(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

We believe combining the periodic reports of Aimco and the Aimco Operating Partnership into this single report provides the following benefits:

•

We present our business as a whole, in the same manner our management views and operates the business;

~~We present our business as a whole, in the same manner our management views and operates the business;~~

•

We eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial portion of the disclosures apply to both Aimco and the Aimco Operating Partnership; and

~~We eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial portion of the disclosures apply to both Aimco and the Aimco Operating Partnership;~~

•

We save time and cost through the preparation of a single combined report rather than two separate reports.

~~We save time and cost through the preparation of a single combined report rather than two separate reports.~~

We operate Aimco and the Aimco Operating Partnership as one enterprise, the management of Aimco directs the management and operations of the Aimco Operating Partnership, and the members of the Board of Directors of Aimco are identical to those of the Aimco Operating ~~Partnership.~~

Partnership’s general partner.

We believe it is important to understand the few differences between Aimco and the Aimco Operating Partnership in the context of how Aimco and the Aimco Operating Partnership operate as a consolidated company. Aimco has no assets or liabilities other than its investment in the Aimco Operating Partnership. Also, Aimco is a corporation that issues publicly traded equity from time to time, whereas the Aimco Operating Partnership is a partnership that has no publicly traded equity. Except for the net proceeds from stock offerings by Aimco, which are contributed to the Aimco Operating Partnership in exchange for additional limited partnership interests (of a similar type and in an amount equal to the shares of stock sold in the offering), the Aimco Operating Partnership generates all remaining capital required by its business. These sources include the Aimco Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility, the issuance of debt and equity securities, including additional partnership units, and proceeds received from the sale of apartment communities.

Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the condensed consolidated financial statements of Aimco and those of the Aimco Operating Partnership. Interests in the Aimco Operating Partnership held by entities other than Aimco, which we refer to as OP Units, are classified within partners’ capital in the Aimco Operating Partnership’s financial statements and as noncontrolling interests in Aimco’s financial statements.

To help investors understand the differences between Aimco and the Aimco Operating Partnership, this report provides: separate condensed consolidated financial statements for Aimco and the Aimco Operating Partnership; a single set of condensed consolidated notes to such financial statements that includes separate discussions of each entity’s ~~stockholders’ equity~~earnings per share or ~~partners’ capital,~~earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for Aimco and the Aimco Operating Partnership in order to establish that the requisite certifications have been made and that Aimco and the Aimco Operating Partnership are both compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

TABLE OF CONTENTS

FORM 10-Q

		Page

		~~Page~~
	PART I. FINANCIAL INFORMATION
ITEM 1.	~~Financial Statements~~FINANCIAL STATEMENTS
	Apartment Investment and Management Company:
	Condensed Consolidated Balance Sheets (Unaudited) ~~(Unaudited)~~	3
	Condensed Consolidated Statements of Operations (Unaudited) ~~(Unaudited)~~	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)~~(Unaudited)~~	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)~~(Unaudited)~~	6 7
	AIMCO Properties, L.P.:
	Condensed Consolidated Balance Sheets (Unaudited) ~~(Unaudited)~~	7 8
	Condensed Consolidated Statements of Operations (Unaudited) ~~(Unaudited)~~	8 9
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)~~(Unaudited)~~	9 10
	Condensed Consolidated Statements of Partners’ Capital (Unaudited)	11
	Condensed Consolidated Statements of Cash Flows (Unaudited)~~(Unaudited)~~	10 12
	Notes to the Condensed Consolidated Financial Statements of Apartment Investment and Management Company and AIMCO Properties, L.P. (Unaudited)	11 13
ITEM 2.	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23 21
ITEM 3.	~~Quantitative and Qualitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	43 40
ITEM 4.	~~Controls and Procedures~~CONTROLS AND PROCEDURES	43 40
	PART II. OTHER INFORMATION
ITEM 1A.	~~Risk Factors~~RISK FACTORS	44 41
ITEM 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	44 41
ITEM 6.	~~Exhibits~~EXHIBITS	45 43
Signatures		47 44

Table of Contents

PART I. FINANCIAL INFORMATION


~~ITEM 1.~~	~~Financial Statements~~

ITEM 1. FINANCIAL STATEMENTS

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	March 31, 2020			December 31, 2019
ASSETS
Buildings and improvements	$	6,967,143		$	6,868,543
Land		1,869,465			1,869,048
Total real estate		8,836,608			8,737,591
Accumulated depreciation		(2,810,949	)		(2,718,284	)
Net real estate		6,025,659			6,019,307
Cash and cash equivalents		340,883			142,902
Restricted cash		33,933			34,800
Mezzanine investment		286,472			280,258
Other assets		361,298			351,472
Total assets	$	7,048,245		$	6,828,739

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	4,208,687		$	4,230,590
Revolving credit facility borrowings		593,845			275,000
Total indebtedness		4,802,532			4,505,590
Accrued liabilities and other		349,099			360,574
Total liabilities		5,151,631			4,866,164

Redeemable preferred OP Units		96,449			97,064
Redeemable noncontrolling interests in consolidated real estate partnership		4,617			4,716
Commitments and contingencies (Note 4)
Equity:
Common Stock, $0.01 par value, 510,587,500 shares authorized, 148,700,407 and 148,885,197 shares issued/outstanding at March 31, 2020 and December 31, 2019, respectively		1,487			1,489
Additional paid-in capital		3,488,611			3,497,367
Accumulated other comprehensive income		4,139			4,195
Distributions in excess of earnings		(1,776,782	)		(1,722,402	)
Total Aimco equity		1,717,455			1,780,649
Noncontrolling interests in consolidated real estate partnerships		(3,409	)		(3,296	)
Common noncontrolling interests in Aimco Operating Partnership		81,502			83,442
Total equity		1,795,548			1,860,795
Total liabilities and equity	$	7,048,245		$	6,828,739

~~(Unaudited)~~

September 30,
2017 December 31,
2016
ASSETS
Buildings and improvements $ 6,264,146
$ 6,106,298
Land 1,827,748
1,824,819
Total real estate 8,091,894
7,931,117
Accumulated depreciation (2,549,197 ) (2,421,357 )
Net real estate 5,542,697
5,509,760
Cash and cash equivalents 38,780
45,821
Restricted cash 47,565
36,405
Other assets 247,722
293,768
Assets of partnerships served by Asset Management business:
Real estate, net 228,830
245,648
Cash and cash equivalents 16,901
15,423
Restricted cash 30,350
33,501
Other assets 16,493
52,492
Total assets $ 6,169,338
$ 6,232,818

LIABILITIES AND EQUITY
Non-recourse property debt secured by Real Estate communities, net $ 3,556,668
$ 3,630,276
Term loan, net 249,252
—
Revolving credit facility borrowings 356,220
17,930
Total indebtedness associated with Real Estate portfolio 4,162,140
3,648,206
Accrued liabilities and other 207,533
218,937
Liabilities of partnerships served by Asset Management business:
Non-recourse property debt, net 228,382
236,426
Accrued liabilities and other 20,135
62,630
Deferred income 13,922
18,452
Total liabilities 4,632,112
4,184,651
Preferred noncontrolling interests in Aimco Operating Partnership 101,537
103,201
Commitments and contingencies (Note 4)

Equity:
Perpetual Preferred Stock 125,000
125,000
Common Stock, $0.01 par value, 500,787,260 shares authorized, 157,023,314 and 156,888,381 shares issued/outstanding at September 30, 2017 and December 31, 2016, respectively 1,570
1,569
Additional paid-in capital 3,898,441
4,051,722
Accumulated other comprehensive income 1,898
1,011
Distributions in excess of earnings (2,572,723 ) (2,385,399 )
Total Aimco equity 1,454,186
1,793,903
Noncontrolling interests in consolidated real estate partnerships (2,955 ) 151,121
Common noncontrolling interests in Aimco Operating Partnership (15,542 ) (58 )
Total equity 1,435,689
1,944,966
Total liabilities and equity $ 6,169,338
$ 6,232,818

See notes to condensed consolidated financial statements.

Table of Contents

��

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
REVENUES
Rental and other property revenues	$	224,552		$	230,235

OPERATING EXPENSES
Property operating expenses		75,480			78,959
Depreciation and amortization		100,476			93,565
General and administrative expenses		10,108			9,829
Investment management expenses		1,184			1,332
Other expenses, net		1,642			5,136
Total operating expenses		188,890			188,821

Interest income		4,523			2,726
Interest expense		(41,336	)		(41,409	)
(Loss) gain on dispositions of real estate		(34	)		291,473
Mezzanine investment income, net		6,747			—
Income from unconsolidated real estate partnerships		182			72
Income before income tax benefit (expense)		5,744			294,276
Income tax benefit (expense)		3,233			(2,981	)
Net income		8,977			291,295
Noncontrolling interests:
Net income attributable to noncontrolling interests in consolidated real estate partnerships		(18	)		(91	)
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership		(1,869	)		(1,934	)
Net income attributable to common noncontrolling interests in Aimco Operating Partnership		(368	)		(15,137	)
Net income attributable to noncontrolling interests		(2,255	)		(17,162	)
Net income attributable to Aimco		6,722			274,133
Net income attributable to Aimco preferred stockholders		—			(2,148	)
Net income attributable to participating securities		(43	)		(417	)
Net income attributable to Aimco common stockholders	$	6,679		$	271,568

Net income attributable to Aimco per common share – basic and diluted	$	0.04		$	1.88

Weighted average common shares outstanding – basic		148,518			144,232
Weighted average common shares outstanding – diluted		148,786			144,445

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
REVENUES
Rental and other property revenues attributable to Real Estate $ 233,708
$ 225,902
$ 686,639
$ 672,234
Rental and other property revenues of partnerships served by Asset Management business 18,232
18,213
55,327
56,233
Tax credit and transaction revenues 2,695
4,789
8,242
17,894
Total revenues 254,635
248,904
750,208
746,361

OPERATING EXPENSES
Property operating expenses attributable to Real Estate 81,179
82,756
239,819
241,936
Property operating expenses of partnerships served by Asset Management business 8,865
9,410
26,445
28,199
Depreciation and amortization 92,513
84,848
268,836
245,356
General and administrative expenses 10,529
11,615
31,599
35,529
Other expenses, net 2,344
1,543
6,809
8,639
Total operating expenses 195,430
190,172
573,508
559,659
Operating income 59,205
58,732
176,700
186,702
Interest income 2,047
2,163
6,251
5,841
Interest expense (50,682 ) (49,377 ) (145,422 ) (145,905 )
Other, net 6,937
558
7,602
5,541
Income before income taxes and gain on dispositions 17,507
12,076
45,131
52,179
Income tax benefit 4,870
3,462
14,878
16,469
Income before gain on dispositions 22,377
15,538
60,009
68,648
Gain (loss) on dispositions of real estate, inclusive of tax (233 ) 14,498
881
237,226
Net income 22,144
30,036
60,890
305,874
Noncontrolling interests:
Net loss (income) attributable to noncontrolling interests in consolidated real estate partnerships 249
(12,489 ) (1,515 ) (22,096 )
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership (1,938 ) (1,842 ) (5,826 ) (5,276 )
Net income attributable to common noncontrolling interests in Aimco Operating Partnership (820 ) (192 ) (2,164 ) (12,499 )
Net income attributable to noncontrolling interests (2,509 ) (14,523 ) (9,505 ) (39,871 )
Net income attributable to Aimco 19,635
15,513
51,385
266,003
Net income attributable to Aimco preferred stockholders (2,148 ) (4,323 ) (6,445 ) (9,838 )
Net income attributable to participating securities (57 ) (14 ) (176 ) (384 )
Net income attributable to Aimco common stockholders $ 17,430
$ 11,176
$ 44,764
$ 255,781

Net income attributable to Aimco per common share – basic and diluted $ 0.11
$ 0.07
$ 0.29
$ 1.64
Dividends declared per common share $ 0.36
$ 0.33
$ 1.08
$ 0.99

Weighted average common shares outstanding – basic 156,306
156,079
156,290
155,944
Weighted average common shares outstanding – diluted 156,835
156,527
156,768
156,341

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Net income	$	8,977		$	291,295
Unrealized (losses) gains on available for sale debt securities		(60	)		61
Comprehensive income		8,917			291,356
Comprehensive income attributable to noncontrolling interests		(2,251	)		(17,166	)
Comprehensive income attributable to Aimco	$	6,666		$	274,190

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income $ 22,144
$ 30,036
$ 60,890
$ 305,874
Other comprehensive income (loss):
Unrealized gains (losses) on interest rate swaps 75
337
(280 ) (748 )
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss 594
390
1,349
1,208
Unrealized gains (losses) on investments in debt securities classified as available-for-sale 381
(336 ) (40 ) 5,615
Other comprehensive income 1,050
391
1,029
6,075
Comprehensive income 23,194
30,427
61,919
311,949
Comprehensive income attributable to noncontrolling interests (2,557 ) (14,639 ) (9,647 ) (40,341 )
Comprehensive income attributable to Aimco $ 20,637
$ 15,788
$ 52,272
$ 271,608

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~

EQUITY

For the Three Months Ended March 31, 2020 and 2019

(In thousands)

(Unaudited)

	Preferred Stock				Common Stock									Accumulated									Noncontrolling Interests in			Common Noncontrolling Interests in
	Shares Issued		Amount		Shares Issued			Amount			Additional Paid- in Capital			Other Comprehensive Income (Loss)			Distributions in Excess of Earnings			Total Aimco Equity			Consolidated Real Estate Partnerships			Aimco Operating Partnership			Total Equity
Balances at December 31, 2018		5,000	$	125,000		144,623		$	1,446		$	3,515,686		$	4,794		$	(1,947,507	)	$	1,699,419		$	(2,967	)	$	67,189		$	1,763,641
Repurchases of Common Stock		—		—		(461	)		(5	)		(20,677	)		—			—			(20,682	)		—			—			(20,682	)
Redemption of Aimco Operating Partnership units		—		—		—			—			—			—			—			—			—			(2,557	)		(2,557	)
Amortization of share-based compensation cost		—		—		22			—			2,442			—			—			2,442			—			796			3,238
Effect of changes in ownership for consolidated entities		—		—		—			—			(2,168	)		—			—			(2,168	)		—			2,168			—
Change in accumulated other comprehensive income		—		—		—			—			—			57			—			57			—			4			61
Net income		—		—		—			—			—			—			274,133			274,133			91			15,137			289,361
Common Stock dividends		—		—		—			—			—			—			(67,476	)		(67,476	)		—			—			(67,476	)
Common Stock issued to Common Stockholders in special dividend		—		—		4,492			45			(45	)		—			—			—			—			—			—
Preferred Stock dividends		—		—		—			—			—			—			(2,148	)		(2,148	)		—			—			(2,148	)
Distributions to noncontrolling interests		—		—		—			—			—			—			—			—			—			(3,244	)		(3,244	)
Other, net		—		—		82			2			57			—			—			59			19			—			78
Balances at March 31, 2019		5,000	$	125,000		148,758		$	1,488		$	3,495,295		$	4,851		$	(1,742,998	)	$	1,883,636		$	(2,857	)	$	79,493		$	1,960,272

Balances at December 31, 2019		—	$	—		148,885		$	1,489		$	3,497,367		$	4,195		$	(1,722,402	)	$	1,780,649		$	(3,296	)	$	83,442		$	1,860,795
Repurchases of Common Stock		—		—		(234	)		(2	)		(10,002	)		—			—			(10,004	)		—			—			(10,004	)
Redemption of Aimco Operating Partnership units		—		—		—			—			—			—			—			—			—			(969	)		(969	)
Amortization of share-based compensation cost		—		—		20			—			1,929			—			—			1,929			—			1,051			2,980
Effect of changes in ownership of consolidated entities		—		—		—			—			(769	)		—			—			(769	)		—			769			—
Cumulative effect of a change in accounting principle		—		—		—			—			—			—			(277	)		(277	)		—			—			(277	)
Change in accumulated other comprehensive income		—		—		—			—			—			(56	)		—			(56	)		—			(4	)		(60	)
Net income		—		—		—			—			—			—			6,722			6,722			118			368			7,208
Common Stock dividends		—		—		—			—			—			—			(60,825	)		(60,825	)		—			—			(60,825	)
Distributions to noncontrolling interests		—		—		—			—			—			—			—			—			(73	)		(3,155	)		(3,228	)
Other, net		—		—		29			—			86			—			—			86			(158	)		—			(72	)
Balances at March 31, 2020		—	$	—		148,700		$	1,487		$	3,488,611		$	4,139		$	(1,776,782	)	$	1,717,455		$	(3,409	)	$	81,502		$	1,795,548

~~(Unaudited~~)

Nine Months Ended
September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 60,890
$ 305,874
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 268,836
245,356
Gain on dispositions of real estate, net of tax (881 ) (237,226 )
Other adjustments (14,482 ) (10,530 )
Net changes in operating assets and operating liabilities (29,338 ) (27,018 )
Net cash provided by operating activities 285,025
276,456
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of real estate (11,706 ) (287,952 )
Capital expenditures (266,623 ) (259,323 )
Proceeds from dispositions of real estate 11,027
325,344
Purchases of corporate assets (7,358 ) (6,472 )
Change in restricted cash 1,607
(15,992 )
Other investing activities (1,086 ) 10,134
Net cash used in investing activities (274,139 ) (234,261 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from non-recourse property debt 165,785
190,714
Principal repayments on non-recourse property debt (250,674 ) (253,328 )
Proceeds from term loan 250,000
—
Net borrowings on revolving credit facility 338,290
267,780
Redemption of Preferred Stock —
(34,791 )
Payment of dividends to holders of Preferred Stock (6,445 ) (7,866 )
Payment of dividends to holders of Common Stock (168,987 ) (154,661 )
Payment of distributions to noncontrolling interests (15,829 ) (29,026 )
Purchases and redemptions of noncontrolling interests (324,265 ) (23,051 )
Other financing activities (4,324 ) (847 )
Net cash used in financing activities (16,449 ) (45,076 )
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,563 ) (2,881 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 61,244
50,789
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 55,681
$ 47,908

See notes to condensed consolidated financial statements.

