3. REAL ESTATE OWNED

Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and held for disposition properties. As of June 30, 2026, the Company owned and consolidated 162 communities in 12 states plus the District of Columbia totaling 54,173 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of June 30, 2026 and December 31, 2025 (dollars in thousands):

​

​

Acquisitions

In April 2026, the Company acquired a 232-home operating apartment community located in Portland, Oregon in connection with the liquidation of the Company’s interest in a joint venture. As a result, the community became wholly owned, and the Company began consolidating the community. In connection with the liquidation, the Company repaid the joint venture’s $53.4 million first mortgage loan and settled its $18.9 million preferred equity investment. No cash consideration was paid to the joint venture partner in connection with the acquisition. The Company increased its real estate assets owned by approximately $72.1 million, and recorded $1.2 million of in-place lease intangibles. Following the recognition of the acquired assets and assumed liabilities, the Company recognized a gain on consolidation of $0.3 million in Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations. (See Note 5, Joint Ventures and Partnerships for more information.)

In June 2026, the Company acquired the developer’s equity interest in a 66 apartment home operating community located in Santa Monica, California. The Company previously held a secured first mortgage loan and preferred equity investment with the joint venture. In connection with the acquisition, the Company issued $2.8 million of OP Units to the developer. As a result, the joint venture became wholly owned, and the Company began consolidating the community. Concurrent with the acquisition, the Company's first mortgage loan, including accrued interest, was settled in full, and its preferred equity investment was adjusted to its liquidation value, resulting in a $3.8 million gain recognized in Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations. The Company increased its real estate assets owned by approximately $45.1 million, and recorded $1.2 million of in-place lease intangibles.

In July 2026, the Company acquired a 286-home operating apartment community located in Portland, Oregon in connection with the liquidation of the Company’s interest in a joint venture. As a result, the community became wholly owned, and the Company began consolidating the community. The consolidated fair value of the community, which was based on a third-party appraisal, exceeded the combination of the joint venture’s $74.1 million first mortgage loan that was repaid at maturity by the Company and the Company’s $27.5 million preferred equity investment, including accrued interest through the acquisition. No cash consideration was paid to the joint venture partner in connection with the acquisition. (See Note 5, Joint Ventures and Partnerships for more information.)

Dispositions

​

In March 2026, the Company sold four operating communities located in various markets with a total of 1,159 apartment homes for gross proceeds of $362.0 million, resulting in total gains of approximately $157.4 million.

​

In June 2026, the Company sold an operating community located in Nashville, Tennessee with 206 apartment homes for gross proceeds of $41.5 million, resulting in a gain of approximately $35.7 million. As of June 30, 2026, the net proceeds of $40.8 million were held by a qualified intermediary, which was recorded in Other Assets on the Consolidated Balance Sheets.

​

In June 2026, the Company entered into an agreement to sell an operating community in Seattle, Washington with a total of 235 apartment homes for a sales price of approximately $157.0 million. The operating community was classified as held for disposition as of June 30, 2026 and the sale is expected to close in the third quarter of 2026.

​

In July 2026, the Company entered into agreements to sell two operating communities comprising a total of 573 apartment homes for a sales price of approximately $95.5 million. The dispositions are expected to close in the third or fourth quarter of 2026, subject to the satisfaction of closing conditions and other terms of the purchase agreements.

Other Activity

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Company capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, for the three months ended June 30, 2026 and 2025, were $2.0 million and $1.4 million, respectively, and for the six months ended June 30, 2026 and 2025, were $6.5 million and $4.0 million, respectively. Total capitalized interest was $2.3 million and $2.1 million for the three months ended June 30, 2026 and 2025, respectively, and $4.5 million and $4.1 million for the six months ended June 30, 2026 and 2025, respectively. As each apartment home in a capital project is completed and becomes available for lease-up, the Company ceases capitalization on the related portion of the costs and depreciation commences over the estimated useful life.

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Our cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair value. Our estimates of fair value represent our best estimate based upon Level 3 inputs such as industry trends and reference to market rates and transactions. The Company did not recognize any impairments in the value of its long-lived assets during the three and six months ended June 30, 2026 and 2025.

In connection with the acquisition of certain properties, the Company agreed to pay certain of the tax liabilities of certain contributors if the Company sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Company may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax-deferred Section 1031 exchange. 

Further, the Company has agreed to maintain certain debt some of which may be guaranteed by certain contributors for specified periods of time following the acquisition. The Company, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.