NexPoint Residential Trust Inc

Previous wording

The year ended December 31, 2022 as compared to the year ended December 31, 2021

Current wording

This section of this Annual Report generally discusses the years ended December 31, 2024 and 2023. A discussion of the year ended December 31, 2022 is available at Part II, “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 which was filed with the SEC on February 27, 2024.

Previous wording

As of December 31, 2023, our portfolio consisted of 38 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 14,133 units of apartment space that was approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,502. Substantially all of our business is conducted through the OP. We own the portfolio through the OP and our TRS. The OP owns approximately 99.9% of the portfolio; our TRS owns approximately 0.1% of the portfolio. The OP GP is the sole general partner of the OP. As of December 31, 2023, there were 26,053,988 OP Units outstanding, of which 25,951,154, or 99.6%, were owned by us and 102,834, or 0.4%, were owned by an unaffiliated limited partners (see Note 9 to our consolidated financial statements).

Current wording

As of December 31, 2024, our Portfolio consisted of 35 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 12,984 units of apartment space that was approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,491. Substantially all of our business is conducted through the OP. We own the Portfolio through the OP and our TRS. The OP owns approximately 99.9% of the Portfolio; our TRS owns approximately 0.1% of the Portfolio. The OP GP is the sole general partner of the OP. As of December 31, 2024, there were 26,053,988 OP Units outstanding, of which 25,951,154, or 99.6%, were owned by us and 102,834, or 0.4%, were owned by unaffiliated limited partners (see Note 9 to our consolidated financial statements).

Previous wording

We are primarily focused on directly or indirectly acquiring, owning, and operating well-located multifamily properties with a value-add component in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. We generate revenue primarily by leasing our multifamily properties. We intend to employ targeted management and a value-add program at a majority of our properties in an attempt to improve rental rates and the net operating income (“NOI”) at our properties and achieve long-term capital appreciation for our stockholders. We are externally managed by the Adviser through the Advisory Agreement, by and among the OP, the Adviser and us. The Advisory Agreement was renewed on February 26, 2024 for a one-year term. The Adviser is wholly owned by NexPoint Advisors, L.P. On March 4, 2020, the Company, the OP and the Adviser entered into separate equity distribution agreements with each the ATM Sales Agents, pursuant to the 2020 ATM Program. See Note 7 to our consolidated financial statements.

Current wording

We are primarily focused on directly or indirectly acquiring, owning, and operating well-located multifamily properties with a value-add component in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. We generate revenue primarily by leasing our multifamily properties. We intend to employ targeted management and a value-add program at a majority of our properties in an attempt to improve rental rates and the NOI at our properties and achieve long-term capital appreciation for our stockholders. We are externally managed by the Adviser through the Advisory Agreement, by and among the OP, the Adviser and us. The Advisory Agreement was renewed on February 24, 2025 for a one-year term. The Adviser is wholly owned by NexPoint Advisors, L.P. On March 4, 2020, the Company, the OP and the Adviser entered into separate equity distribution agreements with each of the 2020 ATM Sales Agents, pursuant to the 2020 ATM Program (as defined below). See Note 7 to our consolidated financial statements.

Previous wording

On October 15, 2021, the Bankruptcy Trust Lawsuit was filed by a litigation subtrust formed in connection with the Highland Bankruptcy against various persons and entities, including our Sponsor and James Dondero. In addition, on February 8, 2023, the UBS Lawsuit was filed against Mr. Dondero and a number of other persons and entities. Neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to our business or our assets. Our Sponsor and Mr. Dondero have informed us they believe the Bankruptcy Trust Lawsuit has no merit, and Mr. Dondero has informed us he believes the UBS Lawsuit has no merit; we have been advised that the defendants named in each of the lawsuits intend to vigorously defend against the claims. We do not expect the Bankruptcy Trust Lawsuit or the UBS Lawsuit will have a material effect on our business, results of operations or financial condition.

