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What changed in AvalonBay Communities's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AvalonBay Communities's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+356 added−336 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-23)

Top changes in AvalonBay Communities's 2024 10-K

356 paragraphs added · 336 removed · 297 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

38 edited+4 added−7 removed51 unchanged
Biggest changeWe are committed to promoting and achieving greater workplace diversity and have undertaken active steps to further this goal, including by supporting associate resource groups. Associate Engagement. We monitor the engagement of our associates, receive feedback from our associates, and benchmark our performance by having a third party firm conduct anonymous associate perspective surveys each year.
Biggest changeWe monitor the engagement of our associates, receive feedback from our associates, and benchmark our performance by having a third party firm conduct anonymous associate perspective surveys each year. The results are discussed and presented both on a company-wide basis and within each functional group. Safety.
We value workforce diversity and an inclusive culture. We believe that a diverse workplace will produce a variety of perspectives, motivate associates and help us understand and better serve our customers and the communities in which we do business.
We value workforce diversity and an inclusive culture and believe that a diverse workplace will produce a variety of perspectives, motivate associates and help us understand and better serve our customers and the communities in which we do business.
We develop, redevelop, acquire, own and operate multifamily apartment communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in our expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado.
We develop, redevelop, acquire, own and operate apartment communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in our expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado.
While we emphasize equity real estate investments in rental apartment communities, we have the ability to invest in other activities and to make non-equity investments, including the following: • Structured Investment Program : while we generally invest in multifamily real estate through fee simple ownership or an equity investment in a joint venture, we operate an investment platform through which we provide mezzanine loans or preferred equity to third-party multifamily developers in our existing regions. • Commercial space : we develop, own and lease commercial space at our communities when either (i) the highest and best use of the space is for commercial (e.g., street level in an urban area); (ii) we believe the commercial space will enhance the attractiveness of the community to residents; or (iii) some component of commercial space is required to obtain entitlements to build apartment homes. • Property technology and environmentally focused companies and investment management funds : we have also invested, either through a wholly-owned TRS, or in an investment vehicle that has elected to be treated as a TRS, in companies (and in venture funds that invest in companies) that provide technology services to the real estate industry, and we have invested, through a TRS, in environmentally focused companies and investment management funds to further our sustainability efforts and learning. 5 Table of Contents • For-sale real estate development : we may also develop a property in conjunction with another real estate company that will own and operate the commercial or for-sale residential components of a mixed-use building or project that we help develop.
While we emphasize equity real estate investments in rental apartment communities, we have the ability to invest in other activities and to make non-equity investments, including the following: • Structured Investment Program : while we generally invest in multifamily real estate through fee simple ownership or an equity investment in a joint venture, we operate an investment platform through which we provide mezzanine loans or preferred equity to third-party multifamily developers in our existing regions. • Commercial space : we develop, own and lease commercial space at our communities when either (i) the highest and best use of the space is for commercial (e.g., street level in an urban area); (ii) we believe the commercial space will enhance the attractiveness of the community to residents; or (iii) some component of commercial space is required to obtain entitlements to build apartment homes. • Property technology and environmentally focused companies and investment management funds : we have also invested, either through a wholly-owned TRS, or in an investment vehicle that has elected to be treated as a TRS, in companies (and in venture funds that invest in companies) that provide technology services to the real estate industry, and we have invested, through a TRS, in environmentally focused companies and investment management funds to further our sustainability efforts and learning. • For-sale real estate development : we may also develop a property in conjunction with another real estate company that will own and operate the commercial or for-sale residential components of a mixed-use building or project that we help develop.
In addition, the charters of our Board's Nominating, Governance and Corporate Responsibility Committee, Audit Committee and Compensation Committee, as well as our Director Independence Standards, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Policy Regarding Shareholder Rights Agreements, Policy Regarding Shareholder Approval of Future Severance Agreements, Senior Officer Stock Ownership Guidelines, Policy on Political Contributions and Government Relations, Compensation Recovery Policy, AvalonBay Sanctions Compliance and Anti-Corruption Policy and Environmental, Social, and Governance Reports, are available free of charge in that section of our website or by writing to AvalonBay Communities, Inc., 4040 Wilson Blvd., Suite 1000, Arlington, Virginia 22203, Attention: Chief Financial Officer.
In addition, the charters of our Board's Nominating, Governance and Corporate Responsibility Committee, Audit Committee and Compensation Committee, as well as our Director Independence Standards, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Policy Regarding Shareholder Rights Agreements, Policy Regarding Shareholder Approval of Future Severance Agreements, Senior Officer Stock Ownership Guidelines, Policy on Political Contributions and Government Relations, Compensation Recovery Policy, Insider Trading Policy, AvalonBay Sanctions Compliance and Anti-Corruption Policy and Environmental, Social, and Governance Reports, are available free of charge in that section of our website or by writing to AvalonBay Communities, Inc., 4040 Wilson Blvd., Suite 1000, Arlington, Virginia 22203, Attention: Chief Financial Officer.
Our redevelopment teams, which include redevelopment, construction and property management personnel, monitor redevelopment progress. Throughout this report, the term “redevelopment” is used to refer to the entire redevelopment cycle, including planning and procurement of architectural and engineering designs, budgeting and actual renovation work.
Our redevelopment teams, which include redevelopment, construction and property management personnel, monitor redevelopment progress. Throughout this report, the term "redevelopment" is used to refer to the entire redevelopment cycle, including planning and procurement of architectural and engineering designs, budgeting and actual renovation work.
We operate our apartment communities under four core brands: • Avalon, our core “Avalon” brand, focuses on upscale apartment living and high end amenities and services; • AVA targets customers in high energy, transit-served neighborhoods and generally feature smaller apartments, many of which are designed for roommate living, and a variety of active common spaces that encourage socialization; • eaves by Avalon is targeted to the cost conscious, “value” segment primarily in suburban areas; and • Kanso is designed to create an apartment living experience that offers simplicity without sacrifice at a more moderate price point, featuring high-quality apartment homes, limited-to-no community amenities and a low-touch, largely self- service operating model that leverages technology and smart access.
We operate our apartment communities under four core brands: • Avalon, our core "Avalon" brand, focuses on upscale apartment living and high end amenities and services; • AVA targets customers in high energy, transit-served neighborhoods and generally feature smaller apartments, many of which are designed for roommate living, and a variety of active common spaces that encourage socialization; • eaves by Avalon is targeted to the cost conscious, "value" segment primarily in suburban areas; and • Kanso is designed to create an apartment living experience that offers simplicity without sacrifice at a more moderate price point, featuring high-quality apartment homes, limited-to-no community amenities and a low-touch, largely self- service operating model that leverages technology and smart access.
We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 and related laws and regulations.
We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, antitrust laws, privacy laws, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 and related laws and regulations.
Throughout this report, the term “development” is used to refer to the entire property development cycle, including pursuit of zoning approvals, procurement of architectural and engineering designs and the construction process. References to “construction” refer to the actual construction of the property, which is only one element of the development cycle. Redevelopment Strategy.
Throughout this report, the term "development" is used to refer to the entire property development cycle, including pursuit of zoning approvals, procurement of architectural and engineering designs and the construction process. References to "construction" refer to the actual construction of the property, which is only one element of the development cycle. Redevelopment Strategy.
The construction, operation and leasing of our communities is subject to federal, state and local laws and regulations, include zoning laws, building codes, requirements 6 Table of Contents that our communities be accessible to persons with disabilities, fair housing laws, and, depending on the jurisdiction, regulations regarding the charging of rents and fees and increases in such amounts upon renewal of leases.
The construction, operation and leasing of our communities is subject to federal, state and local laws and regulations, include zoning laws, building codes, requirements that our communities be accessible to persons with disabilities, fair housing laws, and, depending on the jurisdiction, regulations regarding the charging of rents and fees and increases in such amounts upon renewal of leases.
We engage with our associates to understand our purpose, “Creating a Better Way to Live,” our core values (a commitment to integrity, a spirit of caring and a focus on continuous improvement) and our cultural norms (we collaborate, excel, innovate, act like owners, are thoughtful and thorough, show appreciation, and champion inclusion and diversity).
We engage with our associates to understand our purpose, "Creating a Better Way to Live," our core values (a commitment to integrity, a spirit of caring and a focus on continuous improvement) and our cultural norms (we collaborate, excel, innovate, act like owners, are thoughtful and thorough, show appreciation, and champion inclusion and diversity).
“Management's Discussion and Analysis of Financial Condition and Results of Operations.” A further discussion of our development, redevelopment, disposition, acquisition, operating and property management and related strategies follows. Development Strategy. We select land for development and follow established procedures that we believe minimize both the cost and the risks of development.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." A further discussion of our development, redevelopment, disposition, acquisition, operating and property management and related strategies follows. Development Strategy. We select land for development and follow established procedures that we believe minimize both the cost and the risks of development.
We also seek to generate additional shareholder value from investments in other real estate-related ventures, including through the Structured Investment Program (“SIP”), our platform to provide mezzanine loans or preferred equity to third-party multifamily developers in our existing regions.
We also seek to generate additional shareholder value from investments in other real estate-related ventures, including through our Structured Investment Program ("SIP"), our platform to provide mezzanine loans or preferred equity to third-party multifamily developers in our existing regions.
Our principal strategies to maximize operating income include: • focusing on associate engagement and resident satisfaction; • employing an innovative and continually evolving operating model that combines effective onsite associates with the capabilities of our centralized shared services center, technology platform and digital offerings and various automation technologies; • utilizing data science and our operating experience to optimize revenue from the portfolio, including making operating decisions that reduce customer acquisition, transaction and retention costs; • staggering lease terms such that lease expirations are matched with seasonal demand; and • delivering high occupancy with premium pricing for various customer segments.
Our principal strategies to maximize operating income include: • focusing on associate engagement and resident satisfaction; • employing an innovative and continually evolving operating model that combines effective onsite associates with the capabilities of our centralized shared services center, technology platform and digital offerings and various automation technologies including the use of artificial intelligence ("AI"); • utilizing data science and our operating experience to optimize Net Operating Income ("NOI") from the portfolio, including making operating decisions that reduce customer acquisition, transaction and retention costs; • staggering lease terms such that lease expirations are matched with seasonal demand; and • delivering high occupancy with premium pricing for various customer segments.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including exhibits and amendments to those reports, filed or furnished pursuant to the Exchange Act are available free of charge in the “Investor Relations” section of our website as soon as reasonably practicable after the reports are filed with or furnished to the SEC.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including exhibits and amendments to those reports, filed or furnished pursuant to the Exchange Act are available free of charge in the "Investor Relations" section of our website as soon as reasonably practicable after the reports are filed with or furnished to the SEC.
A more detailed description of our unconsolidated real estate entities and the related investment activity can be found in Note 5, “Investments,” of the Consolidated Financial Statements in Item 8 of this report and in Item 7.
A more detailed description of our unconsolidated real estate entities and the related investment activity can be found in Note 5, "Investments," of the Consolidated Financial Statements in Item 8 of this report and in Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” together with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report, for a discussion of material information relevant to an assessment of our financial condition and results of operations.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations," together with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report, for a discussion of material information relevant to an assessment of our financial condition and results of operations.
In addition to our principal executive office in Arlington, Virginia, we also have regional offices, administrative offices or specialty offices, including offices that are in or near the following cities: 2 Table of Contents • Austin, Texas; • Bellevue, Washington; • Boston, Massachusetts; • Chapel Hill, North Carolina; • Denver, Colorado; • Fort Lauderdale, Florida; • Irvine, California; • Los Angeles, California; • Melville, New York; • New York, New York; • San Antonio, Texas; • San Francisco, California; • San Jose, California; • Shelton, Connecticut; • Virginia Beach, Virginia; and • Westfield, New Jersey.
In addition to our principal executive office in Arlington, Virginia, we also have regional offices, administrative offices or specialty offices, including offices that are in or near the following cities: 2 Table of Contents • Austin, Texas; • Bellevue, Washington; • Boston, Massachusetts; • Durham, North Carolina; • Denver, Colorado; • Fort Lauderdale, Florida; • Irvine, California; • Los Angeles, California; • New York, New York; • San Antonio, Texas; • San Francisco, California; • San Jose, California; • Virginia Beach, Virginia; and • Westfield, New Jersey.
During the three years ended December 31, 2023, we: • acquired 14 apartment communities, excluding unconsolidated investments; • disposed of 22 apartment communities, excluding unconsolidated investments; • realized our pro rata share of the gain from the sale of five communities owned by unconsolidated real estate entities; and • completed the development of 21 apartment communities, including unconsolidated investments, and the redevelopment of two apartment communities.
During the three years ended December 31, 2024, we: • acquired 13 apartment communities, excluding unconsolidated investments; • disposed of 21 apartment communities, excluding unconsolidated investments; • realized our pro rata share of the gain from the sale of three communities owned by unconsolidated real estate entities; and • completed the development of 22 apartment communities, including unconsolidated investments, and the redevelopment of two apartment communities.
As a REIT, with limited exceptions, such as those described under “Property Management Strategy” above, we will not be taxed under federal and certain state income tax laws at the corporate level on our taxable net income to the extent such taxable net income is distributed to our stockholders.
As a REIT, with limited exceptions, such as those described under "Operating & Property Management Strategy" above, we will not be taxed under federal and certain state income tax laws at the corporate level on our taxable net income to the extent such taxable net income is distributed to our stockholders.
From time to time, we may engage a third party to manage leasing and/or maintenance activity at one or more of our communities, including in our expansion regions where we may have limited resources or scale. From time to time we also pursue or arrange ancillary services for our residents to provide additional revenue sources or increase resident satisfaction.
From time to time, we may engage a third party to manage leasing and/or maintenance activity at one or more of our communities, such as in our expansion regions where we may have limited resources or scale. 4 Table of Contents From time to time we also pursue or arrange ancillary services for our residents to provide additional revenue sources or increase resident satisfaction.
For further discussion of our Development Rights, refer to Item 2. “Properties” in this report.
For further discussion of our Development Rights, refer to Item 2. "Properties" in this report.
The actual renovation work is referred to as “reconstruction,” which is only one element of the redevelopment cycle. 3 Table of Contents Disposition Strategy.
The actual renovation work is referred to as "reconstruction," which is only one element of the redevelopment cycle. 3 Table of Contents Disposition Strategy.
At January 31, 2024, we had 3,039 employees, of which approximately 98% were employed on a full-time basis. Approximately 65% of our associates work on-site at our operating communities and the balance work on other matters. None of our associates are represented by a union. We consider the following aspects of human capital management to be important: Diversity and Inclusion.
At January 31, 2025, we had 2,988 employees, of which approximately 98% were employed on a full-time basis. Approximately 63% of our associates work on-site at our operating communities and the balance work on other matters. None of our associates are represented by a union. We consider the following aspects of human capital management to be important: Inclusion and Diversity.
We constrain growth in operating expenses in a variety of ways, which include, but are not limited to, the following: • purchase order controls, including acquiring goods and services from pre-approved vendors; • national negotiated contracts and bulk purchases where possible; • bidding third-party contracts on a volume basis; • retaining residents through high levels of service, which reduces apartment turnover costs, marketing and vacant apartment utility costs; • performing turnover work in-house or hiring third parties, generally considering the most cost-effective approach as well as expertise needed to perform the work; • regular preventive maintenance to maximize resident safety and satisfaction and property and equipment life; • centralization of lease renewal activity, as well as many community administration and support tasks at our shared service center; • pursuing real estate tax appeals; • installing high efficiency lighting and water fixtures, cogeneration systems and solar panels; and • implementing technology for resident and prospect services such as package lockers and self-guided or virtual tours. 4 Table of Contents On-site property management teams receive bonuses based largely upon the revenue, expense, Net Operating Income (“NOI”), prospect conversion, resident retention and customer service metrics produced at their respective communities.
We constrain growth in operating expenses in a variety of ways, which include, but are not limited to, the following: • purchase order controls, including acquiring goods and services from pre-approved vendors; • national negotiated contracts and bulk purchases where possible; • bidding third-party contracts on a volume basis; • retaining residents through high levels of service, which reduces apartment turnover costs, marketing and vacant apartment utility costs; • performing turnover work in-house or hiring third parties, generally considering the most cost-effective approach as well as expertise needed to perform the work; • regular preventive maintenance to maximize resident safety and satisfaction and property and equipment life; • centralization of lease renewal activity, as well as many community administration and support tasks at our shared service center; • pursuing real estate tax appeals; • installing high efficiency lighting and water fixtures, cogeneration systems and solar panels; and • implementing technology for resident and prospect services such as package lockers and self-guided or virtual tours.
Through our Construction Site Safety Observation program and our dedicated safety team, we monitor project-level safety performance metrics at our construction sites, and elements of compensation for our construction group and our CEO are based on safety compliance performance.
We take workplace safety seriously at our construction sites, our operating communities and our offices. Through our Construction Site Safety Observation program and our dedicated safety team, we monitor project-level safety performance metrics at our construction sites, and elements of compensation for our construction group and our CEO are based on safety compliance performance.
ITEM 1. BUSINESS General AvalonBay Communities, Inc. (the “Company,” “we,” “our” and “us” which terms, unless the context otherwise requires, refer to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes.
ITEM 1. BUSINESS General AvalonBay Communities, Inc. (the "Company," "we," "our" and "us" which terms, unless the context otherwise requires, refer to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust ("REIT") for federal income tax purposes.
“Risk Factors” for a discussion of material risks to us, including, to the extent material, to our competitive position, relating to governmental regulations, and see Part II, Item 7.
See Part I, Item 1A. "Risk Factors" for a discussion of material risks to us, including, to the extent material, to our competitive position and relating to governmental and environmental regulations, and see Part II, Item 7.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider new or modified rent control regulations, rent stabilization, or other laws that may limit or delay our ability to charge market rents, increase rents, charge ancillary fees or evict tenants. See Part I, Item 1A.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various 6 Table of Contents constituencies to consider new or modified rent control regulations, rent stabilization, or other laws that may limit or delay our ability to charge market rents, increase rents, use algorithmic pricing tools, charge ancillary fees, or evict tenants.
We provide such non-customary services to residents or share in the revenue or income from such services through a taxable REIT subsidiary (“TRS”), which is a subsidiary that is treated as a “C corporation” subject to federal income taxes. See “Tax Matters” below. Financing Strategy.
We provide such non-customary services to residents or share in the revenue or income from such services through a taxable REIT subsidiary ("TRS"), which is a subsidiary that is treated as a "C corporation" subject to federal income taxes. See "Tax Matters" below. Financing Strategy.
We estimate that our short-term liquidity needs will be met from cash on hand, borrowings under our $2,250,000,000 revolving variable rate unsecured credit facility (the “Credit Facility”) and our $500,000,000 unsecured commercial paper note program (the “Commercial Paper Program”), sales of current operating communities and/or issuance of additional debt or equity securities.
We estimate that our short-term liquidity needs will be met from cash on hand, borrowings under our $2,250,000,000 revolving variable rate unsecured credit facility (the "Credit Facility") and our $500,000,000 unsecured commercial paper ("CP") note program (the "Commercial Paper Program") which is backstopped by our commitment to maintain available capacity under the Credit Facility for any amounts of CP outstanding, sales of current operating communities and/or issuance of additional debt or equity securities.
At January 31, 2024, we owned or held a direct or indirect ownership interest in: • 279 operating apartment communities containing 83,655 apartment homes in 12 states and the District of Columbia, of which 271 communities containing 81,408 apartment homes were consolidated for financial reporting purposes and eight communities containing 2,247 apartment homes were held by unconsolidated entities in which we hold an ownership interest. • 19 wholly-owned development apartment communities that are under construction or completed and in lease-up and are expected to contain an aggregate of 6,539 apartment homes when completed and one unconsolidated investment which holds an apartment community under development and is expected to contain 475 apartment homes when completed. • Rights to develop an additional 30 communities that, if developed as expected, will contain 10,801 apartment homes.
