AvalonBay Communities(AVB) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flow statements Condensed Consolidated Balance Sheets The balance sheets detail the company's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Dollars in thousands) | ASSETS | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total real estate, net | $20,494,489 | $19,767,062 | | Cash and cash equivalents | $102,825 | $108,576 | | Restricted cash | $192,547 | $158,500 | | Total assets | $21,837,945 | $21,000,737 | | LIABILITIES AND EQUITY | | | | Total liabilities | $9,667,647 | $9,059,645 | | Total stockholders' equity | $11,947,719 | $11,941,092 | | Noncontrolling interests | $222,579 | — | | Total equity | $12,170,298 | $11,941,092 | | Total liabilities and equity | $21,837,945 | $21,000,737 | Condensed Consolidated Statements of Comprehensive Income The income statements report revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Dollars in thousands, except per share data) | Metric | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $760,195 | $726,041 | $1,506,075 | $1,438,900 | | Total expenses | $599,850 | $545,655 | $1,170,987 | $1,095,897 | | Net income | $269,855 | $254,007 | $506,452 | $427,564 | | Net income attributable to common stockholders | $268,665 | $253,934 | $505,262 | $427,383 | | Earnings per common share - basic | $1.89 | $1.78 | $3.55 | $3.00 | | Earnings per common share - diluted | $1.88 | $1.78 | $3.54 | $3.00 | Condensed Consolidated Statements of Equity The equity statements show changes in stockholders' equity and noncontrolling interests for the six months ended June 30, 2025 Condensed Consolidated Statements of Equity (Dollars in thousands) | Metric | Balance at December 31, 2024 | Balance at June 30, 2025 | | :--- | :--- | :--- | | Common stock | $1,422 | $1,423 | | Additional paid-in capital | $11,314,116 | $11,323,160 | | Accumulated earnings less dividends | $591,250 | $595,535 | | Accumulated other comprehensive income | $34,304 | $27,601 | | Total stockholder's equity | $11,941,092 | $11,947,719 | | Noncontrolling interests | — | $222,579 | | Total equity | $11,941,092 | $12,170,298 | Condensed Consolidated Statements of Cash Flows The cash flow statements summarize cash movements from operating, investing, and financing activities for the first half of 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | Cash Flow Activity | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $793,715 | $792,896 | | Net cash used in investing activities | $(823,210) | $(463,803) | | Net cash provided by (used in) financing activities | $57,791 | $(94,700) | | Net increase in cash, cash equivalents and restricted cash | $28,296 | $234,393 | | Cash, cash equivalents and restricted cash, end of period | $295,372 | $765,353 | - The Company acquired six apartment communities in the Dallas-Fort Worth metropolitan area for $415,579,000, comprising a cash payment of $193,000,000 and the issuance of 1,060,000 DownREIT Units[20] - Common stock and DownREIT Unit dividends declared but not paid totaled $250,874,000 for the six months ended June 30, 2025[20] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations of the company's accounting policies and financial activities 1. Organization, Basis of Presentation and Significant Accounting Policies This note describes the company's REIT structure, operational scope, and key accounting policies including segment reporting - AvalonBay Communities, Inc operates as a REIT, developing, redeveloping, acquiring, owning, and operating multifamily communities across various U.S metropolitan areas and expansion regions[22] - As of June 30, 2025, the Company owned or held interests in 315 apartment communities (97,212 homes) across 11 states and D.C, with 20 communities under construction and plans for 28 additional communities (8,854 homes)[23] Total Revenue by Segment (Dollars in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Same Store | $695,188 | $675,912 | $1,385,346 | $1,345,694 | | Other Stabilized | $42,537 | $17,415 | $74,859 | $27,839 | | Development/Redevelopment | $9,254 | $1,308 | $16,061 | $1,862 | | Non-allocated | $1,594 | $1,830 | $3,336 | $3,625 | | Total Revenue | $748,573 | $696,465 | $1,479,602 | $1,379,020 | 2. Interest Capitalized This note discloses the amount of interest capitalized for development and redevelopment activities Capitalized Interest (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three months ended June 30 | $11,904 | $11,207 | | Six months ended June 30 | $22,383 | $22,798 | 3. Debt This note details the company's debt structure, including credit facilities, commercial paper, and recent financing activities Debt Summary (Dollars in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fixed rate unsecured notes | $7,325,000 | $7,400,000 | | Fixed rate mortgage notes payable | $332,949 | $333,479 | | Variable rate mortgage notes payable | $392,050 | $400,950 | | Commercial paper | $665,000 | — | | Total principal outstanding | $8,714,999 | $8,134,429 | | Less deferred financing costs and debt discount | $(54,904) | $(57,180) | | Total | $8,660,095 | $8,077,249 | - In April 2025, the Company amended its Credit Facility, increasing borrowing capacity from $2.25 billion to $2.5 billion and extending the term to April 2030[53] - The Commercial Paper Program capacity was increased from $500 million to $1 billion in April 2025, with $665 million outstanding as of June 30, 2025[54] - In April 2025, the Company entered into a $450 million Term Loan maturing in April 2029 with an effective fixed rate of 4.46%, and in June 2025, $525 million of 3.45% unsecured notes were repaid[58] 4. Equity This note provides details on common stock outstanding, equity programs, and share repurchase authorizations - As of June 30, 2025, the Company had 142,381,736 common shares outstanding[10][63] - The Continuous Equity Program (CEP) has $623,997,000 remaining authorized for issuance, with no sales in Q2 2025[62] - The Stock Repurchase Program has $314,237,000 remaining authorized for purchase, with no repurchases in Q2 2025[65] 5. Investments This note outlines the company's real estate acquisitions, structured investment program, and unconsolidated entity investments Consolidated Real Estate Acquisitions (Six months ended June 30, 2025) | Community Name | Location | Period | Apartment Homes | Purchase Price (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Avalon Hill Country | Austin, TX | Q1 2025 | 554 | $136,000 | | Avalon Wolf Ranch | Georgetown, TX | Q1 2025 | 303 | $51,000 | | eaves Twin Creeks | Allen, TX | Q2 2025 | 216 | $44,784 | | Avalon Benbrook | Benbrook, TX | Q2 2025 | 301 | $60,194 | | Avalon Castle Hills | Lewisville, TX | Q2 2025 | 276 | $65,491 | | Avalon Frisco | Frisco, TX | Q2 2025 | 330 | $80,419 | | Avalon Frisco North | Frisco, TX | Q2 2025 | 349 | $88,606 | | eaves North Dallas | Dallas, TX | Q2 2025 | 372 | $76,085 | | Total | | | 2,701 | $602,579 | - The Structured Investment Program (SIP) had eight commitments totaling $211,585,000 as of June 30, 2025, with a weighted average rate of return of 11.6%[68] - The Company holds investments in five unconsolidated entities (20%-50% ownership) and other unconsolidated investments, including property technology and sustainability companies[70] - In June 2025, the Arts District joint venture secured a variable rate loan of up to $173 million, for which the Company provides a 25% partial payment guarantee[71] 6. Real Estate Disposition Activities This note summarizes the company's real estate sales and assets classified as held for sale Real Estate Sales (Six months ended June 30, 2025) | Community Name | Location | Period of Sale | Apartment Homes | Gross Sales Price (in thousands) | Gain on Disposition (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Avalon Wilton on River Road | Wilton, CT | Q1 2025 | 102 | $65,100 | $56,476 | | Avalon Wesmont Station I & II | Wood-Ridge, NJ | Q2 2025 | 406 | $161,500 | $99,636 | | Total | | | 508 | $226,600 | $156,112 | - As of June 30, 2025, the Company had four real estate assets classified as held for sale[77] 7. Commitments and Contingencies This note discusses legal proceedings, including antitrust lawsuits, and details operating lease obligations - The Company is a defendant in antitrust lawsuits alleging unlawful use of RealPage, Inc revenue management systems and