Table of Contents

~~AIMCO PROPERTIES, L.P.~~

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~

STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,977		$	291,295
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		100,476			93,565
Loss (gain) on dispositions of real estate		34			(291,473	)
Income tax (benefit) expense		(3,233	)		2,981
Other adjustments		3,157			3,201
Net changes in operating assets and operating liabilities		(31,995	)		(17,952	)
Net cash provided by operating activities		77,416			81,617
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate		(2,733	)		(2,236	)
Capital expenditures		(94,842	)		(85,546	)
Proceeds from dispositions of real estate		—			342,083
Purchases of corporate assets		(5,104	)		(3,319	)
Other investing activities		4,665			1,422
Net cash (used in) provided by investing activities		(98,014	)		252,404
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt		(22,622	)		(19,580	)
Net borrowings on (repayments of) revolving credit facility		318,845			(90,360	)
Repurchases of Common Stock		(10,004	)		(20,682	)
Payment of dividends to holders of Preferred Stock		—			(2,148	)
Payment of dividends to holders of Common Stock		(61,116	)		(67,405	)
Payment of distributions to noncontrolling interests		(5,442	)		(5,701	)
Redemptions of noncontrolling interests in the Aimco Operating Partnership		(1,584	)		(2,653	)
Other financing activities		(365	)		302
Net cash provided by (used in) financing activities		217,712			(208,227	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		197,114			125,794
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		177,702			72,595
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	374,816		$	198,389

~~(Unaudited)~~

September 30,
2017 December 31,
2016
ASSETS
Buildings and improvements $ 6,264,146
$ 6,106,298
Land 1,827,748
1,824,819
Total real estate 8,091,894
7,931,117
Accumulated depreciation (2,549,197 ) (2,421,357 )
Net real estate 5,542,697
5,509,760
Cash and cash equivalents 38,780
45,821
Restricted cash 47,565
36,405
Other assets 247,722
293,768
Assets of partnerships served by Asset Management business:
Real estate, net 228,830
245,648
Cash and cash equivalents 16,901
15,423
Restricted cash 30,350
33,501
Other assets 16,493
52,492
Total assets $ 6,169,338
$ 6,232,818

LIABILITIES AND EQUITY
Non-recourse property debt secured by Real Estate communities, net $ 3,556,668
$ 3,630,276
Term loan, net 249,252
—
Revolving credit facility borrowings 356,220
17,930
Total indebtedness associated with Real Estate portfolio 4,162,140
3,648,206
Accrued liabilities and other 207,533
218,937
Liabilities of partnerships served by Asset Management business:
Non-recourse property debt, net 228,382
236,426
Accrued liabilities and other 20,135
62,630
Deferred income 13,922
18,452
Total liabilities 4,632,112
4,184,651
Redeemable preferred units 101,537
103,201
Commitments and contingencies (Note 4)

Partners’ capital:
Preferred units 125,000
125,000
General Partner and Special Limited Partner 1,329,186
1,668,903
Limited Partners (15,542 ) (58 )
Partners’ capital attributable to the Aimco Operating Partnership 1,438,644
1,793,845
Noncontrolling interests in consolidated real estate partnerships (2,955 ) 151,121
Total partners’ capital 1,435,689
1,944,966
Total liabilities and partners’ capital $ 6,169,338
$ 6,232,818

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED ~~STATEMENTS OF OPERATIONS~~

BALANCE SHEETS

(In ~~thousands, except per unit data)~~thousands)

(Unaudited)

	March 31, 2020			December 31, 2019
ASSETS
Buildings and improvements	$	6,967,143		$	6,868,543
Land		1,869,465			1,869,048
Total real estate		8,836,608			8,737,591
Accumulated depreciation		(2,810,949	)		(2,718,284	)
Net real estate		6,025,659			6,019,307
Cash and cash equivalents		340,883			142,902
Restricted cash		33,933			34,800
Mezzanine investment		286,472			280,258
Other assets		361,298			351,472
Total assets	$	7,048,245		$	6,828,739

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	4,208,687		$	4,230,590
Revolving credit facility borrowings		593,845			275,000
Total indebtedness		4,802,532			4,505,590
Accrued liabilities and other		349,099			360,574
Total liabilities		5,151,631			4,866,164

Redeemable preferred OP Units		96,449			97,064
Redeemable noncontrolling interests in consolidated real estate partnership		4,617			4,716
Commitments and contingencies (Note 4)
Partners’ capital:
General Partner and Special Limited Partner		1,717,455			1,780,649
Limited Partners		81,502			83,442
Partners’ capital attributable to the Aimco Operating Partnership		1,798,957			1,864,091
Noncontrolling interests in consolidated real estate partnerships		(3,409	)		(3,296	)
Total partners’ capital		1,795,548			1,860,795
Total liabilities and partners’ capital	$	7,048,245		$	6,828,739

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
REVENUES
Rental and other property revenues attributable to Real Estate $ 233,708
$ 225,902
$ 686,639
$ 672,234
Rental and other property revenues of partnerships served by Asset Management business 18,232
18,213
55,327
56,233
Tax credit and transaction revenues 2,695
4,789
8,242
17,894
Total revenues 254,635
248,904
750,208
746,361

OPERATING EXPENSES
Property operating expenses attributable to Real Estate 81,179
82,756
239,819
241,936
Property operating expenses of partnerships served by Asset Management business 8,865
9,410
26,445
28,199
Depreciation and amortization 92,513
84,848
268,836
245,356
General and administrative expenses 10,529
11,615
31,599
35,529
Other expenses, net 2,344
1,543
6,809
8,639
Total operating expenses 195,430
190,172
573,508
559,659
Operating income 59,205
58,732
176,700
186,702
Interest income 2,047
2,163
6,251
5,841
Interest expense (50,682 ) (49,377 ) (145,422 ) (145,905 )
Other, net 6,937
558
7,602
5,541
Income before income taxes and gain on dispositions 17,507
12,076
45,131
52,179
Income tax benefit 4,870
3,462
14,878
16,469
Income before gain on dispositions 22,377
15,538
60,009
68,648
Gain (loss) on dispositions of real estate, inclusive of tax (233 ) 14,498
881
237,226
Net income 22,144
30,036
60,890
305,874
Net loss (income) attributable to noncontrolling interests in consolidated real estate partnerships 249
(12,489 ) (1,515 ) (22,096 )
Net income attributable to the Aimco Operating Partnership 22,393
17,547
59,375
283,778
Net income attributable to the Aimco Operating Partnership’s preferred unitholders (4,086 ) (6,165 ) (12,271 ) (15,114 )
Net income attributable to participating securities (61 ) (14 ) (184 ) (384 )
Net income attributable to the Aimco Operating Partnership’s common unitholders $ 18,246
$ 11,368
$ 46,920
$ 268,280

Net income attributable to the Aimco Operating Partnership per common unit – basic $ 0.11
$ 0.07
$ 0.29
$ 1.64
Net income attributable to the Aimco Operating Partnership per common unit – diluted $ 0.11
$ 0.07
$ 0.29
$ 1.63
Distributions declared per common unit $ 0.36
$ 0.33
$ 1.08
$ 0.99

Weighted average common units outstanding – basic 163,664
163,832
163,739
163,749
Weighted average common units outstanding – diluted 164,194
164,280
164,218
164,146

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~

OPERATIONS

(In ~~thousands)~~thousands, except per unit data)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
REVENUES
Rental and other property revenues	$	224,552		$	230,235

OPERATING EXPENSES
Property operating expenses		75,480			78,959
Depreciation and amortization		100,476			93,565
General and administrative expenses		10,108			9,829
Investment management expenses		1,184			1,332
Other expenses, net		1,642			5,136
Total operating expenses		188,890			188,821

Interest income		4,523			2,726
Interest expense		(41,336	)		(41,409	)
(Loss) gain on dispositions of real estate		(34	)		291,473
Mezzanine investment income, net		6,747			—
Income from unconsolidated real estate partnerships		182			72
Income before income tax benefit (expense)		5,744			294,276
Income tax benefit (expense)		3,233			(2,981	)
Net income		8,977			291,295
Net income attributable to noncontrolling interests in consolidated real estate partnerships		(18	)		(91	)
Net income attributable to the Aimco Operating Partnership		8,959			291,204
Net income attributable to the Aimco Operating Partnership’s preferred unitholders		(1,869	)		(4,082	)
��Net income attributable to participating securities		(43	)		(483	)
Net income attributable to the Aimco Operating Partnership’s common unitholders	$	7,047		$	286,639
Net income attributable to the Aimco Operating Partnership per common unit – basic and diluted	$	0.04		$	1.88

Weighted-average common units outstanding – basic		156,660			152,303
Weighted-average common units outstanding – diluted		157,003			152,632

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income $ 22,144
$ 30,036
$ 60,890
$ 305,874
Other comprehensive income (loss):
Unrealized gains (losses) on interest rate swaps 75
337
(280 ) (748 )
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss 594
390
1,349
1,208
Unrealized gains (losses) on investments in debt securities classified as available-for-sale 381
(336 ) (40 ) 5,615
Other comprehensive income 1,050
391
1,029
6,075
Comprehensive income 23,194
30,427
61,919
311,949
Comprehensive loss (income) attributable to noncontrolling interests 249
(12,591 ) (1,616 ) (22,285 )
Comprehensive income attributable to the Aimco Operating Partnership $ 23,443
$ 17,836
$ 60,303
$ 289,664

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~

COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Net income	$	8,977		$	291,295
Unrealized (losses) gains on available for sale debt securities		(60	)		61
Comprehensive income		8,917			291,356
Comprehensive income attributable to noncontrolling interests		(18	)		(91	)
Comprehensive income attributable to the Aimco Operating Partnership	$	8,899		$	291,265

~~(Unaudited)~~

Nine Months Ended
September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 60,890
$ 305,874
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 268,836
245,356
Gain on dispositions of real estate, net of tax (881 ) (237,226 )
Other adjustments (14,482 ) (10,530 )
Net changes in operating assets and operating liabilities (29,338 ) (27,018 )
Net cash provided by operating activities 285,025
276,456
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of real estate (11,706 ) (287,952 )
Capital expenditures (266,623 ) (259,323 )
Proceeds from dispositions of real estate 11,027
325,344
Purchases of corporate assets (7,358 ) (6,472 )
Change in restricted cash 1,607
(15,992 )
Other investing activities (1,086 ) 10,134
Net cash used in investing activities (274,139 ) (234,261 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from non-recourse property debt 165,785
190,714
Principal repayments on non-recourse property debt (250,674 ) (253,328 )
Proceeds from term loan 250,000
—
Net borrowings on revolving credit facility 338,290
267,780
Redemption of preferred units from Aimco —
(34,791 )
Payment of distributions to holders of Preferred Units (12,271 ) (13,142 )
Payment of distributions to General Partner and Special Limited Partner (168,987 ) (154,661 )
Payment of distributions to Limited Partners (8,026 ) (7,693 )
Payment of distributions to noncontrolling interests (1,977 ) (16,057 )
Purchases of noncontrolling interests in consolidated real estate partnerships (311,079 ) (11,869 )
Other financing activities (17,510 ) (12,029 )
Net cash used in financing activities (16,449 ) (45,076 )
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,563 ) (2,881 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 61,244
50,789
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 55,681
$ 47,908

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Three Months Ended March 31, 2020 and 2019

(In thousands)

(Unaudited)

	Preferred Units		General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to the Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Total Partners’ Capital
Balances at December 31, 2018	$	125,000	$	1,574,419		$	67,189		$	1,766,608		$	(2,967	)	$	1,763,641
Repurchases of common partnership units		—		(20,682	)		—			(20,682	)		—			(20,682	)
Redemption of Aimco Operating Partnership units		—		—			(2,557	)		(2,557	)		—			(2,557	)
Amortization of share-based compensation cost		—		2,442			796			3,238			—			3,238
Effect of changes in ownership of consolidated entities		—		(2,168	)		2,168			—			—			—
Change in accumulated other comprehensive income		—		57			4			61			—			61
Net income		—		274,133			15,137			289,270			91			289,361
Distributions to common unitholders		—		(67,476	)		(3,244	)		(70,720	)		—			(70,720	)
Distributions to preferred unitholders		—		(2,148	)		—			(2,148	)		—			(2,148	)
Other, net		—		59			—			59			19			78
Balances at March 31, 2019	$	125,000	$	1,758,636		$	79,493		$	1,963,129		$	(2,857	)	$	1,960,272

Balances at December 31, 2019	$	—	$	1,780,649		$	83,442		$	1,864,091		$	(3,296	)	$	1,860,795
Repurchases of common partnership units		—		(10,004	)		—			(10,004	)		—			(10,004	)
Redemption of Aimco Operating Partnership units		—		—			(969	)		(969	)		—			(969	)
Amortization of share-based compensation cost		—		1,929			1,051			2,980			—			2,980
Effect of changes in ownership of consolidated entities		—		(769	)		769			—			—			—
Cumulative effect of a change in accounting principle		—		(277	)		—			(277	)		—			(277	)
Change in accumulated other comprehensive income		—		(56	)		(4	)		(60	)		—			(60	)
Net income		—		6,722			368			7,090			118			7,208
Distributions to common unitholders		—		(60,825	)		(3,155	)		(63,980	)		—			(63,980	)
Distributions to noncontrolling interests		—		—			—			—			(73	)		(73	)
Other, net		—		86			—			86			(158	)		(72	)
Balances at March 31, 2020	$	—	$	1,717,455		$	81,502		$	1,798,957		$	(3,409	)	$	1,795,548

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,977		$	291,295
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		100,476			93,565
Loss (gain) on dispositions of real estate		34			(291,473	)
Income tax (benefit) expense		(3,233	)		2,981
Other adjustments		3,157			3,201
Net changes in operating assets and operating liabilities		(31,995	)		(17,952	)
Net cash provided by operating activities		77,416			81,617
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate		(2,733	)		(2,236	)
Capital expenditures		(94,842	)		(85,546	)
Proceeds from dispositions of real estate		—			342,083
Purchases of corporate assets		(5,104	)		(3,319	)
Other investing activities		4,665			1,422
Net cash (used in) provided by investing activities		(98,014	)		252,404
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt		(22,622	)		(19,580	)
Net borrowings on (repayments of) revolving credit facility		318,845			(90,360	)
Repurchases of common partnership units held by General Partner and Special Limited Partner		(10,004	)		(20,682	)
Payment of distributions to General Partner and Special Limited Partner		(61,116	)		(67,405	)
Payment of distributions to Limited Partners		(3,492	)		(3,767	)
Payment of distributions to preferred OP Units		(1,869	)		(4,082	)
Payment of distributions to noncontrolling interests		(81	)		—
Redemption of common and preferred OP Units		(1,584	)		(2,653	)
Other financing activities		(365	)		302
Net cash provided by (used in) financing activities		217,712			(208,227	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		197,114			125,794
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		177,702			72,595
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	374,816		$	198,389

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~

March 31, 2020

(Unaudited)

Note 1 — Organization

Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994. Aimco is a self-administered and self-managed real estate investment trust, or REIT. AIMCO Properties, L.P., or the Aimco Operating Partnership, is a Delaware limited partnership formed on May 16, 1994, to conduct our business, which is focused on the ownership, management, redevelopment, and ~~limited~~some development of quality apartment communities located in several of the largest markets in the United States.

