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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2026
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | . Commitments and Contingencies Construction Contracts. As of March 31, 2026, we estimated the total additional cost to complete the three properties currently under construction to be approximately $176.6 million. We expect to fund this amount through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured revolving credit facility and commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM program, and other unsecured borrowings or secured mortgages. Litigation. We have been named as a defendant in several cases alleging antitrust violations by RealPage, Inc. ("RealPage"), a seller of revenue management software and owners and/or operators of multifamily housing, including us, which utilize this software. The complaints allege collusion among the defendants to fix rents in violation of Section 1 of the Sherman Act. The U.S. Judicial Panel on Multidistrict Litigation has consolidated 43 cases, including those filed against us, into a single action in the United States District Court for the Middle District of Tennessee, in a case captioned In re: RealPage, Inc., Rental Software Antitrust Litigation (No. II) (the "Class Action Litigation"). On April 7, 2026, we entered into a binding term sheet for settlement with the named plaintiffs in the Class Action Litigation. We and the plaintiffs agreed to negotiate and execute a long-form settlement agreement on or before May 7, 2026, which will be subject to preliminary and final approval by the court. Under the term sheet, we agreed to pay an aggregate of $53.0 million to settle all claims which have been asserted, or could have been asserted, against us in the Class Action Litigation, inclusive of class member recoveries, plaintiffs’ attorneys’ fees, and the costs of administering the settlement. The pending settlement payment will be payable in two equal installments of $26.5 million, with the first installment payable within 45 days of execution of a long-form settlement agreement and the second installment payable within four months of execution of a long-form settlement agreement. The pending settlement also includes certain prospective commitments regarding our business practices, including provisions relating to the disclosure and use of non‑public data and our use of revenue management software, which we believe will not require material changes to our operations. The execution of the term sheet and any subsequent settlement agreement do not constitute an admission of fault or liability, and we do not admit wrongdoing. While we believe resolving this matter will allow us to avoid the significant costs and distraction of protracted litigation and reduce legal uncertainty, there can be no assurance a definitive settlement agreement will be finalized or approved by the court. If the settlement is not approved, we intend to continue to vigorously defend ourselves in the Class Action Litigation. In addition to the Class Action Litigation disclosed above, on November 1, 2023, we, along with 13 other owners and/or operators of multifamily housing and RealPage, were named as defendants in a lawsuit centering around the use of said revenue management software by the Attorney General of the District of Columbia. On February 28, 2024, we, along with 11 other owners and/or operators of multifamily housing and RealPage, were named as defendants in a lawsuit centering around the use of said revenue management software by the Attorney General of Arizona. On January 7, 2025, we along with six other owners and/or operators of multifamily housing, were named in a civil lawsuit brought by the U.S. Department of Justice and ten states against RealPage with similar allegations. Additionally, we have been informed by other state regulators they are investigating this matter. We believe these various lawsuits are without merit and we intend to vigorously defend against them. As these proceedings are still in the fact and expert discovery phases, it is not possible for us to predict the outcome nor is it possible to estimate the amount of loss, if any, which may be associated with an adverse decision in any of these cases. As of March 31, 2026 we recorded aggregate loss contingencies of $58.8 million related to the pending settlement described above and other unresolved related legal matters, including estimated costs to defend. These amounts are recorded in accounts payable and accrued expenses on our condensed consolidated balance sheets, and the related expense is included in other nonoperating expenses on our condensed consolidated statements of income and comprehensive income. The ultimate resolution of these matters may differ from the amounts accrued, and any such differences will be recognized in the period in which they become known. We are subject to various other legal proceedings and claims which arise in the ordinary course of business. Matters which arise out of allegation of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolution of these legal proceedings and claims cannot be predicted with certainty, management currently believes the final outcome of such matters will not have a material adverse effect on our condensed consolidated financial statements. Other Commitments and Contingencies. In the ordinary course of our business, we issue letters of intent indicating a willingness to negotiate for acquisitions, dispositions, or joint ventures and also enter into arrangements contemplating various transactions. Such letters of intent and other arrangements are non-binding as to either party unless and until a definitive contract is entered into by the parties. Even if definitive contracts relating to the purchase or sale of real property are entered into, these contracts generally provide the purchaser with time to evaluate the property and conduct due diligence, during which periods the purchaser will have the ability to terminate the contracts without penalty or forfeiture of any deposit or earnest money. There can be no assurance definitive contracts will be entered into with respect to any matter covered by letters of intent or we will consummate any transaction contemplated by any definitive contract. Furthermore, due diligence periods for real property are frequently extended as needed. An acquisition or sale of real property becomes probable at the time the due diligence period expires and the definitive contract has not been terminated. We are then at risk under a real property acquisition contract, but generally only to the extent of any earnest money deposits associated with the contract, and are obligated to sell under a real property sales contract. At March 31, 2026, we had approximately $1.8 million of earnest money deposits for potential acquisitions of land which are included in other assets in our condensed consolidated balance sheet, of which approximately $0.5 million was non-refundable. Lease Commitments. Substantially all of our lessee operating leases, which are recorded within other liabilities in our condensed consolidated balance sheets, are related to office facility leases. We had no significant changes to our lessee lease commitments during the three months ended March 31, 2026. The lease and non-lease components, excluding short-term lease contracts with a duration of 12 months or less, are accounted for as a combined single component based upon the standalone price at the time the applicable lease is commenced and is recognized as a lease expense on a straight-line basis over the lease term. Most of our office facility leases include options to renew and generally are not included in the operating lease liabilities or right-of-use assets as they are not reasonably certain of being exercised. If an option to renew is exercised, it would be considered a separate contract and recognized based upon the standalone price at the time the option to renew is exercised. Variable lease payments which values are not known at lease commencement, such as executory costs of real estate taxes, property insurance, and common area maintenance, are expensed as incurred. Rental expense totaled approximately $1.1 million and $1.0 million for the three months ended March 31, 2026 and 2025. The following is a summary of our future minimum payments of our current leases as of March 31, 2026:
(in millions) |
Year ending December 31, | Operating Leases
Remainder of 2026 | $ | 0.9 |
2027 | 1.6 |
2028 | 3.5 |
2029 | 3.3 |
2030 | 3.1 |
Thereafter | 20.6 |
Discount for time value | (8.4) |
Lease liability as of March 31, 2026 | $ | 24.6 |
Employment Agreements. Effective March 24, 2026, the Company entered into new employment agreements with three of our senior executives in connection with their promotions, including our newly appointed Chief Executive Officer (formerly our President and Chief Financial Officer), President and Chief Operating Officer (formerly our Chief Operating Officer), and Executive Vice President-Chief Financial Officer and Treasurer (formerly our Senior Vice President - Finance and Treasurer). Each agreement provides for a term extending through August 20, 2027, with an annual automatic one-year renewal period, unless earlier terminated. These agreements provide for minimum salary levels as well as various incentive compensation arrangements, which are payable based on the attainment of specific goals. The agreements also provides for severance payments if certain situations occur including termination without cause, or termination due to a change of control. In the event of termination without cause, the severance payment equals two times the greater of the executive’s current year gross income earned or the average gross income earned over the three most recent fiscal years. However, if the termination without cause occurs within 60 days prior to, upon, or at any time following a change in control of the Company, the severance payment will equal 2.99 times the greater of the executive's current year gross income earned or the average gross income earned over the three most recent fiscal years. In the case of termination due to death or disability, the severance payment will equal previously earned compensation and the incentive bonus. Additionally, our former Chief Executive Officer and Chairman of the Board of Trust Managers became the Executive Chairman of the Board of Trust Managers and entered into a letter agreement effective March 24, 2026 relating to the change of positions.

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