CAMDEN PROPERTY TRUST (CPT)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report. Historical results and trends which might appear in the consolidated financial statements should not be interpreted as being indicative of future operations.

Discussion of our year-to-date comparisons between 2024 and 2023 is presented below. Year-to-date comparisons between 2023 and 2022 can be found in "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

We consider portions of this report to be "forward-looking" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act, both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions, or other items relating to the future; forward-looking statements are not guarantees of future performance, results, or events. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance our expectations will be achieved. Any statements contained herein which are not statements of historical fact should be deemed forward-looking statements. Reliance should not be placed on these forward-looking statements as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.

Factors which may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include, but are not limited to, the following:

•Volatility in capital and credit markets, or other unfavorable changes in economic conditions, either nationally or regionally in one or more of the markets in which we operate, could adversely impact us;

•Short-term leases could expose us to the effects of declining market rents;

•We could be negatively impacted by the risks associated with land holdings and related activities;

•Development, repositions, redevelopment and construction risks could impact our profitability;

•Our acquisition strategy may not produce the cash flows expected;

•Changes in rent control or rent stabilization laws and regulations could adversely affect our operations and property values;

•Failure to qualify as a REIT could have adverse consequences;

•Tax laws may continue to change at any time and any such legislative or other actions could have a negative effect on us;

•A cybersecurity incident and other technology disruptions could negatively impact our business;

•We have significant debt, which could have adverse consequences;

•Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders;

•Issuances of additional debt may adversely impact our financial condition;

•We may be unable to renew, repay, or refinance our outstanding debt;

•Rising interest rates could increase our borrowing costs, lower the value of our real estate, and decrease our share price, leading investors to seek higher yields through other investments;

•Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets;

•Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders;

•The form, timing, and amount of dividend distributions in future periods may vary and be impacted by economic and other considerations;

•Litigation risks could affect our business;

•Damage from catastrophic weather and other natural events could result in losses;

•Competition could adversely affect our ability to acquire properties; and

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•We could be adversely impacted due to our share price fluctuations.

These forward-looking statements represent our estimates and assumptions as of the date of this report, and we assume no obligation to update or supplement forward-looking statements because of subsequent events.

Executive Summary

We are primarily engaged in the ownership, management, development, reposition, redevelopment, acquisition, and construction of multifamily apartment communities. Overall, we focus on investing in markets characterized by high-growth economic conditions, strong employment, and attractive quality of life which we believe leads to higher demand and retention of our apartments. As of December 31, 2024, we owned interests in, operated, or were developing 177 multifamily properties comprised of 59,996 apartment homes across the United States as detailed in the Property Portfolio table below. In addition, we own other land holdings which we may develop into multifamily apartment communities in the future.

Business Environment and Current Outlook

Our results for the year ended December 31, 2024, reflect an increase in same store revenues of approximately 1.3% as compared to the same period in 2023. The increase was due to higher rental income as a result of higher average rental rates and lower uncollectible revenue, which we believe was primarily attributable to job growth, favorable demographics with a higher propensity to rent versus buy, and continued demand for multifamily housing in our markets.

We believe the levels of new multifamily supply in the submarkets and asset classes in which we operate will continue to be elevated into 2025 but should be met with continued demand to absorb these new deliveries. However, if this were to change or other economic conditions were to worsen, our operating results could be adversely affected.

Consolidated Results

Net income attributable to common shareholders was $163.3 million and $403.3 million for the years ended December 31, 2024 and December 31, 2023, respectively. The decrease during the year ended December 31, 2024 as compared to the same period in 2023 was primarily due to recognizing a higher gain on sale of two operating properties in 2023 of $225.4 million as compared to recognizing a gain on sale of one operating property in 2024 of $43.8 million. The decrease was also due to recognizing a $41.0 million impairment associated with land development activities in 2024 and no impairments recognized in 2023. See further discussion of our 2024 operations as compared to 2023 in "Results of Operations," below.

Construction and Development Activity

At December 31, 2024, we had a total of three projects under construction to be comprised of 1,138 apartment homes. Initial occupancies of these three projects are currently scheduled to occur within the next two years. As of December 31, 2024, we estimated the total additional cost to complete the construction of these three properties is approximately $243.6 million.

In the third quarter of 2024, we stopped development activities for the foreseeable future on four of our developments and recorded approximately $41.0 million of impairment charges on three of these land parcels. We review our long-lived assets on an annual basis or whenever events or circumstances indicated the carrying amount of an asset may not be recoverable and our impairment evaluations take into consideration the current and anticipated economic climate. We currently have three other land parcels held for future development we plan to develop, and the commencement of future developments may be impacted by macroeconomic issues, multifamily market conditions, and other factors. We will continue to evaluate future development starts based on market, economic, and capital market conditions. There can be no assurance we will not have impairments charges in the future.

Disposition

In February 2024, we sold one operating property comprised of 592 apartment homes located in Atlanta, Georgia, for approximately $115.0 million and recognized a gain of approximately $43.8 million.

Capital Market Highlights

In January 2024, we issued $400.0 million of 4.90% senior unsecured notes due January 15, 2034. We utilized a portion of the net proceeds from these notes to repay the outstanding balance on our $300.0 million, 6.21% unsecured term loan due in August 2024. As a result of this early repayment of the $300.0 million unsecured term loan, we expensed approximately $0.9 million of unamortized loan costs, which are reflected in the loss on early retirement of debt in our consolidated statements of income and comprehensive income.

In September 2024, we extended the maturity date of our $40.0 million unsecured floating rate term loan with an unrelated third party from September 2024 to September 2026.

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During the year ended December 31, 2024, we utilized cash on hand and our unsecured revolving credit facility to repay unsecured notes payable totaling $500.0 million, plus accrued interest.

During the year ended December 31, 2024, we repurchased 515,974 common shares for approximately $50.0 million at an average price of $96.88 per share under our $500.0 million share repurchase plan. As of the date of this filing, the remaining dollar value of our common equity securities authorized to be repurchased under this plan was approximately $450.0 million.

Subsequent Events

In January 2025, we purchased one operating property comprised of 352 homes located in the Austin, Texas metropolitan area for approximately $67.7 million.

Future Outlook

Subject to market conditions, we intend to continue to seek opportunities to acquire operating communities, develop new communities, and to redevelop and reposition existing communities. We also intend to evaluate our operating property and land development portfolios and plan to continue our practice of selective dispositions as market conditions warrant and opportunities arise. We expect to maintain a strong balance sheet and preserve our financial flexibility by continuing to focus on our core fundamentals which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our short-term and long-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured revolving credit facility, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM programs, other unsecured borrowings, or secured mortgages.

As of December 31, 2024, we had approximately $1.0 billion available under our $1.2 billion unsecured revolving credit facility and do not have any debt maturing until April 2026. As of December 31, 2024, and through the date of this filing, we also had common shares having an aggregate offering price of up to $500.0 million remaining available for sale under our 2023 ATM program. We believe we are well-positioned with a strong balance sheet and sufficient liquidity to fund new development, redevelopment, and other capital funding requirements. We will, however, continue to assess and take further actions we believe are prudent to meet our objectives and capital requirements.

Property Portfolio

Our multifamily property portfolio is summarized as follows:

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Stabilized Communities

We generally consider a property stabilized once it reaches 90% occupancy. During the year ended December 31, 2024, we completed the construction of 387 homes at Camden NoDa in Charlotte, North Carolina and achieved stabilization during the quarter ended March 31, 2024.

Completed Construction in Lease-Up

At December 31, 2024, there were three completed operating properties in lease-up as follows:

(1)Excludes leasing costs, which are expensed as incurred.