Aimco, through its wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, ~~owns~~holds a majority of the ownership interests in the Aimco Operating Partnership. Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as OP Units. OP Units include common partnership units, ~~and high performance partnership units,~~ which we refer to as common OP Units, as well as preferred partnership ~~preferred~~ units, which we refer to as preferred OP Units. As of ~~September 30, 2017,~~March 31, 2020, after ~~eliminations for~~elimination of units held by consolidated subsidiaries, the Aimco Operating Partnership had ~~164,459,517~~159,196,780 common ~~partnership units and equivalents~~OP Units outstanding. As of ~~September 30, 2017,~~March 31, 2020, Aimco owned ~~157,023,314~~148,700,407 of the common ~~partnership units (95.5% of the common partnership units and equivalents)~~OP Units of the Aimco Operating Partnership and Aimco had ~~outstanding~~ an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock.

Aimco’s ownership of the total common OP units outstanding represents a 93.4% legal interest in the Aimco Operating Partnership and a 94.8% economic interest.

Except as the context otherwise requires, “we,” ~~“our”~~“our,” and “us” refer to Aimco, the Aimco Operating Partnership, and their consolidated subsidiaries, collectively.

We own and operate a portfolio of apartment communities, diversified by both geography and price point, in 17 states and the District of Columbia. As of ~~September 30, 2017, we owned an equity interest in 141~~March 31, 2020, our portfolio included 124 apartment ~~communiti~~escommunities with ~~39,184~~32,846 apartment homes in our real estate portfolio. Our Real Estate portfolio, which comprises our reportable segment, is diversified by both price point and geography and consists primarily of market rate apartment communities in which we ~~own a substantial interest.~~held an average ownership of approximately 99%. We consolidated ~~137~~120 of these apartment communities with ~~39,042~~32,704 apartment homes.

As of September 30, 2017, we also owned nominal ownership positions in partnerships holding 46 low-income housing tax credit apartment communities with 6,898 apartment homes. We provide services to these partnerships and receive fees and other payments in return. Our relationship with these partnerships is different than real estate ownership and is better described as an asset management business, or Asset Management. In accordance with accounting principles generally accepted in the United States of America, or GAAP, we are required to consolidate partnerships owning an aggregate of 39 apartment communities with 6,211 apartment homes.

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments, ~~(consisting~~consisting of normal recurring ~~items)~~items, considered necessary for a fair presentation have been included. Operating results for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~

2020.

The condensed consolidated balance sheets of Aimco and the Aimco Operating Partnership at December 31, ~~2016,~~2019, have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in Aimco’s and the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. Except where indicated, the footnotes refer to both Aimco and the Aimco Operating Partnership.

Effective in 2017, we modified our condensed consolidated balance sheets to present the assets and liabilities of consolidated partnerships served by our Asset Management business separately from those amounts relating to our Real Estate portfolio. We have similarly modified our condensed consolidated statements of operations to present separately the rental and other property

revenues and property operating expenses of consolidated partnerships served by our Asset Management business. We have reclassified these items in the condensed consolidated balance sheets as of December 31, 2016, and in the condensed consolidated statements of operations for the three and nine months ended September 30, 2016, to conform to the current presentation. These reclassifications had no effect on previously reported total assets, total liabilities or net income amounts.

Principles of Consolidation

Aimco’s accompanying condensed consolidated financial statements include the accounts of Aimco, the Aimco Operating Partnership, and their consolidated subsidiaries. The Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of the Aimco Operating Partnership and its consolidated ~~subsidiaries, including partnerships served by our Asset Management business (see note~~ ~~Note 8~~).subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Table of Contents

We consolidate a variable interest entity, or VIE, in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. As of March 31, 2020, and December 31, 2019, Aimco consolidated 6 VIEs, in addition to the Aimco Operating Partnership.

As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member of a limited liability company. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are reflected in Aimco’s accompanying condensed consolidated balance sheets as noncontrolling interests in the Aimco Operating Partnership. Interests in partnerships consolidated by the Aimco Operating Partnership that are held by third parties are reflected in our accompanying condensed consolidated balance sheets as noncontrolling interests in consolidated real estate partnerships.

~~Temporary Equity~~

We have an interest in a partnership that owns Parkmerced Apartments, which meets the definition of a VIE. However, we are not the primary beneficiary and ~~Partners’ Capital~~

~~The following table presents~~do not consolidate this partnership. We loaned $275 million to the partnership, which accrues interest at 10% per annum with a ~~reconciliation~~five-year term and the right to extend for a second five-year term. Our investment balance of ~~the Aimco Operating Partnership’s~~$286.5 million, reflected in mezzanine investment in our condensed consolidated balance sheets, primarily consists of notes receivable and represents our maximum exposure to loss in this VIE.

Redeemable Preferred OP Units ~~from December 31, 2016 to September 30, 2017. The Preferred~~

As described in Note 5, the preferred OP Units may be redeemed at the ~~holders’~~holder’s option ~~(as further discussed in~~ ~~Note 5~~), and are therefore ~~are~~ presented within temporary equity in Aimco’s condensed consolidated balance sheets and within temporary capital in the Aimco Operating Partnership’s condensed consolidated balance ~~sheets (in thousands).~~

Balance, December 31, 2016 $ 103,201
Distributions to preferred unitholders (5,826 )
Redemption of preferred units and other (1,664 )
Net income 5,826
Balance, September 30, 2017 $ 101,537

~~Aimco Equity (including Noncontrolling Interests)~~

~~The following table presents a reconciliation of Aimco’s consolidated permanent equity accounts from December 31, 2016 to September 30, 2017 (in thousands):~~

Aimco
Equity

Noncontrolling
interests in
consolidated real estate
partnerships

Common
noncontrolling
interests in
Aimco Operating
Partnership

Total
Equity
Balance, December 31, 2016 $ 1,793,903
$ 151,121
$ (58 ) $ 1,944,966
Contributions —
3,341
—
3,341
Dividends on Preferred Stock (6,445 ) —
—
(6,445 )
Dividends and distributions on Common Stock and common OP Units (169,582 ) (1,977 ) (8,094 ) (179,653 )
Redemptions of common OP Units —
—
(11,524 ) (11,524 )
Amortization of stock-based compensation cost 6,780
—
460
7,240
Effect of changes in ownership for consolidated entities (160,187 ) (157,056 ) 4,497
(312,746 )
Cumulative effect of a change in accounting principle (62,682 ) —
(3,028 ) (65,710 )
Change in accumulated other comprehensive loss 887
101
41
1,029
Other 127
—
—
127
Net income 51,385
1,515
2,164
55,064
Balance, September 30, 2017 $ 1,454,186
$ (2,955 ) $ (15,542 ) $ 1,435,689

~~On June 30, 2017, we reacquired the 47% noncontrolling limited partner interest in the Palazzo joint venture, as further discussed in~~ ~~Note 3. As a result of this transaction we recorded the consideration paid in excess of the noncontrolling interest in~~

~~the consolidated real estate partnership of $155.6 million as a reduction of Aimco’s additional paid-in capital and the Aimco Operating Partnership’s partners capital.~~

~~Please refer to the Accounting Pronouncements Adopted in the Current Year heading below, for further discussion of the cumulative effect of a change in accounting principle.~~

~~Partners’ Capital attributable to the Aimco Operating Partnership~~

sheets. The following table presents a reconciliation of the ~~consolidated partners’ capital balances in permanent capital that are attributable~~Aimco Operating Partnership’s preferred OP Units from December 31, 2019, to March 31, 2020 (in thousands):

	2020
Balance at December 31	$	97,064
Preferred distributions		(1,869	)
Redemption of preferred units		(615	)
Net income		1,869
Balance at March 31	$	96,449

The Aimco Operating Partnership has outstanding various classes of redeemable preferred OP Units. As of March 31, 2020, the Aimco Operating Partnership had 3,618,802 redeemable preferred OP Units issued and outstanding with a total redemption value of $96.4 million. Distributions per annum range from ~~December~~1.92% to 8.75% per class and from $0.48 to $8.00 per unit.

Revenue from Leases

The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our residents and commercial tenants primarily for utility reimbursements. For the three months ended March 31, ~~2016 to September 30, 2017~~2020 and 2019, our total lease income was comprised of the following amounts for all operating leases (in thousands):

	2020		2019
Fixed lease income	$	213,416	$	215,581
Variable lease income		13,615		14,144
Total lease income	$	227,031	$	229,725

Partners’ capital
attributable to
the Aimco Operating Partnership
Balance, December 31, 2016 $ 1,793,845
Distributions to preferred units held by Aimco (6,445 )
Distributions to common units held by Aimco (169,582 )
Distributions to common units held by Limited Partners (8,094 )
Redemption of common OP Units (11,524 )
Amortization of Aimco stock-based compensation cost 7,240
Effect of changes in ownership for consolidated entities (155,690 )
Cumulative effect of a change in accounting principle (65,710 )
Change in accumulated other comprehensive loss 928
Other 127
Net income 53,549
Balance, September 30, 2017 $ 1,438,644

~~A separate reconciliation~~

We monitor the collectability of ~~noncontrolling interests in consolidated real estate partnerships~~unpaid rent obligations and ~~total partners’ capital for~~due to the ~~Aimco Operating Partnership~~impact of COVID-19 and the resulting economic impact on our commercial tenants, we recognized a write-off of straight-line rent receivables and deferred leasing costs of $2.9 million and $2.2 million, respectively. The write-off of the straight-line rent receivables is not ~~presented as these amounts are identical to~~included in the ~~corresponding noncontrolling interests~~fixed lease income in ~~consolidated real estate partnerships and total equity for Aimco, which are presented~~the table above.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.

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Reclassifications and Revisions

For the 2020 presentation of our condensed consolidated statements of operations, we have added a caption for investment management expenses. We have reclassified certain items from property operating expenses, general and administrative expenses, and other expenses, net, in our 2019 presentation to conform to the current presentation.

Accounting Pronouncements Adopted in the Current Year

Effective April 1, 2017, we elected to adopt early the new accounting standard that revised the GAAP definition of a business. Under the new standard we expect apartment communities will no longer be considered businesses in most acquisitions and dispositions. Under the new standard, transaction costs incurred related to the acquisition of real estate operations will be capitalized as a cost of the acquisition. Additionally, we will no longer allocate goodwill to apartment communities for purposes of calculating gains or losses upon sale. We have applied the new standard prospectively to transactions occurring after April 1, 2017. This standard did not have a significant effect on our financial condition or results of operations.

~~Effective~~

On January 1, ~~2017,~~2020, we adopted ~~a new standard~~ASC 326, Financial Instruments – Credit Losses, issued by the Financial Accounting Standards Board, or FASB, ~~that simplifies~~which changes the ~~accounting for the income tax consequences~~method and timing of ~~intercompany transfers of assets. Previously,~~ the recognition ~~within~~of credit losses on financial assets. The standard requires us to estimate and record credit losses over the ~~statement~~life of ~~operations of income tax expense~~a financial instrument, including receivables, at its inception. Our notes receivable and investments in available for sale, or ~~benefit resulting from an intercompany transfer of assets did not occur until~~AFS, debt securities are subject to the ~~assets affect GAAP income or loss, for example, through depreciation, impairment or upon the sale of the asset to a third party. Under~~new standard. For AFS debt securities, the new standard ~~an entity recognizes~~requires us to estimate a credit loss if the ~~income tax expense or benefit from an intercompany transfer~~fair value of ~~assets when~~ the ~~transfer occurs.~~ instruments is less than the carrying value of the instruments.

We ~~have applied this change on a modified retrospective basis and~~adopted the credit loss standard using the modified-retrospective approach. We recorded a ~~cumulative effect~~cumulative-effect adjustment ~~to retained~~for the estimated credit loss associated with our notes receivable of $0.3 million in distributions in excess of earnings ~~of $65.7 million~~and partners’ capital in our condensed consolidated balance sheets as of January 1, 2017, representing accumulated unrecognized tax expense from intercompany transfers between the Aimco Operating Partnership and TRS entities. Such amounts were included in other assets within our consolidated balance sheets at December 31, 2016.

~~Also effective January 1, 2017, we adopted guidance that simplifies the accounting for share-based compensation. Under prior practice, tax benefits in excess~~2020. As of those associated with compensation cost recognized in accordance with GAAP, or windfalls, were recorded in equity and tax deficiencies were recorded in equity until previous windfalls had been recouped and then recognized

in earnings. Under the new guidance, all of the tax effects related to share-based compensation are recognized through earnings. This guidance is applied to all windfalls and tax deficiencies resulting from settlements occurring after January 1, 2017. The new guidance also requires windfalls to be recorded in the period the related transaction triggering tax consequences, such as an exercise of stock options or vesting of restricted shares, occurs. This change in timing of recognition has been applied on a modified retrospective basis. We did not record a cumulative effect adjustment to opening retained earnings on the date of adoption, ~~as there were no accumulated windfalls recorded in equity. Compared to prior periods, we may experience incremental volatility in income tax benefit or expense resulting from~~ the ~~recognition in earnings of windfall benefits or deficiencies upon the exercise of stock options and vesting of restricted shares.~~

~~Recent Accounting Pronouncements~~

~~As discussed in Note 2 to the consolidated financial statements in Item 8~~fair value of our ~~Form 10-K for the year ended December 31, 2016, the FASB issued new standards that affect accounting for revenue from contracts with customers~~AFS debt securities exceeded their carrying value and that are effective for us on January 1, 2018. The FASB also issued a new standard on lease accounting, which is effective for Aimco on January 1, 2019, with early adoption permitted. We have substantially completed our evaluation0 estimate of these standards and do not expect our adoption will have a significant effect on the timing or amount of revenue or lease income we recognize on an ongoing basis. However, in circumstances where we are a lessee, primarily in a limited population of ground leases and leases of corporate office space, we will becredit loss was required ~~to recognize right of use assets and related lease liabilities within our consolidated balance sheets. We expect the timing and amount of expense~~ for these ~~leases will remain unchanged unless modified prior to their contractual termination dates.~~

instruments.

Note 3 — Significant Transactions ~~Dispositions of Apartment Communities and Assets Held for Sale~~

~~Reacquisition of Limited Partner Interest in Palazzo Joint Venture and Term Loan~~

Financing Activity

On ~~June 30, 2017,~~April 20, 2020, we ~~reacquired for $451.5 million, the 47% noncontrolling limited partner interest in the Palazzo joint venture, which owns three communities with~~secured a total of 1,382 apartment homes located in Los Angeles, California. We assumed $140.5 million of the noncontrolling interest partner’s share of existing non-recourse property-level debt and paid $311.0 million in cash consideration, which was funded by short-term borrowings we expect to repay using proceeds from apartment community sales. We now own all of the interests in the Palazzo joint venture and its underlying apartment communities. Prior to the transaction, we consolidated into our financial statements the joint venture and underlying apartment communities, therefore this transaction has been accounted for as an equity transaction. In accordance with GAAP, we recognized the $155.6 million of consideration paid in excess of the noncontrolling interest balance as a reduction of additional paid-in capital within Aimco’s equity and the Aimco Operating Partnership’s partners capital.

