Added10-Q 2026-11-09 vs 10-K 2026-02-13
The Merger resulted in changes to the Board of Trustees that may affect the strategy of the Company as compared to that of the Company prior to the Merger.
VMRKVivmark Residential
Equity Residential (“EQR”) is committed to creating communities where people thrive. 10-K, Item 1
- Headquarters
- Chicago, IL
- Next results
- around Feb 4, 2027
3 paragraphs in Risk Factors of the 10-K filed Feb 13, 2026 with nothing like them in the 10-K filed Feb 13, 2025. Quoted exactly. Paragraphs that were only edited are under 10-K change.
Compared with the Risk Factors in the latest 10-K of the other 29 Real estate companies: a paragraph with at least half its words the same at another company is called similar, and the companies are listed under it. A paragraph most of them have is marked boilerplate. No line means no other company has one like it. This counts text; it does not say how serious a risk is.
•The risk that our partner may transfer its interest to a third party whose financial condition, reputation or business goals increase our overall risk profile or are incompatible with our investment strategy.
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Certain of these ground leases have payments subject to annual escalations and/or periodic fair market value adjustments which could adversely affect our financial condition or results of operations.
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•Certain provisions of Maryland law prohibit certain “business combinations” between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our securities or an affiliate thereof or an affiliate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting securities at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose special shareholder voting requirements on these business combinations, unless certain fair price requirements are satisfied.
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New in the latest 10-Q
178 paragraphs in the 10-Q filed Nov 9, 2026 with nothing like them in the 10-Q filed Jul 30, 2026 (at least half the words must differ; new numbers alone do not count). Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
10-Q
Equity Residential (Vivmark Residential) / Not applicable (ERP Operating Limited Partnership)
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(Former name, former address and former fiscal year, if changed since last report)
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On August 17, 2026, in connection with ERP Operating Limited Partnership's repayment at maturity of all of its outstanding 7.57% Notes due August 15, 2026 (the "Notes"), New York Stock Exchange LLC filed a Form 25 with the U.S. Securities and Exchange Commission to complete the delisting of the Notes from The New York Stock Exchange, which delisting became effective on August 27, 2026. The deregistration of the Notes under Section 12(b) of the Act will be effective 90 days, or such shorter period as the U.S. Securities and Exchange Commission may determine, after filing of the Form 25.
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On August 17, 2026 (the "Merger Date"), AvalonBay Communities, Inc., a Maryland corporation ("AvalonBay"), Equity Residential, a Maryland real estate investment trust ("Equity Residential"), ERP Operating Limited Partnership, an Illinois limited partnership (“ERPOP”), and Canopy Merger Sub LLC, a Maryland limited liability company and a direct wholly owned subsidiary of Equity Residential (“Merger Sub”), completed the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, (i) AvalonBay contributed certain assets to ERPOP in exchange for units of partnership interest in ERPOP that had, in the aggregate, a value equal to the fair market value of such contributed assets (the "Asset Contribution") and (ii) following the Asset Contribution, AvalonBay merged with and into Merger Sub, with Merger Sub surviving as a direct, wholly owned subsidiary of Equity Residential (the “Merger”). Following the Merger, Equity Residential contributed all of the membership interests of Merger Sub to ERPOP, and Merger Sub then merged with and into ERPOP, with ERPOP continuing as the surviving entity. On the Merger Date, Equity Residential was renamed Vivmark Residential ("Vivmark"). At the effective time of the Merger, each outstanding share of AvalonBay common stock was automatically cancelled and converted into the right to receive 2.793 common shares ("Common Shares") of Vivmark (the “Exchange Ratio”), plus the right, if any, to receive cash in lieu of fractional Common Shares. As a result, former AvalonBay stockholders and Equity Residential shareholders owned approximately 51% and 49% of Vivmark, respectively. The Merger was accounted for as a reverse acquisition, whereby Equity Residential was the legal acquirer and AvalonBay was the accounting acquirer. As a result, the Company’s historical financial statements for periods before the Merger Date are those of AvalonBay and share and per share amounts for those periods have been retroactively adjusted to reflect the Exchange Ratio.
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Preferred Common Additional Retained Earnings Accumulated Other Total Shareholders' Equity Noncontrolling Interests Total Equity
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Preferred Common Additional Retained Earnings Accumulated Other Total Shareholders' Equity Noncontrolling Interests Total Equity
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Nine Months Ended September 30, 2026 2025 ────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common shares, net $ 811,778 $ 3,377 Repurchase of common shares, net (198,480) (151,846) Dividends paid (752,110) (742,879) Debt financing costs (14,966) (20,003) Net borrowings under unsecured credit facility and commercial paper 281,647 234,981 Repayments of mortgage notes payable, including prepayment penalties (200,886) (10,492) Issuance of unsecured notes — 947,488 Repayment of unsecured notes (567,025) (525,000) Proceeds from (payments on) settlement of derivative instruments — 4,099 Payments related to tax withholding for share-based compensation (13,693) (16,643) Noncontrolling interests, joint venture and preferred equity transactions (20,265) (13,864) Net cash provided by (used for) financing activities (674,000) (290,782) Net increase in cash and cash equivalents and restricted cash 34,621 54,815 Cash and cash equivalents and restricted cash, beginning of period 353,083 267,076 Cash and cash equivalents and restricted cash, end of period $ 387,704 $ 321,891 Cash and cash equivalents and restricted cash, end of period Cash and cash equivalents $ 111,876 $ 123,313 Restricted cash 275,828 198,578 Total cash and cash equivalents and restricted cash, end of period $ 387,704 $ 321,891 Cash paid during the period for interest, net of amount capitalized $ 186,207 $ 163,332
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• The Company recorded (i) an increase to prepaid expenses and other assets of $33.2 million and a corresponding adjustment to accumulated other comprehensive income (loss); and (ii) reclassified $2.0 million of cash flow hedge gains from other comprehensive income (loss) to interest expense to record the impact of the Company's derivative and hedging activity.
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• AvalonBay and Equity Residential completed the previously announced Merger, with each outstanding share of AvalonBay common stock automatically cancelled and converted into the right to receive 2.793 Common Shares, plus the right, if any, to receive cash in lieu of fractional Common Shares. Total net assets acquired were $24.2 billion, exclusive of cash and cash equivalents and restricted cash acquired. See Note 3, “Business Combination,” for more information.
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• The Company recorded adjustments related to its Supplemental Executive Retirement Plan ("SERP"). These adjustments resulted in a reduction of $4.1 million in other liabilities (reflecting changes in deferred compensation and SERP benefit obligations), a reduction of $4.0 million in other assets (reflecting market valuation adjustments on underlying plan assets held in trust), and a corresponding reduction to additional paid-in capital of $0.1 million.
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• The Company recognized a net increase in payables for construction of $36.6 million.
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• The Company acquired six apartment communities, in the Dallas-Fort Worth metropolitan area, containing 1,844 apartment homes for $415.6 million, with the consideration comprised of a cash payment of $193.0 million and the issuance of 2,960,580 units representing limited partnership interests (the “DownREIT Units”).
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• The Company recorded (i) a decrease to prepaid expenses and other assets of $5.8 million and a corresponding adjustment to accumulated other comprehensive income (loss); and (ii) reclassified $2.3 million of cash flow hedge gains from other comprehensive income (loss) to interest expense to record the impact of the Company's derivative and hedging activity.
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• The Company recognized a net increase in payables for construction of $12.0 million.
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Nine Months Ended September 30, 2026 2025 ────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of General Partner Units, net $ 811,778 $ 3,377 Repurchase of General Partner Units, net (198,480) (151,846) Distributions paid (752,110) (742,879) Contributions – Limited Partners 42 — Debt financing costs (14,966) (20,003) Net borrowings under unsecured credit facility and commercial paper 281,647 234,981 Repayments of mortgage notes payable, including prepayment penalties (200,886) (10,492) Issuance of unsecured notes — 947,488 Repayment of unsecured notes (567,025) (525,000) Proceeds from (payments on) settlement of derivative instruments — 4,099 Payments related to tax withholding for share-based compensation (13,693) (16,643) Noncontrolling interests, joint venture and preferred equity transactions (20,307) (13,864) Net cash provided by (used for) financing activities (674,000) (290,782) Net increase in cash and cash equivalents and restricted cash 34,621 54,815 Cash and cash equivalents and restricted cash, beginning of period 353,083 267,076 Cash and cash equivalents and restricted cash, end of period $ 387,704 $ 321,891 Cash and cash equivalents and restricted cash, end of period Cash and cash equivalents $ 111,876 $ 123,313 Restricted cash 275,828 198,578 Total cash and cash equivalents and restricted cash, end of period $ 387,704 $ 321,891 Cash paid during the period for interest, net of amount capitalized $ 186,207 $ 163,332
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• The Company recorded (i) an increase to prepaid expenses and other assets of $33.2 million and a corresponding adjustment to accumulated other comprehensive income (loss); and (ii) reclassified $2.0 million of cash flow hedge gains from other comprehensive income (loss) to interest expense to record the impact of the Company's derivative and hedging activity.
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• AvalonBay and Equity Residential completed the previously announced Merger, resulting in the issuance of Common Shares by the Company and a corresponding issuance of General Partner Units in ERPOP. Total net assets acquired were $24.2 billion, exclusive of cash and cash equivalents and restricted cash acquired. See Note 3, “Business Combination,” for more information.
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• The Company recorded adjustments related to its Supplemental Executive Retirement Plan ("SERP"). These adjustments resulted in a reduction of $4.1 million in other liabilities (reflecting changes in deferred compensation and SERP benefit obligations), a reduction of $4.0 million in other assets (reflecting market valuation adjustments on underlying plan assets held in trust), and a corresponding reduction to General Partner Capital of $0.1 million.
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• The Company recognized a net increase in payables for construction of $36.6 million.
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• The Company acquired six apartment communities, in the Dallas-Fort Worth metropolitan area, containing 1,844 apartment homes for $415.6 million, with the consideration comprised of a cash payment of $193.0 million and the issuance of 2,960,580 DownREIT Units.
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• The Company recorded (i) a decrease to prepaid expenses and other assets of $5.8 million and a corresponding adjustment to accumulated other comprehensive income (loss); and (ii) reclassified $2.3 million of cash flow hedge gains from other comprehensive income (loss) to interest expense to record the impact of the Company's derivative and hedging activity.
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• The Company recognized a net increase in payables for construction of $12.0 million.
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On August 17, 2026 (the “Merger Date”), AvalonBay Communities, Inc., a Maryland corporation (“AvalonBay”), Equity Residential, a Maryland real estate investment trust (“Equity Residential”), ERP Operating Limited Partnership, an Illinois limited partnership (“ERPOP”), and Canopy Merger Sub LLC, a Maryland limited liability company and a direct wholly owned subsidiary of Equity Residential (“Merger Sub”), completed the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, (i) AvalonBay contributed certain assets to ERPOP in exchange for units of partnership interest in ERPOP with an aggregate value equal to the fair market value of the contributed assets (the “Asset Contribution”), and (ii) following the Asset Contribution, AvalonBay merged with and into Merger Sub, with Merger Sub surviving as a direct, wholly owned subsidiary of Equity Residential (the “Merger”). Following the Merger, Equity Residential contributed all of the membership interests of Merger Sub to ERPOP, and Merger Sub then merged with and into ERPOP, with ERPOP continuing as the surviving entity. On the Merger Date, Equity Residential was renamed Vivmark Residential (“Vivmark”).
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At the effective time of the Merger, each outstanding share of AvalonBay common stock was automatically cancelled and converted into the right to receive 2.793 common shares ("Common Shares") of Vivmark (the “Exchange Ratio”), plus the right, if any, to receive cash in lieu of fractional Common Shares. As a result, former AvalonBay stockholders and Equity Residential shareholders owned approximately 51% and 49% of Vivmark, respectively.
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The Merger was accounted for as a reverse acquisition under ASC 805, Business Combinations, with Equity Residential as the legal acquirer and AvalonBay as the accounting acquirer. AvalonBay was determined to be the accounting acquirer based on the following: (i) former AvalonBay stockholders hold the largest portion of the voting rights in the Company; and (ii) AvalonBay’s senior management, including its Chief Executive Officer and President, comprise the majority of the executive management team of the Company. Accordingly, the Company’s historical financial statements for periods before the Merger Date are those of AvalonBay, and share and per share amounts for those periods have been retroactively adjusted to reflect the Exchange Ratio. AvalonBay’s assets and liabilities continue to be reported at their historical carrying amounts, and Equity Residential’s identifiable assets acquired and liabilities assumed were recognized at their fair values as of the Merger Date. The Company’s results include Equity Residential’s operations from the Merger Date. See Note 3, "Business Combination," for additional information.
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Vivmark develops, redevelops, acquires, owns and operates multifamily communities in premier U.S. markets and has elected to be taxed as a real estate investment trust (“REIT”).
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References to the “Company,” “we,” “us” or “our” mean collectively Vivmark, ERPOP and the entities and subsidiaries owned or controlled by Vivmark and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and the entities and subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, these notes apply to both the Company and the Operating Partnership.
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As of September 30, 2026, the Company owned or held a direct or indirect ownership interest in 636 communities containing 185,212 apartment homes located in 12 states and the District of Columbia. The Company also owned or held a direct or indirect ownership interest in land or rights to land on which the Company expects to develop an additional 32 communities that, if developed as expected, will contain an estimated 10,273 apartment homes. The ownership breakdown includes: Communities (1) Apartment Homes Operating Communities 575 166,327 Development Communities 35 11,740 Wholly Owned Communities 610 178,067 Operating Communities 13 3,096 Partially Owned Communities - Consolidated 13 3,096 Operating Communities 13 4,049 Partially Owned Communities - Unconsolidated 13 4,049 Total 636 185,212 (1) Development communities are included when construction starts, and include communities that have completed construction and are conducting or have completed their lease-up activities.
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2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, certain information and footnote disclosures normally included in complete financial statements required by GAAP have been condensed or omitted pursuant to such rules and regulations. Management believes the disclosures are adequate to ensure the information presented is not misleading. In the opinion of management, all adjustments and eliminations, consisting only of normal, recurring adjustments necessary for a fair presentation of the financial statements for the interim periods, have been included. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These unaudited financial statements should be read in conjunction with the Annual Reports on Form 10-K of AvalonBay and Equity Residential for the year ended December 31, 2025, as previously filed with the SEC. See Note 3, "Business Combination," for additional discussion. Principles of Consolidation The Company holds an interest in subsidiaries, partnerships, joint ventures and other similar entities and accounts for these interests in accordance with the consolidation guidance. The Company first determines whether to consolidate the entity as a variable interest entity (“VIE”) or voting interest entity ("VOE"), or to account for the interest under the equity method of accounting as an unconsolidated entity. Under the VIE model, the Company consolidates an investment when it has power to direct the activities of the venture and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company's maximum exposure for its VIEs is limited to its investments in the respective VIEs and its portion of any loan guarantee. Under the VOE model, the Company consolidates an investment when (i) it controls the investment through ownership of a majority voting interest if the investment is not a limited partnership or (ii) it controls the investment through its ability to remove the other partners in the investment, at its discretion, when the investment is a limited partnership. Due to Vivmark’s ability as General Partner to control either through ownership or by contract the Operating Partnership and its subsidiaries, the Operating Partnership and each such subsidiary which it controls has been consolidated with the Company for financial reporting purposes. Noncontrolling Interests Noncontrolling interests are ownership interests in consolidated entities held by parties other than the Company or the Operating Partnership, as applicable. Except for the redeemable interests described below, the Company classifies noncontrolling interests in the equity section of the consolidated balance sheets, separately from the Company’s equity. Consolidated net income (loss) and comprehensive income (loss) are presented inclusive of amounts attributable to both the parent and noncontrolling interests, followed by specific allocations to each presented separately on the face of the consolidated statements of operations and comprehensive income
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(loss). See Note 8, "Equity, Capital and Other Interests," for additional discussion.
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Noncontrolling Interests - Operating Partnership units/Limited Partner Units: The book value of the Noncontrolling Interests - Operating Partnership/Limited Partner Capital is allocated based on the ratio of Noncontrolling Interest - Operating Partnership units/Limited Partner Units to total units outstanding, which includes Common Shares/General Partner Units, Noncontrolling Interest - Operating Partnership/Limited Partner Units and DownREIT Units (as defined below). Net income (loss) and comprehensive income (loss) are allocated to Noncontrolling Interests - Operating Partnership/Limited Partner Capital based on the weighted average Limited Partner OP Units as a percentage of total weighted average OP Units and DownREIT Units. Issuances and retirements of Common Shares and OP Units change the ownership interests of both the Noncontrolling Interests - Operating Partnership and Vivmark. Such transactions and the related proceeds/payments are treated as capital transactions. Subject to certain exceptions, holders of Limited Partner Units may tender them for redemption for Common Shares on a one-for-one basis or, at ERPOP’s election, cash based on the market price of a Common Share. Restricted units become exchangeable only after their capital accounts reach parity with OP Units (the “book-up” requirement) (see Note 9, "Share-Based Compensation").
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Noncontrolling Interests - DownREIT Units: In connection with the Merger, an AvalonBay subsidiary, whose limited partner interests (“DownREIT Units”) are held by third parties, became a subsidiary of the Operating Partnership, and the DownREIT Units were adjusted at the Exchange Ratio. DownREIT Units are presented as noncontrolling interests in the financial statements of both Vivmark and ERPOP. The book value of the DownREIT Units is allocated based on the ratio of DownREIT Units to total units outstanding, which includes Common Shares/General Partner Units, Noncontrolling Interest - Operating Partnership/Limited Partner Units and DownREIT Units. Net income (loss) and comprehensive income (loss) are allocated to DownREIT Units based on the weighted average DownREIT Units as a percentage of total weighted average OP Units and DownREIT Units. Subject to certain exceptions, holders of DownREIT Units may tender them for redemption for cash or, at the election of the DownREIT's general partner, Common Shares on a one-for-one basis.
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Noncontrolling Interests - Partially Owned Communities: Noncontrolling interests in partially owned communities are the portion of consolidated communities not owned by the Company. The earnings or losses attributable to these interests are generally allocated based on ownership percentage, or according to the venture’s distribution provisions where those differ, and are presented as noncontrolling interests in partially owned communities in the accompanying consolidated statements of operations and comprehensive income (loss).
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Redeemable OP Units: For some OP Units, the Company is required, by contract or securities law, to deliver registered Common Shares upon exchange. Because delivering registered shares is not solely within the Company’s control and settlement in cash is assumed, these OP Units are classified outside permanent equity in the mezzanine section of the accompanying consolidated balance sheets.
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The book value of the Redeemable OP Units starts at its pro rata share of the total Limited Partner carrying amount, determined as Redeemable OP Units divided by total Limited Partner OP Units. At each reporting date the book value is adjusted to the greater of that amount or its redemption value, which is based on the Common Share price of Vivmark at the end of each respective reporting period. See Note 8, "Equity, Capital and Other Interests," for additional discussion.
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The Limited Partners include individuals and entities that received Limited Partner Units in exchange for contributed properties and holders of restricted units issued as share-based compensation. Vivmark is the General Partner and holds all General Partner Units. Net income is allocated to the Limited Partners based on their respective ownership percentage of ERPOP. The ownership percentage is calculated by dividing the number of Limited Partner Units by total OP Units. Issuances and retirements of Common Shares and OP Units change the ownership interests of both the Limited Partners and Vivmark. Such transactions and the related proceeds and payments are treated as capital transactions.
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Cash and cash equivalents includes all cash and liquid investments with an original maturity of three months or less from the date acquired. Restricted cash includes replacement reserves for certain communities subject to ground leases, principal reserve funds that are restricted for the repayment of specified secured financing, amounts the Company has designated for planned 1031 exchange activity and resident security deposits. The majority of the Company's cash, cash equivalents and restricted cash are held at major commercial banks.
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The Company accounts for real estate acquisitions as either an asset acquisition or a business combination. Under either model, the Company identifies and determines the fair value of assets acquired, liabilities assumed and any noncontrolling interest in the acquiree. Typical assets acquired and liabilities assumed include land, building, furniture, fixtures and equipment, debt and identified intangible assets and liabilities, typically consisting of the value of above or below market leases and in-place leases. The Company utilizes various sources to determine fair value, including its own analysis of recently acquired and existing comparable communities in its portfolio and other market data. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed. For an asset acquisition, the purchase price is allocated based on the relative fair value of the net assets. For a business combination, the Company records the assets acquired and liabilities assumed based on the fair value of each respective item. The Company expenses all applicable acquisition costs for a business combination and capitalizes all applicable acquisition costs for an asset acquisition. The Company expects that acquisitions of individual operating communities will generally be asset acquisitions.