Properties Under Development and Land

Our consolidated balance sheet at December 31, 2024 included approximately $401.5 million related to properties under development and land. Of this amount, approximately $211.4 million related to our projects currently under construction. In addition, we had approximately $190.1 million primarily invested in land held for future development and land holdings, which included approximately $132.3 million related to land held for future development and $57.8 million invested in land which we may develop in the future.

Properties Under Construction. At December 31, 2024, we had three properties in various stages of construction as follows:

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Development Pipeline Communities. At December 31, 2024, we had the following communities undergoing development activities:

(1)Represents our estimate of total costs we expect to incur on these projects. However, forward-looking statements are not guarantees of future performance, results, or events. Although we believe these expectations are based upon reasonable assumptions, future events rarely develop exactly as forecasted and estimates routinely require adjustment.

Land Holdings. At December 31, 2024, we also had four undeveloped land tracts with a valuation of approximately $57.8 million.

Geographic Diversification

At December 31, 2024 and 2023, the book value of our real estate assets by various markets, excluding depreciation, were as follows:

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Results of Operations

Changes in revenues and expenses related to our operating properties from period-to-period are due primarily to the performance of stabilized properties in the portfolio, the lease-up of newly-constructed properties, acquisitions, and dispositions.

Management considers property net operating income ("NOI") to be an appropriate supplemental measure of operating performance to net income because it reflects the operating performance of our communities without an allocation of corporate level property management overhead or general and administrative costs. NOI is defined as total property income less total property operating expenses. NOI is further detailed in the Property-Level NOI table as seen below. NOI is not defined by accounting principles generally accepted in the United States of America ("GAAP") and should not be considered an alternative to net income as an indication of our operating performance, should not be considered an alternative to net cash from operating activities as a measure of liquidity, and should not be considered an indication of cash available to fund cash needs. Additionally, NOI as disclosed by other REITs may not be comparable to our calculation.

Reconciliations of net income to NOI for the year ended December 31, 2024 and 2023 are as follows:

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Property-Level NOI (1)

Property NOI, as reconciled above, is detailed further into the categories below for the year ended December 31, 2024 as compared to 2023:

* Not a meaningful percentage.

(1)    For 2024, same store communities are communities we owned and were stabilized since January 1, 2023, excluding communities under redevelopment and properties held for sale. Non-same store communities are stabilized communities not owned or stabilized since January 1, 2023, including communities under redevelopment and excluding properties held for sale. We define communities under redevelopment as communities with capital expenditures that improve a community's cash flow and competitive position through extensive unit, exterior building, common area, and amenity upgrades. Management believes same store information is useful as it allows both management and investors to determine financial results over a particular period for the same set of communities. Development and lease-up communities are non-stabilized communities we have developed since January 1, 2023, excluding properties held for sale. Dispositions/other includes those communities disposed of or held for sale which are not classified as discontinued operations, non-multifamily rental properties, expenses related to land holdings not under active development, and other miscellaneous revenues and expenses, including net below market leases, casualty-related expenses net of recoveries, and severance related costs.

Same Store Analysis

Same store property NOI increased approximately $9.9 million for the year ended December 31, 2024 as compared to the same period in 2023. The increase was due to an increase of approximately $19.3 million in same store property revenues, partially offset by an increase of approximately $9.4 million in same store property expenses, for the year ended December 31, 2024, as compared to the same period in 2023.

The $19.3 million increase in same store property revenues for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to higher rental revenue due to higher average rental rates of approximately $9.0 million, lower uncollectible revenue of approximately $6.5 million, and higher other rental income of approximately $1.6 million. The increase was also due to approximately $2.1 million of higher income from our utility and ancillary income programs.

The $9.4 million increase in same store property expenses for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to higher salaries and benefits of approximately $5.7 million, higher utilities expense and expenses associated with our ancillary programs of approximately $4.8 million, higher marketing, leasing, and other expenses of approximately $2.4 million, higher repairs and maintenance expense of approximately $2.3 million, and higher property general and administrative expenses of approximately $0.9 million. The increase was partially offset by lower property insurance expense of approximately $6.4 million and lower real estate taxes of approximately $0.3 million.

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Non-same Store and Development and Lease-up Analysis

Property NOI from non-same store and development and lease-up communities increased $10.8 million for the year ended December 31, 2024, as compared to the same period in 2023. The increase was primarily due to an increase from non-same store communities of approximately $6.8 million and an increase from development and lease-up communities of approximately $4.0 million for the year ended December 31, 2024, as compared to the same period in 2023. The increase in property NOI from our non-same store communities was primarily due to the stabilization of two operating properties in 2023 and one operating property in 2024. The increase in property NOI from our development and lease-up communities was primarily due to the timing of three development communities under lease-up, one of which completed construction during the second quarter of 2024 and two of which completed construction during the fourth quarter of 2024.

The following table details the changes, described above, relating to non-same store and development and lease-up NOI:

Dispositions/Other Property Analysis

Dispositions/other property NOI decreased approximately $28.8 million for the year ended December 31, 2024 as compared to the same period in 2023. The decrease was comprised of lower NOI related to dispositions of approximately $24.3 million due to the dispositions of one operating property in each of June 2023, December 2023, and February 2024. The decrease was also due to lower other property NOI of approximately $4.5 million primarily due to higher storm-related insurance expenses of approximately $5.6 million, partially offset by approximately $1.1 million of higher revenues related to business interruption proceeds for the year ended December 31, 2024 as compared to the same period in 2023.

Non-Property Income

*Not a meaningful percentage.

Fee and asset management income from construction and development activities at our third-party construction projects increased approximately $3.7 million for the year ended December 31, 2024 as compared to 2023. The increase was primarily related to higher fees earned on third-party construction projects due to higher activity during 2024 as compared to 2023.

Interest and other income increased approximately $3.5 million for the year ended December 31, 2024, as compared to 2023. The increase was primarily due to higher investment interest income earned due to having higher average cash balances in 2024 as compared to 2023.

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Our deferred compensation plans recognized income of approximately $12.6 million and $15.4 million in 2024 and 2023, respectively. The changes were related to the performance of the investments held in deferred compensation plans for participants and were directly offset by the expense related to these plans, as discussed below.

Other Expenses

Property management expenses, which primarily represent regional supervision and accounting costs related to property operations, increased approximately $4.6 million for the year ended December 31, 2024 as compared to 2023. The increase was primarily related to higher salary, benefits, and incentive compensation costs, and higher advocacy contributions. Property management expenses were 2.5% and 2.2% of total property revenues for the years ended December 31, 2024 and 2023, respectively.

Fee and asset management expense from construction and development activities at our third-party projects increased approximately $0.5 million for the year ended December 31, 2024 as compared to 2023 primarily due to the increase in third-party construction activity in 2024.

General and administrative expenses increased approximately $9.9 million for the year ended December 31, 2024 as compared to 2023. The increase was primarily related to higher salaries, benefits, and incentive compensation costs, higher legal expenses, and higher abandoned acquisition and development pursuit costs. Excluding income on deferred compensation plans, general and administrative expenses were 4.7% and 4.0% of total revenues for the years ended December 31, 2024 and 2023, respectively.

