NexPoint Residential Trust, Inc.

Previous 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).

Current wording

As of December 31, 2025, our Portfolio consisted of 36 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 13,305 units of apartment space that was approximately 92.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,492. 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, 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 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 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.

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 23, 2026 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 ATM Sales Agents, pursuant to the ATM Program (as defined below). On March 20, 2025, the equity distribution agreements with each of KeyBanc and SunTrust were terminated (each as defined below). See Note 7 to our consolidated financial statements.

Previous 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.

Current wording

For information regarding the Bankruptcy Trust Lawsuit and the UBS Lawsuit, see “Item 1A. Risk Factors—The Chapter 11 bankruptcy filing by Highland Capital Management, L.P. (“Highland”) may have materially adverse consequences on our business, financial condition and results of operations” and “Item 1A. Risk Factors—Litigation against James Dondero and others may have materially adverse consequences on our business, financial condition and results of operations.” 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

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 Adviser Operating Expenses. Under the Advisory Agreement, reimbursement of Adviser Operating Expenses and the 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 Fees otherwise due. If 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.

Previous wording

Casualty losses. Casualty losses include expenses resulting from damages from an unexpected and unusual event such as a natural disaster. Expenses can include additional payments on insurance premiums, impairment recognized on a property, and other abnormal expenses arising from the related event.

Current wording

Casualty loss. Casualty loss includes expenses resulting from damages from an unexpected and unusual event such as a natural disaster. Expenses can include additional payments on insurance premiums, impairment recognized on a property, and other abnormal expenses arising from the related event.

Previous 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.

Current wording

The change in our net income (loss) between the periods primarily relates to decreases in gain on sales of real estate and rental income of $54.2 million and $8.2 million, respectively, partially offset by a decrease in loss on extinguishment of debt and modification costs of $24.0 million.

Previous wording

Rental income. Rental income was $251.9 million for the year ended December 31, 2024 compared to $270.1 million for the year ended December 31, 2023, which was a decrease of approximately $18.2 million. The decrease between the periods was primarily due to our three dispositions in 2024 compared to two dispositions in 2023, and the timing of disposition activity. During the year ended December 31, 2023, the Company sold one property in the third quarter of 2023 and one property in the fourth quarter of 2023. During the year ended December 31, 2024, the Company sold one property in each of the first, second, and fourth quarters of 2024.

Current wording

Rental income. Rental income was $243.7 million for the year ended December 31, 2025 compared to $251.9 million for the year ended December 31, 2024, which was a decrease of approximately $8.2 million. The decrease between the periods was primarily due to our three dispositions in 2024. During the year ended December 31, 2024, the Company sold one property in each of the first, second, and fourth quarters of 2024.

Previous 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.

Current wording

Property operating expenses. Property operating expenses were $53.9 million for the year ended December 31, 2025 compared to $56.6 million for the year ended December 31, 2024, which was a decrease of approximately $2.7 million. The decrease between the periods was primarily due to our disposition activity in 2024.

Previous wording

Property management fees. Property management fees were $7.5 million for the year ended December 31, 2024 compared to $8.1 million for the year ended December 31, 2023, which was a decrease of approximately $0.6 million. The decrease between the periods was primarily due to a decrease in total revenues, which the fee is primarily based on.

Current wording

Property management fees. Property management fees were $7.2 million for the year ended December 31, 2025 compared to $7.5 million for the year ended December 31, 2024, which was a decrease of approximately $0.3 million. The decrease between the periods was primarily due to a decrease in total revenues, which the fee is primarily based on.

Previous 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.

Current wording

Advisory and administrative fees. Advisory and administrative fees were $6.9 million for the year ended December 31, 2025 compared to $6.9 million for the year ended December 31, 2024, which was flat. For the years ended December 31, 2025 and 2024, our Adviser elected to voluntarily waive advisory and administrative fees of approximately $21.0 million and $21.3 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

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.

Current wording

Corporate general and administrative expenses. Corporate general and administrative expenses were $17.9 million for the year ended December 31, 2025 compared to $19.4 million for the year ended December 31, 2024, which was a decrease of approximately $1.5 million. The decrease was primarily due to decreases in stock compensation expense of $0.7 million, other insurance expense of $0.5 million and professional fees of $0.3 million.