data sharing[79][80][81][82] Operating Lease Obligations (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total operating lease assets | $123,053 | $126,572 | | Total operating lease obligations | $149,403 | $153,333 | | Operating lease costs (six months) | $7,771 | $8,377 | 8. Segment Reporting This note defines the company's operating segments and reconciles Net Operating Income (NOI) to net income - The Company's reportable operating segments are Same Store, Other Stabilized, and Development/Redevelopment, with Net Operating Income (NOI) as the primary financial measure[87][88] Net Operating Income (NOI) Reconciliation (Dollars in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $269,855 | $254,007 | $506,452 | $427,564 | | Total NOI | $513,657 | $483,259 | $1,016,699 | $955,012 | | Commercial NOI | $(7,190) | $(8,516) | $(17,092) | $(16,056) | | Residential NOI | $506,467 | $474,743 | $999,607 | $938,956 | Total NOI by Segment (Dollars in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Same Store | $482,088 | $470,369 | $959,991 | $936,069 | | Other Stabilized | $27,285 | $12,581 | $49,393 | $18,642 | | Development/Redevelopment | $4,284 | $309 | $7,315 | $301 | | Total NOI | $513,657 | $483,259 | $1,016,699 | $955,012 | 9. Stock-Based Compensation Plans This note details activity related to stock options, performance awards, and restricted stock plans Stock Options Activity (Six months ended June 30, 2025) | Metric | Options | Weighted Average Exercise Price per Option | | :--- | :--- | :--- | | Options Outstanding at Dec 31, 2024 | 270,862 | $181.84 | | Granted | 9,473 | $221.58 | | Exercised | (8,759) | $180.32 | | Options Outstanding at June 30, 2025 | 271,576 | $183.28 | | Options Exercisable at June 30, 2025 | 249,486 | $182.29 | Performance Awards Activity (Six months ended June 30, 2025) | Metric | Performance Awards | Weighted Average Grant Date Fair Value per Award | | :--- | :--- | :--- | | Outstanding at Dec 31, 2024 | 250,123 | $207.55 | | Granted | 78,681 | $223.02 | | Converted to shares of common stock | (103,332) | $254.95 | | Outstanding at June 30, 2025 | 258,125 | $199.89 | Restricted Stock Activity (Six months ended June 30, 2025) | Metric | Restricted Stock Shares | Weighted Average Grant Date Fair Value per Share | | :--- | :--- | :--- | | Outstanding at Dec 31, 2024 | 182,382 | $182.59 | | Granted | 79,227 | $221.46 | | Vested | (86,121) | $191.64 | | Outstanding at June 30, 2025 | 174,065 | $195.67 | - Total employee stock-based compensation cost recognized in income was $14,188,000 for the six months ended June 30, 2025, with $44,605,000 in unrecognized cost[102] 10. Related Party Arrangements This note discloses fees from and receivables due from unconsolidated entities, as well as director compensation expenses Related Party Fees and Receivables (Dollars in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Fees from unconsolidated entities | $1,594 | $1,830 | $3,336 | $3,625 | | Receivables from unconsolidated entities (as of period end) | $4,119 | N/A | $4,119 | $1,680 | Director Compensation Expense (Dollars in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-employee director compensation | $604 | $603 | $1,192 | $1,199 | 11. Fair Value This note describes the fair value measurement of financial instruments, including derivative positions like interest rate swaps and caps - The Company uses interest rate swap and cap agreements for risk management, not speculation, with fair values primarily classified as Level 2[105] Derivative Positions (June 30, 2025, Dollars in thousands) | Derivative Type | Notional Balance | Weighted Average Interest Rate | Weighted Average Capped/Swapped Interest Rate | Earliest Maturity Date | Latest Maturity Date | | :--- | :--- | :--- | :--- | :--- | :--- | | Interest Rate Caps | $391,846 | 3.5% | 6.7% | February 2026 | January 2027 | | Interest Rate Swaps | $450,000 | N/A | 3.6% | April 2029 | April 2029 | - During H1 2025, the Company entered into $450 million in interest rate swaps to hedge the Term Loan and terminated $200 million of swaps, receiving $4,099,000[108][109] Fair Value Hierarchy of Financial Instruments (June 30, 2025, Dollars in