, 2025 as compared to the year ended December 31, 2024 (dollars in thousands): For the Year Ended December 31, 2025 2024 $ Change % Change Net income (loss) $ (32,154 ) $ 1,114 $ (33,268 ) (1) -2986.4 % NOI (2) 151,737 157,035 (5,298 ) -3.4 % FFO attributable to common stockholders (2) 63,347 44,454 18,893 42.5 % Core FFO attributable to common stockholders (2) 71,293 73,130 (1,837 ) -2.5 % AFFO attributable to common stockholders (2) 81,137 83,631 (2,494 ) -3.0 % (1) The change in our net income (loss) between the periods primarily relates to decreases in gain on sales of real estate and rental income of $54.2 million and $8.2 million, respectively, partially offset by a decrease in loss on extinguishment of debt and modification costs of $24.0 million.
For 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.
For our 2024-2025 Same Store properties, we recorded the following operating metrics for the year ended December 31, 2025 as compared to the year ended December 31, 2024: Operating Metric 2025 2024 % Change Occupancy (1) 92.7 % 94.7 % -2.0 % Average Effective Monthly Rent Per Unit (2) $ 1,489 $ 1,491 -0.1 % Rental income (in thousands) $ 243,489 $ 246,688 -1.3 % Other income (in thousands) $ 5,876 $ 5,320 10.5 % NOI (in thousands) $ 151,591 $ 154,050 -1.6 % (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.
“Contributed Assets” means all of the real estate assets we owned upon the completion of the Spin-Off and is not reduced for dispositions of such assets subsequent to the Spin-Off. “New Assets” means all of the Average Real Estate Assets other than Contributed Assets.
The Advisory Fee on New Assets is not subject to this limitation but is subject to the expense cap mentioned below. “Contributed Assets” means all of the Real Estate Assets we owned upon the completion of the spin-off and is not reduced for dispositions of such assets subsequent to the spin-off.
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.
As of December 31, 2025, the Company, through the OP and the wholly owned TRS, owned 36 properties representing 13,305 units in seven states, as further described under Item 2, “Properties” and Notes 3 and 4 to our consolidated financial statements. 2025 Highlights Key highlights and transactions completed in 2025 include the following: • JPM Facility: We entered into a $200.0 million revolving credit facility with J.P.
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.
During the fourth quarter of 2025, we increased our quarterly dividend for the eighth time since our listing on the New York Stock Exchange (the "NYSE") to $0.53 per share, which was an increase of $0.02 per share, or a 3.9% increase, over our previous quarterly dividends declared in 2025.
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.
The increase in our quarterly dividend to $0.53 per share is an increase of $0.32 per share, or a 157.3% increase, over our quarterly dividends declared since our listing on the NYSE.
Any sums not paid within 10 days after becoming due bear interest at the rate of 18% per annum. Compensation under the Management Agreements consists of the following components: • Management Fee . The management fee is approximately 3% of the monthly gross income from each property.
Compensation under the Management Agreements consists of the following components: • Management Fee . The management fee is approximately 3% of the monthly gross income from each property.
We view our real estate assets as one industry segment and, accordingly, our properties are aggregated into one reportable segment.
For additional information regarding our Portfolio, see Item 2, “Properties” and Notes 3 and 4 to our consolidated financial statements. We view our real estate assets as one industry segment and, accordingly, our properties are aggregated into one reportable segment.
BH must submit subsequent proposed management plans 45 days prior to the beginning of the next year. Amounts Payable under the Management Agreements . The entities that own the properties pay BH monthly for its services. Pursuant to the Management Agreements, BH may pay itself out of each property’s operating account.
Amounts Payable under the Management Agreements . The entities that own the properties pay BH monthly for its services. Pursuant to the Management Agreements, BH may pay itself out of each property’s operating account. Any sums not paid within 10 days after becoming due bear interest at the rate of 18% per annum.
See “Risk Factors—We may face high costs associated with the investigation or remediation of environmental contamination, including asbestos, lead-based paint, chemical vapor, subsurface contamination and mold growth.” Insurance We carry comprehensive general liability coverage on the properties in our Portfolio, with limits of liability customary within the industry to insure against liability claims and related defense costs.
Risk Factors” for additional discussion of environmental-related risks. 15 Insurance We carry comprehensive general liability coverage on the properties in our Portfolio, with limits of liability customary within the industry to insure against liability claims and related defense costs.
In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants or others if property damage or personal injury occurs. We are not presently aware of any material adverse indoor air quality issues at our properties.
Significant mold or other indoor air contaminants could require costly remediation, increased ventilation, or lead to third-party claims. We are not presently aware of any material adverse indoor air quality issues at our properties.
Environmental Matters Under various federal, state and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in, under, or migrating from such property, including costs to investigate and clean up such contamination and liability for natural resources.
Environmental Matters Under various federal, state and local environmental laws and health and safety requirements, we may be liable, without regard to fault and on a joint and several basis, for costs and damages, including fines and penalties, resulting from toxic or hazardous substances or waste or petroleum products at, on, under or migrating from our properties.
We believe we have adequate cash on hand, in addition to our expected cash flows from operations, to meet our near-term obligations, service our debt, pay distributions and make opportunistic acquisitions.
We believe we have adequate cash on hand, in addition to our expected cash flows from operations, to meet our near-term obligations, service our debt, pay distributions and make opportunistic acquisitions. 6 Our Real Estate Portfolio As of December 31, 2025, we owned 36 properties representing 13,305 units that we lease in seven states that were approximately 92.7% occupied with a weighted average monthly effective rent per occupied apartment unit of $1,492.
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.
(2) Average effective monthly rent per unit is equal to 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. • Cash Position: At December 31, 2025, we had $45.2 million of cash on our balance sheet, of which $7.6 million was reserved for future renovations, and $23.8 million was reserved for lender-required escrows and security deposits.
(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.
Details of the acquisition are in the table below (in thousands): Property Name Location Date of Acquisition Purchase Price # Units Effective Ownership Sedona at Lone Mountain Las Vegas, Nevada December 11, 2025 $ 73,250 321 100 % 5 • Renovations: For the properties in our Portfolio as of December 31, 2025, we completed full and partial renovations on 1,518 units at an average cost of $3,920 per renovated unit.
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.
Independent environmental consultants have conducted Phase I environmental site assessments of all of our properties using the applicable American Society for Testing and Materials Standard E 1527. While no material issues have been identified, Phase I assessments are limited in scope and conditions may not have been identified or may arise later, and future laws could impose additional obligations.
Removed
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.
Added
Morgan Chase Bank. The credit facility will mature on June 30, 2028. As of December 31, 2025, the Company had $108.0 million available for borrowing under the credit facility, $90.0 million drawn under the credit facility and a $2.0 million letter of credit outstanding. • Acquisition: We acquired one property totaling 321 units in 2025.
Removed
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.
Added
At times, we may acquire properties from affiliates, including from Delaware statutory trusts managed by affiliates of our Adviser. 7 Our Adviser’s investment approach includes active management of each property acquired. Our Adviser believes that active management is critical to creating value.
Removed
(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).
Added
“New Assets” means all of the Average Real Estate Assets other than Contributed Assets.
Removed
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.
Added
Property Management Agreements Under the Management Agreements, BH operates, coordinates and supervises the ordinary and usual business and affairs pertaining to the operation, maintenance, leasing, licensing, and management of each property. The following summarizes the terms of the Management Agreements. Term .
Removed
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”).
Added
Such liabilities could be substantial, exceed property value, and impair our ability to sell, lease, finance, renovate or demolish properties. Environmental regulations also may lead to governmental liens or restrict the manner in which property may be used.
Removed
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.
Added
Our leases generally require tenants to comply with environmental laws and to indemnify us for losses arising from their activities, although tenant financial distress could limit recovery. Environmental laws and health and safety requirements also govern asbestos- and lead-containing building materials and other airborne contaminants.
Removed
Affiliates of our Adviser own less than 2% of the Adair trust units and less than 1% of the Estates trust units and participated in the sales on the same terms as other holders.
Added
Based on information currently known, we do not believe environmental, health, and safety compliance has adversely affected, or is reasonably expected to adversely affect, our business and we do not currently anticipate material capital expenditures for environmental, health, and safety compliance. See “Item 1A.
Removed
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.
Added
From time to time, we may use our website as a distribution channel for material company information.
Removed
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.
Removed
New Assets includes proceeds from the sale of a Contributed Asset that are used to purchase a new investment.
Removed
The Expense Cap does not limit the reimbursement by us of expenses related to securities offerings paid by our Adviser.
Removed
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.
Removed
Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several. These liabilities could be substantial and the cost of any required remediation, removal, fines, or other costs could exceed the value of the property and/or our aggregate assets.
Removed
In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or personal or property damage or materially adversely affect our ability to sell, lease 15 or develop our properties or to borrow using the properties as collateral.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

95 edited+31 added−8 removed326 unchanged
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.