Previous wording

Depreciation and amortization. Depreciation and amortization costs were $97.8 million for the year ended December 31, 2024 compared to $95.2 million for the year ended December 31, 2023, which was an increase of approximately $2.6 million. The increase between the periods was due to an increase in value add activity during 2023.

Current wording

Depreciation and amortization. Depreciation and amortization costs were $95.8 million for the year ended December 31, 2025 compared to $97.8 million for the year ended December 31, 2024, which was a decrease of approximately $2.0 million. The decrease between the periods was due to the dispositions in the prior year.

Previous 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):

Current wording

Interest expense. Interest expense was $60.7 million for the year ended December 31, 2025 compared to $58.5 million for the year ended December 31, 2024, which was an increase of approximately $2.2 million. The increase between the periods was primarily due to an increase in amortization of deferred financing costs of $3.2 million, respectively, for the years ended December 31, 2025 and 2024 (in thousands):

Previous 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):

Current wording

Loss on extinguishment of debt and modification costs. Loss on extinguishment of debt and modification costs was $0.0 million for the year ended December 31, 2025 compared to $24.0 million for the year ended December 31, 2024, which was a decrease of approximately $24.0 million. The decrease between periods is primarily driven by decreases in prepayment penalties and defeasance costs and write-off of deferred financing costs of $15.5 million and $8.5 million, respectively, due to our refinance activity in 2024 as compared to 2025. 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, 2025 and 2024 (in thousands):

Previous 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).

Current wording

Miscellaneous income. Miscellaneous income was $0.6 million for the year ended December 31, 2025 compared to $0.5 million for the year ended December 31, 2024, which was an increase of approximately $0.1 million. The increase between the periods was primarily due to more 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 $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.

Current wording

Gain on sales of real estate. Gain on sales of real estate was $0.0 million for the year ended December 31, 2025 compared to $54.2 million for the year ended December 31, 2024, which was a decrease of approximately $54.2 million. During the year ended December 31, 2025, we did not sell any properties compared to the year ended December 31, 2024, in which we sold three properties for a combined gain of $54.2 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) 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 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 loss, (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. 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.

Current wording

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 for investors and management 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

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

Current wording

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

Previous wording

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

Current wording

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

Previous 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.

Current 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.

Previous wording

There are 35 properties encompassing 12,948 units of apartment space in our 2023-2024 Same Store properties. Our 2023-2024 Same Store properties exclude the 36 units that are currently down (see Note 4 to our consolidated financial statements).

Current wording

There are 35 properties encompassing 12,963 units of apartment space in our 2024-2025 Same Store properties. Our 2024-2025 Same Store properties exclude the 21 units that are currently down (see Note 4 to our consolidated financial statements). We consider a property to be a same store property if we held the property during the entirety of both periods.

Previous wording

For the years ended December 31, 2024 and 2023, excludes approximately ($624,000) and $54,000, respectively, of casualty-related expenses/(recoveries).

Current wording

For the years ended December 31, 2025 and 2024, excludes approximately $307,000 and $54,000, 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

As of December 31, 2024, our 2023-2024 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,491. As of December 31, 2023, our 2023-2024 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,516. For our 2023-2024 Same Store properties, we recorded the following operating results for the year ended December 31, 2024 as compared to the year ended December 31, 2023:

Current wording

As of December 31, 2025, our 2024-2025 Same Store properties were approximately 92.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,489. As of December 31, 2024, our 2024-2025 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $1,491. For our 2024-2025 Same Store properties, we recorded the following operating results for the year ended December 31, 2025 as compared to the year ended December 31, 2024:

Previous wording

Rental income. Rental income was $246.7 million for the year ended December 31, 2024 compared to $241.2 million for the year ended December 31, 2023, which was an increase of approximately $5.5 million, or 2.3%. The majority of the increase is related to an increase in weighted average occupancy during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Current wording

Rental income. Rental income was $243.5 million for the year ended December 31, 2025 compared to $246.7 million for the year ended December 31, 2024, which was a decrease of approximately $3.2 million, or 1.3%. The majority of the decrease is related to a decrease in weighted average occupancy during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Previous 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.

Current wording

Other income. Other income was $5.9 million for the year ended December 31, 2025 compared to $5.3 million for the year ended December 31, 2024, which was an increase of $0.6 million. The increase between periods is primarily attributable to a $0.8 million increase in internet income.