At January 31, 2025, we owned or held a direct or indirect ownership interest in: • 284 operating apartment communities containing 86,111 apartment homes in 11 states and the District of Columbia, of which 275 communities containing 83,389 apartment homes were consolidated for financial reporting purposes and nine communities containing 2,722 apartment homes were held by unconsolidated entities in which we hold an ownership interest. • 21 wholly-owned development apartment communities that are under construction or completed and in lease-up and are expected to contain an aggregate of 7,305 apartment homes when completed. • Rights to develop an additional 30 communities that, if developed as expected, will contain 9,336 apartment homes.
Our learning management system, AvalonBay University, offers approximately 700 courses providing functional, technical, management, ethics, compliance, cyber-awareness and safety training. 7 Table of Contents Available Information We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may obtain copies of our SEC filings, free of charge, from the SEC's website at www.sec.gov.
Our learning management system, Workday Learning, offers approximately 600 courses providing functional, technical, management, ethics, compliance, cyber-awareness and safety training. 7 Table of Contents Available Information We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC").
At January 31, 2024, 37% of our associates self-identified as White, 30% as Hispanic, 16% as Black, 6% as Asian, and 11% as other ethnicities, two or more ethnicities or did not respond. At January 31, 2024, 59% of our associates self-identified as male and 41% as female.
At January 31, 2025, 36% of our associates self-identified as White, 29% as Hispanic, 17% as Black, 7% as Asian, and 11% as other ethnicities, two or more ethnicities or did not respond. At January 31, 2025, 60% of our associates self-identified as male and 40% as female. Associate Engagement.
When we decide to sell a community, we generally solicit competing bids from unrelated parties for these individual assets and consider the sales price and other terms of each proposal. As part of the Archstone Acquisition in 2013 (as defined in Item 1.
When we decide to sell a community, we generally solicit competing bids from unrelated parties for these individual assets and consider the sales price and other terms of each proposal. Acquisition Strategy. Our core competencies in development and redevelopment discussed above allow us to be selective in the acquisitions we target.
At all times we intend to make investments in a manner so as to qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code of 1986, as amended (the “Code”) (or the Treasury Regulations thereunder), our Board of Directors determines that it is no longer in our best interest to qualify as a REIT.
At all times we intend to make investments in a manner so as to qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code of 1986, as amended (the "Code") (or the Treasury Regulations thereunder), our Board of Directors determines that it is no longer in our best interest to qualify as a REIT. 5 Table of Contents We conduct many of the administrative functions associated with our property operations (including billing, collections, and response to resident inquiries) through an internally operated shared services center, rather than having on-site associates conduct such activities.
We pursue our development, redevelopment, investment and operating activities with the purpose of “Creating a Better Way to Live.” 1 Table of Contents We seek to be a leading apartment company in select U.S. markets that are characterized by growing employment in high wage sectors of the economy, higher home prices and a diverse and vibrant quality of life.
We pursue our development, redevelopment, investment and operating activities with the purpose of "Creating a Better Way to Live." 1 Table of Contents We seek to be the leading rental housing company in select U.S. markets by delivering distinctive experiences that customers value, creating a workplace where associates thrive, and achieving superior results for shareholders.
To the extent required by the rules of the SEC and the New York Stock Exchange (the “NYSE”), we will disclose amendments and waivers relating to these documents in the same place on our website. The information posted on our website is not incorporated into this Annual Report on Form 10-K. 8 Table of Contents
To the extent required by the rules of the SEC and the New York Stock Exchange (the "NYSE"), we will disclose amendments and waivers to the Code of Business Conduct and Ethics, and to the other documents as required by those documents and applicable laws, in the same place on our website.
Removed
“Business” in the Company's Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2019), we acquired, and still own, 14 assets that had previously been contributed by third parties on a tax-deferred basis to an Archstone partnership in which the third parties received ownership interests.
Added
We focus on markets that are characterized by growing employment in high wage sectors of the economy, higher home prices and a diverse and vibrant quality of life.
Removed
To protect the tax-deferred nature of the contribution, the third parties are entitled to cash payments if we trigger tax obligations to the third parties by selling, or failing to maintain sufficient levels of secured financing on, the contributed assets.
Added
On-site property management teams receive bonuses based largely upon the revenue, expense, NOI, prospect conversion, resident retention and customer service metrics produced at their respective communities.
Removed
Our tax protection payment obligations with respect to these assets don’t expire until the death of a third party who contributed ownership interests to the Archstone partnership.
Added
You may obtain copies of our SEC filings, free of charge, from the SEC's website at www.sec.gov. We maintain a website at www.avalonbay.com.
Removed
After review and investigation of Archstone’s tax and accounting records, we estimate that, had we sold or taken other triggering actions in 2023 with respect to all 14 assets, the aggregate amount of the tax protection payments that would have been triggered would have been approximately $44,100,000.
Added
The information posted on our website is not incorporated into this Annual Report on Form 10-K. 8 Table of Contents
Removed
At the present time, we do not intend to take actions that would cause us to be required to make tax protection payments with respect to any of these assets. Acquisition Strategy. Our core competencies in development and redevelopment discussed above allow us to be selective in the acquisitions we target.
Removed
We conduct many of the administrative functions associated with our property operations (including billing, collections, and response to resident inquiries) through an internally operated shared services center, rather than having on-site associates conduct such activities.
Removed
The results are discussed and presented both on a company-wide basis and within each functional group. Safety. We take workplace safety seriously at our construction sites, our operating communities and our offices.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

76 edited+16 added−7 removed131 unchanged
Biggest changeWe intend that our dealings with our TRSs will be on an arm’s-length basis. No assurances can be given, however, that the IRS will not assert a contrary position. Failure of one or more of our subsidiaries to qualify as a REIT could adversely affect our ability to qualify as a REIT.
Biggest changeFurthermore, we may be subject to a 100% penalty tax, to the extent dealings between us and 16 Table of Contents our TRSs are not deemed to be arm’s-length in nature. We intend that our dealings with our TRSs will be on an arm’s-length basis. No assurances can be given, however, that the IRS will not assert a contrary position.
Risks related to investments through acquisitions, construction, development, and joint ventures Development, redevelopment and construction risks could affect our profitability. We intend to continue to develop and redevelop apartment home communities. These activities can include long planning and entitlement timelines and can involve complex and costly activities, including significant environmental remediation or construction work in high-density urban areas.
Risks related to investments through acquisitions, construction, development, and joint ventures Development, redevelopment and construction risks could affect our profitability. We intend to continue to develop and redevelop apartment communities. These activities can include long planning and entitlement timelines and can involve complex and costly activities, including significant environmental remediation or construction work in high-density urban areas.
In addition, our use of hedging arrangements may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may default on the contract. There can be no assurance that our hedging activities will be effective reducing the risks associated with interest rate fluctuations.
In addition, our use of hedging arrangements may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may default on the contract. There can be no assurance that our hedging activities will be effective at reducing the risks associated with interest rate fluctuations.
The tax imposed on REITs engaging in “ prohibited transactions ” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes. We may transfer or otherwise dispose of some of our properties.
The tax imposed on REITs engaging in "prohibited transactions" may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes. We may transfer or otherwise dispose of some of our properties.
These activities may expose us to the following risks, among others: • we have recently, and may in the future, abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs or we may impair land held for development, and as a result, we may fail to recover expenses already incurred in exploring those opportunities; • occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities; • we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy or other required governmental or third party permits and authorizations, which could result in increased costs, or the delay or abandonment of opportunities; • we may incur costs that exceed our original estimates due to increased material, labor or other costs or supply chain disruptions which could impact our overall return from our development, redevelopment or construction activity; • we may be unable to complete construction of a community on schedule or for the originally projected cost resulting in increased construction and financing costs; • we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and • we may incur liability if our communities are not constructed in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements.
These activities may expose us to the following risks, among others: • we have recently abandoned, and may in the future abandon, opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs or we may impair land held for development, and as a result, we may fail to recover expenses already incurred in exploring those opportunities; • occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities; • we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy or other required governmental or third party permits and authorizations, which could result in increased costs, or the delay or abandonment of opportunities; • we may incur costs that exceed our original estimates due to increased material, labor or other costs or supply chain disruptions, including as a result of tariffs or changes in immigration laws or their enforcement, which could impact our overall return from our development, redevelopment or construction activity; • we may be unable to complete construction of a community on schedule or for the originally projected cost resulting in increased construction and financing costs; • we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and • we may incur liability if our communities are not constructed in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements.
Noncompliance could result in imposition of fines, an award of damages to private litigants and a requirement that we undertake structural modifications to remedy the noncompliance. Refer to our “Risks related to liquidity and financing” section below for additional construction and development risks related to financing. Attractive investment opportunities may not be available, which could adversely affect our profitability.
Noncompliance could result in imposition of fines, an award of damages to private litigants and a requirement that we undertake structural modifications to remedy the noncompliance. Refer to our "Risks related to liquidity and financing" section below for additional construction and development risks related to financing. Attractive investment opportunities may not be available, which could adversely affect our profitability.
For example, the State of California has statewide rent control for communities older than fifteen years, limiting rent increases to the lesser of 10% or 5% plus local CPI, and the State of New York has rules for rent-controlled and rent-stabilized units that limit the way rent increases are calculated for renewal leases, basing increases solely on rent actually paid and eliminating the ability to increase the renewal rent to a higher “registered rent.” Furthermore, in California the Governor has the ability to enact local or statewide states of emergency which limit our ability to increase new and renewal rents more than 10% over the rent in place on the date such state of emergency was declared, which has impacted some of our California communities.
For example, the State of California has statewide rent control for communities older than fifteen years, limiting rent increases to the lesser of 10% or 5% plus local CPI, and the State of New York has rules for rent-controlled and rent-stabilized units that limit the way rent increases are calculated for renewal leases, basing increases solely on rent actually paid and eliminating the ability to increase the renewal rent to a higher "registered rent." Furthermore, in California the Governor has the ability to enact local or statewide states of emergency which limit our ability to increase new and renewal rents more than 10% over the rent in place on the date such state of emergency was declared, which has impacted some of our California communities.
Subsequently, on November 1, 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc. and 14 owners and/or operators of multifamily housing in the District of Columbia, including the Company, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data.
Subsequently, on November 1, 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc. and 14 owners and/or operators of multifamily housing in the District of Columbia, including the Company, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data (the “D.C.
Further, laws and regulations at the federal, state and local level requiring climate-related disclosures, including the rules proposed by the SEC and the legislation recently enacted in the state of California, may increase compliance and data collection costs if, and when, such laws and regulations become effective. We may incur costs due to environmental contamination or non-compliance.
Further, laws and regulations at the federal, state and local level requiring climate-related disclosures, including the rules promulgated by the SEC and the legislation recently enacted in the state of California, may increase compliance and data collection costs if, and when, such laws and regulations become effective. We may incur costs due to environmental contamination or non-compliance.
Such initiatives have involved and may involve our employees having new or different responsibilities and processes. We may incur significant costs and divert resources in connection with such initiatives, and these initiatives may not perform as expected, which could adversely affect our business, results of operations, cash flows and financial condition.
Such initiatives have involved and may continue to involve our employees having new or different responsibilities and processes. We may incur significant costs and divert resources in connection with such initiatives, and these initiatives may not perform as expected, which could adversely affect our business, results of operations, cash flows and financial condition.
Although our and our vendors' information technology systems are essential to the operation of our business and our ability to perform day-to-day operations, even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the 19 Table of Contents techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.
Although our and our vendors' information technology systems are essential to the operation of our business and our ability to perform day-to-day operations, even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.
Substantially all of our apartment leases are for a term of one year or less, which we believe mitigates our exposure to inflation by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance).
Most of our apartment leases are for a term of one year or less, which we believe mitigates our exposure to inflation by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance).
Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements or other conditions, or (ii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements or 14 Table of Contents other conditions, or (ii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
We may experience climate change impacts including extreme weather, sea level rise, the effects of declines in available water supplies and changes in precipitation, temperature and wildfire exposure, all of which may result in physical damage to and/or a decrease in demand for properties located in areas affected by these conditions.
We may experience physical climate change impacts including extreme weather, sea level rise, the effects of declines in available water supplies and changes in precipitation, temperature and wildfire exposure, all of which may result in damage to, disruption of services at, and/or a decrease in demand for properties located in areas affected by these conditions.
We rely on information technology, including the internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, personally identifiable information (“PII”), and tenant and lease data.
We rely on information technology, including the internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, personally identifiable information ("PII"), and tenant and lease data.
See “Risks related to our REIT or tax status or reliance on various tax regulations” section for more information on federal tax law risks. In addition, the capitalization rates/disposition yields at which apartment communities may be sold could also be higher than historic rates, thereby reducing our potential proceeds from sale.
See "Risks related to our REIT or tax status or reliance on various tax regulations" section for more information on federal tax law risks. In addition, the capitalization rates/disposition yields at which apartment communities may be sold could also be higher than historic rates, thereby reducing our potential proceeds from sale.
As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law which restricts some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, which may delay or prevent offers to acquire us even if they are in our stockholders' best interests.
As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law which restricts some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, 19 Table of Contents which may delay or prevent offers to acquire us even if they are in our stockholders' best interests.
Changes in U.S. accounting standards may materially and adversely affect the reporting of our operations. We follow accounting principles generally accepted in the United States (“GAAP”). GAAP is established by the Financial Accounting Standards Board (“FASB”), an independent body whose standards are recognized by the SEC as authoritative for publicly held companies.
Changes in U.S. accounting standards may materially and adversely affect the reporting of our operations. We follow accounting principles generally accepted in the United States ("GAAP"). GAAP is established by the Financial Accounting Standards Board ("FASB"), an independent body whose standards are recognized by the SEC as authoritative for publicly held companies.
The form, timing and/or amount of dividend distributions will be declared at the discretion of the Board of Directors and will depend on our rental revenue, actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the 12 Table of Contents Code and other factors as the Board of Directors may consider relevant.
The form, timing and/or amount of dividend distributions will be declared at the discretion of the Board of Directors and will depend on our rental revenue, actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the Board of Directors may consider relevant.
In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock. 11 Table of Contents We may use interest rate derivatives to manage our exposure to fluctuations in interest rates, such as by entering into interest rate contracts.
In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock. We may use interest rate derivatives to manage our exposure to fluctuations in interest rates, such as by entering into interest rate contracts.
“Properties—Other Land and Real Estate Assets,” in the event that the fair market value, less the cost to dispose of a parcel, changes such that it is less than the carrying basis of the parcel, we would be subject to an impairment charge, which would reduce our net income.
"Properties—Other Land and Real Estate Assets," in the event that the fair market value, less the cost to dispose of a parcel, changes such that it is less than the carrying basis of the parcel, we would be subject to an impairment charge, which would reduce our net income.
Certain laws and regulations govern the removal, encapsulation or disturbance of asbestos containing materials (“ACMs”) when such materials are in poor condition or in the event of renovation or demolition of a building.
Certain laws and regulations govern the removal, encapsulation or disturbance of asbestos containing materials ("ACMs") when such materials are in poor condition or in the event of renovation or demolition of a building.
Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our residents’ ability to pay rents or our results of operations.
Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our residents’ 15 Table of Contents ability to pay rents or our results of operations.
This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code 15 Table of Contents for which there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control.
This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code for which there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control.
Current and future enactments of rent control or rent stabilization laws or other laws regulating rental housing may limit our ability to charge market rents, increase rents, charge non-rent fees, screen and evict tenants or recover increases in our operating expenses and could make it more difficult for us to dispose of properties in certain circumstances.
Current and future enactments of rent control or rent stabilization laws or other laws regulating rental housing may limit our ability to charge market rents, increase rents, use algorithmic pricing tools, charge non-rent fees, screen and evict tenants or recover increases in our operating expenses and could make it more difficult for us to dispose of properties in certain circumstances.
Many of our markets, particularly those located in coastal cities, are exposed to risks associated with inclement or severe weather including those arising from climate change such as hurricanes, severe winter storms and coastal flooding. • Terrorism and other risk.
Many of our markets, particularly those located in coastal cities, are exposed to risks associated with inclement or severe weather including those arising from climate change such as hurricanes, severe winter storms and coastal flooding.
These provisions include the following: 18 Table of Contents Our charter authorizes our Board of Directors to issue up to 50,000,000 shares of preferred stock without stockholder approval and to establish the preferences and rights, including voting rights, of any series of preferred stock issued.
These provisions include the following: Our charter authorizes our Board of Directors to issue up to 50,000,000 shares of preferred stock without stockholder approval and to establish the preferences and rights, including voting rights, of any series of preferred stock issued.
During 2023, we began to provide, through our internally operated shared service center, various back-office, financial administrative support services to a third party for a fee, and we may in the future provide such services to other third parties.
We provide, through our internally operated shared service center, various back-office, financial administrative support services to a third party for a fee, and we may in the future provide such services to other third parties.
A number of states and municipalities have implemented or are seeking to implement rent control or rent stabilization laws and regulations or take other actions that could limit or delay our ability to raise rents, charge non-rent fees, screen and evict tenants for non-payment of rent or other lease violations.
A number of states and municipalities have implemented or are seeking to implement rent control or rent stabilization laws and regulations or take other actions that could limit or delay our ability to raise rents, use algorithmic pricing tools, charge non-rent fees, screen and evict tenants for non-payment of rent or other lease violations.
In addition, 17 Table of Contents some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination.
In addition, some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination.
Acquisitions may not yield anticipated results. Our business strategy of acquiring communities may have the following risks: (i) acquisitions may not perform as we expected; (ii) our estimate of the costs of operating, repositioning or redeveloping an acquisition may be inaccurate; and (iii) acquisitions may subject us to unknown liabilities.
Acquisitions may not yield anticipated results. Our business strategy of acquiring communities involves the following risks, among others: (i) acquisitions may not perform as we expected; (ii) our estimate of the costs of operating, repositioning or redeveloping an acquisition may be inaccurate; and (iii) acquisitions may subject us to unknown liabilities.
In addition, the adoption of increased government regulations and changes in investor preference related to ESG and similar matters may result in changes to our business practices, including increasing expenses or capital expenditures. We have communicated certain initiatives and goals regarding ESG matters and we may in the future communicate revised or additional initiatives or goals.
In addition, the adoption of increased government regulations and changes in investor preference related to CR matters may result in changes to our business practices, including increasing expenses or capital expenditures. We have communicated certain initiatives regarding CR matters and we may in the future communicate revised or additional initiatives.
In addition, implementation of new or changes in existing federal, state and local regulations based on concerns about climate change could result in increased capital expenditures or operating expenses on our existing properties (for example, requiring retrofitting of existing systems) and our new development properties (for example, to improve energy efficiency, reduce greenhouse gas emissions and/or improve resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our results of operations.
The implementation of new or changes in existing federal, state and local regulations based on concerns about climate change could result in increased capital expenditures or operating expenses on our existing properties (for example, required retrofitting of existing systems or increased utility costs) and our new development properties (for example, to improve energy efficiency, reduce greenhouse gas emissions and/or improve resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our results of operations.
As of December 31, 2023, 4.6% of our apartment homes at current operating communities were under income limitations such as these. These commitments, which may or may not expire, may limit our ability to raise rents, adversely affecting the value of communities subject to these restrictions.
As of December 31, 2024, 4.1% of our apartment homes at current operating communities were under income limitations such as these. These commitments, which may or may not expire, may limit our ability to raise rents, adversely affecting the value of communities subject to these restrictions.
Gross rental revenue provided by leased commercial space in our portfolio represented 1.5% of our total revenue in 2023. The long term nature of our commercial leases and characteristics of many of our tenants (small, local businesses) may subject us to certain risks.