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; • 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; 17 • 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; • 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.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have subject matter jurisdiction, any state court located within the state of Maryland, or, if all such state courts do not have subject matter jurisdiction, the United States District Court for the District of Maryland will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, or any successor provision thereof, (b) any derivative action or proceeding brought on behalf of the Corporation, (c) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Company to the Company or to the stockholders of the Company, (d) any action asserting a claim against the Company or any director or officer or other employee of the Company arising pursuant to any provision of the MGCL, the Charter or the Bylaws, (e) any action or proceeding to interpret, apply, enforce or determine the validity of the Charter or the Bylaws of the Company (including any right, obligation, or remedy thereunder), (f) any action or proceeding as to which the MGCL confers jurisdiction on the Circuit Court for Baltimore City, Maryland, or (g) any action asserting a claim against the Company or any director or officer or other employee of the Company that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants, except that the foregoing does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have subject matter jurisdiction, any state court located within the state of Maryland, or, if all such state courts do not have subject matter jurisdiction, the United States District Court for the District of Maryland will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, or any successor provision thereof, (b) any derivative action or proceeding brought on behalf of the Corporation, (c) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Company to the Company or to the stockholders of the Company, (d) any action asserting a claim against the Company or any director or officer or other employee of the Company arising pursuant to any provision of the MGCL, the Charter or the Bylaws, (e) any action or proceeding to interpret, apply, enforce or determine the validity of the Charter 39 or the Bylaws of the Company (including any right, obligation, or remedy thereunder), (f) any action or proceeding as to which the MGCL confers jurisdiction on the Circuit Court for Baltimore City, Maryland, or (g) any action asserting a claim against the Company or any director or officer or other employee of the Company that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants, except that the foregoing does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
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.
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; 36 • 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.
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.
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 asset dispositions 33 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.
Under various federal, state and local environmental and public health laws, regulations and ordinances, we may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at our properties (including in some cases natural substances such as methane and radon gas) and may be held liable under these laws or 25 common law to a governmental entity or to third parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the contamination.
Under various federal, state and local environmental and public health laws, regulations and ordinances, we may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at our properties (including in some cases natural substances such as methane and radon gas) and may be held liable under these laws or common law to a governmental entity or to third parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the contamination.
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.
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; 26 • 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.
Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets or to offset certain other positions, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests.
Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets or to offset certain other positions, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of both of the 75% or 95% gross income tests.
Joint venture investments involve risks, including: the possibility that joint venture partners might refuse to make capital contributions when due; that we may be responsible to joint venture partners for indemnifiable losses; that joint venture partners might at any time have business or economic goals which are inconsistent with ours; and that joint venture partners may be in a position to take action or withhold consent contrary to our recommendations, instructions or requests.
Joint venture investments involve risks, including: the possibility that joint venture partners might refuse to make capital contributions when due; that we may be responsible to joint venture partners for indemnifiable losses; that joint venture partners might at any time have business or economic goals which are inconsistent with ours; and that joint venture partners may be in a position to take action or 23 withhold consent contrary to our recommendations, instructions or requests.
Unknown liabilities might include liabilities for, among other things, cleanup or remediation of undisclosed environmental conditions, liabilities under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), claims of residents, vendors or other persons dealing with the entities prior to the acquisition of such property, tax liabilities, and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise.
Unknown liabilities might include liabilities for, among other things, cleanup or remediation of undisclosed environmental conditions, liabilities under the Employee Retirement Income Security Act of 1974, as amended, claims of residents, vendors or other persons dealing with the entities prior to the acquisition of such property, tax liabilities, and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise.
In addition, certain U.S. stockholders may be subject to a 3.8% Medicare tax on dividends payable by REITs. Tax rates could be changed in future legislation. The share ownership restrictions of the Code for REITs and the 6.2% share ownership limit in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.
In addition, certain U.S. stockholders may be subject to a 3.8% Medicare tax on dividends payable by REITs. Tax rates could be changed in future legislation. 34 The share ownership restrictions of the Code for REITs and the 6.2% share ownership limit in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.
These assessments, together with subsurface assessments conducted on some properties, have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. However, such environmental assessments may not identify all potential environmental liabilities.
These assessments, together with subsurface assessments conducted on some properties, 24 have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. However, such environmental assessments may not identify all potential environmental liabilities.
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.
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.
The SEC, Financial Accounting Standards Board (“FASB”) and other regulatory bodies that establish the accounting rules applicable to us have proposed or enacted a wide array of changes to accounting rules over the last several years. Moreover, in the future, these regulators may propose additional changes that we do not currently anticipate.
The SEC, Financial Accounting Standards Board (“FASB”) and other regulatory bodies that establish the accounting rules applicable to us have proposed or enacted a wide array of changes to accounting rules over the last several years. Moreover, in the 41 future, these regulators may propose additional changes that we do not currently anticipate.
While the Company has taken steps to prepare for a potential downturn in the economy, should a recession occur there can be no guaranty that the Company’s efforts will prevent any negative impacts to the value of the Company’s investments. We are subject to risks inherent in ownership of real estate.
While the Company has taken steps to prepare for a potential downturn in the economy, should a recession occur there can be no guaranty that the Company’s efforts will prevent any negative impacts to the value of the Company’s investments. 19 We are subject to risks inherent in ownership of real estate.
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.
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.
In addition, although our Adviser maintains insurance coverage that may cover certain aspects of our cyber and information security risks, such insurance coverage may be insufficient to cover all losses, such as litigation costs or financial losses that exceed policy limits or are not covered under any of our Adviser’s current insurance policies.
In addition, although our Adviser maintains insurance coverage that may cover certain aspects of our cyber and information security 40 risks, such insurance coverage may be insufficient to cover all losses, such as litigation costs or financial losses that exceed policy limits or are not covered under any of our Adviser’s current insurance policies.
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.
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.
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.
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.
We expect that our Adviser will evaluate, negotiate, structure, close and monitor our investments in accordance with the terms of the Advisory Agreement. We also depend upon the senior professionals of our Adviser and our property manager to maintain relationships with sources of potential investments, and we rely upon these relationships to provide us with potential investment opportunities.
We expect that our Adviser will evaluate, negotiate, structure, close and monitor our investments in accordance with the terms of the Advisory Agreement. 28 We also depend upon the senior professionals of our Adviser and our property manager to maintain relationships with sources of potential investments, and we rely upon these relationships to provide us with potential investment opportunities.
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.
Although our OP’s partnership units are not traded on an established securities market, the OP’s units 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.
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.
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. Our business could be harmed if we are unable to effectively integrate and use artificial intelligence.
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.
We cannot assure you, however, that the IRS will not challenge the status of our OP or any other subsidiary 31 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.
Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our business, financial condition or results of operations, and could, in turn, impact the trading price of our capital stock.
Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem 16 immaterial, could materially and adversely affect our business, financial condition or results of operations, and could, in turn, impact the trading price of our capital stock.
We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. 22 We are subject to certain risks associated with selling apartment communities, which could limit our operational and financial flexibility.
We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. We are subject to certain risks associated with selling apartment communities, which could limit our operational and financial flexibility.
As part of our due diligence procedures in connection with the acquisition of a property, we typically conduct an investigation of the 23 property’s compliance with known laws and regulatory requirements with which we must comply once we acquire a property, including a review of compliance with the ADA and local zoning regulations.
As part of our due diligence procedures in connection with the acquisition of a property, we typically conduct an investigation of the property’s compliance with known laws and regulatory requirements with which we must comply once we acquire a property, including a review of compliance with the ADA and local zoning regulations.
We may fail to consummate future property acquisitions, and we may not be able to find suitable alternative investment opportunities. When acquiring properties in the future, we may be subject to various closing conditions, and there can be no assurance that we can satisfy these conditions or that the acquisitions will close.
We may fail to consummate future property acquisitions, and we may not be able to find suitable alternative investment opportunities. 21 When acquiring properties in the future, we may be subject to various closing conditions, and there can be no assurance that we can satisfy these conditions or that the acquisitions will close.
To the extent that the new government administration takes action by proposing and/or passing regulatory policies that could have a negative impact on our industry, such actions may have a material adverse effect on our business, results of operations, liquidity and financial condition.
To the extent that the government administration takes action by proposing and/or passing regulatory policies that could have a negative impact on our industry, such actions may have a material adverse effect on our business, results of operations, liquidity and financial condition.
If an uninsured loss or liability were to occur, whether because of a lack of insurance coverage or a loss in excess of insured limits, we could lose our capital invested in a community, as well as the anticipated future revenues from such community.
If an uninsured loss or liability were to occur, whether because of a lack of insurance coverage or a loss in excess of insured limits, we could lose our capital invested in a community, as well as the anticipated future revenues from such 22 community.
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.
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.
Our charter also prohibits any person from owning shares of our stock that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT.
Our charter also prohibits any person from owning shares of our stock that would result in our being “closely held” under Section 38 856(h) of the Code or otherwise cause us to fail to qualify as a REIT.
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.
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.
If we determine it to be in our best interest to own a substantial number of our properties through one or more TRSs, then it is possible that the IRS may conclude that the value of our interests in our TRSs exceeds 20% of the value of our total assets at the end of any calendar quarter and therefore cause us to fail to qualify as a REIT.