thousands) | Description | Total Fair Value | Level 1 (Quoted Prices) | Level 2 (Observable Inputs) | Level 3 (Unobservable Inputs) | | :--- | :--- | :--- | :--- | :--- | | Assets: | | | | | | Notes Receivable, net | $252,106 | — | $252,106 | — | | Non-designated Hedges (Interest Rate Caps) | $2 | — | $2 | — | | Non-designated Hedges (Interest Rate Swaps) | $57 | — | $57 | — | | Total Assets | $252,165 | — | $252,165 | — | | Liabilities: | | | | | | Interest Rate Swaps - Liabilities | $3,222 | — | $3,222 | — | | Fixed rate unsecured notes | $6,439,154 | $6,439,154 | — | — | | Mortgage notes payable and Commercial Paper Program | $1,794,450 | — | $1,794,450 | — | | Total Liabilities | $8,236,826 | $6,439,154 | $1,797,672 | — | 12. Subsequent Events This note details significant events occurring after the balance sheet date, including debt issuance and credit agreement amendments - In July 2025, the Company issued $400 million of unsecured notes at a 5.00% interest rate, maturing in August 2035[117] - On August 1, 2025, the Term Loan was increased by $100 million to $550 million, with an effective interest rate of 4.44%[117] - On August 6, 2025, forward contracts related to the September 2024 Equity Offering were amended to extend settlement to no later than December 31, 2026[117] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on financial condition, operational results, liquidity, and capital resources for the reporting period Executive Overview This overview highlights the company's REIT business model, key financial results, and recent development and transaction activities - AvalonBay Communities, Inc is a REIT focused on developing, redeveloping, acquiring, owning, and operating apartment communities in leading metropolitan areas[120] - Net income attributable to common stockholders for Q2 2025 increased by 5.8% to $268,665,000, driven by real estate sales gains and increased NOI[124] - Same Store NOI from residential operations for Q2 2025 increased by 2.7% to $477,180,000, due to a 3.0% rise in revenue[124] - As of June 30, 2025, the Company had 20 wholly-owned communities under construction with a projected cost of $2.78 billion[123][125] - During Q2 2025, the Company acquired six Dallas-Fort Worth apartment communities for $415,579,000 and sold two communities for $161,500,000[128] Results of Operations This section analyzes net income, Same Store NOI performance, revenue drivers by region, and non-GAAP measures like FFO and Core FFO Net Income Attributable to Common Stockholders (Dollars in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three months ended June 30 | $268,665 | $253,934 | $14,731 | 5.8% | | Six months ended June 30 | $505,262 | $427,383 | $77,879 | 18.2% | Same Store Residential NOI Changes (Dollars in thousands) | Period | 2025 | 2024 | Increase/ (Decrease) | | :--- | :--- | :--- | :--- | | Three months ended June 30 | $477,180 | $464,602 | $12,578 | | Six months ended June 30 | $948,085 | $923,715 | $24,370 | - Same Store Residential revenue increased by 3.0% for the six months ended June 30, 2025, while direct property operating expenses increased by 5.1%[140][146] Same Store Residential Revenue Drivers (Six months ended June 30) | Region | 2025 Residential Revenue | 2024 Residential Revenue | % Change | 2025 Avg Monthly Revenue per Occupied Home | 2024 Avg Monthly Revenue per Occupied Home | % Change | 2025 Economic Occupancy | 2024 Economic Occupancy | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New England | $188,396 | $183,211 | 2.8% | $3,417 | $3,323 | 2.8% | 96.4% | 96.4% | —% | | Metro NY/NJ | $277,507 | $269,015 | 3.2% | $3,805 | $3,703 | 2.8% | 96.1% | 95.7% | 0.4% | | Mid-Atlantic | $207,614 | $198,425 | 4.6% | $2,565 | $2,456 | 4.4% | 95.8% | 95.6% | 0.2% | | Southeast Florida | $47,996 | $48,031 | (0.1)% | $2,907 | $2,900 | 0.2% | 97.0% | 97.3% | (0.3)% | | Denver, CO | $20,515 | $20,202 | 1.5% | $2,346 | $2,308 | 1.6% | 94.7% | 94.8% | (0.1)% | | Pacific Northwest | $84,861 | $81,475 | 4.2% | $2,872 | $2,748 | 4.5% | 96.4% | 96.7% | (0.3)% | | Northern California | $216,618 | $211,117 | 2.6% | $3,113 | $3,045 | 2.2% | 96.3% | 95.9% | 0.4% | | Southern California | $300,402 | $293,048 | 2.5% | $2,928 | $2,855 | 2.6% | 96.1% | 96.2% | (0.1)% | | Other Expansion Regions | $27,306 | $26,799 | 1.9% | $1,897 | $1,909 | (0.6)% | 95.5% | 93.0% | 2.5% | | Total Same Store | $1,371,215 | $1,331,323 | 3.0% | $3,044 | $2,959 | 2.9% | 96.1% | 96.0% | 0.1% | FFO and Core FFO (Dollars in thousands, except per share amounts) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common stockholders | $268,665 | $253,934 | $505,262 | $427,383 | | FFO | $401,520 | $391,716 | $798,275 | $779,517 | | Core FFO | $403,972 | $394,569 | $807,298 | $778,327 | | FFO per common share - diluted | $2.80 | $2.75 | $5.59 | $5.48 | | Core FFO per common share - diluted | $2.82 | $2.77 | $5.65 | $5.47 | Liquidity and Capital Resources This section details the company's liquidity strategy, cash flow activities, credit facilities, and development project pipeline - The Company's liquidity strategy focuses on funding development, dividends, debt payments, and strategic investments through cash flows, financing, and dispositions[171][174] GAAP Cash Flow Metrics (Six months ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $793,715 | $792,896 | | Net cash used in investing activities | $(823,210) | $(463,803) | | Net cash provided by (used in) financing activities | $57,791 | $(94,700) | - Net cash used in investing activities increased significantly due to $549,366,000 in development, $384,495,000 in acquisitions, and $110,914,000 in capital expenditures[175] - Net cash provided by financing activities was $57,791,000, primarily from $665,000,000 in commercial paper issuance, offset by $525,000,000 debt repayment[175] Credit Facility Availability (July 31, 2025, Dollars in thousands) | Metric | Amount | | :--- | :--- | | Credit facility commitment | $2,500,000 | | Commercial paper outstanding | $(530,400) | | Letters of credit outstanding | $(864) | | Total Credit facility available | $1,968,736 | - The Company was in compliance with all financial covenants under its Credit Facility, Term Loan, and unsecured notes as of June 30, 2025[179] Development Communities Summary (June 30, 2025) | Community Name | Number of Apartment Homes | Projected Total Capitalized Cost ($ millions) | Construction Start | Initial Projected or Actual Occupancy | Estimated Completion | Estimated Stabilized Operations | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Avalon West Windsor | 535 | $210 | Q2 2022 | Q3 2025 | Q2 2026 | Q4 2026 | | Avalon Annapolis | 508 | $199 | Q3 2022 | Q3 2024 | Q3 2025 | Q2 2026 | | Avalon Lake Norman | 345 | $101 | Q1 2023 | Q2 2025 | Q2 2026 | Q3 2026 | | Avalon Hunt Valley West | 322 | $106 | Q2 2023 | Q1 2025 | Q4 2025 | Q3 2026 | | Avalon South Miami | 290 | $186 | Q3 2023 | Q3 2025 | Q1 2026 | Q3 2026 | | Avalon Wayne | 473 | $171 | Q4 2023 | Q2 2025 | Q3 2026 | Q1 2027 | | Avalon Parsippany | 410 | $147 | Q4 2023 | Q3 2025 | Q2 2026 | Q4 2026 | | Avalon Pleasanton | 362 | $218 | Q2 2024 | Q3 2025 | Q3 2027 | Q1 2028 | | Avalon Roseland II | 533 | $199 | Q2 2024 | Q4 2025 | Q4 2026 | Q2 2027 | | Avalon Quincy Adams | 288 | $124 | Q2 2024 | Q1 2026 | Q3 2026 | Q2 2027 | | Avalon Tech Ridge I | 444 | $120 | Q3 2024 | Q1 2026 | Q1 2027 | Q3 2027 | | Avalon Carmel | 360 | $123 | Q3 2024 | Q2 2026 | Q3 2026 | Q3 2027 | | Avalon Plano | 155 | $58 | Q3 2024 | Q2 2026 | Q2 2027 | Q4 2027 | | Avalon Oakridge I | 459 | $149 | Q3 2024 | Q4 2026 | Q4 2027 | Q2 2028 | | AVA Brewer's Hill | 418 | $134 | Q4 2024 | Q4 2026 | Q3 2027 | Q1 2028 | | Kanso Hillcrest | 182 | $85 | Q4 2024 | Q1 2027 | Q2 2027 | Q4 2027 | | Avalon Parker | 312 | $122 | Q1 2025 | Q3 2026 | Q2 2027 | Q1 2028 | | Avalon North Palm Beach | 279 | $118 | Q1 2025 | Q1 2027 | Q3 2027 | Q1 2028 | | Avalon Brier Creek | 400 | $127 | Q2 2025 | Q3 2026 | Q3 2027 | Q1 2028 | | Avalon Kendall | 224 | $83 | Q2 2025 | Q1 2027 | Q2 2027 | Q1 2028 | | Total | 7,299 | $2,780 | | | | | - The Company completed the development of Avalon Princeton on Harrison (200 apartment homes) in Q2 2025, with a total capitalized cost of $79 million[208] - As of June 30, 2025, the Company held $101,066,000 in land parcels and $75,993,000 in capitalized deferred development costs for 28 Development Rights[209] - Expensed transaction, development, and other pursuit costs were $7,237,000 for the six months ended June 30, 2025[210] - As of July 31, 2025, the Structured Investment Program (SIP) had nine commitments totaling $239,585,000, with a weighted average rate of return of 11.7%[211] Supplemental U.S. Federal Income Tax Considerations This section discusses recent legislative changes affecting REIT asset tests and pass-through income deductions - The One Big Beautiful Bill Act, enacted July 4, 2025, relaxed the REIT asset test for taxable REIT subsidiaries from 20% to 25% of gross assets[215][217] - The OBBB permanently extended the pass-through qualified business income deduction, allowing individuals to deduct 20% of ordinary REIT dividends[217] Forward-Looking Statements This section cautions that the report contains statements about future expectations that are subject to risks and uncertainties - The report contains forward-looking statements regarding future events, trends, and expectations, which are subject to known and unknown risks[216][218][219] Critical Accounting Policies and Estimates This section confirms no material changes to the company's critical accounting policies since the last annual report - The Company's critical accounting policies include cost capitalization and asset impairment, which have not materially changed from the prior annual report[220] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes to the Company's exposures to market risk since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to market risk exposures since December 31, 2024[222] ITEM 4. CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[223] - No material changes to internal control over financial reporting occurred during Q2 2025[224] PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section references disclosures on legal contingencies from the financial statement notes - Legal proceedings information is incorporated from Notes 7 and 12 of the financial statements[225] ITEM 1A. RISK FACTORS The Company refers readers to the risk factors discussed in its Annual Report on Form 10-K, noting no material changes - No material changes to risk factors since December 31, 2024, as disclosed in the Annual Report on Form 10-K[226] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the private placement of DownREIT Units and the company's stock repurchase program activity - On April 30, 2025, the Company issued 1,060,000 DownREIT Units in a private placement as part of acquiring six apartment communities[227] Issuer Purchases of Equity Securities (Three months ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | May 1 - May 31, 2025 | 802 | $207.57 | | Total | 802 | $207.57 | - As of June 30, 2025, $314,237,000 remained authorized for purchase under the Stock Repurchase Program[234] ITEM 3. DEFAULTS UPON SENIOR SECURITIES The Company reported no defaults upon senior securities during the period - No defaults upon senior securities[230] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the Company - Mine safety disclosures are not applicable[231] ITEM 5. OTHER INFORMATION This section discloses no insider trading plan modifications and details subsequent amendments to credit facilities - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025[232] - On August 1, 2025, the Credit Facility was amended to extend its sustainability-linked pricing component[233] - On August 1, 2025, the Term Loan was amended to increase its amount by $100,000,000 to $550,000,000 and extend its sustainability-linked pricing component[236] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, debt instruments, and certifications - The exhibits include corporate governance documents, debt instruments, and Sarbanes-Oxley Act certifications[238] - Amendment No 1 to Seventh Amended and Restated Revolving Loan Agreement and Amendment No 1 to Term Loan Agreement were filed herewith[238] SIGNATURES The report is duly signed by the Chief Executive Officer and Chief Financial Officer in accordance with the Securities Exchange Act of 1934 - The report was signed by Benjamin W Schall (CEO and President) and Kevin P O'Shea (CFO) on August 7, 2025[243]