AVALONBAY COMMUNITIES INC

Previous wording

estate investment trust (“REIT”) for federal income tax purposes. We develop, redevelop, acquire, own and operate apartment communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in our expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado. We focus on leading metropolitan areas that we believe are generally characterized by growing employment in high wage sectors of the economy, higher cost of home ownership and a diverse and vibrant quality of life. We believe these market characteristics have offered, and will continue to offer, the opportunity for superior risk-adjusted returns over the long-term on apartment community investments relative to other markets that do not have these characteristics.

Current wording

AvalonBay Communities, Inc. (the “Company,” “we,” “our” and “us” which terms, unless the context otherwise requires, refer to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes. We develop, redevelop, acquire, own and operate apartment communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in our expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado. We focus on leading metropolitan areas that we believe are generally characterized by growing employment in high wage sectors of the economy, higher cost of home ownership and a diverse and vibrant quality of life. We believe these market characteristics have offered, and will continue to offer, the opportunity for superior risk-adjusted returns over the long-term on apartment community investments relative to other markets that do not have these characteristics.

Previous wording

•Net income attributable to common stockholders for the three months ended June 30, 2025 was $268,665,000, an increase of $14,731,000, or 5.8%, from the prior year period. The increase was primarily attributable to increases in real estate sales and related gains and an increase in NOI from communities over the prior year period.

Current wording

•Net income attributable to common stockholders for the three months ended September 30, 2025 was $381,306,000, an increase of $8,787,000, or 2.4%, from the prior year period. The increase was primarily attributable to a net increase in unrealized gains on property technology investments, an increase in NOI from communities over the prior year period, and increases in real estate sales and related gains.

Previous wording

•Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential ("Residential") revenue, for the three months ended June 30, 2025 was $477,180,000, an increase of $12,578,000, or 2.7%, over the prior year period. The increase over the prior year period was due to an increase in Residential revenue of $19,966,000, or 3.0%, partially offset by an increase in Residential property operating expenses of $7,388,000, or 3.6%.

Current wording

•Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential ("Residential") revenue, for the three months ended September 30, 2025 was $461,048,000, an increase of $5,189,000, or 1.1%, over the prior year period. The increase over the prior year period was due to an increase in Residential revenue of $15,100,000, or 2.3%, partially offset by an increase in Residential property operating expenses of $9,911,000, or 4.6%.

Previous wording

•20 wholly-owned communities under construction, which are expected to contain 7,299 apartment homes with a projected total capitalized cost of $2,780,000,000.

Current wording

•21 wholly-owned communities under construction, which are expected to contain 7,806 apartment homes with a projected total capitalized cost of $3,012,000,000.

Previous wording

•Land or rights to land on which we expect to develop an additional 28 apartment communities that, if developed as expected, will contain 8,854 apartment homes.

Current wording

•Land or rights to land on which we expect to develop an additional 34 apartment communities that, if developed as expected, will contain 9,381 apartment homes.

Previous wording

Second Quarter 2025 Real Estate Transactions Highlights

Current wording

Third Quarter 2025 Real Estate Transactions Highlights

Previous wording

•We sold two wholly-owned communities, Avalon Wesmont Station I & II, located in Wood-Ridge, NJ and containing 406 apartment homes and 18,000 square feet of commercial space, for $161,500,000, for a gain in accordance with GAAP of $99,636,000.

Current wording

•We sold six wholly-owned communities containing 1,594 apartment homes and 20,000 square feet of commercial space, for $585,080,000, for a gain in accordance with GAAP of $180,537,000.

Previous wording

•Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the prior year period. For the six month periods ended June 30, 2025 and 2024, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2024, are not conducting or are not probable to conduct substantial redevelopment activities and are not held for sale as of June 30, 2025 or probable for disposition to unrelated third parties within the current year. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.

Current wording

•Same Store is composed of consolidated communities where a comparison of operating results from the prior year to the current year is meaningful as these communities were owned and had stabilized occupancy as of the beginning of the prior year period. For the nine month periods ended September 30, 2025 and 2024, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2024, are not conducting or are not probable to conduct substantial redevelopment activities and are not held for sale as of September 30, 2025 or probable for disposition to unrelated third parties within the current year. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.