Current wording

Securities LLC and its affiliate (collectively, “UBS”) filed a lawsuit in the Supreme Court of the State of New York, County of New York against Mr. Dondero and a number of other persons and entities seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the “UBS Lawsuit”). On February 26, 2024, the respondents, including Mr. Dondero, filed motions to dismiss the UBS Lawsuit. A hearing was held on July 8, 2024. The court dismissed the claims against one respondent, CLO HoldCo Ltd., for lack of personal jurisdiction in a July 12, 2024 order. On August 24, 2024, UBS filed a notice of appeal for that dismissal order, which has not yet been briefed. The remaining respondents’ motions to dismiss, including Mr. Dondero’s, remain pending. Neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to our business or our assets. Our Sponsor and Mr. Dondero have informed us they believe the Bankruptcy Trust Lawsuit has no merit, and Mr. Dondero has informed us he believes the UBS Lawsuit has no merit; we have been advised that the defendants named in each of the lawsuits intend to vigorously defend against the claims. We do not expect the Bankruptcy Trust Lawsuit or the UBS Lawsuit will have a material effect on our business, results of operations or financial condition.

Previous wording

Property management fees. Property management fees include fees paid to BH, our property manager, or other third party management companies for managing each property (see Note 9 to our consolidated financial statements).

Current wording

Property management fees. Property management fees include fees paid to BH, our property manager, for managing each property (see Note 9 to our consolidated financial statements).

Previous wording

The change in our net income (loss) between the periods primarily relates to decreases in gain on sales of real estate of $31.5 million, increase in interest expense of $6.0 million, increase in loss on extinguishment of debt and modification costs of $7.8 million, increase in total expenses of $31.4 million, partially offset by an increase in total revenues of $44.7 million.

Current wording

The change in our net income between the periods primarily relates to decreases in gain on sales of real estate and rental income of $13.7 million and $18.2 million, respectively, in addition to an increase in loss on extinguishment of debt and modification costs of $21.6 million.

Previous wording

Other income. Other income was $7.4 million for the year ended December 31, 2023 compared to $6.1 million for the year ended December 31, 2022, which was an increase of approximately $1.3 million. The increase between the periods was primarily due to a $2.2 million increase in internet and tech income, partially offset by a decrease in cable income of $1.7 million and an increase in all other other income of approximately $0.8 million.

Current wording

Other income. Other income was $7.8 million for the year ended December 31, 2024 compared to $7.4 million for the year ended December 31, 2023, which was an increase of approximately $0.4 million. The increase between the periods was primarily due to a $0.1 million increase in internet and tech income, in addition to an increase in cable income of $0.2 million and an increase in all other income of approximately $0.1 million.

Previous wording

Property operating expenses. Property operating expenses were $57.8 million for the year ended December 31, 2023 compared to $58.2 million for the year ended December 31, 2022, which was a decrease of approximately $0.4 million. The decrease between the periods was primarily due to our acquisition and disposition activity in 2022 and 2023 and the timing of the transactions, as described above. The decrease was also attributable to a decrease in temporary maintenance of $0.2 million.

Current wording

Property operating expenses. Property operating expenses were $56.6 million for the year ended December 31, 2024 compared to $57.8 million for the year ended December 31, 2023, which was a decrease of approximately $1.2 million. The decrease between the periods was primarily due to our disposition activity in 2023 and 2024 and the timing of the transactions, as described above.

Previous wording

Depreciation and amortization. Depreciation and amortization costs were $95.2 million for the year ended December 31, 2023 compared to $97.6 million for the year ended December 31, 2022, which was a decrease of approximately $2.4 million. The decrease between the periods was primarily due to a decrease in amortization expense of $4.1 million, partially offset by an increase in depreciation expense of $1.7 million. The decrease between the periods is primarily attributable to our disposition activity (two dispositions in 2023 versus one disposition in 2022).

Current wording

Real estate taxes and insurance. Real estate taxes and insurance costs were $33.1 million for the year ended December 31, 2024 compared to $36.8 million for the year ended December 31, 2023, which was a decrease of approximately $3.7 million. The decrease between the periods was primarily due to our disposition activity in 2023 and 2024 and the timing of the transactions.