Interest expense decreased approximately $3.6 million for the year ended December 31, 2024 as compared to 2023. The decrease was primarily due to the repayments of a $300 million, 6.21% unsecured term loan and $250.0 million, 4.36% senior unsecured notes in January 2024, and the repayment of a $250 million, 3.68% senior unsecured notes in September 2024, and lower interest expense recognized on our unsecured revolving credit facility resulting from lower average balances outstanding during the year ended December 31, 2024 as compared to the same period in 2023. The decrease was also due to the early retirement of $185.2 million of secured variable rate notes in May 2023 and the repayment of $250 million, 5.07% senior unsecured notes in June 2023. The decrease was partially offset by increases in interest expense due to the issuance of $500 million senior unsecured notes in November 2023, the issuance of $400 million senior unsecured notes in January 2024 and decreases in capitalized interest expense primarily due to having lower average balances in assets under construction during the year ended December 31, 2024 as compared to the same period in 2023.

Depreciation and amortization expense increased approximately $7.2 million for the year ended December 31, 2024 as compared to 2023. The increase was primarily due to the completion of apartment homes in our development pipeline and the completion of capitalized improvements during 2023 and 2024. The increase was partially offset by the disposition of one operating property in each of June 2023, December 2023, and February 2024.

Our deferred compensation plans incurred an expense of approximately $12.6 million and $15.4 million in 2024 and 2023, respectively. The changes were related to the performance of the investments held in deferred compensation plans for participants and were directly offset by the income related to these plans, as discussed in the Non-Property Income section above.

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Other

The impairment expense associated with land development activities for the year ended December 31, 2024 of approximately $41.0 million related to three projects we have put on hold. These impairment charges represent the difference between each parcel's estimated fair value and the carrying value, which included the original purchase price and other capitalized development costs.

The $0.9 million loss on early retirement of debt during the year ended December 31, 2024 was due to the write-off of unamortized loan costs related to the early retirement of our $300 million unsecured term loan in January 2024, which was scheduled to mature in August 2024. The $2.5 million loss on early retirement of debt during the year ended December 31, 2023 was due to the early repayment of our $185.2 million secured variable rate notes due in 2024 and 2026, and consisted of approximately $1.7 million of prepayment penalties and fees and approximately $0.8 million of unamortized fair value adjustments.

The $43.8 million gain on sale for the year ended December 31, 2024 was due to the disposition of one operating property located in Atlanta, Georgia in February 2024. The $225.4 million gain on sale for the year ended December 31, 2023 was primarily due to the disposition of two operating properties located in Costa Mesa, California.

Income tax expense decreased approximately $0.7 million for the year ended December 31, 2024 as compared to the same period in 2023. The decrease was primarily due to lower state income and franchise income taxes relating to recent tax legislation changes in certain state jurisdictions, offset by an increase in taxable income due to higher third-party construction activities within a taxable REIT subsidiary.

Funds from Operations ("FFO"), Core FFO, and Core Adjusted FFO ("Core AFFO")

Management considers FFO, Core FFO, and Core AFFO to be appropriate supplementary measures of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as net income (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and adjustments for unconsolidated joint ventures to reflect FFO on the same basis. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains and losses on dispositions of real estate, impairment write-downs of certain real estate assets, and depreciation, FFO can assist in the comparison of the operating performance of a company's real estate investments between periods or to different companies.

Core FFO represents FFO as further adjusted for items not considered part of our core business operations. We consider Core FFO to be a helpful supplemental measure of operating performance as it excludes not only depreciation expense of real estate assets, but it also excludes certain items which, by nature, are not comparable period over period and therefore tends to obscure actual operating performance. Our definition of Core FFO may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.

Core AFFO is calculated utilizing Core FFO less recurring capitalized expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. We also consider Core AFFO to be a useful supplemental measure because it is frequently used by analysts and investors to evaluate a REIT's operating performance between periods or to different companies. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.

To facilitate a clear understanding of our consolidated historical operating results, we believe FFO, Core FFO, and Core AFFO should be examined in conjunction with net income attributable to common shareholders as presented in the consolidated statements of income and comprehensive income and data included elsewhere in this report. FFO, Core FFO, and Core AFFO are not defined by GAAP and should not be considered alternatives to net income attributable to common shareholders as an indication of our operating performance. Additionally, FFO, Core FFO, and Core AFFO as disclosed by other REITs may not be comparable to our calculation.

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Reconciliations of net income attributable to common shareholders to FFO, Core FFO, and Core AFFO for the years ended December 31, 2024 and 2023 are as follows:

(1) For the year ended December 31, 2023, activity relates to proceeds from an earn-out from a previously sold technology investment.

Liquidity and Capital Resources

Financial Condition and Sources of Liquidity

We intend to maintain a strong balance sheet and preserve our financial flexibility, which we believe should enhance our ability to identify and capitalize on investment opportunities as they become available. We intend to maintain what management believes is a conservative capital structure by:

•extending and sequencing the maturity dates of our debt where practicable;

•managing interest rate exposure using what management believes to be prudent levels of fixed and floating rate debt;

•maintaining what management believes to be conservative coverage ratios; and

•using what management believes to be a prudent combination of debt and equity.

Our interest expense coverage ratio, net of capitalized interest, was approximately 6.9 and 6.8 times for the years ended December 31, 2024 and 2023, respectively. This ratio is a method for calculating the amount of operating cash flows available to cover interest expense and is calculated by dividing interest expense for the period into the sum of property revenues and expenses, non-property income, and other expenses after adding back depreciation, amortization, and interest expense. Approximately 89.9% and 89.8% of our properties were unencumbered at December 31, 2024 and 2023, respectively. Our weighted average maturity of debt was approximately 6.2 years at December 31, 2024.

We also intend to strengthen our capital and liquidity positions by continuing to focus on our core fundamentals, which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.

Our primary source of liquidity is cash flows generated from operations. Other sources may include one or more of the following: availability under our unsecured revolving credit facility, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2023 ATM program, and other

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unsecured borrowings or secured mortgages. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash needs over the next 12 months including:

•normal recurring operating expenses;

•current debt service requirements, including scheduled debt maturities;

•recurring and non-recurring capital expenditures;

•funding of property developments, repositions, redevelopments, and acquisitions; and

•the minimum dividend payments required to maintain our REIT qualification under the Code.

Factors which could increase or decrease our future liquidity include but are not limited to volatility in capital and credit markets, changes in rent control or rent stabilization laws, sources of financing, the minimum REIT dividend requirements, our ability to complete asset purchases, sales, or developments, the effect our debt level and changes in credit ratings could have on our cost of funds, and our ability to access capital markets.

Cash Flows

The following is a discussion of our cash flows for the years ended December 31, 2024 and 2023.

Net cash from operating activities was approximately $774.9 million during the year ended December 31, 2024 as compared to approximately $795.0 million during the year ended December 31, 2023. The decrease was primarily due to a decrease in cash from property operations due to the sale of two operating properties in 2023 and one operating property in 2024, and higher real estate tax payments in 2024 as compared to 2023. The decrease was partially offset by the growth attributable to our same store and non-same store communities. See further discussions of our 2024 operations as compared to 2023 in "Results of Operations."

