Camden Property Trust · 10-Q · Item 2 MD&A

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes appearing elsewhere in this report, as well as Part I, Item 1A, "Risk Factors" within our Annual Report on Form 10-K for the year ended December 31, 2025. Historical results and trends which might appear in the condensed consolidated financial statements should not be interpreted as being indicative of future operations.

We consider portions of this report to be "forward-looking" within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical facts, 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, cost increases, 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 could 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;

•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;

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

•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.

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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

Camden Property Trust and all consolidated subsidiaries are primarily engaged in the ownership, management, development, reposition, redevelopment, acquisition, and construction of multifamily apartment communities. 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 for our apartments and retention of our residents. As of June 30, 2026, we owned interests in, operated, or were developing 179 multifamily properties comprised of 60,838 apartment homes across the United States. Of the 179 properties, three properties were under construction as of June 30, 2026, and will consist of a total of 1,162 apartment homes when completed. We also own land holdings which we may develop into multifamily communities in the future.

Business Environment and Current Outlook

During the three and six months ended June 30, 2026, our results reflect relatively stable same store revenues as compared to the same periods in 2025. The stability was in part due to consistent occupancy, which we believe was primarily attributable to strong resident retention, supported by favorable demographic trends 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 are manageable and moderating levels of supply should likely 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 $18.8 million for the three months ended June 30, 2026 as compared to $80.7 million for the same period ended 2025. For the six months ended June 30, 2026, net income attributable to common shareholders was $61.2 million compared to $119.5 million for the same period in 2025. The decrease during the three months ended June 30, 2026 was primarily due to the recognition of a $47.3 million gain on sale of an operating property in June 2025, higher interest expense of $6.0 million associated with our recent debt issuance and other borrowings, and higher depreciation expense of $5.0 million due to nine acquisitions completed in 2025 and 2026.

The decrease during the six months ended June 30, 2026 was primarily due to the settlement of a $53.0 million class action matter and a $4.9 million impairment charge related to certain technology investments recognized during the six months ended June 30, 2026. See further discussion of our 2026 operations as compared to 2025 in "Results of Operations," below.

Construction and Development Activity

T1At June 30, 2026, we had a total of three properties under construction comprised of 1,162 apartment homes. As of June 30, 2026, we estimated the total additional cost to complete the construction of these three properties was approximately $140.1 million.

Litigation Update

On April 7, 2026, we entered into a binding term sheet to settle the RealPage class action litigation matter related to the use of a revenue management software. Subsequently, the parties executed a definitive settlement agreement, which received the required preliminary court approvals during the three months ending June 30, 2026. Pursuant to the settlement agreement, 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 litigation, inclusive of class member recoveries, plaintiffs’ attorneys’ fees, and settlement administration costs. The settlement payment was payable in two equal installments of $26.5 million, the first of which was timely paid during the three months ending June 30, 2026 and the second of which is due during the third quarter of 2026.

Debt

In February 2026, we issued $600.0 million of 4.90% senior unsecured notes due February 28, 2036.

In March 2026, we amended and restated our existing credit facility to (i) remove a $300 million unsecured term loan facility with a delayed draw feature and (ii) extend the maturity date of the unsecured revolving credit facility from August 2026 to March 2030, which may be extended at the Company’s option for two additional consecutive six-month periods.

In March 2026, we also repaid the principal amount of one of our conventional mortgage secured notes payable, which matured on April 1, 2026, for a total of $12.0 million, plus accrued interest.

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On July 8, 2026, we entered into a 364-day unsecured term loan facility ("term loan facility") with an aggregate principal amount of $350.0 million. The interest rate on our term loan facility is based upon, at our option, (a) Daily SOFR or one-, three- or six-month Term 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 prime rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%, plus a spread based on our credit rating.

Acquisitions

T2During the six months ended June 30, 2026, we acquired five operating properties for an aggregate purchase price of approximately $449.3 million, including a 288-apartment home community in Orlando, Florida and a 269-apartment home community in Alpharetta, Georgia, both acquired in April; a 196-apartment home community in Franklin, Tennessee, a 349-apartment home community in Roanoke, Texas, and a 320-apartment home community in Gilbert, Arizona, each acquired in June.