Previous wording

Our results of operations are driven by our operating platform and are primarily affected by both overall and individual geographic market conditions and apartment fundamentals and are reflected in changes in Same Store NOI; NOI derived from acquisitions, development completions and development under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity. A comparison of our operating results for the three and six months ended June 30, 2025 and 2024 is as follows (unaudited, dollars in thousands).

Current wording

Our results of operations are driven by our operating platform and are primarily affected by both overall and individual geographic market conditions and apartment fundamentals and are reflected in changes in Same Store NOI; NOI derived from acquisitions, development completions and development under construction and in lease-up; loss of NOI related to disposed communities; and capital market and financing activity. A comparison of our operating results for the three and nine months ended September 30, 2025 and 2024 is as follows (unaudited, dollars in thousands).

Previous wording

Net income attributable to common stockholders increased $14,731,000, or 5.8%, to $268,665,000 and $77,879,000, or 18.2%, to $505,262,000 for the three and six months ended June 30, 2025, respectively, as compared to the prior year periods, primarily due to real estate sales and related gains in the current year and increases in NOI from communities.

Current wording

Net income attributable to common stockholders increased $8,787,000, or 2.4%, to $381,306,000 and $86,666,000, or 10.8%, to $886,568,000 for the three and nine months ended September 30, 2025, respectively, as compared to the prior year periods, primarily due to a net increase in unrealized gains on property technology investments, an increase in NOI from communities over the prior year period, and increases in real estate sales and related gains.

Previous wording

NOI. We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), property management and other indirect operating expenses, net of corporate income, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, Structured Investment Program interest income, depreciation expense, income tax expense (benefit), casualty and impairment loss, gain on sale of communities, other real estate activity and net operating income from real estate assets sold or held for sale. Management considers NOI to be an important and appropriate supplemental performance measure to net income because it helps both investors and management to understand the core operations of a community or communities prior to the allocation of any corporate-level property management overhead or financing-related costs. NOI reflects the operating performance of a community and allows for an easier comparison of the operating performance of individual assets or groups of assets. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impact to overhead as a result of acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets.

Current wording

NOI. We define NOI as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), property management and other indirect operating expenses, net of corporate income, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, income from unconsolidated investments, Structured Investment Program interest income, depreciation expense, income tax expense (benefit), casualty and impairment loss, gain on sale of communities, net, other real estate activity and net operating income from real estate assets sold or held for sale. Management considers NOI to be an important and appropriate supplemental performance measure to net income because it helps both investors and management to understand the core operations of a community or communities prior to the allocation of any corporate-level property management overhead or financing-related costs. NOI reflects the operating performance of a community and allows for an easier comparison of the operating performance of individual assets or groups of assets. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impact to overhead as a result of acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets.

Previous wording

NOI does not represent cash generated from operating activities in accordance with GAAP, and NOI should not be considered an alternative to net income as an indication of our performance. NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue. Reconciliations of NOI and Residential NOI for the three and six months ended June 30, 2025 and 2024 to net income for each period are as follows (unaudited, dollars in thousands):

Current wording

NOI does not represent cash generated from operating activities in accordance with GAAP, and NOI should not be considered an alternative to net income as an indication of our performance. NOI should also not be considered an alternative to net cash flow from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to fund cash needs. Residential NOI represents results attributable to our apartment rental operations, including parking and other ancillary residential revenue. Reconciliations of NOI and Residential NOI for the three and nine months ended September 30, 2025 and 2024 to net income for each period are as follows (unaudited, dollars in thousands):

Previous wording

The Residential NOI changes for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 consist of changes in the following categories (unaudited, dollars in thousands):

Current wording

The Residential NOI changes for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 consist of changes in the following categories (unaudited, dollars in thousands):

Previous wording

The 2.7% increase in our Same Store Residential NOI for the three months ended June 30, 2025 is due to an increase in Residential revenue of $19,966,000, or 3.0%, partially offset by an increase in Residential property operating expenses of $7,388,000, or 3.6%, over the prior year period. The 2.6% increase in our Same Store Residential NOI for the six months ended June 30, 2025 is due to an increase in Residential revenue of $39,892,000, or 3.0%, partially offset by an increase in Residential property operating expenses of $15,522,000, or 3.8%, over the prior year period.

Current wording

The 1.1% increase in our Same Store Residential NOI for the three months ended September 30, 2025 is due to an increase in Residential revenue of $15,100,000, or 2.3%, partially offset by an increase in Residential property operating expenses of $9,911,000, or 4.6%, over the prior year period. The 2.1% increase in our Same Store Residential NOI for the nine months ended September 30, 2025 is due to an increase in Residential revenue of $54,483,000, or 2.7%, partially offset by an increase in Residential property operating expenses of $25,445,000, or 4.1%, over the prior year period.

Previous wording

Rental and other income increased $34,390,000, or 4.7%, and $67,464,000, or 4.7%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods, due to the increased rental revenue from our stabilized operating communities, discussed below.

Current wording

Rental and other income increased $32,335,000, or 4.4%, and $99,799,000, or 4.6%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, due to an increase in rental revenue from our stabilized operating communities, discussed below.

Previous wording

Consolidated Communities — The weighted average number of occupied apartment homes for consolidated communities increased to 81,495 apartment homes for the six months ended June 30, 2025, compared to 77,215 homes for the prior year period. The weighted average monthly residential revenue per occupied apartment home decreased to $3,052 for the six months ended June 30, 2025, compared to $3,055 in the prior year period.

Current wording

Consolidated Communities — The weighted average number of occupied apartment homes for consolidated communities increased to 82,437 apartment homes for the nine months ended September 30, 2025, compared to 79,593 homes for the prior year period. The weighted average monthly residential revenue per occupied apartment home increased to $3,073 for the nine months ended September 30, 2025, compared to $3,020 in the prior year period.

Previous wording

Same Store Communities — The following table presents the change in Same Store Residential revenue, including the attribution of the change between average revenue per occupied home and Economic Occupancy (as defined below) for the six months ended June 30, 2025 (unaudited, dollars in thousands).

Current wording

Same Store Communities — The following table presents the change in Same Store Residential revenue, including the attribution of the change between average revenue per occupied home and Economic Occupancy (as defined below) for the nine months ended September 30, 2025 (unaudited, dollars in thousands).

Previous wording

Direct property operating expenses, excluding property taxes, increased $10,993,000, or 7.8%, and $21,269,000, or 7.6%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to the addition of newly developed and acquired apartment communities as well as increased Residential operating expenses at our Same Store communities as discussed below.

Current wording

Direct property operating expenses, excluding property taxes, increased $13,269,000, or 8.8%, and $34,538,000, or 8.0%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to the addition of newly developed and acquired apartment communities as well as increased Residential operating expenses at our Same Store communities as discussed below.

Previous wording

Same Store Residential direct property operating expenses, excluding property taxes, increased $5,684,000, or 4.4%, and $13,088,000, or 5.1%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to increased (i) repairs and maintenance costs, (ii) utility costs from our bulk internet offering, and (iii) payroll costs primarily from increased employee benefit costs and bonus achievement.

Current wording

Same Store Residential direct property operating expenses, excluding property taxes, increased $7,199,000, or 5.2%, and $20,173,000, or 5.1%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to increased (i) repairs and maintenance costs, (ii) utility costs, including from our bulk internet offering, the costs for which are more than offset by the associated bulk internet revenue included as a component of rental and other income and (iii) payroll costs primarily from increased employee benefit costs, growth in average salaries and bonus achievement.

Previous wording

Property taxes increased $4,975,000, or 6.1%, and $7,026,000, or 4.4%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to increases for our Same Store Residential portfolio and the addition of newly developed and acquired apartment communities, partially offset by decreased property taxes from dispositions.

Current wording

Property taxes increased $7,330,000, or 8.9%, and $14,356,000, or 5.9%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to the addition of newly developed and acquired apartment communities and increases for our Same Store Residential portfolio, partially offset by decreased property taxes from dispositions.

Previous wording

Same Store Residential property taxes increased $1,704,000, or 2.3%, and $2,434,000, or 1.6%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods, due to increased assessments across the portfolio and the expiration of property tax incentive programs primarily at certain of our properties in New York City, partially offset by decreased tax rates and/or successful tax appeals at certain of our properties in the current year period in excess of the prior year period.

Current wording

Same Store Residential property taxes increased $2,712,000, or 3.5%, and $5,272,000, or 2.3%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, due to increased assessments across the portfolio and the expiration of property tax incentive programs primarily at certain of our properties in New York City, partially offset by decreased tax rates and/or successful tax appeals at certain of our properties in the current year period in excess of the prior year period.

Previous wording

Property management and other indirect operating expenses, net of corporate income increased $1,190,000, or 1.6%, for the six months ended June 30, 2025, compared to the prior year period, due to increased costs related to investments in technology and process related spend for initiatives to improve future efficiency in services for residents and prospects, as well as higher compensation, partially offset by a decrease in advocacy costs.

Current wording

Property management and other indirect operating expenses, net of corporate income decreased $2,832,000, or 6.8%, and $1,645,000, or 1.4%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, due to decreased advocacy costs partially offset by increased costs related to investments in technology and process related spend for initiatives to improve future efficiency in services for residents and prospects, as well as higher compensation.

Previous wording

Expensed transaction, development and other pursuit costs, net of recoveries includes costs incurred for write downs and abandonment of Development Rights and development pursuits not yet considered probable for development, as well as costs related to abandoned acquisition and disposition pursuits, offset by any recoveries of costs incurred. In periods of increased acquisition and pursuit activity, periods of economic downturn or when there is limited access to capital, these costs can be volatile and may vary significantly from year to year. In addition, the timing for potential recoveries will not always align with the timing for expensing an abandoned pursuit. Expensed transaction, development and other pursuit costs, net of recoveries, was $2,493,000 and $7,237,000 for the three and six months ended June 30, 2025, respectively, and $1,417,000 and $5,662,000 for the three and six months ended June 30, 2024, respectively. The amounts for the six months ended June 30, 2025 and 2024 include a write-off of $3,668,000 and $1,600,000, respectively, for one development opportunity in each year that we determined is no longer probable.

Current wording

Expensed transaction, development and other pursuit costs, net of recoveries includes costs incurred for write downs and abandonment of Development Rights and development pursuits not yet considered probable for development, as well as costs related to abandoned acquisition and disposition pursuits, offset by any recoveries of costs incurred. In periods of increased acquisition and pursuit activity, periods of economic downturn or when there is limited access to capital, these costs can be volatile and may vary significantly from year to year. In addition, the timing for potential recoveries will not always align with the timing for expensing an abandoned pursuit. Expensed transaction, development and other pursuit costs, net of recoveries, was $1,392,000 and $8,629,000 for the three and nine months ended September 30, 2025, respectively, and $1,573,000 and $7,235,000 for the three and nine months ended September 30, 2024, respectively. The amounts for the nine months ended September 30, 2025 and 2024 include a write-off of $3,668,000 and $1,600,000, respectively, for one development opportunity in each year that we determined is no longer probable.

Previous wording

Interest expense, netincreased $7,723,000, or 13.5%, and $12,821,000, or 11.5%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods. This category includes interest costs offset by capitalized interest pertaining to development and redevelopment activity, amortization of premium/discount on debt, interest income and any mark-to-market impact from derivatives not in qualifying hedge relationships. The increases for the three and six months ended June 30, 2025 are primarily due to increased effective interest expense for our unsecured indebtedness, increased commercial paper outstanding and decreases in interest income compared to the prior year periods due to lower cash amounts invested and lower rates. The increases for the three and six months ended June 30, 2025 are also due to decreased capitalized interest, compared to the prior year periods.

Current wording

Interest expense, netincreased $9,641,000, or 17.3%, and $22,462,000, or 13.4%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods. This category includes interest costs offset by capitalized interest pertaining to development and redevelopment activity, amortization of premium/discount on debt, interest income and any mark-to-market impact from derivatives not in qualifying hedge relationships. The increases for the three and nine months ended September 30, 2025 are primarily due to decreases in interest income compared to the prior year periods due to lower cash amounts invested and lower rates, increased commercial paper outstanding and increased effective interest expense for our unsecured indebtedness. The increases for the three and nine months ended September 30, 2025 are partially offset by increased capitalized interest compared to the prior year periods.