On June 30, 2017, we entered into a second amended and restated senior secured credit agreement, or the Credit Agreement. The Credit Agreement continues our existing $600.0 million revolving loan facility with consistent terms and provides for a $250.0$350.0 million term ~~loan, which we used to fund a portion of the Palazzo reacquisition.~~loan. The ~~term~~ loan matures on ~~June 30, 2018,~~April 20, 2021, includes a one-year extension option, ~~subject to the satisfaction of customary conditions,~~ and currently bears interest at a 30-day LIBOR plus ~~1.35%. We paid lender and other fees of $1.0 million in connection~~1.85%, with a 50-basis point LIBOR floor. Proceeds from the ~~term~~ loan ~~which have been deferred and will be recognized as additional interest over the duration of the term loan.~~

were used primarily to repay borrowings on our revolving credit facility.

Dispositions of Apartment Communities

During the ~~nine~~three months ended ~~September 30, 2017, partnerships served by the Asset Management business sold two~~March 31, 2020, 0 apartment communities ~~with a total~~were sold. During the three months ended March 31, 2019 we sold apartment communities as summarized below (dollars in thousands):

	2019
Number of apartment communities sold		7
Number of apartment homes sold		2,206
Gain on dispositions of real estate	$	291,473

The apartment communities sold were predominantly located outside of ~~252~~our primary markets or in lower-rated locations within our primary markets and had average revenues per apartment ~~homes, resulting in gains~~home significantly below those of ~~$2.6 million, and related tax expense of $0.9 million.~~

~~We are currently~~our retained portfolio.

From time to time we may be marketing for sale certain apartment communities that are inconsistent with our long-term investment strategy. ~~Additionally, the consolidated partnerships served by our Asset Management business periodically evaluates for sale certain of their apartment communities.~~ At the end of each reporting period we evaluate whether ~~any consolidated apartment~~such communities meet the criteria to be classified as held for sale. As of ~~September 30, 2017, no~~March 31, 2020, 0 apartment communities were classified as held for sale.

~~Napico Disposition~~

In 2012, we sold the Napico business. The transaction was primarily seller-financed, and the associated notes were scheduled to be repaid from the operation and liquidation of the Napico business and were collateralized by the buyer’s interests in the portfolio. In 2016, the buyer paid the two seller-financed notes in full. At that time we maintained continuing involvement related to preexisting guarantees of property-level debt for two communities. In accordance with GAAP, we deferred recognition of the sale of these communities until the guarantees were released. In September 2017, the owner refinanced the final mortgage, resulting

~~in the release of our remaining guarantee, which allowed us to transfer our nominal general partner interest in the property to the buyer.~~

Accordingly, we reduced other assets and accrued liabilities and other by $34.5 million and $38.4 million, respectively, and recognized a gain of $7.1 million, net of tax, in other, net on our condensed consolidated statement of operations for the three and nine months ended September 30, 2017.

Note 4 — Commitments and Contingencies

Commitments

In connection with our redevelopment, development and other capital ~~improvement~~additions activities, we have entered into various construction-related contracts and we have made commitments to complete redevelopment and development of certain apartment communities, pursuant to financing or other arrangements. As of ~~September 30, 2017,~~March 31, 2020, our commitments related to these capital activities totaled approximately ~~$96.2~~$219.0 million, most of which we expect to incur during the next 12 months.

We enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.

~~Tax Credit Arrangements~~

For various consolidated partnerships served by our Asset Management business, we are required to manage the partnerships and related apartment communities in compliance with various laws, regulations and contractual provisions that apply to historic and low-income housing tax credit syndication arrangements. In some instances, noncompliance with applicable requirements could result in projected tax benefits not being realized by the limited partners in these partnerships and would require a refund or reduction of investor capital contributions, which are reported as deferred income in our condensed consolidated balance sheets, until such time as our obligation to deliver tax benefits is relieved. The remaining compliance periods for the tax credit syndication arrangements range from less than one year to eight years. We do not anticipate that any material refunds or reductions of investor capital contributions will be required in connection with these arrangements.

~~Income Taxes~~

In 2014, the Internal Revenue Service initiated an audit of the Aimco Operating Partnership’s 2011 and 2012 tax years. We do not believe the audit will have any material effect on our unrecognized tax benefits, financial condition or results of operations.

Legal Matters

In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

~~Limited Partnerships~~

~~In connection with our acquisitions~~

Table of interests in real estate partnerships, we are sometimes subject to legal actions, including allegations that such activities may involve breaches of fiduciary duties to the partners of such real estate partnerships or violations of the relevant partnership agreements. We may incur costs in connection with the defense or settlement of such litigation. We believe that we comply with our fiduciary obligations and relevant partnership agreements. Although the outcome of any litigation is uncertain, we do not expect any such legal actions to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

~~La Jolla Cove Litigation~~

We are a defendant in a lawsuit filed by a group of disappointed buyers that contend we interfered with their allegedly superior right to acquire the La Jolla Cove property. The case, pending in state court in California, is in fact discovery at this stage. The case is set for jury trial in February 2018. Although the outcome of this litigation is uncertain, we do not believe its resolution will have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

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Environmental

Various federal, state and local laws subject apartment community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present in the land or buildings of an apartment community. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was

responsible for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such apartment communities as well as the ability to sell or finance such apartment communities. In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur or for personal injury, disease, disability or other infirmities related to the alleged presence of hazardous materials. In addition to potential environmental liabilities or costs associated with our current apartment communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or apartment communities we no longer own or operate.

We are engaged in discussions with the Environmental Protection Agency, or EPA, ~~and the Indiana Department of Environmental Management, or IDEM,~~ regarding contaminated groundwater ~~in a residential area in the vicinity of~~near an Indiana apartment community that has not been owned by us since 2008. The contamination allegedly derives from a dry cleaner that operated on our former property, prior to our ownership. We ~~have undertaken~~undertook a voluntary remediation of the dry cleaner contamination under ~~IDEM’s oversight, and in previous years accrued our share of the then-estimated cleanup and abatement costs.~~state oversight. In 2016, EPA listed our former community and a number of residential communities in the vicinity on the National Priorities List, or NPL (i.e., as a Superfund site),. In May 2018, we prevailed on our federal judicial appeal vacating the Superfund listing. We continue to work with EPA to formulate a scope of work and ~~IDEM has formally sought~~agreed order to ~~terminate us from the voluntary remediation program. We have filed a formal appeal~~finish clean up of the ~~EPA listing and~~site outside the ~~IDEM termination of us from the voluntary remediation~~Superfund program. Although the outcome of these processes are uncertain, we do not expect their resolution to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

We also have ~~been contacted by regulators and the current owner of~~a contingent environmental liability related to a property in Lake Tahoe, ~~regarding environmental issues allegedly stemming from the historic operation of a dry cleaner.~~California. An entity owned by us was the former general partner of a now-dissolved partnership that previously owned a site ~~that was used for dry cleaning.~~where a laundromat, with a self-service dry-cleaning machine, operated. That entity and the current property owner have been remediating the ~~dry cleaner~~ site since 2009, under the oversight of the Lahontan Regional Water Quality Control Board, or Lahontan. In ~~2016,~~May 2017, Lahontan ~~sent us, the current property owner, and~~issued a ~~former operator of the dry cleaner drafts of a proposed~~final cleanup and abatement order that ~~if entered as drafted, would have required all three~~names 4 potentially-responsible parties, acknowledges that there may be additional responsible parties, and requires the named parties to perform additional groundwater investigation and corrective actions with respect to onsite and offsite contamination. After review of comments from us, Lahontan issued a final order in May 2017. The final order adds one more potentially-responsible party, acknowledges that there may be additional responsible parties, and narrows (as compared to earlier drafts) the scope of work. We are appealing the final order while simultaneously complying with it. Although the outcome of this process is uncertain, we do not expect its resolution to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

We have determined that our legal obligations to remove or remediate certain potentially hazardous materials may be conditional asset retirement obligations, as defined inby GAAP. Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or apartment community casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. Asset retirement obligations that are reasonably estimable as of ~~September 30, 2017,~~March 31, 2020, are immaterial to our consolidated financial condition, results of operations and cash flows.

Note 5 — Earnings and Dividends per Share and Unit

Aimco and the Aimco Operating Partnership calculate basic earnings per common share and basic earnings per common unit based on the weighted average number of shares of Common Stock and common partnership units ~~and participating securities outstanding, and~~outstanding. We calculate diluted earnings per share and diluted earnings per unit taking into consideration dilutive common stock and common partnership unit equivalents and dilutive convertible securities outstanding during the period.

Our common stock and common partnership unit equivalents include options to purchase shares of Common Stock, which, if exercised, would result in Aimco’s issuance of additional shares and the Aimco Operating Partnership’s issuance to Aimco of additional common partnership units equal to the number of shares purchased under the options. These equivalents also include unvested total shareholder ~~return-based~~return, or TSR, restricted stock ~~and unit~~ awards that do not meet the definition of participating securities, which would result in an increase in the number of ~~common~~ shares of Common Stock and common partnership units outstanding equal to the number of shares that vest. ~~The effect of these securities was dilutive for the three and nine months ended September 30, 2017 and 2016, and accordingly has been included~~Common partnership unit equivalents also include unvested long-term incentive partnership units. We include in the denominator ~~for~~securities with dilutive effect in calculating diluted earnings per share and per unit during these periods.

Our ~~time-based~~ restricted stock awards that are subject to time-based vesting receive non-forfeitable dividends similar to shares of Common Stock and common partnership units prior to ~~vesting. These dividends are not forfeited in~~vesting, and our TSR long-term incentive partnership units receive non-forfeitable distributions based on specified percentages of the ~~event that the~~distributions paid to common partnership units prior to vesting and conversion. The unvested restricted ~~stock does not vest. Therefore, the unvested~~ shares and units related to these awards are participating securities. ~~The~~ We include the

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effect of participating securities ~~is included~~ in basic and diluted earnings per share and unit computations using the two-class method of allocating distributed and undistributed ~~earnings. There were 0.2 million unvested participating shares~~earnings when the two-class method is more dilutive than the treasury stock method.

Reconciliations of the numerator and ~~units at September 30, 2017~~denominator in the calculations of basic and ~~2016.~~diluted earnings per share and per unit for the three months ended March 31, 2020 and 2019 are as follows (in thousands, except per share and per unit data):

	Three Months Ended
	March 31, 2020		March 31, 2019
Earnings per share
Numerator:
Basic and dilutive net income attributable to Aimco common stockholders	$	6,679	$	271,568

Denominator - shares:
Basic weighted-average Common Stock outstanding		148,518		144,232
Dilutive share equivalents outstanding		268		213
Dilutive weighted-average Common Stock outstanding		148,786		144,445

Earnings per share – basic	$	0.04	$	1.88
Earnings per share – dilutive	$	0.04	$	1.88

Non-dilutive share equivalents outstanding		97		36

Earnings per unit
Numerator:
Basic and dilutive net income attributable to the Aimco Operating Partnership's common unitholders	$	7,047	$	286,639

Denominator - units
Basic weighted-average common partnership units outstanding		156,660		152,303
Dilutive partnership unit equivalents outstanding		343		329
Dilutive weighted-average common partnership units outstanding		157,003		152,632

Earnings per unit – basic	$	0.04	$	1.88
Earnings per unit – dilutive	$	0.04	$	1.88

Non-dilutive partnership unit equivalents outstanding		1,847		229

The Aimco Operating Partnership has various classes of preferred OP Units, which may be redeemed at the holders’ option. The Aimco Operating Partnership may redeem these units for cash, or at its option, shares of Common Stock. As of ~~September 30, 2017,~~March 31, 2020, these preferred OP Units were potentially redeemable for approximately ~~2.3~~2.7 million shares of Common Stock (based on the period end market price), or cash. The Aimco Operating Partnership has a redemption policy that requires cash settlement of redemption requests for the preferred OP Units, subject to limited exceptions. Accordingly, we have excluded these securities from earnings per share and unit computations for the periods presented above, and we expect to exclude them in future periods.

During the three months ended March 31, 2020 and 2019, we paid $0.41 and $2.02, respectively, in dividends and distributions per share and per unit. The $2.02 paid during the three months ended March 31, 2019 represents the per share and per unit value of the special dividend and special distribution authorized by the Board of Directors in the first quarter of 2019. The special dividend consisted of $67.1 million in cash, 4.5 million shares of Common Stock and $0.4 million of cash paid in lieu of issuing fractional shares. The special distribution consisted of $72.7 million in cash, 4.8 million common partnership units and $0.4 million of cash paid in lieu of issuing fractional units.

In connection with the special dividend and distribution, the Board of Directors authorized a reverse stock split during the three months ended March 31, 2019. The reverse split combined every 1.03119 common shares and common partnership units into one common share or common partnership unit and was intended to neutralize the dilutive impact of the shares and units issued in the special dividend and distribution. As a result, the number of shares and units outstanding after the dividend/distribution and reverse split was unchanged from the number outstanding immediately prior to the two actions.

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Note 6 — Fair Value Measurements

Recurring Fair Value Measurements

We measure at fair value on a recurring basis our investments in the securitization trust that holds certain of our property debt, which we classify as ~~available for sale, or~~ AFS ~~securities, and our interest rate swaps, both of which are classified within Level 2 of the GAAP fair value hierarchy.~~

~~Our~~debt securities. These investments ~~classified as AFS~~ are presented within other assets in the ~~accompanying~~ condensed consolidated balance sheets. We hold several positions in the securitization trust that pay interest currently and we also hold the first loss position in the securitization trust, which accrues interest over the term of the investment. WeThese investments were acquired at a discount to face value and we are accreting the discount to the $100.9 million face value of the investments ~~into~~through interest income using the effective interest method over the remaining expected term of the investments, which as of ~~September 30, 2017,~~March 31, 2020, was approximately ~~3.7~~1.2 years. Our amortized cost basis for these investments, which represents the original cost adjusted for interest accretion less interest payments received, was ~~$76.4~~$91.7 million and ~~$72.5~~$90.0 million ~~at September 30, 2017~~as of March 31, 2020, and December 31, ~~2016,~~2019, respectively. ~~We estimated~~

Our investments in AFS debt securities are classified within Level 2 of the GAAP fair value ~~of these investments to be $79.9 million and $76.1 million at September 30, 2017 and December 31, 2016, respectively.~~

hierarchy. We estimate the fair value of these investments using an income and market approach with primarily ~~with~~ observable inputs, including yields and other information regarding similar types of investments, and adjusted for certain unobservable inputs specific to these investments. The fair value of the positions that pay interest currently typically moves in an inverse relationship with movements in interest rates. The fair value of the first loss position is primarily correlated to collateral quality and demand for similar subordinate commercial mortgage-backed securities.

Certain consolidated partnerships served by our Asset Management business have entered into interest rate swap agreements, which limit exposure to interest rate fluctuations on the partnerships’ variable-rate debt by effectively converting the interest on variable-rate debt to a fixed rate. We estimate the fair value of interest rate swaps using an income approach with primarily observable inputs including information regarding the hedged variable cash flows and forward yield curves relating to the variable interest rates on which the hedged cash flows are based.

The following table ~~sets forth a summary of the changes in~~summarizes fair value ~~of these interest rate swaps~~for our AFS debt securities (in thousands):

	As of March 31, 2020								As of December 31, 2019
	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
AFS debt securities	$	95,906	$	—	$	95,906	$	—	$	94,251	$	—	$	94,251	$	—

Nine Months Ended September 30,
2017 2016
Beginning balance $ (3,175 ) $ (4,938 )
Realized (unrealized) losses included in interest expense 73
(33 )
Realized losses on derecognition of interest rate swaps included in earnings 273
—
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss 1,076
1,208
Unrealized losses included in equity and partners’ capital (280 ) (748 )
Ending balance $ (2,033 ) $ (4,511 )

Realized losses on derecognition of interest rate swaps included in earnings represents previously unrealized losses related to an interest rate swap to which the partnership owning the final Napico property was a party. Upon derecognition of the assets and liabilities related to the final property, we also wrote off the accumulated other comprehensive income related to this swap, which was included in the gain on derecognition included in other, net on our condensed consolidated statement of operations for the three and nine months ended September 30, 2017. Please refer to ~~Note 3~~ ~~for further discussion.~~

As of September 30, 2017 and December 31, 2016, the remaining interest rate swaps, exclusive of the derecognized Napico interest rate swap, had aggregate notional amounts of $22.1 million and $22.4 million, respectively. As of September 30, 2017, these swaps had a weighted average remaining term of 6.2 years. We have designated these interest rate swaps as cash flow hedges. The fair value of these swaps is presented within accrued liabilities and other in our condensed consolidated balance sheets, and

~~we recognize any changes in the fair value as an adjustment of accumulated other comprehensive loss within equity and partners’ capital to the extent of their effectiveness.~~

If the forward rates at September 30, 2017 remain constant, we estimate that during the next 12 months, we would reclassify approximately $0.5 million of the unrealized losses in accumulated other comprehensive loss into earnings. If market interest rates increase above the 3.26% weighted average fixed rate under these interest rate swaps the consolidated partnerships will benefit from net cash payments due from the counterparties to the interest rate swaps.

