NexPoint Residential Trust, Inc.

Previous wording

As of September 30, 2024, our Portfolio consisted of 36 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 13,174 units of apartment space that was approximately 94.8% leased with a weighted average monthly effective rent per occupied apartment unit of $1,500. 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 September 30, 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 an unaffiliated limited partner (see Note 8 to our consolidated financial statements).

Current wording

As of March 31, 2025, 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 94.4% leased with a weighted average monthly effective rent per occupied apartment unit of $1,495. 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 March 31, 2025, 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 8 to our consolidated financial statements).

Previous wording

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code, and expect to continue to qualify as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income to our stockholders. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to qualify as a REIT. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the nine months ended September 30, 2024 and 2023.

Current wording

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code, and expect to continue to qualify as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income to our stockholders. As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to qualify as a REIT. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the three months ended March 31, 2025 and 2024.

Previous wording

The macroeconomic environment remains challenging as central banks have continued to rapidly raise interest rates. The rising rate environment, coupled with large bank failures in early 2023 and ongoing economic uncertainty, has limited credit availability to commercial real estate. Less available and more expensive debt capital has had pronounced effects on the capital markets, making property acquisitions and other investments harder to finance. Similar factors also impact the timing of and proceeds generated from asset sales and our ability to obtain debt capital.

Current wording

The macroeconomic environment remains challenging. Less available and more expensive debt capital has had pronounced effects on the capital markets, making property acquisitions and other investments harder to finance. Similar factors also impact the timing of and proceeds generated from asset sales and our ability to obtain debt capital. Further, the United States government has recently announced a comprehensive set of tariffs. The United States government has paused the implementation of certain of these tariffs, and the timing and scope of such tariffs is currently uncertain. Such tariffs could impact our results of operations by increasing the costs of various inputs, including construction materials. The impact of such tariffs is subject to uncertainties regarding the timing of their implementation, the magnitude of such tariffs and possible exemptions for certain goods, among other uncertainties.

Previous wording

On October 16, 2019, Highland, a former affiliate of our Sponsor, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware (the “Highland Bankruptcy”). On October 15, 2021, Marc S. Kirschner, as litigation trustee of a litigation subtrust formed pursuant to Highland’s plan of reorganization and disclosure statement which became effective on August 11, 2021, filed a lawsuit (the “Bankruptcy Trust Lawsuit”) against various persons and entities, including our Sponsor and James Dondero. On March 24, 2023, the litigation trustee filed a motion for leave to stay the Bankruptcy Trust Lawsuit, which was granted by the bankruptcy court on April 4, 2023. Per the court’s order, the Bankruptcy Trust Lawsuit is stayed until any party provides 30 days’ notice of the intent to resume the adversary proceeding, with all pending deadlines extended for a period of time commensurate with the length of the stay. As of the date of this filing, the Bankruptcy Trust Lawsuit continues to be stayed. In addition, on February 8, 2023, UBS 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”). 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

On October 16, 2019, Highland, a former affiliate of our Sponsor, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware (the “Highland Bankruptcy”). On October 15, 2021, Marc S. Kirschner, as litigation trustee of a litigation subtrust formed pursuant to Highland’s plan of reorganization and disclosure statement which became effective on August 11, 2021, filed a lawsuit (the “Bankruptcy Trust Lawsuit”) against various persons and entities, including our Sponsor and James Dondero. On March 24, 2023, the litigation trustee filed a motion for leave to stay the Bankruptcy Trust Lawsuit, which was granted by the bankruptcy court on April 4, 2023. Per the court’s order, the Bankruptcy Trust Lawsuit is stayed until any party provides 30 days’ notice of the intent to resume the adversary proceeding, with all pending deadlines extended for a period of time commensurate with the length of the stay. As of the date of this filing, the Bankruptcy Trust Lawsuit continues to be stayed. In addition, on February 8, 2023, UBS Securities LLC and UBS AG London (collectively, “UBS”) filed a lawsuit in the Supreme Court of the State of New York, County of New York related to a default that occurred in 2009 on a warehouse facility between UBS and funds affiliated with Highland. The lawsuit makes claims against several persons and entities, including Mr. Dondero, the President of the Adviser, seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the “UBS Lawsuit”). On March 7, 2023, the matter was removed to the United States District Court for the Southern District of New York. On April 6, 2023, UBS moved to have the case remanded to New York state court. The federal court remanded the state-law causes of action and retained and stayed the federal cause of action. On February 26, 2024, several of the respondents, including Mr. Dondero, filed motions in state court to dismiss the UBS Lawsuit on various grounds. 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 March 26, 2025, the court entered an order denying the remaining motions to dismiss and directed the respondents to file an answer to the UBS Lawsuit within 20 days, which they did. Mr.

Previous wording

Corporate general and administrative expenses. Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, listing fees, board of director fees, equity-based compensation expense, investor relations costs and payments of reimbursements to our Adviser for operating expenses. Corporate general and administrative expenses and the advisory and administrative fees paid to our Adviser (including advisory and administrative fees on properties defined in the Advisory Agreement as New Assets) will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect), calculated in accordance with the Advisory Agreement, or the Expense Cap. The Expense Cap does not limit the reimbursement by us of expenses related to securities offerings paid by our Adviser. The Expense Cap also does not apply to legal, accounting, financial, due diligence, and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation, or other events outside our ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets. Additionally, in the sole discretion of the Adviser, the Adviser may elect to waive certain advisory and administrative fees otherwise due. If advisory and administrative fees are waived in a period, the waived fees for that period are considered to be waived permanently and the Adviser may not be reimbursed in the future.

Current wording

Corporate general and administrative expenses. Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, listing fees, board of director fees, equity-based compensation expense, investor relations costs and payments of reimbursements to our Adviser for operating expenses. Corporate general and administrative expenses and the advisory and administrative fees paid to our Adviser (including advisory and administrative fees on properties defined in the Advisory Agreement as New Assets) will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect), calculated in accordance with the Advisory Agreement, or the Expense Cap. The Expense Cap does not limit the reimbursement by us of expenses related to securities offerings paid by our Adviser. The Expense Cap also does not apply to legal, accounting, financial, due diligence, and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation, or other events outside our ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets. Additionally, in the sole discretion of the Adviser, the Adviser may elect to waive certain advisory and administrative fees otherwise due. If advisory and administrative fees are waived in a period, the waived fees for that period are considered to be waived permanently and the Adviser may not be reimbursed in the future. On April 4, 2025, the compensation committee of the Board recommended that the Board approve the 2025 Long Term Incentive Plan (the “2025 LTIP”), and the Board unanimously approved and determined that the 2025 LTIP was advisable and in the best interests of the Company and the Company’s stockholders. The Board subsequently directed that approval of the 2025 LTIP be submitted for consideration by our stockholders at our annual meeting.

Previous wording

Gain (loss) on extinguishment of debt and modification costs. Gain (loss) on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs, 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.

Current wording

Loss on extinguishment of debt and modification costs. Gain (loss) on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs, 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.

Previous wording

The change in our net loss for the three months ended September 30, 2024 as compared to our net income for the three months ended September 30, 2023 primarily relates to the change in gain on sales of real estate of $43.1 million.

Current wording

The change in our net loss for the three months ended March 31, 2025 as compared to our net income for the three months ended March 31, 2024 primarily relates to a decrease in gain on sales of real estate of $31.7 million.

Previous wording

Other income. Other income was $1.8 million for the three months ended September 30, 2024 compared to $2.0 million for the three months ended September 30, 2023, which was a decrease of approximately $0.2 million. The decrease between the periods was primarily due to our disposition activity.

Current wording

Other income. Other income was $1.8 million for the three months ended March 31, 2025 compared to $2.0 million for the three months ended March 31, 2024, which was a decrease of approximately $0.2 million. The decrease between the periods was primarily due to our disposition activity in 2024.

Previous wording

Property operating expenses. Property operating expenses were $39.9 million for the nine months ended September 30, 2024 compared to $38.4 million for the nine months ended September 30, 2023, which was an increase of approximately $1.5 million, or 4.0%. The majority of the increase is related to an increase of approximately $1.3 million in repairs and maintenance.

Current wording

Property operating expenses. Property operating expenses were $12.5 million for the three months ended March 31, 2025 compared to $13.8 million for the three months ended March 31, 2024, which was a decrease of approximately $1.3 million. The decrease between the periods was primarily due to our disposition activity in 2024.

Previous wording

Rental income. Rental income was $62.3 million for the three months ended September 30, 2024 compared to $67.9 million for the three months ended September 30, 2023, which was a decrease of approximately $5.6 million. The decrease between the periods was primarily due our disposition activity in 2024 and in the latter half of 2023.

Current wording

Real estate taxes and insurance. Real estate taxes and insurance costs were $9.0 million for the three months ended March 31, 2025 compared to $9.3 million for the three months ended March 31, 2024, which was a decrease of approximately $0.3 million. The decrease between the periods was primarily due our disposition activity in 2024.

Previous wording

Property management fees. Property management fees were $1.8 million for the three months ended September 30, 2024 compared to $2.0 million for the three months ended September 30, 2023 which was a decrease of $0.2 million. Property management fees are primarily based on total revenues.

Current wording

Property management fees. Property management fees were $1.8 million for the three months ended March 31, 2025 and $2.0 million for the three months ended March 31, 2024, which was a decrease of approximately $0.2 million. Property management fees are primarily based on total revenues, which decreased between periods.

Previous wording

Advisory and administrative fees. Advisory and administrative fees were $1.7 million for the three months ended September 30, 2024 compared to $2.0 million for the three months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, our Adviser elected to voluntarily waive the advisory and administrative fees of approximately $5.3 million and $5.5 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 $1.7 million for the three months ended March 31, 2025 and $1.7 million for the three months ended March 31, 2024 which was flat. For the three months ended March 31, 2025 and 2024, our Adviser elected to voluntarily waive the advisory and administrative fees of approximately $5.3 million and $5.5 million, respectively, 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 $4.8 million for the three months ended September 30, 2024 compared to $4.9 million for the three months ended September 30, 2023, which was a decrease of approximately $0.1 million. The decrease between the periods was primarily due to disposition activity in 2023 and 2024.

Current wording

Corporate general and administrative expenses. Corporate general and administrative expenses were $4.5 million for the three months ended March 31, 2025 compared to $4.9 million for the three months ended March 31, 2024, which was a decrease of approximately $0.4 million. The decrease was primarily due to decreases in professional fees and stock compensation expense for a total of $0.4 million.

Previous wording

Depreciation and amortization. Depreciation and amortization costs were $24.6 million for the three months ended September 30, 2024 compared to $23.8 million for the three months ended September 30, 2023, which was an increase of approximately $0.8 million. The increase between the periods was primarily due to an increase in depreciation expense of approximately $0.8 million, which was primarily due to our value-add activities in 2023 and 2024.

Current wording

Depreciation and amortization. Depreciation and amortization costs were $24.4 million for the three months ended March 31, 2025 compared to $24.3 million for the three months ended March 31, 2024, which was an increase of approximately $0.1 million, which was attributable to our value-add activities in 2024.

Previous wording

Interest expense. Interest expense was $14.6 million for the three months ended September 30, 2024 compared to $17.6 million for the three months ended September 30, 2023, which was a decrease of approximately $3.0 million. The decrease in interest expense between the periods is primarily attributable to a decrease in interest on debt of approximately $3.1 million, partially offset by a decrease in effective interest rate swap expense of $0.7 million. The following table details the various costs included in interest expense for the three months ended September 30, 2024 and 2023 (in thousands):

Current wording

Interest expense. Interest expense was $14.4 million for the three months ended March 31, 2025 compared to $14.4 million for the three months ended March 31, 2024, which was flat. The following table details the various costs included in interest expense for the three months ended March 31, 2025 and 2024 (in thousands):

Previous wording

Casualty (loss). Casualty loss was $0.5 million compared to a $1.0 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in casualty loss between periods of $0.5 million is attributable to the Company's casualty events and the timing.

Current wording

Casualty gain (loss). Casualty loss was $0.2 million gain compared to a $0.8 million loss for the three months ended March 31, 2025 and 2024, respectively. The increase in casualty gain between periods of $1.0 million is attributable to the Company's casualty events and the timing.

Previous wording

Miscellaneous income. Miscellaneous income was $0.1 million compared to $0.1 million for the three months ended September 30, 2024 and 2023, respectively, which was flat.

Current wording

Miscellaneous income. Miscellaneous income was $0.1 million compared to $0.1 million for the three months ended March 31, 2024.