If we determine it to be in our best interest to own a substantial number of our properties through one or more TRSs, then it is possible that the IRS may conclude that the value of our interests in our TRSs exceeds 25% of the value of our total assets at the end of any calendar quarter and therefore cause us to fail to qualify as a REIT.
Macroeconomic trends including inflation, high interest rates or recession may adversely affect our financial condition and results of operations. Macroeconomic trends, including increases in or high inflation and high interest rates, may adversely impact our business, financial condition and results of operations.
Macroeconomic trends including inflation, high interest rates, tariffs or recession may adversely affect our financial condition and results of operations. Macroeconomic trends, including increases in or high inflation and high interest rates, may adversely impact our business, financial condition and results of operations.
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.
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.
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.
No strategy can completely insulate us from the risks associated with interest rate fluctuations. 27 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.
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.
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, 2025, there was $1.5 billion of mortgage debt outstanding related to our Portfolio.
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.
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 qualifying real estate assets, including certain mortgage loans and mortgage-backed securities.
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 of December 31, 2025, 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 20 permanent financing on properties we may develop in the future. Currently, there is uncertainty regarding the future of Freddie Mac.
The remainder of our investment in securities (other than government securities, securities of TRSs and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
The remainder of our investments in securities (other than government securities, securities of TRSs and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
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.
As of December 31, 2025, 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.
The recent change in the U.S. Presidential Administration and changes in Congress could result in significant policy changes or regulatory uncertainty in our industry.
Changes in the U.S. Presidential Administration and changes in Congress could result in significant policy changes or regulatory uncertainty in our industry.
Factors that may affect our occupancy levels, our revenues, our NOI and/or the value of our properties include the following, among others: • downturns in global, national, regional and local economic conditions; • declines in the financial condition of our residents, which may make it more difficult for us to collect rents from these residents; • the inability or unwillingness of our residents to pay rent increases; • a decline in household formation; • a decline in employment or lack of employment growth; • an oversupply of, or a reduced demand for, apartment homes; • changes in market rental rates in our core markets; • our ability to renew leases or re-lease space on favorable terms; 19 • the timing and costs associated with property improvements, repairs and renovations, including supply chain issues, inflation and labor shortages; • declines in mortgage interest rates, making home and condominium ownership more affordable; • changes in home loan lending practices, including the easing of credit underwriting standards, increasing the availability of home loans and thereby reducing demand for apartment homes; • government or builder incentives which enable first-time homebuyers to put little or no money down, making alternative housing options more attractive; • rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and • economic conditions that could cause an increase in our operating expenses, such as increases in property taxes (particularly as a result of increased local, state and national government budget deficits and debt and potentially reduced federal aid to state and local governments), utilities, insurance, compensation of on-site associates and routine maintenance.
Factors that may affect our occupancy levels, our revenues, our NOI and/or the value of our properties include the following, among others: • downturns in global, national, regional and local economic conditions; • declines in the financial condition of our residents, which may make it more difficult for us to collect rents from these residents; 18 • the inability or unwillingness of our residents to pay rent increases; • a decline in household formation; • a decline in employment or lack of employment growth; • an oversupply of, or a reduced demand for, apartment homes; • changes in market rental rates in our core markets; • our ability to renew leases or re-lease space on favorable terms; • the timing and costs associated with property improvements, repairs and renovations, including supply chain issues, inflation and labor shortages; • declines in mortgage interest rates, making home and condominium ownership more affordable; • changes in home loan lending practices, including the easing of credit underwriting standards, increasing the availability of home loans and thereby reducing demand for apartment homes; • government or builder incentives which enable first-time homebuyers to put little or no money down, making alternative housing options more attractive; • government policies intended to prioritize sales of single-family homes to individual owner-occupants rather than large institutional investors, which could reduce demand for multifamily properties; • rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and • economic conditions that could cause an increase in our operating expenses, such as increases in property taxes (particularly as a result of increased local, state and national government budget deficits and debt and potentially reduced federal aid to state and local governments), utilities, insurance, compensation of on-site associates and routine maintenance.
Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions, the risk of which may be heightened by the increased prevalence and use of artificial intelligence.
Despite our security measures, our information technology and infrastructure and the information technology and infrastructure of our Adviser or our third-party providers may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions, the risk of which may be heightened by the increased prevalence and use of artificial intelligence.
The Company’s real estate assets may be subject to impairment charges. 24 A decline in the fair value of our assets may require us to recognize an impairment against our assets under accounting principles generally accepted in the United States (“GAAP”) if we were to determine that, with respect to any assets in unrealized loss positions, we do not have the ability and intent to hold such assets for a period of time sufficient to allow for recovery of the depreciated cost of such assets.
A decline in the fair value of our assets may require us to recognize an impairment against our assets under accounting principles generally accepted in the United States (“GAAP”) if we were to determine that, with respect to any assets in unrealized loss positions, we do not have the ability and intent to hold such assets for a period of time sufficient to allow for recovery of the depreciated cost of such assets.
The number of competitive multifamily properties and/or condominiums in a particular area, and any increased affordability of owner occupied single and multifamily homes caused by declining housing prices, low mortgage interest rates and government programs to promote home ownership, could have a material adverse effect on our ability to lease our apartments and the rents we are able to obtain.
The number of competitive multifamily properties and/or condominiums in a particular area, and any increased affordability of owner occupied single and multifamily homes caused by declining housing prices, low mortgage interest rates and government programs to promote home ownership (including a recent executive order issued by the Trump Administration), could have a material adverse effect on our ability to lease our apartments and the rents we are able to obtain.
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.
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 require us to seek alternative funding sources, 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.
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.
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.
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.
As of December 31, 2025, approximately $1.6 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, 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.
As of December 31, 2025, the interest rate cap agreements we have entered into effectively cap the applicable reference rate on $1.5 billion of our floating rate mortgage debt outstanding at a weighted average rate of 7.98% for the term of the agreements, which is generally 2-3 years.
If we are unable to remain competitive by integrating and using artificial intelligence, our business could be harmed. In addition to competitive risks, the incorporation of artificial intelligence into our technological framework poses ethical and cybersecurity risks, as well as the regulatory risks associated with compliance with state and national laws and regulations. Item 1B. Unresolv ed Staff Comments None.
If we are unable to remain competitive by integrating and using artificial intelligence, our business could be harmed. In addition to competitive risks, the incorporation of artificial intelligence into our technological framework poses ethical and cybersecurity risks, as well as the regulatory risks associated with compliance with state and national laws and regulations.
In addition, single-family homes and other residential properties provide housing alternatives to residents and potential residents of our multifamily properties. A decrease in residential mortgage rates may result in potential renters purchasing residences rather than leasing them, and as a result, cause a decline in occupancy rates.
In addition, single-family homes and other residential properties provide housing alternatives to residents and potential residents of our multifamily properties. The relatively low or declining residential mortgage rates may result in potential renters purchasing residences rather than leasing them, and as a result, cause a decline in our occupancy rates.
In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in delays and increased costs to complete our rehabilitation projects and increased capital expenditures on our existing properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, and, as a result, adversely impact our financial results and operations.
In addition, changes in federal, state and local legislation and regulation related to environmental events could result in delays and increased costs to complete our rehabilitation projects and increased capital expenditures on our existing properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, and, as a result, adversely impact our financial results and operations.
As cybersecurity threats and government and regulatory oversight of associated risks continue to evolve, we may be required to expend additional resources to enhance or expand upon the security measures we currently maintain. Any such actions may adversely impact our results of operations and financial condition.
As cybersecurity threats and government and regulatory oversight of associated risks continue to evolve, we may be required to expend additional resources to enhance or expand upon the security measures we currently maintain. Any such actions may adversely impact our results of operations and financial condition. Breaches of our data security could materially harm our business and reputation.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends. Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts, and estates is generally subject to tax at reduced rates.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends. Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts, and estates is generally subject to tax at reduced rates. Currently, the maximum tax rate applicable to qualified income payable to U.S. stockholders that are individuals, trusts and estates is 20%.
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.
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.
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.
General Risks We, our Adviser, our property manager and our and their other third-party providers 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.
Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary or non-customary services to residents of its parent REIT. A TRS is subject to income tax as a C corporation.
Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary or non-customary services to residents of its parent REIT. A TRS is subject to income tax as a C corporation. We currently own interests in TRSs and may acquire securities in additional TRSs in the future.
We have been and may continue to be adversely impacted by the direct consequences of climate change, such as property damage due to increases in the frequency, duration and severity of extreme weather events, such as hurricanes and floods. Similarly, changes in precipitation levels could lead to increases in droughts or wildfires that could adversely impact demand for our communities.
We have been and may continue to be adversely impacted by property damage due to extreme weather events, such as hurricanes and floods. Similarly, changes in precipitation levels could lead to increases in droughts or wildfires that could adversely impact demand for our communities.
