Shareholder letter
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1 Managem ent Letter February 17, 2026 Our Fellow Shareholders: As we begin 2026, the macro-economic environment remains mixed and defined by uneven growth, shifting interest-rate expectations, and continued uncertainty around federal spending. Yet even with this backdrop, the DC region appears to be finding its footing. The federal workforce has absorbed the bulk of last year’s adjustments, and with Congress restoring funding in several key areas and putting guardrails around future cuts, the sense is that the worst of the disruption is behind us. At the same time, defense and intelligence spending is set to grow meaningfully in the years ahead, reinforcing long-term demand drivers in our markets, especially National Landing. These shifts are already reflected in local real estate fundamentals. While DC has felt the bru nt of federal spending and employment cuts, especially the multifamily market, Northern Virginia – supported by defense, technology, and diversified private-sector growth – continues to show relative resilience across both multifamily and office asset classes with potential upside on the horizon. Looking ahead, political and economic uncertainty remains, but our transformation of National Landing continues to bear fruit and deepen its relevance as a defense-tech hub; and our North Star remains unchanged: maximizing long-term NAV per share through disciplined capital allocation The following are highlights from this quarter and the year: 2025 Accomplishments Sold or recapitalized $660.3 million of multifamily and land assets at a weighted average capitalization rate of 4.3%, including the following significant transactions: ▪ $194.0 million sale of 8001 Woodmont, a 322-unit multifamily asset in Bethesda, Maryland ▪ $186.0 million sale of WestEnd25, a 283-unit multifamily asset in the West End submarket of Washington, DC ▪ $155.0 million sale of The Batley, a 432-unit multifamily asset in the Union Market neighborhood of Washington, DC ▪ $100.0 million sale of a 40% interest in West Half, a 465-unit multifamily asset in the Ballpark submarket of Washington, DC Acquired $61.2 million of office assets at a weighted average capitalization rate of 17.9%, representing an $87 per square foot acquisition price ▪ Acquired Tysons Dulles Plaza, a three-building office campus in Tysons, Virginia, for $42.3 million. The three office buildings comprise approximately 491,500 square feet. Given our extremely low basis, we have the ability to offer attractive lease terms to incentivize external demand while maintaining the flexibility to relocate existing tenancy while we re-entitle one of the buildings for ground-up residential development. ▪ Acquired Dulles View in a joint venture with a defense-tech tenant for $31.5 million ($18.9 million at our 60% share). These two office towers in Herndon, Virginia comprise approximately 354,400 square feet (212,600 square feet at our share). We intend to drive occupancy, extend WALT, and bring liquidity to a formerly distressed asset.
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2 Leased approximately 723,000 square feet of office space ▪ These leases have a weighted average lease term of 4.1 years and include 327,000 square feet of new leasing with a weighted average lease term of 6.1 years, 243,000 square feet of which is in National Landing. Demand in National Landing remains strong, driven by the growing defense tech sector’s desire for proximity to the Pentagon and the appeal of the highly amenitized neighborhood we created. Completed construction of The Zoe and Valen, two multifamily towers in the heart of National Landing, totaling 775 units. ▪ As of year end, the towers were 42.6% leased and pace continues to be strong driven by the lack of competing new supply in the submarket and the vibrant amenities we created through our placemaking interventions. ▪ We expect these assets to generate $21.1 million of annualized NOI once stabilized. Entitled 2.2 million SF of estimated potential development density in National Landing. ▪ Entitled approximately 870 mid-rise multifamily units and approximately 250 townhomes across multiple sites. ▪ Entitled 2100 and 2200 Crystal Drive, two obsolete office buildings, for conversion into a 345 -key, dual branded hotel and 195 multifamily units. Reduced G&A by approximately 10% in 2025, a total reduction of over 40% since 2019 ▪ Continued to reorganize teams and maximize efficiency Capital Allocation Our capital allocation strategy remains anchored in our core objective: maximizing long -term NAV per share growth. Drawing on our deep expertise in mixed-use, urban infill real estate, we have consistently rotated across asset classes based on relative value, cost of capital, and risk-adjusted return potential. In previous cycles, this has meant divesting low-cap-rate CBD office assets and reallocating capital into higher-yield multifamily development. Alternatively, during cycles marked by strong private-market demand, we have focused on monetizing multifamily assets — often at premiums to NAV — creating efficient sources