Non-Recurring Fair Value ~~Disclosures~~

Measurements

We believe that the carrying ~~values~~value of the consolidated amounts of cash and cash equivalents, ~~receivables~~restricted cash, accounts receivable, and ~~payables approximates~~accounts payable approximated their fair value ~~at September 30, 2017~~as of March 31, 2020, and December 31, ~~2016,~~2019, due to their relatively short-term nature and high probability of realization. The carrying amounts of notes receivable and the revolving credit facility approximated their estimated fair value as of ~~total indebtedness associated with our Real Estate portfolio was approximately $4.2 billion and $3.7 billion at September 30, 2017~~March 31, 2020, and December 31, 2016, respectively, as compared to carrying amounts of $4.2 billion and $3.6 billion, respectively. The carrying values of the non-recourse property debt of the consolidated partnerships served by our Asset Management business approximated its estimated fair value at September 30, 2017 and December 31, 2016.2019. We estimate the fair value of our non-recourse property debt using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, collateral quality and loan to value ratios on similarly encumbered ~~assets~~apartment communities within our portfolio. We classify the fair value of our non-recourse property debt within Level 32 of the GAAP valuation hierarchy based on the significance of certain of the unobservable inputs used to estimate ~~their~~its fair ~~values.~~value.

The following table summarizes carrying value and fair value for our non-recourse property debt (in thousands):

	As of March 31, 2020				As of December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Non-recourse property debt	$	4,228,440	$	4,166,396	$	4,251,339	$	4,298,630

Note 7 — Business Segments

~~In 2017,~~

We have 4 segments: Same Store, Redevelopment and Development, Acquisition, and Other Real Estate.

Our Same Store segment includes communities that have reached a stabilized level of operations as of the beginning of a two-year comparable period and maintained it throughout the current and comparable prior year and are not expected to be sold within 12 months. Our Redevelopment and Development segment includes apartment communities that are currently under construction, and those that have been completed in recent years that have not achieved and maintained stabilized operations for both the current and comparable prior year. Our Acquisition segment includes communities that we ~~revised~~have acquired since the ~~information regularly reviewed by our chief executive officer, who is our chief operating decision maker,~~beginning of a two-year comparable period. Our Other Real Estate segment primarily includes communities that are subject to ~~assess our operating performance. Apartment~~limitations on rent increases, communities ~~are~~that we expect to sell within 12 months but do not yet meet the criteria to be classified as ~~either part of our Real Estate portfolio or those owned through partnerships served by our Asset Management business.~~

~~Our Real Estate portfolio consisted of 141 apartment~~held for sale, communities ~~with 39,184 apartment homes at September 30, 2017. This portfolio is diversified by both price point~~that we expect to redevelop, and ~~geography and consists primarily of market rate apartment communities.~~

certain commercial spaces.

Our chief operating decision maker uses proportionate property net operating income to assess the operating performance of our ~~apartment~~ communities. Proportionate property net operating income reflects our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, ~~including real estate taxes,~~net of utility reimbursements, for consolidated

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communities. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP.

As of March 31, 2020, our Same Store segment included 95 consolidated apartment communities ~~we own~~with 28,095 apartment homes; our Redevelopment and ~~manage. As of September 30, 2017, for~~Development segment ~~performance evaluation,~~included 6 consolidated communities with 2,210 homes; our Acquisition segment included 1 consolidated community with 110 homes, and 1 consolidated community with 136 homes under construction; and our Other Real Estate segment included ~~137 consolidated apartment~~18 communities with ~~39,042 apartment~~2,289 homes and ~~excluded four~~1 office building.

The following tables present the rental and other property revenues, property operating expenses, proportionate property net operating income, and income before income tax benefit (expense) of our segments on a proportionate basis, excluding amounts related to sold communities and our proportionate share of 4 apartment communities with 142 apartment homes that we neither manage nor ~~consolidate.~~

~~As discussed in~~ ~~Note 1~~, as of September 30, 2017, through our Asset Management business we also owned nominal ownership positions in consolidated partnerships for which we provide asset management services. These partnerships own 46 low-income housing tax credit apartment communities with 6,898 apartment homes. Neither the results of operations, nor the assets of these partnerships and apartment communities are quantitatively material; therefore, we have one reportable segment, Real Estate. The results of operationsconsolidate, for the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2020 and ~~the segment assets as of December 31, 2016, shown below have been revised to reflect the change in our reportable segments.~~

The following tables present the revenues, net operating income and income before gain on dispositions of our Real Estate segment on a proportionate basis (excluding amounts related to apartment communities sold) for the three and nine months ended September 30, 2017 and 20162019 (in thousands):

	Same Store		Redevelopment and Development		Acquisition		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended March 31, 2020:
Rental and other property revenues	$	187,956	$	11,913	$	884	$	17,875	$	8,812	$	(2,888	)	$	224,552
Property operating expenses		48,782		4,687		401		6,174		8,175		7,261			75,480
Other operating expenses not allocated to segments (3)		—		—		—		—		—		113,410			113,410
Total operating expenses		48,782		4,687		401		6,174		8,175		120,671			188,890
Proportionate property net operating income (loss)		139,174		7,226		483		11,701		637		(123,559	)		35,662
Other items included in income before income tax benefit (4)		—		—		—		—		—		(29,918	)		(29,918	)
Income before income tax benefit	$	139,174	$	7,226	$	483	$	11,701	$	637	$	(153,477	)	$	5,744

	Same Store		Redevelopment and Development		Acquisition			Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended March 31, 2019:
Rental and other property revenues	$	181,523	$	14,012	$	—		$	14,113	$	8,292	$	12,295		$	230,235
Property operating expenses		48,990		5,255		127			4,991		7,733		11,863			78,959
Other operating expenses not allocated to segments (3)		—		—		—			—		—		109,862			109,862
Total operating expenses		48,990		5,255		127			4,991		7,733		121,725			188,821
Proportionate property net operating income (loss)		132,533		8,757		(127	)		9,122		559		(109,430	)		41,414
Other items included in income before income tax expense (4)		—		—		—			—		—		252,862			252,862
Income before income tax expense	$	132,533	$	8,757	$	(127	)	$	9,122	$	559	$	143,432		$	294,276

Real Estate
Proportionate
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
Consolidated
Three Months Ended September 30, 2017
Rental and other property revenues attributable to Real Estate $ 230,008
$ 1,170
$ 2,530
$ 233,708
Rental and other property revenues of partnerships served by Asset Management business —
—
18,232
18,232
Tax credit and transaction revenues —
—
2,695
2,695
Total revenues 230,008
1,170
23,457
254,635
Property operating expenses attributable to Real Estate 71,346
410
9,423
81,179
Property operating expenses of partnerships served by Asset Management business —
—
8,865
8,865
Other operating expenses not allocated to reportable
segment (3)
—
—
105,386
105,386
Total operating expenses 71,346
410
123,674
195,430
Net operating income 158,662
760
(100,217 ) 59,205
Other items included in income before gain on
dispositions (4)
—
—
(36,828 ) (36,828 )
Income before gain on dispositions $ 158,662
$ 760
$ (137,045 ) $ 22,377

Real Estate
Proportionate
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
�� Consolidated
Three Months Ended September 30, 2016
Rental and other property revenues attributable to Real Estate $ 210,775
$ 7,457
$ 7,670
$ 225,902
Rental and other property revenues of partnerships served by Asset Management business —
—
18,213
18,213
Tax credit and transaction revenues —
—
4,789
4,789
Total revenues 210,775
7,457
30,672
248,904
Property operating expenses attributable to Real Estate 68,933
2,307
11,516
82,756
Property operating expenses of partnerships served by Asset Management business —
—
9,410
9,410
Other operating expenses not allocated to reportable
segment (3)
—
—
98,006
98,006
Total operating expenses 68,933
2,307
118,932
190,172
Net operating income 141,842
5,150
(88,260 ) 58,732
Other items included in income before gain on
dispositions (4)
—
—
(43,194 ) (43,194 )
Income before gain on dispositions $ 141,842
$ 5,150
$ (131,454 ) $ 15,538

Real Estate
Proportionate
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
Consolidated
Nine Months Ended September 30, 2017
Rental and other property revenues attributable to Real Estate $ 666,120
$ 15,666
$ 4,853
$ 686,639
Rental and other property revenues of partnerships served by Asset Management business —
—
55,327
55,327
Tax credit and transaction revenues —
—
8,242
8,242
Total revenues 666,120
15,666
68,422
750,208
Property operating expenses attributable to Real Estate 209,197
4,978
25,644
239,819
Property operating expenses of partnerships served by Asset Management business —
—
26,445
26,445
Other operating expenses not allocated to reportable
segment (3)
—
—
307,244
307,244
Total operating expenses 209,197
4,978
359,333
573,508
Net operating income 456,923
10,688
(290,911 ) 176,700
Other items included in income before gain on
dispositions (4)
—
—
(116,691 ) (116,691 )
Income before gain on dispositions $ 456,923
$ 10,688
$ (407,602 ) $ 60,009

Real Estate
Proportionate
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
Consolidated
Nine Months Ended September 30, 2016
Rental and other property revenues attributable to Real Estate $ 618,122
$ 22,479
$ 31,633
$ 672,234
Rental and other property revenues of partnerships served by Asset Management business —
—
56,233
56,233
Tax credit and transaction revenues —
—
17,894
17,894
Total revenues 618,122
22,479
105,760
746,361
Property operating expenses attributable to Real Estate 200,874
6,531
34,531
241,936
Property operating expenses of partnerships served by Asset Management business —
—
28,199
28,199
Other operating expenses not allocated to reportable
segment (3)
—
—
289,524
289,524
Total operating expenses 200,874
6,531
352,254
559,659
Net operating income 417,248
15,948
(246,494 ) 186,702
Other items included in income before gain on
dispositions (4)
—
—
(118,054 ) (118,054 )
Income before gain on dispositions $ 417,248
$ 15,948
$ (364,548 ) $ 68,648

(1)

~~(1)~~

Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of consolidated ~~apartment~~ communities in our ~~Real Estate segment,~~segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP.

(2)

~~(2)~~

Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if ~~any, and the operating results of apartment communities owned by consolidated partnerships served by our Asset Management business. Corporate and Amounts Not Allocated to Reportable Segment also~~any. Also includes ~~property management revenues (which are included in consolidated rental and other property revenues),~~ property management expenses and casualty gains and losses, ~~(which~~which are included in consolidated property operating ~~expenses)~~expenses and ~~depreciation and amortization, which~~ are not part of our segment performance measure. Write-off of straight-line rent receivables, which was recognized due to the impact of COVID-19 and the resulting economic impact on our commercial tenants, is included in consolidated rental and other property revenues. The write-off of straight-line rent is not included in our measurement of segment performance.

(3)
~~(3)~~	~~Other operating expenses not allocated to reportable segment consists of~~ Includes depreciation and amortization, general and administrative expenses, and other operating expenses including provision for real estate impairment loss, which are not included in our measure of segment performance.

(4)
~~(4)~~	~~Other items included in income before~~ Includes gain (loss) on dispositions ~~primarily consists~~ of real estate, mezzanine investment income, interest ~~expense~~income, and ~~income tax benefit.~~interest expense.

~~For the nine months ended September 30, 2017 and 2016, capital additions related to our Real Estate segment totaled $258.3 million and $247.5 million, respectively.~~

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The assets of our ~~reportable segment~~segments and the consolidated assets not allocated to our ~~segment are~~segments were as follows (in thousands):

	March 31, 2020		December 31, 2019
Same Store	$	4,643,371	$	4,679,211
Redevelopment and Development		731,811		694,188
Acquisition		102,217		89,405
Other Real Estate		733,138		736,934
Corporate and other assets (1)		837,708		629,001
Total consolidated assets	$	7,048,245	$	6,828,739

September 30, 2017 December 31, 2016
Real Estate $ 5,593,795
$ 5,545,693
Corporate and other assets (1) 575,543
687,125
Total consolidated assets $ 6,169,338
$ 6,232,818

(1)
~~(1)~~	Includes the assets not allocated to our segments, primarily corporate assets and assets of ~~consolidated partnerships served by the Asset Management business and~~sold apartment ~~communities sold as of September 30, 2017.~~communities.

For the three months ended March 31, 2020 and 2019, capital additions related to our segments were as follows (in thousands):

	2020		2019
Same Store	$	27,526	$	35,379
Redevelopment and Development		44,596		36,458
Acquisition		15,343		76
Other Real Estate		6,419		3,477
Total capital additions	$	93,884	$	75,390

Note 8 ~~— Variable Interest Entities~~

~~Aimco consolidates the Aimco Operating Partnership, which is~~– Subsequent Events

In December 2019, COVID-19 was first identified during an investigation into an outbreak in Wuhan, China. The World Health Organization declared COVID-19 to be a variable interest entity, or VIE, for which Aimco is the primary beneficiary. Aimco, through the Aimco Operating Partnership, consolidates all VIEs for which we are the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majoritypandemic on March 11, 2020. The outbreak of the ~~limited partners unrelated~~COVID-19 pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. Many states and local jurisdictions have reacted by instituting a wide variety of measures including states of emergency, mandatory quarantines, required business and school closures, implementing “shelter in place” orders, and restricting travel. In addition, many cities and states have enacted, or are considering enacting, protections for residents and commercial tenants, including government mandated rent delays, other abatement measures or concessions, and prohibitions on lease terminations or evictions for tenants. Many experts predict that the outbreak will trigger a period of material global economic slowdown or a global recession.

We will continue to monitor impairments of our real estate assets, impairment of our mezzanine loan investment, and estimates of bad debt on rental income. The unknown duration of the pandemic, any limitations that prevent us from enforcing our legal right, and the resulting economy are expected to likely result in increased bad debt and lower occupancy, negatively impacting our results. We will continue to monitor the collectability of all unpaid commercial rent obligations and may be required to make further write-offs in the future. Additionally, we will continue to monitor economic and market conditions and provide no assurance that a prolonged recession will not result in a non-cash impairment loss in the future.

On April 10, 2020, the FASB issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions, including deferrals or reductions of future lease payments. Consequently, in accordance with the Staff Q&A issued by the FASB, we may elect to not follow lease modification accounting for concessions related to the ~~general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results~~effects of the partnership. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

All of the VIEs we consolidate own interests in one or more apartment communities. VIEs that own apartment communities we classify as part of our Real Estate segment are typically structured to generate a return for their partners through the operation and ultimate sale of the communities.COVID-19 pandemic. We are ~~the primary beneficiary in the limited partnerships in which we are the sole decision maker and have a substantial economic interest.~~

All of the partnerships served by our Asset Management business own interests in low-income housing tax credit apartment communities that are structured to provide for the pass-through of tax credits and tax deductions to their partners and are VIEs. We hold a nominal ownership position in these partnerships, generally one percent or less. As general partner in these partnerships, we are the sole decision maker and we receive fees and other payments in return for the asset management and other services we provide and thus share in the economics of the partnerships, and as such, we are the primary beneficiary of these partnerships. The table below summarizes information regarding VIEs consolidatedcurrently working with tenants impacted by the ~~Aimco Operating Partnership:~~

September 30, 2017 December 31, 2016
Real Estate portfolio:
VIEs with interests in apartment communities 12
13
Apartment communities held by VIEs 16
19
Apartment homes in communities held by VIEs 4,728
6,110
Consolidated partnerships served by the Asset Management business:
VIEs with interests in apartment communities 53
54
Apartment communities held by VIEs 37
38
Apartment homes in communities held by VIEs 5,893
6,093

~~Assets~~COVID-19 pandemic and will continue to evaluate the accounting impact of ~~the Aimco Operating Partnership’s consolidated VIEs must first be used to settle the liabilities~~future lease concessions.