Pursuant to the Advisory Agreement, we pay significant fees to our Adviser and its affiliates. Those fees include advisory and administrative fees and obligations to reimburse our Adviser and its affiliates for expenses they incur in connection with providing services to us, including certain personnel services.
Those fees include advisory and administrative fees and obligations to reimburse our Adviser and its affiliates for expenses they incur in connection with providing services to us, including certain personnel services. 29 Additionally, pursuant to the Management Agreements we have entered into with BH, we pay significant fees to BH.
Breaches of our data security could materially harm our business and reputation. We collect and retain certain personal information provided by our residents and prospective residents. In addition, our Sponsor engages third-party service providers that may collect and hold personally identifiable information of our residents or prospective residents.
We collect and retain certain personal information provided by our residents and prospective residents. In addition, our Sponsor engages third-party service providers that may collect and hold personally identifiable information of our residents or prospective residents.
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.
As of December 31, 2025, 7 interest rate swap agreements, with a combined notional amount of $0.9 billion and terms expiring in 2026, effectively fix the interest rate on $0.9 billion, or 59%, of our $1.6 billion of floating rate debt outstanding.
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.
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.
These restrictive provisions and third-party rights would potentially preclude us from achieving full value of the properties because of our inability to obtain the necessary consents to sell or transfer the interests.
These restrictive provisions and third-party rights would potentially preclude us from achieving full value of the properties because of our inability to obtain the necessary consents to sell or transfer the interests. The Company’s real estate assets may be subject to impairment charges.
Cybersecurity incidents and cyber-attacks, ransomware attacks and social engineering attempts (including business email compromise attacks) have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future.
The secure maintenance and transmission of this information is critical to our operations. Cybersecurity incidents and cyber-attacks, ransomware attacks and social engineering attempts (including business email compromise attacks) have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future.
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.
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. Damage from extreme weather and other natural events may adversely affect our business.
We do not anticipate material income tax obligations in connection with our ownership of interests in TRSs. As a REIT, the value of our interests in our TRSs generally may not exceed 20% of the total value of our total assets at the end of any calendar quarter.
We do not anticipate material income tax obligations in connection with our ownership of interests in TRSs. As a REIT and for taxable years beginning after December 31, 2025, the value of our interests in our TRSs generally may not exceed 25% of the total value of our total assets at the end of any calendar quarter.
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.
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.
A TRS is a corporation other than a REIT in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a TRS.
Our ownership of interests in TRSs raises certain tax risks. 32 A TRS is a corporation other than a REIT in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a TRS.
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%.
At the current maximum ordinary income tax rate of 37%, the maximum tax rate on ordinary REIT dividends for non-corporate stockholders is 29.6%.
Similarly, some of our competitors may have loan covenants or fund requirements that encourage decisions on occupancy targets or rental rates that vary from decisions based on market conditions, which could require us to react in ways that may affect our strategy or negatively affect our performance. 21 Competition and any increased affordability of residential homes could limit our ability to lease our apartments or increase or maintain rents.
Similarly, some of our competitors may have loan covenants or fund requirements that encourage decisions on occupancy targets or rental rates that vary from decisions based on market conditions, which could require us to react in ways that may affect our strategy or negatively affect our performance.
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.
In addition, our TRSs and any TRS we form in the future will be subject to corporate U.S. federal income tax and applicable state and local taxes on their net income. State, local and non-U.S. income tax laws may differ substantially from the corresponding U.S. federal income tax laws.
The war in Ukraine and the Israel-Hamas war adds, and other international tensions or escalations of conflict may add, instability to the uncertainty driving socioeconomic forces, which may continue to have an impact on global trade and result in inflation or economic instability.
The war in Ukraine and other international tensions or escalations of conflict may add instability to the uncertainty driving socioeconomic forces, which may continue to have an impact on global trade and result in inflation or economic instability. The U.S. government announced a comprehensive set of tariffs in the second quarter of 2025.
To help limit mold growth, we educate residents about the importance of adequate ventilation and include a lease requirement that they notify us when they see mold or excessive moisture.
Certain molds may in some instances lead to adverse health effects, including allergic or other reactions. To help limit mold growth, we educate residents about the importance of adequate ventilation and include a lease requirement that they notify us when they see mold or excessive moisture.
Future issuances of debt securities and equity securities may negatively affect the market price of shares of our common stock and, in the case of equity securities, may be dilutive to existing stockholders and could reduce the overall value of your investment.
Future issuances of debt securities and equity securities may negatively affect the market price of shares of our common stock and, in the case of equity securities, may be dilutive to existing stockholders and could reduce the overall value of your investment. 37 In the future, we may issue debt or equity securities or incur other financial obligations, including stock dividends and shares that may be issued in exchange for common units and equity plan shares/units.
Prospective investors are urged to consult their tax advisors regarding the effect of the other U.S. federal, state, local and non-U.S. tax laws on an investment in our stock. Our ownership of interests in TRSs raises certain tax risks.
Any of these taxes would decrease cash available for distributions to stockholders. Prospective investors are urged to consult their tax advisors regarding the effect of the other U.S. federal, state, local and non-U.S. tax laws on an investment in our stock.
Our multifamily properties compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. All of our multifamily properties are located in developed areas that include other multifamily properties and/or condominiums.
Competition and any increased affordability of residential homes could limit our ability to lease our apartments or increase or maintain rents. Our multifamily properties compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale.
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.
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.
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.
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.
However, 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)).
Dividends payable by REITs, however, generally are not eligible for this reduced rate. However, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified income) received from a REIT (subject to certain limitations).
Any breach of our data security measures and/or loss of this information may result in legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business and financial performance. 41 As the techniques used to obtain unauthorized access to information technology systems become more varied and sophisticated and the occurrence of such breaches becomes more frequent, we and our third-party service providers and other third parties may be unable to adequately anticipate these techniques or breaches or implement appropriate preventative measures.
As the techniques used to obtain unauthorized access to information technology systems become more varied and sophisticated and the occurrence of such breaches becomes more frequent, we and our third-party service providers and other third parties may be unable to adequately anticipate these techniques or breaches or implement appropriate preventative measures.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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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.
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 Adviser’s Director of Information Technology has served in various roles in information technology and information security for 25 years, including serving as Global Technology Manager at a multi-national publicly traded broker-dealer, and 15 years as the Director of Information Technology at a privately held financial services firm.
The Adviser’s Director of Information Technology has served in various roles in information technology and information security for over 25 years, including serving as Global Technology Manager at a multi-national publicly traded broker-dealer, and over 15 years as the Director of Information Technology at a privately held financial services firm.
The Adviser’s Director of Information Technology, in coordination with relevant senior management and personnel of the Adviser, which includes our Adviser’s Chief Financial Officer, Senior Infrastructure Engineer, and Chief Compliance Officer, work to conceive, implement, and monitor the effectiveness of a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any security incidents in accordance with the Company’s business continuity plan.
The Adviser’s Director of Information Technology, in coordination with relevant senior management and personnel of the Adviser, which includes our Adviser’s Chief Financial Officer and Chief Compliance Officer, work to conceive, implement, and monitor the effectiveness of a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any security incidents in accordance with the Company’s business continuity plan.
The Adviser’s Director of Information Technology holds an undergraduate degree in biochemistry and has attained numerous information technology certifications over the years including Microsoft Certified Systems Engineer (MCSE) and Cisco Certified network Professional (CCNP). The Adviser’s Senior Infrastructure Engineer has over 20 years industry experience, holds an undergraduate degree in radiology, and has completed various Microsoft related information technology certifications.
The Adviser’s Director of Information Technology holds an undergraduate degree in biochemistry and has attained numerous information technology certifications over the years including Microsoft Certified Systems Engineer (MCSE) and Cisco Certified network Professional (CCNP).
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.
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. However, the risk of cybersecurity threats could be significant if a cyber-attack disrupts the Company’s critical operations, service or financial systems.
The Audit Committee also receives prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed. On an annual basis, the Board and the Audit Committee discuss the Company’s approach to cybersecurity risk management with our Adviser, including the Adviser’s Director of Information Technology.
The Audit Committee also receives prompt 43 and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed.
Removed
Combined, our Adviser’s information technology team has over 50 years of experience covering all major aspects of network architecture and management.
Added
On an annual basis, the Board and the Audit Committee discuss the Company’s approach to cybersecurity risk management with our Adviser, including the Adviser’s Director of Information Technology.
Removed
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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(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.
(2) Percent occupied is calculated as the number of units occupied as of December 31, 2025, 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, 2025.
(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.
(5) Includes the 21 downed units excluded from our 2024-2025 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, 2024, our Portfolio consisted of 35 properties representing 12,984 units in seven states.
Item 2. Pr operties As of December 31, 2025, our Portfolio consisted of 36 properties representing 13,305 units in seven states.
The 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.
