Camden Property Trust
11/06/2026 | Press release | Distributed by Public on 11/06/2026 10:55
Quarterly Report for Quarter Ending 9/30/26 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the condensed consolidated financial statements and notes appearing elsewhere in this report, as well as Part I, Item 1A, "Risk Factors" within our Annual Report on Form 10-K for the year ended December 31, 2025. Historical results and trends which might appear in the condensed consolidated financial statements should not be interpreted as being indicative of future operations.
We consider portions of this report to be "forward-looking" within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical facts, but instead include statements related to expectations, projections, intentions, or other items relating to the future; forward-looking statements are not guarantees of future performance, results, or events. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance our expectations will be achieved. Any statements contained herein which are not statements of historical fact should be deemed forward-looking statements. Reliance should not be placed on these forward-looking statements as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.
Factors which may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include, but are not limited to, the following:
•Volatility in capital and credit markets, cost increases, or other unfavorable changes in economic conditions, either nationally or regionally in one or more of the markets in which we operate, could adversely impact us;
•Short-term leases could expose us to the effects of declining market rents;
•We could be negatively impacted by the risks associated with land holdings and related activities;
•Development, repositions, redevelopment and construction risks could impact our profitability;
•Our acquisition strategy may not produce the cash flows expected;
•Changes in rent control or rent stabilization laws and regulations could adversely affect our operations and property values;
•Failure to qualify as a REIT could have adverse consequences;
•Tax laws could continue to change at any time and any such legislative or other actions could have a negative effect on us;
•A cybersecurity incident and other technology disruptions could negatively impact our business;
•We have significant debt, which could have adverse consequences;
•Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders;
•Issuances of additional debt may adversely impact our financial condition;
•We may be unable to renew, repay, or refinance our outstanding debt;
•Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets;
•Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders;
•The form, timing, and amount of dividend distributions in future periods may vary and be impacted by economic and other considerations;
•Litigation risks could affect our business;
•Damage from catastrophic weather and other natural events could result in losses;
•Competition could adversely affect our ability to acquire properties;
•We could be adversely impacted due to our share price fluctuations; and
•Rising interest rates could increase our borrowing costs, lower the value of our real estate, and decrease our share price, leading investors to seek higher yields through other investments.
These forward-looking statements represent our estimates and assumptions as of the date of this report, and we assume no obligation to update or supplement forward-looking statements because of subsequent events.
Executive Summary
Camden Property Trust and all consolidated subsidiaries are primarily engaged in the ownership, management, development, reposition, redevelopment, acquisition, and construction of multifamily apartment communities. We focus on investing in markets characterized by high-growth economic conditions, strong employment, and attractive quality of life which we believe leads to higher demand for our apartments and retention of our residents. As of September 30, 2026, we owned interests in, operated, or were developing 172 multifamily properties comprised of 58,555 apartment homes across the United States. Of the 172 properties, four properties were under construction as of September 30, 2026, and will consist of a total of 1,560 apartment homes when completed. We also own land holdings we may develop into multifamily communities in the future.
Business Environment and Current Outlook
During the three and nine months ended September 30, 2026, our results reflect relatively stable same store revenues as compared to the same periods in 2025. The stability was in part due to consistent occupancy, which we believe was primarily attributable to strong resident retention, supported by favorable demographic trends and continued demand for multifamily housing in our markets.
We believe the levels of new multifamily supply in the submarkets and asset classes in which we operate are manageable and moderating levels of supply should likely be met with continued demand to absorb these new deliveries. However, if this were to change or other economic conditions were to worsen, our operating results could be adversely affected.
Consolidated Results
Net income attributable to common shareholders was $900.4 million for the three months ended September 30, 2026, compared to $108.9 million for the same period in 2025. For the nine months ended September 30, 2026, net income attributable to common shareholders was $961.6 million, compared to $228.4 million for the same period in 2025. The increases for the three and nine months ended September 30, 2026 were primarily attributable to higher operating property disposition activity during 2026, resulting in significantly higher gains on the sale of operating properties. During the third quarter of 2026, we recognized a $973.0 million gain on the sale of operating properties located in California, compared to $85.6 million of gains on operating property sales recognized during the same period in 2025. For the nine months ended September 30, 2026, we recognized $1.0 billion of gains on operating property sales, compared to $132.9 million during the same period in 2025. The increases were partially offset by an $86.4 million impairment charge associated with land development activities recognized in the third quarter of 2026. For the nine months ended September 30, 2026, the increase was also partially offset by a $53.0 million settlement expense relating to the Class Action Litigation recognized during the first quarter of 2026. See further discussion of our 2026 operations as compared to 2025 in "Results of Operations" below.
Construction and Development Activity
At September 30, 2026, we had a total of four properties under construction to be comprised of 1,560 apartment homes. As of September 30, 2026, we estimated the total additional cost to complete the construction of these four properties was approximately $209.3 million.
We stopped development activities for the foreseeable future on two of our developments in the third quarter of 2026 and recorded approximately $85.2 million of impairment charges on these land parcels. Additionally, in the third quarter of 2026, we recorded an impairment charge of approximately $1.2 million related to one undeveloped land parcel as the estimated fair value was less than its book value. We review our long-lived assets on an annual basis or whenever events or circumstances indicated the carrying amount of an asset may not be recoverable and our impairment evaluations take into consideration the current and anticipated economic climate. We currently have two other land parcels held for future development we plan to develop. However, the commencement of future developments may be impacted by macroeconomic issues, multifamily market conditions, and other factors. We will continue to evaluate future development starts based on market, economic, and capital market conditions. However, there can be no assurance we will not have impairment charges in the future.
Litigation Update
On April 7, 2026, we entered into a binding term sheet to settle the Class Action Litigation. Subsequently, the parties executed a definitive settlement agreement, and received the required preliminary court approvals during the three months ended June 30, 2026. Final court approval was granted in October 2026. Pursuant to the settlement agreement, we agreed to pay an aggregate of $53.0 million to settle all claims which have been asserted, or could have been asserted, against us in the litigation, inclusive of class member recoveries, plaintiffs' attorneys' fees, and settlement administration costs. The settlement
payment was payable in two equal installments of $26.5 million, which were timely paid during the three months ended June 30, 2026 and September 30, 2026.
Debt
In February 2026, we issued $600.0 million of 4.90% senior unsecured notes due February 28, 2036.
In March 2026, we amended and restated our existing credit facility to (i) remove a $300 million unsecured term loan facility with a delayed draw feature and (ii) extend the maturity date of the unsecured revolving credit facility from August 2026 to March 2030, which may be extended at the Company's option for two additional consecutive six-month periods.
In July 2026, we entered into a 364-day unsecured term loan facility ("term loan facility") with an aggregate principal amount of $350.0 million. The interest rate on our term loan facility is based upon, at our option, (a) Daily SOFR or one-, three- or six-month Term SOFR plus, in each case, a spread based on our credit rating or (b) a base rate equal to the higher of: (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America, N.A.'s prime rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%, plus a spread based on our credit rating.