Net cash used in investing activities during the year ended December 31, 2024 totaled approximately $285.2 million as compared to $127.1 million during the year ended December 31, 2023. Cash outflows during 2024 primarily related to amounts paid for property development and capital improvements of approximately $393.7 million, partially offset by net proceeds from the sale of one operating property of approximately $114.5 million. Cash outflows during 2023 primarily related to the amounts paid for property development and capital improvements of approximately $410.9 million, partially offset by net proceeds from the sale of two operating properties of approximately $290.7 million. The decrease in property development and capital improvements for 2024, as compared to the same period in 2023, was primarily due to lower property development expenditures in 2024 as compared to 2023. The property development and capital improvements during 2024 and 2023, included the following:

Net cash used in financing activities totaled approximately $725.5 million during the year ended December 31, 2024 as compared to approximately $417.2 million during the year ended December 31, 2023. Cash outflows during 2024 primarily related to the repayment of our $250 million senior unsecured notes in September 2024 and the repayment of our $300 million unsecured term loan and the $250 million senior unsecured notes in January 2024. Cash outflows also related to $451.0 million used for distributions to common shareholders and non-controlling interest holders, and $50.0 million used for common share repurchases. These outflows were partially offset by net proceeds of approximately $396.0 million from the issuance of $400.0 million senior unsecured notes in January 2024, and net proceeds of $178.0 million of borrowings from our unsecured revolving credit facility. Cash outflows during 2023 primarily related to $434.9 million used for distributions to common shareholders and non-controlling interest holders, the repayment of $250 million senior unsecured notes and $187.7 million secured variable rate notes, which includes prepayment penalties and fees, and the net repayment of $42.0 million of borrowings from our unsecured revolving credit facility. These outflows were partially offset by net proceeds of approximately $498.2 million from the issuance of $500.0 million senior unsecured notes in November 2023.

Financial Flexibility

We have a $1.2 billion unsecured revolving credit facility which matures in August 2026, with two options to extend the facility at our election for two consecutive six-month periods and to expand the facility up to three times by up to an additional $500 million upon satisfaction of certain conditions. The interest rate on our unsecured revolving credit facility is based upon,

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at our option, (a) the daily or the one-, three-, or six- months Secured Overnight Financing Rate ("SOFR") plus, in each case, a spread based on our credit rating, or (b) a base rate equal to the higher of: (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America, N.A.'s price rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%. Advances under our unsecured revolving credit facility may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of 180 days or less and may not exceed the lesser of $600 million or the remaining amount available under our unsecured revolving credit facility. Our unsecured revolving credit facility is subject to customary financial covenants and limitations. We believe we are in compliance with all such financial covenants and limitations as of December 31, 2024 and through the date of this filing.

Our unsecured revolving credit facility provides us with the ability to issue up to $50 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our revolving credit facility, it does reduce the amount available. At December 31, 2024, we had outstanding letters of credit totaling $27.5 million, and approximately $1.0 billion available under our unsecured revolving credit facility.

In May 2023, we created the 2023 ATM share offering program through which we can, but have no obligation to, sell common shares and we may also enter into separate forward sale agreements with forward purchasers for an aggregate offering amount of up to $500.0 million, in amounts and at times as we determine, into the existing trading market at current market prices as well as through negotiated transactions. Actual sales from time to time may depend on a variety of factors including, among others, market conditions, the trading price of our common shares, and determinations by management of the appropriate sources of funding for us. We intend to use the proceeds from any sale of our common shares under the 2023 ATM program for general corporate purposes, which may include reducing future borrowings under our unsecured revolving credit facility, the repayment of other indebtedness, the redemption or other repurchase of outstanding debt or equity securities, funding for development activities, and financing for acquisitions. As of the date of this filing, we have not entered into any forward sales agreements and have not sold any shares under the 2023 ATM program.

We currently have an automatic shelf registration statement which allows us to offer, from time to time, common shares, preferred shares, debt securities, or warrants. Our Amended and Restated Declaration of Trust provides we may issue up to 185 million shares of beneficial interest, consisting of 175 million common shares and 10 million preferred shares. At December 31, 2024, we had approximately 106.7 million common shares outstanding, net of treasury shares and shares held in our deferred compensation arrangements, and no preferred shares outstanding.

We believe our ability to access the capital markets is enhanced by our senior unsecured debt ratings by Fitch, Moody's, and Standard and Poor's, which were A- with stable outlook, A3 with stable outlook, and A- with stable outlook, respectively, as of December 31, 2024. We believe our ability to access the capital markets is also enhanced by our ability to borrow on a secured basis from various institutions including banks, Fannie Mae, Freddie Mac, or life insurance companies. However, we may not be able to maintain our current credit ratings and may not be able to borrow on a secured or unsecured basis in the future.

Future Cash Requirements and Contractual Obligations

One of our principal long-term liquidity requirements includes the repayment of maturing debt, including any future borrowings under our unsecured revolving credit facility. As of the date of this filing, we did not have any debt maturing until April 2026. See Note 8. "Notes Payable," in the notes to Consolidated Financial Statements for further discussion of our scheduled maturities.

As of December 31, 2024, we estimate the additional cost to complete the construction of the three projects to be approximately $243.6 million. Of this amount, we expect to incur costs between approximately $135 million and $155 million during 2025 and to incur the remaining costs during 2026 and 2027. Additionally, we expect to incur costs between approximately $100 million and $110 million related to the start of new development activities, between approximately $96 million and $100 million of repositions, redevelopment, repurposes, and revenue enhancing expenditures and between approximately $108 million and $112 million of additional recurring capital expenditures during 2025.

We anticipate meeting our short-term and long-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured revolving credit facility, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM programs, other unsecured borrowings or secured mortgages. We continue to evaluate our portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities arise.

As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute current dividends to our shareholders equal to a minimum of 90% of our annual taxable income. In order to reduce the amount of income taxes, our general policy is to distribute at least 100% of our taxable income. In December 2024, we announced our Board of Trust Managers had declared a quarterly dividend of $1.03 per common share to our common shareholders of record as of December 18, 2024. This dividend was subsequently paid on January 17, 2025, and we paid equivalent amounts per unit to holders of common operating partnership units. When aggregated with previous 2024 dividends,

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this distribution to common shareholders and holders of the common operating partnership units equates to an annual dividend rate of $4.12 per share or unit for the year ended December 31, 2024.

In the first quarter of 2025, the Company's Board of Trust Managers declared a first quarter dividend of $1.05 per common share to our common shareholders of record as of March 31, 2025. Future dividend payments are paid at the discretion of the Board of Trust Managers and a number of factors are considered, including the Company's past performance and future prospects, which may be deemed relevant by our Board of Trust Managers. Assuming similar dividend distributions for the remainder of 2025, our annualized dividend rate for 2025 would be $4.20.

Critical Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date, and the amounts of revenues and expenses recognized during the reporting period. These estimates are based on historical experience and other assumptions believed to be reasonable under the circumstances. The following is a discussion of our critical accounting policies. For a discussion of all of our significant accounting policies, see Note 2. "Summary of Significant Accounting Policies and Recent Accounting Pronouncements," to the accompanying consolidated financial statements.

Valuation of Assets. Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment may exist if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to recover the carrying value of such assets. We consider projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. While we believe our estimates of future cash flows are reasonable, different assumptions regarding a number of factors, including market rents, economic conditions, and occupancies, could significantly affect these estimates. When impairment exists, the long-lived asset is adjusted to its fair value. In estimating fair value, management uses appraisals, comparable sales, management estimates, and discounted cash flow calculations which utilize inputs from a marketplace participant’s perspective. During the year ended December 31, 2024, we recorded an impairment of approximately $41.0 million related to three parcels of land.

The value of our properties under development depends on market conditions, including estimates of the project start date, projected construction costs, as well as estimates of demand for multifamily communities. We have reviewed market trends and other marketplace information and have incorporated this information as well as our current outlook into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the impairment analyses, it is possible actual results could differ substantially from those estimated.

We believe the carrying value of our operating real estate assets, properties under development, and land is currently recoverable. However, if market conditions deteriorate or if changes in our development strategy significantly affect any key assumptions used in our fair value estimates, we may need to take material charges in future periods for impairments related to existing assets. Any such material non-cash charges could have an adverse effect on our consolidated financial position and results of operations and therefore could reduce net income.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report. Historical results and trends which might appear in the consolidated financial statements should not be interpreted as being indicative of future operations.