Previous wording

General and administrative expense increased $3,411,000, or 17.4%, and $2,860,000, or 7.2%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods primarily due to an increase in legal settlements and associated costs, partially offset by decreased compensation costs, including severance.

Current wording

General and administrative expense increased $1,939,000, or 9.7%, and $4,799,000, or 8.0%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods primarily due to an increase in legal costs and settlements and higher compensation costs.

Previous wording

Depreciation expense increased $24,807,000, or 12.0%, and $30,426,000, or 7.3%, for the three and six months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to the addition of newly developed and acquired apartment communities, partially offset by dispositions.

Current wording

Depreciation expense increased $18,249,000, or 8.6%, and $48,675,000, or 7.7%, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to the addition of newly developed and acquired apartment communities, partially offset by dispositions.

Previous wording

Casualty and impairment loss for the three and six months ended June 30, 2025 was $858,000 and the loss for the six months ended June 30, 2024 was $2,935,000, which represents property and casualty damage to certain of our communities. The charge for the three and six months ended June 30, 2025 relates to damage from a water pipe break at a community in Massachusetts. The charge for the six months ended June 30, 2024 relates to flooding and resulting water damage at communities in California from extensive rainfall and a fire at a community in New Jersey.

Current wording

Casualty and impairment loss for the nine months ended September 30, 2025 and September 30, 2024 was $858,000 and $2,935,000, respectively, which represents property and casualty damage to certain of our communities. The charge for the nine months ended September 30, 2025 relates to damage from a water pipe break at a community in Massachusetts. The charge for the nine months ended September 30, 2024 relates to flooding and resulting water damage at communities in California from extensive rainfall and a fire at a community in New Jersey.

Previous wording

Structured Investment Program interest income increased $2,981,000 and $5,976,000 for the three and six months ended June 30, 2025, compared to the prior year periods, primarily due to the increased amount funded in our SIP investments as of the six months ended June 30, 2025, compared to the prior year period.

Current wording

Structured Investment Program interest income increased $1,362,000 and $7,338,000 for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to the increased principal amount funded in our SIP investments.

Previous wording

Gain on sale of communities increased $30,901,000 and $87,440,000 for the three and six months ended June 30, 2025, compared to the prior year periods. The amount of gain realized in a given period depends on many factors, including the number of communities sold, expected operating performance of the communities and the market conditions in the local area. For the three and six months ended June 30, 2025, we sold two and three wholly-owned communities and recognized gains of $99,457,000 and $155,926,000, respectively. For the six months ended June 30, 2024, we sold three wholly-owned communities and recognized gains of $68,486,000.

Current wording

Gain on sale of communities, net increased $7,182,000 and $94,622,000 for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods. The amount of gain realized in a particular period depends on many factors, including the number of communities sold, expected operating performance of the communities and the market conditions in the local area. For the three and nine months ended September 30, 2025, we sold six and nine wholly-owned communities and recognized gains of $180,155,000 and $336,081,000, respectively. For the three and nine months ended September 30, 2024, we sold two and five wholly-owned communities and recognized gains of $172,973,000 and $241,459,000, respectively.

Previous wording

(1)Amounts consist primarily of net unrealized losses (gains) on third-party property technology and sustainability fund investments.

Current wording

(1)Amounts consist primarily of net unrealized gains on property technology investments.

Previous wording

(4)Amounts for the three and six months ended June 30, 2025 consist primarily of the gain on the sale of a development right. Amounts for the three and six months ended June 30, 2024 consist primarily of gains on sale of other non-operating real estate, as well as the imputed carry cost of for-sale residential condominiums at The Park Loggia. We compute this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by our weighted average unsecured debt effective interest rate.

Current wording

(4)Amounts for the nine months ended September 30, 2025 consist primarily of the gain on sale of a development right. Amounts for the three and nine months ended September 30, 2024 consist primarily of gains on sale of other non-operating real estate, as well as the imputed carry cost of for-sale residential condominiums at The Park Loggia. We compute this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by the weighted average effective interest rate on our unsecured debt.