Previous wording

Gain on sale of real estate. Gain on sale of real estate was $0.0 million compared to $43.1 million for the three months ended September 30, 2024 and 2023, respectively. The decrease between periods is attributable to zero dispositions during the three months ended September 30, 2024 compared to one disposition during the three months ended September 30, 2023.

Current wording

Gain on sales of real estate. Gain on sales of real estate was $0.0 million compared to $31.7 million for the three months ended March 31, 2024. The decrease between periods is attributable to our sale of one property during the three months ended March 31, 2024 compared to no disposition activity for the three months ended March 31, 2025.

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) 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.

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 and properties, (6) other gains and losses that are specific to us including loss on extinguishment of debt and modification costs, (7) casualty-related expenses/(recoveries) and casualty gains (losses), (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.

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, and non-operating fees to affiliates and equity in earnings of affiliates 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 are excluded because they do not reflect continuing operating costs of the property owner. 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 on forfeited deposits is excluded as it does not reflect the ongoing operations of the properties. Corporate income is excluded as it does not pertain to the performance of the operating properties. Also, expenses that are incurred upon acquisition of a property do not reflect continuing operating costs of the property owner. These gains and losses 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 (loss) 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 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 the extinguishment of 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 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. 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 (loss) 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

NOI and Same Store NOI for the Three and Nine Months Ended September 30, 2024 and 2023

Current wording

NOI and Same Store NOI for the Three Months Ended March 31, 2025 and 2024

Previous wording

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our Same Store NOI for the three and nine months ended September 30, 2024 and 2023 to net 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 Same Store NOI for the three months ended March 31, 2025 and 2024 to net income (loss), the most directly comparable GAAP financial measure (in thousands):

Previous wording

There are 35 properties encompassing 12,948 units of apartment space in our same store pool for the three months ended September 30, 2024 and 2023 (our “Q3 Same Store” properties). Our Q3 Same Store properties exclude the following property in our Portfolio as of September 30, 2024: Stone Creek at Old Farm, as well as the 36 units that are currently down (see Note 3).

Current wording

There are 35 properties encompassing 12,948 units of apartment space in our same store pool for the three months ended March 31, 2025 and 2024 (our “Q1 Same Store” properties). Our Q1 Same Store properties exclude the 36 units that are currently down (see Note 3).

Previous wording

Fees incurred to an affiliate of the noncontrolling limited partner of the OP.

Current wording

Fees incurred to an affiliate of the noncontrolling limited partners of the OP.

Previous wording

See reconciliation of net income (loss) to NOI above under “NOI and Same Store NOI for the Three and Nine Months Ended September 30, 2024 and 2023.”

Current wording

See reconciliation of net income (loss) to NOI above under “NOI and Same Store NOI for the Three Months Ended March 31, 2025 and 2024.”

Previous wording

Q3 Same Store Results of Operations for the Three Months Ended September 30, 2024 and 2023

Current wording

Same Store Results of Operations for the Three Months Ended March 31, 2025 and 2024

Previous wording

As of September 30, 2024, our Q3 Same Store properties were approximately 94.9% leased with a weighted average monthly effective rent per occupied apartment unit of $1,502. As of September 30, 2023, our Q3 Same Store properties were approximately 93.9% leased with a weighted average monthly effective rent per occupied apartment unit of $1,529. For our Q3 Same Store properties, we recorded the following operating results for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023:

Current wording

As of March 31, 2025, our Q1 Same Store properties were approximately 94.4% leased with a weighted average monthly effective rent per occupied apartment unit of $1,495. As of March 31, 2024, our Q1 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,514. For our Q1 Same Store properties, we recorded the following operating results for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024:

Previous wording

Other income. Other income was $1.3 million for the three months ended September 30, 2024, compared to $1.5 million for the three months ended September 30, 2023, which was a decrease of $0.2 million. The majority of the decrease is related to a $0.1 million decrease in cable income.

Current wording

Other income. Other income was $1.3 million for the three months ended March 31, 2025 compared to $1.5 million for the three months ended March 31, 2024, which was a decrease of approximately $0.2 million. The majority of the decrease is related to a $0.1 million decrease in cable tv income.

Previous wording

Property operating expenses. Property operating expenses were $14.1 million for the three months ended September 30, 2024 compared to $12.8 million for the three months ended September 30, 2023, which was an increase of $1.3 million, or 10.1%. The majority of the increase is related to repairs and maintenance and utilities increases of $0.1 million and $0.1 million, respectively.

Current wording

Property operating expenses. Property operating expenses were $13.1 million for the three months ended March 31, 2025 compared to $12.7 million for the three months ended March 31, 2024, which was an increase of approximately $0.4 million, or 3.3%. The majority of the increase is related to increases in repairs and maintenance and utilities expenses of $0.2 million and $0.1 million, respectively.

Previous wording

Property general and administrative expenses. Property general and administrative expenses were $1.3 million for the three months ended September 30, 2024 compared to $1.2 million for the three months ended September 30, 2023, which was an increase of approximately $0.1 million. The increase between periods was primarily due to increases in office operations and marketing of $0.1 million.

Current wording

Property general and administrative expenses. Property general and administrative expenses were $1.2 million for the three months ended March 31, 2025 compared to $1.2 million for the three months ended March 31, 2024, which was flat.

Previous wording

Core FFO makes certain adjustments to FFO, which are 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, gain (loss) on extinguishment of debt and modification costs that are not reflective of continuing operations of the properties, 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.

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, gain (loss) on extinguishment of debt and modification costs that are not reflective of continuing operations of the properties, 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 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.

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) 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.

Previous wording

The following table reconciles our calculations of FFO, Core FFO and AFFO to net loss, the most directly comparable GAAP financial measure, for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):

Current wording

The following table reconciles our calculations of FFO, Core FFO and AFFO to net loss, the most directly comparable GAAP financial measure, for the three months ended March 31, 2025 and 2024 (in thousands, except per share amounts):

Previous wording

$31.5 million with a related party for the nine months ended September 30, 2024.

Current wording

$31.7 million with a related party for the three months ended March 31, 2024.

Previous wording

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

Previous wording

FFO was $15.7 million for the three months ended September 30, 2024 compared to $14.5 million for the three months ended September 30, 2023, which was an increase of approximately $1.2 million. The change in our FFO between the periods primarily relates to a decrease in total revenues of $5.7 million, offset by decreases in interest expense, loss on extinguishment and property general and administrative expenses of $3.0, $2.2 million and $0.9 million, respectively.

Current wording

FFO was $17.4 million for the three months ended March 31, 2025 compared to $18.9 million for the three months ended March 31, 2024, which was a decrease of approximately $1.5 million. The change in our FFO between the periods primarily relates to a decrease in total revenues of $4.4 million, partially offset by an increase in casualty-related recoveries of $0.7 million.

Previous wording

Core FFO was $55.5 million for the nine months ended September 30, 2024 compared to $56.8 million for the nine months ended September 30, 2023, which was a decrease of approximately $1.3 million. The change in our Core FFO between the periods primarily relates to a decrease in FFO and a decrease in loss on extinguishment of debt and modification costs of $1.3 million, partially offset by increases in casualty-related expenses of $3.0 million.

Current wording

Core FFO was $19.1 million for the three months ended March 31, 2025 compared to $19.4 million for the three months ended March 31, 2024, which was a decrease of approximately $0.3 million. The change in our Core FFO between the periods primarily relates to a decrease in FFO, partially offset by the change in mark-to-market adjustments of interest rate caps of $1.2 million.

Previous wording

AFFO was $63.3 million for the nine months ended September 30, 2024 compared to $63.8 million for the nine months ended September 30, 2023, which was a decrease of approximately $0.5 million. The change in our AFFO between the periods primarily relates to a decrease in Core FFO partially offset by an increase of equity-based compensation expense of $0.9 million.

Current wording

AFFO was $21.6 million for the three months ended March 31, 2025 compared to $22.0 million for the three months ended March 31, 2024, which was a decrease of approximately $0.4 million. The change in our AFFO between the periods primarily relates to a decrease in Core FFO and equity-based compensation expense of $0.1 million.

Previous wording

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

Previous wording

interest expense and scheduled principal payments on outstanding indebtedness (see “—Obligations and Commitments” below);

Current wording

interest expense and scheduled principal payments on outstanding indebtedness, if any (see “—Obligations and Commitments” below);