VIVMARK RESIDENTIAL
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 9, 2026
VMRK$66.14+1.0%Stored close · as of Nov 9, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001193125-26-326170
Item 1A. Risk FactorsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-09.
0001193125-26-453735
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 57 current paragraphs.
11 unchanged; 42 reworded; 4 added; 40 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
The current filing states there were no material changes to risk factors.
This is the filer’s own statement, not a conclusion from the comparison. Read its qualifications and the report it references.
Current filing’s statement
There have been no material changes to the risk factors that were discussed in Part I, Item 1A of AvalonBay’s Annual Report on Form 10-K for the year ended December 31, 2025 and in Part I, Item 1A of Equity Residential's and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2025, except for the following:
Added paragraphs (4)
Current report
The diversion of management’s attention from ongoing business concerns and performance shortfalls as a result of the devotion of management’s attention to integration matters;
Current report
Mezzanine debt and preferred equity investments could cause us to incur expenses and experience delays in recovery, which could adversely affect our results of operations.
Current report
We make mezzanine loans to borrowers and obtain preferred equity interests in projects owned by third-party sponsors as part of our SIP. Some of these instruments may have some recourse to their borrower or sponsor, while others are limited to the collateral securing the loan or the right to remove the sponsor as manager of the venture in preferred equity investments. In the event of a default under these obligations, we may elect to take possession of the collateral securing these interests, or remove a sponsor from management of a preferred equity investment. Borrowers of mezzanine loans may contest our enforcement actions, including foreclosure, assignment in lieu of foreclosure, or other remedies, and sponsors may contest our removal actions. In addition, borrowers and sponsors may seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce their obligations to us, which could result in significant legal costs, delays, or limitations on our ability to realize the value of our investments. Declines in the value of the underlying properties may also prevent us from realizing an amount equal to our investment upon foreclosure or other remedies even if we make substantial improvements or repairs to maximize such properties’ investment potential.
Current report
We cannot be certain that our estimate of future credit losses will be adequate over time because of unanticipated adverse changes in the economy or events adversely affecting specific properties, assets, tenants, borrowers, industries in which our tenants and borrowers operate or markets in which our tenants and borrowers or their properties are located. The ultimate resolutions may differ from our expectation, and we could suffer losses that have a material adverse effect on our financial performance, the trading price of our securities and our ability to pay dividends and distributions.
Removed paragraphs (40)
Previous report
The Merger is subject to conditions, some or all of which may not be satisfied or completed on a timely basis, if at all. Failure to complete the Merger could have material adverse effects on the Company.
Previous report
The completion of the Merger is subject to a number of conditions, including, among others, the approval of the issuance of shares of the Company in connection with the Merger by the Company’s shareholders, the approval of the Merger by the AvalonBay stockholders and the absence of a law or order restraining, enjoining, rendering illegal or otherwise prohibiting the consummation of the Merger, which makes the completion of the Merger and timing thereof uncertain. In addition, the Company and AvalonBay are entitled to terminate the Merger Agreement under certain circumstances.
Previous report
If the Merger is not completed, the Company’s ongoing business may be materially adversely affected and, without realizing any of the benefits of having completed the Merger, the Company will be subject to a number of risks, including the following:
Previous report
The market price of the Common Shares could decline;
Previous report
The Company could owe substantial termination fees to AvalonBay under certain circumstances;
Previous report
If the Merger Agreement is terminated and the Board of Trustees seeks another business combination, the Company’s shareholders cannot be certain that the Company will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms agreed to in the Merger Agreement;
Previous report
Time, resources, and costs committed by the Company’s management team to matters relating to the Merger could otherwise have been devoted to pursuing other beneficial opportunities for the Company;
Previous report
The Company may experience negative reactions from the financial markets or from its customers, suppliers, employees, labor unions or other business partners; and
Previous report
The Company will be required to pay its costs relating to the Merger, such as legal, accounting, financial advisory and printing fees, whether or not the Merger is completed.
Previous report
In addition, if the Merger is not completed, the Company could be subject to litigation related to any failure to complete the Merger or to any enforcement proceeding commenced against the Company to perform its obligations under the Merger Agreement, and whether or not any such litigation has any merit, the cost of defending such litigation may be significant. The materialization of any of these risks could adversely impact the Company’s ongoing business.
Previous report
Similarly, delays in the completion of the Merger could, among other things, result in additional transaction costs, loss of revenue, or other negative effects associated with uncertainty about completion of the Merger.
Previous report
The exchange ratio will not be adjusted in the event of any change in either the Company’s or AvalonBay’s stock price. As a result, the Merger Consideration payable to AvalonBay’s stockholders may be subject to change if the Company’s stock price fluctuates.