Table of such consolidated VIEs. These consolidated VIEs’ creditors do not have recourse to the general credit of the Aimco Operating Partnership. Assets and liabilities of consolidated VIEs are summarized in the table below (in thousands):

September 30, 2017 December 31, 2016
Real Estate portfolio:
Assets
Net real estate $ 567,401
$ 897,510
Cash and cash equivalents 14,155
15,877
Restricted cash 9,256
7,981
Liabilities
Non-recourse property debt secured by Real Estate communities, net 418,348
725,061
Accrued liabilities and other 16,368
14,270
Consolidated partnerships served by the Asset Management business:
Assets
Real estate, net 219,410
235,920
Cash and cash equivalents 15,445
14,926
Restricted cash 29,573
32,542
Liabilities
Non-recourse property debt 221,564
229,509
Accrued liabilities and other 15,686
16,934

Contents


~~ITEM 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report contains or may contain information that is forward-looking, within the meaning of the federal securities laws, including, without limitation, statements regarding: the impact of the COVID-19 pandemic, including on our ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, redevelopments, and developments; our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our redevelopment and development investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ratios.

Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors, some of which are beyond our control, including, without limitation:

•

Real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing of acquisitions, dispositions, redevelopments, and developments; and changes in operating costs, including energy costs;

Real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing of acquisitions, dispositions, redevelopments and developments; and changes in operating costs, including energy costs;

•

Impact of the COVID-19 pandemic on our residents, commercial tenants, and operations, including as a result of government restrictions and the overall impact on the real estate industry and economy generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, all of which heightens the impact of the other risks and factors described below;

Financing risks, including the availability and cost of capital markets financing and the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest

•

Financing risks, including the availability and cost of capital markets’ financing; the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; and the risk that our earnings may not be sufficient to maintain compliance with debt covenants;

•

Insurance risks, including the cost of insurance, ~~and~~ natural disasters, and severe weather such as hurricanes; and

•

Legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of governmental regulations that affect us and interpretations of those regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by us.

In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code and depends on our ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership.

Readers should carefully review our financial statements and the notes thereto, as well as Item 1A. Risk Factors in Part II of this report, the section entitled “Risk Factors” described in Item 1A of Apartment Investment and Management Company’s and AIMCO Properties, L.P.’s combined Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, and the other documents we file from time to time with the Securities and Exchange Commission.

As used herein and except as the context otherwise requires, “we,” ~~“our”~~“our,” and “us” refer to Apartment Investment and Management Company (which we refer to as Aimco), AIMCO Properties, L.P. (which we refer to as the Aimco Operating Partnership) and their consolidated entities, collectively.

~~Executive Overview~~

~~Aimco~~

Certain financial and operating measures found herein and used by management are not defined under accounting principles generally accepted in the United States, or GAAP. These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading and include: Nareit Funds from Operations, Pro forma Funds from Operations, Adjusted Funds from Operations, Free Cash Flow, Net Asset Value, Economic Income, and the ~~Aimco Operating Partnership~~measures used to compute our leverage ratios.

Executive Overview

We are focused on the ownership, management, redevelopment, and ~~limited~~some development of quality apartment communities located in several of the largest markets in the United States. ~~Our business activities are defined by a commitment to our core values~~

Table of integrity, respect, collaboration, performance and a focus on our customers. These values and our corporate mission, “to consistently provide quality apartment homes in a respectful environment delivered by a team of people who care,” shape our culture. In all our interactions with residents, team members, business partners, lenders and equity holders, we aim to be the best owner and operator of apartment communities and an outstanding corporate citizen.

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Our principal financial objective is to provide predictable and attractive returns to our equity holders. We measure our long-term total return using ~~growth in~~ Economic Income, defined as changes in the per share Net Asset Value, or NAV, growth plus dividends. NAV is used by many investors because the value of company assets can be readily estimated, even for non-earning assets such as land or properties under development. NAV has the advantage of incorporating the investment decisions of thousands of real estate investors, enhancing comparability among companies that have differences in their accounting and ~~our~~avoiding disparity that can result from application of GAAP to investment properties and various ownership structures. NAV also provides real estate investors a basis for the perceived quality and predictability of future cash flows as well as their expected growth. Some investors focus on multiples of Adjusted Funds from Operations, or AFFO, and Funds from Operations as defined by the National Association of Real Estate Investment Trusts, or Nareit FFO. Our disclosure of AFFO, a measure of current return, ~~using Adjusted Funds From Operations (each~~complements our focus on Economic Income. We also use Pro forma FFO as a secondary measure of operational performance.

Our Economic Income is the result of performance in five key business areas:

•

increase revenue based on high levels of resident retention, through superior customer selection and satisfaction, coupled with innovation resulting in sustained cost control, to further improve net operating income margins;

•

create value and future earnings growth by the renovation and repositioning of apartment communities through short-cycle and long-cycle redevelopments;

•

own an apartment portfolio diversified by geography and price point with a focus on properties with high land value located in submarkets with outsized future growth prospects, and diversify the portfolio by maintaining allocation to both “income” properties (high quality properties with predictable, “low beta” AFFO returns, usually with B or C+ rents) where we expect appreciation of the substantial land value will create opportunities for “high alpha” value creation through profitable redevelopment;

•

primarily utilize safe property debt that is low-cost, long-dated, amortizing, and non-recourse, limiting entity and refunding risk while maintaining flexibility to sell or redevelop properties; and

•

emphasize an intentional culture that is collaborative and productive, based on respect for others and personal responsibility, strengthened by a preference for promotion from within and explicit talent development and succession planning to produce the strong, stable team that is the enduring foundation of our success.

Over our first 25 years as a public company, our Economic Income compounded at an annual rate of 14%.

COVID-19 Update

In December 2019, COVID-19 was first identified during an investigation into an outbreak in Wuhan, China. The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The following is a summary of our response to the COVID-19 pandemic and a discussion of financial information for the three months ended March 31, 2020, and periods subsequent to March 31, 2020.

As the crisis approached, we made the health and safety of teammates our priority and we:

•

formed a cross-functional committee of approximately a dozen, from across the company, that met daily to re-design how work was done on site, to keep our team safe while continuing to lease apartments and fulfil service requests;

•

made it clear, and consistent with company policies providing flexibility, that any teammate who felt unsafe at work because of the virus was free to stay home, with pay and without penalty;

•

undertook to pay all costs related to COVID-19 testing and treatment;

•

committed to keep our team intact, without layoffs or pay cuts; and

•

continued, and increased, regular communications and transparency, providing a steady flow of written, oral, and video reports to the entire team.

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Customer focus led us to make our properties safer by increasing cleaning, reducing opportunities for infection, and limiting in-person interactions with neighbors and site teams, and we:

•

searched out ways to support those sheltering at home and to meet the needs of the relatively few who reported positive for infection by COVID-19;

•

redeployed construction supervisors whose work had been paused to support property service teams, and redeployed dozens of our office workers to join our shared service center team to hold thousands of structured conversations with residents helping each plan his or her personal adjustment to the crisis, including offering financial advice, tips on job searches, help with errands, ideas about how to find a roommate, establishing payment plans where appropriate, and even, in a few difficult cases, providing money for groceries;

•

utilized our previous investment in technology and artificial intelligence to adapt to the new conditions of social distancing and sheltering at home; and

•

mindful of the sacrifice of healthcare providers who worked long hours and felt unable to go home without risking infection of their families, and as part of the Aimco Cares Good Neighbor program, provided free use of furnished apartments at 21 Fitzsimons on the Anschutz Medical Campus, Parc Mosaic near Boulder Community Health, and River Club near Newark University Hospital.

Our Board of Directors was fully informed and fully engaged, including two candidates for the board who were not formally elected until the end of April. During March and April, we delivered five management reports, made numerous calls, asked individual directors for specific assistance, and held four virtual board meetings.

Knowing the importance of financial liquidity and building on $650 million of cash and committed credit at the start of 2020, we drew down $300 million on our revolving credit facility, reduced expected 2020 capital spending by $150 million, or almost one-half, and undertook to increase available credit by another $720 million: a $350 million bank term loan and approximately $370 million in proceeds from property loans, of which half are ~~defined under~~closed or rate-locked and half closing over the ~~Non-GAAP Measures heading below).~~ next 30 days.

Preliminary 2^nd Quarter Information

•

In April, our resident turnover reached an all-time low of 41.1%, down 270 basis points year over year.

•

Leasing pace, which initially dropped by half in mid-March, is recovering. In April, our leasing team provided more than 3,300 live, virtual tours to prospects generating more than 1,000 leases.

•

April average daily occupancy of 96.6% was down 40 basis points year over year, yet higher by 20 basis points from April 2018.

•

Pricing has remained solid with April blended lease rate increases of 4.2%, up 50 basis points year-over-year.

•

April residential revenue was approximately $69 million, of which we recognized 99%, after a 1% provision for bad debt. Of the 99% recognized, 96% was received in cash and 3% was accrued based on security deposits available for offset, and the FICO scores of the resident or his guarantor. Effective in April, we revised our estimation of residential bad debt to consider creditworthy residents and their guarantors who choose to withhold rent payments.

Our ~~business plan~~new methodology accelerated the estimate of collectability to ~~achieve this principal financial objective is to:~~

~~operate~~month-end based on our ~~portfolio~~assessment of ~~desirable apartment homes with valued amenities, with a high level~~the creditworthiness of ~~focus~~the tenants and third-party guarantors, based on ~~customer selection and customer satisfaction, and in~~their FICO scores. Previously, we evaluated collectability of balances only after such balances were more than 30 days past due. Using the new methodology, April residential bad debt expense was approximately 1% of revenues, or $670k; an ~~efficient manner that realizes~~increase of $270k from what would have been the ~~benefits~~result using our former methodology.

We also reviewed the viability of our ~~corporate systems~~commercial tenants and ~~local management expertise;~~

~~improve~~the related accounting assets for straight-line rents and deferred broker commissions.

Approximately $2.5 million, or 3.5%, of our ~~portfolio~~monthly revenue is derived from commercial tenants, about one-half office uses and one-half other commercial uses. In April, we collected 90% of amounts due from office tenants and 30% of rents from the other commercial users.

US GAAP requires revenue subject to long-term leases to be recognized in a ratable, or straight-line, manner over the life of the lease. In practice, this results in GAAP income in excess of cash receipts in the early years of a lease. Additionally, GAAP requires broker commissions paid for origination of the lease to be deferred and recognized over the life of the lease. Entering 2020, we had recognized $6.7 million of GAAP rental revenue in-excess of cash rent and had deferred $3.8 million of broker commissions. Based on the expected economic impact of COVID-19 and the recession at hand, we wrote off, in the first

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quarter, $2.9 million of its straight-line rent receivable and $2.2 million of deferred broker commissions related to leases to commercial tenants with retail, restaurant, and fitness uses. Monthly rent for these tenants is approximately $0.6 million and future rental revenue will be recognized on a cash basis.

The unknown duration of the pandemic, any limitations that prevent us from enforcing our legal right, and the resulting economy are expected to likely result in higher uncollected rents and lower expected occupancy, negatively impacting our results. Partially mitigating these negative factors is an expectation for higher customer retention and lowering turnover costs. Additionally, while no provision for real estate impairment was recognized during the first quarter, we continue to monitor economic and market conditions and provide no assurance that a prolonged recession will not result in a non-cash impairment loss in the future.

Redevelopment and Development

When the current crisis became apparent, we paused all of our short-cycle redevelopment and capital enhancement activities. Together with other projects that had been slated to start later this year, we reduced expected 2020 capital spending by 45%, or $150 million.

We are continuing construction of five long-cycle redevelopments and developments currently underway. These five apartment communities have an estimated remaining cost to complete of approximately $212 million; approximately $140 million of which is ~~diversified both~~expected to be spent in 2020. Three are expected to be completed in 2020 and two are expected to be completed in 2021. When stabilized, these communities are expected to contribute approximately $30 million of additional net operating income.

Liquidity and Leverage

Today, we have $1 billion of liquidity: summing cash on hand; availability under our revolving credit facility; and excess proceeds on rate-locked debt closing in the next few weeks. This liquidity will increase by ~~geography~~an additional $200 million, as in-process property loans close over the next 30 days.

In total, we are placing $688 million of new property debt, generating incremental proceeds of $367 million. We have closed or rate-locked $326 million of the new property loans. These loans have a weighted-average term to maturity of 8.3 years and ~~price point,~~a weighted-average interest rate of 2.9%, lowering our overall borrowing costs by five basis points. When these financings, and ~~which averages “B/B+”~~the property loans currently in ~~quality (defined under~~process, are completed, we will have no loan maturities in 2020 and will have reduced 2021 to 2024 maturities by $229 million; resulting in average annual maturities of $265 million for the ~~Portfolio Management~~ ~~heading below)~~four years 2021 to 2024.

Our investment-grade balance sheet provides flexibility and liquidity. Leverage, as measured by ~~selling apartment communities with lower projected free cash flow returns and investing the proceeds from such sales in prospects with higher projected free cash flow returns than expected~~leverage-to-EBITDAre, remains above targeted levels. We expect to reduce leverage to targeted levels through increased EBITDAre from the ~~communities~~lease up of the five properties under construction and from property sales.

In early May, we sold ~~such as property upgrades, redevelopment, development and selective acquisitions;~~

~~use financial leverage primarily~~an apartment community located in Annandale, Virginia at a price of $58.9 million, equal to its estimated gross asset value at December 31, 2019.

Results for the form of non-recourse, long-dated, fixed-rate property debt and perpetual preferred equity, a combination which reduces our refunding and re-pricing risk and which provides a hedge against increases in interest rates; and

~~emphasize a collaborative, respectful, and performance-oriented culture with high team engagement.~~

~~Our business is organized around our strategic areas of focus: property operations; redevelopment/development; portfolio management; balance sheet; and culture.~~

Three Months Ended March 31, 2020

The results from the execution of our business plan during the three months ended ~~September 30, 2017,~~March 31, 2020, are further described below.

Net income attributable to common stockholders per common share increased by $0.04 in the three months ended September 30, 2017, as compared to the same period in 2016, primarily due to increased contribution from property net operating income more fully described below, partially offset by higher depreciation expense.

Pro forma FFO per share increased $0.08, or 14.5%, for the three months ended September 30, 2017, as compared to the same period in 2016. The primary driver of this increase was property net operating income growth of $0.05, consisting of:

~~$0.03 from Same Store property net operating income growth of 4.5%, driven primarily by a 2.8% increase in revenue and a 1.1% reduction in expenses;~~

$0.04 from the lease-up over the last 12 months of 930 renovated homes at redevelopment communities and completion of the lease-up of One Canal in Boston, Massachusetts and Indigo in Redwood City, California; less

~~$0.02 in property net operating income from apartment communities sold in 2016.~~

~~Lower general and administrative expenses, lower interest rates, higher tax benefits, and various other factors contributed an additional $0.03 to Pro Forma FFO.~~

The amounts above exclude property net operating income from the reacquisition of the 47% limited partner interest in the Palazzo joint venture, which was largely offset by higher interest expense related to temporary borrowings used to fund the purchase.

~~The $0.08 increase year-over-year in Pro forma FFO per share plus $0.01 in lower capital replacement spending increased AFFO per share by $0.09, or 20.0%.~~

~~Pro Forma FFO and AFFO are non-GAAP financial measures that are defined and reconciled under the Non-GAAP Measures heading.~~

~~Property~~

Operations

We own and operate a portfolio of apartment communities, diversified by both geography and price point. ~~At September 30, 2017,~~As of March 31, 2020, our ~~Real Estate~~ portfolio ~~include~~d ~~141 predominantly market rate~~ included 124 apartment communities with ~~39,184~~32,846 apartment homes in which we held an average ownership of approximately 99%.

Our property operations team ~~delivered~~produced solid results for our ~~Real Estate~~ portfolio for the three months ended ~~September 30, 2017. Highlights~~March 31, 2020. Same Store highlights include:

•

Average daily occupancy of 97.6%, 60 basis points higher than the three months ended March 31, 2019;

•

Net operating income increased 5.0% with a 74.0% net operating income margin, 100 basis points higher than the margin for the three months ended March 31, 2019; and

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•

Rent increases on renewals and new leases averaged 5.8% and 1.7%, respectively, for a weighted-average increase of 3.6%, 50 basis points higher than the three months ended March 31, 2019.

