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REAL ESTATE OWNED

6 Months Ended

Jun. 30, 2025

REAL ESTATE OWNED

REAL ESTATE OWNED

3. REAL ESTATE OWNED

Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and held for disposition properties. As of June 30, 2025, the Company owned and consolidated 168 communities in 12 states plus the District of Columbia totaling 55,808 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of June 30, 2025 and December 31, 2024 (dollars in thousands):


		June 30,			December 31,
		2025			2024
Land		$	2,528,813		$	2,521,363
Depreciable property — held and used:
Land improvements			278,739			271,702
Building, improvements, and furniture, fixtures and equipment			13,440,643			13,189,796
Real estate intangible assets			21,995			11,933
Under development:
Land and land improvements			13,468			—
Building, improvements, and furniture, fixtures and equipment			27,640			—
Real estate held for disposition:
Land and land improvements			—			44,645
Building, improvements, and furniture, fixtures and equipment			—			135,844
Real estate intangible assets			—			38,080
Real estate owned			16,311,298			16,213,363
Accumulated depreciation			(7,157,371)			(6,901,026)
Real estate owned, net		$	9,153,927		$	9,312,337

Acquisitions

In May 2025, the Company acquired the developer’s equity interest in a 478 apartment home operating community located in Philadelphia, Pennsylvania. The Company previously had three loans with the joint venture including a senior loan. In connection with the acquisition, the developer paid the Company $6.7 million, which consisted primarily of unpaid interest on the senior loan and reimbursement for certain costs previously advanced by the Company. (See Note 2, Significant Accounting Policies for more information). The Company increased its real estate assets owned by approximately $166.0 million, recorded approximately $10.1 million of real estate intangibles, recorded $6.4 million of in-place lease intangibles, and recognized a gain on consolidation of $0.3 million.

Dispositions

In January 2025, the Company sold an operating community located in Brooklyn, New York with a total of 188 apartment homes for gross proceeds of $127.5 million, resulting in a gain of approximately $23.5 million. This operating community was classified as held for disposition as of December 31, 2024.

In January 2025, the Company sold an operating community located in Englewood, New Jersey with a total of 185 apartment homes for gross proceeds of $84.0 million, resulting in a gain of approximately $24.4 million. This operating community was classified as held for disposition as of December 31, 2024.

Other Activity

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Company capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, for the three months ended June 30, 2025 and 2024, were $1.4 million and $4.4 million, respectively, and $4.0 million and $8.6 million, respectively, for the six months ended June 30, 2025 and 2024. Total capitalized interest was $2.1 million and $2.4 million, respectively, for the three months ended June 30, 2025 and 2024, and $4.1 million and $5.3 million for the six months ended June 30, 2025 and 2024, respectively. As each apartment home in a capital project is completed and becomes available for lease-up, the Company ceases capitalization on the related portion of the costs and depreciation commences over the estimated useful life.

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Our cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair value. Our estimates of fair value represent our best estimate based upon Level 3 inputs such as industry trends and reference to market rates and transactions. The Company did not recognize any impairments in the value of its long-lived assets during the three and six months ended June 30, 2025 and 2024.

In connection with the acquisition of certain properties, the Company agreed to pay certain of the tax liabilities of certain contributors if the Company sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Company may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax-deferred Section 1031 exchange.

Further, the Company has agreed to maintain certain debt some of which may be guaranteed by certain contributors for specified periods of time following the acquisition. The Company, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.