Previous report
Upon completion of the Merger, each eligible share of AvalonBay Common Stock will be converted into the right to receive 2.793 Common Shares, plus the right to receive cash in lieu of fractional Common Shares, if any, into which such AvalonBay Common Stock would have been converted. The exchange ratio will not be adjusted for changes in the market price of either Common Shares or AvalonBay Common Stock between the date the Merger Agreement was signed and completion of the Merger. Due to the fixed nature of the exchange ratio, fluctuations in the price of Common Shares will drive corresponding changes in the value of the Merger Consideration payable to each AvalonBay stockholder, and accordingly, at the time of the AvalonBay special meeting, AvalonBay stockholders will not know or be able to determine the market value of the consideration they will receive upon completion of the Merger. Factors influencing stock prices include:
Previous report
Market reaction to the Merger announcement and combined company prospects;
Previous report
Changes in the respective business, operations, assets, liabilities or financial outlook of either company;
Previous report
Investor sentiment and perceived likelihood of closing of the Merger;
Previous report
Economic conditions, geopolitical uncertainties, interest rates, regulatory developments and other factors generally affecting the market prices of Common Shares and AvalonBay Common Stock and the broader financial markets;
Previous report
Federal, state and local legislation, governmental regulation and legal developments in the businesses in which the Company and AvalonBay operate; and
Previous report
The price of Common Shares has fluctuated since the date the Merger Agreement was executed, and may continue to fluctuate through the date of each of the Company’s special meeting and the AvalonBay special meeting and the date the Merger is completed. For example, based on the range of closing prices of Common Shares during the period from May 20, 2026, the last trading day before the public announcement of the Merger Agreement, through July 24, 2026, the exchange ratio resulted in an implied value of the Merger Consideration ranging from a high of approximately $195.93 to a low of approximately $179.00 for each share of AvalonBay Common Stock. The actual market value of the Common Shares received by AvalonBay stockholders upon completion of the Merger may result in an implied value of the Merger Consideration outside this range.
Previous report
The Merger Agreement contains provisions that limit the Company’s ability to pursue alternatives to the Merger, which could discourage a potential competing acquirer of the Company from making an alternative proposal and, in specified circumstances, could require the Company to pay substantial termination fees to AvalonBay.
Previous report
The Merger Agreement contains certain provisions that restrict the Company’s ability to initiate, solicit, knowingly encourage or, subject to certain exceptions, engage in discussions or negotiations with respect to, or to approve or recommend, any alternative proposal. Further, even if the Board of Trustees withdraws or qualifies its recommendation with respect to the Share Issuance, the Company will still be required to submit the Share Issuance to a vote at its special meeting. In addition, AvalonBay generally has an opportunity to offer to modify the terms of the transactions contemplated by the Merger Agreement in response to any alternative proposal before the Board of Trustees may withdraw or qualify its recommendation with respect to the Share Issuance.
Previous report
In some circumstances, upon termination of the Merger Agreement in connection with an alternative proposal, the Company may be required to pay a termination fee of approximately $1.005 billion to AvalonBay. This provision could discourage a potential third-party acquirer or merger partner that might have an interest in acquiring all or a significant portion of the Company, or pursuing an alternative acquisition transaction, from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per-share value than the per-share value proposed to be received or realized in the Merger. In particular, a termination fee, if applicable, could result in a potential third-party acquirer or merger partner proposing to pay a lower price to the Company’s shareholders than it might otherwise have proposed to pay absent such a fee.
Previous report
If the Merger Agreement is terminated in accordance with its terms, and the Company determines to seek another business combination, the Company may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger Agreement.
Previous report
The Company is subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect the Company’s business and operations.
Previous report
In connection with the pendency of the Merger, some customers, suppliers and other persons with whom the Company has a business relationship have delayed or deferred or may delay or defer certain business decisions or terminate, change, or renegotiate their relationships with the Company as a result of the Merger, which could negatively affect the Company’s revenues, earnings, and cash flows, as well as the market price of the Common Shares, regardless of whether the Merger is completed.
Previous report
Under the terms of the Merger Agreement, the Company is subject to certain restrictions on the conduct of its business prior to completing the Merger, which may adversely affect its ability to execute certain of its business strategies, including the ability in certain cases to enter into or amend contracts, acquire or dispose of assets, incur indebtedness, incur capital expenditures, settle litigation, amend organizational documents, declare dividends, enter new business lines and invest in third parties. Such limitations could adversely affect the Company’s businesses and operations prior to the completion of the Merger.
Previous report
If the Merger is not consummated by the outside date, either the Company or AvalonBay may terminate the Merger Agreement.
Previous report
Either the Company or AvalonBay may terminate the Merger Agreement if the Merger has not been consummated by the outside date in the Merger Agreement. However, this termination right will not be available to a party if that party materially breached any of its obligations under the Merger Agreement and that breach resulted in the failure to consummate the Merger before such date. Any termination of the Merger Agreement may adversely affect the Company’s business, financial condition, results of operations and growth prospects.
Previous report
The Company’s shareholders will not have appraisal rights or dissenters’ rights in the Merger.