Our focus on efficient operations through productivity initiatives such as centralization of administrative tasks, optimization of economies of scale at the corporate level, and increased automation has helped us control operating expenses. These and other innovations contributed to a growth rate in Same Store controllable operating expense, which we define as property expenses less taxes, insurance, and utility expenses, compounding for the ~~quarter include:~~

12 years ended December 31, 2019, at an annual rate of negative 0.2%. During the three months ended March 31, 2020, Same Store ~~net~~controllable operating ~~income increased year-over-year by 4.5%, consisting of revenue growth of 2.8%~~expenses decreased 3.5% compared to the three months ended March 31, 2019.

Redevelopment and ~~expense reduction of 1.1%; and~~

~~Same Store rent increases on renewals and new leases averaged 4.5% and 1.4%, respectively, for a weighted average increase of 3.0%~~.

~~Redevelopment/~~Development

~~Redevelopment/Development is our~~

Our second line of ~~business. Within~~business is the redevelopment and some development of apartment communities. Through redevelopment activities, we expect to create value by repositioning communities within our ~~Real Estate portfolio, we invest~~portfolio. We undertake ground-up development when warranted by risk-adjusted investment returns, either directly or in connection with the redevelopment of an existing apartment ~~communities when~~community. When warranted, we ~~believe~~rely on the ~~investment will yield~~expertise and credit of a third-party developer familiar with the local market to limit our exposure to construction risk. We invest to earn risk-adjusted returns in excess of those expected from the apartment communities sold in ~~paired trades~~“paired trades” to fund the ~~redevelopment.~~

redevelopment or development. Of these two activities, we generally favor redevelopment because it permits adjustment of the scope and timing of spending to align with changing market conditions and customer preferences.

We ~~have undertaken~~execute redevelopments using a range of approaches. We prefer to limit risk by executing redevelopments ~~including those~~using a short-cycle approach, in which ~~buildings~~we renovate an apartment community in stages. These short-cycle redevelopments can be completed one apartment home at a time, when that home is vacated and available for renovation, or ~~exteriors are renovated without~~one floor at a time, thereby limiting the ~~need~~number of down homes and lease-up risk. As a result, short-cycle redevelopments provide us the flexibility to ~~vacate apartment homes; those in which significant renovation~~maintain current earnings while aligning the timing of the completed apartment homes with market demand. When short-cycle redevelopments are not possible, we may ~~be accomplished upon lease expiration and turnover; and those~~engage in ~~which~~redevelopment activities where an entire building or community is vacated. We ~~execute our redevelopments using a phased approach, in which we renovate portions of an apartment community in stages.~~refer to these as long-cycle redevelopments. We undertake some ground-up development when warranted by risk-adjusted investment returns. Redevelopment work may include seeking entitlements from local governments, which enhance the value of our existing portfolio by increasing ~~density,~~density; that is, the right to add apartment homes to a site. ~~We expect to create value equal to 25% to 35% of our investment in redevelopment.~~

~~We favor redevelopment because it permits adjustment of the scope and timing of spending to align with changing market conditions.~~

We also undertake ground-up development when warranted by risk-adjusted investment returns, either directly in connection with the redevelopment of an existing apartment community or, on a more limited basis, at a new location. In such cases, we may rely on a third-party developer with expertise in the local market and with contracts that limit our exposure to construction risk.

During the three months ended ~~September 30, 2017,~~March 31, 2020, we invested ~~$33.3~~$67.4 million ~~primarily~~in redevelopment and development. In March, as mentioned above, we paused investment in our ~~ongoing redevelopments~~short-cycle redevelopment projects and ~~continued~~delayed the start of new projects. We intend to ~~lease redeveloped~~continue five long-cycle redevelopment and development projects already under construction, including the full redevelopment of the North Tower at Flamingo Point and 707 Leahy, ground-up construction at The Fremont on the Anschutz Medical Campus, Eldridge Townhomes adjacent to our Elm Creek apartment community, and Prism in Cambridge, Massachusetts. Our estimated cost to complete these projects is $212.2 million, an amount equal to 1.5% of our estimated gross asset value and readily funded from our liquidity.

The following table summarizes our significant redevelopment and development communities as of March 31, 2020 (dollars in millions):

	Location	Homes Approved for Redevelopment		Homes Completed		Homes Leased		Total Planned Investment (1)		Investment to Date		Expected Initial Occupancy (2)	Expected NOI Stabilization (3)
Short-cycle redevelopments:
Bay Parc	Miami, FL		75		75		70	$	26.3	$	26.3	N/A	N/A
Long-cycle redevelopments:
707 Leahy (4)	Redwood City, CA		110		12		19		25.0		16.1	1Q 2020	2Q 2022
Eldridge Townhomes	Elmhurst, IL		58		—		12		35.1		24.1	2Q 2020	4Q 2022
Flamingo Point	Miami Beach, FL		385		18		12		224.9		90.2	4Q 2021	2Q 2024
The Fremont	Denver, CO (MSA)		253		—		16		87.0		69.8	3Q 2020	1Q 2023
Parc Mosaic (5)	Boulder, CO		226		226		157		124.6		123.4	3Q 2019	1Q 2022
Prism (6)	Cambridge, MA		136		—		2		73.2		32.8	1Q 2021	3Q 2023
Total			1,243		331		288	$	596.1	$	382.7

(1)	Represents the total actual or estimated investment, net of tax and other credits earned as a direct result of our redevelopment or development of the community.

(2)

Delivery timing and stabilization is subject to change and are based on the best estimate at this time. Temporary local restrictions halting construction activity and extended ‘‘shelter-in-place’ orders, related to COVID-19 or otherwise, may delay project completion and impact the timing of stabilization. Any additional delays may also result in increased costs.

(3)	Represents the period in which we expect the communities to achieve stabilized rents and operating costs, generally five quarters after occupancy stabilization.

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(4)

In March 2020, complying with local COVID-19 related restrictions, construction activities were halted temporarily at 707 Leahy. On May 4, 2020, restrictions were eased, and construction activities resumed. Completion of construction, previously expected during the second quarter of 2020, is now expected during the third quarter of 2020.

(5)	During the three months ended March 31, 2020, we substantially completed construction at Parc Mosaic. As of March 31, 2020, we had leased 69% of the apartment homes at rents exceeding underwriting.

(6)	In July 2019, we announced the acquisition of an under-development apartment community, now called Prism. The City of Cambridge has halted all construction. Assuming the current ban is lifted by early summer, completion of this 136-apartment home property is expected in the first quarter of 2021.

As of March 31, 2020, our total estimated net investment at redevelopment and development communities is $596.1 million, of which we have funded $382.7 million. We expect to fund the remaining estimated net investment of $213.4 million on these communities in 2020 and future years, on a ~~pace consistent~~leverage-neutral basis, with ~~our expectations.~~

proceeds from sales of apartment communities with lower forecasted FCF internal rates of return.

During the three months ended ~~September 30, 2017,~~March 31, 2020, we ~~completed construction on the third tower of Park Towne Place in Center City, Philadelphia.~~leased 73 redeveloped or newly developed apartment homes. As of ~~September 30, 2017, this tower was 74% leased~~March 31, 2020, our exposure to lease-up at ~~rates consistent with underwriting. We expect this tower to be more than 90% leased by year-end, as are the first two towers redeveloped at the community.~~

In the past three years, we have leased more than 1,100 redeveloped apartment homes in Center City, Philadelphia. Based on these results, we decided to proceed with a $40.0 million redevelopment of the fourth and final tower at Park Towne Place. De-leasing is underway and construction is scheduled to commence by year end.

In 2014, we acquired Eastpointe, a “C” property located in Boulder, Colorado. The site is two miles from the new Google campus and is across the street from Ball Aerospace’s Technology Campus and Foothills Hospital. Building in Boulder is highly regulated and new supply is limited, notwithstanding higher enrollment at the University of Colorado and increased employment generally. Over the past two years, we have planned and entitled a new $117.0 million, 226 apartment home community to be known as Parc Mosaic. De-leasing of Eastpointe is now underway and construction of Parc Mosaic is scheduled to commence by year end.

Inclusive of these two new projects, our total estimated net investment in redevelopment/development is $710.4 million, with a projected weighted average net operating income yield on these investments of 6.1%, assuming untrended rents. Of this total, $481.4 million has been funded.

~~During the three months ended September 30, 2017, we leased 278 apartment homes at our~~long-cycle redevelopment and ~~acquisition communities.~~

In measuring lease-up exposure related to redevelopment activities, we consider: (a) apartments that have been de-leased in preparation for construction; (b) apartments currently under construction; and (c) apartments for whichdevelopment communities was 892 apartment homes; 70 homes where construction is complete, ~~and the apartment home is ready for occupancy. In each case, lease-up exposure is measured as the number of~~347 homes expected to be ~~leased for~~delivered during the ~~apartment community~~remainder of 2020, and 475 homes expected to ~~achieve 95% occupancy.~~

~~As of September 30, 2017, our lease-up exposure at active redevelopment projects included approximately 360 apartment homes. Of these, 231 related to apartments that have been or will~~ be de-leased for redevelopment of the final tower at Park Towne Place, 33 related to apartment homes under construction, and 103 related to homes for which construction is complete and the homes are available for occupancy.

~~Please see below under the Liquidity~~delivered in 2021.

Portfolio Management and Capital ~~Resources – Redevelopment /Development heading for additional information regarding our redevelopment and development investment during the nine months ended September 30, 2017.~~

~~Portfolio Management~~

Allocation

Our ~~portfolio strategy seeks predictable rent growth from a~~ portfolio of apartment communities ~~that~~ is diversified across “A,” ~~“B”~~“B,” and “C+” price points, averaging “B/B+” in quality, and ~~that~~ is also diversified across several of the largest markets in the United States.

We measure the quality of apartment communities in our ~~Real Estate~~ portfolio based on average rents of our apartment homes compared to local market average rents as reported by a third-party provider of commercial real estate performance data and analysis. Under this rating system, we classify as “A” quality apartment communities those earning rents greater than 125% of ~~the~~ local market ~~average,~~average; as “B” quality apartment communities those earning rents between 90% and 125% of ~~the~~ local market average; as “C+” quality apartment communities ~~are~~ those earning rents greater than $1,100 per month, but lower than 90% of ~~the~~ local market average; and as “C” quality apartment communities ~~are~~ those earning rents less than $1,100 per month and lower than 90% of ~~the~~ local market average. We classify as “B/B+” quality a portfolio that on average earns rents between 100% and 125% of ~~the~~ local market average ~~rents where the portfolio is located.~~rents. Although some companies and analysts within the multifamily real estate industry use apartment community quality ratings of “A,” ~~“B”~~“B,” and “C,” some of which are tied to local market rent averages, the metrics used to classify apartment community quality as well as the ~~timing~~period for which local market rents are calculated may vary from company to company. Accordingly, our rating system for measuring apartment community quality is neither broadly nor consistently used in the multifamily real estate industry.

The following table summarizes information about our portfolio relative to the market for the three months ended March 31, 2020:

Average revenue per Aimco apartment home (1)	$	2,280
Portfolio average rents as a percentage of local market average rents		112	%
Percentage A (1Q 2020 average revenue per Aimco apartment home $2,988)		53	%
Percentage B (1Q 2020 average revenue per Aimco apartment home $2,010)		30	%
Percentage C+ (1Q 2020 average revenue per Aimco apartment home $1,769)		17	%

(1)	Represents average monthly rental and other property revenues (excluding resident reimbursement of utility cost) divided by the number of occupied apartment homes as of the end of the period.

Our average revenue per apartment home was $2,280 for the three months ended March 31, 2020, representing an increase of 5% compared to the same period in 2019. This increase is due primarily to growth in Same Store revenue, lease-up of redeveloped apartment homes, and the sale of communities with average monthly revenues per apartment home lower than those of the retained portfolio.

We follow a disciplined paired trade policy in making investments. As part of our portfolio strategy, we seek to sell ~~each year~~ up to 10% of ~~the apartment communities in~~ our portfolio annually and to reinvest the proceeds from such sales in accretive uses such as ~~property upgrades, redevelopment of communities in its current portfolio, occasional development of new communities,~~capital enhancements, redevelopments, some developments, and selective acquisitions with projected FCF internal rates of ~~apartment communities with~~return higher ~~projected free cash flow returns~~ than expected from the communities ~~sold to fund the activity.~~being sold. We prefer well-located real estate where land is a significant percentage of total value and provides potential upside from development or redevelopment. Through this disciplined approach to capital recycling, we ~~have significantly increased~~increase the quality and expected growth rate of ~~its~~our portfolio.

Three Months Ended
September 30,
2017 2016
Average revenue per Aimco apartment home (1) $ 2,075
$ 1,954
Portfolio average rents as a percentage of local market average rents 112 % 113 %
Percentage A (3Q 2017 average revenue per Aimco apartment home $2,708) 53 % 51 %
Percentage B (3Q 2017 average revenue per Aimco apartment home $1,776) 34 % 37 %
Percentage C+ (3Q 2017 average revenue per Aimco apartment home $1,725) 13 % 12 %
(1) Represents average monthly rental and other property revenues divided by the number of occupied apartment homes multiplied by our ownership interest in the apartment community as of the end of the current period.

During the three months ended September 30, 2017, average revenue per Aimco apartment home for our Real Estate portfolio was $2,075, a 6% increase compared to three months ended September 30, 2016. The increase is due to year-over-year growth in Same Store revenue as well as our reacquisition of the 47% limited partnership interest in the Palazzo joint venture, lease-up of redevelopment and acquisition apartment communities, and the sale of apartment communities with average monthly revenues per Aimco apartment home lower than those of the retained portfolio.

As we execute our portfolio strategy, we expect to increase average revenue per Aimco apartment home ~~for our Real Estate portfolio~~ at a rate greater than market rent ~~growth; to~~growth, increase ~~free cash flow margins;~~FCF margins, and to maintain sufficient geographic and price point diversification to limit volatility and concentration risk.

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During the three months ended March 31, 2020, we made no acquisitions or dispositions.

Balance Sheet ~~and Liquidity~~

~~We target net leverage of $3.8 billion.~~

Leverage

Our leverage ~~is currently above this target as the second quarter reacquisition of the 47% limited partner interest in the Palazzo joint venture was temporarily funded~~strategy seeks to increase financial returns by using leverage with ~~debt.~~appropriate caution. We ~~are on track~~limit risk through our balance sheet structure, employing low leverage, primarily non-recourse and long-dated property debt; build financial flexibility by maintaining ample unused and available credit; holding properties with ~~plans to sell apartment communities in Virginia, Maryland,~~substantial value unencumbered by property debt; maintaining an investment grade rating; and ~~New Jersey to reduce leverage to our $3.8 billion target.~~

using partners’ capital when it enhances financial returns or reduces investment risk.

Our leverage includes our share of long-term, non-recourse property debt ~~secured by~~encumbering apartment communities, ~~in our Real Estate portfolio, our one-year term loan,~~ outstanding borrowings ~~under our~~on the revolving credit facility, and ~~outstanding~~other leverage. Please refer to the Liquidity and Capital Resources section for additional information regarding our leverage. Other leverage includes mezzanine equity instruments, including preferred ~~equity. In our calculation of~~OP Units and redeemable noncontrolling interests in consolidated real estate partnership.