Previous wording

We had cash, cash equivalents and restricted cash of $295,372,000 at June 30, 2025, an increase of $28,296,000 from $267,076,000 at December 31, 2024. The following discussion relates to changes in cash, cash equivalents and restricted cash due to operating, investing and financing activities.

Current wording

We had cash, cash equivalents and restricted cash of $321,891,000 at September 30, 2025, an increase of $54,815,000 from $267,076,000 at December 31, 2024. The following discussion relates to changes in cash, cash equivalents and restricted cash due to operating, investing and financing activities.

Previous wording

•Net cash used in investing activities was primarily due to (i) the investment of $549,366,000 in the development and redevelopment of communities, (ii) acquisition of eight wholly-owned communities for $384,495,000 and (iii) capital expenditures of $110,914,000 for our wholly-owned communities and non-real estate assets. These amounts were partially offset by net proceeds from the disposition of three wholly-owned communities of $228,058,000.

Current wording

•Net cash used in investing activities was primarily due to (i) the investment of $849,799,000 in the development and redevelopment of communities, (ii) acquisition of 12 wholly-owned communities and our joint venture partner's 50% interest in Avalon Alderwood Place for $643,975,000 and (iii) capital expenditures of $186,318,000 for our wholly-owned communities and non-real estate assets. These amounts were partially offset by net proceeds from the disposition of real estate assets of $799,247,000.

Previous wording

•Net cash provided by financing activities was primarily due to proceeds from the issuance of commercial paper in the amount of $665,000,000, partially offset by the repayment of $525,000,000 of our 3.45% coupon unsecured notes at par upon maturity.

Current wording

•Net cash used in financing activities was primarily due to (i) the payment of cash dividends in the amount of $742,879,000, (ii) repayment of $525,000,000 of our 3.45% coupon unsecured notes at par upon maturity and (iii) the repurchase of 786,797 shares of common stock at an average price of $192.99 per share for a total purchase price including fees of $151,846,000. These amounts were partially offset by proceeds from the issuance of unsecured notes, including the Term Loan, in the amount of $947,488,000 and proceeds from the issuance of commercial paper in the amount of $234,981,000.

Previous wording

In April 2025, we entered into the Seventh Amended and Restated Revolving Loan Agreement with a syndicate of banks (the “Credit Facility”), which replaces our prior credit facility, dated September 27, 2022. The amended and restated Credit Facility (i) increased the borrowing capacity under the Credit Facility from $2,250,000,000 to $2,500,000,000, and (ii) extended the term of the Credit Facility from September 2026 to April 2030. The interest rate that would be applicable to borrowings under the Credit Facility was 5.10% at July 31, 2025 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the Credit Facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.705% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.65% to SOFR plus 1.40% based upon the rating of our unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the Credit Facility, which can vary from 0.10% to 0.30% based upon the rating of our unsecured senior notes. The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases related to certain environmental sustainability targets, specifically greenhouse gas emission reductions, with the adjustment determined annually. The most recent annual determination under the sustainability-linked pricing component occurred in July 2025, maintaining reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.

Current wording

In April 2025, we entered into the Seventh Amended and Restated Revolving Loan Agreement with a syndicate of banks (the “Credit Facility”), which replaces our prior credit facility, dated September 27, 2022. The amended and restated Credit Facility (i) increased the borrowing capacity under the Credit Facility from $2,250,000,000 to $2,500,000,000, and (ii) extended the term of the Credit Facility from September 2026 to April 2030. The interest rate that would be applicable to borrowings under the Credit Facility was 4.93% at October 31, 2025 and is composed of (i) the Secured Overnight Financing Rate ("SOFR"), applicable to the period of borrowing for a particular draw of funds from the Credit Facility (e.g., one month to maturity, three months to maturity, etc.), plus (ii) the current borrowing spread to SOFR of 0.705% per annum, assuming a daily SOFR borrowing rate. The borrowing spread to SOFR can vary from SOFR plus 0.65% to SOFR plus 1.40% based upon the rating of our unsecured senior notes. There is also an annual facility commitment fee of 0.12% of the borrowing capacity under the Credit Facility, which can vary from 0.10% to 0.30% based upon the rating of our unsecured senior notes. The Credit Facility contains a sustainability-linked pricing component which provides for interest rate margin and commitment fee reductions or increases related to certain environmental sustainability targets, specifically greenhouse gas emission reductions, with the adjustment determined annually. The most recent annual determination under the sustainability-linked pricing component occurred in July 2025, maintaining reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee due to our achievement of sustainability targets.

Previous wording

(1)In addition, we had $55,387 outstanding in additional letters of credit unrelated to the Credit Facility as of July 31, 2025.

Current wording

(1)In addition, we had $54,864 outstanding in additional letters of credit unrelated to the Credit Facility as of October 31, 2025.

Previous wording

We have a Commercial Paper Program in which we may issue unsecured commercial paper notes with maturities of less than one year. In April 2025, we increased the maximum amount of commercial paper notes that can be outstanding under the Commercial Paper Program from $500,000,000 to $1,000,000,000. The Commercial Paper Program is backstopped by our commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. As of July 31, 2025, we had $530,400,000 of borrowings outstanding under the Commercial Paper Program.

Current wording

We have a Commercial Paper Program in which we may issue unsecured commercial paper notes with maturities of less than one year. In April 2025, we increased the maximum amount of commercial paper notes that can be outstanding under the Commercial Paper Program from $500,000,000 to $1,000,000,000. The Commercial Paper Program is backstopped by our commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. As of October 31, 2025, we had $445,000,000 of borrowings outstanding under the Commercial Paper Program.

Previous wording

Under our continuous equity program (the "CEP"), we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time. During 2024, we entered into forward contracts under the CEP to sell 367,113 shares of common stock for approximate proceeds, net of fees, of $80,687,000, based on the gross weighted average price of $223.27 per share, with settlement of the forward contracts expected to occur on one or more dates not later than December 31, 2025. The final proceeds will be determined on the date(s) of settlement and are subject to certain customary adjustments for dividends and a daily interest factor. During the three and six months ended June 30, 2025 and through July 31, 2025, we did not have any sales under the CEP. As of July 31, 2025, we had $623,997,000 remaining authorized for issuance under this program, after consideration of outstanding forward contracts.

Current wording

Under our continuous equity program (the "CEP"), we may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of our common stock from time to time. During 2024, we entered into forward contracts under the CEP to sell 367,113 shares of common stock for approximate proceeds, net of fees, of $80,687,000, based on the gross weighted average price of $223.27 per share, with settlement of the forward contracts expected to occur on one or more dates not later than December 31, 2025. The final proceeds will be determined on the date(s) of settlement and are subject to certain customary adjustments for dividends and a daily interest factor. During the three and nine months ended September 30, 2025 and through October 31, 2025, we did not have any sales under the CEP. As of October 31, 2025, we had $623,997,000 remaining authorized for issuance under this program, after consideration of outstanding forward contracts.

Previous wording

In addition to the CEP, during the year ended December 31, 2024, we completed the September 2024 Equity Offering of 3,680,000 shares of our common stock at a discount to the closing price of $226.52 per share, net of fees, offered in connection with forward contracts entered into with certain financial institutions acting as forward purchasers. Assuming full physical settlement of the forward contracts, we will receive approximate proceeds, net of fees, of $808,606,000, based on the initial forward price. The final proceeds will be determined on the date(s) of settlement and are subject to certain customary adjustments for dividends and a daily interest factor. On August 6, 2025, the Company amended each of the forward contracts related to the September 2024 Equity Offering to extend the settlement of the forward contracts to a date no later than December 31, 2026.

Current wording

In addition to the CEP, during the three months ended September 30, 2024, we entered into forward contracts to sell 3,680,000 shares of common stock at a discount to the closing price of $226.52 per share for approximate net proceeds of $808,606,000. The final proceeds will be determined on the date(s) of settlement and are subject to certain customary adjustments for dividends and a daily interest factor. During the three months ended September 30, 2025, we amended each of the forward contracts related to the September 2024 Equity Offering to extend the settlement of the forward contracts to a date no later than December 31, 2026.

Previous wording

The following debt and derivative activity occurred during the six months ended June 30, 2025 through the date of this Form 10-Q:

Current wording

The following debt and derivative activity occurred during the nine months ended September 30, 2025 through the date of this Form 10-Q: