The Company acquired six apartment communities in the Dallas-Fort Worth metropolitan area, adding 1,844 apartment homes for $415,579,000 during the six months ended June 30, 2025. This demonstrates a continued focus on expanding its presence in key growth markets.

Two wholly-owned communities, Avalon Wesmont Station I & II, were sold for $161,500,000, generating a GAAP gain of $99,636,000. This highlights management's strategy of selectively selling assets that no longer meet long-term investment criteria or to redeploy capital.

As of June 30, 2025, the Company had 20 wholly-owned communities under construction, expected to add 7,299 apartment homes with a projected total capitalized cost of $2,780,000,000. Additionally, the Avalon Pleasanton development was expanded by 280 apartment homes, increasing its estimated capitalized costs by $160,000,000.

Management actively managed its capital structure by increasing the Credit Facility borrowing capacity from $2,250,000,000 to $2,500,000,000 and extending its term to April 2030. The Commercial Paper Program capacity was also doubled from $500,000,000 to $1,000,000,000, enhancing financial flexibility for ongoing development and acquisition activities.

Same Store Residential direct property operating expenses increased by 5.1% for the six months ended June 30, 2025, attributed to higher repairs & maintenance, utility costs from bulk internet offerings, and increased payroll costs including employee benefits and bonus achievement. General and administrative expenses also rose by 7.2% due to legal settlements and technology investments.

The Company faces ongoing antitrust litigation in D.C., Maryland, and New Jersey related to its use of RealPage, Inc. revenue management systems. The D.C. Superior Court denied the Company's motion to dismiss, indicating persistent legal challenges that management intends to vigorously defend.

The Company is a defendant in multiple antitrust lawsuits in D.C., Maryland, and New Jersey, alleging violations related to the use of RealPage, Inc. revenue management systems. The denial of the Company's motion to dismiss in the D.C. case indicates these legal proceedings are advancing and their outcome or potential loss amount remains uncertain.

Net interest expense increased by $12,821,000, or 11.5%, for the six months ended June 30, 2025, compared to the prior year. This rise is primarily due to higher effective interest expense on unsecured indebtedness and commercial paper outstanding, coupled with decreased capitalized interest, indicating sensitivity to interest rate fluctuations despite hedging activities.

The Company's forward-looking statements highlight risks such as construction costs exceeding estimates, delays in project completion and lease-up, and the potential for abandoning development opportunities due to market conditions or capital availability. A $3,668,000 write-off for a development opportunity deemed no longer probable underscores these risks.

The total Same Store Economic Occupancy for the six months ended June 30, 2025, remained stable at 96.1%, a slight increase from 96.0% in the prior year period. This indicates consistent demand and effective property management in its target metropolitan areas.

Same Store Residential revenue increased by 3.0% for the six months ended June 30, 2025, primarily driven by a 2.9% increase in average monthly revenue per occupied home. This suggests the Company maintains pricing power in its established markets despite competitive pressures.

The Company continues to focus its investments and operations in leading metropolitan areas characterized by growing employment in high-wage sectors, higher home ownership costs, and a diverse quality of life, such as Dallas and Austin. This strategy aims to capture superior risk-adjusted returns over the long term.

Same Store Residential direct property operating expenses increased by $13,088,000, or 5.1%, for the six months ended June 30, 2025. This was primarily due to higher repairs and maintenance costs, increased utility costs from the bulk internet offering, and higher payroll expenses, including employee benefits and bonus achievement.

General and administrative expense rose by $2,860,000, or 7.2%, for the six months ended June 30, 2025. This increase was driven by higher legal settlements and associated costs, as well as investments in technology and process-related initiatives aimed at improving future efficiency.

Property taxes increased by $7,026,000, or 4.4%, for the six months ended June 30, 2025, compared to the prior year. This was due to increased assessments across the Same Store Residential portfolio and the addition of newly developed and acquired communities, partially offset by successful tax appeals and decreased property taxes from dispositions.

Property management and other indirect operating expenses increased, partly 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. This indicates a commitment to digital transformation for operational improvements.

The Company holds direct equity investments in third-party property technology and sustainability-focused companies. While these investments resulted in unrealized losses impacting income from unconsolidated investments for the current period, they represent a strategic commitment to innovation and ESG initiatives.

The ongoing antitrust lawsuits related to the use of RealPage, Inc. revenue management systems highlight potential risks associated with reliance on third-party technology for core operational functions. This could necessitate re-evaluation of technology partners and internal processes.

Net cash used in investing activities significantly increased to $823,210,000 for the six months ended June 30, 2025. This was driven by $549,366,000 invested in development and redevelopment of communities and $384,495,000 for the acquisition of eight wholly-owned communities, demonstrating a strong focus on portfolio growth.

The Company repaid $525,000,000 of 3.45% unsecured notes at par upon maturity in June 2025 and subsequently issued $400,000,000 principal amount of new unsecured notes in July 2025 at a 5.00% interest rate, maturing in August 2035. This indicates active management of debt maturities and access to capital markets.

The Credit Facility borrowing capacity was increased from $2,250,000,000 to $2,500,000,000 and its term extended to April 2030. Concurrently, the Commercial Paper Program capacity was expanded from $500,000,000 to $1,000,000,000, providing greater financial flexibility and liquidity for future capital needs.

The Company amended both its Credit Facility and Term Loan in August 2025 to extend the applicability of sustainability-linked pricing components. These components provide for interest rate margin and commitment fee reductions or increases based on the achievement of environmental sustainability targets, particularly greenhouse gas emission reductions.

In July 2024, the Company's achievement of sustainability targets resulted in maintaining reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee under the Credit Facility. This demonstrates tangible benefits from its ESG efforts.

The Company has direct equity investments in sustainability-focused companies, indicating a broader strategy to support and integrate ESG principles into its investment portfolio. While these investments show commitment, they also contributed to unrealized losses in the current period.

The 'One Big Beautiful Bill Act' (H.R. 1), enacted in July 2025, relaxed the REIT asset test requirement for taxable REIT subsidiaries from 20% to 25% and permanently extended the pass-through qualified business income deduction for ordinary REIT dividends. These changes are favorable for REITs like AvalonBay, potentially enhancing operational flexibility and investor appeal.

The Company entered into $450,000,000 notional amount of interest rate swaps to hedge the impact of variability in interest rates on its Term Loan and terminated $200,000,000 of interest rate swaps for unsecured notes. This demonstrates proactive management of interest rate risk in a dynamic macroeconomic environment.

The Company continues to focus its development and acquisition activities in leading metropolitan areas such as Dallas-Fort Worth, Austin, and Denver, which are characterized by growing employment in high-wage sectors and high home ownership costs. This strategy aims to capitalize on strong apartment fundamentals in these resilient markets.