Discussion of our year-to-date comparisons between 2023 and 2022 is presented below. Year-to-date comparisons between 2022 and 2021 can be found in "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

We consider portions of this report to be "forward-looking" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions, or other items relating to the future; forward-looking statements are not guarantees of future performance, results, or events. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance our expectations will be achieved. Any statements contained herein which are not statements of historical fact should be deemed forward-looking statements. Reliance should not be placed on these forward-looking statements as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.

Factors which may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include, but are not limited to, the following:

•Volatility in capital and credit markets, or other unfavorable changes in economic conditions, either nationally or regionally in one or more of the markets in which we operate, could adversely impact us;

•Short-term leases could expose us to the effects of declining market rents;

•Competition could limit our ability to lease apartments or increase or maintain rental income;

•We could be negatively impacted by the risks associated with land holdings and related activities;

•Development, repositions, redevelopment and construction risks could impact our profitability;

•Our acquisition strategy may not produce the cash flows expected;

•Changes in rent control or rent stabilization laws and regulations could adversely affect our operations and property values;

•Failure to qualify as a REIT could have adverse consequences;

•Tax laws may continue to change at any time and any such legislative or other actions could have a negative effect on us;

•A cybersecurity incident and other technology disruptions could negatively impact our business;

•We have significant debt, which could have adverse consequences;

•Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders;

•Issuances of additional debt may adversely impact our financial condition;

•We may be unable to renew, repay, or refinance our outstanding debt;

•Rising interest rates could increase our borrowing costs, lower the value of our real estate, and decrease our share price, leading investors to seek higher yields through other investments;

•Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets;

•Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders;

•The form, timing, and amount of dividend distributions in future periods may vary and be impacted by economic and other considerations;

•Environmental, social, and governance factors may impose additional costs and/or expose us to new risks;

•Litigation risks could affect our business;

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•Damage from catastrophic weather and other natural events could result in losses;

•Competition could adversely affect our ability to acquire properties; and

•We could be adversely impacted due to our share price fluctuations.

These forward-looking statements represent our estimates and assumptions as of the date of this report, and we assume no obligation to update or supplement forward-looking statements because of subsequent events.

Executive Summary

We are primarily engaged in the ownership, management, development, reposition, redevelopment, acquisition, and construction of multifamily apartment communities. Overall, we focus on investing in markets characterized by high-growth economic conditions, strong employment, and attractive quality of life which we believe leads to higher demand and retention of our apartments. As of December 31, 2023, we owned interests in, operated, or were developing 176 multifamily properties comprised of 59,800 apartment homes across the United States as detailed in the Property Portfolio table below. In addition, we own other land holdings which we may develop into multifamily apartment communities in the future.

Business Environment and Current Outlook

Our results for the year ended December 31, 2023, reflect an increase in same store revenues of approximately 5.1% as compared to the same period in 2022. The increase was primarily due to higher average rental rates which we believe was primarily attributable to job growth, favorable demographics with a higher propensity to rent versus buy, continued demand for multifamily housing in our markets, and a manageable supply of new multifamily housing.

We believe the levels of new multifamily supply in the submarkets and asset classes in which we operate will likely rise in 2024, but should be met with continued demand to absorb these new deliveries. However, if this were to change or other economic conditions were to worsen, our operating results could be adversely affected.

Consolidated Results

Net income attributable to common shareholders was $403.3 million and $653.6 million for the years ended December 31, 2023 and December 31, 2022, respectively. The decrease during the year ended December 31, 2023 as compared to the same period in 2022 was primarily due to a $474.1 million gain recognized in 2022 as a result of the remeasurement of our previously held 31.3% ownership interest in two unconsolidated Funds (collectively, "the Funds" or "the acquisition of the Funds") upon our acquiring the remaining ownership interests on April 1, 2022. The decrease was also due to higher interest expense incurred during the year ended December 31, 2023 as compared to the same period in 2022. The decrease was partially offset by recognizing a higher gain on sale of two operating properties during the year ended December 31, 2023 of approximately $225.3 million as compared to a gain on sale of one operating property during the year ended December 31, 2022 of approximately $36.4 million. The decrease was further offset by an increase in property operations during the year ended December 31, 2023 as compared to the same period in 2022. See further discussion of our 2023 operations as compared to 2022 in "Results of Operations," below.

Construction Activity

At December 31, 2023, we had a total of four projects under construction to be comprised of 1,166 apartment homes. Initial occupancies of these four projects are currently scheduled to occur within the next nine months. We estimate the additional cost to complete the construction of the four projects to be approximately $137.6 million.

Dispositions

Operating Properties: During the year ended December 31, 2023, we sold two operating properties comprised of an aggregate of 852 apartment homes located in Costa Mesa, California for an aggregate of approximately $293.1 million and recognized a gain of approximately $225.3 million.

Other

In May 2023, we created an at-the market ("ATM") share offering program through which we can, but have no obligation to, sell common shares and we may also enter into separate forward sale agreements with forward purchasers for an aggregate offering price of up to $500.0 million (the "2023 ATM program"). As of the date of this filing, we have $500.0 million available for sale under this program.

In May 2023, we utilized draws our unsecured revolving credit facility to retire our $185.2 million secured variable rate notes due in 2024 and 2026. As a result of the early repayments, we recorded a $2.5 million loss on early retirement of debt in

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our consolidated statements of income and comprehensive income, which was comprised of approximately $1.7 million of prepayment penalties and fees and approximately $0.8 million for the write-off of unamortized fair value adjustments.

In June 2023, we utilized draws on our unsecured revolving credit facility to repay the principal amount of our 5.07% senior unsecured notes payable, which matured on June 15, 2023, for a total of $250.0 million, plus accrued interest.

In November 2023, we issued $500.0 million of 5.85% senior unsecured notes due November 3, 2026. We utilized an interest rate swap with a notional amount of $500.0 million which exposes us to interest rate fluctuations on these notes. This interest rate swap was designated and qualified as a fair value hedging instrument.

Subsequent Events

In January 2024, we issued $400.0 million of 4.90% senior unsecured notes due January 15, 2034. We utilized a portion of the net proceeds from these notes to repay the outstanding balance on our $300 million, 6.21% unsecured term loan due in August 2024.

In January 2024, we utilized cash on hand to repay the principal amount of our 4.36% senior unsecured notes payable, which matured on January 15, 2024, for a total of $250.0 million, plus accrued interest.

In February 2024, we sold one operating property comprised of 592 apartment homes located in Atlanta, Georgia for approximately $115.0 million.

Future Outlook

Subject to market conditions, we intend to continue to seek opportunities to develop new communities, and to redevelop, reposition and acquire existing communities. We also intend to evaluate our operating property and land development portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities arise. We expect to maintain a strong balance sheet and preserve our financial flexibility by continuing to focus on our core fundamentals which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our short-term and long-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured revolving credit facility, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM programs, other unsecured borrowings, or secured mortgages.

As of December 31, 2023, we had approximately $1.2 billion available under our unsecured revolving credit facility. As of December 31, 2023 and through the date of this filing, we also had common shares having an aggregate offering price of up to $500.0 million remaining available for sale under our 2023 ATM program. We believe the remaining scheduled payments of debt over the next 12 months are manageable at approximately $290.0 million, which excludes the amortization of debt discounts and debt issuance costs as well as the $550 million of debt we repaid in January 2024, as discussed above. We also believe we are well-positioned with a strong balance sheet and sufficient liquidity to fund new development, redevelopment, and other capital funding requirements. We will, however, continue to assess and take further actions we believe are prudent to meet our objectives and capital requirements.

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Property Portfolio

Our multifamily property portfolio is summarized as follows:

Stabilized Communities

We generally consider a property stabilized once it reaches 90% occupancy. During the year ended December 31, 2023, stabilization was achieved at two operating properties as follows:

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Completed Construction in Lease-Up

At December 31, 2023, we had one completed operating property in lease-up as follows:

(1)Excludes leasing costs, which are expensed as incurred.

Properties Under Development

Our consolidated balance sheet at December 31, 2023 included approximately $486.9 million related to properties under development and land. Of this amount, approximately $214.0 million related to our projects currently under construction. In addition, we had approximately $272.9 million primarily invested in land held for future development related to projects we currently expect to begin construction.

Communities Under Construction. At December 31, 2023, we had four properties in various stages of construction as follows:

(1)Property in lease-up and was 17% leased at January 31, 2024.

(2)Property in lease-up and was 15% leased at January 31, 2024.

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Development Pipeline Communities. At December 31, 2023, we had the following communities undergoing development activities:

(1)Represents our estimate of total costs we expect to incur on these projects. However, forward-looking statements are not guarantees of future performance, results, or events. Although we believe these expectations are based upon reasonable assumptions, future events rarely develop exactly as forecasted and estimates routinely require adjustment.

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Geographic Diversification

At December 31, 2023 and 2022, our real estate assets by various markets, excluding depreciation, were as follows:

Results of Operations

Changes in revenues and expenses related to our operating properties from period-to-period are due primarily to the performance of stabilized properties in the portfolio, the lease-up of newly-constructed properties, acquisitions, and dispositions.

Management considers property net operating income ("NOI") to be an appropriate supplemental measure of operating performance to net income because it reflects the operating performance of our communities without an allocation of corporate level property management overhead or general and administrative costs. We define NOI as total property income less property operating and maintenance expenses less real estate taxes. NOI is further detailed in the Property-Level NOI table as seen below. NOI is not defined by accounting principles generally accepted in the United States of America ("GAAP") and should not be considered an alternative to net income as an indication of our operating performance, should not be considered an alternative to net cash from operating activities as a measure of liquidity, and should not be considered an indication of cash available to fund cash needs. Additionally, NOI as disclosed by other REITs may not be comparable to our calculation.

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Reconciliations of net income to NOI for the year ended December 31, 2023 and 2022 are as follows:

Property-Level NOI (1)

Property NOI, as reconciled above, is detailed further into the categories below for the year ended December 31, 2023 as compared to 2022:

* Not a meaningful percentage.

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(1)    For 2023, same store communities are communities we owned and were stabilized since January 1, 2022, excluding communities under redevelopment and properties held for sale. Non-same store communities are stabilized communities not owned or stabilized since January 1, 2022, including communities under redevelopment and excluding properties held for sale. We define communities under redevelopment as communities with capital expenditures that improve a community's cash flow and competitive position through extensive unit, exterior building, common area, and amenity upgrades. Management believes same store information is useful as it allows both management and investors to determine financial results over a particular period for the same set of communities. Development and lease-up communities are non-stabilized communities we have developed since January 1, 2022, excluding properties held for sale. Dispositions/other includes those communities disposed of or held for sale which are not classified as discontinued operations, non-multifamily rental properties, expenses related to land holdings not under active development, and other miscellaneous revenues and expenses, including net below market leases, casualty-related expenses net of recoveries, and severance related costs.

Same Store Analysis

Same store property NOI increased approximately $33.2 million for the year ended December 31, 2023 as compared to the same period in 2022. The increase was due to an increase of approximately $60.3 million in same store property revenues, partially offset by an increase of approximately $27.1 million in same store property expenses, for the year ended December 31, 2023, as compared to the same period in 2022.

The $60.3 million increase in same store property revenues for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to an increase of approximately $56.5 million in rental revenues comprised of a 6.6% increase in average rental rates and higher other rental income. The increase was also due to an increase of approximately $3.3 million related to income from our utility rebilling and ancillary income programs, and an increase of approximately $0.5 million in fees and other income.

The $27.1 million increase in same store property expenses for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to higher insurance expense of approximately $9.7 million primarily due to increased premiums and claims; repairs and maintenance expense of $4.8 million; real estate taxes of $4.6 million due to increased tax rates and property valuations; utilities expense of $3.4 million; and, marketing and leasing expenses of $1.7 million. The increase was also due to higher property general and administrative expenses of $3.4 million, a portion of which was due to centralizing our workforce to manage certain responsibilities for all of our communities during 2022, and was partially offset by a decrease in salaries expense of $0.5 million.

Non-same Store and Development and Lease-up Analysis

Property NOI from non-same store (which includes acquisitions, non-same store stabilized properties, and other) and development and lease-up communities increased $42.6 million for the year ended December 31, 2023, as compared to the same period in 2022. The increase was comprised of an increase from non-same store communities of approximately $40.0 million and an increase from development and lease-up communities of approximately $2.6 million for the year ended December 31, 2023, as compared to the same period in 2022. The increase in property NOI from our non-same store communities was primarily due to our acquisition of the Funds on April 1, 2022, and the stabilization of three operating properties in 2022 and two operating properties in 2023. The increase in property NOI from our development and lease-up communities in fiscal year 2023 was primarily due to the timing of one property under development, which began lease-up during the year ended December 31, 2023.

The following table details the changes, described above, relating to non-same store and development and lease-up NOI:

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Dispositions/Other Property Analysis

Dispositions/other property NOI decreased approximately $7.4 million for the year ended December 31, 2023 as compared to the same period in 2022. The decrease was comprised of lower NOI related to dispositions of approximately $1.4 million and lower other property NOI of approximately $6.0 million for the year ended December 31, 2023 as compared to the same period in 2022. The decrease in NOI related to dispositions was due to the disposition of two operating properties in 2023, and the disposition of one operating property in March 2022. The lower other property NOI was primarily due to a decrease in revenues in 2023 related to approximately $7.6 million of net below market leases recognized during the year ended December 31, 2022 as a result of the acquisition of the Funds in April 2022. The decrease in other property NOI was partially offset by higher revenues of approximately $1.1 million related to business interruptions received during the year ended December 31, 2023.

Non-Property Income

*Not a meaningful percentage.

Fee and asset management income from property management, asset management, construction, and development activities at our joint ventures and our third-party construction projects decreased approximately $1.7 million for the year ended December 31, 2023 as compared to 2022. The decrease was primarily due to the consolidation of the Funds on April 1, 2022, and no longer earning the related fee and asset management income. The decrease was also due to slightly lower fees earned related to a decrease in third-party construction activity during 2023 as compared to 2022.

Interest and other income decreased approximately $2.1 million for the year ended December 31, 2023, as compared to 2022. The decrease was primarily due to a higher earn-out received in 2022 as compared to 2023 related to a technology joint venture sold in September 2020.

Our deferred compensation plans recognized income of approximately $15.4 million in 2023 and incurred a loss of approximately $19.6 million in 2022. The changes were related to the performance of the investments held in deferred compensation plans for participants and were directly offset by the expense/(benefit) related to these plans, as discussed below.

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Other Expenses

*Not a meaningful percentage.

Property management expenses, which primarily represent regional supervision and accounting costs related to property operations, increased approximately $5.1 million for the year ended December 31, 2023 as compared to 2022. The increase was primarily related to higher salary, benefits, and incentive compensation costs and higher travel related costs. Property management expenses were 2.2% and 2.0% of total property revenues for the years ended December 31, 2023 and 2022, respectively.

Fee and asset management expense from property management, asset management, construction, and development activities at our joint ventures and our third-party projects decreased approximately $0.8 million for the year ended December 31, 2023 as compared to 2022. The decrease was primarily due to our consolidating the Funds on April 1, 2022, and no longer having any related fee and asset management expenses.

General and administrative expenses increased approximately $2.1 million for the year ended December 31, 2023 as compared to 2022. Excluding deferred compensation plans, general and administrative expenses were 4.0% and 4.2% of total revenues for the years ended December 31, 2023 and 2022, respectively.

Interest expense increased approximately $20.0 million for the year ended December 31, 2023 as compared to 2022. The increase was primarily due to a $300 million term loan we entered into in December 2022, the issuance of $500 million unsecured notes in November 2023, higher interest expense recognized on our unsecured revolving credit facility resulting from higher interest rates and an increase in average balances outstanding, and higher interest expense recognized on our other variable rate debt outstanding in 2023 due to higher interest rates as compared to the same period in 2022. The increase in 2023 was also due to an increase in interest expense related to our assuming approximately $515 million of secured mortgage debt upon completion of the acquisition of the Funds on April 1, 2022.

The increase in interest expense in 2023 was partially offset by lower interest expense related to the repayment of a $350 million, 3.15% senior unsecured notes payable in December 2022, the repayment of a $250 million, 5.07% senior unsecured notes payable in June 2023, and higher capitalized interest in 2023 resulting from higher interest rates on our unsecured revolving credit facility. The increase in 2023 was also partially offset by lower interest expense in 2023, as compared to the same period in 2022, related to the early retirement of $185.2 million of secured variable rate notes in May 2023.

Depreciation and amortization expense decreased approximately $2.2 million for the year ended December 31, 2023 as compared to 2022. The decrease was primarily due to the amortization of in-place leases incurred related to the acquisition of the Funds in April 2022 being fully amortized by December 31, 2022, and the amortization of in-place leases related to the acquisition of two operating properties in 2021 being fully amortized by March 31, 2022. The decrease was also due to a higher amount of three to five year assets being fully depreciated in 2023 as compared to 2022 and the dispositions of an operating property in March of 2022, June of 2023, and December of 2023. The decrease was partially offset by higher depreciation expense in 2023 related to the acquisition of the Funds on April 1, 2022 and the completion of apartment homes in our development pipeline and completion of repositions during 2022 and 2023.

Our deferred compensation plans incurred an expense of approximately $15.4 million in 2023 and recognized a benefit of approximately $19.6 million in 2022. The changes were related to the performance of the investments held in deferred compensation plans for participants and were directly offset by the income/(loss) related to these plans, as discussed in the Non-Property Income section above.

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Other

The $2.5 million loss on early retirement of debt during the year ended December 31, 2023 was due to the early repayment of our $185.2 million secured variable rate notes due in 2024 and 2026, and consisted of approximately $1.7 million of prepayment penalties and fees and approximately $0.8 million of unamortized fair value adjustments.

The $225.4 million gain on sale for the year ended December 31, 2023 was primarily due to the disposition of two operating properties located in Costa Mesa, California. The $36.4 million gain on sale for the year ended December 31, 2022 was due to the disposition of one operating property located in Largo, Maryland during the first quarter of 2022.

On April 1, 2022, we acquired the remaining 68.7% ownership interest in the Funds. Prior to the acquisition, we held a 31.3% ownership interest in the Funds, and accounted for these investments under the equity method. As a result of acquiring the remaining ownership interests, we consolidated the Funds and recorded a gain of approximately $474.1 million which represented the difference between the fair market value and the cost basis of our previously owned equity interests.

Equity in income of joint ventures decreased approximately $3.0 million for the year ended December 31, 2023 as compared to 2022. The decrease was primarily due to our consolidating the Funds on April 1, 2022.

Income tax expense increased approximately $0.7 million for the year ended December 31, 2023 as compared to the same period in 2022. The increase was primarily due to higher state income and franchise taxes.

Funds from Operations ("FFO"), Core FFO, and Core Adjusted FFO ("Core AFFO")

Management considers FFO, Core FFO, and Core AFFO to be appropriate supplementary measures of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as net income (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains (or losses) from the sale of certain real estate assets (depreciable real estate), impairments of certain real estate assets (depreciable real estate), gains (or losses) from change in control, and adjustments for unconsolidated joint ventures to reflect FFO on the same basis. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of depreciable real estate and depreciation, FFO can assist in the comparison of the operating performance of a company's real estate investments between periods or to different companies.

Core FFO represents FFO as further adjusted for items not considered part of our core business operations. We consider Core FFO to be a helpful supplemental measure of operating performance as it excludes not only depreciation expense of real estate assets, but it also excludes certain items which, by nature, are not comparable period over period and therefore tends to obscure actual operating performance. Our definition of Core FFO may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.

Core AFFO is calculated utilizing Core FFO less recurring capitalized expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. We also consider Core AFFO to be a useful supplemental measure because it is frequently used by analysts and investors to evaluate a REIT's operating performance between periods or to different companies. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.

To facilitate a clear understanding of our consolidated historical operating results, we believe FFO, Core FFO, and Core AFFO should be examined in conjunction with net income attributable to common shareholders as presented in the consolidated statements of income and comprehensive income and data included elsewhere in this report. FFO, Core FFO, and Core AFFO are not defined by GAAP and should not be considered alternatives to net income attributable to common shareholders as an indication of our operating performance. Additionally, FFO, Core FFO, and Core AFFO as disclosed by other REITs may not be comparable to our calculation.

Reconciliations of net income attributable to common shareholders to FFO, Core FFO, and Core AFFO for the years ended December 31, 2023 and 2022 are as follows:

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(1) For the year ended December 31, 2023 and 2022 activity relates to proceeds from a previously sold technology investment.

Liquidity and Capital Resources

Financial Condition and Sources of Liquidity

We intend to maintain a strong balance sheet and preserve our financial flexibility, which we believe should enhance our ability to identify and capitalize on investment opportunities as they become available. We intend to maintain what management believes is a conservative capital structure by:

•extending and sequencing the maturity dates of our debt where practicable;

•managing interest rate exposure using what management believes to be prudent levels of fixed and floating rate debt;

•maintaining what management believes to be conservative coverage ratios; and

•using what management believes to be a prudent combination of debt and equity.

Our interest expense coverage ratio, net of capitalized interest, was approximately 6.8 and 7.4 times for the years ended December 31, 2023 and 2022, respectively. This ratio is a method for calculating the amount of operating cash flows available to cover interest expense and is calculated by dividing interest expense for the period into the sum of property revenues and expenses, non-property income, and other expenses after adding back depreciation, amortization, and interest expense. Approximately 89.8% and 83.9% of our properties were unencumbered at December 31, 2023 and 2022, respectively. Our weighted average maturity of debt was approximately 5.6 years at December 31, 2023.

We also intend to strengthen our capital and liquidity positions by continuing to focus on our core fundamentals, which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.

Our primary sources of liquidity are cash flows generated from operations. Other sources may include one or more of the following: availability under our unsecured revolving credit facility, the use of debt and equity offerings under our automatic

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shelf registration statement, proceeds from property dispositions, equity issued from our ATM programs, and other unsecured borrowings or secured mortgages. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash needs over the next 12 months including:

•normal recurring operating expenses;

•current debt service requirements, including debt maturities;

•recurring capital expenditures;

•reposition expenditures;

•funding of property developments, redevelopments, and acquisitions; and

•the minimum dividend payments required to maintain our REIT qualification under the Code.