Previous report
Appraisal rights (also known as dissenters’ rights) are statutory rights that, if applicable under law, enable shareholders to
Previous report
dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as
Previous report
determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the
Previous report
Under Maryland law, dissenting shareholders may have, subject to satisfying certain procedures, the right to demand and receive
Previous report
payment of the fair value of their shares of stock in connection with certain transactions (often referred to as appraisal rights), including a proposed merger, share exchange or sale of substantially all of the assets of the corporation. Under Maryland Real Estate
Previous report
Investment Trust Law and the Company’s declaration of trust, the Company’s shareholders are not entitled to appraisal or dissenters’
Previous report
rights in connection with the Merger, the Share Issuance or any other transactions contemplated by the Merger Agreement.
Previous report
The Company’s shareholders will have a reduced ownership and voting interest after the Merger and will exercise less influence over the policies of the combined company than they now have on the policies of the Company.
Previous report
The Company’s shareholders presently have the right to vote in the election of the Board of Trustees and on other matters affecting the Company. Immediately after the Merger is completed, it is expected that the Company’s legacy shareholders will own approximately 49% of the combined company’s common shares outstanding and AvalonBay’s legacy stockholders will own approximately 51% of the combined company’s common shares outstanding.
Previous report
As a result, the Company’s current shareholders will have less influence on the policies of the combined company than they now have on the policies of the Company as an individual company.
Reworded paragraphs (42)
Previous wording
There have been no material changes to the risk factors that were discussed in Part I, Item 1A of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2025, except for the following:
Current wording
There have been no material changes to the risk factors that were discussed in Part I, Item 1A of AvalonBay’s Annual Report on Form 10-K for the year ended December 31, 2025 and in Part I, Item 1A of Equity Residential's and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2025, except for the following:
Previous wording
The Merger will result in changes to the Board of Trustees that may affect the strategy of the combined company as compared to that of the Company independently.
Current wording
The Merger resulted in changes to the Board of Trustees that may affect the strategy of the Company as compared to that of the Company prior to the Merger.
Previous wording
If the Merger is completed, the composition of the Board of Trustees will change. Immediately following the Merger, the Board of Trustees will consist of fourteen (14) members, seven (7) of whom are current trustees of the Company and seven (7) of whom are current directors of AvalonBay. The composition of the Board of Trustees may affect the business strategy and operating decisions of the combined company upon the completion of the Merger.
Current wording
Due to the Merger, the composition of the Board of Trustees has changed. The Board of Trustees currently consists of fourteen (14) members, seven (7) of whom were trustees of Equity Residential prior to the Merger and seven (7) of whom were directors of AvalonBay prior to the Merger. The composition of the Board of Trustees may affect the business strategy and operating decisions of the Company as compared to prior to the Merger.
Previous wording
Uncertainties associated with the Merger may cause a loss of management personnel and other key employees, and the Company and AvalonBay may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the future business and operations of the combined company or, in the event the Merger is not completed, the Company.
Current wording
Uncertainties associated with the Merger may cause a loss of management personnel and other key employees, and the Company may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the business and operations of the Company.
Previous wording
The Company and AvalonBay are dependent on the experience and industry knowledge of their respective management personnel and other key employees to execute their business plans. The combined company’s success after the completion of the Merger will depend in part upon the ability of the Company and AvalonBay to attract, motivate, and retain key management personnel and other key employees. Prior to completion of the Merger, current and prospective employees of the Company and AvalonBay may experience uncertainty about their roles within the combined company following the completion of the Merger, which may have an adverse effect on the ability of each of the Company and AvalonBay to attract, motivate or retain management personnel and other key employees. In addition, no assurance can be given that the combined company will be able to attract, motivate or retain management personnel and other key employees to the same extent that the Company and AvalonBay have previously been able to attract or retain their own employees. These same risks apply to the ability of the Company to retain its key management personnel and other key employees, in the event the Merger is not completed.
Current wording
The Company is dependent on the experience and industry knowledge of its management personnel and other key employees to execute its business plans. The Company’s success following the completion of the Merger depends in part upon the ability to attract, motivate, and retain key management personnel and other key employees. Current and prospective employees of the Company may experience uncertainty about their roles within the Company following the completion of the Merger, which may have an adverse effect on the ability of the Company to attract, motivate or retain management personnel and other key employees. In addition, no assurance can be given that the Company will be able to attract, motivate or retain management personnel and other key employees to the same extent that Equity Residential and AvalonBay were previously able to attract or retain their own employees.
Previous wording
The Company has been and may continue to be the target of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Merger from being completed, whether or not such lawsuits have any merit.
Current wording
The Company has been and may continue to be the target of securities class action and derivative lawsuits that could result in substantial costs, whether or not such lawsuits have any merit.
