| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying unaudited interim consolidated financial statements of the Parent Company and Operating Partnership have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in our latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year. Principles of Consolidation As discussed in the Explanatory Note, we have combined the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report. As a result, we present two sets of consolidated financial statements. Both sets of consolidated financial statements include the accounts of the entity, its corporate subsidiaries, and all entities in which it has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity. The Parent Company's consolidated financial statements include the accounts of the Operating Partnership and its subsidiaries as the Parent Company, through its ownership and control over the General Partner, exercises exclusive control over the Operating Partnership. The equity interests of other investors are reflected as noncontrolling interests or redeemable noncontrolling interests. All significant intercompany transactions and balances are eliminated in consolidation. We account for our interests in joint ventures which we do not control using the equity method of accounting. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP,” requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates. Segment Information We have one reportable segment. We evaluate financial performance using property operating income ("POI"), a non-GAAP measure which consists of rental income, other property income, and mortgage interest income, less rental expenses and real estate taxes. Reconciliation of property operating income to consolidated net income: | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, | | 2026 | | 2025 | | 2026 | | 2025 | | (In thousands) | | (In thousands) | | Property operating income | $ | 232,138 | | | $ | 213,233 | | | $ | 459,554 | | | $ | 418,016 | | | General and administrative expense | (13,470) | | | (11,925) | | | (25,395) | | | (22,800) | | | Depreciation and amortization | (100,623) | | | (89,241) | | | (199,840) | | | (176,187) | | | Gain on sale of real estate | 20,617 | | | 76,501 | | | 113,328 | | | 77,672 | | | New market tax credit transaction income | — | | | 14,176 | | | — | | | 14,176 | | | Other interest income | 563 | | | 905 | | | 1,603 | | | 1,648 | | | Interest expense | (50,008) | | | (44,598) | | | (99,124) | | | (87,073) | | | (Loss) income from partnerships | (664) | | | 905 | | | (503) | | | 1,082 | | | Net income | $ | 88,553 | | | $ | 159,956 | | | $ | 249,623 | | | $ | 226,534 | | | | | | | | | | | | | | | | | |
We do not present significant expense disclosures for our reportable segment as operating segment level expenses are not regularly provided to our chief operating decision maker ("CODM"). However, real estate tax expense is presented on the face of the consolidated statement of comprehensive income. We do not present a reconciliation of our reportable segment's assets to consolidated assets, as asset information by operating segment is not used by our CODM to allocate resources and capital or assess performance. Recent Accounting Pronouncements | | | | | | | | | | | | | | | | Standard | | Description | | Effect on the financial statements or significant matters | | | | | | | Adopted in 2026: | | | | | ASU 2024-04, November 2024, Debt—Debt with Conversion and Other Options (Subtopic 470-20), Induced Conversions of Convertible Debt Instruments | | This ASU clarifies the requirements for determining whether to account for certain early settlements of convertible debt instruments as induced conversions or extinguishments.
Entities have the option to apply the guidance either (1) prospectively to settlements of convertible debt instruments that occur during fiscal years (and interim periods within those fiscal years) beginning after the effective date or (2) retrospectively. This is effective for all entities for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. | | We adopted this ASU as of January 1, 2026. The implementation of this ASU did not have an impact on our consolidated financial statements. | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Standard | | Description | | Effect on the financial statements or significant matters | | Issued in 2025: | | | | | ASU 2025-01, January 2025, and ASU 2024-03, November 2024, Income Statement—Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) | | This ASU requires the disaggregation of specific natural expense categories within relevant income statement captions. Public business entities are required to provide tabular disclosures which disaggregate expenses such as purchases of inventory, employee compensation, depreciation and amortization. A separate total of an entity's selling expenses is also required, along with the disclosure of how the company determines them.
The guidance is required to be applied prospectively, but may be applied retrospectively for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15 2027. Early adoption is permitted. | | We are assessing the impact of this ASU on our consolidated financial statements. | | | | | | | | | | | | | | | | ASU 2025-09, November 2025, Derivatives and Hedging (Topic 815), Hedge Accounting Improvements | | This ASU amends certain aspects of hedge accounting in ASC 815. The main amendments relate to cash flow hedging, but some of the amendments affect certain fair value and net investment hedges. The key changes include: (1) Allows individual forecasted transactions to be hedged in a group if they have similar risk exposure for cash flow hedges. (2) Establishes a model borrowers can use in cash flow hedges of forecasted interest payments on choose-your-rate debt instruments. (3) Expands hedge accounting for forecasted purchases and sales of nonfinancial assets. (4) Eliminates the requirement for the net written option test in certain instances to accommodate differences in the loan and swap markets that resulted from reference rate reform. (5) Eliminates the recognition and presentation mismatch for foreign currency-denominated debt used as both a net investment hedge instrument and a hedged item for interest rate risk.
The guidance is applied prospectively for all hedging relationships as of the date of adoption. The guidance applies to all public entities and is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption is permitted. | | We are assessing the impact of this ASU on our consolidated financial statements. | | | | | | ASU 2025-10, December 2025, Government Grants (Topic 832), Accounting for Government Grants Received by Business Entities | | This ASU establishes guidance on the recognition, measurement, and presentation of government grants received by business entities. ASU 2025-10 introduces specific recognition thresholds (probability of compliance and receipt) and detailed disclosures, aiming to improve consistency and comparability in financial reporting for grants.
The new guidance is effective for public business entities in annual periods beginning after December 15, 2028 (including interim periods within), with early adoption permitted in any period for which financial statements have not yet been issued. The guidance can be applied on a modified prospective basis, a modified retrospective basis, or a full retrospective basis | | We are assessing the impact of this ASU on our consolidated financial statements. | | | | | | ASU 2025-11, December 2025, Interim Reporting (Topic 270), Narrow-Scope Improvements | | This ASU clarifies interim disclosure requirements including the form and content of such financial statements, adds a comprehensive list of mandatory interim disclosures, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.
The guidance can be applied either prospectively or retrospectively. The guidance applies to all public entities and is effective for interim reporting periods with annual reporting periods after December 15, 2027. Early adoption is permitted. | | We are assessing the impact of this ASU on our consolidated financial statements. |
| | | | | | | | | | | | | | | | Standard | | Description | | Effect on the financial statements or significant matters | | | | | | ASU 2025-12, December 2025, Codification Improvements | | This ASU clarifies, corrects errors in and makes improvements to several topics within the FASB Codification. The amendments are part of an ongoing FASB project to make non-substantive technical corrections, clarifications, and improvements to make standards more consistent and easier to interpret for preparers and users.
The guidance applies to all public entities and is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption is permitted. | | We do not expect this ASU to have a material impact on our consolidated financial statements. | | | | | | | | | | |
Consolidated Statements of Cash Flows—Supplemental Disclosures The following tables provide supplemental disclosures related to the Consolidated Statements of Cash Flows: | | | | | | | | | | | | | | | Six Months Ended | | | | June 30, | | | | 2026 | | 2025 | | | | (In thousands) | | SUPPLEMENTAL DISCLOSURES: | | | | | | | Total interest costs incurred | $ | 104,786 | | | $ | 94,947 | | | | | Interest capitalized | (5,662) | | | (7,874) | | | | | Interest expense | $ | 99,124 | | | $ | 87,073 | | | | | Cash paid for interest, net of amounts capitalized | $ | 95,584 | | | $ | 82,424 | | | | | Cash paid for income taxes | $ | 314 | | | $ | 320 | | | | | NON-CASH INVESTING AND FINANCING TRANSACTIONS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mortgage note receivable repaid with property acquisition | $ | 9,575 | | | $ | — | | | | | Shares issued under dividend reinvestment plan | $ | 752 | | | $ | 796 | | | | | DownREIT operating partnership units issued with acquisition | $ | 265 | | | $ | — | | | | | DownREIT operating partnership units redeemed for common shares | $ | — | | | $ | 103 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | June 30, | | December 31, | | | | 2026 | | 2025 | | | | (In thousands) | | RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | | | | | | | Cash and cash equivalents | $ | 107,246 | | | $ | 107,415 | | | | | Restricted cash (1) | 7,539 | | | 10,291 | | | | | Total cash, cash equivalents, and restricted cash | $ | 114,785 | | | $ | 117,706 | | | |
(1)Restricted cash balances are included in "prepaid expenses and other assets" on our consolidated balance sheets.
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