Factors which could increase or decrease our future liquidity include but are not limited to volatility in capital and credit markets, changes in rent control or rent stabilization laws, sources of financing, the minimum REIT dividend requirements, our ability to complete asset purchases, sales, or developments, the effect our debt level and changes in credit ratings could have on our cost of funds, and our ability to access capital markets.

Cash Flows

The following is a discussion of our cash flows for the years ended December 31, 2023 and 2022.

Net cash from operating activities was approximately $795.0 million during the year ended December 31, 2023 as compared to approximately $744.7 million during the year ended December 31, 2022. The increase was primarily due to the increase in cash from non-same store property operations due to the acquisition of the Funds on April 1, 2022, and the growth attributable to our same store, other non-same store and development and lease-up communities. The increase was partially offset by higher real estate tax payments related to the acquisition of the Funds and higher interest payments on our secured and unsecured debt. See further discussions of our 2023 operations as compared to 2022 in "Results of Operations."

Net cash used in investing activities during the year ended December 31, 2023 totaled approximately $127.1 million as compared to $1.5 billion during the year ended December 31, 2022. Cash outflows during 2023 primarily related to amounts paid for property development and capital improvements of approximately $410.9 million. These outflows were partially offset by net proceeds from the sale of two operating properties of approximately $290.7 million. Cash outflows during 2022 primarily related to the acquisition of the Funds for cash consideration of approximately $1.1 billion, and amounts paid for property development and capital improvements of approximately $449.4 million. These outflows were partially offset by net proceeds from the sale of one operating property for approximately $70.5 million in 2022. The decrease in property development and capital improvements for 2023, as compared to the same period in 2022, was primarily due to the acquisition of four parcels of land for development in 2022, partially offset by higher reposition expenditures in 2023 as compared to 2022. The property development and capital improvements during 2023 and 2022, included the following:

Net cash used in financing activities totaled approximately $417.2 million during the year ended December 31, 2023 as compared to net cash from financing activities of approximately $109.9 million during the year ended December 31, 2022. Cash outflows during 2023 primarily related to $434.9 million used for distributions to common shareholders and non-controlling interest holders, the repayment of $250 million senior unsecured notes and $187.7 million secured variable rate notes, which includes prepayment penalties and fees, and the net repayment of $42.0 million of borrowings from our unsecured revolving credit facility. These outflows were partially offset by net proceeds of approximately $498.2 million from the issuance of $500.0 million senior unsecured notes in November 2023. Cash inflows during 2022 primarily related to net proceeds of approximately $516.8 million from the issuance of approximately 2.9 million common shares from our equity offering and approximately 0.2 million common shares from our ATM programs, as well as net proceeds of approximately $300.0 million of borrowings under our unsecured term loan, and net proceeds of $42.0 million of borrowings from our unsecured revolving credit facility. These cash inflows were partially offset by approximately $396.8 million to pay

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distributions to common shareholders, and non-controlling interest holders and the repayment of $350.0 million senior unsecured notes in the fourth quarter of 2022.

Financial Flexibility

We have a $1.2 billion unsecured revolving credit facility which matures in August 2026, with two options to extend the facility at our election for two consecutive six-month periods and to expand the facility up to three times by up to an additional $500 million upon satisfaction of certain conditions. The interest rates on our unsecured revolving credit facility and term loan are based upon, at our option, (a) the daily or the one-, three-, or six- months Secured Overnight Financing Rate ("SOFR") plus, in each case, a spread based on our credit rating, or (b) a base rate equal to the higher of: (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America, N.A.'s price rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%. Advances under our unsecured revolving credit facility may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of 180 days or less and may not exceed the lesser of $600 million or the remaining amount available under our unsecured revolving credit facility. Our unsecured revolving credit facility and term loan are subject to customary financial covenants and limitations. We believe we are in compliance with all such financial covenants and limitations as of December 31, 2023 and through the date of this filing.

Our unsecured revolving credit facility provides us with the ability to issue up to $50 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our revolving credit facility, it does reduce the amount available. At December 31, 2023, we had outstanding letters of credit totaling $27.7 million, and approximately $1.2 billion available under our unsecured revolving credit facility.

In May 2023, we created an at-the-market ("ATM") share offering program through which we can, but have no obligation to, sell common shares for an aggregate offering amount of up to $500.0 million (the "2023 ATM program"), in amounts and at times as we determine, into the existing trading market at current market prices as well as through negotiated transactions. Actual sales from time to time may depend on a variety of factors including, among others, market conditions, the trading price of our common shares, and determinations by management of the appropriate sources of funding for us. We intend to use the proceeds from any sale of our common shares under the 2023 ATM program for general corporate purposes, which may include reducing future borrowings under our unsecured revolving credit facility, the repayment of other indebtedness, the redemption or other repurchase of outstanding debt or equity securities, funding for development activities, and financing for acquisitions. As of the date of this filing, we have not entered into any forward sales agreements and have not sold any shares under the 2023 ATM program.

We currently have an automatic shelf registration statement which allows us to offer, from time to time, common shares, preferred shares, debt securities, or warrants. Our Amended and Restated Declaration of Trust provides we may issue up to 185 million shares of beneficial interest, consisting of 175 million common shares and 10 million preferred shares. At December 31, 2023, we had approximately 106.8 million common shares outstanding, net of treasury shares and shares held in our deferred compensation arrangements, and no preferred shares outstanding.

We believe our ability to access the capital markets is enhanced by our senior unsecured debt ratings by Fitch, Moody's, and Standard and Poor's, which were A- with stable outlook, A3 with stable outlook, and A- with stable outlook, respectively, as of December 31, 2023. We believe our ability to access the capital markets is also enhanced by our ability to borrow on a secured basis from various institutions including banks, Fannie Mae, Freddie Mac, or life insurance companies. However, we may not be able to maintain our current credit ratings and may not be able to borrow on a secured or unsecured basis in the future.

Future Cash Requirements and Contractual Obligations

One of our principal long-term liquidity requirements includes the repayment of maturing debt, including any future borrowings under our unsecured revolving credit facility. At December 31, 2023, we had outstanding debt of approximately $3.7 billion. In January 2024, we issued $400.0 million of 4.90% senior unsecured notes due January 15, 2034. We utilized a portion of the net proceeds from these notes to repay the outstanding balance on our $300 million, 6.21% unsecured term loan due in August 2024 with a one year extension option to August 2025. In January 2024, we also repaid the $250.0 million principal balance related to the 4.36% senior unsecured notes payable, which matured on January 15, 2024. We believe the remaining scheduled payments of debt over the next 12 months are manageable at approximately $290.0 million, which excludes the amortization of debt discounts and debt issuance costs as well as the $550 million of debt we repaid in January 2024, as discussed above. See Note 9, "Notes Payable," in the notes to Consolidated Financial Statements for further discussion of scheduled maturities beyond 2024. Interest payments related to the debt discussed above and as further discussed in Note 9 will be approximately $123.1 million for the year ended December 31, 2024 and for the years ending 2025 through 2028 will be approximately $115.2 million, $110.6 million, $86.0 million, and $82.5 million, respectively, and approximately $346.5 million in the aggregate thereafter.

We estimate the additional cost to complete the construction of the four projects to be approximately $137.6 million. Of this amount, we expect to incur costs between approximately $120 million and $130 million during 2024 and to incur the

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remaining costs during 2025. Additionally, we expect to incur costs between approximately $40 million and $60 million related to the start of new development activities, between approximately $90 million and $94 million of repositions, redevelopment, repurposes, and revenue enhancing expenditures and between approximately $101 million and $105 million of additional recurring capital expenditures during 2024.