Previous wording
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against or otherwise resolving these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on the Company’s or the combined company’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, then that injunction may delay or prevent the Merger from being completed, or from being completed within the expected timeframe, which may adversely affect the Company’s business, financial position and results of operations.
Current wording
Securities class action lawsuits, derivative lawsuits and other regulatory actions are often brought against public companies that have completed merger transactions. Even if the lawsuits or regulatory matters are without merit, defending against, responding to or otherwise resolving them can result in substantial costs and divert management time and resources. An adverse judgment, settlement or regulatory penalty could result in monetary damages or fines, which could have a negative impact on the Company’s liquidity and financial condition.
Previous wording
Completion of the Merger may trigger change in control or other provisions in certain agreements to which Equity Residential, AvalonBay or their respective subsidiaries are a party, which may have an adverse impact on the combined company’s business and results of operations.
Current wording
Completion of the Merger has triggered change in control or other provisions in certain agreements to which Equity Residential, AvalonBay or their respective subsidiaries are a party, which may have an adverse impact on the Company’s business and results of operations.
Previous wording
The completion of the Merger may trigger change in control or other provisions in certain agreements to which Equity Residential, AvalonBay or their respective subsidiaries are a party. If Equity Residential and AvalonBay are unable to obtain certain consents or waivers from the applicable counterparties, the counterparties may exercise their rights and remedies under the applicable agreements, potentially resulting in defaults, accelerations of indebtedness, termination of the applicable agreements, or claims for monetary damages. Even if Equity Residential and AvalonBay are able to negotiate the required consents or waivers, the counterparties may require a fee for such consents or waivers or seek to renegotiate the agreements on terms less favorable to Equity Residential, AvalonBay or the combined company. Any of the foregoing or similar developments may have an adverse impact on the combined company’s business, financial condition and results of operations.
Current wording
The completion of the Merger has triggered change in control or other provisions in certain agreements to which Equity Residential, AvalonBay or their respective subsidiaries are a party. If the Company is unable to obtain any required consents or waivers from the applicable counterparties, the counterparties may exercise their rights and remedies under the applicable agreements, potentially resulting in defaults, accelerations of indebtedness, termination of the applicable agreements, or claims for monetary damages. Even if the Company is able to negotiate required consents or waivers, counterparties may require a fee for such consents or waivers or seek to renegotiate the agreements on terms less favorable to the Company. Any of the foregoing or similar developments may have an adverse impact on the Company’s business, financial condition and results of operations.
Previous wording
The combined company may be unable to successfully integrate the businesses of the Company and AvalonBay and realize the anticipated benefits of the Merger.
Current wording
The Company may be unable to successfully integrate the businesses of Equity Residential and AvalonBay and realize the anticipated benefits of the Merger.
Previous wording
The success of the Merger will depend, in part, on the combined company’s ability to successfully combine the businesses of the Company and AvalonBay, which currently operate as independent public companies, and realize the anticipated benefits, including synergies, cost savings, innovation, operational efficiencies and reduced cost of capital, from the combination. If the combined company is unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully, or at all, or may take longer to realize than expected and the value of the Common Shares may be harmed. Additionally, as a result of the Merger, rating agencies may take negative actions against the combined company’s credit ratings, which may increase the combined company’s financing costs, including in connection with any financing of the Merger.
Current wording
The success of the Merger will depend, in part, on the Company’s ability to successfully combine the businesses of Equity Residential and AvalonBay, which previously operated as independent public companies, and realize the anticipated benefits, including synergies, cost savings, innovation, operational efficiencies and reduced cost of capital, from the combination. If the Company is unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully, or at all, or may take longer to realize than expected and the value of the Common Shares may be harmed. Additionally, as a result of the Merger, rating agencies may take negative actions against the Company’s credit ratings, which may increase the Company’s financing costs.
Previous wording
The Merger involves the integration of the Company’s and AvalonBay’s businesses, which is a complex, costly, and time-consuming process. Neither the Company nor AvalonBay has previously completed a transaction comparable in size or scope to the Merger. The integration of the two companies may result in material challenges, including, without limitation:
Current wording
The Merger involves the integration of Equity Residential’s and AvalonBay’s businesses, which is a complex, costly, and time-consuming process. Neither Equity Residential nor AvalonBay has previously completed a transaction comparable in size or scope to the Merger. The integration of the two companies may result in material challenges, including, without limitation:
Previous wording
Issues in integrating information technology, operational, safety, communications and other systems, including maintaining cybersecurity and data privacy protections and avoiding security breaches, data loss, or service interruptions during the integration of the combined company’s systems;
Current wording
Issues in integrating information technology, operational, safety, communications and other systems, including maintaining cybersecurity and data privacy protections and avoiding security breaches, data loss, or service interruptions during the integration of the Company’s systems;
Previous wording
Legislative, regulatory and economic developments, including the level of new multifamily communities construction and development, government regulations and competition, that may restrict or adversely impact the combined company’s business operations;
Current wording
Legislative, regulatory and economic developments, including the level of new multifamily communities construction and development, government regulations and competition, that may restrict or adversely impact the Company’s business operations;
Previous wording
Expansion of rent control, rent stabilization, eviction moratoriums or other regulations that restrict the methods and strategies of the combined company’s business; and
Current wording
Expansion of rent control, rent stabilization, eviction moratoriums or other regulations that restrict the methods and strategies of the Company’s business; and
Previous wording
Unforeseen expenses or delays associated with the Merger.