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The Company classifies real estate assets as real estate held for sale when it is probable a community will be disposed of. The Company presents the assets and liabilities of any communities that qualify as held for sale separately in the accompanying consolidated balance sheets. Real estate assets held for sale are measured at the lower of the carrying amount or the fair value less the cost to sell. Upon the classification of an asset as held for sale, no further depreciation is recorded.
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The Company enters into interest rate swap and interest rate cap agreements (collectively, "Hedging Derivatives") for interest rate risk management purposes and in conjunction with certain variable rate secured debt to satisfy lender requirements. The Company does not enter into Hedging Derivatives for trading or other speculative purposes. The Company assesses the effectiveness of qualifying hedges, both at inception and on an ongoing basis. The Company recognizes the fair value of all Hedging Derivatives as either assets or liabilities in the accompanying consolidated balance sheets. Fair value changes for derivatives that are not in qualifying hedge relationships are reported as a component of interest expense, net on the accompanying consolidated statements of operations. For the Hedging Derivatives that qualify as effective cash flow hedges, the Company records the cumulative changes in the Hedging Derivatives' fair value in accumulated other comprehensive income (loss) on the accompanying consolidated statements of comprehensive income (loss). Amounts recorded in accumulated other comprehensive income (loss) will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow. The effective portion of the change in fair value of the Hedging Derivatives that qualify as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding hedged item. Receipts or payments associated with the gains and losses on the Company’s cash flow hedges of future fixed rate debt issuances are presented as a component of cash flows from financing activities in the period the hedges are terminated and the receipt or payments for the Company’s cash flow hedges of interest on variable rate debt are presented as a component of cash flows from operating activities. Payments for derivatives that are not designated in hedging relationships are presented as a component of cash flows from operating activities. See Note 11, “Fair Value Measurements,” for further discussion of derivative financial instruments.
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The Company recognizes revenue for the transfer of goods and services to customers for consideration that the Company expects to receive. The majority of the Company’s revenue is derived from residential and non-residential rental and other lease income. The Company's revenue streams have the same timing and pattern of revenue recognition, with consistent allocations between the lease and revenue recognition standards. The Company has elected an accounting policy to account for both its lease and non-lease components (specifically common area maintenance charges) as a single lease component under the lease standard.
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Residential leases may include lease income related to utility recoveries, parking rent, storage rent and pet rent, while non-residential leases may include lease income related to utility recoveries, parking rent and storage rent. These items are accounted for as part of a single lease component as they cannot be leased separately and have the same timing and pattern of transfer as the related lease. Rental income attributable to residential leases is recognized on a straight-line basis when reasonably assured they are collectible, which is not materially different than if it were recorded when due from residents and recognized monthly as it was earned. Rental income
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attributable to non-residential leases is also recorded on a straight-line basis over the term of the lease when reasonably assured they are collectible. Residential leases generally have one-year lease terms renewable upon consent of both parties on an annual or monthly basis. Non-residential leases generally have five- to ten-year lease terms with market-based renewal options. The Company is a lessor for its residential and non-residential leases and a lessee for its corporate headquarters, regional offices and ground leases for land underlying certain communities. If applicable, lease agreements are evaluated to determine the accounting treatment as a finance or operating lease in accordance with the lease standard. See Note 6, "Leases," for the Company’s rental income detail allocated between the lease and revenue recognition standards. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to amounts in prior periods reported in the financial statements and notes to the financial statements to conform to current year presentations in connection with the Merger, as well as changes in held for sale classification, disposition activity and segment classification. The reclassifications associated with the Merger include: Consolidated Balance Sheets As of December 31, 2025 • $70.3 million from Unconsolidated investments to Prepaid expenses and other assets; • $259.1 million from Prepaid expenses and other assets to Notes receivable; • $92.3 million and $68.6 million from Payables for construction and Accrued interest payable, respectively, to Accounts payable and accrued expenses; and • $60.7 million and $72.7 million from Resident security deposits and Accrued expenses and other liabilities, respectively, to Other liabilities. These reclassifications had no effect on previously reported total assets, total liabilities and total shareholders' equity as of December 31, 2025. Consolidated Statements of Operations For the three months ended September 30, 2025 • $39.1 million from Operating expenses, excluding property taxes to Property management; • $42.4 million from Income from unconsolidated investments to Non-operating gains (losses); and • $6.8 million from Structured Investment Program interest income to Other income (expense), net. For the nine months ended September 30, 2025 • $116.7 million from Operating expenses, excluding property taxes to Property management; • $39.9 million from Income from unconsolidated investments to Non-operating gains (losses); and • $19.9 million from Structured Investment Program interest income to Other income (expense), net. These reclassifications did not impact previously reported net income or comprehensive income (loss) for the three and nine months ended September 30, 2025. Recent Accounting Pronouncements In December 2025, the Financial Accounting Standards Board (“FASB”) issued an amendment to the interim reporting standards which is intended to improve the navigability of the required interim reporting disclosures and clarify when that guidance is applicable.
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3. Business Combination As discussed in Note 1, "Business," on August 17, 2026, the Company completed the Merger between AvalonBay and Equity Residential, which was accounted for as a reverse acquisition. Purchase Price and Consideration Because AvalonBay was the accounting acquirer, the consideration transferred was measured as the fair value of the number of AvalonBay shares that AvalonBay would have had to issue to give Equity Residential shareholders 49% ownership of Vivmark. The consideration was calculated at the Merger Date as summarized in the table below (in thousands, except price per share): Total initial common shares of Vivmark 772,714 Shares as adjusted by the Exchange Ratio 276,661 Less: Outstanding shares of AvalonBay (142,612) Hypothetical AvalonBay shares issued to acquire Equity Residential 134,049 AvalonBay closing share price as of August 14, 2026 $184.06 Consideration transferred $24,673,053 Provisional Purchase Price Allocation Equity Residential’s historical assets and liabilities were recorded at fair value as of the Merger Date, and the consolidated financial statements present AvalonBay’s historical balances and pre-Merger results. The fair value of the identifiable net assets acquired equaled the consideration transferred of $24.7 billion, and no goodwill was recognized. Management determined the fair value of the assets acquired and liabilities assumed based, in part, upon a preliminary valuation prepared by an independent third-party valuation specialist, which used techniques including direct capitalization and market-based comparables, among others. The allocation is provisional as the Company is in the process of reviewing the assumptions, inputs, estimates and methodologies to ensure reasonableness. The fair value of noncontrolling interests assumed was based on Equity Residential's share price on the Merger Date. The Company will record any measurement-period adjustments from finalizing its assessment in the period in which they are determined, not to exceed one year from the Merger Date.
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The following table summarizes the provisional fair values of the assets acquired and liabilities assumed (in thousands): Land $9,441,282 Building 19,787,630 In place leases (1) 2,232,199 Furniture, fixtures and equipment 1,263,145 Projects under construction 65,415 Total real estate 32,789,671 Unconsolidated real estate investments and advances 339,055 Cash and cash equivalents 316,134 Restricted cash 108,447 Right of use lease assets 557,590 Prepaid expenses and other assets 287,493 Total assets acquired 34,398,390 Unsecured debt, net (6,614,264) Mortgage notes payable, net (1,524,511) Lease liabilities (264,234) Accounts payable and accrued expenses (266,611) Other liabilities (333,888) Less total liabilities assumed (9,003,508) Redeemable Noncontrolling Interests - Operating Partnership (184,339) Preferred Shares (17,155) SERP paid-in-capital 8,476 Other Noncontrolling Interests (528,811) Less total equity interests assumed (721,829) Total consideration $24,673,053 (1) The acquired in place lease intangible includes $2.1 billion for residential leases, which has an estimated useful life of six months and is amortized on a straight-line basis as a component of depreciation expense in the consolidated statements of operations. From the Merger Date through September 30, 2026, the total revenue and net loss from Equity Residential included in Vivmark's consolidated statements of operations are $394.9 million and $483.3 million, respectively. The net loss primarily reflects the impact of depreciation on in-place leases. Transaction and other Merger-related costs During the three and nine months ended September 30, 2026, the Company incurred transaction and other Merger-related costs of $544.0 million and $556.4 million, respectively, consisting primarily of $464.3 million and $476.7 million, respectively, of transaction costs, including real estate transfer taxes, advisory fees, legal and accounting and other professional fees, and $79.7 million of Merger-related compensation costs for both the three and nine months ended September 30, 2026, which are presented in general and administrative expenses on the Company's consolidated statements of operations. Pro forma Information The pro forma financial information set forth below is based upon the Company’s historical consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025, adjusted to give effect to the Merger as of January 1, 2025. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it purport to represent the results of income for future periods (amounts in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Rental income $ 1,588,012 $ 1,547,200 $4,697,221 $ 4,579,395 Net income (loss) $ (139,270) $ (406,049) $556,756 $ (685,257)
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4. Real Estate The following table summarizes the carrying amounts for the Company’s investment in real estate, at cost, as of September 30, 2026 and December 31, 2025 (amounts in thousands): September 30, 2026 December 31, 2025 ─────────────────────────────────────────────────────────────────────────────────────────────────── Land $14,319,107 $4,910,995 Buildings and improvements 41,290,158 20,959,101 Furniture, fixtures and equipment 2,986,405 1,546,813 In-place lease intangibles 2,514,184 293,036 Operating real estate 61,109,854 27,709,945 Less accumulated depreciation (9,898,933) (8,686,084) Operating real estate, net 51,210,921 19,023,861 Land under development 349,258 297,527 Construction in progress 1,340,242 1,161,268 Construction in progress ("CIP"), including land 1,689,500 1,458,795 Land held for development 133,943 123,751 Real estate assets held for sale, net 166,642 150,262 Total real estate, net $53,201,006 $20,756,669 During the three months ended September 30, 2026, the Company disposed of two wholly owned communities with an aggregate of 467 apartment homes for $208.1 million, resulting in gain on sale of communities of $108.1 million. During the nine months ended September 30, 2026, the Company disposed of five wholly owned communities with an aggregate of 1,351 apartment homes for $548.8 million, resulting in gain on sale of communities of $287.8 million. As of September 30, 2026, the Company had one real estate asset that qualified as held for sale.
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The Company's Structured Investment Program (the "SIP") is an investment platform through which the Company provides mezzanine loans or preferred equity to third-party multifamily developers in the Company's markets. The Company evaluates each SIP commitment to determine the classification as a loan or an investment in a real estate development project. As of September 30, 2026, all SIP commitments are classified as loans.
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The Company has various equity interests in joint ventures that have been deemed to be VIEs, of which the Company is the primary beneficiary and therefore consolidates the joint ventures. The noncontrolling equity balances and net income attributable to these communities are presented as Partially Owned Communities in the accompanying consolidated balance sheet and statement of operations. The following table summarizes the Company’s consolidated joint ventures as of September 30, 2026:
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The Company has equity interests in 4 additional wholly owned VIEs consisting of an aggregate of 785 apartment homes as part of a developer funding program. Unconsolidated Real Estate Investments and Advances The Company has various equity interests in joint ventures that are unconsolidated and accounted for using the equity method of accounting. Certain of these entities are VIEs for which the Company is not the primary beneficiary. The following table summarizes the Company’s unconsolidated real estate investments and advances as of September 30, 2026 and December 31, 2025 (amounts in thousands except for ownership percentage): Ownership Percentage September 30, 2026 December 31, 2025 ──────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Operating communities 20% - 80% (1) $ 268,165 (2) $ 122,607 (2) Development communities 95% (1) 166,689 - Other real estate investments Varies 13,308 566 Unconsolidated real estate investments and advances $ 448,162 $ 123,173 (1) In certain instances, the joint venture agreements contain provisions for promoted interests in favor of our joint venture partner. If the terms of the promoted interest are attained, then our share of the proceeds from a sale or other capital event of the unconsolidated entity may be less than the indicated ownership percentage. (2) The Company's interest includes $56.8 million of a mortgage note receivable from a joint venture. The following table summarizes the Company’s unconsolidated real estate investments as of September 30, 2026: Communities Apartment Homes Operating communities 13 4,049 Property Technology Companies and Other Fund Investments The Company invested in, and may continue in the future to invest in, third-party property technology companies and other fund investments, holding 15 such investments as of September 30, 2026. The Company elected the net asset value ("NAV") practical expedient to measure these funds and related activity. The following table summarizes these investments, which are included in prepaid expenses and other assets on the accompanying consolidated balance sheets as of September 30, 2026 and December 31, 2025 (amounts in thousands): September 30, 2026 December 31, 2025 ─────────────────────────────────────────────────────────────────────────────────────────────────────────── Property technology companies and other fund investments $141,995 $71,663 Development and Pursuit Costs The Company capitalizes costs associated with its development activities to the basis of land held when future development is probable, or if the Company has either not yet acquired the land or if the project is subject to a leasehold interest, the costs are capitalized as deferred development costs ("Development Rights"). Future development of these Development Rights is dependent upon various factors, including zoning and regulatory approval, rental market conditions, construction costs and the availability of capital. Costs incurred for pursuits for which future development is not yet considered probable are expensed as incurred. If the Company determines a Development Right is no longer probable, the Company recognizes any necessary impairment. The Company incurred expense of $5.0 million and $1.4 million for the three months ended September 30, 2026 and 2025, respectively, and $16.0 million and $8.6 million for the nine months ended September 30, 2026 and 2025, respectively, for costs which include development pursuits that were not yet probable of future development at the time incurred, or for pursuits that the Company determined were no longer probable of being developed. These costs are included in expensed development and pursuit costs on the accompanying consolidated statements of operations. Casualty and Impairment Loss The Company recognized expense of $2.4 million for the three months ended September 30, 2026 and $7.0 million and $0.9 million for the nine months ended September 30, 2026 and 2025, respectively, from property damage at certain of the Company's communities. These expenses are reported as casualty and impairment loss on the accompanying consolidated statements of operations.
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$2.5 billion Commercial Paper Program (as defined below) along with certain other obligations. The Company did not have any amounts outstanding under its Credit Facilities at September 30, 2026.
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The availability on the Company’s Credit Facilities as of September 30, 2026 was as follows (amounts in thousands):
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The following debt activity occurred during the nine months ended September 30, 2026:
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In May 2026, the Company repaid $475.0 million of its 2.95% unsecured notes at par upon maturity.
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In August 2026, the Company repaid three 3.61% mortgage notes with an aggregate principal amount of $185.1 million in advance of their scheduled maturity, recognizing a loss on debt extinguishment of $2.0 million for the write-off of the remaining deferred issuance and hedging costs.
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In August 2026, the Company repaid $92.0 million of its 7.57% unsecured notes at par upon maturity.
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See Note 14, "Subsequent Events," for additional debt activity. Scheduled payments and maturities of fixed and variable rate debt outstanding at September 30, 2026 are as follows (amounts in thousands):
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Units; liquidation value $50 per share and unit; 343,100 shares and units issued
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Any Common Shares issued pursuant to Vivmark’s equity incentive compensation and employee share purchase plans result in ERPOP issuing OP Units to Vivmark on a one-for-one basis with ERPOP receiving the net cash proceeds of such issuances.
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Following the closing of the Merger, the Company assumed AvalonBay’s 2026 Equity Incentive Plan (the “2026 Plan”), AvalonBay’s Second Amended and Restated 2009 Equity Incentive Plan (the “2009 Plan”), and AvalonBay’s Deferred Compensation Plan. While the 2026 Plan replaced the 2009 Plan effective May 20, 2026, awards previously granted under the 2009 Plan remain outstanding. Outstanding awards under both the 2026 Plan and the 2009 Plan, as well as obligations under the Deferred Compensation Plan, were converted into or assumed as obligations or equity awards of the Company in accordance with the Merger Agreement, as described below. The Company maintains Equity Residential's 2019 Share Incentive Plan (the “2019 Plan”), which was approved by Equity Residential’s shareholders on June 27, 2019. Pursuant to the 2019 Plan, officers, trustees, key employees and consultants of the Company and its subsidiaries may be granted share options to acquire Common Shares (“Options”), including non-qualified share options and incentive share options, share appreciation rights (“SARs”), or restricted shares or units, including long-term incentive plan awards. Options, SARs, restricted shares and restricted units are collectively referred to herein as “Awards”. The 2019 Plan reserves 11,331,958 Common Shares for issuance and expires on June 27, 2029. As of September 30, 2026, 4,212,339 Common Shares were available for future issuance. Equity Residential's 2011 Share Incentive Plan also survived the Merger and will terminate when all outstanding Awards have expired and been exercised/vested.
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In connection with the Merger, the Company granted certain post-closing management retention equity awards and recognized accelerated share-based compensation expense on certain existing awards under its equity incentive plans that accelerated pursuant to the terms of the Merger Agreement. During the three months ended September 30, 2026, the Company incurred $11.4 million in accelerated share-based compensation costs related to awards that vested upon consummation of the Merger, which is included in general and administrative expenses on the accompanying consolidated statements of operations. Refer to Note 3, "Business Combination," for discussion of transaction and other Merger-related costs.
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At the effective time of the Merger, each outstanding AvalonBay equity award, other than any award of deferred stock units, was converted into an Award of the Company in accordance with the Merger Agreement, as adjusted by the Exchange Ratio. The converted AvalonBay awards remain outstanding and generally continue to be subject to the terms and conditions of the applicable equity incentive compensation plan and award agreement in effect immediately prior to the effective time of the Merger. Outstanding AvalonBay performance awards were converted into restricted share or restricted unit awards based on the greater of target performance and the actual level of performance determined as of close of the Merger, with the performance conditions eliminated and the remaining awards subject to the applicable time-based vesting requirements that applied immediately prior to the effective time of the Merger. Outstanding AvalonBay deferred stock units were converted into Common Shares based on the Exchange Ratio.
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Equity Residential Options and restricted shares/units remain outstanding and continue to be subject to the terms and conditions of the 2019 Plan except that each Equity Residential long-term incentive plan award was deemed achieved based on the greater of target performance and the actual level of performance determined as of close of the Merger, with the performance conditions eliminated and the earned awards remaining subject to the applicable time-based vesting requirements.
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Compensation Awards The following table summarizes the terms of the Awards. Unless otherwise noted below, the terms apply to all Awards, including AvalonBay awards converted in connection with the Merger. Options Restricted Shares Restricted Units ─────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Overview Options exercised after vesting result in issuance of new Common Shares. Restricted shareholders generally have the same voting rights and receive quarterly dividend payments on their shares at the same rate and on the same date as any other Common Share holder (1). When certain conditions are met, restricted units convert into an equal number of OP Units, which the holder may exchange for Common Shares on a one-for-one basis or at the option of the Company, the cash value of such shares. Restricted unitholders receive quarterly distribution payments on their restricted units at the same rate and on the same date as any other OP Unit holder (1). Grant/Exercise Granted at the fair market value of Common Shares as of the grant date. Granted at the fair market value of Common Shares as of the grant date. Granted at varying discount rates to the fair market value of Common Shares as of the grant date (3).
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Vesting Period In three equal installments over a three-year period from the grant date. Three years from the grant date (2). Three years from the grant date.
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Expiration Ten years from the grant date. Not applicable. Ten years from the grant date (3).
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Upon Employee Termination Unvested options are canceled (2). Unvested restricted shares are canceled (2). Unvested restricted units are canceled (2).
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Dividends and distributions paid on unvested restricted shares and units are included as a component of retained earnings and Noncontrolling Interest - Operating Partnership/Limited Partner Capital, respectively, and have not been considered in reducing net income available to Common Shares and Units in a manner similar to the Company’s preferred share and preference unit dividends for the earnings per share and Unit calculation.
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Certain AvalonBay time-based restricted share awards granted under the 2009 and/or 2026 Plans vest over a three-year period at one-third per year. AvalonBay options, restricted share and restricted unit awards granted under the 2009 and/or 2026 Plans vest upon employee termination without cause. Certain Vivmark Awards granted in connection with the Merger vest upon termination without cause, except for retirement.
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A restricted unit will automatically convert to an OP Unit when the capital account of each restricted unit increases (“books-up”) to a specified target. The probability of a book-up occurring within the ten-year contractual life along with the liquidity risk associated with various hold period restrictions are both reflected in the discount. If the capital target is not attained within ten years following the date of issuance, the restricted unit will automatically be canceled and no compensation will be payable to the holder of such canceled restricted unit. If the capital target is attained and the restricted unit is converted to an OP Unit, it will not expire.
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The following table summarizes the Award activity of the 2019 Plan, 2026 Plan and 2009 Plan for the nine months ended September 30, 2026:
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The following table summarizes information regarding Options outstanding and exercisable at September 30, 2026:
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in Years ─────────────────────────────────────────────────────────────────────────────────────────────────────────────── Options outstanding 4,840,787 3.98 $65.43 Options exercisable 4,537,971 3.66 $65.43 Vested and expected to vest 300,595 8.81 $65.38 Total employee compensation expense recognized in net income (loss) was $36.1 million and $21.4 million for the nine months ended September 30, 2026 and 2025, respectively, and total capitalized compensation expense was $8.9 million and $9.7 million for the nine months ended September 30, 2026 and 2025, respectively. At September 30, 2026, total unrecognized compensation cost was $93.6 million which is expected to be recognized over a weighted average period of 1.4 years. The Company reverses any previously recognized compensation expense for forfeitures as they occur. Deferred compensation related to the Company's Awards does not impact the Company's consolidated financial statements until recognized as compensation cost.
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11. Fair Value Measurements A three-level valuation hierarchy exists for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: • Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Financial Instruments Carried at Fair Value Derivative Financial Instruments Hedging Derivatives are carried at fair value in the Company's financial statements. The Company minimizes its credit risk on these transactions by dealing with major, creditworthy financial institutions and monitors the credit ratings of counterparties and the exposure of the Company to any single entity. The Company believes the likelihood of realizing losses from counterparty nonperformance is remote. The Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, relying on readily observable market parameters such as forward yield curves, interest rates, term to maturity, volatility and credit default swap data. Credit valuation adjustments associated with these derivatives use Level 3 inputs, such as estimates of current credit spreads, which the Company concluded are not significant. As a result, the Company determined that its derivative valuations are classified in Level 2 of the fair value hierarchy.
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The following table summarizes the consolidated derivative positions at September 30, 2026 (amounts in thousands): Non-designated Hedges Cash Flow Hedges Interest Rate Caps Interest Rate Swaps Notional balance $ 353,818 $ 700,000 Weighted average interest rate (1) 5.5% N/A Weighted average capped/swapped interest rate 6.7% 3.6% Earliest maturity date November 2026 January 2027 Latest maturity date July 2029 April 2029 (1) For debt hedged by interest rate caps, represents the weighted average interest rate on the hedged debt prior to any impact of the associated interest rate caps. During the nine months ended September 30, 2026, the Company entered into $150.0 million of forward starting interest rate swap agreements designated as cash flow hedges of interest rate variability on future debt issuance activity through December 31, 2026. The Company expects to cash settle the swaps and either pay or receive cash for the then current fair value. Assuming that the Company issues the debt as expected, the hedging impact from these positions will then be recognized over the life of the issued debt as a yield adjustment. The Company had certain derivatives not designated as hedges during the three and nine months ended September 30, 2026 and 2025, for which fair value changes during each of the respective periods were not material. As of September 30, 2026 and December 31, 2025, there were $57.6 million and $26.5 million in deferred gains, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and/or unsettled derivative instruments. The Company anticipates reclassifying $7.8 million of net hedging gains from accumulated other comprehensive income (loss) into earnings within the next 12 months as an offset to the hedged item during this period. Redeemable Noncontrolling Interests Redeemable Noncontrolling Interests are adjusted to the greater of carrying value or the market value of the Common Share price of Vivmark at the end of each respective reporting period. As the valuation is based on observable inputs, Redeemable Noncontrolling Interests are classified as Level 2. Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”) Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”) are valued using quoted market prices for identical assets. These holdings are included in other assets and other liabilities on the consolidated balance sheets. Financial Instruments Not Carried at Fair Value Cash, Cash Equivalents and Restricted Cash Cash, cash equivalent and restricted cash balances are held with various financial institutions within accounts designed to preserve principal. The Company monitors credit ratings of these financial institutions and the concentration of cash, cash equivalent and restricted cash balances with any one financial institution and believes the likelihood of realizing material losses related to cash, cash equivalent and restricted cash balances is remote. Cash, cash equivalent and restricted cash balances are carried at their face amounts, which reasonably approximate their fair values and are Level 1 within the fair value hierarchy. Other Financial Instruments Other financial instruments consist of (i) rents, (ii) other receivables, including notes receivable, (iii) prepaid expenses, (iv) accounts and construction payable and (v) accrued expenses and other liabilities. These assets and liabilities are carried at their face amounts, which reasonably approximate their fair values. The Company determined that its notes receivable approximate fair value because interest rates, yields and other terms are consistent with interest rates, yields and other terms currently available for similar instruments and are considered to be a Level 2 price within the fair value hierarchy.
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Equity Securities The Company has direct equity investments in third-party property technology companies without readily determinable fair values and has elected to measure them using the measurement alternative in accordance with the applicable accounting standards for equity securities. These investments are carried at cost less any impairment and adjusted to fair value if there are observable price changes for an identical or similar investment of the same issuer. The following table summarizes the Company’s property technology investment securities included in prepaid expenses and other assets as of September 30, 2026 and December 31, 2025 (amounts in thousands): September 30, 2026 December 31, 2025 ────────────────────────────────────────────────────────────────────────────────── Property technology investments $158,747 $78,686 During the three months ended September 30, 2026 and 2025, the Company recognized unrealized gains of $24.4 million and $42.4 million, respectively, and unrealized gains of $18.3 million and $39.9 million during the nine months ended September 30, 2026 and 2025, respectively, related to these investments, which were reported as a component of other income (expense), net on the accompanying consolidated statements of operations. As of September 30, 2026, the Company had recorded cumulative fair value adjustments of $86.8 million for net unrealized gains on equity securities. Indebtedness The Company values its fixed rate unsecured debt using quoted market prices, a Level 1 price within the fair value hierarchy. The Company values its mortgage notes payable, the Term Loan and any outstanding amounts under the Credit Facilities and Commercial Paper Program using a discounted cash flow analysis on the expected cash flows of each instrument. This analysis reflects the contractual terms of the instrument, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The process also considers credit valuation adjustments to appropriately reflect the Company's nonperformance risk. The Company has concluded that the value of its mortgage notes payable, Term Loan and any outstanding amounts under the Credit Facilities and Commercial Paper Program are Level 2 prices as the majority of the inputs used to value its positions fall within Level 2 of the fair value hierarchy. Financial Instruments Measured/Disclosed at Fair Value on a Recurring Basis The following tables summarize the classification between the three levels of the fair value hierarchy of the Company's financial instruments measured or disclosed at fair value on a recurring basis (amounts in thousands): September 30, 2026 Description Total Fair Value Quoted Prices in Significant Other Significant
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13. Reportable Segments The Company's reportable operating segments include Same Store, Other Stabilized and Development/Redevelopment. Annually as of January 1, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change. In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment. The Company's segment disclosures present the measure(s) used by the Chief Operating Decision Maker ("CODM") for assessing each segment's performance. The Company's CODM is comprised of several members of its executive management team, including its Chief Executive Officer and President, Chief Financial Officer, Chief Development Officer, Chief Investment and Growth Officer, Chief Operating Officer, and Executive Vice President - Portfolio and Asset Management. The CODM uses net operating income ("NOI") as the primary financial measure for Same Store communities and Other Stabilized communities. NOI is defined by the Company as total property revenue less direct property operating expenses including property taxes. NOI excludes corporate-level income and expenses including management, development and other fee income, property management expense, expensed development and pursuit costs, transaction costs, interest expense, casualty and impairment loss, gain/loss on sale of communities, income/loss from unconsolidated real estate investments, non-operating gains/losses, other income/expense, net and tax benefit/expense. Although the Company considers NOI a useful measure of communities' operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP. The CODM evaluates the Company's financial performance on a consolidated residential and non-residential basis. The non-residential results attributable to the non-apartment components of the Company's mixed-use communities and other non-residential operations represent 2.0% and 1.5% of total NOI for the three months ended September 30, 2026 and 2025, respectively, and 1.7% and 1.6% of total NOI for the nine months ended September 30, 2026 and 2025, respectively. A reconciliation of NOI to net income (loss) for the three and nine months ended September 30, 2026 and 2025 is as follows (amounts in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 ─────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Net (loss) income $ (747,141) $ 384,162 $ (261,959) $ 890,614 Adjustments: Property management, net of corporate income 54,319 37,192 130,903 111,449 General and administrative 118,308 22,052 167,521 64,828 Expensed development and pursuit costs 5,017 1,392 16,042 8,629 Transaction costs 464,321 - 476,688 - Depreciation 897,976 230,371 1,364,056 679,989 Interest expense 123,791 68,172 268,652 197,933 Casualty and impairment loss 2,374 - 6,993 858 (Gain) loss on sale of communities (108,304) (180,155) (287,877) (336,081) (Income) loss from unconsolidated real 5,811 (137) 6,286 (552)
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The primary performance measure for communities under development or redevelopment depends on the stage of completion. While under development, management monitors actual construction costs against budgeted costs as well as lease-up pace and rent levels compared to budget.
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The following tables detail the Company's segment information as of the dates specified (amounts in thousands). The segments are classified based on the individual community's status at January 1, 2026. As Equity Residential communities were acquired in connection with the Merger on August 17, 2026, they are not included in the Same Store segment. The Equity Residential communities with stabilized occupancy are classified in the Other Stabilized segment and will not be eligible to enter the Company's Same Store segment until January 1, 2028. Segment information for the three and nine months ended September 30, 2026 and 2025 has been adjusted to exclude the real estate assets that were sold from January 1, 2025 through September 30, 2026, or otherwise qualify as held for sale as of September 30, 2026, as described in Note 4, "Real Estate". Three Months Ended September 30, 2026 Three Months Ended September 30, 2025 Rental Operating NOI (2) Rental Operating NOI (2)
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The Company has evaluated subsequent events through the date on which this Quarterly Report on Form 10-Q was filed, the date on which these financial statements were issued, and identified the items below for discussion.
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As of November 6, 2026, the principal amount outstanding under the Commercial Paper Program was $2.0 billion.
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The Company repaid $300.0 million of its 2.90% unsecured notes at par upon maturity.
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The Company repaid $500.0 million of its 2.85% unsecured notes at par upon maturity.
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Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help provide an understanding of our business, financial condition and results of operations. This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this report, as well as the Annual Report on Form 10-K for the year ended December 31, 2025 of AvalonBay Communities, Inc., a Maryland corporation (“AvalonBay”), and the combined Annual Report on Form 10-K for the year ended December 31, 2025 of Equity Residential, a Maryland real estate investment trust (“Equity Residential”), and ERP Operating Limited Partnership, an Illinois limited partnership (“ERPOP”), each as previously filed with the SEC.
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At the effective time of the Merger, each outstanding share of AvalonBay common stock was automatically cancelled and converted into the right to receive 2.793 common shares ("Common Shares") of Vivmark (the “Exchange Ratio”), plus the right, if any, to receive cash in lieu of fractional Common Shares. As a result, former AvalonBay stockholders and Equity Residential shareholders owned approximately 51% and 49% of Vivmark, respectively.
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The Merger was accounted for as a reverse acquisition under ASC 805, Business Combinations, with Equity Residential as the legal acquirer and AvalonBay as the accounting acquirer. AvalonBay was determined to be the accounting acquirer based on the following: (i) former AvalonBay stockholders hold the largest portion of the voting rights in the Company; and (ii) AvalonBay’s senior management, including its Chief Executive Officer and President, comprise the majority of the executive management team of the Company. Accordingly, the Company’s historical financial statements for periods before the Merger Date are those of AvalonBay, and share and per share amounts for those periods have been retroactively adjusted to reflect the Exchange Ratio. AvalonBay’s assets and liabilities continue to be reported at their historical carrying amounts, and Equity Residential’s identifiable assets acquired and liabilities assumed were recognized at their fair values as of the Merger Date. The Company’s results include Equity Residential’s operations from the Merger Date. See Note 3, "Business Combination," of the Consolidated Financial Statements for further discussion of the Merger.
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Vivmark develops, redevelops, acquires, owns and operates multifamily communities in premier U.S. markets and has elected to be taxed as a real estate investment trust (“REIT”).
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References to the “Company,” “we,” “us” or “our” mean collectively Vivmark, ERPOP and the entities and subsidiaries owned or controlled by Vivmark and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and the entities and subsidiaries owned or controlled by ERPOP.
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• Net loss attributable to Common Shares for the three months ended September 30, 2026 was $735.5 million compared to net income attributable to Common Shares of $381.3 million for the prior year period, a decrease of $1.1 billion. The decrease was primarily attributable to an increase in depreciation expense driven by real estate assets acquired in the Merger, specifically in-place lease intangible assets, and transaction costs associated with the Merger.
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• Same Store NOI attributable to our apartment rental operations, including parking and other ancillary residential ("Residential") revenue, for the three months ended September 30, 2026 was $471.6 million, an increase of $4.2 million, or 0.9%, over the prior year period. The increase was primarily attributable to an increase in Residential revenue of $21.5 million, or 3.1%, partially offset by an increase in Residential property operating expenses of $17.3 million, or 7.6%.
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• Other Stabilized Residential NOI for the three months ended September 30, 2026 was $288.9 million, an increase of $273.5 million over the prior year period due to the real estate assets acquired in the Merger.
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• Development and Redevelopment Residential NOI for the three months ended September 30, 2026 was $19.3 million, an increase of $13.8 million over the prior year period due to recently completed Development projects that had not reached stabilized occupancy.
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• 28 wholly owned communities under construction, which are expected to contain 9,104 apartment homes with a projected total capitalized cost of $3.5 billion.
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• Land or rights to land on which we expect to develop an additional 32 apartment communities that, if developed as expected, will contain 10,273 apartment homes.
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During the three months ended September 30, 2026 we sold two wholly owned communities containing 467 apartment homes for $208.1 million.
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Our real estate investments consist primarily of current apartment operating communities ("Current Communities"), consolidated and unconsolidated communities in various stages of development ("Development" communities and "Unconsolidated Development" communities) and Development Rights (as defined below). Our Current Communities are further classified as Same Store communities, Other Stabilized communities, Redevelopment communities and Unconsolidated communities. Our Current Communities and Development communities include communities that we wholly own as well as communities that we partially own through consolidated or unconsolidated joint ventures. While we generally establish the classification of communities on an annual basis, we update the classification of communities during the calendar year to the extent that our plans with regard to the disposition or redevelopment of a community change, or if something occurs that materially impacts the operations of a community such as a casualty loss. The following is a description of each category:
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Current Communities are categorized as Same Store, Other Stabilized, Redevelopment, or Unconsolidated according to the following attributes:
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• 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 respective prior year period. For the nine month periods ended September 30, 2026 and 2025, Same Store communities are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2025, are not conducting or expected to conduct substantial redevelopment activities and are not held for sale as of September 30, 2026 or probable for disposition to unrelated third parties within the current year. As Equity Residential communities were acquired in connection with the Merger on August 17, 2026, they are not classified as Same Store communities. The Equity Residential communities with stabilized occupancy are classified as Other Stabilized communities and will not be eligible to enter the Company's Same Store portfolio until January 1, 2028. 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.
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• Other Stabilized is composed of completed consolidated communities that we wholly or partially own and that are not Same Store but which have stabilized occupancy, as defined above, as of January 1, 2026, or which were acquired subsequent to January 1, 2025. Other Stabilized includes all stabilized consolidated communities acquired in the Merger. Other Stabilized excludes communities that are conducting, or are probable to conduct substantial redevelopment activities within the current year, as defined below.
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• Redevelopment is composed of consolidated communities where substantial redevelopment occurred, is in progress, or is probable to begin during the fiscal year. Redevelopment is considered substantial when (i) capital invested is expected to exceed the lesser of $5,000,000 or 10% of the community's pre-redevelopment basis and (ii) physical occupancy is below or is expected to be below 90% during, or as a result of, the redevelopment activity.
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• Unconsolidated is composed of communities that we have an indirect ownership interest in through our investment interest in an unconsolidated joint venture.
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Development is composed of consolidated projects that are either currently under construction, were under construction and were completed during the current year or where construction has been complete for less than one year and that do not have stabilized occupancy. These projects may be partially or fully complete and operating.
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Unconsolidated Development is composed of projects that are either currently under construction, or were under construction and were completed during the current year, in which we have an indirect ownership interest through an unconsolidated joint venture. These projects may be partially or fully complete and operating.
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Development Rights are development opportunities in the early phase of the development process where we either have an option to acquire land or enter into a leasehold interest, where we are the buyer under a long-term conditional contract to purchase land, where we control the land through a ground lease or own land to develop a new community, or where we are the designated developer in a public-private partnership. We capitalize related pre-development costs incurred in pursuit of new developments for which we currently believe future development is probable.
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As of September 30, 2026, communities that we owned or held a direct or indirect interest in were classified as follows:
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Communities Homes Same Store: Boston, MA 39 9,697 Metro NY/NJ 41 12,795 Mid-Atlantic 36 12,655 Southeast Florida 9 3,091 Denver, CO 8 2,192 Seattle, WA 19 5,624 Northern California 37 11,197 Southern California 59 17,899 Other expansion regions 12 3,200 Total Same Store 260 78,350 Other Stabilized (1): Boston, MA 25 6,908 Metro NY/NJ 35 8,784 Mid-Atlantic 42 13,553 Atlanta, GA 22 6,420 Southeast Florida 1 270 Denver, CO 17 5,085 Seattle, WA 40 8,419 Northern California 41 12,339 Southern California 77 19,994 Other expansion regions 26 8,019 Total Other Stabilized 326 89,791 Redevelopment 1 842 Unconsolidated 11 3,410 Total Current Communities 598 172,393 Development 36 12,180 Unconsolidated Development 2 639 Total Communities 636 185,212 Development Rights 32 10,273
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Other Stabilized includes all stabilized consolidated communities acquired in the Merger (the “Equity Residential Communities”), including communities that are partially owned through consolidated joint ventures. Equity Residential Communities held through unconsolidated joint ventures are included in Unconsolidated.
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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. A comparison of our operating results for the three and nine months ended September 30, 2026 and 2025 is as follows (amounts in thousands):
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Rental income increased $428.6 million, or 56.0%, and $470.3 million, or 20.7%, for the three and nine months ended September 30, 2026, respectively, as compared to the prior year periods, primarily due to rental revenue from the Equity Residential Communities acquired in the Merger and an increase in rental revenue from our stabilized operating communities. For the Company's same store portfolio, average rental revenue per home increased 2.1% to $3,119 for the nine months ended September 30, 2026.
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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 flows from operating activities, as determined by GAAP, as a measure of liquidity, nor is NOI indicative of cash available to fund cash needs.
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Represents results attributable to the retail and other non-residential operations at our communities.
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Does not include Residential NOI from real estate assets sold or held for sale. Residential NOI related to these assets is $5,423 and $15,009 for the three months ended September 30, 2026 and 2025, respectively, and $20,954 and $58,166 for the nine months ended September 30, 2026 and 2025, respectively.
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The 0.7% increase in Same Store Residential NOI for the nine months ended September 30, 2026 is due to an increase in Residential revenue of $42.6 million, or 2.1%, partially offset by an increase in Residential property operating expenses of $33.3 million, or 5.1%, over the prior year period.
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The following table provides results related to the Equity Residential Communities, which are included in our Other Stabilized results, by market for the period from August 17, 2026, the Merger Date, through September 30, 2026 (amounts in thousands):
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Property management, net of corporate income increased $17.1 million, or 46.1%, and $19.5 million, or 17.5%, for the three and nine months ended September 30, 2026, respectively, as compared to the prior year periods, primarily due to the inclusion of property management costs of Equity Residential subsequent to the closing of the Merger, primarily for higher payroll related costs, legal and professional fees.
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General and administrative increased $96.3 million to $118.3 million and $102.7 million to $167.5 million, for the three and nine months ended September 30, 2026, respectively, as compared to the prior year periods, primarily due to Merger-related compensation costs, including severance costs, transaction awards, and accelerated vesting of long-term compensation.