Previous wording

Advisory and administrative fees. Advisory and administrative fees were $7.6 million for the year ended December 31, 2023 compared to $7.5 million for the year ended December 31, 2022, which was an increase of approximately $0.1 million. For the years ended December 31, 2023 and 2022, our Adviser elected to voluntarily waive advisory and administrative fees of approximately $21.7 million and $21.0 million and are considered permanently waived. Our Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion. Advisory and administrative fees may increase in future periods as we acquire additional properties, which will be classified as New Assets.

Current wording

Advisory and administrative fees. Advisory and administrative fees were $6.9 million for the year ended December 31, 2024 compared to $7.6 million for the year ended December 31, 2023, which was a decrease of approximately $0.7 million. For the years ended December 31, 2024 and 2023, our Adviser elected to voluntarily waive advisory and administrative fees of approximately $21.3 million and $21.7 million and are considered permanently waived. Our Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion. Advisory and administrative fees may increase in future periods as we acquire additional properties, which will be classified as New Assets.

Previous wording

Corporate general and administrative expenses. Corporate general and administrative expenses were $17.1 million for the year ended December 31, 2023 compared to $14.7 million for the year ended December 31, 2022, which was an increase of approximately $2.4 million. The increase was primarily due to increases in stock compensation expense, professional fees, and audit fees of $1.4 million, $0.8 million and $0.4 million, respectively.

Current wording

Corporate general and administrative expenses. Corporate general and administrative expenses were $19.4 million for the year ended December 31, 2024 compared to $17.1 million for the year ended December 31, 2023, which was an increase of approximately $2.3 million. The increase was primarily due to increases in stock compensation expense of $1.3 million and an increase in all other corporate general and administrative expenses of $1.0 million.

Previous wording

Property general and administrative expenses. Property general and administrative expenses were $9.5 million for the year ended December 31, 2023 compared to $9.3 million for the year ended December 31, 2022, which was an increase of approximately $0.2 million. The increase between the periods was primarily due to increases in apartment listing fees of $0.3 million.

Current wording

Property general and administrative expenses. Property general and administrative expenses were $9.2 million for the year ended December 31, 2024 compared to $9.5 million for the year ended December 31, 2023, which was a decrease of approximately $0.3 million. The decrease between the periods was primarily due to decreases in audit fees of $0.3 million.

Previous wording

Interest expense. Interest expense was $67.1 million for the year ended December 31, 2023 compared to $50.6 million for the year ended December 31, 2022, which was an increase of approximately $16.5 million. The increase between the periods was primarily due to an increase in interest on debt of $52.5 million, partially offset by a decrease in interest rate swap expense of $41.0 million for the years ended December 31, 2023 and 2022 (in thousands):

Current wording

Interest expense. Interest expense was $58.5 million for the year ended December 31, 2024 compared to $67.1 million for the year ended December 31, 2023, which was a decrease of approximately $8.6 million. The decrease between the periods was primarily due to a decrease in interest on debt and an increase in mark-to-market gain on interest rate caps of $6.3 million and $2.1 million, respectively, for the years ended December 31, 2024 and 2023 (in thousands):

Previous wording

Loss on extinguishment of debt and modification costs. Loss on extinguishment of debt and modification costs was $8.7 million for the year ended December 31, 2022 compared to $0.9 million for the year ended December 31, 2021, which was an increase of approximately $7.8 million. The increase between periods primarily relates to increases in prepayment penalties and defeasance costs and write-off of deferred financing costs of $5.3 million and $1.5 million, respectively. The change between periods is attributable to increased refinancing activity in 2022 versus 2021. The following table details the various costs included in loss on extinguishment of debt and modification costs for the years ended December 31, 2022 and 2021 (in thousands):

Current wording

Loss on extinguishment of debt and modification costs. Loss on extinguishment of debt and modification costs was $24.0 million for the year ended December 31, 2024 compared to $2.4 million for the year ended December 31, 2023, which was an increase of approximately $21.6 million. The increase between periods is primarily driven by increases in prepayment penalties and defeasance costs and write-off of deferred financing costs of $13.1 million and $8.0 million, respectively, due to our refinance activity in 2024 as compared to 2023. During the year ended December 31, 2024, the Company completed a portfolio refinance on 34 of its property mortgages. The following table details the various costs included in loss on extinguishment of debt and modification costs for the years ended December 31, 2024 and 2023 (in thousands):