The following table provides a summary of the properties in our Portfolio as of December 31, 2025: As of December 31, 2025 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 $ 1,136 96.2 % 173 $ 4,143 Cutter's Point Richardson, Texas 196 1/31/2014 15,845 1,428 91.3 % 159 5,845 Versailles Dallas, Texas 388 2/26/2015 26,165 1,105 85.8 % 390 5,019 Venue at 8651 Fort Worth, Texas 333 10/30/2015 19,250 1,152 95.8 % 327 6,302 Atera Apartments Dallas, Texas 380 10/25/2017 59,200 1,470 92.4 % 248 3,249 Versailles II Dallas, Texas 242 9/26/2018 24,680 1,092 86.4 % 93 4,021 Summers Landing Fort Worth, Texas 196 6/7/2019 19,396 1,170 88.7 % 83 8,612 Florida The Summit at Sabal Park Tampa, Florida 252 8/20/2014 19,050 1,368 93.3 % 228 5,477 Courtney Cove Tampa, Florida 324 8/20/2014 18,950 1,323 90.4 % 299 4,438 Sabal Palm at Lake Buena Vista Orlando, Florida 400 11/5/2014 49,500 1,650 93.8 % 138 8,574 Cornerstone Orlando, Florida 430 1/15/2015 31,550 1,382 90.0 % 500 4,642 Seasons 704 Apartments West Palm Beach, Florida 222 4/15/2015 21,000 1,830 95.9 % 222 7,160 Parc500 West Palm Beach, Florida 217 7/27/2016 22,421 1,941 95.9 % 245 13,101 Avant at Pembroke Pines Pembroke Pines, Florida 1,520 8/30/2019 322,000 2,233 94.1 % 716 16,208 Residences at West Place Orlando, Florida 342 7/17/2019 55,000 1,591 92.7 % 161 11,316 Nevada Bella Solara Las Vegas, Nevada 320 11/22/2019 66,500 1,335 88.4 % 135 9,685 Bloom Las Vegas, Nevada 528 11/22/2019 106,500 1,313 92.8 % 161 12,611 Torreyana Apartments Las Vegas, Nevada 316 11/22/2019 68,000 1,479 90.5 % 65 11,022 Sedona at Lone Mountain Las Vegas, Nevada 321 12/11/2025 73,250 1,592 91.6 % — — Georgia The Preserve at Terrell Mill Marietta, Georgia 752 2/6/2015 58,000 1,296 91.2 % 798 10,417 Rockledge Apartments Marietta, Georgia 708 6/30/2017 113,500 1,481 93.3 % 561 9,052 The Adair Sandy Springs, Georgia 232 4/1/2022 65,500 1,942 95.3 % 165 11,370 Tennessee Brandywine I & II Nashville, Tennessee 632 9/26/2018 79,800 1,170 91.3 % 587 10,444 Arbors of Brentwood Nashville, Tennessee 346 9/10/2019 62,250 1,415 92.2 % 170 9,293 Residences at Glenview Reserve Nashville, Tennessee 360 7/17/2019 45,000 1,248 93.9 % 299 12,809 Arizona Madera Point Mesa, Arizona 256 8/5/2015 22,525 1,273 96.1 % 282 4,295 The Venue on Camelback Phoenix, Arizona 415 10/11/2016 44,600 951 92.5 % 294 9,837 Bella Vista Phoenix, Arizona 248 1/28/2019 48,400 1,590 96.4 % 209 10,125 The Enclave Tempe, Arizona 204 1/28/2019 41,800 1,720 94.6 % 175 9,725 The Heritage Phoenix, Arizona 204 1/28/2019 41,900 1,593 92.6 % 185 9,170 Fairways at San Marcos Chandler, Arizona 352 11/2/2020 84,480 1,529 96.0 % 190 10,166 Estates on Maryland Phoenix, Arizona 330 4/1/2022 77,900 1,400 93.9 % 144 11,005 North Carolina The Verandas at Lake Norman Charlotte, North Carolina 264 6/30/2021 63,500 1,341 94.3 % 93 9,578 Creekside at Matthews Charlotte, North Carolina 240 6/30/2021 58,000 1,461 92.9 % 106 8,935 Six Forks Station Raleigh, North Carolina 323 9/10/2021 74,760 1,347 93.5 % 142 11,760 High House at Cary Cary, North Carolina 302 12/7/2021 93,250 1,466 92.4 % 144 11,372 Total 13,305 $ 2,106,227 $ 1,492 92.7 % 8,887 $ 9,115 (1) Average effective monthly rent per unit is equal to the contractual rent for commenced leases as of December 31, 2025 minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31, 2025.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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”).
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 .
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.
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.
The following graph assumes an investment of $100 on the initial day of the relevant measurement period and that all dividends were reinvested. Dividends We intend to make regular quarterly dividend payments to holders of our common stock.
REIT Index. The following graph assumes an investment of $100 on the initial day of the relevant measurement period and that all dividends were reinvested. Dividends We intend to make regular quarterly dividend payments to holders of our common stock.
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.
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 and NYSE Texas under the ticker symbol “NXRT.” Stockholder Information On February 26, 2026, we had 25,411,252 shares of common stock outstanding held by a total of approximately 730 record holders.
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.
On August 19, 2025, our common stock commenced trading on NYSE Texas. The following graph compares the cumulative total stockholder return on our common shares for the measurement period commencing December 31, 2020 and ending December 31, 2025 with the cumulative total returns of the Russell 3000 Index, the MSCI U.S. REIT Index (^RMZ) and the Standard & Poor’s U.S.
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.
During the year ended December 31, 2025, the Company repurchased 223,109 shares of its common stock, par value of $0.01 per share, at a total cost of approximately $7.7 million, or $34.29 per share on average.
Since 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.
During the three months ended December 31, 2025, the Company repurchased zero shares of its common stock 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 3,212,415 $ 29.44 3,212,415 $ 77.8 October 1 – October 31 — — — 77.8 November 1 – November 30 — — — 77.8 December 1 – December 31 — — — 77.8 Total as of December 31, 2025 3,212,415 $ 29.44 3,212,415 $ 77.8 47 PERFORMANCE GRAPH On April 1, 2015, our common stock commenced trading on the NYSE.
Added
Since the inception of the share repurchase program in June 2016 through December 31, 2025, the Company had repurchased 3,212,415 shares of its common stock, par value $0.01 per share, at a total cost of approximately $94.6 million, or $29.44 per share.

Item 7. Management's Discussion & Analysis

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

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Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, listing fees, board of director fees, equity-based compensation expense, investor relations costs and payments of reimbursements to our Adviser for operating expenses.
Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, listing fees, board of director fees, equity-based compensation expense, investor relations costs and payments of reimbursements to our Adviser for Adviser Operating Expenses.
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 65 from prior years.
Due to the short-term nature of our leases, we do not believe our results will be materially affected. Inflation may also affect the overall cost of debt, as the implied cost of capital increases. We intend to mitigate these risks through interest rate hedges, which to date have included interest rate cap and interest rate swap agreements. 71
Due to the short-term nature of our leases, we do not believe our results will be materially affected. Inflation may also affect the overall cost of debt, as the implied cost of capital increases. We intend to mitigate these risks through interest rate hedges, which to date have included interest rate cap and interest rate swap agreements.
AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the related noncontrolling interests (as described above). 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.
AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the related noncontrolling interests (as described above) related to these items. 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.
When incurred, these expenditures are either capitalized or expensed, in accordance with GAAP, depending on the type of the expenditure. Although we will continuously monitor the adequacy of this average, we believe these figures to be sufficient to maintain the properties at a high level in the markets in which we operate.
When incurred, these expenditures are either capitalized or expensed, in accordance with GAAP, depending on the type of the expenditure. Although we will continuously monitor the adequacy of this average, we believe these figures to be sufficient to maintain the properties at a high 64 level in the markets in which we operate.
(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.
(2) Adjustment to net income (loss) 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.
Additionally, in the sole discretion of the Adviser, the Adviser may elect to waive certain advisory and administrative fees otherwise due. If advisory and administrative fees are waived in a period, the waived fees for that period are considered to be waived permanently and the Adviser may not be reimbursed in the future. Property general and administrative expenses.
Additionally, in the sole discretion of the Adviser, the Adviser may elect to waive certain Fees otherwise due. If Fees are waived in a period, the waived Fees for that period are considered to be waived permanently and the Adviser may not be reimbursed in the future. Property general and administrative expenses.
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.
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.
The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement and Disclosures (see Note 6 to our consolidated financial statements), is based on management’s estimate of the property’s “as-if” vacant fair value and is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information.
The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement and Disclosures (“ASC 820”) (see Note 6 to our consolidated financial statements), is based on management’s estimate of the property’s “as-if” vacant fair value and is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information.
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.
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, 2025. We believe that our sources of long-term cash will be sufficient for our needs thereafter.
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.
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, 2025, 2024 and 2023. The macroeconomic environment remains challenging.
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, 2025, 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).
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.
The success of our business strategy will depend, in part, on our ability to access these various capital sources. 59 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. 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.
See Notes 5 and 6 for additional information. 61 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.
Our management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of our financial condition and results of operations in the future. This section of this Annual Report generally discusses the years ended December 31, 2024 and 2023.
Our management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of our financial condition and results of operations in the future. This section of this Annual Report generally discusses the years ended December 31, 2025 and 2024.
Loss on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment.
Loss on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment. 50 Casualty loss .
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.
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, 2025.
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.
Off-Balance Sheet Arrangements As of December 31, 2025, 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.
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.
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, 2025, 2024 and 2023.
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.
We and our subsidiaries are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. The 2024, 2023 and 2022 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject.
We compute FFO attributable to common stockholders in accordance with NAREIT’s definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to noncontrolling interests and we show the amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.
We compute FFO attributable to common stockholders in accordance with NAREIT’s definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to redeemable noncontrolling interests in the OP and we show the combined amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.
We believe that eliminating these items from net income is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.
We believe that eliminating these items from net income is useful for investors and management because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.
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).
The Advisory Agreement was renewed on February 23, 2026 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 ATM Sales Agents, pursuant to the ATM Program (as defined below).
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.
We used SOFR as of December 31, 2025 to calculate interest expense due by period on our floating rate debt and net interest expense due by period on our interest rate swaps.
Casualty losses . Casualty losses include expenses resulting from damages from an unexpected and unusual event such as a natural disaster. Expenses can include additional payments on insurance premiums, impairment recognized on a property, and other abnormal expenses arising from the related event. Miscellaneous income .
Casualty loss includes expenses resulting from damages from an unexpected and unusual event such as a natural disaster. Expenses can include additional payments on insurance premiums, impairment recognized on a property, and other abnormal expenses arising from the related event. Miscellaneous income .
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.
For purposes of calculating the adjusted weighted average interest rate of our mortgage debt outstanding, we have included the weighted average fixed rate of 1.36% for Adjusted SOFR on our combined $0.9 billion notional amount of interest rate swap agreements, which effectively fix the interest rate on $0.9 billion of our floating rate mortgage debt.
(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.
(3) For the years ended December 31, 2025 and 2024, excludes approximately $3,703,000 and $3,944,000, 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, 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 .
As of December 31, 2024, our 2024-2025 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,491. For our 2024-2025 Same Store properties, we recorded the following operating results for the year ended December 31, 2025 as compared to the year ended December 31, 2024: Revenues Rental income .
A discussion of the year ended December 31, 2022 is available at Part II, “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 which was filed with the SEC on February 27, 2024.
A discussion of the year ended December 31, 2023 is available at Part II, “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed with the SEC on February 26, 2025.
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.
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, 2025, interest rate swap agreements effectively covered 62% of our $1.5 billion of floating rate mortgage debt outstanding.
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.
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, 2025, we had approximately $8.3 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 rehabs.
(2) Percent occupied is calculated as the number of units occupied as of December 31, 2024 and 2023, divided by the total number of units, expressed as a percentage. (3) Includes 36 down units due to casualty events as of December 31, 2024 (see Note 4 to our consolidated financial statements).
(2) Percent occupied is calculated as the number of units occupied as of December 31, 2025 and 2024, divided by the total number of units, expressed as a percentage. (3) Includes 22 down units due to casualty events as of December 31, 2025 (see Note 4 to our consolidated financial statements).
Corporate general and administrative expenses and the advisory and administrative fees paid to our Adviser (including advisory and administrative fees on properties defined in the Advisory Agreement as New Assets) will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect), calculated in accordance with the Advisory Agreement, or the Expense Cap.
Under the Advisory Agreement, reimbursement of Adviser Operating Expenses and the Fees paid to our Adviser (including advisory and administrative fees on properties defined in the Advisory Agreement as New Assets) will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect), calculated in accordance with the Advisory Agreement, or the Expense Cap.
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.
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 loss, (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.
For the year ended December 31, 2024, the Company incurred expenses of $2.6 million for fiber internet service which is included in property operating expenses on the consolidated statement of operations and comprehensive income (loss).
For the year ended December 31, 2025, the Company incurred expenses of $3.2 million for fiber internet service which is included in property operating expenses on the consolidated statement of operations and comprehensive income (loss).
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.
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, one with JPM and one with Truist Bank (collectively the “Counterparties”) with a combined notional amount of $0.9 billion which are effective as of December 31, 2025.
(5) For the years ended December 31, 2024 and 2023, excludes approximately $54,000 and $697,000, 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. 57 See reconciliation of net income to NOI above under “NOI and 2023-2024 Same Store NOI for the Years Ended December 31, 2024 and 2023.” 2023-2024 Same Store Results of Operations for the Years Ended December 31, 2024 and 2023 As of December 31, 2024, our 2023-2024 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,491.
(5) For the years ended December 31, 2025 and 2024, excludes approximately $307,000 and $54,000, 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. 55 See reconciliation of net income (loss) to NOI above under “NOI and 2024-2025 Same Store NOI for the Years Ended December 31, 2025 and 2024.” 2024-2025 Same Store Results of Operations for the Years Ended December 31, 2025 and 2024 As of December 31, 2025, our 2024-2025 Same Store properties were approximately 92.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,489.
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. As of December 31, 2024, we had approximately $3.2 million of renovation value-add reserves for our planned capital expenditures to implement our value-add program.
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 Credit Facility (as defined below). As of December 31, 2025, we had approximately $8.3 million of renovation value-add reserves for our planned capital expenditures to implement our value-add program.
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.
During the year ended December 31, 2025, net cash provided by operating activities was $83.6 million compared to net cash provided by operating activities of $73.6 million for the year ended December 31, 2024.
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.
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 the Secured Overnight Financing Rate (“SOFR”).
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.
As of December 31, 2025, interest rate cap agreements covered $1.5 billion of our $1.5 billion of floating rate mortgage debt outstanding, which effectively cap SOFR on $1.5 billion of our floating rate mortgage debt at a weighted average rate of 7.98%. LIBOR ceased publication on June 30, 2023.
Starting in the third quarter of 2024, the Company has adjusted Core FFO to remove (1) the amortization of all deferred financing costs instead of those solely related to short-term debt financing and (2) mark-to-market gains or losses related to interest rate cap agreements not designated as hedges for accounting purposes.
Starting in the third quarter of 2024, the Company adjusted Core FFO to remove (1) the amortization of all deferred financing costs instead of those solely related to short-term debt financing and (2) mark-to-market gains or losses related to interest rate cap agreements not designated as hedges for accounting purposes. Prior periods have been recast to conform to current presentations.
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.
The following table sets forth a summary of our capital expenditures related to our value-add program for the years ended December 31, 2025, 2024 and 2023 (in thousands): For the Year Ended December 31, Rehab Expenditures 2025 2024 2023 Interior (1) $ 5,951 $ 4,760 $ 25,504 Exterior and common area 283 $ 2,202 11,730 Total rehab expenditures $ 6,234 $ 6,962 $ 37,234 (1) Includes total capital expenditures during the period on completed and in-progress interior rehabs.
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.
Property management fees were $7.2 million for the year ended December 31, 2025 compared to $7.3 million for the year ended December 31, 2024, which was a decrease of approximately $0.1 million, or 1.4%. The majority of the decrease is related to a decrease in total revenues, which the fee is primarily based on. Property general and administrative expenses.
(4) For the years ended December 31, 2024 and 2023, excludes approximately $16,000 and $32,000, respectively, of casualty-related expenses.
(4) For the years ended December 31, 2025 and 2024, excludes approximately $0 and $16,000, respectively, of casualty-related expenses.
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.
Real estate taxes and insurance costs were $32.4 million for the year ended December 31, 2025 compared to $32.7 million for the year ended December 31, 2024, which was a decrease of approximately $0.3 million, or 0.9%. The majority of the decrease is related to a $0.2 million decrease in property taxes. Property management fees.
Core FFO adjusts FFO to remove items such casualty-related expenses and recoveries and gains or losses, loss on extinguishment of debt and modification costs, gain on forfeited deposits, the 60 amortization of deferred financing costs, mark-to-market gains or losses related to interest rate cap agreements not designated as hedges for accounting purposes, and the noncontrolling interests (as described above) related to these items.
Core FFO adjusts FFO to remove items such casualty-related expenses and recoveries and gains or losses, loss (gain) on extinguishment 56 of debt and modification costs that are not reflective of continuing operations of the properties, the amortization of deferred financing costs, mark-to-market gains or losses related to interest rate cap agreements not designated as hedges for accounting purposes, and the noncontrolling interests (as described above) related to these items.
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 operating expenses were $53.6 million for the year ended December 31, 2025 compared to $53.5 million for the year ended December 31, 2024, which was an increase of approximately $0.1 million, or 0.3%. The majority of the increase is related to increases in electricity expenses of $0.1 million. Real estate taxes and insurance.
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%.
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, 2025, our subsidiaries had aggregate mortgage debt outstanding to third parties of approximately $1.6 billion at a weighted average interest rate of 4.86% and an adjusted weighted average interest rate of 3.28%.
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.
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.