Current wording
Unforeseen expenses or delays associated with the integration.
Previous wording
Many of these factors will be outside of the combined company’s control and any one of them could result in delays, increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially affect the combined company’s financial position, results of operations and cash flows.
Current wording
Many of these factors are outside of the Company’s control and any one of them could result in delays, increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially affect the Company’s financial position, results of operations and cash flows.
Previous wording
The Company and AvalonBay have operated, and until completion of the Merger will continue to operate, independently. The Company and AvalonBay have not yet determined the exact nature of how the businesses and operations of the two companies will be combined after the Merger. The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. In particular, the integration of two large multifamily REIT platforms—each with its own property management systems, technology platforms, employee benefit plans, and corporate cultures—presents significant operational challenges. Integration costs may exceed current estimates, and the combined company may incur significant one-time charges in connection with the integration.
Current wording
Equity Residential and AvalonBay previously operated independently. The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. In particular, the integration of two large multifamily REIT platforms—each with its own property management systems, technology platforms, employee benefit plans, and corporate cultures—presents significant operational challenges. Integration costs may exceed current estimates, and the Company may incur significant one-time charges in connection with the integration.
Previous wording
The future results of the combined company may be adversely impacted if the combined company does not effectively manage its expanded operations following the completion of the Merger.
Current wording
The future results of the Company may be adversely impacted if the Company does not effectively manage its expanded operations following the completion of the Merger.
Previous wording
Following the completion of the Merger, the size of the combined company’s business will be significantly larger than the current size of either the Company’s or AvalonBay’s respective businesses. The combined company’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement operational, managerial, financial and strategic initiatives that address not only the integration of two independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, synergies, cost savings and other benefits currently anticipated from the Merger.
Current wording
The size of the Company’s business is significantly larger than the pre-Merger size of either Equity Residential’s or AvalonBay’s respective businesses. The Company’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement operational, managerial, financial and strategic initiatives that address not only the integration of two independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity. There can be no assurances that the Company will be successful or that it will realize the expected operating efficiencies, synergies, cost savings and other benefits currently anticipated from the Merger.
Previous wording
The combined company is expected to incur substantial expenses related to the completion of the Merger and the integration of the Company and AvalonBay.
Current wording
The Company has incurred and is expected to continue to incur substantial expenses related to the completion of the Merger and the integration of Equity Residential and AvalonBay.
Previous wording
The combined company is expected to incur substantial expenses in connection with the completion of the Merger and the integration of the Company and AvalonBay. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. The substantial majority of these costs will be non-recurring expenses related to the Merger (including any financing of the Merger), facilities and systems consolidation costs. The combined company may incur additional costs to retain employees and/or maintain employee morale and to attract, motivate or retain management personnel and other key employees. The Company and AvalonBay will also incur transaction fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs. Additionally, as a result of the Merger, rating agencies may take negative actions with regard to the combined company’s credit ratings, which may increase the combined company’s financing costs, including in connection with any financing of the Merger. These incremental transaction and Merger-related costs may exceed the savings the combined company expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term, and in the event there are material unanticipated costs.
Current wording
The Company has incurred and is expected to continue to incur substantial expenses in connection with the completion of the Merger and the ongoing integration of Equity Residential and AvalonBay. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. The substantial majority of these costs will be non-recurring expenses related to the Merger, facilities and systems consolidation costs. The Company may incur additional costs to retain employees and/or maintain employee morale and to attract, motivate or retain management personnel and other key employees. The execution of integration plans may also lead to additional unanticipated costs. These incremental transaction and Merger-related costs may exceed the savings the Company expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term, and in the event there are material unanticipated costs.
Previous wording
In connection with the Merger, the combined company may refinance a significant amount of indebtedness and cannot guarantee that it will be able to obtain the necessary funds on favorable terms or at all.
Current wording
As a result of the Merger, the Company may refinance a significant amount of indebtedness and cannot guarantee that it will be able to obtain the necessary funds on favorable terms or at all.
Previous wording
In connection with the Merger, the combined company may seek to refinance some or all of the indebtedness of each of the Company and AvalonBay or, alternatively, seek any waivers or amendments that may be necessary or advisable to permit certain indebtedness to remain outstanding following the Merger. The combined company’s ability to obtain such refinancing, waivers or amendments will depend on, among other factors, prevailing market conditions and other factors beyond the control of the combined company. The Company cannot assure you that the combined company will be able to obtain financing on terms acceptable to the combined company or at all, and any such failure could materially adversely affect the operations and financial conditions of the combined company. If the combined company is not able to obtain such refinancing, waivers or amendments, it may be required to repay some or all of such indebtedness upon consummation of the Merger. Under such circumstances, the combined company may not have sufficient resources to repay such indebtedness. Completion of the Merger is not conditioned on completing such financing transactions.
Current wording
As a result of the Merger, the Company may seek to refinance some or all of the indebtedness of the Company or, alternatively, seek any waivers or amendments that may be necessary or advisable to permit certain indebtedness to remain outstanding. The Company’s ability to obtain such refinancing, waivers or amendments will depend on, among other factors, prevailing market conditions and other factors beyond the control of the Company. The Company cannot assure you that the Company will be able to obtain financing on terms acceptable to the Company or at all, and any such failure could materially adversely affect the operations and financial condition of the Company. If the Company is not able to obtain such refinancing, waivers or amendments, it may be required to repay some or all of such indebtedness, and under such circumstances, the Company may not have sufficient resources to repay such indebtedness.
Previous wording
The combined company will have significantly greater indebtedness than the Company on a standalone basis, which may adversely affect the combined company’s financial flexibility and increase its exposure to interest rate risk.
Current wording
The Company has significantly greater indebtedness than the Company had prior to the Merger, which may adversely affect the Company’s financial flexibility and increase its exposure to interest rate risk.
Previous wording
The significantly increased level of indebtedness of the combined company following the closing of the Merger may limit the combined company’s financial flexibility, increase its exposure to interest rate fluctuations, and require a greater portion of the combined company’s cash flows to be dedicated to debt service. A significant portion of the combined company’s indebtedness may bear interest at variable rates, and increases in interest rates could materially increase the combined company’s interest expense and adversely affect its financial condition and results of operations.
Current wording
The significantly increased level of indebtedness of the Company following the closing of the Merger may limit the Company’s financial flexibility, increase its exposure to interest rate fluctuations, and require a greater portion of the Company’s cash flows to be dedicated to debt service. A significant portion of the Company’s indebtedness may bear interest at variable rates, and increases in interest rates could materially increase the Company’s interest expense and adversely affect its financial condition and results of operations.
Previous wording
Following the Merger, the combined company’s indebtedness, under certain circumstances, contains restrictions and limitations that could significantly impact the combined company’s ability to operate its business and increase its borrowing costs.
Current wording
The Company’s indebtedness, under certain circumstances, contains restrictions and limitations that could significantly impact the Company’s ability to operate its business and increase its borrowing costs.
Previous wording
Following the Merger, the combined company’s consolidated indebtedness may have the effect of, among other things, increasing borrowing costs. In addition, the amount of cash required to service the indebtedness levels will be greater than the amount of cash flows required to service the indebtedness of Equity Residential and AvalonBay individually prior to completion of the Merger. The level of indebtedness of the combined company following the Merger could also reduce or limit dividend payments, share repurchases, and other activities and may create competitive disadvantages relative to other companies with lower debt levels. The combined company may be required to raise additional financing for working capital, capital expenditures, acquisitions, or other general corporate purposes. Following the Merger, the combined company’s ability to arrange additional financing or refinancing will depend on, among other factors, its financial condition and performance, as well as prevailing market conditions, the terms of third-party debt financing incurred in connection with the consummation of the Merger (if any), and other factors beyond its control. There can be no assurance that the combined company will be able to obtain additional financing or arrange refinancing on terms acceptable to it or at all, and any such failure could materially adversely affect its operations and financial condition.
Current wording
The Company’s consolidated indebtedness may have the effect of, among other things, increasing borrowing costs. In addition, the amount of cash required to service the indebtedness levels is greater than the amount of cash flows required to service the indebtedness of Equity Residential and AvalonBay individually prior to completion of the Merger. The level of indebtedness of the Company could also reduce or limit dividend payments, share repurchases, and other activities and may create competitive disadvantages relative to other companies with lower debt levels. The Company may be required to raise additional financing for working capital, capital expenditures, acquisitions, or other general corporate purposes. The Company’s ability to arrange additional financing or refinancing will depend on, among other factors, its financial condition and performance, as well as prevailing market conditions, the terms of third-party debt financing, and other factors beyond its control. There can be no assurance that the Company will be able to obtain additional financing or arrange refinancing on terms acceptable to it or at all, and any such failure could materially adversely affect its operations and financial condition.
Previous wording
Additionally, the combined company expects that the agreements that will govern the terms of its indebtedness will contain a number of restrictive covenants (including, without limitation, financial maintenance covenants) that impose significant operating and financial restrictions on the combined company and may limit its ability to engage in acts that may be in its long-term best interest. Moreover, the combined company’s ability to satisfy any financial maintenance covenants may be affected by events beyond its control and, as a result, it cannot provide assurance that it will be able to satisfy any such covenants.
Current wording
Additionally, the agreements governing the terms of the Company’s indebtedness contain a number of restrictive covenants (including, without limitation, financial maintenance covenants) that impose significant operating and financial restrictions on the Company and may limit its ability to engage in acts that may be in its long-term best interest. Moreover, the Company’s ability to satisfy any financial maintenance covenants may be affected by events beyond its control and, as a result, it cannot provide assurance that it will be able to satisfy any such covenants.
Previous wording
Following the Merger, a breach of the covenants under the agreements that will govern the terms of any of the combined company’s indebtedness could result in a default or an event of default under the applicable indebtedness agreement. Such an event of default or a default that matures into an event of default may allow the applicable creditors to foreclose on any collateral for such debt, accelerate the related debt, and/or terminate any related commitments to extend further credit and may result in a default or an event of default under or the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event debtholders accelerate the repayment of the combined company’s indebtedness, the combined company may not have sufficient resources to repay such indebtedness.
Current wording
A breach of the covenants under the agreements governing the terms of any of the Company’s indebtedness could result in a default or an event of default under the applicable indebtedness agreement. Such an event of default or a default that matures into an event of default may allow the applicable creditors to foreclose on any collateral for such debt, accelerate the related debt, and/or terminate any related commitments to extend further credit and may result in a default or an event of default under or the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event debtholders accelerate the repayment of the Company’s indebtedness, the Company may not have sufficient resources to repay such indebtedness.
Previous wording
Following the Merger, the combined company cannot assure you that it will be able to pay dividends at or above the rate currently paid by the Company or AvalonBay.
Current wording
The Company cannot assure you that it will be able to pay dividends at or above the rate previously paid by the Company or AvalonBay.
Previous wording
Following the Merger, the combined company is expected to pay an initial annualized dividend equivalent to the Company’s existing dividend per share, which is higher than AvalonBay’s current dividend yield per share. However, there can be no guarantee that shareholders of the combined company will receive dividends at the same rate, or any rate, that they received as shareholders of the Company or stockholders of AvalonBay prior to the Merger. Dividend payments are subject to the discretion of the Board of Trustees, which reserves the right to change the combined company’s dividend policy at any time and for any reason, including as a result of the other risk factors discussed in this section.
Current wording
The Company declared a dividend of $0.7025 per Common Share for the third quarter of 2026 ($2.81 on an annualized basis), consistent with the initial expected annualized dividend announced at the closing of the Merger, which is higher than AvalonBay’s pre-Merger annualized dividend per share on an Exchange Ratio-adjusted basis. However, there can be no guarantee that shareholders of the Company will receive dividends at the same rate, or any rate, that they received as shareholders of the Company or stockholders of AvalonBay prior to the Merger. Dividend payments are subject to the discretion of the Board of Trustees, which reserves the right to change the Company’s dividend policy at any time and for any reason, including as a result of the other risk factors discussed in this section.
Previous wording
The combined company may incur adverse tax consequences if the Company or AvalonBay has failed or fails to qualify as a REIT.
Current wording
The Company may incur adverse tax consequences if the Company or AvalonBay has failed or fails to qualify as a REIT.
Previous wording
Each of the Company and AvalonBay has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and intends to continue to do so through the time of the Merger. The combined company intends to continue operating in such a manner following the Merger. Neither the Company nor AvalonBay has requested or plans to request a ruling from the U.S. Internal Revenue Service (the “IRS”) that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of the Company or AvalonBay may affect each company’s ability to qualify as a REIT. In order to qualify as a REIT, each of the Company and AvalonBay must satisfy a number of requirements, including requirements regarding the ownership of its stock and the composition of its gross income and assets. Also, a REIT must make distributions to stockholders aggregating annually at least 90% of its net taxable income, excluding any net capital gains.
Current wording
Each of Equity Residential and AvalonBay has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and the Company intends to continue operating in such a manner. Neither the Company nor AvalonBay has requested or plans to request a ruling from the U.S. Internal Revenue Service (the “IRS”) that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of the Company may affect its ability to qualify as a REIT. In order to qualify as a REIT, each of Equity Residential and AvalonBay must have satisfied, and the Company must continue to satisfy, a number of requirements, including requirements regarding the ownership of its stock and the composition of its gross income and assets. Also, a REIT must make distributions to shareholders aggregating annually at least 90% of its net taxable income, excluding any net capital gains.