of capital for opportunistic investments. This disciplined, return-driven approach enables us to continually recycle capital into opportunities we believe offer the strongest long-term NAV per share growth potential. We continue to believe that share repurchases offer highly attractive returns when our shares trade at a meaningful discount to NAV. In today’s market environment, we believe that distressed office acquisitions offer comparably compelling economics. Going forward, the balance between our investment in new acquisitions and share repurchases will remain opportunistic. We expect to fund growth opportunities through a combination of asset sales and private equity joint ventures – choosing among these sources based on their relative cost of capital and availability at the time. Across all channels, our capital allocation strategy remains focused on enhancing long -term shareholder value and positioning our portfolio for sustained NAV per share growth. During the fourth quarter, we sold 2100 Crystal Drive, a recently entitled opportunity to convert an obsolete office building into a 345-key, dual-branded hotel in National Landing, for $8.0 million. Over the course of 2025, we closed $660.3 million of dispositions and recapitalizations, representing an average capitalization rate of 4.8% on the income-producing multifamily assets. Recent softness in the multifamily investment sales market, especially in DC proper, has added to transaction timelines, but that market continues to be a source of capital. Subsequent to year end, we closed on the sale of Potomac Yard Landbay H, a land parcel in National Landing that we recently entitled for 120 townhome units, for $50.7 million.
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3 Given the substantial discount our shares have historically traded at relative to NAV, we allocated a significant amount of our capital to share repurchases. During 2025, we repurchased 26.8 million shares at an average price of $16.52 per share, totaling $443.1 million. Since launching our share repurchase program in 2020, we have repurchased 84.3 million shares, which is approximately 63% of the shares outstanding as of December 31, 2019, at an average price of $18.77 per share, totaling $1.6 billion. We are actively pursuing new growth opportunities that align with our strategy and leverage our competitive strengths as a mixed-use owner, operator, and developer. We expect to fund these investments primarily through asset recycling. We believe the current market dislocation is creating some of the most compelling office investment opportunities in nearly two decades, as reflected in our recent acquisitions of Tysons Dulles Plaza in May and Dulles View in December. These acquisitions represent an approximately 18% going-in capitalization rate and an $87 per square foot acquisition price. In parallel, we continue to explore the monetization of our land bank and recapitalization of certain assets. These initiatives support incremental fee revenue and carried interest income through third-party joint ventures, while enabling continued investment in high-growth markets without increasing leverage. Financial and Operating Metrics For the three months ended December 31, 2025, we reported Core FFO attributable to common shares of $9.9 million, or $0.17 per diluted share. Annualized NOI increased 1.2% quarter over quarter, totaling $244.7 million, excluding assets that were sold or recently acquired. Our multifamily portfolio ended the quarter at 84.7% leased and 82.7% occupied. Our office portfolio ended the quarter at 77.5% leased and 75.1% occupied. Our portfolio Same Store NOI decreased 4.2% and 5.1% for the three months and year ended December 31, 2025. As of December 31, 2025, our Net Debt to Annualized Adjusted EBITDA was 12.5x. We are currently operating at elevated leverage levels while our newly constructed multifamily assets (The Grace, Reva, The Zoe, and Valen) lease up. In the near term, we expect our leverage will moderate through additional income from the stabilization of these newly constructed multifamily assets and additional commercial revenue from our signed but not yet commenced leases. Our floating rate exposure remains low, with 84.7% of our debt fixed or hedged as of the end of the fourth quarter, after accounting for in-place interest rate swaps and caps. The floating rate exposure is tied to our revolving credit facility and assets where the business plan warrants preserving flexibility. We continue to be well positioned with respect to our near-term debt maturities. Our debt has a weighted average maturity of 2.8 years, after adjusting for by-right extension options. Our non-recourse asset-level financing strategy continues to be most valuable in an environment like today, providing a floor on our downside risk. Operating Portfolio Multifamily Trends Our Same Store multifamily portfolio ended the quarter at 91.8% leased, down 1.3%, and 90.4% occupied, down 1.8% quarter over quarter, largely driven by our assets in the District. In our Same Store multifamily portfolio, effective rents for new leases decreased 8.1% and increased 3.4% upon renewal while achieving a 53.4% renewal rate during the fourth quarter, and decreased 1.1% for new leases and increased 5.0% upon renewal while achieving a 56.2% renewal rate during 2025. Our multifamily portfolio Same Store NOI decreased 5.1% and 2.4% for the three months and year ended December 31, 2025, driven by lower occupancy and higher operating expenses, partially offset by higher rents. We continue to make progress leasing up our recently completed assets – The Grace, Reva, The Zoe, and Valen – which were 63.2% leased on average as of year end. We believe that the amenity -rich environment we have