Gross rental revenue provided by leased commercial space in our portfolio represented 1.4% of our total revenue in 2024. The long term nature of our commercial leases and characteristics of many of our tenants (small, local businesses) may subject us to certain risks.
We may face risks in connection with Section 1031 exchanges. We may dispose of real properties in transactions intended to qualify as “like-kind exchanges” under Section 1031 of the Code.
We may face risks in connection with Section 1031 exchanges. We may dispose of real properties in transactions intended to qualify as "like-kind exchanges" under Section 1031 of the Code.
We are and may in the future become involved in legal proceedings, claims, actions, inquiries and/or investigations in connection with our operations, which may result in defense costs, settlements, fines and/or judgments against us, some of which are not, or cannot be, covered by insurance, including risks related to the multifamily rental antitrust litigation discussed below.
We are and may in the future become involved in legal proceedings, claims, actions, inquiries and/or investigations in connection with our operations, which may result in defense costs, settlements, fines and/or judgments against us, some of which are not, or cannot be, covered by insurance, including risks related to the multifamily rental antitrust litigation discussed elsewhere in this Form 10-K.
Incidents that directly or indirectly damage our communities, both physically and financially, or cause losses that exceed our insurance coverage could have a material adverse effect on our business, financial condition and results of operations including increased maintenance, repair, and delays in construction.
Incidents that directly or indirectly damage our communities, both physically and financially, or cause losses that exceed our insurance coverage (including amounts payable by our captive insurance company) could have a material adverse effect on our business, financial condition and results of operations including increased maintenance, repair, and delays in construction.
In addition, state and federal legislation has been introduced that could regulate the use by multifamily apartment rental companies of third party algorithmic revenue management systems, and if legislation of this type passes, the impact on the Company is difficult to predict.
In addition, state and federal legislation has been introduced (and in San Francisco adopted) to regulate the use by multifamily apartment rental companies of third party algorithmic revenue management systems, and if legislation of this type passes, the impact on the Company is difficult to predict.
Short-term leases expose us to the effects of declining market rents. Substantially all of our apartment leases are for a term of one year or less.
Short-term leases expose us to the effects of declining market rents. Most of our apartment leases are for a term of one year or less.
“Properties—Insurance and Risk of Uninsured Losses”): • Earthquake risk. As further described in Item 2. “Properties—Insurance and Risk of Uninsured Losses,” many of our West Coast communities are located in the general vicinity of active earthquake faults. Insurance coverage for earthquakes can be costly and in limited supply. • Climate and severe or inclement weather risk.
"Properties—Insurance and Risk of Uninsured Losses"): • Earthquake risk. As further described in Item 2. "Properties—Insurance and Risk of Uninsured Losses," many of our West Coast communities are located in the general vicinity of active earthquake faults. Insurance coverage for earthquakes can be costly and in limited supply. • Climate, severe or inclement weather or natural disaster risk.
Risks related to a pandemic’s impact on multifamily rental housing. The national and global impacts of a pandemic, such as the COVID-19 pandemic, may present material uncertainty and risk with respect to our financial condition, results of operations and cash flows.
Risks related to the impact of a pandemic, epidemic or other health crisis on multifamily rental housing. The national and global impacts of a health crisis, such as the COVID-19 pandemic, may present material uncertainty and risk with respect to our financial condition, results of operations and cash flows.
Insufficient cash flow could affect our debt financing and create refinancing risk. We are subject to the risks associated with debt financing, including the risk that our available cash will be insufficient to meet required payments of principal and interest on our debt.
We are subject to the risks associated with debt financing, including the risk that our available cash will be insufficient to meet required payments of principal and interest on our debt.
A disruption in the normal operations of our workforce, as well as the possibility of illness among our associates or a substantial portion of our workforce, could also adversely affect our operations. Risks related to commercial leasing operations. Although we are primarily in the multifamily rental business, we also own and lease ancillary commercial space.
A disruption in the normal operations of our workforce, including impacts of illness among a substantial portion of our workforce, could also adversely affect our operations. Risks related to commercial leasing operations. Although we are primarily in the multifamily rental business, we also own and lease ancillary commercial space.
These obligations are commonly referred to as “tax-exempt bonds” and generally must be secured by mortgages on our communities.
These obligations are commonly referred to as "tax-exempt bonds" and generally must be secured by mortgages on our communities.
We could face liabilities for failure to comply with these requirements. Privacy laws and regulations, such as the California Consumer Privacy Act as amended by the California Privacy Rights Act (“CCPA”), related regulations and other U.S. state privacy laws, are evolving and may be subject to differing interpretations.
We could face liabilities for failure to comply with these requirements. Privacy laws and 20 Table of Contents regulations, such as the California Consumer Privacy Act as amended by the California Privacy Rights Act and the Texas Data Privacy and Security Act, related regulations and other U.S. state privacy laws, are evolving and may be subject to differing interpretations.
Disruptions and uncertainty with respect to financial institutions, including as a result of recent bank failures and liquidity concerns, may negatively impact our ability to refinance existing indebtedness and access additional financing at reasonable terms or at all or may cause us or our transactional counterparties to be unable to complete transactions as intended, all of which could have a material adverse effect on our financial condition and results of operations .
Disruptions and uncertainty with respect to financial institutions, including as a result of bank failures and liquidity concerns, may negatively impact our ability to refinance existing indebtedness and access additional financing at reasonable terms or at all or may cause us or our transactional counterparties to be unable to complete transactions as intended, all of which could have a material adverse effect on our financial condition and results of operations. 11 Table of Contents Insufficient cash flow could affect our debt financing and create refinancing risk.
However, inflation could outpace any increases in rent and adversely affect us. We may not be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation, and any related adverse effects on our results of operations and financial condition, are unknown at this time.
We may not be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation, and any related adverse effects on our results of operations and financial condition, are unknown at this time.
This has included or may in the future include expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor and risk oversight, and could expand the nature, scope, and complexity of matters that we are required to control, assess and report, which may prove difficult, expensive and time consuming.
Changing practices have in the past and may in the future include expanded mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, inclusion and diversity, labor, and risk oversight, and these could expand the nature, scope, and complexity of matters that we are required to control, assess and report on, which may prove difficult, expensive and time consuming.
Should the impact of these conditions be material in nature or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected, and may negatively impact the types and pricing of insurance we are able to procure.
Should the impact of these conditions be material or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected, and it may negatively impact the types and pricing of insurance we are able to procure. In addition, we may experience transition risks associated with climate change.
A default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could materially adversely affect our liquidity and increase our financing costs. Refer to Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” for further discussion.
A default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could materially adversely affect our liquidity and increase our financing costs. Refer to Item 7.
Moreover, many of the risk factors set forth in this Form 10-K could be interpreted as heightened risks as a result of the impact of a pandemic.
Moreover, many of the risk factors set forth in this Form 10-K could be interpreted as heightened risks due to the impact of a pandemic, epidemic or other health crisis.
All of our stabilized operating communities, and all of the communities that we are currently developing, have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or groundwater sampling.
We are aware that some of our communities have lead paint and have implemented an operations and maintenance program at each of those communities. 18 Table of Contents All of our stabilized operating communities, and all of the communities that we are currently developing, have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or groundwater sampling.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider regulations of the types described above.
We have seen an increase in state and local governments in our markets implementing, considering or being urged by various constituencies to consider regulations of the types described above. Additionally, various federal agencies have engaged in efforts aimed at increasing fairness in the rental market.
A substantial portion of our debt is subject to prepayment penalties or premiums that we will be obligated to pay in the event that we elect to prepay the debt prior to the earlier of (i) its stated maturity or (ii) another stated date.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion. 12 Table of Contents A substantial portion of our debt is subject to prepayment penalties or premiums that we will be obligated to pay in the event that we elect to prepay the debt prior to the earlier of (i) its stated maturity or (ii) another stated date.
Regardless of whether the Company remains named in the District of Columbia lawsuit or any other lawsuits or becomes the focus of any governmental investigation, the Company may incur substantial costs related to these lawsuits, whether as a defendant or as a third-party witness.
Antitrust Litigation, the Maryland Antitrust Litigation or any other lawsuits or becomes the focus of any governmental investigation, the Company may incur substantial costs related to these lawsuits or investigations, whether as a defendant or as a third-party witness.
These ground leases may impose 10 Table of Contents limitations on our use or improvement of the properties, restrict our ability to finance, sell or otherwise transfer our interests or restrict the leasing of the properties.
We own assets that are subject to long-term ground leases. These ground leases may impose limitations on our use or improvement of the properties, restrict our ability to finance, sell or otherwise transfer our interests or restrict the leasing of the properties.
Relying on third parties to assist with and/or oversee development and construction creates additional and different risks than when we manage these activities directly, including that the third party may not perform to our standards, may breach contractual arrangements, or may incur liquidity constraints. 9 Table of Contents We also may engage or have an interest in for-sale activity, such as the sale of the residential condominiums at The Park Loggia, a mixed-use development located in New York, New York.
Relying on third parties to assist with and/or oversee development and 9 Table of Contents construction creates additional and different risks than when we manage these activities directly, including that the third party may not perform to our standards, may breach contractual arrangements, or may incur liquidity constraints.
Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development projects. Risks related to our REIT or tax status or reliance on various tax regulations Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to stockholders.
Risks related to our REIT or tax status or reliance on various tax regulations Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to stockholders.
Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so. Inflation may also increase the costs to complete our development projects, including costs of materials, labor and services from third-party contractors and suppliers.
Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so.
Taxable stockholders receiving 16 Table of Contents such dividends will be required to include the full amount of the dividend as income to the extent of our current and accumulated earnings and profits for federal income tax purposes.
Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of the cash dividend received.
Rising interest rates could increase interest costs and could affect the market price of our common stock, and efforts to hedge such risk could be ineffective and cause us to incur additional costs. If interest rates increase, our interest costs on variable rate debt will rise unless we have hedged the risk of rising interest rates.
Rising interest rates could increase interest costs and could affect the market price of our common stock, and efforts to hedge such risk could be ineffective and cause us to incur additional costs. Interest rates have increased in recent years, and may increase further.
Increased scrutiny and changing expectations from investors, tenants and others regarding our environmental, social and governance ( “ ESG ” ) practices and reporting could impact our business practices, cause us to incur additional costs and expose us to new risks.
Increased scrutiny and changing expectations from regulators, investors, associates, residents and others regarding our environmental, social and governance practices and reporting, including those related to workplace inclusion and diversity (collectively, "Corporate Responsibility" or "CR"), could impact our business practices, cause us to incur additional costs and expose us to new risks.
Inflation and related volatility in the economy could negatively impact our residents and our results of operations. Inflation accelerated rapidly in 2022, continued at an elevated level in 2023 and may continue at the present level or increase.
Inflation and related volatility in the economy could negatively impact our residents and our results of operations. Although it has declined from its 2022 peak, inflation has remained elevated in 2023 and 2024 compared to pre-pandemic years, and may continue at the present level or increase.
Our various technology-related initiatives to improve our operating margins and customer experience may fail to perform as expected. We have developed and may continue to develop initiatives that are intended to serve our customers better and operate more efficiently, including “smart home” technology and self-service options that are accessible to residents through smart devices or otherwise.
We have developed and may continue to develop initiatives that are intended to serve our customers better and operate more efficiently, including "smart home" technology; use of AI in correspondence with prospective, current and prior residents; and self-service options that are accessible to residents through smart devices or otherwise.
We have owned and may in the future own interests in subsidiaries that have elected (or will elect) to be taxed as REITs under the Code. These subsidiary REITs were or will be subject to the REIT qualification requirements and other limitations that are applicable to us.
These subsidiary REITs were or will be subject to the REIT qualification requirements and other limitations that are applicable to us.
While the Company intends to vigorously defend against this lawsuit, given the early stage of the District of Columbia’s lawsuit, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuit. The Company is also aware that governmental investigations regarding antitrust matters in the multifamily industry are ongoing.
While the Company intends to vigorously defend against the D.C. Antitrust Litigation and the Maryland Antitrust Litigation, given the early stage of the lawsuits, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuits.
To the extent we experience delays in construction, our construction costs may increase and we may not achieve, on the schedule we originally planned, the cash flows that we expect when we begin leasing a completed property.
Further, emergency orders such as shutting down non-essential businesses, may disrupt our development and construction activity which may increase our construction costs and we may not achieve, on the schedule we originally planned, the cash flows that we expect when we begin leasing a completed property.
While we will attempt to ensure that our dealings with our TRSs do not adversely affect our REIT qualification, we cannot provide assurances that it will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, to the extent dealings between us and our TRSs are not deemed to be arm’s-length in nature.
While we will attempt to ensure that our dealings with our TRSs do not adversely affect our REIT qualification, we cannot provide assurances that it will successfully achieve that result.
We are exposed to risks associated with real estate assets that are subject to ground leases that may restrict our ability to finance, sell or otherwise transfer our interests in those assets, limit our use and expose us to loss if such agreements are breached by us or terminated. We own assets that are subject to long-term ground leases.
The ultimate resolutions may differ from our expectation, and we could suffer losses that would have a material adverse effect on our financial performance, the trading price of our securities and our ability to pay dividends and distributions. 10 Table of Contents We are exposed to risks associated with real estate assets that are subject to ground leases that may restrict our ability to finance, sell or otherwise transfer our interests in those assets, limit our use and expose us to loss if such agreements are breached by us or terminated.
Impacts from a pandemic may include the following: • State, local, and federal entities may impose restrictions, for varying times and to varying degrees, on our ability to enforce residents’ contractual lease obligations, and this may affect our ability to enforce all our remedies (such as pursuing collections and seeking evictions) for the failure to pay rent. • Consumers whose income has declined or who are working remotely may decide to live in a location other than our markets.
State, local, and federal entities may impose restrictions, for varying times and to varying degrees (as experienced during the COVID-19 pandemic), on our ability to enforce residents’ contractual lease obligations, and this may affect our ability to enforce all of our remedies (such as pursuing collections, imposing late fees and seeking evictions) for the failure to pay rent and may result in foregone revenue.
Municipalities other than the 13 Table of Contents District of Columbia or federal agencies may also bring suits against multifamily rental providers.
Jurisdictions other than the District of Columbia and Maryland, or additional federal agencies, may also bring suits against multifamily rental providers. Regardless of whether the Company remains named in the D.C.
Risks related to operations of our communities Laws, regulations and orders imposing rent control or rent stabilization, or limiting our rights as a landlord, could adversely affect our operations and revenue.
Legislation, regulatory initiatives, litigation, legal opinions, federal executive orders and increased scrutiny related to CR matters could expose the Company to additional compliance obligations, costs, and potential liabilities. 13 Table of Contents Risks related to operations of our communities Laws, regulations and orders imposing rent control or rent stabilization, or limiting our rights as a landlord, could adversely affect our operations and revenue.
Compliance with all such laws and regulations may increase our operating costs and adversely impact our ability to market our properties and services. Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.
Compliance with all such laws and regulations may increase our operating costs and adversely impact our ability to market our properties and services.
If we fail to satisfy the expectations of investors, residents and other stakeholders, our initiatives are not executed as planned, or we do not satisfy our goals, our reputation and financial results could be adversely affected.
If our initiatives are unsuccessful or we fail to satisfy the expectations of investors, residents, employees and other stakeholders, our reputation could be adversely affected. In recent years, corporate initiatives relating to environmental, social and governance matters, including workplace inclusion and diversity, have attracted negative commentary and regulatory attention in the broader business sector.
These requirements or practices may result in foregone revenue. 14 Table of Contents • Our properties may incur significant costs or losses related to shelter-in-place or stay-at-home orders, quarantines, infection, clean-up costs or other related factors. • Impacts on the general economy and our industry caused by (i) supply chain constraints and (ii) inflation caused by both supply chain constraints and governmental fiscal and monetary policies.
Our properties could also incur significant costs or losses related to shelter-in-place or stay-at-home orders, quarantines, infection, clean-up costs or other related factors, which may cause residents to move to locations other than our markets.
Removed
The ultimate resolutions may differ from our expectation, and we could suffer losses that would have a material adverse effect on our financial performance, the trading price of our securities and our ability to pay dividends and distributions.
Added
We also may engage or have an interest in for-sale activity, such as the sale of our remaining residential condominium at The Park Loggia, a mixed-use development located in New York, New York.
Removed
ESG evaluations, including ESG scores and ratings, are important to some investors and other stakeholders and may impact the price of our securities and business practices. Investors may focus on, and consider a company's ESG-related business practices, scores and reporting when choosing to allocate their capital in making investment decisions, including if they invest in our securities.
Added
Our various technology-related initiatives to improve our operating margins and customer experience may fail to perform as expected and may expose us to additional risks.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+0 added−0 removed5 unchanged
Biggest changeWe rely on information technology to process, transmit and store electronic information, and to manage or support a variety of business 20 Table of Contents processes, including financial transactions, PII, and resident and lease data. Our business requires us and some of our vendors, to use and store PII and other confidential and sensitive information of our residents and associates.
Biggest changeWe rely on information technology to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions, PII, and resident and lease data. Our business requires us and some of our vendors to use and store PII and other confidential and sensitive information of our residents and associates.
We also utilize third-party service providers to enhance our CSP, including engaging them annually to assess our CSP against the NIST CSF. We use one or more third-party managed security solution providers, who provide us with threat intelligence information and managed threat detection and response capabilities. We have also engaged a third party to assist with associate cybersecurity training.
We utilize third-party service providers to enhance our CSP, including engaging them annually to assess our CSP against the NIST CSF. We use one or more third-party managed security solution providers, who provide us with threat intelligence information and managed threat detection and response capabilities. We have also engaged a third party to assist with associate cybersecurity training.
Prior to contracting with an outside vendor that hosts our data, such as Company information, or PII of our associates or residents, or that integrates with our systems, our policy is to conduct a cybersecurity risk assessment, which includes, as appropriate, a due diligence questionnaire completed by the vendor, a System and Organization Controls 1 (“SOC1”) report from major vendors and a review of the vendor’s scope of access to our IT systems and data.
Prior to contracting with an outside vendor that hosts our data, such as Company information, or PII of our associates or residents, or that integrates with our systems, our policy is to conduct a cybersecurity risk assessment, which includes, as appropriate, a due diligence questionnaire completed by the vendor, a System and Organization Controls 1 ("SOC1") report from major vendors and a review of the vendor’s scope of access to our IT systems and data.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management, Strategy and Governance We have implemented and maintain a risk management framework designed to identify, assess, and mitigate risks from cybersecurity threats.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We have implemented and maintain a risk management framework designed to identify, assess, and mitigate risks from cybersecurity threats.
The Audit Committee and management have adopted a policy that categorizes cybersecurity incidents and sets out incident escalation procedures to the full Board of Directors. 21 Table of Contents
The Audit Committee and management have adopted a policy that categorizes cybersecurity incidents and sets out incident escalation procedures to the full Board of Directors. 22 Table of Contents
The Senior Director of Cybersecurity and the Senior Vice President-Information Technology are part of, and work with, a management Cybersecurity Steering Committee (“CSC”), which meets regularly. The CSC works to ensure strategic alignment of the CSP with our business objectives and priorities.
The Senior Director of Cybersecurity and the Senior Vice President-Information Technology are part of, and work with, a management Cybersecurity Steering Committee ("CSC"), which meets regularly. The CSC works to ensure strategic alignment of the CSP with our 21 Table of Contents business objectives and priorities.
You should carefully review Part I, Item 1A. “Risk Factors” of this Form 10-K for a discussion of the risks to the Company related to cybersecurity. Our cybersecurity team is headed by our Senior Director of Cybersecurity, who has over 15 years of experience with IT and cybersecurity. The cybersecurity team reports to our Senior Vice President-Information Technology.
You should carefully review Part I, Item 1A. "Risk Factors" of this Form 10-K for a discussion of the risks to the Company related to cybersecurity. Governance Our cybersecurity team is led by our Senior Director of Cybersecurity, who has over 15 years of experience with IT and cybersecurity. The cybersecurity team reports to our Senior Vice President-Information Technology.
We assess our cybersecurity program (“CSP”), as part of our enterprise risk management program, against the National Institute of Standards and Technology’s Cybersecurity Framework (“NIST CSF”) and also use as a model the Center for Internet Security (“CIS”) control framework’s Implementation Group 2 (“IG2”). We perform annual assessments against NIST CSF benchmarks and focus on continuous improvement over those criteria.
We assess our cybersecurity program ("CSP"), as part of our enterprise risk management program, against the National Institute of Standards and Technology’s Cybersecurity Framework ("NIST CSF") and also use as a model the Center for Internet Security ("CIS") control framework’s Implementation Group 2 ("IG2"). We perform annual assessments against NIST CSF benchmarks and focus on continuous improvement over those criteria.

Item 2. Properties

Properties — owned and leased real estate

50 edited+16 added−13 removed29 unchanged
Biggest changeWe believe our mission of “Creating a Better Way to Live” helps us achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses. 24 Table of Contents Our Current Communities are located in the following geographic markets: Number of communities at Number of apartment homes at Percentage of total apartment homes at 1/31/2023 1/31/2024 1/31/2023 1/31/2024 1/31/2023 1/31/2024 New England 41 42 10,221 10,328 12.4 % 12.4 % Metro NY/NJ 47 49 14,296 14,756 17.4 % 17.6 % New York City, NY 14 14 5,089 5,089 6.2 % 6.1 % New York Suburban 12 13 3,792 3,878 4.6 % 4.6 % New Jersey 21 22 5,415 5,789 6.6 % 6.9 % Mid-Atlantic 45 44 15,770 15,501 19.2 % 18.5 % Washington Metro 39 36 13,808 12,784 16.8 % 15.3 % Baltimore, MD 6 8 1,962 2,717 2.4 % 3.2 % Southeast Florida 8 8 2,837 2,837 3.4 % 3.4 % Denver, Colorado 6 6 1,539 1,539 1.9 % 1.8 % Pacific Northwest 21 21 5,802 5,802 7.0 % 6.9 % Northern California 42 41 12,641 12,446 15.3 % 14.9 % San Jose, CA 12 12 4,723 4,723 5.7 % 5.7 % Oakland-East Bay, CA 15 15 4,338 4,338 5.3 % 5.2 % San Francisco, CA 15 14 3,580 3,385 4.3 % 4.0 % Southern California 59 59 17,924 17,934 21.7 % 21.4 % Los Angeles, CA 39 39 12,133 12,143 14.7 % 14.5 % Orange County, CA 13 13 4,024 4,024 4.9 % 4.8 % San Diego, CA 7 7 1,767 1,767 2.1 % 2.1 % Other Expansion Regions 6 9 1,381 2,512 1.7 % 3.1 % North Carolina 4 5 760 963 0.9 % 1.2 % Texas 2 4 621 1,549 0.8 % 1.9 % 275 279 82,411 83,655 100.0 % 100.0 % We manage and operate substantially all of our Current Communities.
Biggest changeWe believe our mission of "Creating a Better Way to Live" helps us achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses. 25 Table of Contents Our Current Communities are located in the following geographic markets: Number of communities at Number of apartment homes at Percentage of total apartment homes at 1/31/2024 1/31/2025 1/31/2024 1/31/2025 1/31/2024 1/31/2025 New England 42 39 10,328 9,697 12.4 % 11.3 % Metro NY/NJ 49 50 14,756 15,089 17.6 % 17.5 % New York City, NY 14 14 5,089 5,089 6.1 % 5.9 % New York Suburban 13 14 3,878 4,216 4.6 % 4.9 % New Jersey 22 22 5,789 5,784 6.9 % 6.7 % Mid-Atlantic 44 44 15,501 15,501 18.5 % 18.0 % Washington Metro 36 35 12,784 12,347 15.3 % 14.3 % Baltimore, MD 8 9 2,717 3,154 3.2 % 3.7 % Southeast Florida 8 9 2,837 3,091 3.4 % 3.6 % Denver, Colorado 6 8 1,539 2,192 1.8 % 2.5 % Pacific Northwest 21 21 5,802 6,118 6.9 % 7.1 % Northern California 41 41 12,446 12,857 14.9 % 14.9 % San Jose, CA 12 12 4,723 4,727 5.7 % 5.5 % Oakland-East Bay, CA 15 15 4,338 4,743 5.2 % 5.5 % San Francisco, CA 14 14 3,385 3,387 4.0 % 3.9 % Southern California 59 60 17,934 18,366 21.4 % 21.4 % Los Angeles, CA 39 39 12,143 12,475 14.5 % 14.5 % Orange County, CA 13 13 4,024 4,024 4.8 % 4.7 % San Diego, CA 7 8 1,767 1,867 2.1 % 2.2 % Other Expansion Regions 9 12 2,512 3,200 3.1 % 3.7 % North Carolina 5 6 963 1,225 1.2 % 1.4 % Texas 4 6 1,549 1,975 1.9 % 2.3 % 279 284 83,655 86,111 100.0 % 100.0 % We manage and operate substantially all of our Current Communities.
A community is considered to have stabilized occupancy at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment. • Other Stabilized is composed of completed consolidated communities that we own and that are not Same Store but which have stabilized occupancy, as defined above, as of January 1, 2023, or which were acquired subsequent to January 1, 2022.
A community is considered to have stabilized occupancy at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment. • Other Stabilized is composed of completed consolidated communities that we own and that are not Same Store but which have stabilized occupancy, as defined above, as of January 1, 2024, or which were acquired subsequent to January 1, 2023.
We also maintain other insurance programs that provide coverage for events including but not limited to employee dishonesty, loss of data, and liability associated with management of certain employee benefit plans. These policies are subject to maximum loss limits and include coverage limitations or exclusion that may preclude us from fully recovering.
We also maintain other insurance programs that provide coverage for events including but not limited to employee dishonesty, loss of data, and liability associated with management of certain employee benefit plans. These policies are subject to maximum loss limits and include coverage limitations or exclusions that may preclude us from fully recovering.
We estimate that the successful completion of all of these communities would ultimately add approximately 10,801 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own. The Development Rights are in different stages of the due diligence and regulatory approval process.
We estimate that the successful completion of all of these communities would ultimately add approximately 8,801 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own. The Development Rights are in different stages of the due diligence and regulatory approval process.
The following is a description of each category: Current Communities are categorized as Same Store, Other Stabilized, Redevelopment or Unconsolidated according to the following attributes: • Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the respective prior year period.
The following is a description of each category: Current Communities are categorized as Same Store, Other Stabilized, Redevelopment or Unconsolidated according to the following attributes: • Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the prior year.
Collectively, the land held for development and associated costs for deferred development rights relate to 30 Development Rights for which we expect to develop new apartment communities in the future. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately.
Collectively, the land held for development and associated costs for deferred development rights relate to 28 Development Rights for which we expect to develop new apartment communities in the future. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately.
For the year ended December 31, 2023, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2022, did not conduct substantial redevelopment activities and are not held for sale as of December 31, 2023.
For the year ended December 31, 2024, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2023, did not conduct substantial redevelopment activities and are not held for sale as of December 31, 2024.
The amount or types of insurance we maintain may not be sufficient to cover all losses and we may change our policy limits, coverages, and self-insured retentions or deductibles at any time. 31 Table of Contents
The amount or types of insurance we maintain may not be sufficient to cover all losses and we may change our policy limits, coverages, and self-insured retentions or deductibles at any time. 33 Table of Contents
Our communities are insured for terrorism related losses through the Terrorism Risk Insurance Program Reauthorization Act (“TRIPRA”) program. This coverage extends to most of our casualty exposures (subject to deductibles and insured limits) and certain property insurance policies.
Our communities are insured for terrorism related losses through the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA") program. This coverage extends to most of our casualty exposures (subject to deductibles and insured limits) and certain property insurance policies.
After applicable self-insured retentions borne by us, our captive insurance company is directly responsible for the first $2,000,000 of losses (per occurrence) covered by the master general liability insurance policy. 30 Table of Contents Just as with office buildings, transportation systems and government buildings, apartment communities could become targets of terrorism.
After applicable self-insured retentions borne by us, our captive insurance company is directly responsible for the first $2,000,000 of losses (per occurrence) covered by the master general liability insurance policy. Just as with office buildings, transportation systems and government buildings, apartment communities could become targets of terrorism.
We have also purchased private-market insurance for property damage due to terrorism with limits of $600,000,000 per occurrence and in the annual aggregate that includes certain coverages (not covered under TRIPRA) such as domestic-based terrorism. This insurance, often referred to as “non-certified” terrorism insurance, is subject to deductibles, limits and exclusions.
We have also purchased private-market insurance for property damage due to terrorism with limits of $600,000,000 per occurrence and in the annual aggregate that includes certain coverages (not covered under TRIPRA) such as domestic-based terrorism. This insurance, often referred to as "non-certified" terrorism insurance, is subject to deductibles, limits and exclusions.
“Risk Factors” of this Form 10-K for a discussion of risks associated with an uninsured property or casualty loss. Our communities are insured for certain property damage and business interruption losses through a combination of community specific insurance policies and/or a master property insurance program which covers the majority of our communities.
"Risk Factors" of this Form 10-K for a discussion of risks associated with an uninsured property or casualty loss. Our communities are insured for certain property damage and business interruption losses through a combination of community specific insurance policies and/or a master property insurance program which covers the majority of our communities.
Changes in the Same Store communities portfolios for the years ended December 31, 2023, 2022 and 2021 were as follows: Number of communities Same Store communities as of December 31, 2020 232 Communities added 15 Communities removed (1) Redevelopment communities — Disposed communities (9) Other Stabilized (1) Same Store communities as of December 31, 2021 237 Communities added 8 Communities removed (1) Redevelopment communities (1) Disposed communities (9) Same Store communities as of December 31, 2022 235 Communities added 21 Communities removed (1) Redevelopment communities — Disposed communities (4) Same Store communities as of December 31, 2023 252 _________________________________ (1) Communities were removed from our Same Store portfolio if we believed that planned activity for the upcoming year would result in that community's expected operations not being comparable to the prior year, including (i) when we intended to undertake a significant capital renovation, such that the community was classified as a Redevelopment community; (ii) when we intended to dispose of a community; or (iii) when a significant casualty loss occurred.
Changes in the Same Store communities portfolios for the years ended December 31, 2024, 2023 and 2022 were as follows: Number of communities Same Store communities as of December 31, 2021 237 Communities added 8 Communities removed (1) Redevelopment communities (1) Disposed communities (9) Same Store communities as of December 31, 2022 235 Communities added 21 Communities removed (1) Redevelopment communities — Disposed communities (4) Same Store communities as of December 31, 2023 252 Communities added 10 Communities removed (1) Redevelopment communities — Disposed communities (9) Same Store communities as of December 31, 2024 253 _________________________________ (1) Communities were removed from our Same Store portfolio if we believed that planned activity for the upcoming year would result in that community's expected operations not being comparable to the prior year, including (i) when we intended to undertake a significant capital renovation, such that the community was classified as a Redevelopment community; (ii) when we intended to dispose of a community; or (iii) when a significant casualty loss occurred.
We cannot assure you that we will meet our schedule for construction completion or that we will meet our budgeted costs, either individually, or in the aggregate. You should carefully review Item 1A. “Risk Factors” for a discussion of the risks associated with development activity and our discussion under Item 7.
We cannot assure you that we will meet our schedule for construction completion or that we will meet our budgeted costs, either individually, or in the aggregate. You should carefully review Item 1A. "Risk Factors" for a discussion of the risks associated with development activity and our discussion under Item 7.
Debt (1) Unconsolidated Real Estate Investments Company Ownership Percentage # of Apartment Homes Total Capitalized Cost Principal Amount Type Interest Rate Maturity Date NYTA MF Investors LLC 1. Avalon Bowery Place I—New York, NY 206 $ 215,923 $ 93,800 Fixed 4.01 % Jan 2029 2. Avalon Bowery Place II—New York, NY 90 91,368 39,639 Fixed 4.01 % Jan 2029 3.
Debt (1) Unconsolidated Real Estate Investments Company Ownership Percentage # of Apartment Homes Total Capitalized Cost Principal Amount Type Interest Rate Maturity Date NYTA MF Investors LLC 1. Avalon Bowery Place I—New York, NY 206 $ 217,504 $ 93,800 Fixed 4.01 % Jan 2029 2. Avalon Bowery Place II—New York, NY 90 91,691 39,639 Fixed 4.01 % Jan 2029 3.
ITEM 2. PROPERTIES Our real estate investments consist primarily of current operating apartment communities (“Current Communities”), consolidated and unconsolidated communities in various stages of development (“Development” communities and “Unconsolidated Development” communities) and Development Rights (as defined below). Our Current Communities are further classified as Same Store communities, Other Stabilized communities, Redevelopment communities and Unconsolidated communities.
ITEM 2. PROPERTIES Our real estate investments consist primarily of current operating apartment communities ("Current Communities"), consolidated and unconsolidated communities in various stages of development ("Development" communities and "Unconsolidated Development" communities) and Development Rights (as defined below). Our Current Communities are further classified as Same Store communities, Other Stabilized communities, Redevelopment communities and Unconsolidated communities.
In addition, we had $53,122,000 in capitalized costs (including legal fees, design fees and related overhead costs) related to (i) 19 Development Rights for which we control the land parcel, typically through a conditional agreement or option to purchase or lease the land, as well as (ii) costs incurred for three Development Rights that we expect to construct as additional phases of our existing stabilized operating communities on land we own.
In addition, we had $43,675,000 in capitalized costs (including legal fees, design fees and related overhead costs) related to (i) 17 Development Rights for which we control the land parcel, typically through a conditional agreement or option to purchase or lease the land, as well as (ii) costs incurred for four Development Rights that we expect to construct as additional phases of our existing stabilized operating communities on land we own.
During 2023, we incurred a charge of $33,479,000 for expensed transaction, development and other pursuit costs, net of recoveries, which include development pursuits that were not yet probable of future development at the time incurred, or for pursuits that we determined were no longer probable of being developed.
During 2024, we incurred a charge of $18,341,000 for expensed transaction, development and other pursuit costs, net of recoveries, which include development pursuits that were not yet probable of future development at the time incurred, or for pursuits that we determined were no longer probable of being developed.
Of the Current Communities, as of January 31, 2024, we owned (directly or through wholly-owned subsidiaries): • 270 operating communities, including 263 with a full fee simple or absolute ownership interest, and seven that are on land subject to a land lease.
Of the Current Communities, as of January 31, 2025, we owned (directly or through wholly-owned subsidiaries): • 275 operating communities, including 268 with a full fee simple or absolute ownership interest, and seven that are on land subject to a land lease.
AVA High Line—New York, NY (3) 405 122,463 84,000 Fixed 4.01 % Jan 2029 Total NYTA MF Investors LLC 20.0 % 1,301 771,423 394,734 3.88 % Other Operating Joint Ventures 1. MVP I, LLC - Avalon at Mission Bay II - San Francisco, CA 25.0 % 313 129,681 103,000 Fixed 3.24 % Jul 2025 2.
AVA High Line—New York, NY (3) 405 122,839 84,000 Fixed 4.01 % Jan 2029 Total NYTA MF Investors LLC 20.0 % 1,301 778,330 394,734 3.88 % Other Operating Joint Ventures 1. MVP I, LLC - Avalon at Mission Bay II - San Francisco, CA 25.0 % 313 130,073 103,000 Fixed 3.24 % Jul 2025 2.
For further discussion of the risks and our related prevention and remediation activities, please refer to the discussion under Part I, Item 1A. “Risk Factors - We may incur costs due to environmental contamination or non-compliance” elsewhere in this report.
For further discussion of the risks and our related prevention and remediation activities, please refer to the discussion under Part I, Item 1A. "Risk Factors - We may incur costs due to 32 Table of Contents environmental contamination or non-compliance" elsewhere in this report.
(4) In addition to leasehold assets, there were net other assets of $30,792 as of December 31, 2023 associated with our unconsolidated real estate investments which are primarily cash and cash equivalents. We had an equity interest of 28.6% in the Archstone Multifamily Partners AC LP (the “U.S.
(5) In addition to leasehold assets, there were net other assets of $38,506 as of December 31, 2024 associated with our unconsolidated real estate investments which are primarily cash and cash equivalents. We had an equity interest of 28.6% in the Archstone Multifamily Partners AC LP (the "U.S.
One of the ventures, the NYTA MF Investors LLC, through subsidiaries owns a fee simple interest in three operating communities and a leasehold interest in two additional operating communities.
One of the ventures, the NYTA MF Investors LLC, through subsidiaries owns a fee simple interest in three operating communities and a leasehold interest in two additional operating communities. The other four ventures each hold a fee simple interest in an operating community.
Fund”) and because we achieved a threshold return for the fund, during the years ended December 31, 2023 and 2022, we recognized income of $1,519,000 and $4,690,000, respectively, for our promoted interest, which is included in income from unconsolidated investments on the accompanying Consolidated Statements of Comprehensive Income. The U.S.
Fund") and because we achieved a threshold return for the fund, during the year ended December 31, 2023, we recognized income of $1,519,000 for our promoted interest, which is included in income from unconsolidated investments on the accompanying Consolidated Statements of Comprehensive Income. The U.S. Fund sold its final three communities in 2022 and completed its dissolution in 2023.
Avalon Carmel Charlotte, NC 360 126 December 2023 Total 2,190 $ 795 ____________________________________ (1) Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land and related acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions, net of projected proceeds for any planned sales of associated outparcels and other real estate.
Kanso Hillcrest (2) San Diego, CA 182 85 November 2024 Total 2,783 $ 990 ____________________________________ (1) Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land and related acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions, net of projected proceeds for any planned sales of associated outparcels and other real estate.
The land leases have various expiration dates from July 2046 to April 2106, and three of the land leases are used to support tax advantaged structures that ultimately allow us to purchase the land upon lease expiration. • A membership interest in five limited liability companies.
The land leases have various expiration dates from July 2046 to May 2123, and three of the land leases are used to support tax advantaged structures that ultimately allow us to purchase the land upon lease expiration. The Company has purchase options for all land leases expiring prior to 2062. • A membership interest in five limited liability companies.
While we generally establish the classification of communities on an annual basis, we update the classification of communities during the calendar year to the extent that our plans with regard to the disposition or redevelopment of a community change.
While we generally establish the classification of communities on an annual basis, we update the classification of communities during the calendar year to the extent that our plans with regard to the disposition or redevelopment of a community change, or if something occurs that materially impacts the operations of a community such as a casualty loss.
Avalon Morningside—New York, NY (2) 295 212,444 111,295 Fixed 3.55 % Jan 2029/May 2046 4. Avalon West Chelsea—New York, NY (3) 305 129,225 66,000 Fixed 4.01 % Jan 2029 5.
Avalon Morningside—New York, NY (2) 295 216,153 111,295 Fixed 3.55 % Jan 2029/May 2046 4. Avalon West Chelsea—New York, NY (3) 305 130,143 66,000 Fixed 4.01 % Jan 2029 5.
Avalon Parsippany Parsippany, NJ 410 148 Q4 2023 Q3 2025 Q2 2026 Q3 2026 Total 6,064 $ 2,491 _________________________________ (1) Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
Kanso Hillcrest San Diego, CA 182 85 Q4 2024 Q1 2027 Q2 2027 Q4 2027 Total 6,004 $ 2,253 _________________________________ (1) Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
The venture had drawn $135,983 of the $167,147 maximum borrowing capacity of the construction loan as of December 31, 2023. While we guarantee the construction loan on behalf of the venture, any amounts p ayable under the guarantee are obligations of the venture partners in proportion to ownership interest.
The venture had drawn $155,968 of the $167,147 maximum borrowing capacity of the construction loan as of December 31, 2024. While we guarantee 30% of the venture's construction loan, any amounts payable under the guarantee are obligations of the venture partners in proportion to their ownership interest.
See Note 5, “Investments,” of the Consolidated Financial Statements included elsewhere in this report. For joint ventures holding operating apartment communities as of December 31, 2023, detail of the real estate and associated indebtedness underlying our unconsolidated investments is presented in the following table (dollars in thousands).
For joint ventures holding operating apartment communities as of December 31, 2024, detail of the real estate and associated indebtedness underlying our unconsolidated investments is presented in the following table (dollars in thousands).
Development Communities As of December 31, 2023, we owned or held a direct interest in 17 Development Communities under construction. We expect these Development Communities, when completed, to add a total of 6,064 apartment homes and 59,000 square feet of commercial space to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $2,491,000,000.
We expect these Development Communities, when completed, to add a total of 6,004 apartment homes and 59,000 square feet of commercial space to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $2,253,000,000.
During the year ended December 31, 2023, we completed construction of six communities containing 1,393 apartment homes, acquired three communities containing 1,131 apartment homes and sold four operating communities containing 987 apartment homes.
During the year ended December 31, 2024, we completed construction of nine communities containing 2,981 apartment homes, acquired six communities containing 1,441 apartment homes and sold eight operating communities containing 1,532 apartment homes.
As of January 31, 2024, our Current Communities consisted of the following: Number of communities Number of apartment homes Garden-style 131 41,026 Mid-rise 120 34,187 High-rise 28 8,442 Total Current Communities 279 83,655 As discussed in Item 1. “Business,” we operate under four core brands: Avalon, AVA, e aves by Avalon and Kanso.
As of January 31, 2025, our Current Communities consisted of the following: Number of communities Number of apartment homes Garden-style 134 42,206 Mid-rise 122 35,607 High-rise 28 8,298 Total Current Communities 284 86,111 As discussed in Item 1. "Business," we operate under four core brands: Avalon, AVA, e aves by Avalon and Kanso.
We currently lease our corporate headquarters located in Arlington, Virginia, as well as our other regional and administrative offices, under operating leases. 22 Table of Contents As of December 31, 2023, communities that we owned or held a direct or indirect interest in were classified as follows: Number of communities Number of apartment homes Current Communities Same Store: New England 39 9,577 Metro NY/NJ 41 12,766 Mid-Atlantic 39 13,301 Southeast Florida 7 2,187 Denver, CO 4 1,086 Pacific Northwest 20 5,474 Northern California 40 12,133 Southern California 58 17,281 Other Expansion Regions 4 925 Total Same Store 252 74,730 Other Stabilized: New England 1 350 Metro NY/NJ — — Mid-Atlantic 4 1,895 Southeast Florida 1 650 Denver, CO 2 453 Pacific Northwest — — Northern California — — Southern California 1 653 Other Expansion Regions 5 1,587 Total Other Stabilized 14 5,588 Redevelopment — — Unconsolidated 8 2,247 Total Current 274 82,565 Development 24 7,629 Unconsolidated Development 1 475 Total Communities 299 90,669 Development Rights 30 10,801 Our holdings under each of the above categories are discussed on the following pages. 23 Table of Contents We generally establish the composition of our Same Store communities portfolio annually.
We currently lease our corporate headquarters located in Arlington, Virginia, as well as our other regional and administrative offices, under operating leases. 23 Table of Contents As of December 31, 2024, communities that we owned or held a direct or indirect interest in were classified as follows: Number of communities Number of apartment homes Current Communities Same Store: New England 36 9,134 Metro NY/NJ 40 12,540 Mid-Atlantic 42 14,482 Southeast Florida 8 2,837 Denver, CO 6 1,539 Pacific Northwest 18 5,109 Northern California 39 12,045 Southern California 58 17,791 Other Expansion Regions 6 1,381 Total Same Store 253 76,858 Other Stabilized: New England 3 503 Metro NY/NJ 3 689 Mid-Atlantic 1 714 Southeast Florida — — Denver, CO 2 653 Pacific Northwest — — Northern California — — Southern California 1 100 Other Expansion Regions 6 1,819 Total Other Stabilized 16 4,478 Redevelopment — — Unconsolidated 9 2,722 Total Current 278 84,058 Development 28 9,460 Unconsolidated Development — — Total Communities 306 93,518 Development Rights 28 8,801 Our holdings under each of the above categories are discussed on the following pages. 24 Table of Contents We generally establish the composition of our Same Store communities portfolio annually.
(2) Borrowing on this community is comprised of two mortgage loans. The interest rate is the weighted average interest rate as of December 31, 2023. (3) Borrowing on this dual-branded community is comprised of a single mortgage loan. This dual-branded community is subject to a leasehold interest which is not included in the total capitalized cost.
We bear no responsibility for the repayment unless otherwise disclosed. (2) Borrowing on this community is comprised of two mortgage loans. The interest rate is the weighted average interest rate as of December 31, 2024. (3) Borrowing on this dual-branded community is comprised of a single mortgage loan.
Avalon Princeton Circle Princeton, NJ 221 89 253,462 $ 351 Q4 2023 Total 1,393 $ 575 ____________________________________ (1) Total capitalized cost is as of December 31, 2023. We generally anticipate incurring additional costs associated with these communities that are customary for new developments. (2) Avalon Harrison contains 27,000 square feet of commercial space. (3) Community was developed through our DFP.
Avalon Durham (2) Durham, NC 336 121 300,566 $ 403 Q4 2024 Total 2,981 $ 1,286 ____________________________________ (1) Total capitalized cost is as of December 31, 2024. We generally anticipate incurring additional costs associated with these communities that are customary for new developments. (2) Community was developed through our DFP.
Avalon Annapolis Annapolis, MD 508 200 Q3 2022 Q3 2024 Q3 2025 Q2 2026 11. Kanso Milford Milford, MA 162 65 Q4 2022 Q1 2024 Q3 2024 Q1 2025 12. Avalon Lake Norman (5) Mooresville, NC 345 101 Q1 2023 Q1 2025 Q1 2026 Q3 2026 13.
Avalon Annapolis Annapolis, MD 508 199 Q3 2022 Q3 2024 Q3 2025 Q2 2026 3. Avalon Lake Norman (4) Mooresville, NC 345 101 Q1 2023 Q2 2025 Q1 2026 Q3 2026 4. Avalon Hunt Valley West Hunt Valley, MD 322 107 Q2 2023 Q1 2025 Q1 2026 Q3 2026 5.
Land Acquisitions We select land for development and follow established procedures that we believe minimize both the cost and the risks of development. During 2023, we acquired the following land parcels for an aggregate investment of $80,870,000. Estimated number of apartment homes Projected total capitalized cost (1) ($ millions) Date acquired 1.
"Risk Factors," for a discussion of the risks associated with Development Rights. 30 Table of Contents Land Acquisitions We select land for development and follow established procedures that we believe minimize both the cost and the risks of development. During 2024, we acquired the following land parcels for an aggregate investment of $111,812,000.
Insurance and Risk of Uninsured Losses We maintain commercial general liability insurance and property insurance with respect to all of our communities, with insurance policies issued by a combination of third party insurers as well as a wholly-owned captive insurance company.
From January 1, 2024 to January 31, 2025, (i) we acquired six wholly-owned communities containing 1,441 apartment homes for an aggregate purchase price of $460,100,000 and (ii) we sold our interest in nine wholly-owned communities, containing 1,634 apartment homes, with an aggregate gross sales price of $791,300,000. 31 Table of Contents Insurance and Risk of Uninsured Losses We maintain commercial general liability insurance and property insurance with respect to all of our communities, with insurance policies issued by a combination of third party insurers as well as a wholly-owned captive insurance company.
The amount for 2023 includes write-offs of $27,455,000 related to seven Development Rights that we determined are no longer probable. You should carefully review Item 1A. “Risk Factors,” for a discussion of the risks associated with Development Rights.
The amount for 2024 includes a write-off of $8,947,000 related to one Development Right in Northern California that we determined was no longer probable. You should carefully review Item 1A.
(2) Construction on this land parcel commenced during 2023. 29 Table of Contents Acquisition & Disposition Activity We buy and sell assets based on our long-term investment criteria and target portfolio allocation.
(2) Communities are currently under construction. (3) Community is being developed through our DFP. Acquisition & Disposition Activity We buy and sell assets based on our long-term investment criteria and target portfolio allocation.
Brandywine Apartments of Maryland, LLC - Brandywine - Washington, D.C. 28.7 % 305 20,093 19,062 Fixed 3.40 % Jun 2028 3.
Brandywine Apartments of Maryland, LLC - Brandywine - Washington, D.C. 28.7 % 305 20,093 18,368 Fixed 3.40 % Jun 2028 3. Avalon Alderwood MF Member, LLC - Avalon Alderwood Place - Lynnwood, WA 50.0 % 328 111,223 — N/A N/A N/A 4.
During the year ended December 31, 2023, we completed the development of the following wholly-owned communities: Number of apartment homes Total capitalized cost (1) ($ millions) Approximate rentable area (sq. ft.) Total capitalized cost per sq. ft. Quarter of completion 1. Avalon Harrison (2) Harrison, NY 143 $ 94 171,036 $ 550 Q2 2023 2.
The DFP utilizes third-party multifamily developers to source and construct communities which we own and operate. 28 Table of Contents During the year ended December 31, 2024, we completed the development of the following wholly-owned communities: Number of apartment homes Total capitalized cost (1) ($ millions) Approximate rentable area (sq. ft.) Total capitalized cost per sq. ft.
Fund sold its final three communities in 2022 and has completed its dissolution in 2023. 28 Table of Contents Development Rights At December 31, 2023, we had $199,062,000 in acquisition and related capitalized costs for direct interests in eight land parcels we own.
Development Rights At December 31, 2024, we had $151,922,000 in acquisition and related capitalized costs for direct interests in seven land parcels we own.
“Management's Discussion and Analysis of Financial Condition and Results of Operations” (including the factors identified under “Forward-Looking Statements”) for further discussion of development activity. The following table presents a summary of the Development Communities. Number of apartment homes Projected total capitalized cost (1) ($ millions) Construction start Initial projected or actual occupancy Estimated completion Estimated stabilized operations (2) 1.
The following table presents a summary of the Development Communities. 27 Table of Contents Number of apartment homes Projected total capitalized cost (1) ($ millions) Construction start Initial projected or actual occupancy Estimated completion Estimated stabilized operations (2) 1. Avalon West Windsor (3) West Windsor, NJ 535 $ 210 Q2 2022 Q2 2025 Q2 2026 Q4 2026 2.
The other four ventures each hold a fee simple interest in an operating community, one of which is consolidated for financial reporting purposes. 25 Table of Contents In addition to our Current Communities, we also hold, directly or through wholly-owned subsidiaries, a full fee simple ownership interest in our wholly-owned Development Communities and a membership interest in one limited liability company that holds a fee simple interest in an Unconsolidated Development Community.
In addition to our Current Communities, we also hold, directly or through wholly-owned subsidiaries, a full fee simple ownership interest in our wholly-owned Development Communities. 26 Table of Contents As part of the Archstone Acquisition in 2013 (as defined in Item 1.
Avalon Hunt Valley West Hunt Valley, MD 322 109 Q2 2023 Q1 2025 Q1 2026 Q3 2026 14. Avalon South Miami (4) South Miami, FL 290 186 Q3 2023 Q3 2025 Q1 2026 Q3 2026 15. Avalon Princeton Shopping Center Princeton, NJ 200 82 Q3 2023 Q1 2025 Q2 2025 Q4 2025 16.
Avalon South Miami (3) South Miami, FL 290 186 Q3 2023 Q3 2025 Q1 2026 Q3 2026 6. Avalon Princeton on Harrison Princeton, NJ 200 82 Q3 2023 Q1 2025 Q2 2025 Q1 2026 7. Avalon Wayne Wayne, NJ 473 171 Q4 2023 Q2 2025 Q3 2026 Q1 2027 8.
(2) Stabilized operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development. 26 Table of Contents (3) Avalon Redmond Campus is a densification of the existing eaves Redmond Campus wholly-owned community, replacing 48 existing older apartment homes that were demolished.
(2) Stabilized operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development. (3) Development Communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 square feet) and Avalon South Miami (32,000 square feet).
(4) Stabilized operations is defined as the earlier of either (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development. 27 Table of Contents Unconsolidated Operating Communities As of December 31, 2023, we had investments in the following unconsolidated real estate entities accounted for under the equity method of accounting, excluding development joint ventures.
Unconsolidated Operating Communities As of December 31, 2024, we had investments in the following unconsolidated real estate entities accounted for under the equity method of accounting. See Note 5, "Investments," of the Consolidated Financial Statements included elsewhere in this report.
Removed
Unconsolidated Development is composed of communities that are either currently under construction, or were under construction and were completed during the current year, in which we have an indirect ownership interest through our investment interest in an unconsolidated joint venture. These communities may be partially or fully complete and operating.
Added
"Business" in the Company's Form 10-K filed with the SEC on February 22, 2019), we acquired, and still own, 14 assets that had previously been contributed by third parties on a tax-deferred basis to an Archstone partnership in which the third parties received ownership interests.
Removed
Avalon Amityville Amityville, NY 338 $ 134 Q2 2021 Q3 2023 Q2 2024 Q4 2024 2. Avalon Bothell Commons I Bothell, WA 467 236 Q2 2021 Q3 2023 Q2 2024 Q1 2025 3. Avalon Westminster Promenade Westminster, CO 312 112 Q3 2021 Q2 2024 Q3 2024 Q2 2025 4.
Added
To protect the tax-deferred nature of the contribution, the third parties are entitled to cash payments if we trigger tax obligations to the third parties by selling, or failing to maintain sufficient levels of secured financing on, the contributed assets.
Removed
Avalon West Dublin Dublin, CA 499 267 Q3 2021 Q4 2023 Q4 2024 Q2 2025 5. Avalon Montville Montville, NJ 349 127 Q4 2021 Q4 2023 Q3 2024 Q4 2024 6. Avalon Redmond Campus (3) Redmond, WA 214 89 Q4 2021 Q1 2024 Q2 2024 Q4 2024 7.
Added
Our tax protection payment obligations with respect to these assets don’t expire until the death of a third party who contributed ownership interests to the Archstone partnership.
Removed
Avalon Governor's Park Denver, CO 304 135 Q1 2022 Q3 2024 Q4 2024 Q2 2025 8. Avalon West Windsor (4) West Windsor, NJ 535 201 Q2 2022 Q2 2025 Q3 2026 Q1 2027 9. Avalon Durham (5) Durham, NC 336 125 Q2 2022 Q2 2024 Q3 2024 Q2 2025 10.
Added
After review and investigation of Archstone’s tax and accounting records, we estimate that, had we sold or taken other triggering actions in 2024 with respect to all 14 assets, the aggregate amount of the tax protection payments that would have been triggered would have been approximately $43,815,000.
Removed
Avalon Wayne Wayne, NJ 473 174 Q4 2023 Q2 2025 Q2 2026 Q4 2026 17.
Added
At the present time, we do not intend to take actions that would cause us to be required to make tax protection payments with respect to any of these assets. Development Communities As of December 31, 2024, we owned or held a direct interest in 17 Development Communities under construction.
Removed
(4) Development Communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 square feet) and Avalon South Miami (32,000 square feet). (5) Communities being developed through our Developer Funding Program (“DFP”). The DFP utilizes third-party multifamily developers to source and construct communities which we own and operate.
Added
"Management's Discussion and Analysis of Financial Condition and Results of Operations" (including the factors identified under "Forward-Looking Statements") for further discussion of development activity.
Removed
Avalon Brighton Boston, MA 180 90 167,230 $ 538 Q2 2023 3. Avalon Somerville Station Somerville, NJ 374 121 368,396 $ 328 Q3 2023 4. Avalon North Andover North Andover, MA 221 77 216,545 $ 356 Q3 2023 5. Avalon Merrick Park (3) Miami, FL 254 104 218,742 $ 475 Q3 2023 6.
Added
Avalon Parsippany Parsippany, NJ 410 147 Q4 2023 Q3 2025 Q2 2026 Q4 2026 9. Avalon Pleasanton I Pleasanton, CA 82 58 Q2 2024 Q3 2025 Q4 2025 Q1 2026 10. Avalon Roseland II Roseland, NJ 533 199 Q2 2024 Q4 2025 Q4 2026 Q2 2027 11.
Removed
Unconsolidated Development Communities As of December 31, 2023, we had an indirect interest in the following Unconsolidated Development Communities. Unconsolidated Development Community Company ownership percentage # of apartment homes Projected total capitalized cost (1) ($ millions) Construction start Initial occupancy Estimated completion Estimated stabilized operations (4) 1.
Added
Avalon Quincy Adams Quincy, MA 288 124 Q2 2024 Q1 2026 Q3 2026 Q2 2027 12. Avalon Tech Ridge I Austin, TX 444 120 Q3 2024 Q1 2026 Q1 2027 Q3 2027 13. Avalon Carmel (4) Charlotte, NC 360 123 Q3 2024 Q2 2026 Q3 2026 Q3 2027 14.
Removed
AVA Arts District (2)(3) Los Angeles, CA 25.0 % 475 $ 291 Q3 2020 Q3 2023 Q1 2024 Q4 2024 _____________________________ (1) Projected total capitalized cost includes all capitalized costs projected to be incurred to develop the respective Unconsolidated Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
Added
Avalon Plano (4) Plano, TX 155 58 Q3 2024 Q2 2026 Q2 2027 Q4 2027 15. Avalon Oakridge I Durham, NC 459 149 Q3 2024 Q4 2026 Q4 2027 Q2 2028 16. AVA Brewer's Hill Baltimore, MD 418 134 Q4 2024 Q4 2026 Q3 2027 Q1 2028 17.
Removed
Projected total capitalized cost is the total projected joint venture amount. (2) AVA Arts District is expected to contain 56,000 square feet of commercial space. (3) As of December 31, 2023, we had contributed an equity investment in AVA Arts District of $32,738. The remaining development costs are primarily expected to be funded by the venture's variable rate construction loan.
Added
(4) Communities being developed through our Developer Funding Program ("DFP").
Removed
Avalon Alderwood MF Member, LLC - Avalon Alderwood Place - Lynnwood, WA 50.0 % 328 111,159 — N/A N/A N/A Total Other Joint Ventures 946 260,933 122,062 3.26 % Total Unconsolidated Real Estate Investments (4) 2,247 $ 1,032,356 $ 516,796 3.73 % _________________________________ (1) We have not guaranteed the debt of these unconsolidated investees and bear no responsibility for the repayment unless otherwise disclosed.
Added
Quarter of completion 1. Avalon Amityville Amityville, NY 338 $ 135 322,103 $ 419 Q2 2024 2. Avalon Montville Montville, NJ 349 127 365,281 $ 348 Q2 2024 3. Avalon Redmond Campus Redmond, WA 214 89 187,175 $ 475 Q2 2024 4. Avalon Bothell Commons I Bothell, WA 467 236 491,661 $ 480 Q3 2024 5.
Removed
Avalon Quincy Adams Quincy, MA 288 $ 117 April 2023 2. Avalon Princeton Shopping Center (2) Princeton, NJ 200 82 June 2023 3. Avalon Wayne (2) Wayne, NJ 473 174 September 2023 4. Avalon Oakridge I Durham, NC 459 148 October 2023 5. Avalon Parsippany (2) Parsippany, NJ 410 148 October 2023 6.
Added
Kanso Milford Milford, MA 162 63 179,056 $ 352 Q3 2024 6. Avalon Westminster Promenade Westminster, CO 312 114 269,401 $ 423 Q4 2024 7. Avalon West Dublin Dublin, CA 499 263 461,361 $ 570 Q4 2024 8. Avalon Governor's Park Denver, CO 304 138 244,578 $ 564 Q4 2024 9.
Removed
From January 1, 2023 to January 31, 2024, (i) we acquired three wholly-owned communities containing 1,131 apartment homes for an aggregate purchase price of $277,200,000 and (ii) we sold our interest in four wholly-owned communities, containing 987 apartment homes, with an aggregate gross sales price of $446,000,000.
Added
Arts District Joint Venture - AVA Arts District - Los Angeles, CA (4) 25.0 % 475 287,953 155,968 Variable 6.91 % Aug 2025 Total Other Joint Ventures 1,421 549,342 277,336 5.31 % Total Unconsolidated Real Estate Investments (5) 2,722 $ 1,327,672 $ 672,070 4.47 % 29 Table of Contents _________________________________ (1) We have not guaranteed the debt of these unconsolidated investees with the exception of the construction loan associated with the Arts District Joint Venture.
Added
This dual-branded community is subject to a leasehold interest which is not included in the total capitalized cost. (4) AVA Arts District completed development during the year ended December 31, 2024 and achieved stabilized residential operations. It contains 57,000 square feet of commercial space.
Added
Estimated number of apartment homes Projected total capitalized cost (1) ($ millions) Date acquired 1. Avalon Parsippany (2) Parsippany, NJ 410 $ 148 January 2024 2. AVA Brewer's Hill (2) Baltimore, MD 418 134 March 2024 3. Avalon Brier Creek Raleigh, NC 400 130 April 2024 4. Avalon Roseland II (2) Roseland, NJ 533 199 April 2024 5.
Added
Avalon Parker Parker, CO 312 122 May 2024 6. Avalon Plano (2) (3) Plano, TX 155 58 July 2024 7. Avalon Oakridge II Durham, NC 373 114 September 2024 8.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS As disclosed in Note 7, “Commitments and Contingencies” of the Consolidated Financial Statements in Item 8 of this report, we are engaged in certain legal proceedings, and the disclosure set forth in Note 7, “Commitments and Contingencies” relating to legal and other contingencies is incorporated herein by reference. ITEM 4.
Biggest changeLEGAL PROCEEDINGS As disclosed in Note 7, "Commitments and Contingencies" and Note 12, "Subsequent Events" of the Consolidated Financial Statements in Item 8 of this report, we are engaged in certain legal proceedings, and the disclosure set forth in Note 7, "Commitments and Contingencies" and Note 12, "Subsequent Events" relating to legal and other contingencies is incorporated herein by reference.
MINE SAFETY DISCLOSURES Not Applicable. 32 Table of Contents PART II
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities Period (a) Total Number of Shares Purchased (1) (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2) October 1 - October 31, 2023 28 $ 169.88 — $ 314,237 November 1 - November 30, 2023 — $ — — $ 314,237 December 1 - December 31, 2023 427 $ 177.94 — $ 314,237 Total 455 $ 177.44 — _________________________________ (1) Consists of (i) shares surrendered to the Company in connection with exercise of stock options as payment of exercise price, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to shares of common stock and (ii) activity under the Stock Repurchase Program, if any, as indicated under Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs.
Biggest changeIssuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2) October 1 - October 31, 2024 130 $ 222.06 — $ 314,237 November 1 - November 30, 2024 550 $ 218.15 — $ 314,237 December 1 - December 31, 2024 427 $ 235.35 — $ 314,237 Total 1,107 $ 225.24 — _________________________________ (1) Consists of (i) shares surrendered to the Company in connection with exercise of stock options as payment of exercise price, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to shares of common stock and (ii) activity under the Stock Repurchase Program, if any, as indicated under Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs.
The Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice. Information regarding securities authorized for issuance under equity compensation plans is included in the section entitled Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in this Form 10-K.
The Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice. Information regarding securities authorized for issuance under equity compensation plans is included in the section entitled Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" in this Form 10-K.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE under the ticker symbol AVB. On January 31, 2024 there were 694 holders of record of an aggregate of 142,025,313 shares of our outstanding common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE under the ticker symbol AVB. On January 31, 2025, there were 663 holders of record of an aggregate of 142,254,778 shares of our outstanding common stock.
The dividend will be payable on April 15, 2024 to all common stockholders of record as of March 28, 2024.
The dividend will be payable on April 15, 2025 to all common stockholders of record as of March 31, 2025.
The Board of Directors may modify our dividend policy from time to time. In January 2024, we announced that our Board of Directors declared a dividend on our common stock for the first quarter of 2024 of $1.70 per share, a 3.0% increase over the Company's prior quarterly dividend of $1.65 per share.
The Board of Directors may modify our dividend policy from time to time. In February 2025, we announced that our Board of Directors declared a dividend on our common stock for the first quarter of 2025 of $1.75 per share, a 2.9% increase over the Company's prior quarterly dividend of $1.70 per share.

Item 7. Management's Discussion & Analysis

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

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Biggest changeEffective interest rate (1) Principal maturity date Balance Outstanding (2) Scheduled Maturities Debt 12/31/2022 12/31/2023 2024 2025 2026 2027 2028 Thereafter Tax-exempt bonds Variable rate Avalon Acton 4.91 % Jul-2040 (3) $ 45,000 $ 45,000 $ — $ — $ — $ — $ — $ 45,000 Avalon Clinton North 5.56 % Nov-2038 (3)(5) 147,000 126,400 — — — 700 2,800 122,900 Avalon Clinton South 5.56 % Nov-2038 (3)(5) 121,500 104,500 — — — 600 2,300 101,600 Avalon Midtown West 5.51 % May-2029 (3) 82,700 76,600 6,800 7,300 8,100 8,800 9,600 36,000 Avalon San Bruno I 5.45 % Dec-2037 (3) 60,950 57,650 2,200 2,400 2,600 2,800 3,000 44,650 457,150 410,150 9,000 9,700 10,700 12,900 17,700 350,150 Conventional loans Fixed rate $250 million unsecured notes — % Mar-2023 (4) 250,000 — — — — — — — $350 million unsecured notes — % Dec-2023 (4) 350,000 — — — — — — — $300 million unsecured notes 3.66 % Nov-2024 300,000 300,000 300,000 — — — — — $525 million unsecured notes 3.55 % Jun-2025 525,000 525,000 — 525,000 — — — — $300 million unsecured notes 3.62 % Nov-2025 300,000 300,000 — 300,000 — — — — $475 million unsecured notes 3.35 % May-2026 475,000 475,000 — — 475,000 — — — $300 million unsecured notes 3.01 % Oct-2026 300,000 300,000 — — 300,000 — — — $350 million unsecured notes 3.95 % Oct-2046 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 3.50 % May-2027 400,000 400,000 — — — 400,000 — — $300 million unsecured notes 4.09 % Jul-2047 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.32 % Jan-2028 450,000 450,000 — — — — 450,000 — $300 million unsecured notes 3.97 % Apr-2048 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.66 % Jun-2029 450,000 450,000 — — — — — 450,000 $700 million unsecured notes 2.69 % Mar-2030 700,000 700,000 — — — — — 700,000 $600 million unsecured notes 2.65 % Jan-2031 600,000 600,000 — — — — — 600,000 $700 million unsecured notes 2.16 % Jan-2032 700,000 700,000 — — — — — 700,000 $400 million unsecured notes 2.03 % Dec-2028 400,000 400,000 — — — — 400,000 — $350 million unsecured notes 4.38 % Feb-2033 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 5.19 % Dec-2033 — 400,000 — — — — — 400,000 Avalon Walnut Creek 4.00 % Jul-2066 4,327 4,501 — — — — — 4,501 eaves Los Feliz 3.68 % Jun-2027 41,400 41,400 — — — 41,400 — — eaves Woodland Hills 3.67 % Jun-2027 111,500 111,500 — — — 111,500 — — Avalon Russett 3.77 % Jun-2027 32,200 32,200 — — — 32,200 — — Avalon San Bruno III 2.38 % Mar-2027 51,000 51,000 — — — 51,000 — — Avalon Cerritos 3.35 % Aug-2029 30,250 30,250 — — — — — 30,250 Avalon West Plano 5.97 % May-2029 — 63,041 593 1,065 1,111 1,159 1,202 57,911 7,770,677 7,633,892 300,593 826,065 776,111 637,259 851,202 4,242,662 Variable rate Term Loan - $150 million — % Feb-2024 (5) 150,000 — — — — — — — Total indebtedness - excluding Credit Facility and Commercial Paper $ 8,377,827 $ 8,044,042 $ 309,593 $ 835,765 $ 786,811 $ 650,159 $ 868,902 $ 4,592,812 _________________________________ (1) Rates are as of December 31, 2023 and include credit enhancement fees, facility fees, trustees’ fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees.
Biggest changeEffective interest rate (1) Principal maturity date Balance Outstanding (2) Scheduled Maturities Debt 12/31/2023 12/31/2024 2025 2026 2027 2028 2029 Thereafter Tax-exempt bonds Variable rate Avalon Acton 4.66 % Jul-2040 (3) $ 45,000 $ 45,000 $ — $ — $ — $ — $ — $ 45,000 Avalon Clinton North 5.31 % Nov-2038 (3) 126,400 126,400 — — 700 2,800 3,000 119,900 Avalon Clinton South 5.31 % Nov-2038 (3) 104,500 104,500 — — 600 2,300 2,400 99,200 Avalon Midtown West 5.28 % May-2029 (3) 76,600 69,800 8,100 8,100 8,900 9,800 34,900 — Avalon San Bruno I 5.20 % Dec-2037 (3) 57,650 55,250 2,200 2,600 2,700 2,900 3,100 41,750 410,150 400,950 10,300 10,700 12,900 17,800 43,400 305,850 Conventional loans Fixed rate $300 million unsecured notes — % Nov-2024 (4) 300,000 — — — — — — — $525 million unsecured notes 3.55 % Jun-2025 525,000 525,000 525,000 — — — — — $300 million unsecured notes 3.62 % Nov-2025 300,000 300,000 300,000 — — — — — $475 million unsecured notes 3.35 % May-2026 475,000 475,000 — 475,000 — — — — $300 million unsecured notes 3.01 % Oct-2026 300,000 300,000 — 300,000 — — — — $350 million unsecured notes 3.95 % Oct-2046 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 3.50 % May-2027 400,000 400,000 — — 400,000 — — — $300 million unsecured notes 4.09 % Jul-2047 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.32 % Jan-2028 450,000 450,000 — — — 450,000 — — $300 million unsecured notes 3.97 % Apr-2048 300,000 300,000 — — — — — 300,000 $450 million unsecured notes 3.66 % Jun-2029 450,000 450,000 — — — — 450,000 — $700 million unsecured notes 2.69 % Mar-2030 700,000 700,000 — — — — — 700,000 $600 million unsecured notes 2.65 % Jan-2031 600,000 600,000 — — — — — 600,000 $700 million unsecured notes 2.16 % Jan-2032 700,000 700,000 — — — — — 700,000 $400 million unsecured notes 2.03 % Dec-2028 400,000 400,000 — — — 400,000 — — $350 million unsecured notes 4.38 % Feb-2033 350,000 350,000 — — — — — 350,000 $400 million unsecured notes 5.19 % Dec-2033 400,000 400,000 — — — — — 400,000 $400 million unsecured notes 5.05 % Jun-2034 — 400,000 — — — — — 400,000 47 Table of Contents Effective interest rate (1) Principal maturity date Balance Outstanding (2) Scheduled Maturities Debt 12/31/2023 12/31/2024 2025 2026 2027 2028 2029 Thereafter Avalon Walnut Creek 4.00 % Jul-2066 4,501 4,681 — — — — — 4,681 eaves Los Feliz 3.68 % Jun-2027 41,400 41,400 — — 41,400 — — — eaves Woodland Hills 3.67 % Jun-2027 111,500 111,500 — — 111,500 — — — Avalon Russett 3.77 % Jun-2027 32,200 32,200 — — 32,200 — — — Avalon San Bruno III 2.38 % Mar-2027 51,000 51,000 — — 51,000 — — — Avalon Cerritos 3.34 % Aug-2029 30,250 30,250 — — — — 30,250 — Avalon West Plano 5.97 % May-2029 63,041 62,448 1,065 1,111 1,159 1,202 57,911 — 7,633,892 7,733,479 826,065 776,111 637,259 851,202 538,161 4,104,681 Total indebtedness - excluding Credit Facility and Commercial Paper $ 8,044,042 $ 8,134,429 $ 836,365 $ 786,811 $ 650,159 $ 869,002 $ 581,561 $ 4,410,531 _________________________________ (1) Rates are as of December 31, 2024 and include credit enhancement fees, facility fees, trustees' fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees.
In periods of increased acquisition pursuit activity, periods of economic downturn or when there is limited access to capital, these costs can be volatile and may vary significantly from year to year. In addition, the timing for potential recoveries will not always align with the timing for expensing an abandoned pursuit.
In periods of increased acquisition and pursuit activity, periods of economic downturn or when there is limited access to capital, these costs can be volatile and may vary significantly from year to year. In addition, the timing for potential recoveries will not always align with the timing for expensing an abandoned pursuit.
In evaluating our allocation of capital within our markets, we sell assets that do not meet our long-term investment criteria or when capital and real estate markets allow us to realize a portion of the value created over our ownership periods and redeploy the proceeds from those sales to develop and redevelop communities.
In evaluating our allocation of capital within our markets, we sell assets that do not meet our long-term investment criteria or when capital and real estate markets allow us to realize a portion of the value created over our ownership periods and redeploy the proceeds from those sales to develop, redevelop and acquire communities.
We cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect our current expectations of the approximate outcomes of the matters discussed. We do not undertake a duty to update these forward-looking statements, and therefore they may not represent our estimates and assumptions after the date of this report.
We cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect our current expectations of the outcomes of the matters discussed. We do not undertake a duty to update these forward-looking statements, and therefore they may not represent our estimates and assumptions after the date of this report.
Gross potential revenue is determined by valuing occupied homes at contract rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant units at current market rents. Economic Occupancy considers that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue.
Gross potential revenue is determined by valuing occupied homes at contract rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant units at market rents. Economic Occupancy considers that apartment homes of different sizes and locations within a community have different economic impacts on a community's gross revenue.
We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, depreciation expense, income tax expense, casualty loss, gain on sale of communities, other real estate activity and net operating income from real estate assets sold or held for sale.
We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), property management and other indirect operating expenses, net of corporate income, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, depreciation expense, income tax expense (benefit), casualty and impairment loss, gain on sale of communities, other real estate activity and net operating income from real estate assets sold or held for sale.
Consistent with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts® (“Nareit”), we calculate Funds from Operations Attributable to Common Stockholders (“FFO”) as net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for: • gains or losses on sales of previously depreciated operating communities; • cumulative effect of a change in accounting principle; • impairment write-downs of depreciable real estate assets; • write-downs of investments in affiliates due to a decrease in the value of depreciable real estate assets held by those affiliates; • depreciation of real estate assets; and • similar adjustments for unconsolidated partnerships and joint ventures, including those from a change in control.
Consistent with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts® ("Nareit"), we calculate Funds from Operations Attributable to Common Stockholders ("FFO") as net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for: • gains or losses on sales of previously depreciated operating communities; • cumulative effect of a change in accounting principle; • impairment write-downs of depreciable real estate assets; • write-downs of investments in affiliates due to a decrease in the value of depreciable real estate assets held by those affiliates; • depreciation of real estate assets; and • similar adjustments for unconsolidated partnerships and joint ventures, including those from a change in control.
This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report. This report, including the following MD&A, contains forward-looking statements regarding future events or trends that should be read in conjunction with the factors described under “Forward-Looking Statements” included in this report.
This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report. This report, including the following MD&A, contains forward-looking statements regarding future events or trends that should be read in conjunction with the factors described under "Forward-Looking Statements" included in this report.
Stock Repurchase Program We have a stock repurchase program under which we may acquire shares of our common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the “Stock Repurchase Program”).
Stock Repurchase Program We have a stock repurchase program under which we may acquire shares of our common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the "Stock Repurchase Program").
NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue.
NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to 38 Table of Contents fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue.
Increases in inflation can result in an increase in our operating costs both at our communities and at the corporate level. Substantially all of our apartment leases are for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases.
Increases in inflation can result in an increase in our operating costs both at our communities and at the corporate level. Most of our apartment leases are for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases.
Rental income and operating expenses incurred during the initial lease-up or post-redevelopment lease-up period are fully recognized in earnings as they accrue. 49 Table of Contents During the development and redevelopment efforts we capitalize all direct costs and indirect costs which have been incurred as a result of the development and redevelopment activities.
Rental income and operating expenses incurred during the initial lease-up or post-redevelopment lease-up period are fully recognized in earnings as they accrue. During the development and redevelopment efforts we capitalize all direct costs and indirect costs which have been incurred as a result of the development and redevelopment activities.
Although each of these categories is important to our business, we generally evaluate overall operating, industry and market trends based on the operating results of Same Store communities, for which a detailed discussion can be found in “Results of Operations” as part of our discussion of overall operating results.
Although each of these categories is important to our business, we generally evaluate overall operating, industry and market trends based on the operating results of Same Store communities, for which a detailed discussion can be found in "Results of Operations" as part of our discussion of overall operating results.
A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” of our Consolidated Financial Statements. Cost Capitalization We capitalize costs during the development of assets.
A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," of our Consolidated Financial Statements. Cost Capitalization We capitalize costs during the development of assets.
Expensed transaction, development and other pursuit costs, net of recoveries primarily reflect costs incurred for write downs and abandonment of Development Rights, development pursuits not yet considered probable for development, as well as costs related to abandoned acquisition and disposition pursuits, offset by any recoveries of costs incurred.
Expensed transaction, development and other pursuit costs, net of recoveries includes costs incurred for write downs and abandonment of Development Rights and development pursuits not yet considered probable for development, as well as costs related to abandoned acquisition and disposition pursuits, offset by any recoveries of costs incurred.
We are not directly or indirectly (as borrower or guarantor) obligated in any material respect to pay principal or interest on the indebtedness of any unconsolidated entities in which we have an equity or other interest, other than as disclosed related to the AVA Arts District construction loan (see “Unconsolidated Investments” for further discussion of the construction loan).
We are not directly or indirectly (as borrower or guarantor) obligated in any material respect to pay principal or interest on the indebtedness of any unconsolidated entities in which we have an equity or other interest, other than as disclosed related to the AVA Arts District construction loan (see "Unconsolidated Operating Communities" for further discussion of the construction loan).
These provisions in our secured borrowings are generally consistent with other similar types of debt instruments issued during the same time period in which our borrowings were secured. 43 Table of Contents Continuous Equity Offering Program Under our continuous equity program (the “CEP”), we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time.
These provisions in our borrowings are generally consistent with other similar types of debt instruments issued during the same time period in which our borrowings were issued. 45 Table of Contents Continuous Equity Offering Program Under our continuous equity program (the "CEP"), we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time.
Additional sources of liquidity in 2024 may include the issuance of common and preferred equity, including the issuance of shares of our common stock under the CEP.
Additional sources of liquidity in 2025 may include the issuance of common and preferred equity, including the issuance of additional shares of our common stock under the CEP.
We expect to be able to meet our reasonably foreseeable liquidity needs, as they arise, through a combination of one or more of the following sources: existing cash on hand; operating cash flows; borrowings under our Credit Facility and Commercial Paper Program; secured debt; the issuance of corporate securities (which could include unsecured debt, preferred equity and/or common equity); the sale of apartment communities; or through the formation of joint ventures.
We expect to be able to meet our reasonably foreseeable liquidity needs, as they arise, through a combination of one or more of the following sources: existing cash on hand; operating cash flows; the settlement of the outstanding equity forwards; borrowings under our Credit Facility and Commercial Paper Program; the issuance of corporate securities (which could include unsecured debt, preferred equity and/or additional common equity after considering the outstanding equity forwards); the sale of apartment communities; secured debt; or through the formation of joint ventures.
The interest rate that would be applicable to borrowings under the Credit Facility is 6.13% at January 31, 2024 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.805% per annum, which consists of a 0.10% SOFR adjustment plus 0.705% per annum, assuming a daily SOFR borrowing rate.
The interest rate that would be applicable to borrowings under the Credit Facility is 5.19% at January 31, 2025 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.805% per annum, which consists of a 0.10% SOFR adjustment plus 0.705% per annum, assuming a daily SOFR borrowing rate.
Indirect project costs, which include personnel and office and administrative costs that are clearly associated with our development and redevelopment efforts, are also capitalized. Capitalized indirect costs associated with our development and redevelopment activities are comprised primarily of compensation related costs for associates dedicated to our development and redevelopment efforts and total $50,996,000 and $50,039,000 for 2023 and 2022, respectively.
Indirect project costs, which include personnel and office and administrative costs that are clearly associated with our development and redevelopment efforts, are also capitalized. Capitalized indirect costs associated with our development and redevelopment activities are comprised primarily of compensation related costs for associates dedicated to our development and redevelopment efforts and total $50,343,000 and $50,996,000 for 2024 and 2023, respectively.
Actual results or developments could differ materially from those projected in such statements as a result of the factors described under “Forward-Looking Statements” as well as the risk factors described in Part I, Item 1A. “Risk Factors” of this report. Capitalized terms used without definition have the meanings provided elsewhere in this Form 10-K.
Actual results or developments could differ materially from those projected in such statements as a result of the factors described under "Forward-Looking Statements" as well as the risk factors described in Part I, Item 1A. "Risk Factors" of this report. Capitalized terms used without definition have the meanings provided elsewhere in this Form 10-K.
The amount of gain realized in a given period depends on many factors, including the number of communities sold, the size and carrying value of the communities sold and the market conditions in the local area.
The amount of gain realized in a given period depends on many factors, including the number of communities sold, the size and carrying value of the communities sold, expected operating performance of the communities and the market conditions in the local area.
We expense costs related to abandoned pursuits, which include the abandonment of Development Rights and costs related to development pursuits not yet considered probable for development, as well as costs incurred in pursuing the acquisition or disposition of assets for which such acquisition and disposition activity did not occur, of which we expensed $33,479,000, $16,565,000 and $2,192,000 of these costs during the years ended December 31, 2023, 2022 and 2021, respectively.
We expense costs related to abandoned pursuits, which include the abandonment of Development Rights and costs related to development pursuits not yet considered probable for development, as well as costs incurred in pursuing the acquisition or disposition of assets for which such acquisition and disposition activity did not occur, of which we expensed $18,341,000, $33,479,000 and $16,565,000 of these costs during the years ended December 31, 2024, 2023 and 2022, respectively.
We calculate Core FFO as FFO, adjusted for: • joint venture gains (if not adjusted through FFO), non-core costs and promoted interests from partnerships; • casualty and impairment losses or gains, net on non-depreciable real estate or other investments; • gains or losses from early extinguishment of consolidated borrowings; • expensed transaction, development and other pursuit costs, net of recoveries; • third-party business interruption insurance proceeds and the related lost NOI that is covered by the expected third party business interruption insurance proceeds; • property and casualty insurance proceeds and legal settlements and costs; • gains or losses on sales of assets not subject to depreciation and other investment gains or losses; • advocacy contributions, representing payments to promote our business interests; • hedge ineffectiveness or gains or losses from derivatives not designated as hedges for accounting purposes; • changes to expected credit losses associated with the lending commitments under the SIP; • severance related costs; • executive transition compensation costs; • net for-sale condominium activity, including gains, marketing, operating and administrative costs and imputed carry cost; and • income taxes.
We calculate Core FFO as FFO, adjusted for: • joint venture gains (if not adjusted through FFO), non-core costs and promoted interests from partnerships; • casualty and impairment losses or gains, net on non-depreciable real estate or other investments; • gains or losses from early extinguishment of consolidated borrowings; • expensed transaction, development and other pursuit costs, net of recoveries; • legal recoveries, settlement proceeds, and certain legal costs; • property and casualty insurance proceeds; • gains or losses on sales of assets not subject to depreciation and other investment gains or losses; • advocacy contributions, representing payments to promote our business interests; • hedge ineffectiveness or gains or losses from derivatives not designated as hedges for accounting purposes; • changes to expected credit losses associated with the lending commitments under the SIP; • severance related costs; • executive transition compensation costs; • net for-sale condominium activity, including gains, marketing, operating and administrative costs and imputed carry cost; and • income taxes.
We were in compliance with these covenants at December 31, 2023. In addition, some of our secured borrowings include yield maintenance, defeasance, or prepayment penalty provisions, which would result in us incurring an additional charge in the event of a full or partial prepayment of outstanding principal before the scheduled maturity.
We were in compliance with these covenants at December 31, 2024. In addition, some of our secured and unsecured borrowings include yield maintenance, defeasance, or prepayment penalty provisions, which could result in us incurring an additional charge in the event of a full or partial prepayment of outstanding principal before the scheduled maturity.
In 2024, we expect to continue to meet our liquidity needs from one or more of a variety of internal and external sources, which may include (i) real estate dispositions, (ii) cash balances on hand as well as cash generated from our operating activities, (iii) borrowing capacity under the Credit Facility, (iv) borrowings under the Commercial Paper Program and (v) secured and unsecured debt financings.
In 2025, we expect to continue to meet our liquidity needs from one or more of a variety of internal and external sources, which may include (i) settlement of our outstanding equity forward contracts, (ii) real estate dispositions, (iii) cash balances on hand as well as cash generated from our operating activities, (iv) borrowing capacity under the Credit Facility, (v) borrowings under the Commercial Paper Program and (vi) secured and unsecured debt financings.
Some of the factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: 48 Table of Contents • we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals; • we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; • construction costs of a community may exceed our original estimates; • we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in our expected rental revenues; • occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control; • financing may not be available on favorable terms or at all, and our cash flows from operations and access to cost-effective capital may be insufficient for the development of our pipeline, which could limit our pursuit of opportunities; • the impact of new landlord-tenant laws and rent regulations may be greater than we expect; • an outbreak of disease or other public health event may affect the multifamily industry and general economy, including from measures taken by businesses and the government and the preferences of consumers and businesses for living and working arrangements both during and after such an event; • our cash flows may be insufficient to meet required payments of principal and interest, and we may be unable to refinance existing indebtedness or the terms of such refinancing may not be as favorable as the terms of existing indebtedness; • we may be unsuccessful in our management of joint ventures and the REIT vehicles that are used with certain joint ventures; • laws and regulations implementing rent control or rent stabilization, or otherwise limiting our ability to increase rents, charge fees or evict tenants, may impact our revenue or increase our costs; • our expectations, estimates and assumptions as of the date of this filing regarding legal proceedings are subject to change; • the possibility that we may choose to pay dividends in our stock instead of cash, which may result in stockholders having to pay taxes with respect to such dividends in excess of the cash received, if any; and • investments made under the SIP in either mezzanine debt or preferred equity of third-party multifamily development may not be repaid as expected or the development may not be completed on schedule, which could require us to engage in litigation, foreclosure actions, and/or first party project completion to recover our investment, which may not be recovered in full or at all in such event.
Some of the factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: • we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals; • we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; • construction costs of a community may exceed original estimates; • we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in expected rental revenues; • occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control; • our cash flows from operations and access to cost-effective capital may be insufficient for the development of our pipeline, which could limit our pursuit of opportunities; • an outbreak of disease or other public health event may affect the multifamily industry and general economy; • our cash flows may be insufficient to meet required payments of principal and interest, and we may be unable to refinance existing indebtedness or the terms of such refinancing may not be as favorable as the terms of existing indebtedness; • we may be unsuccessful in our management of joint ventures and the REIT vehicles that are used with certain joint ventures; 51 Table of Contents • we may experience a casualty loss, natural disaster or severe weather event, including those caused by climate change; • new or existing laws and regulations implementing rent control or rent stabilization, or otherwise limiting our ability to increase rents, charge fees or evict tenants, may impact our revenue or increase our costs; • our expectations, estimates and assumptions as of the date of this filing regarding legal proceedings are subject to change; • the possibility that we may choose to pay dividends in our stock instead of cash, which may result in stockholders having to pay taxes with respect to such dividends in excess of the cash received, if any; and • investments made under the SIP may not be repaid as expected or the development may not be completed on schedule, which could require us to engage in litigation, foreclosure actions, and/or first party project completion to recover our investment, which may not be recovered in full or at all in such event.
The following table details the increase in Same Store Residential rental revenue by component for the year ended December 31, 2023, compared to the prior year: For the year ended December 31, 2023 Residential rental revenue Lease rates 5.4 % Concessions and other discounts 0.4 % Economic Occupancy (0.3) % Other rental revenue 0.9 % Uncollectible lease revenue (excluding rent relief) 1.2 % Rent relief (1.3) % Total Residential rental revenue 6.3 % The increase for Same Store Residential rental revenue for the year ended December 31, 2023, as compared to the prior year was not significantly impacted by uncollectible lease revenue, inclusive of amounts received from government rent relief programs.
The following table details the increase in Same Store Residential revenue by component for the year ended December 31, 2024, compared to the prior year: For the year ended December 31, 2024 Residential revenue Lease rates 2.2 % Economic Occupancy (0.1) % Other rental revenue 0.9 % Uncollectible lease revenue (excluding rent relief) 0.5 % Rent relief (0.1) % Total Residential revenue 3.4 % The increase for Same Store Residential revenue for the year ended December 31, 2024, as compared to the prior year was impacted by uncollectible lease revenue, inclusive of amounts received from government rent relief programs.
We cannot predict the occurrence of future events that may cause an impairment assessment to be performed, or the likelihood of any future impairment charges, if any. You should also review Item 1A. “Risk Factors” in this Form 10-K. 50 Table of Contents
We cannot predict the occurrence of future events that may cause an impairment assessment to be performed, or the likelihood of any future impairment charges, if any. You should also review Item 1A. "Risk Factors" in this Form 10-K. 53 Table of Contents
Results of Operations Our year-over-year operating performance is primarily affected by both overall and individual geographic market conditions and apartment fundamentals and is reflected in changes in Same Store NOI; NOI derived from acquisitions, development completions and development under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity.
Results of Operations Our results of operations are driven by our operating platform and are primarily affected by both overall and individual geographic market conditions and apartment fundamentals and are reflected in changes in Same Store NOI; NOI derived from acquisitions, development completions and development under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity.
We use concessions periodically as a means to increase leasing velocity, providing our new and existing residents an upfront incentive to enter into a new lease, or extend an existing lease. During 2023, concessions granted for our Same Store communities increased over the prior year by $5,341,000 to $17,040,000.
We use concessions periodically as a means to increase leasing velocity, providing our new and existing residents an upfront incentive to enter into a new lease, or extend an existing lease. During 2024, concessions granted for our Same Store communities increased over the prior year by $562,000 to $17,288,000.
This refinancing may be accomplished by uncollateralized private or public debt offerings, equity issuances, additional debt financing that is secured by mortgages on individual communities or groups of communities or borrowings under our Credit Facility or Commercial Paper Program.
This refinancing may be accomplished by uncollateralized private or public debt offerings, equity issuances, including through the settlement of the outstanding equity forwards, additional debt financing that is secured by mortgages on individual communities or groups of communities or borrowings under our Credit Facility or Commercial Paper Program.
Same Store Residential property taxes increased $13,071,000, or 4.9%, in 2023 compared to the prior year, primarily due to increased assessments across the portfolio, successful appeals in the prior year and the expiration of property tax incentive programs primarily at certain of our properties in New York City.
Same Store Residential property taxes increased $13,885,000, or 4.9%, in 2024 compared to the prior year, primarily due to increased assessments across the portfolio, a higher level of successful appeals in the prior year and the expiration of property tax incentive programs primarily at certain of our properties in New York City.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide an understanding of our business, financial condition and results of operations.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help provide an understanding of our business, financial condition and results of operations.
The Commercial Paper Program is backstopped by our commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. As of January 31, 2024, we had $20,000,000 outstanding under the Commercial Paper Program at a weighted average contractual interest rate of 5.45%.
The Commercial Paper Program is backstopped by our commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. As of January 31, 2025, we had $170,000,000 outstanding under the Commercial Paper Program at a weighted average contractual interest rate of 4.55%.
Interest Rate Swap Agreements The following derivative activity occurred during the year ended December 31, 2023: • In connection with the issuance of our $400,000,000 unsecured notes in December 2023 maturing in 2033, we terminated $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving payments of $8,331,000 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate.
Interest Rate Swap Agreements The following derivative activity occurred during the year ended December 31, 2024: • In connection with the issuance of our $400,000,000 unsecured notes in May 2024 maturing in 2034, we terminated $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving $16,839,000 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate.
The first determination under the sustainability-linked pricing component occurred in July 2023, resulting in reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.
The annual determination under the sustainability-linked pricing component occurred in July 2024, maintaining reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.
Property taxes increased $17,834,000, or 6.2%, in 2023 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities and increases for our Same Store Residential portfolio, partially offset by decreased property taxes from dispositions.
Property taxes increased $20,817,000, or 6.8%, in 2024 compared to the prior year, primarily due to increases for our Same Store Residential portfolio and the addition of newly developed and acquired apartment communities, partially offset by decreased property taxes from dispositions.
We frequently review our liquidity needs, especially in periods with volatile market conditions, as well as the adequacy of cash flows from operations and other expected liquidity sources to meet these needs. We had cash, cash equivalents and restricted cash of $530,960,000 at December 31, 2023, a decrease of $203,285,000 from $734,245,000 at December 31, 2022.
We frequently review our liquidity needs, especially in periods with volatile market conditions, as well as the adequacy of cash flows from operations and other expected liquidity sources to meet these needs. We had cash, cash equivalents and restricted cash of $267,076,000 at December 31, 2024, a decrease of $263,884,000 from $530,960,000 at December 31, 2023.
(2) Amounts are for our recognition of our promoted interest in the U.S. Fund. (3) Amounts are the expected credit losses associated with our lending commitments primarily under our SIP. The timing and amount of actual losses that will be incurred, if any, is to be determined.
(2) Amount is for recognition of our promoted interest in the U.S. Fund. (3) Reflects changes to expected credit losses associated with our lending commitments primarily under the SIP. The timing and amount of actual losses that will be incurred, if any, is to be determined at the maturity of each respective lending agreement.
Financial Covenants We are subject to financial covenants contained in the Credit Facility and the indentures under which our unsecured notes were issued.
Secured and Unsecured Borrowings— Financial Covenants and Early Repayment Provisions We are subject to financial covenants contained in the Credit Facility and the indentures under which our unsecured notes were issued.
Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of Same Store Residential rental revenue decreased to 2.4% in the year ended December 31, 2023 from 3.7% in the year ended December 31, 2022.
Adjusting to remove the impact of rent relief, uncollectible lease revenue as a percentage of Same Store Residential revenue decreased to 1.8% in the year ended December 31, 2024 from 2.4% in the year ended December 31, 2023.
As of December 31, 2023, we have $73,892,000 of remaining equity commitments to contribute to these investment management funds, with the timing and amount for these commitments to be fulfilled dependent on if, and when, investment opportunities are identified by the respective funds.
As of December 31, 2024, we have invested $58,122,000 and have $62,494,000 of remaining equity commitments to contribute to these investment management funds, with the timing and amount for these commitments to be fulfilled dependent on if, and when, investment opportunities are identified by the respective funds.
While we guarantee the construction loan on behalf of the venture, any amounts payable under the guarantee are obligations of the venture partners in proportion to ownership interest. • We invested $10,748,000 in various property technology and environmentally focused companies directly and indirectly through investment management funds during the year ended December 31, 2023.
While we guarantee 30% of the venture's construction loan, any amounts payable under the guarantee are obligations of the venture partners in proportion to their ownership interest. • We invested $11,196,000 in various property technology and environmentally focused companies directly and indirectly through investment management funds during the year ended December 31, 2024.
We amortize concessions on a straight-line basis over the life of the respective leases (generally one year), reducing the income recognized over the lease term. For the year ended December 31, 2023, amortized concessions decreased by $7,219,000 contributing to the increase in revenue as compared to the prior year.
We amortize concessions on a straight-line basis over the life of the respective leases (generally one year), reducing the income recognized over the lease term. For the year ended December 31, 2024, amortized concessions increased by $927,000, partially offsetting the increase in revenue as compared to the prior year.
(2) Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $43,848 and $47,695 as of December 31, 2023 and 2022, respectively, deferred financing costs and debt discount associated 45 Table of Contents with secured notes of $18,372 and $14,087 as of December 31, 2023 and 2022, respectively, as reflected on our Consolidated Balance Sheets included elsewhere in this report.
(2) Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $41,216 and $43,848 as of December 31, 2024 and 2023, respectively, deferred financing costs and debt discount associated with secured notes of $15,964 and $18,372 as of December 31, 2024 and 2023, respectively, as reflected on our Consolidated Balance Sheets included elsewhere in this report.
In addition to consolidated debt, we have scheduled contractual obligations associated with (i) ground leases for land underlying current operating or development communities and commercial and parking facilities and (ii) office leases for our corporate headquarters and regional offices of $15,333,000 for 2024, $15,633,000 for 2025 and $348,404,000 thereafter.
In addition to consolidated debt, we have scheduled contractual obligations associated with (i) ground leases for land underlying current operating or development communities and commercial and parking facilities and (ii) office leases for our corporate headquarters and regional offices of $16,433,000 for 2025, $16,843,000 for 2026 and $486,656,000 thereafter.
See also Part I, Item 1A, “Risk Factors.” Discussion of our operating results for 2022 and comparison to 2021 can be found in Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K filed with the SEC on February 24, 2023.
See also Part I, Item 1A, "Risk Factors." Discussion of our operating results for 2023 and comparison to 2022 can be found in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K filed with the SEC on February 23, 2024.
Management, development and other fees increased $1,389,000, or 21.9%, in 2023, compared to the prior year, primarily due to fees for third-party back-office, financial administrative support services in the current year, partially offset by reduced third-party development fees. 38 Table of Contents Direct property operating expenses, excluding property taxes, increased $42,376,000, or 8.3%, in 2023 compared to the prior year, primarily due to the addition of newly developed apartment communities as well as increased Residential operating expenses at our Same Store communities as discussed below.
Management, development and other fees decreased $641,000, or 8.3%, in 2024, compared to the prior year, primarily due to reduced third-party development fees, partially offset by an increase in fees for third-party back-office, financial administrative support services in the current year. 40 Table of Contents Direct property operating expenses, excluding property taxes, increased $36,818,000, or 6.8%, in 2024 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities as well as increased Residential operating expenses at our Same Store communities as discussed below, partially offset by dispositions.
The weighted average monthly rental revenue per occupied apartment home increased to $2,955 for 2023 compared to $2,784 in 2022.
The weighted average monthly revenue per occupied apartment home increased to $3,081 for 2024 compared to $2,955 in 2023.
Rental and other income increased $173,074,000, or 6.7%, in 2023 compared to the prior year primarily due to the increased rental revenue from our Same Store communities, discussed below. Consolidated Communities —The weighted average number of occupied apartment homes for consolidated communities increased to 77,667 apartment homes for 2023, compared to 77,319 homes for 2022.
Rental and other income increased $146,489,000, or 5.3%, in 2024 compared to the prior year primarily due to the increased revenue from our Same Store communities, discussed below. Consolidated Communities —The weighted average number of occupied apartment homes for consolidated communities increased to 79,240 apartment homes for 2024, compared to 77,667 homes for 2023.
The expiration of property tax incentive programs represents $6,810,000 or 52% of the 4.9% increase in property taxes for the year ended December 31, 2023.
The expiration of property tax incentive programs represents $5,364,000 or 39% of the 4.9% increase in property taxes for the year ended December 31, 2024.
Depreciation expense increased $1,987,000, or 0.2%, in 2023 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities, partially offset by dispositions.
Depreciation expense increased $29,888,000, or 3.7%, in 2024 compared to the prior year, primarily due to the addition of newly developed and acquired apartment communities, partially offset by dispositions.
Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential revenue (“Residential”), for the year ended December 31, 2023 was $1,732,422,000, an increase of $100,738,000, or 6.2%, over the prior year.
Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential revenue ("Residential"), for the year ended December 31, 2024 was $1,828,266,000, an increase of $48,643,000, or 2.7%, over the prior year.
Due to the subjectivity in determining whether a pursuit will result in the development of an apartment community, and therefore should be capitalized, the accounting for pursuit costs is a critical accounting estimate. As of December 31, 2023, capitalized pursuit costs associated with Development Rights totaled $53,122,000.
Due to the subjectivity in determining whether a pursuit will result in the development of an apartment community, and therefore should be capitalized, the accounting for pursuit costs is a critical accounting estimate.
A presentation of GAAP based cash flow metrics is as follows (unaudited, dollars in thousands): For the year ended December 31, 2023 2022 Net cash provided by operating activities $ 1,560,029 $ 1,421,932 Net cash used in investing activities $ (928,955) $ (560,419) Net cash used in financing activities $ (834,359) $ (671,056) • Net cash provided by operating activities increased primarily due to increases in NOI. • Net cash used in investing activities was primarily due to (i) investment of $901,847,000 in the development and redevelopment of communities, (ii) acquisition of three wholly-owned communities for $215,889,000 and (iii) capital expenditures of $197,274,000 for our wholly-owned communities and non-real estate assets.
A presentation of GAAP based cash flow metrics is as follows (dollars in thousands): For the year ended December 31, 2024 2023 Net cash provided by operating activities $ 1,607,878 $ 1,560,029 Net cash used in investing activities $ (996,864) $ (928,955) Net cash used in financing activities $ (874,898) $ (834,359) • Net cash provided by operating activities increased primarily due to increases in NOI. • Net cash used in investing activities was primarily due to (i) the investment of $951,101,000 in the development and redevelopment of communities, (ii) acquisition of six wholly-owned communities for $464,419,000 and (iii) capital expenditures of $198,026,000 for our wholly-owned communities and non-real estate assets.
Our Current Communities are further classified as Same Store communities, Other Stabilized communities, Redevelopment communities and Unconsolidated communities. Same Store communities are consolidated communities that were owned and had stabilized occupancy as of the beginning of the prior year, allowing for a meaningful comparison of operating results between years.
Same Store communities are consolidated communities that were owned and had stabilized occupancy as of the beginning of the prior year, allowing for a meaningful comparison of operating results between years. Other Stabilized communities are generally all other completed consolidated communities that have stabilized occupancy at the beginning of the current year or were acquired during the year.
The availability on the Credit Facility as of January 31, 2024 is as follows (dollars in thousands): January 31, 2024 Credit Facility commitment $2,250,000 Credit Facility outstanding — Commercial paper outstanding (20,000) Letters of credit outstanding (1) (1,914) Total Credit Facility available $ 2,228,086 _____________________________________ (1) In addition, we had $58,616 outstanding in additional letters of credit unrelated to the Credit Facility as of January 31, 2024.
The availability on the Credit Facility as of January 31, 2025 is as follows (dollars in thousands): January 31, 2025 Credit Facility commitment $2,250,000 Credit Facility outstanding — Commercial paper outstanding (170,000) Letters of credit outstanding (1) (964) Total Credit Facility available $ 2,079,036 _____________________________________ (1) In addition, we had $47,592 outstanding in additional letters of credit unrelated to the Credit Facility as of January 31, 2025.
These statements include, among other things, statements regarding our intent, belief or expectations with respect to: • our potential development, redevelopment, acquisition or disposition of communities; • the timing and cost of completion of apartment communities under construction, reconstruction, development or redevelopment; • the timing of lease-up, occupancy and stabilization of apartment communities; • the pursuit of land on which we are considering future development; • the anticipated operating performance of our communities; • cost, yield, revenue, NOI and earnings estimates; • the impact of landlord-tenant laws and rent regulations; • our expansion into new regions; • our declaration or payment of dividends; • our joint venture activities; • our policies regarding investments, indebtedness, acquisitions, dispositions, financings and other matters; • our qualification as a REIT under the Code; • the real estate markets in Metro New York/New Jersey, Northern and Southern California, Denver, Colorado, Southeast Florida, Dallas and Austin, Texas and Charlotte and Raleigh-Durham, North Carolina, and markets in selected states in the Mid-Atlantic, New England and Pacific Northwest regions of the United States and in general; • the availability of debt and equity financing; • interest rates; • general economic conditions, including the potential impacts from current economic conditions, including rising interest rates and general price inflation; • trends affecting our financial condition or results of operations; • regulatory changes that may affect us; and • the impact of legal proceedings.
These statements, among other things, address the Company's intent, belief or expectations with respect to: • development, redevelopment, acquisition or disposition of communities; • the timing and cost of completion of communities under development or redevelopment; • the timing of lease-up, occupancy and stabilization of communities; • the pursuit of land for future development; • the anticipated operating performance of our communities; • cost, yield, revenue, NOI and earnings estimates; • the impact of landlord-tenant laws and rent regulations, including rent caps; • our expansion into new regions; • our declaration or payment of dividends; • our joint venture activities; • our policies regarding investments, indebtedness, acquisitions, dispositions, financings and other matters; • our qualification as a REIT under the Code; • the real estate markets in regions where we operate and in general; • the availability of debt and equity financing; • interest rates; • inflation, tariffs and other economic conditions, and their potential impacts; • trends affecting our financial condition or results of operations; • regulatory changes that may affect us; and • the impact of legal proceedings.
(3) Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement. (4) During 2023, we repaid this borrowing at its scheduled maturity date. (5) During 2023, we repaid some or all amounts outstanding of this borrowing in advance of its scheduled maturity date.
(3) Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement. (4) During 2024, we repaid this borrowing at par at its scheduled maturity date.
The remaining net unamortized balance of Same Store residential concessions as of December 31, 2023 and 2022 was $8,480,000 and $6,229,000, respectively.
The remaining net unamortized balance of Same Store residential concessions as of December 31, 2024 and 2023 was $2,358,000 and $187,000, respectively.
You should carefully review the discussion under Item 1A. “Risk Factors” in this report for further discussion of risks associated with forward-looking statements.
You should carefully review the discussion under Part I, Item 1A. "Risk Factors" in this Form 10-K for further discussion of risks associated with forward-looking statements.
Same Store uncollectible lease revenue decreased for the year ended December 31, 2023 by $4,172,000, resulting in a 0.1% decrease in Same Store Residential rental revenue. However, uncollectible lease revenue was impacted by a decrease in government rent relief of $31,766,000 for the year ended December 31, 2023 from the prior year.
Same Store uncollectible lease revenue decreased for the year ended December 31, 2024 as compared to the prior year by $10,582,000, resulting in a 0.4% increase in Same Store Residential revenue. Uncollectible lease revenue was impacted by a decrease in government rent relief of $3,967,000 for the year ended December 31, 2024 from the prior year.
We may also use joint ventures related to mixed-use land development opportunities and new markets where our partners bring development and operational expertise and/or experience to the venture.
We generally employ joint ventures to mitigate asset concentration or market risk and secondarily as a source of liquidity. We may also use joint ventures related to mixed-use land development opportunities and new markets where our partners bring development and operational expertise and/or experience to the venture.
See the discussion under “Liquidity and Capital Resources.” Communities Overview As of December 31, 2023 we owned or held a direct or indirect ownership interest in 299 apartment communities containing 90,669 apartment homes in 12 states and the District of Columbia, of which 18 communities were under development.
See the discussion under "Liquidity and Capital Resources." 36 Table of Contents Communities Overview As of December 31, 2024, we owned or held a direct or indirect ownership interest in 306 communities containing 93,518 homes in 12 states and the District of Columbia, of which 17 communities were under development.
Actual sales will depend on a variety of factors to be determined, including market conditions, the trading price of our common stock and our determinations of the appropriate funding sources. We engaged sales agents for the CEP who receive compensation of up to 1.5% of the gross sales price for shares sold.
Actual sales will depend on a variety of factors to be determined, including market conditions, the trading price of our common stock and our determinations of the appropriate funding sources.
These amounts were partially offset by (i) the settlement of the Equity Forward for $491,912,000 and (ii) proceeds from the issuance of unsecured notes in the amount of $399,756,000. 42 Table of Contents Variable Rate Unsecured Credit Facility The $2,250,000,000 Credit Facility matures in September 2026.
These amounts were partially offset by the proceeds from the issuance of unsecured notes in the amount of $398,788,000. 44 Table of Contents Variable Rate Unsecured Credit Facility The $2,250,000,000 Credit Facility matures in September 2026.
In the event that financing cannot be obtained, we may abandon Development Rights, write off associated pre-development costs that were capitalized and/or forego reconstruction activity. In such instances, we will not realize the increased revenues and earnings that we expected from such Development Rights or reconstruction activity and significant losses could be incurred.
In the event that financing cannot be obtained, we may abandon Development Rights, write off associated pre-development costs that were capitalized and/or forego reconstruction activity.
During 2023, we raised approximately $1,363,299,000 of gross capital through the sale of wholly-owned real estate, the issuance of unsecured notes and the settlement of the outstanding forward contracts entered into in April 2022 (the "Equity Forward"). We believe that our current capital structure will continue to provide financial flexibility to access capital on attractive terms.
During 2024, excluding the equity capital raised through forward sales of our common shares not yet settled, we raised approximately $1,130,366,000 of gross capital through the sale of wholly-owned real estate and the issuance of unsecured notes. We believe that our current capital structure will continue to provide financial flexibility to access capital on attractive terms.
Forward-Looking Statements This Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
These amounts were partially offset by net proceeds from the disposition of four operating communities and the sale of for-sale residential condominiums of $467,096,000. • Net cash used in financing activities was primarily due to (i) payment of cash dividends in the amount of $922,657,000, (ii) the repayment of the $600,000,000 fixed rate unsecured notes and (iii) the repayment of the $150,000,000 Term Loan.
These amounts were partially offset by net proceeds from the disposition of eight wholly-owned communities. • Net cash used in financing activities was primarily due to (i) payment of cash dividends in the amount of $961,914,000, and (ii) the repayment of the $300,000,000 fixed rate unsecured notes.
The following is a reconciliation of net income attributable to common stockholders to FFO attributable to common stockholders and to Core FFO attributable to common stockholders for the years ended December 31, 2023 and 2022 (dollars in thousands, except per share amounts). 40 Table of Contents For the year ended December 31, 2023 2022 Net income attributable to common stockholders $ 928,825 $ 1,136,775 Depreciation - real estate assets, including joint venture adjustments 811,717 810,611 Distributions to noncontrolling interests 25 48 Gain on sale of unconsolidated entities holding previously depreciated real estate — (38,144) Gain on sale of previously depreciated real estate (287,424) (555,558) Casualty loss on real estate 9,118 — FFO attributable to common stockholders $ 1,462,261 $ 1,353,732 Adjusting items: Unconsolidated entity gains, net (1) (4,161) (8,355) Joint venture promote (2) (1,519) (4,690) Structured Investment Program loan reserve (3) 1,186 1,632 Loss on extinguishment of consolidated debt 150 1,646 Hedge accounting activity 566 (229) Advocacy contributions 1,625 634 Executive transition compensation costs 1,244 1,631 Severance related costs 2,625 1,097 Expensed transaction, development and other pursuit costs, net of recoveries (4) 30,583 13,288 Other real estate activity (174) (5,127) For-sale condominium imputed carry cost (5) 602 2,306 Legal settlements and costs (6) 457 (2,212) Income tax expense (7) 10,153 14,646 Core FFO attributable to common stockholders $ 1,505,598 $ 1,369,999 Weighted average common shares outstanding - diluted 141,643,788 139,975,087 Earnings per common share - diluted $ 6.56 $ 8.12 FFO per common share - diluted $ 10.32 $ 9.67 Core FFO per common share - diluted $ 10.63 $ 9.79 _________________________________ (1) Amounts consist primarily of net unrealized gains on technology investments.
For the year ended December 31, 2024 2023 Net income attributable to common stockholders $ 1,081,994 $ 928,825 Depreciation - real estate assets, including joint venture adjustments 843,224 811,717 Distributions to noncontrolling interests — 25 Gain on sale of previously depreciated real estate (363,300) (287,424) Casualty loss and impairment on real estate 2,935 9,118 FFO attributable to common stockholders $ 1,564,853 $ 1,462,261 Adjusting items: Unconsolidated entity gains, net (1) (33,137) (4,161) Joint venture promote (2) — (1,519) Structured Investment Program loan reserve (3) (1,057) 1,186 Loss on extinguishment of consolidated debt — 150 Hedge accounting activity 61 566 Advocacy contributions 19,156 1,625 Executive transition compensation costs 304 1,244 Severance related costs 1,787 2,625 Expensed transaction, development and other pursuit costs, net of recoveries (4) 13,649 30,583 Other real estate activity (753) (174) For-sale condominium imputed carry cost (5) 84 602 Legal settlements and costs (6) 3,002 457 Income tax expense (7) 445 10,153 Core FFO attributable to common stockholders $ 1,568,394 $ 1,505,598 Weighted average common shares outstanding - diluted 142,458,604 141,643,788 Earnings per common share - diluted $ 7.60 $ 6.56 FFO per common share - diluted $ 10.98 $ 10.32 Core FFO per common share - diluted $ 11.01 $ 10.63 _________________________________ (1) Amounts consist primarily of net unrealized gains on technology investments.
FFO and Core FFO do not represent net income in accordance with GAAP, and therefore should not be considered an alternative to net income, which remains the primary measure, as an indication of our performance. In addition, FFO and Core FFO as calculated by other REITs may not be comparable to our calculations of FFO and Core FFO.
FFO and Core FFO do not represent (i) net income in accordance with GAAP, and therefore should not be considered an alternative to net income, which remains the primary measure, as an indication of our performance, or (ii) cash generated from operating activities in accordance with GAAP, and therefore should not be considered an alternative to net cash flows from operating activities, as determined by GAAP, as a measure of liquidity.
Abandoned Pursuit Costs & Asset Impairment We evaluate our direct and indirect investments in real estate and other long-lived assets for impairment when potential indicators of impairment exist.
As of December 31, 2024, capitalized pursuit costs associated with Development Rights totaled $43,675,000. 52 Table of Contents Abandoned Pursuit Costs & Asset Impairment We evaluate our direct and indirect investments in real estate and other long-lived assets for impairment when potential indicators of impairment exist.
The increase was due to an increase in Same Store Residential rental revenue of $149,495,000, or 6.3%, partially offset by an increase in Same Store Residential property operating expenses of $48,752,000, or 6.6%, over 2022.
The increase was due to an increase in Same Store Residential revenue of $87,854,000, or 3.4%, partially offset by an increase in Same Store Residential property operating expenses of $39,211,000, or 5.0%, over 2023.
Executive Overview 2023 Financial Highlights Net income attributable to common stockholders for the year ended December 31, 2023 was $928,825,000, a decrease of $207,950,000, or 18.3%, from the prior year. The decrease was primarily attributable to decreases in real estate sales and related gains, partially offset by an increase in NOI from communities over the prior year.
Executive Overview 2024 Financial Highlights Net income attributable to common stockholders for the year ended December 31, 2024 was $1,081,994,000, an increase of $153,169,000, or 16.5%, from the prior year. The increase was primarily attributable to increases in NOI from communities over the prior year, increases in real estate sales and related gains, and increases in income from unconsolidated investments.
We believe that the temporary absence of future cash flows from communities sold will not have a material impact on our ability to fund future liquidity and capital resource needs.
We believe that the temporary absence of future cash flows from communities sold will not have a material impact on our ability to fund future liquidity and capital resource needs. Investments We invest in consolidated real estate entities, unconsolidated investments in real estate ventures and direct and indirect investments in property technology and environmentally focused companies through investment management funds.
Unconsolidated communities are communities in which we have an indirect ownership interest through our investment interest in an unconsolidated joint venture. A more detailed description of our reportable segments and other related operating information can be found in Note 8, “Segment Reporting,” of our Consolidated Financial Statements.
A more detailed description of our reportable segments and other related operating information can be found in Note 8, "Segment Reporting," of our Consolidated Financial Statements.
Although we believe we will have the capacity to meet our currently anticipated liquidity needs, we cannot assure you that capital from additional debt financing or debt or equity offerings will be available or, if available, that they will be on terms we consider satisfactory. 44 Table of Contents The following table details our consolidated debt obligations, including the effective interest rate and contractual maturity dates, and principal payments for periodic amortization and maturities for the next five years, excluding our Credit Facility and Commercial Paper Program and amounts outstanding related to communities classified as held for sale, for debt outstanding at December 31, 2023 and 2022 (dollars in thousands).
The following table details our consolidated debt obligations, including the effective interest rate and contractual maturity dates, and principal payments for periodic amortization and maturities for the next five years, excluding our Credit Facility and Commercial Paper Program and amounts outstanding related to communities classified as held for sale at December 31, 2024 and 2023 (dollars in thousands).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, we had outstanding debt of $8,044,042,000 with an estimated aggregate fair value of $7,360,944,000 at December 31, 2023. Contractual fixed rate debt represented $7,011,605,000 of the fair value at December 31, 2023.
Biggest changeAs of December 31, 2024, we had outstanding debt of $8,134,429,000 with an estimated aggregate fair value of $7,456,236,000 at December 31, 2024. Contractual fixed rate debt represented $7,104,942,000 of the fair value at December 31, 2024.
If interest rates on the variable rate debt had been 100 basis points higher throughout 2023 and 2022, our annual interest incurred would have increased by approximately $5,428,000 and $6,850,000, respectively, based on balances outstanding during the applicable years.
If interest rates on the variable rate debt had been 100 basis points higher throughout 2024 and 2023, our annual interest incurred would have increased by approximately $4,102,000 and $5,428,000, respectively, based on balances outstanding during the applicable years.
As of December 31, 2023 and 2022, we had $410,150,000 and $607,150,000, respectively, in variable rate debt outstanding, with no amounts outstanding under our Credit Facility or Commercial Paper Program.
As of December 31, 2024 and 2023, we had $400,950,000 and $410,150,000, respectively, in variable rate debt outstanding, with no amounts outstanding under our Credit Facility or Commercial Paper Program.
During the year ended December 31, 2023, in connection with the issuance of our $400,000,000 unsecured notes in December 2023 maturing in 2033, we terminated $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving payments of $8,331,000 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate.
During the year ended December 31, 2024, in connection with the issuance of our $400,000,000 unsecured notes in May 2024 maturing in 2034, we terminated $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the issuance of unsecured notes, receiving payments of $16,839,000 which will be recognized over the life of the unsecured notes as a reduction in the effective interest rate.
If interest rates had been 100 basis points higher as of December 31, 2023, the fair value of this fixed rate debt would have decreased by approximately $449,065,000.
If interest rates had been 100 basis points higher as of December 31, 2024, the fair value of this fixed rate debt would have decreased by approximately $403,558,000.

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