Previous wording

Property management fees. Property management fees were $7.3 million for the year ended December 31, 2024 compared to $7.1 million for the year ended December 31, 2023, which was an increase of approximately $0.2 million, or 1.8%. 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 $5.2 million for the year ended December 31, 2025 compared to $5.0 million for the year ended December 31, 2024, which was an increase of approximately $0.2 million, or 2.6%. The majority of the increase is related to a $0.1 million increase in marketing expenses.

Previous wording

Since the historical cost accounting convention used for real estate assets requires depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. We compute FFO attributable to common stockholders in accordance with NAREIT’s definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to noncontrolling interests and we show the amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.

Current wording

Since the historical cost accounting convention used for real estate assets requires depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. We compute FFO attributable to common stockholders in accordance with NAREIT’s definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to redeemable noncontrolling interests in the OP and we show the combined amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.

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 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.

Current 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, loss (gain) 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 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 current presentations.

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 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 income, the most directly comparable GAAP financial measure, for the years ended December 31, 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 income (loss), the most directly comparable GAAP financial measure, for the years ended December 31, 2025 and 2024 (in thousands, except per share amounts):

Previous wording

Indicates coverage ratio of net income/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 $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.

Current wording

FFO was $63.3 million for the year ended December 31, 2025 compared to $44.5 million for the year ended December 31, 2024, which was an increase of approximately $18.8 million. The change in our FFO between the periods primarily relates to a decrease in gain on sales of real estate of $54.2 million offset by a decrease in net income of $33.2 million.

Previous 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.

Current wording

Core FFO was $71.3 million for the year ended December 31, 2025 compared to $73.1 million for the year ended December 31, 2024, which was a decrease of approximately $1.8 million. The change in our Core FFO between the periods primarily relates to a decrease in loss on extinguishment of debt and modification costs of $24.0 million, partially offset by an increase in FFO and amortization of deferred financing costs of $18.8 million and $3.2 million.

Previous 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.

Current wording

AFFO was $81.1 million for the year ended December 31, 2025 compared to $83.6 million for the year ended December 31, 2024, which was a decrease of approximately $2.5 million. The change in our AFFO between the periods primarily relates to a decrease in Core FFO of $1.8 million and a decrease in equity-based compensation expense of $0.7 million.

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, 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.

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 Credit Facility (as defined below). As of December 31, 2025, we had approximately $8.3 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, 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.

Current wording

Cash flows from operating activities. During the year ended December 31, 2025, net cash provided by operating activities was $83.6 million compared to net cash provided by operating activities of $73.6 million for the year ended December 31, 2024. The change in cash flows from operating activities was mainly due to a decrease on gain on sales of real estate of $54.2 million, offset by a decreases in amortization/write-off of deferred financing costs of $21.0 million and net cash received on derivative settlements of $22.2 million.

Previous 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.

Current wording

Cash flows from investing activities. During the year ended December 31, 2025, net cash used in investing activities was $115.8 million compared to net cash provided by investing activities of $130.6 million for the year ended December 31, 2024. The change in cash flows from investing activities was mainly due to a decrease in net proceeds from sales of real estate of $165.7 million and partially offset by a decrease in acquisitions of real estate investments of $73.3 million.

Previous wording

Cash flows from financing activities. During the year ended December 31, 2024, net cash used in financing activities was $195.6 million compared to net cash used in financing activities of $155.0 million for the year ended December 31, 2023. The change in cash flows from financing activities was mainly due to increases in deferred financing cost paid, prepayment penalties on extinguished debt and repurchases of common stock of $6.4 million, $13.1 million and $14.6 million, respectively.

Current wording

Cash flows from financing activities. During the year ended December 31, 2025, net cash provided by financing activities was $23.4 million compared to net cash used in financing activities of $195.6 million for the year ended December 31, 2024. The change in cash flows from financing activities was mainly due to increases in mortgage payments, credit facilities proceeds received, credit facilities payments and prepayment penalties on extinguished debt of $1.5 billion, $90.0 million, $24.0 million and $15.5 million, partially offset by a decrease in mortgage proceeds received of $1.4 billion.

Previous wording

As of December 31, 2024, the Company was invested in a total of 35 multifamily properties, as listed below:

Current wording

As of December 31, 2025, the Company was invested in a total of 36 multifamily properties, as listed below: