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FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS
 9 Months Ended
Sep. 30, 2025
FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS  
FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

10. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

●Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
●Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
●Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of September 30, 2025 and December 31, 2024, are summarized as follows (dollars in thousands):

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​

Fair Value at September 30, 2025, Using

​

​

Total

​

​

​

Quoted

​

​

​

​

​

​

Carrying

​

​

​

Prices in

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​

​

​

​

​

Amount in

​

​

​

Active

​

​

​

​

​

​

​

Statement of

​

​

​

​

Markets

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Significant

​

​

​

​

​

Financial

​

Fair Value

​

for Identical

​

Other

​

Significant

​

​

Position at

​

Estimate at

​

Assets or

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Observable

​

Unobservable

​

​

September 30, 

​

September 30, 

​

Liabilities

​

Inputs

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Inputs

​

​

2025 (a)

​

2025

​

(Level 1)

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(Level 2)

​

(Level 3)

Description:

    

​

  

    

​

  

    

​

  

    

​

  

    

​

​

Notes receivable, net (b)

​

$

146,749

​

$

141,190

​

$

—

​

$

—

​

$

141,190

Equity securities (c)

​

​

1,032

​

​

1,032

​

​

1,032

​

​

—

​

​

—

Derivatives - Interest rate contracts (d)

​

 

558

​

 

558

​

 

—

​

 

558

​

 

—

Total assets

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$

148,339

​

$

142,780

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$

1,032

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$

558

​

$

141,190

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Secured debt instruments - fixed rate: (e)

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​

 

  

​

 

  

​

 

  

​

 

​

Mortgage notes payable

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$

1,066,336

​

$

1,018,888

​

$

—

​

$

—

​

$

1,018,888

Secured debt instruments - variable rate: (e)

​

 

  

​

 

  

​

 

  

​

 

  

​

 

​

Tax-exempt secured notes payable

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27,000

​

 

27,000

​

 

—

​

 

—

​

 

27,000

Unsecured debt instruments: (e)

​

 

  

​

 

​

​

 

  

​

 

  

​

 

​

Working capital credit facility

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​

15,686

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​

15,686

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​

—

​

​

—

​

​

15,686

Commercial paper program

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​

340,000

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​

340,000

​

​

—

​

​

—

​

​

340,000

Unsecured notes

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​

4,407,080

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​

4,093,122

​

​

—

​

​

—

​

​

4,093,122

Total liabilities

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$

5,856,102

​

$

5,494,696

​

$

—

​

$

—

​

$

5,494,696

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (f)

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$

876,127

​

$

876,127

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$

—

​

$

876,127

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$

—

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​

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​

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​

Fair Value at December 31, 2024, Using

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Total

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​

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Quoted

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​

​

​

​

​

Carrying

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​

​

Prices in

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​

​

​

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Amount in

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​

​

Active

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​

​

​

​

​

Statement of

​

​

​

Markets

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Significant

​

​

​

​

Financial

​

Fair Value

​

for Identical

​

Other

​

Significant

​

​

Position at

​

Estimate at

​

Assets or

​

Observable

​

Unobservable

​

​

December 31, 

​

December 31, 

​

Liabilities

​

Inputs

​

Inputs

​

 

2024 (a)

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2024

​

(Level 1)

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(Level 2)

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(Level 3)

Description:

    

​

  

    

​

  

    

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​

  

    

​

​

Notes receivable, net (b)

​

$

247,849

​

$

243,546

​

$

—

​

$

—

​

$

243,546

Equity securities (c)

​

​

1,281

​

​

1,281

​

​

1,281

​

​

—

​

​

—

Derivatives - Interest rate contracts (d)

​

 

3,227

​

 

3,227

​

 

—

​

 

3,227

​

 

—

Total assets

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$

252,357

​

$

248,054

​

$

1,281

​

$

3,227

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$

243,546

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Secured debt instruments - fixed rate: (e)

​

 

  

​

 

  

​

 

  

​

 

  

​

 

​

Mortgage notes payable

​

$

1,115,999

​

$

1,039,482

​

$

—

​

$

—

​

$

1,039,482

Secured debt instruments - variable rate: (e)

​

 

  

​

 

  

​

 

  

​

 

  

​

 

​

Tax-exempt secured notes payable

​

 

27,000

​

 

27,000

​

 

—

​

 

—

​

 

27,000

Unsecured debt instruments: (e)

​

 

​

​

 

  

​

 

  

​

 

  

​

 

​

Working capital credit facility

​

​

9,361

​

​

9,361

​

​

—

​

​

—

​

​

9,361

Commercial paper program

​

​

289,900

​

​

289,900

​

​

—

​

​

—

​

​

289,900

Unsecured notes

​

​

4,408,376

​

​

3,897,187

​

​

—

​

​

—

​

​

3,897,187

Total liabilities

​

$

5,850,636

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$

5,262,930

​

$

—

​

$

—

​

$

5,262,930

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (f)

​

$

1,017,355

​

$

1,017,355

​

$

—

​

$

1,017,355

​

$

—

(a)Certain balances include fair market value adjustments and exclude deferred financing costs.
(b)See Note 2, Significant Accounting Policies. Note receivables, net includes any accrued and unpaid interest, as applicable, and allowance for credit losses.
(c)The Company holds a direct investment in a publicly traded real estate technology company, SmartRent. The investment is valued at the market price on September 30, 2025 and December 31, 2024. The Company currently classifies the investment as Level 1 in the fair value hierarchy.
(d)See Note 11, Derivatives and Hedging Activity.
(e)See Note 7, Secured and Unsecured Debt, Net.
(f)See Note 9, Noncontrolling Interests.

There were no transfers into or out of any of the levels of the fair value hierarchy during the nine months ended September 30, 2025.

Financial Instruments Carried at Fair Value

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate swaps and caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of

its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2025 and December 31, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership have a redemption feature and are marked to their redemption value. The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership are classified as Level 2.

Financial Instruments Not Carried at Fair Value

At September 30, 2025 and December 31, 2024, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes notes receivable and debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.