Previous wording

Casualty gains (losses). Casualty losses were $0.9 million for the year ended December 31, 2023 compared to casualty gains of $2.5 million for the year ended December 31, 2022. The decrease between periods was primarily due to damages sustained at Cutter’s Point, Venue 8651, and Timber Creek during the year ended December 31, 2022 (see Note 4 to our consolidated financial statements).

Current wording

Casualty gains (losses). Casualty losses were $0.6 million for the year ended December 31, 2024 compared to casualty gains of $0.9 million for the year ended December 31, 2023. The increase in casualty losses is attributable to damages sustained at Bella Solara (see Note 4 to our consolidated financial statements).

Previous wording

Miscellaneous income. Miscellaneous income was $1.2 million for the year ended December 31, 2023 compared to $1.3 million for the year ended December 31, 2022, which was a decrease of approximately $0.1 million. The decrease between the periods was primarily due to business interruption proceeds received from casualty events (see Note 4).

Current wording

Miscellaneous income. Miscellaneous income was $0.5 million for the year ended December 31, 2024 compared to $1.2 million for the year ended December 31, 2023, which was a decrease of approximately $0.7 million. The decrease between the periods was primarily due to business interruption proceeds received from casualty events (see Note 4).

Previous wording

Gain on sales of real estate. Gain on sales of real estate was $14.7 million for the year ended December 31, 2022 compared to $46.2 million for the year ended December 31, 2021, which was a decrease of approximately $31.5 million. During the year ended December 31, 2022, we sold one property; for the year ended December 31, 2021, we sold two properties.

Current wording

Gain on sales of real estate. Gain on sales of real estate was $54.2 million for the year ended December 31, 2024 compared to $67.9 million for the year ended December 31, 2023, which was a decrease of approximately $13.7 million. During the year ended December 31, 2024, we sold three properties for a combined gain of $54.2 million whereas during the year ended December 31, 2023, we sold two properties for a combined gain of $67.9 million.

Previous wording

NOI is a non-GAAP financial measure of performance. NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is calculated by adjusting net income (loss) to add back (1) interest expense (2) advisory and administrative fees, (3) the impact of: (a) depreciation and amortization expenses and (b) gains or losses from the sale of operating real estate assets that are included in net income (loss) computed in accordance with GAAP, (4) corporate general and administrative expenses, (5) other gains and losses that are specific to us including loss on extinguishment of debt and modification costs, (6) casualty-related expenses/(recoveries) and casualty gains (losses), (7) gain on forfeited deposits, (8) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on behalf of the Company at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees and (9) equity in earnings of affiliates.

Current wording

NOI is a non-GAAP financial measure of performance. NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is calculated by adjusting net income (loss) to add back (1) interest expense, (2) advisory and administrative fees, (3) depreciation and amortization expenses, (4) gains or losses from the sale of operating real estate assets that are included in net income (loss) computed in accordance with GAAP, (5) corporate income and corporate general and administrative expenses that are not reflective of operations of the properties, (6) other gains and losses that are specific to us including gain (loss) on extinguishment of debt and modification costs, (7) casualty-related expenses/(recoveries) and casualty gains (losses), (8) gain on forfeited deposits, (9) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on behalf of the Company at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees and (10) equity in earnings of affiliates.

Previous wording

The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital, which may have changed or may change in the future. Corporate general and administrative expenses are eliminated because they do not reflect continuing operating costs of the property owner. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our multifamily properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale, which will usually change from period to period. Casualty-related expenses and recoveries, casualty gains and losses, and losses of extinguished debt and modification costs are excluded because they do not reflect continuing operating costs of the property owner. Entity level general and administrative expenses incurred at the properties and pandemic expenses are eliminated as they are specific to the way in which we have chosen to hold our properties and are the result of our ownership structuring. Gain of forfeited deposits is eliminated because such gains are not part of our core operations for the properties. Equity in earnings of affiliates is excluded as its not part of our core operations for the properties. These items can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. We believe that eliminating these items from net income is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

Current wording

The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital, which may have changed or may change in the future. Advisory and administrative fees and corporate general and administrative expenses are eliminated because they do not reflect continuing operating costs of the property owner. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our multifamily properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale, which will usually change from period to period. Casualty-related expenses and recoveries, casualty gains and losses, and losses on extinguishment of debt and modification costs are excluded because they do not reflect continuing operating costs of the property owner. Corporate income is excluded as it does not pertain to the performance of the operating properties. Entity level general and administrative expenses incurred at the properties are eliminated as they are specific to the way in which we have chosen to hold our properties and are the result of our ownership structuring. Gain of forfeited deposits is eliminated because such gains are not part of our core operations for the properties. Equity in earnings of affiliates is excluded as its not part of our core operations for the properties. These items can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. We believe that eliminating these items from net income is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

Previous wording

Adjustment to net income (loss) to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.

Current wording

Adjustment to net income to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.

Previous wording

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our 2022-2023 Same Store NOI for the years ended December 31, 2023 and 2022 to net income (loss), the most directly comparable GAAP financial measure (in thousands):

Current wording

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our 2022-2024 Same Store NOI for the years ended December 31, 2024 and 2023 to net income, the most directly comparable GAAP financial measure (in thousands):

Previous wording

Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related expenses/(recoveries).

Current wording

Adjustment to net income to exclude certain property operating expenses that are casualty-related expenses/(recoveries).

Previous wording

For the years ended December 31, 2023 and 2022, excludes approximately $54,000 and $(2,136,000), respectively, of casualty-related expenses/(recoveries).

Current wording

For the years ended December 31, 2024 and 2023, excludes approximately $54,000 and $697,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional, centralized leasing service and franchise tax fees.

Previous wording

See reconciliation of net income (loss) to NOI above under “NOI and 2021-2023 Same Store NOI for the Years Ended December 31, 2023, 2022 and 2021.”

Current wording

See reconciliation of net income to NOI above under “NOI and 2023-2024 Same Store NOI for the Years Ended December 31, 2024 and 2023.”

Previous wording

Other income. Other income was $5.3 million for the year ended December 31, 2023 compared to $5.0 million for the year ended December 31, 2021. The majority of the increase in other income is attributable to an increase in non-refundable fees of $0.2 million.

Current wording

Other income. Other income was $5.3 million for the year ended December 31, 2024 compared to $5.8 million for the year ended December 31, 2023, which was a decrease of $0.5 million. The increase between period is primarily attributable to a $0.4 million increase in internet income.

Previous wording

Property management fees. Property management fees were $6.2 million for the year ended December 31, 2023 to $4.9 million for the year ended December 31, 2021, which was an increase of approximately $1.2 million, or 24.4%. The majority of the increase is related to an increase in total revenues, which the fee is primarily based on.

Current wording

Property general and administrative expenses. Property general and administrative expenses were $5.0 million for the year ended December 31, 2024 compared to $4.9 million for the year ended December 31, 2023, which was an increase of approximately $0.1 million, or 2.0%. The majority of the increase is related to a $0.1 million increase in education and training expense.

Previous wording

There are 33 properties encompassing 12,378 units of apartment space in our 2022-2023 Same Store properties. Our 2022-2023 Same Store properties exclude the following 5 properties in our portfolio as of December 31, 2023: Old Farm, Stone Creek at Old Farm, The Adair, Estates on Maryland and Radbourne Lake as well as the 45 units that are currently down (see Note 4 to our consolidated financial statements).

Current wording

There are 33 properties encompassing 12,386 units of apartment space in our same store pool for the years ended December 31, 2024, 2023 and 2022 (our “2022-2024 Same Store” properties). Our 2022-2024 Same Store properties exclude the following 2 properties in our Portfolio as of December 31, 2024: The Adair and Estates on Maryland as well as 36 units that are currently down (see Note 4 to our consolidated financial statements).

Previous wording

Rental income. Rental income was $207.0 million for the year ended December 31, 2023 compared to $193.1 million for the year ended December 31, 2022, which was an increase of approximately $13.9 million, or 7.2%. The majority of the increase is related to a 0.6% increase in occupancy from 94.1% as of December 31, 2022 to 94.7% as of December 31, 2023 and a increase in the total number of units in the 2021-2023 same store pool from 11,023 units to 11,061 units as of December 31, 2022 and 2023, respectively.

Current wording

Rental income. Rental income was $234.9 million for the year ended December 31, 2024 compared to $229.8 million for the year ended December 31, 2023, which was an increase of approximately $5.1 million, or 2.2%. The majority of the increase is related to an increase in the total number of units in the 2022-2024 same store pool from 12,341 units to 12,386 units as of December 31, 2023 and 2024, respectively.

Previous wording

Other income. Other income was $5.3 million for the year ended December 31, 2023 compared to $5.0 million for the year ended December 31, 2022, which was an increase of $0.3 million. The increase is related to an increase in non refundable fees of $0.1 million and increases in all other income of $0.2 million.

Current wording

Other income. Other income was $5.2 million for the year ended December 31, 2024 compared to $5.7 million for the year ended December 31, 2023, which was a decrease of $0.5 million. The decrease is related to a decrease in cable TV income of $0.1 million and decreases in all other income of $0.4 million.

Previous wording

Property general and administrative expenses. Property general and administrative expenses were $4.2 million for the year ended December 31, 2023 compared to $3.6 million for the year ended December 31, 2021, which was an increase of approximately $0.6 million. The majority of the increase is related to $0.6 million increase in listing fees.

Current wording

Real estate taxes and insurance. Real estate taxes and insurance costs were $31.3 million for the year ended December 31, 2024 compared to $30.7 million for the year ended December 31, 2023, which was an increase of approximately $0.6 million. The majority of the increase is related to a $0.7 million increase in property insurance expense.

Previous wording

Core FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our portfolio. Core FFO adjusts FFO to remove items such as losses on extinguishment of debt and modification costs (including prepayment penalties and defeasance costs incurred on the early repayment of debt, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment), casualty-related expenses and recoveries and gains or losses, gain on forfeited deposits, the amortization of deferred financing costs incurred in connection with obtaining short-term debt financing, and the noncontrolling interests (as described above) related to these items. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.

Current wording

Core FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our Portfolio. Core FFO adjusts FFO to remove items such casualty-related expenses and recoveries and gains or losses, loss on extinguishment of debt and modification costs, gain on forfeited deposits, the amortization of deferred financing costs, mark-to-market gains or losses related to interest rate cap agreements not designated as hedges for accounting purposes, and the noncontrolling interests (as described above) related to these items. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities. Starting in the third quarter of 2024, the Company has adjusted Core FFO to remove (1) the amortization of all deferred financing costs instead of those solely related to short-term debt financing and (2) mark-to-market gains or losses related to interest rate cap agreements not designated as hedges for accounting purposes. Prior periods have been recast to conform to the current presentation.

Previous wording

AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the amortization of deferred financing costs incurred in connection with obtaining long-term debt financing, and the noncontrolling interests (as described above) related to these items. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.

Current wording

AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the related noncontrolling interests (as described above). We believe AFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.

Previous wording

Indicates coverage ratio of net earnings (loss)/FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

Current wording

Indicates coverage ratio of net income/FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

Previous wording

FFO was $71.4 million for the year ended December 31, 2023 compared to $73.4 million for the year ended December 31, 2022, which was a decrease of approximately $2.0 million. The change in our FFO between the periods primarily relates to an increase in total revenues of $13.5 million offset by an increase in interest expense of $16.5 million.

Current wording

FFO was $44.5 million for the year ended December 31, 2024 compared to $71.4 million for the year ended December 31, 2023, which was a decrease of approximately $26.9 million. The change in our FFO between the periods primarily relates to a decrease in total revenues of $17.8 million and an increase in loss on extinguishment of debt and modification costs of $21.6 million.