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Expensed development and pursuit costs include write downs and costs related to the abandonment of Development Rights, development pursuits not yet considered probable for development, and abandoned acquisition and disposition pursuits. These costs may vary significantly from year to year driven by fluctuations in our investment activity, volatility in capital market conditions, or other factors. In addition, the timing for recoveries will not always align with the timing for expensing an abandoned pursuit. Expensed development and other pursuit costs were $5.0 million and $16.0 million for the three and nine months ended September 30, 2026, respectively, and $1.4 million and $8.6 million for the three and nine months ended September 30, 2025, respectively.
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Transaction costs are primarily composed of transfer taxes, advisory fees and legal fees related to the Merger, and were $464.3 million and $476.7 million for the three and nine months ended September 30, 2026, respectively. See Note 3, "Business Combination," of the Consolidated Financial Statements for further discussion of the Merger.
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Interest expense increased $55.6 million, or 81.6%, and $70.7 million, or 35.7%, for the three and nine months ended September 30, 2026, respectively, as compared to the prior year periods, primarily resulting from the Merger, whereby the Company assumed $8.4 billion principal amount of secured and unsecured indebtedness that remained outstanding as of September 30, 2026. The debt assumed in the Merger was recognized at fair value, resulting in a net discount of $516.0 million, which is recognized as an increase to the contractual interest expense over the life of the related debt. The increase in interest expense was partially offset by higher capitalized interest. The Company capitalized interest of $17.9 million and $13.7 million during the three months ended September 30, 2026 and 2025, respectively, and $48.4 million and $36.1 million during the nine months ended September 30, 2026 and 2025, respectively.
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Casualty and impairment loss for the three and nine months ended September 30, 2026 was $2.4 million and $7.0 million, respectively, and $0.9 million for the nine months ended September 30, 2025, which represents property damage and emergency response at certain of our communities resulting from casualty events.
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Gain on sales of communities decreased $71.9 million, or 39.9%, and $48.2 million, or 14.3%, for the three and nine months ended September 30, 2026, respectively, as 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, 2026, we sold two and five wholly owned communities and recognized a gain of $108.1 million and $287.8 million, respectively. For the three and nine months ended September 30, 2025, we sold six and nine wholly owned communities and recognized a gain of $180.2 million and $336.1 million, respectively.
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Cash flows from operations are determined by operating activities and factors including but not limited to (i) the number of apartment homes owned, (ii) rental rates, (iii) occupancy levels, (iv) uncollectible lease revenue levels or interruptions in collections caused by market conditions, (v) operating expenses and (vi) capital expenditures with respect to our communities. Cash provided by operating activities for the nine months ended September 30, 2026 as compared to the prior year period decreased by $228.8 million primarily due to the payment of Merger-related costs and an increase in prepaid expenses and other assets.
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Our investing cash flows are primarily impacted by our transaction activity, development spend and capital expenditures. Cash used in investing activities for the nine months ended September 30, 2026 decreased by approximately $591.8 million primarily due to (i) a decrease in the acquisition of real estate assets from the prior year period and (ii) cash acquired in the Merger, partially offset by a decrease in net proceeds from the disposition of real estate assets.
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• Repaid $92.0 million of our 7.57% unsecured notes at par upon maturity, which were assumed in connection with the Merger;
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• Repaid three 3.61% mortgage notes with an aggregate principal amount of $185.1 million in advance of their scheduled maturity;
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• Settled outstanding forward contracts, issuing 10,278,240 Common Shares at $78.75 per share for proceeds of $809.4 million;
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As of October 30, 2026, available borrowing capacity under the Credit Facilities was $3.2 billion. This reflects $1.8 billion of commercial paper outstanding and no borrowings outstanding under the Credit Facilities.
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The following table details our consolidated debt obligations, including the effective interest rate and contractual maturity dates, and principal payments for periodic amortization and maturities for the next five years, excluding the Credit Facilities and our Commercial Paper Program and amounts outstanding related to communities classified as held for sale at September 30, 2026 (dollars in thousands).
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Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured debt of $458,684 as of September 30, 2026 and deferred financing costs and debt discount for the secured notes of $96,475 as of September 30, 2026 as reflected on our Consolidated Balance Sheets included elsewhere in this report.
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The Term Loan has been swapped to an effective fixed rate using interest rate swaps.
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During the year ended December 31, 2024, AvalonBay completed an underwritten public offering pursuant to which it entered into forward contracts to sell 10,278,240 Common Shares at a discount to the closing price of $81.10 per share for net proceeds of $808.6 million based on the initial forward price. During the nine months ended September 30, 2026, AvalonBay fully settled the outstanding forward contracts, issuing 10,278,240 Common Shares at an average price of $78.75 per share for proceeds of $809.4 million.
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During the nine months ended September 30, 2026, we entered into $150.0 million of forward starting interest rate swap agreements designated as cash flow hedges of interest rate variability on future debt issuance activity through December 31, 2026. We expect to cash settle the swaps and either pay or receive cash for the then current fair value, and will amortize the deferred hedging gain or loss over the life of the hedged debt as a component of interest expense.
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NOI Debt Weighted Average Ownership Total Total QTD 2026 YTD 2026 Principal Amount Weighted Average
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As of September 30, 2026, we owned or held a direct interest in 28 Development communities under construction. We expect these Development communities, when completed, to add a total of 9,104 apartment homes and 89,000 square feet of commercial space to our portfolio. We cannot assure you that we will meet our schedule for construction completion or that we will meet our projected total capital cost, either individually, or in the aggregate.
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The following table presents a summary of the Development communities (dollars in thousands):
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Projected total capital cost includes all capitalized costs projected to be or actually incurred to develop the respective Development community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation commercial tenants such as tenant improvements and leasing commissions.
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Stabilized operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
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Development communities containing at least 10,000 square feet of commercial space include Avalon West Windsor (19,000 sf), Avalon North Palm Beach (10,000 sf), Avalon Mission Valley (31,000 sf) and Wilder at Windward (11,000 sf).
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Communities being developed through our Developer Funding Program ("DFP"). The DFP utilizes third-party multifamily developers to source and construct communities which we own and operate.
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At September 30, 2026, we had $133.9 million in acquisition and related capitalized costs for direct interests in seven land parcels we own and intend to develop. In addition, we had $74.2 million in capitalized costs (including legal fees, design fees and related overhead costs) related to pursuits probable of future development including (i) 20 Development Rights for which we control the land parcel, typically through a conditional agreement or option to purchase or lease the land, as well as (ii) costs incurred for five Development Rights that we expect to construct as additional phases of our existing stabilized operating communities on land we own. Collectively, the land held for development and associated costs for deferred Development Rights relate to 32 Development Rights for which we expect to develop new apartment communities in the future. We estimate that the successful completion of all of these communities would ultimately add approximately 10,273 apartment homes to our portfolio. There can be no assurance that any
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or all of these developments will be completed on the anticipated terms, or at all.
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During the nine months ended September 30, 2026, we entered into one new Structured Investment Program (the "SIP") commitment, agreeing to provide an aggregate investment of up to $15.0 million in a multifamily development project in Metro NY/NJ.
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As of September 30, 2026, we had fully funded nine outstanding commitments under the SIP totaling $241.8 million in the aggregate. As of September 30, 2026, our investment commitments had a weighted average rate of return of 11.8% and a weighted average final maturity date of November 2028, inclusive of the impact of contractual extension options which typically allow the borrower to extend the maturity of their loan by up to two years from the initial maturity date. See Note 5, "Investments," in the Notes to Consolidated Financial Statements for additional discussion.
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Preparing financial statements in conformity with GAAP requires management to use judgment in applying accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions had been made, different accounting policies might have been applied, resulting in different financial results or a different presentation of our financial statements. Our critical accounting policies are: (i) cost capitalization, (ii) abandoned pursuit costs and asset impairment, and (iii) business combinations. Except for the addition of business combinations as a result of the Merger, described below, our critical accounting policies and estimates have not changed materially from the information included in AvalonBay’s Annual Report on Form 10-K for the year ended December 31, 2025 and Equity Residential’s and ERPOP’s combined Annual Report on Form 10-K for the year ended December 31, 2025.
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On August 17, 2026, we completed the Merger, which we accounted for as a reverse acquisition under ASC 805. AvalonBay was determined to be the accounting acquirer, based on the following: (i) former AvalonBay stockholders hold the largest portion of the voting rights in the Company; and (ii) AvalonBay’s senior management, including its Chief Executive Officer and President, comprise the majority of the executive management team of the Company. That determination required significant judgment. Equity Residential’s assets acquired and liabilities assumed were recorded at fair value as of the Merger Date. The consideration transferred was approximately $24.7 billion, and we recognized no goodwill.
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Allocating the purchase price required significant estimates by management, based, in part, on a valuation prepared by an independent third-party valuation specialist. The most significant were:
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• Real estate: Land was valued using market comparables. Buildings were valued on an as-if-vacant basis, mainly by direct capitalization.
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• In-place lease intangibles: These were valued based on the estimated lost rent and leasing costs avoided during an assumed lease-up period, and are amortized over the remaining lease terms of approximately six months.
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• Assumed debt: This was valued using quoted market prices or discounted cash flows, which resulted in a discount that is being amortized into interest expense.
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Changes in the valuation assumptions, particularly capitalization rates and market rents, could materially change the allocation among asset classes and future depreciation, amortization and net income. The allocation is provisional. We will record any measurement-period adjustments within one year of the Merger Date. See Note 3, “Business Combination”.
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FFO and FFO adjusted for non-core items, or “Core FFO,” as defined below, are generally considered by management to be appropriate supplemental measures of our operating and financial performance.
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Consistent with the definition adopted by the National Association of Real Estate Investment Trusts, we calculate Funds from Operations Attributable to Common Shares (“FFO”) as net income or loss attributable to Common Shares computed in accordance with GAAP, adjusted for:
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• write-downs of investments in affiliates due to a decrease in the value of depreciable real estate assets held by those affiliates;
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• similar adjustments for unconsolidated partnerships and joint ventures, including those from a change in control.