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4 developed in National Landing and proximity to transit are key factors contributing to the successful leasing performance. DC Metro Multifamily Trends (based on CoStar, Apartment List, and BLS data) The softness we have observed in our multifamily operating portfolio is mirrored by the broader DC metro area – largely the result of a tumultuous job market. The metro area shed 48,500 jobs from November 2024 to November of 2025. The losses were driven by the federal government, which lost 52,400 jobs during the same period, implying net growth across all other sectors. Most of these losses were recorded in October with the “fork in the road” federal buyouts going into effect on September 30th. November, however, saw losses taper significantly. While the losses were the culmination of the now-defunct DOGE effort, the passage by Congress of bipartisan “minibus” appropriations bills has begun the restoration of funding for certain agencies (namely health and science agencies) and improved protections for remaining federal workforces. The defense budget (already $1 trillion in FY2025 with reconciliation) grew as part of the FY2026 appropriations and the FY2027 proposed budget is $1.5 trillion. Despite robust debate, Homeland Security spending is also likely to remain elevated although its FY2026 budget had not been approved at the time of this writing. The passage of these bills and the provisions that come with them suggests that the largest of the cuts – both budget and workforce – are likely behind us particularly as we enter a contested midterm election cycle. DC proper has borne the brunt of the cuts, accounting for just over 48% of federal job losses in the DC metro region as of November 2025, despite making up only 23% of the region’s total employment as of November 2024. Northern Virginia’s greater exposure to currently favored defense, intelligence, and homeland security agencies has helped to insulate it somewhat. Against this backdrop, Apartment List data reported a 3.6% year-over-year rent decline for DC proper and 1.2% rent decline for the metro area. Arlington County, where National Landing is located, saw just shy of a 1.0% rent decline – similar to Fairfax and Loudoun Counties – which are also home to significant national security demand drivers. From an occupancy perspective, the metro region ended the year at 93.4% occupied (a metric most comparable to our percentage leased figure) with Arlington at 93.1% and DC proper at 92.0% occupied. All have seen occupancies soften significantly, and the metro region now lags the other gateway markets in both occupancy and rent growth. Looking forward, however, the stemming of federal job losses, the restoration of federal funding to many impacted agencies, and new protections for federal employment – coupled with significant current and planned defense and intelligence spending – should stabilize demand in 2026 into 2027. New supply, as we have noted in the past, remains extremely muted with CoStar showing only three new starts in the fourth quarter totaling 1,083 units. Nearly all of these starts are wood frame projects on the extreme outer edges of the metro region – the least expensive to start and not competitive with our urban assets. In total, about 1.2% of inventory is under construction as of the fourth quarter. We believe supply will remain constrained in the medium-term, giving stabilized demand an opportunity to drive occupancy and rent growth, although recovery will not be immediate. Office Trends Our office portfolio ended the quarter at 77.5% leased, down 0.1% quarter over quarter, and 75.1% occupied, down 0.6% quarter over quarter. The spread between our leased and occupied percentages represents approximately $10.2 million of contractual annualized rent, which is expected to commence by year end. In the fourth quarter, we executed 262,000 square feet of leases with a weighted average lease term of 3.3 years. For second generation leases, the rental rate mark-to-market was negative 3.2%. Leasing activity continued to be strong during the fourth quarter. Leasing in National Landing continues to be driven primarily by office users who fall into three categories: (i) companies who need SCIF/secure facility space; (ii) technology-related new tenants largely attracted by the recent delivery of our placemaking interventions; and (iii)