In July 2026, we acquired two operating properties for an aggregate purchase price of approximately $196.1 million, including a 296-apartment home community in Tampa, Florida and a 343-apartment home community in Charlotte, North Carolina.

During the six months ended June 30, 2026, we acquired for future development purposes two parcels of land for an aggregate purchase price of approximately $45.0 million. These acquisitions, both completed in May 2026, consisted of approximately 17.9 acres in Morrisville, North Carolina and 64.4 acres in Tampa, Florida.

Dispositions

During the six months ended June 30, 2026 we sold one operating property in Irving, Texas for approximately $77.0 million in February and recognized a gain of approximately $67.9 million.

Properties Held for Sale

As of June 30, 2026, 11 operating properties, comprised of 3,620 apartment homes, located in Los Angeles/Orange County and San Diego/Inland Empire, California were classified as held for sale and did not meet the criteria to qualify as a discontinued operation as the disposition did not represent a strategic shift which has or will have a major effect on our operations or financial results. As such, the results of operations for these properties continue to be included in income from continuing operations for all periods presented. At June 30, 2026, these California properties had aggregate net real estate and other assets of approximately $625.3 million, consisting of $463.0 million of buildings and improvements, less accumulated depreciation, $159.0 million of land, and $3.3 million of restricted cash.

These properties also had liabilities of approximately $6.4 million, primarily consisting of resident deposits and prepaid rental income. T3The 11 operating properties were subsequently sold in July 2026 for an aggregate sales price of approximately $1.6 billion.

Share Repurchases

In January 2026, we repurchased 1,096,807 common shares at an average price of $110.03 per share for approximately $120.7 million under our then-existing share repurchase plan, which authorized up to $500.0 million of our common equity securities through open-market purchases, block purchases, and privately negotiated transactions.

In February 2026, our Board of Trust Managers authorized a new share repurchase plan of up to $600.0 million of our common shares or equity securities. During February and March 2026, we repurchased an additional 1,536,223 common shares at an average price of $102.91 per share, and a total cost of approximately $158.1 million under the share repurchase plan authorized in February 2026. In the second quarter, we repurchased 1,429,136 common shares at an average price of $100.78 per share for approximately $144.1 million. T4Through June 30, 2026, we repurchased an aggregate of 2,965,359 common shares under the February 2026 share repurchase plan for approximately $302.1 million. As of the date of this filing, $297.9 million remained available for repurchases under our share repurchase plan.

In April 2026, we renewed our at-the-market ("ATM") share offering program, which was expiring pursuant to its terms in May 2026, and entered into a replacement 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 "2026 ATM program"). As of the date of this filing, we have $500.0 million available for sale under this program.

Leadership Changes

Effective March 24, 2026, Richard J. Campo, our former Chief Executive Officer and Chairman of the Board of Trust Managers, became the Executive Chairman of the Board of Trust Managers. Additionally, Alexander J. Jessett became the Chief Executive Officer of the Company, Laurie A. Baker became the President and Chief Operating Officer of the Company, and Benjamin D. Fraker became the Executive Vice President-Chief Financial Officer and Treasurer of the Company.

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Effective July 2, 2026, Kevin J. Necas, Jr. was appointed Senior Vice President - Chief Accounting Officer and designated as the Company's principal accounting officer following the retirement of Michael P. Gallagher.

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 portfolio and plan to continue our practice of selective dispositions and redeploying capital 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 we believe are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our near-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 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.

T5We believe we remain well positioned from a liquidity and capital resources perspective. As of June 30, 2026, we had approximately $842.7 million available under our unsecured revolving credit facility, which also serves as a liquidity backstop for our commercial paper program. At quarter-end, outstanding borrowings under the commercial paper program totaled $600.0 million, and other contractual debt maturities due within the next 12 months totaled approximately $695.3 million. In addition, as of the filing date, up to $500.0 million of common shares remained available for issuance under our 2026 ATM program. Subsequent to quarter-end, we also completed the disposition of 11 California properties, which generated additional liquidity and enhanced our financial flexibility.

We believe our strong balance sheet, available liquidity, and access to capital provide sufficient resources to fund future acquisitions, development and redevelopment activities, scheduled debt maturities, and other capital requirements.

Property Portfolio

Our multifamily property portfolio is summarized as follows:

Number of

Homes

Properties

Number of

Homes

Properties

Operating Properties

Houston, Texas

Washington, D.C. Metro

Dallas/Fort Worth, Texas

Orlando, Florida

Atlanta, Georgia

Phoenix, Arizona

Raleigh, North Carolina

Austin, Texas

Charlotte, North Carolina

Tampa/St. Petersburg, Florida

9

9

Southeast Florida

9

9

Denver, Colorado

9

9

Los Angeles/Orange County, California (1)

5

5

San Diego/Inland Empire, California (1)

6

6

Nashville, Tennessee

4

3

Total Operating Properties

Properties Under Construction

Charlotte, North Carolina

2

2

Nashville, Tennessee

1

1

Total Properties Under Construction

3

3

Total Properties

(1) As of June 30, 2026, these properties were classified as held for sale and were subsequently sold in July 2026.

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Completed Construction in Lease- Up

At June 30, 2026, there was one completed operating property in lease-up as follows:

($ in millions)

Property and Location

Number of

Homes

Cost

Incurred (1)

Date of

Construction

Completion

Estimated

Date of

Stabilization

Camden Village District

Raleigh, NC

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

Properties Under Development and Land

Our condensed consolidated balance sheet at June 30, 2026 includes approximately $500.1 million related to properties under development and land. Of this amount, approximately $301.2 million related to our projects currently under construction. In addition, we had approximately $198.9 million primarily invested in land held for future development and land holdings, which included approximately $154.0 million related to land held for future development and $44.9 million invested in land which we may develop in the future.

Properties Under Construction. At June 30, 2026, we had three properties in various stages of construction as follows:

($ in millions)

Properties and Locations

Number of

Homes

Estimated

Cost

Cost

Incurred

Included in Properties Under Development

Estimated

Date of

Construction

Completion

Estimated

Date of

Stabilization

Camden South Charlotte (1)

Charlotte, NC

$

$

$

Camden Blakeney

Charlotte, NC

Camden Nations

Nashville, TN

Total

$

$

$

Development Pipeline Communities. At June 30, 2026, we had the following multifamily communities undergoing development activities:

($ in millions)

Properties and Locations

Projected Homes

Total Estimated Cost (1)

Cost to Date

Camden RTP

Morrisville, NC

$

$

Camden Gulch

Nashville, TN

Camden Baker

Denver, CO

Camden Riverview

Tampa, FL

Total

$

$

(1)Represents our estimate of total costs we expect to incur on these projects. However, forward-looking estimates 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 forecast, and estimates routinely require adjustment.

Land Holdings. At June 30, 2026, we also had four undeveloped land tracts with a valuation of approximately $44.9 million.

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, and the impact of 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

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level property management overhead or general and administrative costs. We define NOI as total property revenue less total property operating expenses. NOI is further detailed in the Property-Level NOI table as seen below, and 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. Additionally, NOI as disclosed by other REITs may not be comparable to our calculation.

Reconciliations of net income to NOI for the three and six months ended June 30, 2026 and 2025 are as follows:

Three Months Ended

Six Months Ended

(in thousands)

Net income

$

$

$

$

Less: Fee and asset management income

Less: Interest and other income

Less: Income on deferred compensation plans

Plus: Property management expense

Plus: Fee and asset management expense

Plus: General and administrative expense

Plus: Interest expense

Plus: Depreciation and amortization expense

Plus: Expense on deferred compensation plans

Plus: Other non-operating expenses

Less: Gain on sale of operating property, including land

—

Plus: Income tax expense

Net operating income

$

$

$

$

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Property-Level NOI (1)

Property NOI, as reconciled above, is detailed further into the following categories for the three and six months ended June 30, 2026 as compared to the same period in 2025:

($ in thousands)

Homes at

Three Months Ended

Change

Six Months Ended

Change

$

%

$

%

Property revenues:

Same store communities

$

$

$

%

$

$

$

—

%

Non-same store communities

Development and lease-up communities

*

*

Held-for-sale communities

Dispositions/Other

—

Total property revenues

$

$

$

%

$

$

$

%

Property expenses:

Same store communities

$

$

$

%

$

$

$

%

Non-same store communities

Development and lease-up communities

*

*

Held-for-sale communities

Dispositions/Other

—

*

*

Total property expenses

$

$

$

%

$

$

$

%

Property NOI:

Same store communities

$

$

$

%

$

$

$

%

Non-same store communities

Development and lease-up communities

*

*

Held-for-sale communities

Dispositions/Other

—

Total property NOI

$

$

$

%

$

$

$

%

* Not a meaningful percentage.

(1) For 2026, same store communities are communities we wholly-owned and were stabilized since January 1, 2025, excluding communities under redevelopment and properties held for sale. Non-same store communities are stabilized communities not owned or stabilized since January 1, 2025, including communities under redevelopment and excluding properties held for sale. We define communities under redevelopment as communities with capital expenditures which 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 beneficial as it allows both management and investors the ability 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, 2025, excluding properties held for sale. Held-for-sale communities are communities and associated non-multifamily rental properties we wholly-owned and were stabilized since January 1, 2025, which met the held-for-sale criteria, but did not meet the criteria to be classified as discontinued operations. Dispositions/Other includes communities disposed of which are not classified as discontinued operations, non-multifamily rental properties not classified as held for sale, expenses related to land holdings not under active development, and other miscellaneous revenues and expenses, including net above or below-market leases, casualty-related expenses net of recoveries, and severance related costs.

Same Store Analysis

T6Same store property NOI decreased approximately $3.0 million and $4.8 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025.

The $3.0 million decrease in same store property NOI for the three months ended June 30, 2026 was primarily due to an increase in same store property expenses of approximately $2.8 million. This increase was primarily due to higher salaries and benefits of approximately $0.9 million, increased utilities of approximately $0.7 million, and higher real estate taxes of approximately $0.7 million. The increase was also due to higher marketing and leasing expense of approximately $0.4 million and higher insurance expense of approximately $0.2 million. The increase was partially offset by lower repair and maintenance expense of approximately $0.1 million.

The $4.8 million decrease in same store property NOI for the six months ended June 30, 2026 was primarily due to an increase in same store property expenses of approximately $4.6 million. This increase was primarily due to higher salaries and benefits of approximately $1.6 million, higher real estate taxes of approximately $1.4 million, and increased utilities of approximately $0.9 million. The increase was also due to higher marketing and leasing expense of approximately $0.6 million

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and increased general and administrative expense of approximately $0.3 million. These increases were partially offset by lower repair and maintenance expense of approximately $0.2 million.

Same store property revenues remained relatively unchanged for both periods, decreasing $0.2 million for each as compared to the same period in 2025, primarily due to lower rental rates, mostly offset by increases from our utility and ancillary income programs, changes to occupancy, and lower uncollectible revenues.

Non-same Store and Development and Lease-up Analysis

Property NOI from non-same store and development and lease-up communities increased approximately $5.7 million and $11.1 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025.

The increases were related to higher NOI from our non-same store communities of approximately $4.7 million and $9.4 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increases were primarily due to the acquisition of four operating properties in 2025 and five operating properties in 2026, as well as the stabilization of three operating properties during 2025.

The increases were also related to higher NOI from our development and lease-up communities of $1.0 million and $1.7 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increases were due to lease-up for one operating property which completed construction during the third quarter of 2025.

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

(in millions)

Property Revenues:

Revenues from acquisitions

$

$

Revenues from non-same store stabilized properties

Revenues from development and lease-up properties

Other non-same store

$

$

Property Expenses:

Expenses from acquisitions

$

$

Expenses from non-same store stabilized properties

—

Expenses from development and lease-up properties

Other non-same store

$

$

Property NOI:

NOI from acquisitions

$

$

NOI from non-same store stabilized properties

NOI from development and lease-up properties

Other non-same store

$

$

Held-for-Sale Analysis

Held-for-sale property NOI decreased approximately $0.1 million for the three months ended June 30, 2026 and increased $0.1 million for the six months ended June 30, 2026, as compared to the same periods in 2025. During the three months ended June 30, 2026, the $0.1 million decrease was primarily driven by approximately $0.8 million of higher expenses, mostly offset by an increase in revenues of $0.7 million. The increase in expenses was primarily due to higher utilities and repairs and maintenance expenses. The increase in revenues was primarily due to higher rental rates, an increase from our utilities and ancillary income programs, and changes to occupancy. During the six months ended June 30, 2026, the $0.1 million increase was primarily driven by approximately $1.5 million of higher revenues, primarily offset by $1.4 million of increased expenses.

The increase in revenues was primarily due to the same factors above, and was primarily offset by higher salaries and benefits, repairs and maintenance, utilities, and other property operating expenses.

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Dispositions/Other Property Analysis

Dispositions/other property NOI decreased approximately $3.5 million and $9.6 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The decreases were comprised of lower NOI related to dispositions of approximately $6.9 million and $13.4 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, due to the seven dispositions completed in 2025 and one disposition completed during the six months ended June 30, 2026. The decreases were partially offset by higher other property NOI of approximately $3.4 million and $3.8 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increases were primarily due to higher casualty-related expense recoveries during the three and six months ended June 30, 2026 as compared to the same periods in 2025.

Non-Property Income

($ in thousands)

Three Months Ended

Change

Six Months Ended

Change

$

%

$

%

Fee and asset management

$

$

$

$

$

$

Interest and other income

*

Income on deferred compensation plans

Total 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 $0.5 million and $0.2 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increases in fees were primarily due to higher third-party construction activity as compared to the same periods in 2025.

Interest and other income increased approximately $0.1 million and $0.3 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, primarily attributable to higher interest income earned during 2026.

Our deferred compensation plans incurred income of approximately $12.6 million and $11.4 million during the three and six months ended June 30, 2026, respectively, and approximately $8.4 million and $9.5 million for the same periods in 2025, respectively. The changes were related to the performance of the investments held in deferred compensation plans for participants and was directly offset by the expense related to these plans, as discussed below.

Other Expenses

($ in thousands)

Three Months Ended

Change

Six Months Ended

Change

$

%

$

%

Property management

$

$

$

%

$

$

$

%

Fee and asset management

*

General and administrative

Interest

Depreciation and amortization

Expense on deferred compensation plans

Other non-operating expenses

*

Total other expenses

$

$

$

%

$

$

$

%

* Not a meaningful percentage.

Property management expense, which represents regional supervision and accounting costs related to property operations, increased approximately $0.4 million and $0.8 million for the three and six months ended June 30, 2026 as compared to the same periods in 2025. The increases were primarily related to higher salaries, benefits, and incentive compensation costs. Property management expenses were approximately 2.6% and 2.4% of total property revenues for the three months ended June 30, 2026 and 2025, respectively, and were 2.6% and 2.5% of total property revenues for the six months ended June 30, 2026 and 2025, respectively.

Fee and asset management expenses from construction and development activities at our third-party projects increased approximately $1.2 million for each of the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to increased third-party construction activity and higher other miscellaneous operating expenses.

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General and administrative expense increased approximately $3.4 million and $1.1 million during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increases were primarily driven by higher acquisition pursuit costs, together with higher salaries, benefits, and incentive compensation costs, and higher rental expense. The increase for the six months ended 2026 was partially offset by lower legal expenses resulting from approximately $5.0 million of legal recoveries received during the three months ended March 31, 2026 related to a construction litigation matter. General and administrative expenses were approximately 5.6% and 4.8% of total revenues for the three months ended June 30, 2026 and 2025, respectively, and were 4.7% and 4.5% of total revenues for the six months ended June 30, 2026 and 2025, respectively.

T7Interest expense increased approximately $6.0 million and $9.6 million for the three and six months ended June 30, 2026, as compared to the same periods in 2025. The increase for the three months ended June 30, 2026 was primarily due to increases in interest expense relating to the issuance of $600 million of 4.90% senior unsecured notes in February 2026 and the unsecured revolving credit facility due to higher average outstanding borrowings. These increases were partially offset by higher capitalized interest due to having higher average balances of assets under construction and lower variable-rate interest expense on the $500 million senior unsecured notes.

The $9.6 million increase in interest expense for the six months ended June 30, 2026, was primarily due to higher interest expense related to the February 2026 issuance of the $600 million senior unsecured notes and having higher average borrowings under the commercial paper program. These increases were partially offset by lower variable-rate interest expense on the $500 million senior unsecured notes, higher capitalized interest due to having higher average balances of assets under construction, and lower interest expense on the unsecured revolving credit facility due to lower interest rates during 2026 as compared to the same period in 2025.

Depreciation and amortization expense increased approximately $5.0 million and $5.8 million for the three and six months ended June 30, 2026 as compared to the same periods in 2025. The increases were primarily due to higher depreciation expense related to the acquisition of four operating properties during 2025 and five operating properties during 2026, as well as higher depreciation expense related to development properties placed in service during 2026. These increases were partially offset by lower depreciation expense resulting from the disposition of seven operating properties in 2025 and one operating property in February 2026.

Our deferred compensation plans recognized an expense of approximately $12.6 million and $11.4 million for the three and six months ended June 30, 2026, respectively, and approximately $8.4 million and $9.5 million during the three and six months ended June 30, 2025, 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.

Other non‑operating expenses increased by $57.4 million for the six months ended June 30, 2026, as compared to the same period in 2025. T8The increase was primarily attributable to higher legal expenses associated with a $53.0 million legal settlement recognized during the three months ended March 31, 2026, together with increased costs associated with other litigation matters. On April 7, 2026, the Company entered into a binding term sheet to settle a class action legal matter, and the parties subsequently executed a definitive long-form settlement agreement, which received the required preliminary court approvals during the three months ended June 30, 2026, as disclosed in Note 9. "Commitments and Contingencies" to the condensed consolidated financial statements.

The increase during the six months ended June 30, 2026 also reflects a $4.9 million impairment charge related to technology investments resulting from the permanent decline in estimated market conditions.

Other

Three Months Ended

Change

Six Months Ended

Change

($ in thousands)

$

$

Gain on sale of operating property, including land

$

—

$

$

$

$

$

Income tax expense

$

$

$

$

$

$

The gain on sale of operating property, including land recognized during the six months ended June 30, 2026, was primarily related to a $67.9 million gain from the disposition of one operating property located in Irving, Texas. The $47.3 million gain on sale during the three and six months ended June 30, 2025 was due to the disposition of one operating property located in Houston, Texas in June 2025.

Income tax expense increased approximately $0.4 million for the six months ended June 30, 2026 as compared to the same period in 2025. The increase was primarily driven by higher state and franchise income tax expenses during the six

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months ended June 30, 2026 primarily due to tax refunds recognized in the same period in 2025 related to tax legislation changes enacted in certain state jurisdictions in 2024.

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 (calculated 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 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 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 condensed 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 three and six months ended June 30, 2026 and 2025 are as follows:

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Three Months Ended

Six Months Ended

($ in thousands)

Funds from operations

Net income attributable to common shareholders

$

$

$

$

Real estate depreciation and amortization

Gain on sale of operating property

—

Income allocated to non-controlling interests

Funds from operations

$

$

$

$

Casualty-related expenses, net of (recoveries)

Legal costs and settlements

Expensed transaction, development, and other pursuit costs

Investment losses

—

—

—

Other miscellaneous items

1

Core funds from operations

$

$

$

$

Less: recurring capitalized expenditures

Core adjusted funds from operations

$

$

$

$

Weighted average shares – basic

Incremental shares issuable from assumed conversion of:

Awards granted

Common units

Weighted average shares – diluted

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 5.3 and 6.4 for the three months ended June 30, 2026 and 2025, respectively, and 5.6 and 6.6 for the months ended June 30, 2026 and 2025, 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 90.9% and 90.2% of our properties were unencumbered at June 30, 2026 and 2025, respectively. Our weighted average maturity of debt was approximately 4.9 years at June 30, 2026.

We also intend to maintain or 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 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. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash needs during the next twelve months from our filing date including:

•normal recurring operating expenses;

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•current debt service requirements including scheduled debt maturities;

•recurring and non-recurring capital expenditures;

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

•the minimum dividend payments required to maintain our REIT qualification under the Internal Revenue Code; and

•funding share repurchases.

Factors which could increase or decrease our future liquidity include but are not limited to volatility in capital and credit markets, changes in costs, changes in governmental regulations, including tariffs and 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 six months ended June 30, 2026 as compared to the same period in 2025.

Net cash from operating activities was approximately $359.7 million during the six months ended June 30, 2026 as compared to approximately $378.9 million for the same period in 2025. The decrease was primarily due to the $26.5 million payment relating to the Class Action Litigation, and the timing of real estate tax payments in 2026 as compared to 2025, partially offset by the timing of property insurance payments. See further discussion of our 2026 operations as compared to 2025 in "Results of Operations."

Net cash used in investing activities during the six months ended June 30, 2026 totaled approximately $618.8 million as compared to $473.5 million during the same period in 2025. Cash outflows during the six months ended June 30, 2026 primarily related to the acquisition of five operating properties for approximately $446.5 million and amounts paid for property development and capital improvements of approximately $239.9 million. These outflows were partially offset by net proceeds primarily due from the sale of one operating property of approximately $76.7 million. Cash outflows during the six months ended June 30, 2025 primarily related to the acquisition of three operating properties for approximately $334.2 million, and amounts paid for property development and capital improvements of approximately $195.2 million.

These outflows were partially offset by net proceeds from the sale of one operating property of approximately $58.8 million. The increase in property development and capital improvements for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily due to the acquisition of two land parcels for approximately $44.4 million. The property development and capital improvements during the six months ended June 30, 2026 and 2025, included the following:

Six Months Ended

(in millions)

Expenditures for new development

$

$

Capital expenditures

Reposition expenditures

Direct real estate taxes and capitalized interest and other indirect costs

Total

$

$

Net cash provided by financing activities totaled approximately $280.5 million for the six months ended June 30, 2026 as compared to $106.9 million during the same period in 2025. Cash inflows during the six months ended June 30, 2026 primarily related to net proceeds of approximately $595.7 million from the issuance of $600.0 million senior unsecured notes in February 2026 and net proceeds of $357.0 million from our unsecured revolving credit facilities. These inflows were partially offset by $433.0 million used for common share repurchases and $227.1 million used for distributions to common shareholders and non-controlling interest holders. Cash inflows during the six months ended June 30, 2025 primarily related to net proceeds of approximately $514.8 million of borrowings from our commercial paper program.

These inflows were partially offset by $229.5 million used for distributions to common shareholders and non-controlling interest holders and net payments of $178.0 million of borrowings from our unsecured revolving credit facility.

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Financial Flexibility

In March 2026 we amended and restated our existing credit facility (the "Credit Agreement"), to among other things, remove a $300 million unsecured term loan facility with a delayed draw feature and extend the maturity date of our $1.2 billion unsecured revolving credit facility from August 2026 to March 2030, which may be extended at our option for two consecutive six-month periods. The Credit Agreement also continues to provide that, upon satisfaction of certain conditions, we may expand the facility up to three times by up to an additional $500.0 million in the aggregate. The interest rate on our unsecured revolving credit facility is based upon, at our option, (a) the daily or the one-, three-, or six-month 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 prime 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 June 30, 2026 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 unsecured revolving credit facility, it does reduce the amount available. At June 30, 2026, we had $357.0 million outstanding on our $1.2 billion unsecured facility and we had outstanding letters of credit totaling approximately $0.3 million, leaving approximately $842.7 million available under our unsecured revolving credit facility. The unsecured revolving credit facility also serves as a liquidity backstop for our commercial paper program, under which $600.0 million was outstanding at June 30, 2026.

In February 2025, we established a commercial paper program under which we may issue short-term, unsecured Notes under the exemption from registration contained in Section (4)(a) of the Securities Act. Amounts available under the commercial paper program may be borrowed, repaid, and reborrowed from time to time, with the aggregate face or principal amount of the Notes outstanding under the commercial paper program at any time not to exceed $600 million. The Notes will have maturities of up to 397 days from the date of issue. The Notes will rank at least equal in priority to all of the Company's other unsecured and unsubordinated indebtedness. The net proceeds of the issuances of the Notes are expected to be used for general corporate purposes, which may include property acquisitions and development in the ordinary course of business, capital expenditures, and working capital.

On July 8, 2026, we entered into a 364-day unsecured term loan facility ("term loan facility") with an aggregate principal amount of $350.0 million. The interest rate on our term loan facility is based upon, at our option, (a) Daily SOFR or one-, three- or six-month Term 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 prime rate, (iii) Term SOFR plus 1.0%, and (iv) 1.0%, plus a spread based on our credit rating. The term loan facility is subject to the same financial covenants and limitations as those contained in our unsecured revolving credit facility, and we believe we are in compliance with all such covenants and limitations through the date of this filing.

In May 2023, we created the 2023 ATM share offering program through which we could, but had 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. In April 2026, we terminated the 2023 ATM program, which was expiring pursuant to its terms in May 2026, and did not sell any shares under this program, and replaced it with the 2026 ATM 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.

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 proceeds from any sales of our common shares under the 2026 ATM program for general corporate purposes, which may include reducing future borrowings under our unsecured revolving credit facility or commercial paper program, 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 sold any shares or entered into any forward sales agreement and have common shares having an aggregate offering amount of up to $500.0 million remaining available for sale under the 2026 ATM program.

We believe our ability to access capital markets is enhanced by our senior unsecured debt ratings by Moody's, Fitch, and Standard and Poor's, which are currently A3 with stable outlook, A- with stable outlook, and A- with stable outlook, respectively. We believe our ability to access 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 or borrow on an unsecured or secured basis in the future.

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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 June 30, 2026, we had approximately $842.7 million available under our unsecured revolving credit facility, which also serves as a liquidity backstop for our commercial paper program. At quarter-end, outstanding borrowings under the commercial paper program totaled $600.0 million, and other contractual debt maturities due within the next 12 months totaled approximately $695.3 million. See Note 6. "Notes Payable," in the notes to Condensed Consolidated Financial Statements for a further discussion of our scheduled maturities.

As of June 30, 2026, we estimated the additional cost to complete the construction of three properties to be approximately $140.1 million. Of this amount, we expect to incur costs between approximately $60 million and $70 million during the remainder of 2026 and to incur the remaining costs during 2027 and 2028. Additionally, for the remainder of 2026, we expect to incur costs between approximately $67 million and $87 million related to the start of new development activities, approximately $39 million and $47 million of reposition, redevelopment, repurpose, and revenue enhancing expenditures, and between approximately $70 million and $78 million of additional recurring capital expenditures.

We anticipate meeting our near-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 and through our commercial paper program, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, including the sale of 11 California properties completed subsequent to quarter-end, equity issued from our ATM program, and other unsecured borrowings or secured mortgages. We continue to evaluate our portfolio and plan to continue our practice of selective dispositions and redeploying capital 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 minimize paying income taxes, our general policy is to distribute at least 100% of our taxable income. In June 2026, our Board of Trust Managers declared a quarterly dividend of $1.06 per common share to our common shareholders of record as of June 30, 2026. The quarterly dividend was subsequently paid on July 17, 2026, and we paid equivalent amounts per unit to holders of the common operating partnership units. Assuming similar quarterly dividend distributions for the remainder of 2026, our annualized dividend rate would be $4.24 per share or unit.

Critical Accounting Policies

Our critical accounting policies have not changed from the information reported in our Annual Report on Form 10-K for the year ended December 31, 2025.