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FFO can help with the comparison of the operating and financial performance of a real estate company between periods or as compared to different companies because the adjustments such as (i) gains or losses on sales of previously depreciated property or (ii) real estate depreciation may impact comparability as the amount and timing of these or similar items can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates. By further adjusting for items that we do not consider part of our core business operations, Core FFO can help with the comparison of our core operating performance year over year. We believe that, in order to understand our operating results, FFO and Core FFO should be considered in conjunction with net income as presented in the Consolidated Statements of Operations included elsewhere in this report.
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• joint venture gains and losses (if not adjusted through FFO), non-core costs, promoted interests from partnerships and distributions from unconsolidated ventures where income recognition is deferred;
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• casualty and impairment losses or gains, net on non-depreciable real estate or other investments;
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• gains or losses on sales of assets not subject to depreciation and other investment gains or losses;
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• advocacy contributions, representing payments to promote our business interests;
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• hedge ineffectiveness or gains or losses from derivatives not designated as hedges for accounting purposes;
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• changes to expected credit losses associated with the lending commitments under the SIP;
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• net for-sale condominium activity, including gains, marketing, operating and administrative costs and imputed carry cost; and
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FFO and Core FFO do not represent (i) net income in accordance with GAAP, and therefore should not be considered an alternative to net income, which remains the primary measure, as an indication of our performance, or (ii) cash generated from operating activities in accordance with GAAP, and therefore should not be considered an alternative to net cash flows from operating activities, as determined by GAAP, as a measure of liquidity. In addition, FFO and Core FFO are not necessarily indicative of cash available to fund cash needs and may not be comparable to FFO and Core FFO as calculated by other REITs.
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Reflects changes to expected credit losses associated with our lending commitments primarily under the SIP. The timing and amount of actual losses that will be incurred, if any, is to be determined at the maturity of each respective lending agreement.
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Merger-related costs include transaction and integration costs, as well as Merger-related compensation costs. Merger-related compensation costs were $79.7 million for the three and nine months ended September 30, 2026 and are recognized in general and administrative expenses on the Company's Consolidated Statements of Operations.
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Merger accounting interest expense adjustment (i) excludes the non-cash amortization of the fair value discount recorded on Equity Residential debt with the Merger and (ii) reduces Core FFO by the amortization of Equity Residential original issue discounts that were eliminated in purchase accounting.
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Amounts for the three and nine months ended September 30, 2026 consist primarily of net unrealized gains on property technology investments, partially offset by a land impairment charge. Amounts for the three and nine months ended September 30, 2025 consist primarily of net unrealized gains on property technology investments.
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Market risk
We are exposed to market risks from our financial instruments primarily from changes in market interest rates. In addition, changes in interest rates affect the fair value of our fixed rate debt. In connection with the Merger, the Company assumed from Equity Residential $8.4 billion of fixed rate debt and $193 million of variable rate debt. See Note 7, "Debt" and Note 11, "Fair Value Measurements" for additional information. See also Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of AvalonBay’s Annual
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Risk Factors
Mezzanine debt and preferred equity investments could cause us to incur expenses and experience delays in recovery, which could adversely affect our results of operations.
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We make mezzanine loans to borrowers and obtain preferred equity interests in projects owned by third-party sponsors as part of our SIP. Some of these instruments may have some recourse to their borrower or sponsor, while others are limited to the collateral securing the loan or the right to remove the sponsor as manager of the venture in preferred equity investments. In the event of a default under these obligations, we may elect to take possession of the collateral securing these interests, or remove a sponsor from management of a preferred equity investment. Borrowers of mezzanine loans may contest our enforcement actions, including foreclosure, assignment in lieu of foreclosure, or other remedies, and sponsors may contest our removal actions. In addition, borrowers and sponsors may seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce their obligations to us, which could result in significant legal costs, delays, or limitations on our ability to realize the value of our investments. Declines in the value of the underlying properties may also prevent us from realizing an amount equal to our investment upon foreclosure or other remedies even if we make substantial improvements or repairs to maximize such properties’ investment potential.
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We cannot be certain that our estimate of future credit losses will be adequate over time because of unanticipated adverse changes in the economy or events adversely affecting specific properties, assets, tenants, borrowers, industries in which our tenants and borrowers operate or markets in which our tenants and borrowers or their properties are located. The ultimate resolutions may differ from our expectation, and we could suffer losses that have a material adverse effect on our financial performance, the trading price of our securities and our ability to pay dividends and distributions.
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Share sales and buybacks
The Company repurchased and retired the following Common Shares during the three months ended September 30, 2026:
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Period Total Number of Common Shares Purchased (1) Weighted Average Price Paid Per Share (4) Total Number of Maximum Number of Common Shares that May Yet
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Consists of Common Shares surrendered to the Company in connection with the exercise of stock options as payment of the exercise price, as well as for taxes associated with the vesting of restricted share grants and the conversion of performance awards to Common Shares.
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The number of shares available for purchase under the Company’s publicly announced share repurchase program authorized by the Board of Trustees. The Company may repurchase Common Shares under its share repurchase program in open market or privately negotiated transactions. The timing and actual number of shares repurchased under the repurchase program depend on a variety of factors, including price, general business and market conditions and other investment opportunities.
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The Company's share repurchase program was publicly announced on July 30, 2013 and the Company's Board of Trustees most recently replenished the share repurchase program on December 11, 2025, giving the Company the authority to repurchase up to 13.0 million Common Shares. The program does not have an expiration date and may be suspended or discontinued at any time and does not obligate the Company to make any repurchases of its Common Shares.
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Share and per share amounts for periods prior to the Merger Date are those of AvalonBay and share and per share amounts for those periods have been retroactively adjusted to reflect the Exchange Ratio.
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Item 6
3.2 Composite restatement of Declaration of Trust of Vivmark Residential reflects the provisions of the Articles of Restatement of Vivmark Residential, dated December 9, 2004, as amended by the Articles of Amendment, dated August 17, 2026. Attached herein.
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10.4 AvalonBay Communities, Inc. 2026 Equity Incentive Plan. Included as Exhibit 4.4 to Vivmark Residential's Form S-8 filed on August 17, 2026.
Read in the 10-Q ↗
The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Nov 9, 2026 against Item 1A of the 10-K filed Feb 13, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted and underlined).
Text on the page, not a score; each links to the filing at sec.gov.
What the 10-Q itself says about its risk factors:
Read in the 10-Q ↗
There have been no material changes to the risk factors that were discussed in Part I, Item 1A of AvalonBay’s Annual Report on Form 10-K for the year ended December 31, 2025 and in Part I, Item 1A of Equity Residential's and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2025, except for the following:
Added10-Q 2026-11-09 vs 10-K 2026-02-13
Due to the Merger, the composition of the Board of Trustees has changed. The Board of Trustees currently consists of fourteen (14) members, seven (7) of whom were trustees of Equity Residential prior to the Merger and seven (7) of whom were directors of AvalonBay prior to the Merger. The composition of the Board of Trustees may affect the business strategy and operating decisions of the Company as compared to prior to the Merger.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
Uncertainties associated with the Merger may cause a loss of management personnel and other key employees, and the Company may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the business and operations of the Company.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
The Company is dependent on the experience and industry knowledge of its management personnel and other key employees to execute its business plans. The Company’s success following the completion of the Merger depends in part upon the ability to attract, motivate, and retain key management personnel and other key employees. Current and prospective employees of the Company may experience uncertainty about their roles within the Company following the completion of the Merger, which may have an adverse effect on the ability of the Company to attract, motivate or retain management personnel and other key employees. In addition, no assurance can be given that the Company will be able to attract, motivate or retain management personnel and other key employees to the same extent that Equity Residential and AvalonBay were previously able to attract or retain their own employees.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
The Company has been and may continue to be the target of securities class action and derivative lawsuits that could result in substantial costs, whether or not such lawsuits have any merit.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
Securities class action lawsuits, derivative lawsuits and other regulatory actions are often brought against public companies that have completed merger transactions. Even if the lawsuits or regulatory matters are without merit, defending against, responding to or otherwise resolving them can result in substantial costs and divert management time and resources. An adverse judgment, settlement or regulatory penalty could result in monetary damages or fines, which could have a negative impact on the Company’s liquidity and financial condition.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
Completion of the Merger has triggered change in control or other provisions in certain agreements to which Equity Residential, AvalonBay or their respective subsidiaries are a party, which may have an adverse impact on the Company’s business and results of operations.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
The completion of the Merger has triggered change in control or other provisions in certain agreements to which Equity Residential, AvalonBay or their respective subsidiaries are a party. If the Company is unable to obtain any required consents or waivers from the applicable counterparties, the counterparties may exercise their rights and remedies under the applicable agreements, potentially resulting in defaults, accelerations of indebtedness, termination of the applicable agreements, or claims for monetary damages. Even if the Company is able to negotiate required consents or waivers, counterparties may require a fee for such consents or waivers or seek to renegotiate the agreements on terms less favorable to the Company. Any of the foregoing or similar developments may have an adverse impact on the Company’s business, financial condition and results of operations.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
The Company may be unable to successfully integrate the businesses of Equity Residential and AvalonBay and realize the anticipated benefits of the Merger.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
The success of the Merger will depend, in part, on the Company’s ability to successfully combine the businesses of Equity Residential and AvalonBay, which previously operated as independent public companies, and realize the anticipated benefits, including synergies, cost savings, innovation, operational efficiencies and reduced cost of capital, from the combination. If the Company is unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully, or at all, or may take longer to realize than expected and the value of the Common Shares may be harmed. Additionally, as a result of the Merger, rating agencies may take negative actions against the Company’s credit ratings, which may increase the Company’s financing costs.
Added10-Q 2026-11-09 vs 10-K 2026-02-13
The Merger involves the integration of Equity Residential’s and AvalonBay’s businesses, which is a complex, costly, and time-consuming process. Neither Equity Residential nor AvalonBay has previously completed a transaction comparable in size or scope to the Merger. The integration of the two companies may result in material challenges, including, without limitation:
Added10-Q 2026-11-09 vs 10-K 2026-02-13
• The diversion of management’s attention from ongoing business concerns and performance shortfalls as a result of the devotion of management’s attention to integration matters;
Reworded10-Q 2026-11-09 vs 10-K 2026-02-13
The first 13 of 55 are shown (at most 12 of each type).
Work on VMRK in a spreadsheet:
Excel workbook (a sheet per section, ten years by column, charts, links to the filings) ·
CSV.
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