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5 defense-related tenants who have long called this submarket home. 90% of our fourth quarter leasing activity and 93% of our 2025 leasing activity was with tenants in the defense and technology industries. Demand for SCIF spaces that meet the current standard is particularly strong, and the ability to deliver new SCIF or assign existing SCIF is often a major differentiator in our tenant conversations. Looking forward, we have modest lease rollover during the next five years in National Landing, averaging approximately 6% per year, and we expect our retention rate to improve given approximately 70% of the tenancy in our National Landing portfolio comprises defense -tech tenants. Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of National Landing that we have enhanced through our placemaking interventions and that are accessible via multi - modal transportation. In total, we will have taken over 1.0 million square feet of obsolete office space out of service in National Landing. Our rationale for reducing competitive stock in National Landing remains the same: to help foster a healthier long-term office market while repurposing older, underutilized buildings for redevelopment or conversion to multifamily housing, hospitality, or other complimentary uses that will support a vibrant mixed -use environment. Northern Virginia Office Trends (based on JLL and CBRE data) The tide is turning for office in Northern Virginia. Defense and professional services drove strong leasing activity reflecting healthy federal budgets in the national security space which is concentrated in Northern Virginia. CBRE reported absorption turning positive in 2025 for the first time since 2019. While the gain was just shy of 500,000 square feet across a roughly 150 million square-foot market and vacancy remained over 22%, this gain is an important milestone on the road to recovery. Although new leasing is often a mixed bag of growth and contractions as companies continue to work through optimal space utilization, demand is only one part of the equation. The re - pricing of suburban office and the relative health of the Virginia multifamily and hous ing market – not to mention data center market – have also continued to contribute meaningfully to a reduction in inventory that we have not seen as consistently in any other jurisdiction. JLL reported in the fourth quarter that a further 2.7 million squar e feet of office came offline, with the redevelopment pipeline now at 13.8 million square feet and office inventory at its lowest level since 2016. This has created pockets of extremely low vacancy rates far below the headline statistics, particularly in nodes around major sources of defense or intelligence contracting. The robust defense spending environment along with growth in homeland security and intelligence functions, continues to be an important driver of this increasing demand particularly among t he new generation of defense technology companies which are receiving increasing focus, attention, and funding. This trend will continue to disproportionately favor Northern Virginia versus DC proper given that Virginia is home to both the defense and intelligence community customers as well as many of their largest contractors. We believe that defense and intelligence spending will likely remain a bipartisan priority even after midterm elections and a robust source of continued future growth not only for National Landing but for our new acquisitions along the contractor-heavy Dulles Toll Road and Route 28 corridors. * * * As we look ahead, our priorities are clear. We will continue to execute with discipline, focus on the long -term value of our business, and allocate capital where we see the most compelling risk -adjusted opportunities. The progress we made in 2025 – from advancing the transformation of National Landing to deepening our portfolio concentration and capturing significant NAV accretion through asset recycling and share repurchases – reflects the strength of our strategy and the resilience of our team. Several encouraging signs emerged late in the year, including moderating inflation, improving capital market stability, and sustained demand from defense - and technology-oriented tenants in National Landing. These trends give us reason for cautious optimism heading into the new year, even as we remain
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6 clear-eyed about the risks inherent in a still-volatile macro backdrop. While we expect the macro environment to continue on an uneven path, similar periods have historically offered the greatest opportunity for well -positioned, long-term investors. We believe our mixed-use platform, our balance sheet strategy, and our ability to capitalize on dislocation will serve us well in 2026. The quality of our assets, the strong demand drivers in National Landing, and our disciplined approach to capital allocation give us confidence in our ability to navigate near-term volatility and deliver sustained NAV per share growth. We appreciate your continued trust and partnership as we pursue opportunities we believe will drive durable, long-term value for our shareholders. Sincerely, W. Matthew Kelly Chief Executive Officer