The increase between periods is primarily driven by increases in prepayment penalties and defeasance costs and write-off of deferred financing costs of $13.1 million and $8.0 million, respectively, due to our refinance activity in 2024 as compared to 2023. During the year ended December 31, 2024, the Company completed a portfolio refinance on 34 of its property mortgages.
The decrease between periods is primarily driven by decreases in prepayment penalties and defeasance costs and write-off of deferred financing costs of $15.5 million and $8.5 million, respectively, due to our refinance activity in 2024 as compared to 2025. During the year ended December 31, 2024, the Company completed a portfolio refinance on 34 of its property mortgages.
Prior periods have been recast to conform to the current presentation. AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry.
AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry.
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 have allocated the total impact of expected settlements on the $1.0 billion notional amount of interest rate swaps to ‘Operating Properties Mortgage Debt.’ We used the applicable reference rate as of December 31, 2025 to determine our expected settlements through the terms of the interest rate swaps.
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.
Overview As of December 31, 2025, our Portfolio consisted of 36 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 13,305 units of apartment space that was approximately 92.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,492. Substantially all of our business is conducted through the OP.
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.
Miscellaneous income was $0.6 million for the year ended December 31, 2025 compared to $0.5 million for the year ended December 31, 2024, which was an increase of approximately $0.1 million. The increase between the periods was primarily due to more business interruption proceeds received from casualty events (see Note 4). Gain on sales of real estate.
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.
Property management fees were $7.2 million for the year ended December 31, 2025 compared to $7.5 million for the year ended December 31, 2024, which was a decrease of approximately $0.3 million. 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.
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.
During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.36%, on a weighted average basis, on the notional amounts, while the Counterparties are obligated to make monthly floating rate payments based on Adjusted SOFR, other than the JPM swap which is based on SOFR, to us referencing the same notional amounts.
See Note 5 to our consolidated financial statements. Advisory Agreement Our Advisory Agreement requires that we pay our Adviser an annual advisory and administrative fee of 1.2%. The advisory and administrative fees paid to the Adviser on the Contributed Assets (as defined in the Advisory Agreement) are subject to an annual cap of approximately $5.4 million.
Advisory Agreement Our Advisory Agreement requires that we pay our Adviser an annual advisory and administrative fee of 1.2%. The advisory and administrative fees paid to the Adviser on the Contributed Assets are subject to an annual cap of approximately $5.4 million.
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%.
As of December 31, 2025, the interest rate swaps we have entered into effectively replace the floating interest rate (Adjusted SOFR or SOFR) with respect to $0.9 billion of our floating rate debt outstanding with a weighted average fixed rate of 1.36%.
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 general and administrative expenses were $5.2 million for the year ended December 31, 2025 compared to $5.0 million for the year ended December 31, 2024, which was an increase of approximately $0.2 million, or 2.6%. The majority of the increase is related to a $0.1 million increase in marketing expenses.
Other income was $5.3 million for the year ended December 31, 2024 compared to $5.8 million for the year ended December 31, 2023, which was a decrease of $0.5 million. The increase between period is primarily attributable to a $0.4 million increase in internet income. Expenses Property operating expenses.
Other income was $5.9 million for the year ended December 31, 2025 compared to $5.3 million for the year ended December 31, 2024, which was an increase of $0.6 million. The increase between periods is primarily attributable to a $0.8 million increase in internet income. Expenses Property operating expenses.
Gain on sales of real estate was $54.2 million for the year ended December 31, 2024 compared to $67.9 million for the year ended December 31, 2023, which was a decrease of approximately $13.7 million.
Gain on sales of real estate was $0.0 million for the year ended December 31, 2025 compared to $54.2 million for the year ended December 31, 2024, which was a decrease of approximately $54.2 million.
The majority of the increase is related to an increase in weighted average occupancy during the year ended December 31, 2024 compared to the year ended December 31, 2023. Other income.
The majority of the decrease is related to a decrease in weighted average occupancy during the year ended December 31, 2025 compared to the year ended December 31, 2024. Other income.
During the year ended December 31, 2024, the Company sold one property in each of the first, second, and fourth quarters of 2024. 51 Other income. Other income was $7.8 million for the year ended December 31, 2024 compared to $7.4 million for the year ended December 31, 2023, which was an increase of approximately $0.4 million.
During the year ended December 31, 2024, the Company sold one property in each of the first, second, and fourth quarters of 2024. Other income. Other income was $7.5 million for the year ended December 31, 2025 compared to $7.8 million for the year ended December 31, 2024, which was a decrease of approximately $0.3 million.
Core FFO was $73.1 million for the year ended December 31, 2024 compared to $76.6 million for the year ended December 31, 2023, which was a decrease of approximately $3.5 million.
Core FFO was $71.3 million for the year ended December 31, 2025 compared to $73.1 million for the year ended December 31, 2024, which was a decrease of approximately $1.8 million.
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.
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 % April 3, 2025 April 1, 2030 JPM 100,000 3.489 % $ 917,500 1.361 % (2) (1) The floating rate option for the interest rate swaps is Adjusted SOFR and SOFR.
We view Same Store NOI as an important measure of the operating performance of our properties because it allows us to compare operating results of properties owned for the entirety of the current and comparable periods and therefore eliminates variations caused by acquisitions or dispositions during the periods. 54 NOI and 2023-2024 Same Store NOI for the Years Ended December 31, 2024 and 2023 The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our 2023-2024 Same Store NOI for the years ended December 31, 2024 and 2023 to net income, the most directly comparable GAAP financial measure (in thousands): For the Year Ended December 31, 2024 2023 Net income $ 1,114 $ 44,433 Adjustments to reconcile net income (loss) to NOI: Advisory and administrative fees 6,899 7,645 Corporate general and administrative expenses 19,399 17,146 Corporate income (2,215 ) (483 ) Casualty-related expenses/(recoveries) (1) 1,389 (2,214 ) Casualty losses (gains) 626 856 Gain on forfeited deposits — (250 ) Property general and administrative expenses (2) 3,998 3,701 Depreciation and amortization 97,762 95,186 Interest expense 58,477 67,106 Equity in earnings of affiliate (172 ) (205 ) Loss on extinguishment of debt and modification costs 24,004 2,409 Gain on sales of real estate (3) (54,246 ) (67,926 ) NOI $ 157,035 $ 167,404 Less Non-Same Store Revenues (5,478 ) (30,082 ) Operating expenses 2,496 15,542 Operating income (3 ) (134 ) Same Store NOI $ 154,050 $ 152,730 (1) Adjustment to net income to exclude certain property operating expenses that are casualty-related expenses/(recoveries).
We view Same Store NOI as an important measure of the operating performance of our properties because it allows us to compare operating results of properties owned for the entirety of the current and comparable periods and therefore eliminates variations caused by acquisitions or dispositions during the periods. 53 NOI and 2024-2025 Same Store NOI for the Years Ended December 31, 2025 and 2024 The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our 2024-2025 Same Store NOI for the years ended December 31, 2025 and 2024 to net income (loss), the most directly comparable GAAP financial measure (in thousands): For the Year Ended December 31, 2025 2024 Net income (loss) $ (32,154 ) $ 1,114 Adjustments to reconcile net income (loss) to NOI: Advisory and administrative fees 6,941 6,899 Corporate general and administrative expenses 17,945 19,399 Corporate income (1,666 ) (2,215 ) Casualty-related expenses (1) 264 1,389 Casualty loss 167 626 Property general and administrative expenses (2) 4,010 3,998 Depreciation and amortization 95,752 97,762 Interest expense 60,735 58,477 Equity in earnings of affiliate (257 ) (172 ) Loss on extinguishment of debt and modification costs — 24,004 Gain on sales of real estate (3) — (54,246 ) NOI $ 151,737 $ 157,035 Less Non-Same Store Revenues (250 ) (5,478 ) Operating expenses 104 2,496 Operating income — (3 ) Same Store NOI $ 151,591 $ 154,050 (1) Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related expenses/(recoveries).
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.
For the years ended December 31, 2025, 2024 and 2023, we completed full and partial interior rehabs on 1,518, 388 and 2,703 units, respectively.
Cash Flows The following table presents selected data from our consolidated statements of cash flows for the years ended December 31, 2024 and 2023 (in thousands): For the Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 73,573 $ 96,581 Net cash provided by (used in) investing activities 130,619 51,923 Net cash provided by (used in) financing activities (195,554 ) (155,024 ) Net increase (decrease) in cash, cash equivalents and restricted cash 8,638 (6,520 ) Cash, cash equivalents and restricted cash, beginning of year 45,279 51,799 Cash, cash equivalents and restricted cash, end of year $ 53,917 $ 45,279 The year ended December 31, 2024 as compared to the year ended December 31, 2023 Cash flows from operating activities.
Cash Flows The following table presents selected data from our consolidated statements of cash flows for the years ended December 31, 2025 and 2024 (in thousands): For the Year Ended December 31, 2025 2024 Net cash provided by operating activities $ 83,589 $ 73,573 Net cash provided by (used in) investing activities (115,750 ) 130,619 Net cash provided by (used in) financing activities 23,424 (195,554 ) Net increase (decrease) in cash, cash equivalents and restricted cash (8,737 ) 8,638 Cash, cash equivalents and restricted cash, beginning of year 53,917 45,279 Cash, cash equivalents and restricted cash, end of year $ 45,180 $ 53,917 The year ended December 31, 2025 as compared to the year ended December 31, 2024 Cash flows from operating activities.
Advisory and administrative fees include the fees paid to our Adviser pursuant to the Advisory Agreement (see Note 10 to our consolidated financial statements). Corporate general and administrative expenses.
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. Advisory and administrative fees include the fees paid to our Adviser pursuant to the Advisory Agreement (see Note 10 to our consolidated financial statements). Corporate general and administrative expenses.
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, 2025, net cash used in investing activities was $115.8 million compared to net cash provided by investing activities of $130.6 million for the year ended December 31, 2024.
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.
During the year ended December 31, 2025, net cash provided by financing activities was $23.4 million compared to net cash used in financing activities of $195.6 million for the year ended December 31, 2024.
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.
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.
Rental income was $246.7 million for the year ended December 31, 2024 compared to $241.2 million for the year ended December 31, 2023, which was an increase of approximately $5.5 million, or 2.3%.
Rental income was $243.5 million for the year ended December 31, 2025 compared to $246.7 million for the year ended December 31, 2024, which was a decrease of approximately $3.2 million, or 1.3%.
During the year ended December 31, 2024, we sold three properties for a combined gain of $54.2 million whereas during the year ended December 31, 2023, we sold two properties for a combined gain of $67.9 million. Non-GAAP Measurements Net Operating Income and Same Store Net Operating Income NOI is a non-GAAP financial measure of performance.
During the year ended December 31, 2025, we did not sell any properties compared to the year ended December 31, 2024, in which we sold three properties for a combined gain of $54.2 million. Non-GAAP Measurements Net Operating Income and Same Store Net Operating Income NOI is a non-GAAP financial measure of performance.
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.
For the years ended December 31, 2025 and 2024, the Company incurred advisory and administrative fees of $6.9 million and $6.9 million, respectively. NLMF Holdco, LLC The Company’s agreement with NLMF Holdco, LLC may result in additional funding requirements to cover future project costs.
Loss on extinguishment of debt and modification costs was $24.0 million for the year ended December 31, 2024 compared to $2.4 million for the year ended December 31, 2023, which was an increase of approximately $21.6 million.
Loss on extinguishment of debt and modification costs was $0.0 million for the year ended December 31, 2025 compared to $24.0 million for the year ended December 31, 2024, which was a decrease of approximately $24.0 million.
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.
The change in cash flows from financing activities was mainly due to increases in mortgage payments, credit facilities proceeds received, credit facilities payments and prepayment penalties on extinguished debt of $1.5 billion, $90.0 million, $24.0 million and $15.5 million, partially offset by a decrease in mortgage proceeds received of $1.4 billion. 60 Real Estate Investments Statistics As of December 31, 2025, the Company was invested in a total of 36 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 2025 2024 2025 2024 Arbors on Forest Ridge 155 210 1/31/2014 $ 1,136 $ 1,121 96.2 % 98.6 % Cutter's Point 198 196 1/31/2014 1,428 1,370 91.3 % 98.5 % The Summit at Sabal Park 205 252 8/20/2014 1,368 1,370 93.3 % 94.4 % Courtney Cove 225 324 8/20/2014 1,323 1,249 90.4 % 92.9 % Sabal Palm at Lake Buena Vista 371 400 11/5/2014 1,650 1,671 93.8 % 94.0 % Cornerstone 318 430 1/15/2015 1,382 1,435 90.0 % 94.4 % The Preserve at Terrell Mill 692 752 2/6/2015 1,296 1,282 91.2 % 94.3 % Versailles 301 388 2/26/2015 1,105 1,130 85.8 % 96.1 % Seasons 704 Apartments 217 222 4/15/2015 1,830 1,818 95.9 % 95.0 % Madera Point 193 256 8/5/2015 1,273 1,311 96.1 % 93.8 % Venue at 8651 289 333 10/30/2015 1,152 1,160 95.8 % 95.5 % Parc500 266 217 7/27/2016 1,941 1,879 95.9 % 96.3 % The Venue on Camelback 256 415 10/11/2016 951 981 92.5 % 92.8 % Rockledge Apartments 802 708 6/30/2017 1,481 1,488 93.3 % 94.3 % Atera Apartments 334 380 10/25/2017 1,470 1,487 92.4 % 95.0 % Versailles II 199 242 9/26/2018 1,092 1,064 86.4 % 96.7 % Brandywine I & II 414 632 9/26/2018 1,170 1,204 91.3 % 94.6 % Bella Vista 243 248 1/28/2019 1,590 1,712 96.4 % 89.9 % The Enclave 194 204 1/28/2019 1,720 1,782 94.6 % 93.6 % The Heritage 199 204 1/28/2019 1,593 1,676 92.6 % 94.6 % Summers Landing 139 196 6/7/2019 1,170 1,198 88.7 % 95.4 % Residences at Glenview Reserve 344 360 7/17/2019 1,248 1,248 93.9 % 95.3 % Residences at West Place 345 342 7/17/2019 1,591 1,586 92.7 % 95.0 % Avant at Pembroke Pines 1,442 1520 8/30/2019 2,233 2,199 94.1 % 95.3 % Arbors of Brentwood 325 346 9/10/2019 1,415 1,458 92.2 % 93.1 % Torreyana Apartments 309 316 11/22/2019 1,479 1,444 90.5 % 95.9 % Bloom 498 528 11/22/2019 1,313 1,276 92.8 % 94.7 % Bella Solara 271 320 11/22/2019 1,335 1,328 88.4 % 93.1 % Fairways at San Marcos 340 352 11/2/2020 1,529 1,574 96.0 % 95.7 % The Verandas at Lake Norman 241 264 6/30/2021 1,341 1,343 94.3 % 98.1 % Creekside at Matthews 263 240 6/30/2021 1,461 1,423 92.9 % 95.8 % Six Forks Station 360 323 9/10/2021 1,347 1,359 93.5 % 93.2 % High House at Cary 293 302 12/7/2021 1,466 1,498 92.4 % 92.1 % The Adair 328 232 4/1/2022 1,942 1,995 95.3 % 91.4 % Estates on Maryland 324 330 4/1/2022 1,400 1,430 93.9 % 95.5 % Sedona at Lone Mountain 354 321 12/11/2025 1,592 — 91.6 % — 12,247 13,305 (1) Average effective monthly rent per unit is equal to the contractual rent for commenced leases as of December 31, 2025 and December 31, 2024, respectively, minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of December 31, 2025 and December 31, 2024, respectively.
Equity in earnings of affiliates is excluded as its not part of our core operations for the properties. These items can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales.
These items can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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An increase in interest rates could make the financing of any acquisition by us costlier. Rising or high interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
An increase in interest rates could make the financing of any acquisition by us more costly. Rising or high interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
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.
During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.36%, on a weighted average basis, on the notional amounts, while the Counterparties are obligated to make monthly floating rate payments based on Adjusted SOFR or 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 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.
For purposes of calculating the adjusted weighted average interest rate of the total indebtedness, we have included the weighted average fixed rate of 1.36% for the floating rate on the $0.9 billion notional amount of interest rate swap agreements that we have entered into as of December 31, 2025, which effectively fix the interest rate on $0.9 billion of our floating rate mortgage debt outstanding.
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.
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, 2025, we had total indebtedness of $1.6 billion at a weighted average interest rate of 4.90%, of which $1.6 billion was debt with a floating interest rate.
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 nine interest rate swap transactions with the Counterparties with a combined notional amount of $1.1 billion.
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 seven interest rate swap transactions with the Counterparties with a combined notional amount of $0.9 billion, and one forward rate swap agreement with a notional amount of approximately $0.1 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, 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.
We have designated these interest rate swaps as cash flow hedges of interest rate risk. 67 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, 2025, of the amounts illustrated in the table below for our indebtedness as of December 31, 2025 (dollars in thousands): Change in Interest Rates Annual Increase to Interest Expense 0.25% $ 1,600 0.50% 3,200 0.75% 4,800 1.00% 6,400 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.
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.
As of December 31, 2025, the interest rate cap agreements we have entered into effectively cap SOFR on $1.5 billion of our floating rate mortgage debt at a weighted average rate of 7.98% 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 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%.
The interest rate swap agreements we have entered into effectively fix the interest rate on 62% of our $1.5 billion of floating rate mortgage debt outstanding (see below). As of December 31, 2025, the adjusted weighted average interest rate of our total indebtedness was 3.39%.
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%.
The interest rate swaps we have entered into effectively replace the floating interest rate (Adjusted SOFR or SOFR) with respect to that amount with a weighted average fixed rate of 1.36%.
Removed
We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and floating rates for our indebtedness.
Removed
We have designated these interest rate swaps as cash flow hedges of interest rate risk.

Other NXRT 10-K year-over-year comparisons