Previous wording

Core FFO was $73.5 million for the year ended December 31, 2023 compared to $81.8 million for the year ended December 31, 2022, which was a decrease of approximately $8.3 million. The change in our Core FFO between the periods primarily relates to an decrease in FFO of $2.1 million and a decrease in loss on extinguishment of debt and modification costs of $6.3 million.

Current wording

Core FFO was $73.1 million for the year ended December 31, 2024 compared to $76.6 million for the year ended December 31, 2023, which was a decrease of approximately $3.5 million. The change in our Core FFO between the periods primarily relates to a decrease in FFO of $26.9 million, partially offset by an increase in loss on extinguishment of debt and modification costs of $21.6 million.

Previous wording

AFFO was $84.4 million for the year ended December 31, 2023 compared to $91.4 million for the year ended December 31, 2022, which was a decrease of approximately $7.0 million. The change in our AFFO between the periods primarily relates to a decrease in Core FFO of $8.3 million partially offset by an increase in equity-based compensation expense of $1.4 million.

Current wording

AFFO was $83.6 million for the year ended December 31, 2024 compared to $85.9 million for the year ended December 31, 2023, which was a decrease of approximately $2.3 million. The change in our AFFO between the periods primarily relates to a decrease in Core FFO of $3.5 million partially offset by an increase in equity-based compensation expense of $1.3 million.

Previous wording

Our short-term cash requirements consist primarily of funds necessary to pay for debt maturities, operating expenses and other expenditures directly associated with our multifamily properties, including:

Current wording

Our short-term cash requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our multifamily properties, including:

Previous wording

We expect to meet our short-term cash requirements generally through net cash provided by operations and existing cash balances and any unused capacity on the Corporate Credit Facility. As of December 31, 2023, we had approximately $2.9 million of renovation value-add reserves for our planned capital expenditures to implement our value-add program. Renovation value-add reserves are not required to be held in escrow by a third party. We may reallocate these funds, at our discretion, to pursue other investment opportunities or meet our short-term liquidity requirements.

Current wording

We expect to meet our short-term cash requirements generally through net cash provided by operations and existing cash balances and any unused capacity on the Corporate Credit Facility. As of December 31, 2024, we had approximately $3.2 million of renovation value-add reserves for our planned capital expenditures to implement our value-add program. Renovation value-add reserves are not required to be held in escrow by a third party. We may reallocate these funds, at our discretion, to pursue other investment opportunities or meet our short-term liquidity requirements.

Previous wording

Cash flows from operating activities. During the year ended December 31, 2023, net cash provided by operating activities was $96.6 million compared to net cash provided by operating activities of $79.1 million for the year ended December 31, 2022. The change in cash flows from operating activities was mainly due to an increase in total revenues of $13.5 million between the periods and an increase in vesting of stock-based compensation of $1.4 million.

Current wording

Cash flows from operating activities. During the year ended December 31, 2024, net cash provided by operating activities was $73.6 million compared to net cash provided by operating activities of $96.6 million for the year ended December 31, 2023. The change in cash flows from operating activities was mainly due to a decrease in net income (loss) of $43.3 million partially offset by a decrease in gain on sales of real estate of $13.7 million and an increase in amortization/write-off of deferred financing costs of $22.0 million.

Previous wording

Cash flows from investing activities. During the year ended December 31, 2023, net cash provided by investing activities was $51.9 million compared to net cash used in investing activities of $162.3 million for the year ended December 31, 2022. The change in cash flows from investing activities was mainly due to our acquisition and disposition activity in 2023 and 2022 and the timing of the transactions.

Current wording

Cash flows from investing activities. During the year ended December 31, 2024, net cash provided by investing activities was $130.6 million compared to net cash provided by investing activities of $51.9 million for the year ended December 31, 2023. The change in cash flows from investing activities was mainly due to an increase in net proceeds from sales of real estate of $47.9 million and decrease in additions of real estate investments of $34.2 million.