In September 2026, we extended the maturity date of our $40.0 million unsecured floating rate term loan with an unrelated third party from September 2026 to September 2028.
During 2026, we repaid two conventional mortgage notes payable totaling $24.0 million, plus accrued interest. The first note, with a principal balance of $12.0 million, was repaid in March 2026 in advance of its April 1, 2026 maturity date, and the second note, also with a principal amount of $12.0 million, was repaid in September 2026 in advance of its October 1, 2026 maturity date.
In October 2026, we repaid, at par, the $500.0 million principal amount of our 5.85% senior unsecured notes due November 2026 prior to maturity and incurred no prepayment penalties in connection with the early repayment. The repayment was funded with a combination of cash on hand and borrowings under our commercial paper program. Concurrent with the repayment, we terminated the related $500.0 million notional amount interest rate swap, which had been designated as a fair value hedge of the 5.85% fixed rate senior unsecured notes due November 2026.
Acquisitions
During the nine months ended September 30, 2026, we acquired eight operating properties for an aggregate purchase price of approximately $754.5 million as follows: a 288-apartment home community in Orlando, Florida, and a 269-apartment home community in Alpharetta, Georgia, both of which were acquired in April; a 196-apartment home community in Franklin, Tennessee, a 349-apartment home community in Roanoke, Texas, and a 320-apartment home community in Gilbert, Arizona, each of which were acquired in June; a 296-apartment home community in Tampa, Florida, and a 343-apartment home community in Charlotte, North Carolina, both of which were acquired in July; and a 300-apartment home community in Nashville, Tennessee, which was acquired in August.
During the nine months ended September 30, 2026, we acquired for future development purposes three parcels of land for an aggregate purchase price of approximately $63.3 million as follows: approximately 17.9 acres in Morrisville, North Carolina, and 64.4 acres in Tampa, Florida, both of which were acquired in May, and approximately 18.6 acres in Tampa, Florida, which was acquired in August.
Dispositions
During the three months ended September 30, 2026, we sold 11 operating properties, comprised of 3,620 apartment homes in Los Angeles/Orange County and San Diego/Inland Empire, California, for an aggregate of approximately $1.6 billion in July. We recognized a gain of approximately $973.0 million, which is included in gain on sale of operating properties, including land in our condensed consolidated statements of income and comprehensive income. During the third quarter of 2026, approximately $0.9 billion of the proceeds were used to retire balances outstanding under the Company's unsecured revolving credit facility and commercial paper program. As of September 30, 2026, approximately $427.0 million of the proceeds remained in restricted cash held by a qualified intermediary in connection with Section 1031 exchange transactions. In addition, approximately $121.7 million of additional proceeds from the sale were in cash and cash equivalents as of September 30, 2026.
During the nine months ended September 30, 2026, we also sold one operating property in Irving, Texas for approximately $77.0 million in February and recognized a gain of approximately $67.9 million.
During the nine months ended September 30, 2026, we disposed of small land parcels in Houston, Texas and Raleigh, North Carolina for total proceeds of approximately $1.1 million and recognized an aggregate gain on sale of approximately $0.8 million.
In October 2026, we sold approximately 2.6 acres of land in Los Angeles, California for approximately $10.7 million.
Share Repurchases
In January 2026, we repurchased 1,096,807 common shares at an average price of $110.03 per share for approximately $120.7 million under our then-existing share repurchase plan.
In February 2026, our Board of Trust Managers authorized a new share repurchase plan of up to $600.0 million of our common shares or equity securities. Through September 30, 2026, we repurchased an aggregate of 3,440,019 common shares under the new plan for approximately $352.1 million, at an average price of $102.36 per share. As of the date of this filing, approximately $247.9 million remained available for repurchase under our share repurchase plan.
In April 2026, we renewed our at-the-market ("ATM") share offering program, which was expiring pursuant to its terms in May 2026, and entered into a replacement ATM share offering program through which we can, but have no obligation to, sell common shares and we may also enter into separate forward sale agreements with forward purchasers for an aggregate offering price of up to $500.0 million (the "2026 ATM program"). As of the date of this filing, we have $500.0 million available for sale under this program.
Leadership Changes
Effective March 24, 2026, Richard J. Campo, our former Chief Executive Officer and Chairman of the Board of Trust Managers, became the Executive Chairman of the Board of Trust Managers. Additionally, Alexander J. Jessett became the Chief Executive Officer of the Company, Laurie A. Baker became the President and Chief Operating Officer of the Company, and Benjamin D. Fraker became the Executive Vice President - Chief Financial Officer and Treasurer of the Company.
Effective July 2, 2026, Kevin J. Necas, Jr. was appointed Senior Vice President - Chief Accounting Officer and designated as the Company's principal accounting officer following the retirement of Michael P. Gallagher.
Effective August 31, 2026, D. Keith Oden, co-founder of the Company, retired as Executive Vice Chairman of the Board of Trust Managers and continues to serve as a member of the Board of Trust Managers.
Future Outlook
Subject to market conditions, we intend to continue to seek opportunities to acquire operating communities, develop new communities, and to redevelop and reposition existing communities. We also intend to evaluate our portfolio and plan to continue our practice of selective dispositions and redeploying capital as market conditions warrant and opportunities arise. We expect to maintain a strong balance sheet and preserve our financial flexibility by continuing to focus on our core fundamentals which are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our near-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, existing cash and cash equivalents, draws on our unsecured revolving credit facility and commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM program, and other unsecured borrowings or secured mortgages.
We believe we remain well positioned from a liquidity and capital resources perspective. As of September 30, 2026, we had $168.7 million of unrestricted cash and cash equivalents and approximately $1.2 billion available under our unsecured revolving credit facility, which also serves as a liquidity backstop for our commercial paper program, for which no amount was outstanding at September 30, 2026. Contractual debt maturities due within the next 12 months totaled approximately $1.0 billion, including $500.0 million of senior unsecured notes due November 2026. In October 2026, we repaid, at par, the $500.0 million principal amount of those notes prior to maturity using a combination of cash on hand and commercial paper borrowings. In addition, as of the filing date, up to $500.0 million of common shares remained available for issuance under our 2026 ATM program. We believe our strong balance sheet, available liquidity, and access to capital provide sufficient resources to fund future acquisitions, development and redevelopment activities, scheduled debt maturities, and other capital requirements.