Previous wording
The closing of the Merger is conditioned on receipt by the Company of an opinion from Goodwin Procter LLP (or other nationally recognized tax counsel reasonably acceptable to the Company), dated as of the closing date of the Merger, substantially in the form attached to the Merger Agreement, to the effect that, beginning with its taxable year ended December 31, 1994 and through its taxable year ending immediately prior to the Effective Time, AvalonBay has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and receipt by AvalonBay of an opinion from DLA Piper LLP (US) (or other nationally recognized tax counsel as may be reasonably acceptable to AvalonBay), dated as of the closing date of the Merger, substantially in the form attached to the Merger Agreement, to the effect that, beginning with its taxable year ended December 31, 1992, the Company has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and the Company’s proposed method of organization and operation will enable it to continue to satisfy the requirements for qualification and taxation as a REIT under the Code for its taxable year which includes the closing date of the Merger and thereafter. The foregoing REIT opinions, however, will be based on the factual representations provided by the Company and AvalonBay to counsel and limited by the exceptions, assumptions and qualifications set forth therein, and if any such representations are or become inaccurate or incomplete, such opinions may be invalid and the conclusions reached therein could be jeopardized. The foregoing REIT opinions are not a guarantee that the Company or AvalonBay, in fact, has qualified, or, in the case of the combined company, will continue to qualify, as a REIT, nor are such opinions binding on the IRS and there can be no assurance that the IRS will not take a contrary position or that such position would not be sustained.
Current wording
In connection with the closing of the Merger, Equity Residential received an opinion from Goodwin Procter LLP, dated as of the closing date of the Merger, substantially in the form attached to the Merger Agreement, to the effect that, beginning with its taxable year ended December 31, 1994 and through its taxable year ending immediately prior to the effective time, AvalonBay was organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and AvalonBay received an opinion from DLA Piper LLP (US), dated as of the closing date of the Merger, substantially in the form attached to the Merger Agreement, to the effect that, beginning with its taxable year ended December 31, 1992, Equity Residential was organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and the Company’s proposed method of organization and operation would enable it to continue to satisfy the requirements for qualification and taxation as a REIT under the Code for its taxable year which includes the closing date of the Merger and thereafter. The foregoing REIT opinions, however, were based on the factual representations provided by Equity Residential and AvalonBay to counsel and limited by the exceptions, assumptions and qualifications set forth therein, and if any such representations were or become inaccurate or incomplete, such opinions may be invalid and the conclusions reached therein could be jeopardized. The foregoing REIT opinions are not a guarantee that Equity Residential or AvalonBay, in fact, has qualified, or, in the case of the Company, will continue to qualify, as a REIT, nor are such opinions binding on the IRS and there can be no assurance that the IRS will not take a contrary position or that such position would not be sustained.
Previous wording
If, notwithstanding the opinions described above, the Company (or, following the Merger, the combined company) loses its REIT status, or is determined to have failed to qualify as a REIT in a prior year, it will face serious tax consequences that would substantially reduce the funds available for distribution to its shareholders, because:
Current wording
If, notwithstanding the opinions described above, the Company loses its REIT status, or either company is determined to have failed to qualify as a REIT in a prior year, it will face serious tax consequences that would substantially reduce the funds available for distribution to its shareholders, because:
Previous wording
Even if the Company (or, following the Merger, the combined company) retains its REIT status, if AvalonBay is determined to have lost its REIT status for a taxable year ending on or before the Merger, AvalonBay would be subject to adverse tax consequences similar to those described above. This could substantially reduce the combined company’s funds available for distributions to shareholders, because, assuming that the combined company otherwise maintains its REIT qualification:
Current wording
Even if the Company retains its REIT status, if AvalonBay is determined to have lost its REIT status for a taxable year ending on or before the Merger, AvalonBay would be subject to adverse tax consequences similar to those described above. This could substantially reduce the Company’s funds available for distributions to shareholders, because, assuming that the Company otherwise maintains its REIT qualification:
Previous wording
The combined company generally would be subject to U.S. federal corporate level income tax with respect to the built-in gain on each asset of AvalonBay existing at the time of the Merger if the combined company were to dispose of the AvalonBay asset during the five-year period following the Merger;
Current wording
The Company generally would be subject to U.S. federal corporate level income tax with respect to the built-in gain on each asset of AvalonBay existing at the time of the Merger if the Company were to dispose of the AvalonBay asset during the five-year period following the Merger;
Previous wording
The combined company would succeed to any earnings and profits accumulated by AvalonBay for taxable periods that it did not qualify as a REIT, and the combined company would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits (or if the combined company does not timely distribute those earnings and profits, the combined company could fail to qualify as a REIT); and
Current wording
The Company would succeed to any earnings and profits accumulated by AvalonBay for taxable periods that it did not qualify as a REIT, and the Company would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits (or if the Company does not timely distribute those earnings and profits, the Company could fail to qualify as a REIT); and
Previous wording
If AvalonBay incurred any unpaid tax liabilities, including penalties and interest, prior to the Merger, those tax liabilities would be transferred to the combined company as a result of the Merger.
Current wording
If AvalonBay incurred any unpaid tax liabilities, including penalties and interest, prior to the Merger, those tax liabilities would be transferred to the Company as a result of the Merger.
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Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other factors beyond the control of the Company and AvalonBay.