Property Portfolio
Our multifamily property portfolio is summarized as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
|
Number of Homes |
Properties |
Number of Homes |
Properties | ||||||||||||||||||||
| Operating Properties | |||||||||||||||||||||||
| Houston, Texas | 8,207 | 23 | 8,207 | 23 | |||||||||||||||||||
| Washington, D.C. Metro | 6,194 | 17 | 6,194 | 17 | |||||||||||||||||||
| Dallas/Fort Worth, Texas | 5,773 | 14 | 5,940 | 14 | |||||||||||||||||||
| Orlando, Florida | 4,564 | 13 | 4,276 | 12 | |||||||||||||||||||
| Atlanta, Georgia | 4,539 | 15 | 4,270 | 14 | |||||||||||||||||||
| Phoenix, Arizona | 4,414 | 14 | 4,094 | 13 | |||||||||||||||||||
| Raleigh, North Carolina | 4,041 | 11 | 4,041 | 11 | |||||||||||||||||||
| Austin, Texas | 4,038 | 12 | 4,038 | 12 | |||||||||||||||||||
| Charlotte, North Carolina | 3,853 | 16 | 3,510 | 15 | |||||||||||||||||||
| Tampa/St. Petersburg, Florida | 3,760 | 10 | 3,464 | 9 | |||||||||||||||||||
| Southeast Florida | 3,050 | 9 | 3,050 | 9 | |||||||||||||||||||
| Denver, Colorado | 2,873 | 9 | 2,873 | 9 | |||||||||||||||||||
| Nashville, Tennessee | 1,689 | 5 | 1,193 | 3 | |||||||||||||||||||
|
Los Angeles/Orange County, California (1)
|
- | - | 1,812 | 5 | |||||||||||||||||||
|
San Diego/Inland Empire, California (1)
|
- | - | 1,797 | 6 | |||||||||||||||||||
| Total Operating Properties | 56,995 | 168 | 58,759 | 172 | |||||||||||||||||||
| Properties Under Construction | |||||||||||||||||||||||
| Charlotte, North Carolina | 769 | 2 | 769 | 2 | |||||||||||||||||||
| Nashville, Tennessee | 393 | 1 | 393 | 1 | |||||||||||||||||||
| Raleigh, North Carolina | 398 | 1 | - | - | |||||||||||||||||||
| Total Properties Under Construction | 1,560 | 4 | 1,162 | 3 | |||||||||||||||||||
| Total Properties | 58,555 | 172 | 59,921 | 175 | |||||||||||||||||||
(1) The 11 California operating properties were sold in July 2026.
Completed Construction in Lease-Up
At September 30, 2026, there was one completed operating property in lease-up as follows:
|
($ in millions)
Property and Location
|
Number of Homes |
Cost
Incurred (1)
|
% Leased at 10/31/2026 |
Date of Construction Completion |
Estimated Date of Stabilization |
||||||||||||||||||||||||
| Camden Village District | |||||||||||||||||||||||||||||
| Raleigh, NC | 369 | $139.6 | 88% | 3Q25 | 1Q27 | ||||||||||||||||||||||||
(1) Excludes leasing costs, which are expensed as incurred.
Properties Under Development and Land
Our condensed consolidated balance sheet at September 30, 2026 includes approximately $402.8 million related to properties under development and land. Of this amount, approximately $289.6 million related to our projects currently under construction. In addition, we had approximately $113.2 million primarily invested in land held for future development and land holdings, which included approximately $54.1 million related to land held for future development and $59.1 million invested in land which we may develop in the future.
Properties Under Construction. At September 30, 2026, we had four properties in various stages of construction as follows:
|
($ in millions)
Properties and Locations
|
Number of Homes |
Estimated Cost |
Cost Incurred |
Included in Properties Under Development |
Estimated Date of Construction Completion |
Estimated Date of Stabilization |
|||||||||||||||||||||||||||||
|
Camden South Charlotte (1)
|
|||||||||||||||||||||||||||||||||||
| Charlotte, NC | 420 | $ | 155.0 | $ | 142.1 | $ | 56.5 | 2Q27 | 4Q28 | ||||||||||||||||||||||||||
|
Camden Blakeney (2)
|
|||||||||||||||||||||||||||||||||||
| Charlotte, NC | 349 | 149.0 | 129.7 | 96.2 | 3Q27 | 3Q28 | |||||||||||||||||||||||||||||
| Camden Nations | |||||||||||||||||||||||||||||||||||
| Nashville, TN | 393 | 184.0 | 114.8 | 114.8 | 3Q28 | 2Q30 | |||||||||||||||||||||||||||||
| Camden RTP | |||||||||||||||||||||||||||||||||||
| Morrisville, NC | 398 | 130.0 | 22.1 | 22.1 | 4Q29 | 3Q31 | |||||||||||||||||||||||||||||
| Total | 1,560 | $ | 618.0 | $ | 408.7 | $ | 289.6 | ||||||||||||||||||||||||||||
(1) Property in lease-up was 24% leased at October 31, 2026.
(2) Property in lease-up was 8% leased at October 31, 2026.
Development Pipeline Communities. At September 30, 2026, we had the following multifamily communities undergoing development activities:
|
($ in millions)
Properties and Locations
|
Projected Homes |
Total Estimated Cost (1)
|
Cost to Date | ||||||||||||||
| Camden Riverview | |||||||||||||||||
| Tampa, FL | 765 | $ | 242.0 | $ | 34.8 | ||||||||||||
| Camden Palm River | |||||||||||||||||
| Tampa, FL | 356 | 120.0 | 19.3 | ||||||||||||||
| Total | 1,121 | $ | 362.0 | $ | 54.1 | ||||||||||||
(1)Represents our estimate of total costs we expect to incur on these projects. However, forward-looking estimates are not guarantees of future performance, results, or events. Although we believe these expectations are based upon reasonable assumptions, future events rarely develop exactly as forecast, and estimates routinely require adjustment.
Land Holdings. At September 30, 2026, we also had six undeveloped land tracts with a valuation of approximately $59.1 million.
Results of Operations
Changes in revenues and expenses related to our operating properties from period-to-period are due primarily to the performance of stabilized properties in the portfolio, the lease-up of newly-constructed properties, and the impact of acquisitions and dispositions.
Management considers property net operating income ("NOI") to be an appropriate supplemental measure of operating performance to net income because it reflects the operating performance of our communities without an allocation of corporate level property management overhead or general and administrative costs. We define NOI as total property revenue less total property operating expenses. NOI is further detailed in the Property-Level NOI table as seen below, and is not defined by accounting principles generally accepted in the United States of America ("GAAP") and should not be considered an alternative to net income as an indication of our operating performance. Additionally, NOI as disclosed by other REITs may not be comparable to our calculation.
Reconciliations of net income to NOI for the three and nine months ended September 30, 2026 and 2025 are as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net income | $ | 906,771 | $ | 113,579 | $ | 971,851 | $ | 236,940 | ||||||||||||||||||
| Less: Fee and asset management income | (4,377) | (2,565) | (9,651) | (7,685) | ||||||||||||||||||||||
| Less: Interest and other income | (3,709) | (78) | (4,091) | (156) | ||||||||||||||||||||||
| Less: (Income)/loss on deferred compensation plans | 2,481 | (6,749) | (8,955) | (16,297) | ||||||||||||||||||||||
| Plus: Property management expense | 8,544 | 8,863 | 28,936 | 28,457 | ||||||||||||||||||||||
| Plus: Fee and asset management expense | 856 | 965 | 3,357 | 2,277 | ||||||||||||||||||||||
| Plus: General and administrative expense | 18,193 | 17,835 | 55,246 | 53,779 | ||||||||||||||||||||||
| Plus: Interest expense | 41,034 | 34,995 | 119,815 | 104,160 | ||||||||||||||||||||||
| Plus: Depreciation and amortization expense | 160,032 | 159,474 | 467,166 | 460,834 | ||||||||||||||||||||||
| Plus: Expense/(benefit) on deferred compensation plans | (2,481) | 6,749 | 8,955 | 16,297 | ||||||||||||||||||||||
| Plus: Other non-operating expenses | (1,000) | 1,777 | 60,305 | 5,724 | ||||||||||||||||||||||
| Plus: Impairment associated with land development activities | 86,404 | - | 86,404 | - | ||||||||||||||||||||||
| Less: Gain on sale of operating properties, including land | (973,508) | (85,645) | (1,041,608) | (132,938) | ||||||||||||||||||||||
| Plus: Income tax expense | 1,032 | 780 | 3,246 | 2,570 | ||||||||||||||||||||||
| Net operating income | $ | 240,272 | $ | 249,980 | $ | 740,976 | $ | 753,962 | ||||||||||||||||||
Property-Level NOI (1)
Property NOI, as reconciled above, is detailed further into the following categories for the three and nine months ended September 30, 2026 as compared to the same periods in 2025:
| ($ in thousands) | Homes at |
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/30/2026 | 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
| Property revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Same store communities | 51,087 | $ | 332,846 | $ | 333,258 | $ | (412) | (0.1) | % | $ | 996,340 | $ | 996,532 | $ | (192) | - | % | ||||||||||||||||||||||||||||||||||||
|
Non-same store communities
|
5,539 | 32,447 | 17,524 | 14,923 | 85.2 | 73,895 | 45,065 | 28,830 | 64.0 | ||||||||||||||||||||||||||||||||||||||||||||
|
Development and lease-up communities
|
1,929 | 2,347 | 790 | 1,557 | * | 5,274 | 1,108 | 4,166 | * | ||||||||||||||||||||||||||||||||||||||||||||
| Dispositions/Other | - | 13,421 | 44,104 | (30,683) | (69.6) | 87,269 | 140,045 | (52,776) | (37.7) | ||||||||||||||||||||||||||||||||||||||||||||
| Total property revenues | 58,555 | $ | 381,061 | $ | 395,676 | $ | (14,615) | (3.7) | % | $ | 1,162,778 | $ | 1,182,750 | $ | (19,972) | (1.7) | % | ||||||||||||||||||||||||||||||||||||
| Property expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Same store communities | 51,087 | $ | 121,921 | $ | 122,006 | $ | (85) | (0.1) | % | $ | 363,342 | $ | 358,866 | $ | 4,476 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
|
Non-same store communities
|
5,539 | 12,362 | 7,001 | 5,361 | 76.6 | 29,070 | 18,671 | 10,399 | 55.7 | ||||||||||||||||||||||||||||||||||||||||||||
|
Development and lease-up communities
|
1,929 | 892 | 539 | 353 | 65.5 | 2,071 | 800 | 1,271 | * | ||||||||||||||||||||||||||||||||||||||||||||
| Dispositions/Other | - | 5,614 | 16,150 | (10,536) | (65.2) | 27,319 | 50,451 | (23,132) | (45.9) | ||||||||||||||||||||||||||||||||||||||||||||
| Total property expenses | 58,555 | $ | 140,789 | $ | 145,696 | $ | (4,907) | (3.4) | % | $ | 421,802 | $ | 428,788 | $ | (6,986) | (1.6) | % | ||||||||||||||||||||||||||||||||||||
| Property NOI: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Same store communities | 51,087 | $ | 210,925 | $ | 211,252 | $ | (327) | (0.2) | % | $ | 632,998 | $ | 637,666 | $ | (4,668) | (0.7) | % | ||||||||||||||||||||||||||||||||||||
|
Non-same store communities
|
5,539 | 20,085 | 10,523 | 9,562 | 90.9 | 44,825 | 26,394 | 18,431 | 69.8 | ||||||||||||||||||||||||||||||||||||||||||||
|
Development and lease-up communities
|
1,929 | 1,455 | 251 | 1,204 | * | 3,203 | 308 | 2,895 | * | ||||||||||||||||||||||||||||||||||||||||||||
| Dispositions/Other | - | 7,807 | 27,954 | (20,147) | (72.1) | 59,950 | 89,594 | (29,644) | (33.1) | ||||||||||||||||||||||||||||||||||||||||||||
| Total property NOI | 58,555 | $ | 240,272 | $ | 249,980 | $ | (9,708) | (3.9) | % | $ | 740,976 | $ | 753,962 | $ | (12,986) | (1.7) | % | ||||||||||||||||||||||||||||||||||||
* Not a meaningful percentage.
(1) For 2026, same store communities are communities we wholly-owned and were stabilized since January 1, 2025, excluding communities under redevelopment and properties held for sale. Non-same store communities are stabilized communities not owned or stabilized since January 1, 2025, including communities under redevelopment and excluding properties held for sale. We define communities under redevelopment as communities with capital expenditures which improve a community's cash flow and competitive position through extensive unit, exterior building, common area, and amenity upgrades. Management believes same store information is beneficial as it allows both management and investors the ability to determine financial results over a particular period for the same set of communities. Development and lease-up communities are non-stabilized communities we have developed since January 1, 2025, excluding properties held for sale. Dispositions/Other includes those communities disposed of or held for sale which are not classified as discontinued operations, non-multifamily rental properties, expenses related to land holdings not under active development, and other miscellaneous revenues and expenses, including net above or below-market leases, casualty-related expenses net of recoveries, and severance related costs.
Same Store Analysis
Same store property NOI decreased approximately $0.3 million and $4.7 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025.
The $0.3 million decrease in same store property NOI for the three months ended September 30, 2026 was primarily due to lower same store property revenues of approximately $0.4 million, partially offset by a decrease of approximately $0.1 million in same store expenses as compared to the same period in 2025.
The $0.4 million decrease in same store property revenues during the three months ended September 30, 2026, as compared to the same period in 2025, was primarily due to lower rental rates, partially offset by increases in revenues from our utility and ancillary income programs and changes to occupancy.
The $0.1 million decrease in same store property expenses during the three months ended September 30, 2026, as compared to the same period in 2025, was primarily due to lower insurance expense of approximately $1.4 million, lower salaries and benefits of approximately $0.8 million, and lower real estate taxes of approximately $0.2 million. The decrease was mostly offset by increased utility expenses of approximately $1.7 million, higher marketing and leasing expense of approximately $0.4 million, and higher repair and maintenance expense of approximately $0.3 million.
The $4.7 million decrease in same store property NOI for the nine months ended September 30, 2026 was primarily due to higher same store property expenses of approximately $4.5 million and a decrease of approximately $0.2 million in same store property revenues as compared to the same period in 2025.
The $0.2 million decrease in same store property revenues during the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to lower rental rates, mostly offset by increases in revenues from our utility and ancillary income programs and changes to occupancy.
The $4.5 million increase in same store property expenses during the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to increased utility expenses of approximately $2.6 million, higher real estate taxes of approximately $1.1 million, higher marketing and leasing expense of approximately $0.9 million, higher salaries and benefits of approximately $0.9 million, higher property general and administrative expense of approximately $0.2 million, and higher repair and maintenance expense of approximately $0.1 million. The increase was partially offset by lower insurance expense of approximately $1.4 million.
Non-same Store and Development and Lease-up Analysis
Property NOI from non-same store and development and lease-up communities increased approximately $10.8 million and $21.3 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025.
The increases were related to higher NOI from our non-same store communities of approximately $9.6 million and $18.4 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025. The increases were primarily due to the acquisition of four operating properties in 2025 and eight operating properties in 2026, as well as the stabilization of three operating properties during 2025.
The increases were also related to higher NOI from our development and lease-up communities of $1.2 million and $2.9 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025. The increases were due to lease-up for one operating property which completed construction during the third quarter of 2025.
The following table details the changes, described above, relating to non-same store and development and lease-up NOI:
| (in millions) | For the three months ended September 30, 2026 as compared to 2025 | For the nine months ended September 30, 2026 as compared to 2025 | ||||||||||||
| Property Revenues: | ||||||||||||||
| Revenues from acquisitions | $ | 14.8 | $ | 27.6 | ||||||||||
| Revenues from non-same store stabilized properties | 0.3 | 2.0 | ||||||||||||
| Revenues from development and lease-up properties | 1.6 | 4.2 | ||||||||||||
| Other non-same store | (0.2) | (0.8) | ||||||||||||
| $ | 16.5 | $ | 33.0 | |||||||||||
| Property Expenses: | ||||||||||||||
| Expenses from acquisitions | $ | 4.7 | $ | 10.2 | ||||||||||
| Expenses from non-same store stabilized properties | 0.3 | 0.3 | ||||||||||||
| Expenses from development and lease-up properties | 0.4 | 1.3 | ||||||||||||
| Other non-same store | 0.3 | (0.1) | ||||||||||||
| $ | 5.7 | $ | 11.7 | |||||||||||
| Property NOI: | ||||||||||||||
| NOI from acquisitions | $ | 10.1 | $ | 17.4 | ||||||||||
| NOI from non-same store stabilized properties | - | 1.7 | ||||||||||||
| NOI from development and lease-up properties | 1.2 | 2.9 | ||||||||||||
| Other non-same store | (0.5) | (0.7) | ||||||||||||
| $ | 10.8 | $ | 21.3 | |||||||||||
Dispositions/Other Property Analysis
Dispositions/other property NOI decreased approximately $20.1 million and $29.6 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025.
The decreases were comprised of lower NOI related to dispositions of approximately $20.2 million and $33.5 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025, due to the seven dispositions completed in 2025 and the 12 dispositions completed during the nine months ended September 30, 2026. The decrease during the nine months ended September 30, 2026 as compared to the same period in 2025 was partially offset by higher other property NOI of approximately $3.9 million primarily due to higher casualty-related expense recoveries.
Non-Property Income
| ($ in thousands) |
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | |||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Fee and asset management | $ | 4,377 | $ | 2,565 | $ | 1,812 | 70.6% | $ | 9,651 | $ | 7,685 | $ | 1,966 | 25.6% | |||||||||||||||||||||||||||||||||
| Interest and other income | 3,709 | 78 | 3,631 | * | 4,091 | 156 | 3,935 | * | |||||||||||||||||||||||||||||||||||||||
| Income/(loss) on deferred compensation plans | (2,481) | 6,749 | (9,230) | * | 8,955 | 16,297 | (7,342) | (45.1)% | |||||||||||||||||||||||||||||||||||||||
| Total non-property income | $ | 5,605 | $ | 9,392 | $ | (3,787) | (40.3) | % | $ | 22,697 | $ | 24,138 | $ | (1,441) | (6.0) | % | |||||||||||||||||||||||||||||||
* Not a meaningful percentage.
Fee and asset management income from construction and development activities at our third-party construction projects increased approximately $1.8 million and $2.0 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025. The increases in fees were primarily due to higher third-party construction activity as compared to the same periods in 2025.
Interest and other income increased approximately $3.6 million and $3.9 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025, primarily due to higher interest income earned on increased cash and investment balances resulting from proceeds received from the sale of 11 California operating properties in July 2026.
Our deferred compensation plans recognized a loss of approximately $2.5 million during the three months ended September 30, 2026, compared to income of approximately $6.7 million during the same period in 2025. For the nine months ended September 30, 2026 and 2025, the plans recognized income of $9.0 million and $16.3 million, respectively. The changes
were related to the performance of the investments held in deferred compensation plans for participants and was fully offset by the expense or benefit related to these plans, as discussed below.
Other Expenses
| ($ in thousands) |
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | |||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Property management | $ | 8,544 | $ | 8,863 | $ | (319) | (3.6) | % | $ | 28,936 | $ | 28,457 | $ | 479 | 1.7 | % | |||||||||||||||||||||||||||||||
| Fee and asset management | 856 | 965 | (109) | (11.3) | 3,357 | 2,277 | 1,080 | 47.4 | |||||||||||||||||||||||||||||||||||||||
| General and administrative | 18,193 | 17,835 | 358 | 2.0 | 55,246 | 53,779 | 1,467 | 2.7 | |||||||||||||||||||||||||||||||||||||||
| Interest | 41,034 | 34,995 | 6,039 | 17.3 | 119,815 | 104,160 | 15,655 | 15.0 | |||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 160,032 | 159,474 | 558 | 0.3 | 467,166 | 460,834 | 6,332 | 1.4 | |||||||||||||||||||||||||||||||||||||||
| Expense/(benefit) on deferred compensation plans | (2,481) | 6,749 | (9,230) | * | 8,955 | 16,297 | (7,342) | (45.1) | |||||||||||||||||||||||||||||||||||||||
|
Other non-operating expenses
|
(1,000) | 1,777 | (2,777) | * | 60,305 | 5,724 | 54,581 | * | |||||||||||||||||||||||||||||||||||||||
| Total other expenses | $ | 225,178 | $ | 230,658 | $ | (5,480) | (2.4) | % | $ | 743,780 | $ | 671,528 | $ | 72,252 | 10.8 | % | |||||||||||||||||||||||||||||||
* Not a meaningful percentage.
Property management expense, which represents regional supervision and accounting costs related to property operations, decreased approximately $0.3 million for the three months ended September 30, 2026 and increased approximately $0.5 million for the nine months ended September 30, 2026 as compared to the same periods in 2025. The decrease for the three months ended September 30, 2026 was primarily due to lower benefit costs and lower rental expense. These decreases were partially offset by higher conference and training costs for regional employees. Property management expenses were approximately 2.2% of total property revenues for both of the three months ended September 30, 2026 and 2025.
The increase for the nine months ended September 30, 2026 was primarily due to higher salaries and incentive compensation costs, higher conference and training costs for regional employees, partially offset by lower rental expense. Property management expenses were 2.5% and 2.4% of total property revenues for the nine months ended September 30, 2026 and 2025, respectively.
Fee and asset management expenses from construction and development activities at our third-party projects increased approximately $1.1 million for the nine months ended September 30, 2026, compared to the same period in 2025, primarily due to increased third-party construction activity and higher other miscellaneous operating expenses.
General and administrative expense increased approximately $0.4 million and $1.5 million during the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025. The increases were primarily related to higher acquisition pursuit costs. The increase for the nine months ended September 30, 2026 was also due to higher salaries, benefits and incentive compensation costs, as well as higher corporate and public company costs. The increase for the nine months ended September 30, 2026, was partially offset by lower legal expenses resulting from approximately $5.0 million of legal recoveries received during the three months ended March 31, 2026 related to a construction litigation matter. General and administrative expenses were approximately 4.7% of total revenues for each of the three and nine months ended September 30, 2026, and 4.5% of total revenues for each of the three and nine months ended September 30, 2025.
Interest expense increased approximately $6.0 million and $15.7 million for the three and nine months ended September 30, 2026, as compared to the same periods in 2025. The increases were primarily due to increases in interest expense relating to the issuance of $600 million of 4.90% senior unsecured notes issued in February 2026 and a $350 million term loan entered into in July 2026, as well as higher borrowings under our unsecured revolving credit facility during the third quarter of 2026. These increases were partially offset by lower interest expense on commercial paper borrowings, higher capitalized interest related to development projects, lower interest on certain variable-rate interest debt, and lower interest following the completion of amortization of a settled forward interest rate swap associated with the $600 million senior unsecured notes in June 2026.
Depreciation and amortization expense increased approximately $6.3 million for the nine months ended September 30, 2026, as compared to the same period in 2025. The increase was primarily due to depreciation expense and amortization of in-place leases associated with operating properties acquired during 2025 and 2026. The increase was partially offset by lower depreciation expense resulting from property dispositions during 2025 and 2026, as well as the expiration of in-place lease amortization associated with certain acquisitions completed in 2025.
Our deferred compensation plans recognized a benefit of approximately $2.5 million during the three months ended September 30, 2026, compared to an expense of approximately $6.7 million during the same period in 2025. For the nine months ended September 30, 2026 and 2025, the plans recognized an expense of $9.0 million and $16.3 million, respectively.
The changes were related to the performance of the investments held in deferred compensation plans for participants and were fully offset by the income or loss related to these plans, as discussed in the non-property income section above.
Other non-operating expense increased by $54.6 million for the nine months ended September 30, 2026, as compared to the same period in 2025. The increase was primarily attributable to higher legal expenses associated with a $53.0 million settlement amount for the Class Action Litigation recognized during the three months ended March 31, 2026, as disclosed in Note 9. "Commitments and Contingencies" to the condensed consolidated financial statements. The increase was also due to a $4.9 million impairment charge related to technology investments resulting from the permanent decline in estimated market conditions.
Other
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | 2026 | 2025 | $ | |||||||||||||||||||||||||||||
| Impairment associated with land development activities | $ | (86,404) | $ | - | $ | (86,404) | $ | (86,404) | $ | - | $ | (86,404) | |||||||||||||||||||||||
| Gain on sale of operating properties, including land | $ | 973,508 | $ | 85,645 | $ | 887,863 | $ | 1,041,608 | $ | 132,938 | $ | 908,670 | |||||||||||||||||||||||
| Income tax expense | $ | (1,032) | $ | (780) | $ | (252) | $ | (3,246) | $ | (2,570) | $ | (676) | |||||||||||||||||||||||
During the three and nine months ended September 30, 2026, we recognized impairment charges of approximately $85.2 million related to land holdings for two projects we have put on hold for the foreseeable future. These charges reflect the difference between the estimated fair value of each parcel and its carrying value. These impairments included the original purchase price and other capitalized development costs. Additionally, during the three and nine months ended September 30, 2026, we recognized an impairment charge of approximately $1.2 million related to one undeveloped land parcel, as the estimated fair value was less than its book value. We did not record any impairment charges during the three and nine months ended September 30, 2025.
The gain on sale of operating properties, including land recognized during the three and nine months ended September 30, 2026, was primarily due to a $973.0 million gain from the disposition of 11 operating properties in Los Angeles/Orange County and San Diego/Inland Empire, California, in July 2026. During the nine months ended September 30, 2026, we also recognized a gain of approximately $67.9 million from the sale of an operating property located in Irving, Texas in February 2026. During the three months ended September 30, 2025, we recognized aggregate gains of approximately $85.6 million related to the disposition of one dual-phased operating property located in Houston, Texas and one operating property located in Irving, Texas all of which were sold in July 2025. During the nine months ended September 30, 2025, we also recognized a $47.3 million gain from the sale of an operating property located in Houston, Texas in June 2025.
Income tax expense increased approximately $0.3 million and $0.7 million for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in 2025. The increase for the three months ended September 30, 2026 was primarily due to higher taxable income generated by increased third-party construction activities within our taxable REIT subsidiary.
The increase for the nine months ended September 30, 2026 was primarily due to higher state and franchise income tax expenses during the nine months ended September 30, 2026 primarily due to tax refunds recognized in the same period in 2025 related to tax legislation changes enacted in certain state jurisdictions in 2024. The increase was also due to higher taxable income generated by increased third-party construction activities within our taxable REIT subsidiary.
Funds from Operations ("FFO"), Core FFO, and Core Adjusted FFO ("Core AFFO")
Management considers FFO, Core FFO, and Core AFFO to be appropriate supplementary measures of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and adjustments for unconsolidated joint ventures to reflect FFO on the same basis. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains and losses on dispositions of real estate, impairment write-downs of certain real estate assets, and depreciation, FFO can assist in the comparison of the operating performance of a company's real estate investments between periods or to different companies.
Core FFO represents FFO as further adjusted for items not considered part of our core business operations. We consider Core FFO to be a helpful supplemental measure of operating performance as it also excludes certain items which, by nature, are
not comparable period over period and therefore tend to obscure actual operating performance. Our definition of Core FFO may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.
Core AFFO is calculated utilizing Core FFO less recurring capitalized expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. We also consider Core AFFO to be a useful supplemental measure because it is frequently used by analysts and investors to evaluate a REIT's operating performance between periods or different companies. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.
To facilitate a clear understanding of our consolidated historical operating results, we believe FFO, Core FFO, and Core AFFO should be examined in conjunction with net income attributable to common shareholders as presented in the condensed consolidated statements of income and comprehensive income and data included elsewhere in this report. FFO, Core FFO, and Core AFFO are not defined by GAAP and should not be considered alternatives to net income attributable to common shareholders as an indication of our operating performance. Additionally, FFO, Core FFO, and Core AFFO as disclosed by other REITs may not be comparable to our calculation.
Reconciliations of net income attributable to common shareholders to FFO, Core FFO, and Core AFFO for the three and nine months ended September 30, 2026 and 2025 are as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Funds from operations | |||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 900,391 | $ | 108,934 | $ | 961,630 | $ | 228,426 | |||||||||||||||
| Real estate depreciation and amortization | 156,148 | 156,272 | 455,989 | 451,326 | |||||||||||||||||||
| Impairment associated with land development activities | 86,404 | - | 86,404 | - | |||||||||||||||||||
| Gain on sale of operating properties | (972,971) | (85,645) | (1,040,849) | (132,938) | |||||||||||||||||||
| Income allocated to non-controlling interests | 6,380 | 4,645 | 10,221 | 8,514 | |||||||||||||||||||
| Funds from operations | $ | 176,352 | $ | 184,206 | $ | 473,395 | $ | 555,328 | |||||||||||||||
| Gain on sale of land | (537) | - | (537) | - | |||||||||||||||||||
| Casualty-related expenses, net of (recoveries) | - | (444) | (3,479) | (1,413) | |||||||||||||||||||
| Legal costs and settlements | (985) | 2,151 | 50,619 | 6,334 | |||||||||||||||||||
| Expensed transaction, development, and other pursuit costs | 3,233 | 695 | 9,312 | 3,658 | |||||||||||||||||||
| Investment losses | - | - | 4,855 | - | |||||||||||||||||||
| Other miscellaneous items | (36) | 168 | 26 | 244 | |||||||||||||||||||
| Core funds from operations | $ | 178,027 | $ | 186,776 | $ | 534,191 | $ | 564,151 | |||||||||||||||
| Less: recurring capitalized expenditures | (30,338) | (29,274) | (76,630) | (75,340) | |||||||||||||||||||
| Core adjusted funds from operations | $ | 147,689 | $ | 157,502 | $ | 457,561 | $ | 488,811 | |||||||||||||||
| Weighted average shares - basic | 102,163 | 108,524 | 103,101 | 108,564 | |||||||||||||||||||
| Incremental shares issuable from assumed conversion of: | |||||||||||||||||||||||
| Awards granted | 69 | 56 | 54 | 53 | |||||||||||||||||||
| Common units | 1,594 | 1,594 | 1,594 | 1,594 | |||||||||||||||||||
| Weighted average shares - diluted | 103,826 | 110,174 | 104,749 | 110,211 | |||||||||||||||||||
Liquidity and Capital Resources
Financial Condition and Sources of Liquidity
We intend to maintain a strong balance sheet and preserve our financial flexibility, which we believe should enhance our ability to identify and capitalize on investment opportunities as they become available. We intend to maintain what management believes is a conservative capital structure by:
•extending and sequencing the maturity dates of our debt where practicable;
•managing interest rate exposure using what management believes to be prudent levels of fixed and floating rate debt;
•maintaining what management believes to be conservative coverage ratios; and
•using what management believes to be a prudent combination of debt and equity.
Our interest expense coverage ratio, net of capitalized interest, was approximately 5.4 and 6.5 for the three months ended September 30, 2026 and 2025, respectively, and 5.6 and 6.5 for the nine months ended September 30, 2026 and 2025, respectively. This ratio is a method for calculating the amount of operating cash flows available to cover interest expense and is calculated by dividing interest expense for the period into the sum of property revenues and expenses, non-property income, and other expenses, after adding back depreciation, amortization, and interest expense. Approximately 90.9% and 90.2% of our properties were unencumbered at September 30, 2026 and 2025, respectively. Our weighted average maturity of debt was approximately 5.0 years at September 30, 2026.
We also intend to maintain or strengthen our capital and liquidity positions by continuing to focus on our core fundamentals, which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.
Our primary source of liquidity is cash flows generated from operations. Other sources may include one or more of the following: existing cash and cash equivalents, availability under our unsecured revolving credit facility and commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM program, and other unsecured borrowings or secured mortgages. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash needs during the next twelve months from our filing date including:
•normal recurring operating expenses;
•current debt service requirements including scheduled debt maturities;
•recurring and non-recurring capital expenditures;
•funding of property developments, repositions, redevelopments, and acquisitions;
•the minimum dividend payments required to maintain our REIT qualification under the Internal Revenue Code; and
•funding share repurchases.
Factors which could increase or decrease our future liquidity include but are not limited to volatility in capital and credit markets, changes in costs, changes in governmental regulations, including tariffs and rent control or rent stabilization laws, sources of financing, the minimum REIT dividend requirements, our ability to complete asset purchases, sales, or developments, the effect our debt level and changes in credit ratings could have on our cost of funds, and our ability to access capital markets.
Cash Flows
The following is a discussion of our cash flows for the nine months ended September 30, 2026 as compared to the same period in 2025.
Net cash from operating activities was approximately $516.0 million during the nine months ended September 30, 2026 as compared to approximately $629.8 million for the same period in 2025. The decrease was primarily due to the $53.0 million payment relating to the Class Action Litigation, dispositions completed in 2025 and 2026, the timing of real estate tax payments in 2026 as compared to 2025, and higher interest payments on our unsecured debt. These decreases were partially offset by incremental operating cash flows generated by non-same store operations, including the contribution from four operating property acquisitions completed during 2025 and eight operating property acquisitions completed during 2026. See further discussion of our 2026 operations as compared to 2025 in "Results of Operations."
Net cash from investing activities during the nine months ended September 30, 2026 totaled approximately $555.5 million as compared to $478.6 million of net cash used during the same period in 2025. Cash inflows during the nine months ended September 30, 2026 primarily related to net proceeds from the sale of 12 operating properties of approximately $1.7 billion. These inflows were partially offset by the acquisition of eight operating properties for approximately $749.6 million and amounts paid for property development and capital improvements of approximately $362.1 million. Cash outflows during the nine months ended September 30, 2025 primarily related to the acquisition of three operating properties for approximately $334.2 million, and amounts paid for property development and capital improvements of approximately $310.4 million. These outflows were partially offset by net proceeds from the sale of one dual-phased operating property and two other operating properties of approximately $169.4 million. The increase in property development and capital improvements for the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to the acquisition of three land parcels in 2026 for approximately $62.7 million. The property development and capital improvements during the nine months ended September 30, 2026 and 2025, included the following:
|
Nine Months Ended September 30, |
||||||||||||||
| (in millions) | 2026 | 2025 | ||||||||||||
| Expenditures for new development | $ | 190.2 | $ | 146.8 | ||||||||||
| Capital expenditures | 85.4 | 80.1 | ||||||||||||
| Reposition expenditures | 63.4 | 63.9 | ||||||||||||
| Direct real estate taxes and capitalized interest and other indirect costs | 23.1 | 19.6 | ||||||||||||
| Total | $ | 362.1 | $ | 310.4 | ||||||||||
Net cash used in financing activities totaled approximately $501.4 million for the nine months ended September 30, 2026 as compared to $146.1 million during the same period in 2025. Cash outflows during the nine months ended September 30, 2026 primarily related to $591.5 million of net repayments on our commercial paper program, $483.1 million used for common share repurchases, $337.4 million used for distributions to common shareholders and non-controlling interest holders, and $24.0 million of repayments of two secured notes. These outflows were partially offset by net proceeds of approximately $945.7 million from the issuance of $600.0 million senior unsecured notes in February 2026 and the issuance of a $350.0 million term loan facility in July 2026. Cash outflows during the nine months ended September 30, 2025 primarily related to $345.5 million used for distributions to common shareholders and non-controlling interest holders, net payments of $178.0 million of borrowings from our unsecured revolving credit facility, and $50.0 million used for common share repurchases. These outflows were partially offset by net proceeds of approximately $428.3 million of borrowings from our commercial paper program.
Financial Flexibility
In March 2026, we amended and restated our existing credit facility (the "Credit Agreement"), to among other things, remove a $300 million unsecured term loan facility with a delayed draw feature and extend the maturity date of our $1.2 billion unsecured revolving credit facility from August 2026 to March 2030, which may be extended at our option for two consecutive six-month periods. The Credit Agreement also continues to provide that, upon satisfaction of certain conditions, we may expand the facility up to three times by up to an additional $500.0 million in the aggregate. The interest rate on our unsecured revolving credit facility is based upon, at our option, (a) the daily or the one-, three-, or six-month Secured Overnight Financing Rate ("SOFR") plus, in each case, a spread based on our credit rating, or (b) a base rate equal to the higher of: (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America, N.A.'s prime rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%. Advances under our unsecured revolving credit facility may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of 180 days or less and may not exceed the lesser of $600 million or the remaining amount available under our unsecured revolving credit facility. Our unsecured revolving credit facility is subject to customary financial covenants and limitations. We believe we are in compliance with all such financial covenants and limitations as of September 30, 2026 and through the date of this filing.
Our unsecured revolving credit facility provides us with the ability to issue up to $50 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our unsecured revolving credit facility, it does reduce the amount available. At September 30, 2026, we had $1.2 billion available under our unsecured facility and we had outstanding letters of credit totaling approximately $0.3 million, leaving approximately $1.2 billion available under our unsecured revolving credit facility. The unsecured revolving credit facility also serves as a liquidity backstop for our commercial paper program, for which no amount was outstanding at September 30, 2026.
In February 2025, we established a commercial paper program under which we may issue short-term, unsecured notes under the exemption from registration contained in Section (4)(a) of the Securities Act. Amounts available under the commercial paper program may be borrowed, repaid, and reborrowed from time to time, with the aggregate face or principal amount of the commercial paper notes outstanding under the commercial paper program at any time not to exceed $600 million. The commercial paper notes have maturities of up to 397 days from the date of issuance and rank at least equally with all other unsecured and unsubordinated indebtedness. Net proceeds from issuances under the program may be used for general corporate purposes, which may include property acquisitions and development in the ordinary course of business, capital expenditures, and working capital.
In July 2026, we entered into a 364-day unsecured term loan facility ("term loan facility") with an aggregate principal amount of $350.0 million. The interest rate on our term loan facility is based upon, at our option, (a) Daily SOFR or one-, three- or six month Term SOFR plus, in each case, a spread based on our credit rating or (b) a base rate equal to the higher of: (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America, N.A.'s prime rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%, plus a spread based on our credit rating. The term loan facility is subject to the same financial covenants and limitations as those contained in our unsecured revolving credit facility, and we believe we are in compliance with all such covenants and limitations through the date of this filing.
In May 2023, we created the 2023 ATM share offering program through which we could, but had no obligation to, sell common shares and we may also enter into separate forward sale agreements with forward purchasers for an aggregate offering amount of up to $500.0 million, in amounts and at times as we determine, into the existing trading market at current market prices as well as through negotiated transactions. In April 2026, we terminated the 2023 ATM program, which was expiring pursuant to its terms in May 2026, and did not sell any shares under this program, and replaced it with the 2026 ATM program through which we can, but have no obligation to, sell common shares and we may also enter into separate forward sale agreements with forward purchasers for an aggregate offering price of up to $500.0 million. Actual sales from time to time may depend on a variety of factors including, among others, market conditions, the trading price of our common shares, and determinations by management of the appropriate sources of funding for us. We intend to use proceeds from any sales of our common shares under the 2026 ATM program for general corporate purposes, which may include reducing future borrowings under our unsecured revolving credit facility or commercial paper program, the repayment of other indebtedness, the redemption or other repurchase of outstanding debt or equity securities, funding for development activities, and financing for acquisitions. As of the date of this filing, we have not sold any shares or entered into any forward sales agreement and have common shares having an aggregate offering amount of up to $500.0 million remaining available for sale under the 2026 ATM program.
We believe our ability to access capital markets is enhanced by our senior unsecured debt ratings by Moody's, Fitch, and Standard and Poor's, which are currently A3 with stable outlook, A- with stable outlook, and A- with stable outlook, respectively. We believe our ability to access capital markets is also enhanced by our ability to borrow on a secured basis from various institutions including banks, Fannie Mae, Freddie Mac, or life insurance companies. However, we may not be able to maintain our current credit ratings or borrow on an unsecured or secured basis in the future.
Future Cash Requirements and Contractual Obligations
One of our principal long-term liquidity requirements includes the repayment of maturing debt, including any future borrowings under our unsecured revolving credit facility. As of September 30, 2026, we had approximately $1.2 billion available under our unsecured revolving credit facility, which also serves as a liquidity backstop for our commercial paper program, for which no amount was outstanding at September 30, 2026. Contractual debt maturities due within the next 12 months totaled approximately $1.0 billion, including $500.0 million of senior unsecured notes due November 2026. In October 2026, we repaid, at par, the $500.0 million principal amount of those notes prior to maturity using a combination of cash on hand and commercial paper borrowings. See Note 6. "Notes Payable," in the notes to condensed consolidated financial statements for a further discussion of our scheduled maturities.
As of September 30, 2026, we estimated the additional cost to complete the construction of four properties to be approximately $209.3 million. Of this amount, we expect to incur costs between approximately $29 million and $35 million during the remainder of 2026 and to incur the remaining costs during 2027 and 2028. Additionally, for the remainder of 2026, we expect to incur costs between approximately $14 million and $18 million of reposition, redevelopment, repurpose, and revenue enhancing expenditures, and between approximately $42 million and $46 million of additional recurring capital expenditures.
We anticipate meeting our near-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, existing cash and cash equivalents, draws on our unsecured revolving credit facility and through our commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM program, and other unsecured borrowings or secured mortgages. We continue to evaluate our portfolio and plan to continue our practice of selective dispositions and redeploying capital as market conditions warrant and opportunities arise.
As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute current dividends to our shareholders equal to a minimum of 90% of our adjusted taxable income. In order to minimize paying income taxes, our general policy is to distribute at least 100% of our taxable income. In September 2026, our Board of Trust Managers declared a quarterly dividend of $1.06 per common share to our common shareholders of record as of September 30, 2026. The quarterly dividend was subsequently paid on October 16, 2026, and we paid equivalent amounts per unit to holders of the common operating partnership units. Assuming similar quarterly dividend distributions for the remainder of 2026, our annualized dividend rate would be $4.24 per share or unit.
Critical Accounting Policies
Our critical accounting policies have not changed from the information reported in our Annual Report on Form 10-K for the year ended December 31, 2025.
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