Our target leverage ~~we exclude non-recourse property debt obligations of consolidated partnerships served by our Asset Management business, as these~~ratios are ~~not our obligations and they have limited effect on the amount of fees and other amounts we expect to receive in our role as asset manager for these partnerships.~~

~~Our leverage strategy seeks to increase financial returns while using leverage with appropriate caution. We target the ratio of Proportionate Debt and Preferred Equity~~Net Leverage to Adjusted ~~EBITDA to be~~EBITDAre below 7.0x and ~~we target the ratio of~~ Adjusted ~~EBITDA~~EBITDAre to Adjusted Interest Expense and Preferred ~~Dividends to be~~Distributions greater than 2.5x. We ~~also focus on the ratios of Proportionate Debt to~~calculate Adjusted ~~EBITDA and Adjusted EBITDA to Adjusted Interest Expense.~~

~~Proportionate Debt, Adjusted EBITDA~~EBITDAre and Adjusted Interest Expense as used in ~~these ratios, are non-GAAP financial measures, which are further discussed and reconciled under the Non-GAAP Measures~~ – ~~Leverage Ratios heading. Preferred Equity represents~~

~~Aimco’s preferred stock and the Aimco Operating Partnership’s preferred OP Units. Our leverage ratios for the three months ended September 30, 2017 are presented below:~~



	~~Three Months Ended September 30, 2017~~
~~Proportionate Debt to Adjusted EBITDA~~	~~6.9x~~
~~Proportionate Debt and Preferred Equity to Adjusted EBITDA~~	~~7.3x~~
~~Adjusted EBITDA to Adjusted Interest Expense~~	~~3.4x~~
~~Adjusted EBITDA to Adjusted Interest Expense and Preferred Dividends~~	~~3.1x~~

~~We calculate~~ our leverage ratios based on the most recent ~~three month~~three-month amounts, annualized. ~~We expect improvement in~~Our leverage metrics from earnings growth, primarily due to increasing contribution from redevelopment apartment communities and reduction in debt balances due to regularly scheduled debt amortization and apartment community sales, partially offset by the loss of earnings from sold communities. We expect that these activities will reduce our Proportionate Debt to Adjusted EBITDA and Proportionate Debt and Preferred Equity to Adjusted EBITDA ratios ~~by year-end to approximately 6.2x and 6.6x, respectively.~~

~~During~~for the three months March 31, 2020, are presented below:


Proportionate Debt to Adjusted EBITDAre		7.5x
Net Leverage to Adjusted EBITDAre		7.7x
Adjusted EBITDAre to Adjusted Interest Expense		3.7x
Adjusted EBITDAre to Adjusted Interest Expense and Preferred Distributions		3.6x

Our leverage is expected to be reduced to target levels through the lease up of the five properties under construction and through property sales.

Under our revolving credit facility, we have agreed to maintain a fixed charge coverage ratio of 1.40x, as well as other covenants customary for similar revolving credit arrangements. For the trailing twelve months ended ~~September~~March 31, 2020, our fixed charge coverage ratio was 2.08x. We expect to remain in compliance with these covenants.

Please refer to the Leverage Ratios subsection of the Non-GAAP Measures section for further information about the calculation of our leverage ratios.

Liquidity

Our liquidity consists of cash and restricted cash balances and available capacity on our revolving credit facility.

In April 2020, we secured a $350.0 million term loan. The loan has a one-year term, with a one-year extension option. The loan bears interest at 185 basis points above 30-day LIBOR, with a 50-basis point LIBOR floor. Proceeds from the loan were primarily used to repay borrowings on our $800.0 million revolving credit facility, increasing our availability to $473.6 million as of April 30, ~~2017,~~2020.

Additionally, as of May 1, 2020, we had closed or ~~rate locked five non-recourse,~~rate-locked $326.2 million of fixed-rate property ~~loans totaling $297.3 million. On~~debt financing with a ~~weighted average basis, these loans have~~weighted-average term to maturity of 8.3 years and a ~~9.6 year term and an~~weighted-average interest rate of ~~3.43%, 125 basis points more than~~2.9%. We have an additional $200.0 million of in-process property loans that we expect to close over the ~~corresponding Treasury rates at the time of pricing.~~

~~The net effect of 2017 property debt refinancing~~next 30 days.

After these financing activities, ~~has been~~our total liquidity is expected to ~~lower~~be approximately $1.2 billion.

We manage our ~~weighted average fixed interest rates~~financial flexibility by ~~about 10 basis points to 4.75%, generating prospective annual interest savings of approximately $3.0 million.~~

~~As of September 30, 2017, we held unencumbered~~maintaining an investment grade rating and holding apartment communities ~~with an estimated fair value of approximately $1.8 billion, an increase of approximately12% from December 31, 2016.~~

that are unencumbered by property debt.

Two credit rating agencies rate our creditworthiness, using different methodologies and ratios for assessing our credit, and both have rated our credit and outlook as BBB- (stable), an investment grade rating. Although some of the ratios they use are similar to those we use to measure our leverage, there are differences in our methods of calculation and therefore our leverage ratios disclosed above ~~may~~are not be indicative of the ratios that may be calculated by these agencies.

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Equity Capital Activities

During the three months ended March 31, 2020, we repurchased 0.2 million shares of Common Stock for $10.0 million, at a weighted-average price of $42.79 per share, approximately a 27% discount to our estimated NAV per share.

On April 28, 2020, our Board of Directors declared a quarterly cash dividend of $0.41 per share of Common Stock, an increase of 5% compared to the regular quarterly dividends paid in 2019. This amount is payable on May 29, 2020, to stockholders of record on May 15, 2020.

Team and Culture

Our team and culture ~~is the key~~are keys to our success. Our ~~emphasis~~intentional focus on a collaborative ~~respectful,~~ and ~~performance-oriented~~productive culture based on respect for others and personal responsibility is ~~what enables~~reinforced by a preference for promotion from within. We focus on succession planning and talent development to produce a strong, stable team that is the ~~continuing transformation~~enduring foundation of our success. We offer benefits reinforcing our value of caring for each other, including paid time for parental leave, paid time annually to volunteer in local communities, college scholarships for the children of team members, an emergency fund to help team members in crisis, financial support for our team members who are becoming United States citizens, and a bonus structure at all levels of the ~~Aimco business. In April 2017, Aimco was recognized~~organization. We also pay full compensation and benefits for team members who are actively deployed by the ~~Denver Post~~United States military. Out of hundreds of participating companies in 2019, we were one of only seven recognized as a “Top Workplace” in Colorado for each of the past seven years. We were also recognized as a Top ~~Work Place. We are one~~Workplace in the Bay Area in 2019. Also in 2019, we were the only real estate company to receive a BEST award from the Association for Talent Development in recognition of ~~only a dozen Colorado companies of all sizes who have earned~~our company-wide success in talent development, marking our second consecutive year receiving this ~~designation for five consecutive years.~~

~~Key Financial Indicators~~

The key financial indicators that we use in managing our business and in evaluating our operating performance are Economic Income, our measure of total return, and Adjusted Funds From Operations, our measure of current return. In addition to these indicators, we evaluate our operating performance and financial condition using: Pro forma Funds From Operations; Free Cash Flow, or FCF, capitalization rate; net operating income, or NOI, capitalization rate; same store property operating results; average revenue per Aimco apartment home; financial coverage ratios; and net leverage. Certain of these financial indicators are non-GAAP financial measures, which are defined, further described, and for certain of the measures, reconciled to comparable GAAP-based measures, under the Non-GAAP Measures heading.

award.

Results of Operations

Because our operating results depend primarily on income from our apartment communities, the supply of and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our apartment communities and the pace and price at which we redevelop, acquire, and dispose of our apartment communities affect our operating results.

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.

~~Three and Nine Months Ended September 30, 2017 compared to September 30, 2016~~

Financial Highlights

Net income attributable to ~~Aimco increased by $4.1 million and~~common stockholders per common share, on a dilutive basis, decreased by ~~$214.6 million~~$1.84 during the three ~~and nine~~ months ended ~~September 30, 2017, respectively, as~~March 31, 2020, compared to ~~the September 30, 2016 comparable periods. Net income attributable~~2019, due primarily to ~~the Aimco Operating Partnership~~lower gains from dispositions.

AFFO per share increased by $4.8 million and decreased by $224.4 million during the three and nine months ended September 30, 2017, respectively, as compared to the September 30, 2016 comparable periods. The increase in income for Aimco and the Aimco Operating Partnership$0.05 for the three months ended ~~was~~March 31, 2020, compared to 2019, due primarily to a ~~variety~~$0.05 increase in Same Store property net operating income.

Detailed Results of ~~factors, including improved operating results. The decrease in income for Aimco and the Aimco Operating Partnership~~Operations for the ~~nine~~Three Months Ended March 31, 2020, Compared to March 31, 2019

Net income decreased by $282.3 million during the three months ended ~~was primarily due~~March 31, 2020, compared to ~~lower gains on disposition of real estate.~~

~~The following paragraphs discuss these~~2019, as described more fully below.

Property Operations

We have four segments: Same Store, Redevelopment and ~~other items affecting the results~~Development, Acquisition, and Other Real Estate. Our Same Store segment includes communities that have reached a stabilized level of operations as of ~~Aimco~~the beginning of a two-year comparable period and maintained it throughout the ~~Aimco Operating Partnership~~current and comparable prior year and are not expected to be sold within 12 months. Our Redevelopment and Development segment includes communities that are currently under construction, and those that have been completed in ~~more detail.~~

~~Property Operations~~

~~As described under~~recent years that have not achieved and maintained stabilized operations for both the ~~preceding Executive Overview heading, our~~current and comparable prior year. Our Acquisition segment includes those communities that we have acquired since the beginning of a two-year comparable period. Our Other Real Estate segment ~~consists~~ primarily ~~of market rate~~includes apartment communities ~~in which~~that are subject to limitations on rent increases, communities that we ~~hold~~expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale, communities that we expect to redevelop, and certain commercial spaces.

As of March 31, 2020, our Same Store segment included 95 apartment communities with 28,095 apartment homes.

From December 31, 2019 to March 31, 2020, on a ~~substantial equity ownership interest.~~net basis, our Same Store segment increased by four apartment communities and 1,446 apartment homes. These changes consisted of:

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•

the addition of one redeveloped apartment community with 940 apartment homes that was classified as Same Store upon maintaining stabilized operation for the entirety of the periods presented;

•

the addition of six acquired apartment communities with 1,480 apartment homes that were classified as Same Store because we have now owned them for the entirety of both periods presented; and

•

the reduction of three apartment communities with 974 apartment homes that we have classified in Other Real Estate, as we are planning to redevelop these communities.

As of March 31, 2020: our Redevelopment and Development segment included six apartment communities with 2,210 apartment homes; our Acquisition segment included one apartment community with 110 apartment homes and one apartment community with 136 homes under construction; and our Other Real Estate segment included 18 apartment communities with 2,289 apartment homes and one office building.

We use proportionate property net operating income to assess the operating performance of our ~~apartment~~ communities. Proportionate property net operating income reflects our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, ~~including real estate taxes,~~net of utility reimbursements, for consolidated ~~apartment communities we manage.~~communities. Accordingly, the results of operations of our ~~Real Estate segment~~segments discussed below are presented on a proportionate basis and exclude the results of four apartment communities with 142 apartment homes that we ~~neither manage nor~~do not consolidate.

We do not include ~~property management revenues,~~ offsite costs associated with property management, casualty gains or ~~casualty-related~~losses, or the results of apartment communities sold or held for sale, reported in consolidated amounts, in our assessment of segment performance. Accordingly, these items are not allocated to our segment results discussed below. ~~Refer~~

Please refer to Note 7 of to the condensed consolidated financial statements in Item 1 for further discussion regarding our ~~reportable segment,~~segments, including a reconciliation of these proportionate amounts to ~~the corresponding amounts in our condensed~~ consolidated ~~statements of operations.~~

~~Real Estate~~ rental and other property revenues and property operating expenses.

Proportionate Property Net Operating Income

We classify apartment communities within our Real Estate segment as Same Store and those Outside of Same Store. Same Store apartment communities are those that have reached a stabilized level of operations as of January 1, 2016 and maintained it throughout the current and comparable prior periods, and are not expected to be sold within 12 months. The communities Outside of Same Store are those that do not meet the Same Store definition, including, but not limited to: redevelopment and development apartment communities, which are those currently under construction that have not achieved a stabilized level of operations and those that have been completed in recent years that had not achieved and maintained stabilized operations for both the current and comparable prior year; acquisition apartment communities, which are those we have acquired since the beginning of a two year comparable period; and communities that we expect to sell within twelve months but do not yet meet the criteria to be classified as held for sale.

As of September 30, 2017, as defined by our segment performance metrics, our Real Estate portfolio consisted of 92 Same Store apartment communities with 26,386 apartment homes and 45 communities Outside of Same Store with 12,656 apartment homes.

~~From December 31, 2016 to September 30, 2017, on a net basis, our Same Store portfolio decreased by nine apartment communities and 4,507 apartment homes. These changes consisted of:~~

~~the addition of three redeveloped apartment communities with 974 apartment homes that were classified as Same Store upon maintaining stabilized operations for the entirety of both periods presented;~~

~~the addition of one acquired apartment community with 94 apartment homes that was classified as Same Store because we have now owned it for the entirety of both periods presented;~~

~~the reduction of five apartment communities with 2,460 apartment homes at which we commenced redevelopment or development activities during the period; and~~

~~the reduction of eight apartment communities with 3,115 apartment homes, which are expected to be sold within 12 months, but do not yet meet the criteria to be classified as held for sale.~~

~~As of September 30, 2017, our communities Outside of Same Store comprised approximately one-third of our Real Estate portfolio, and included:~~

~~15 apartment communities with 6,375 apartment homes in redevelopment or development;~~

~~2 apartment communities with 578 apartment homes recently acquired;~~

~~4 apartment communities with 604 apartment homes owned that receive forms of government rental assistance;~~

14 apartment communities with 1,389 apartment homes that do not meet the definition of Same Store because they are either subject to agreements that limit the amount by which we may increase rents or have not reached or maintained a stabilized level of occupancy as of the beginning of a two year comparable period, often due to a casualty event; and

~~10 apartment communities with 3,710 apartment homes we expect to sell in the next twelve months but that do not yet meet the criteria to be classified as held for sale.~~

~~Prior to 2017, seven of the communities Outside of Same Store were classified as part of our prior Affordable segment.~~

The results of ~~operations for these communities are reflected in both 2017 and 2016 comparable periods in the tables below.~~

~~Our Real Estate segment results~~our segments for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, as presented below, are based on ~~the apartment community populations~~segment classifications as of ~~September 30, 2017.~~March 31, 2020.

	Three Months Ended March 31,
(in thousands)	2020		2019			$ Change			% Change
Rental and other property revenues, before utility reimbursements:
Same Store	$	187,956	$	181,523		$	6,433			3.5	%
Redevelopment and Development		11,913		14,012			(2,099	)		(15.0	%)
Acquisition		884		—			884		nm
Other Real Estate		17,875		14,113			3,762			26.7	%
Total		218,628		209,648			8,980			4.3	%
Property operating expenses, net of utility reimbursements:
Same Store		48,782		48,990			(208	)		(0.4	%)
Redevelopment and Development		4,687		5,255			(568	)		(10.8	%)
Acquisition		401		127			274			215.7	%
Other Real Estate		6,174		4,991			1,183			23.7	%
Total		60,044		59,363			681			1.1	%
Proportionate property net operating income:
Same Store		139,174		132,533			6,641			5.0	%
Redevelopment and Development		7,226		8,757			(1,531	)		(17.5	%)
Acquisition		483		(127	)		610			(480.3	%)
Other Real Estate		11,701		9,122			2,579			28.3	%
Total	$	158,584	$	150,285		$	8,299			5.5	%

Three Months Ended September 30,
(in thousands) 2017 2016 $ Change % Change
Rental and other property revenues:
Same Store communities $ 148,207
$ 144,127
$ 4,080
2.8 %
Communities Outside of Same Store 81,801
66,648
15,153
22.7 %
Total 230,008
210,775
19,233
9.1 %
Property operating expenses:
Same Store communities 42,289
42,776
(487 ) (1.1 )%
Communities Outside of Same Store 29,057
26,157
2,900
11.1 %
Total 71,346
68,933
2,413
3.5 %
Proportionate property net operating income:
Same Store communities 105,918
101,351
4,567
4.5 %
Communities Outside of Same Store 52,744
40,491
12,253
30.3 %
Total $ 158,662
$ 141,842
$ 16,820
11.9 %

For the three months ended ~~September 30, 2017, as~~March 31, 2020, compared to ~~the three months ended September 30, 2016,~~2019, our ~~Real Estate segment’s proportionate property net operating income increased $16.8 million, or 11.9%.~~

Same Store proportionate property net operating income increased by ~~$4.6~~$6.6 million, or ~~4.5%~~5.0%. This increase was attributable primarily ~~attributable~~ to a ~~$4.1~~$6.4 million, or 2.8%, increase in rental and other property revenues due to higher average monthly revenues (approximately $50 per Aimco apartment home), comprised primarily of increases in rental rates and a 20 basis point increase in average daily occupancy. Rental rates on renewals transacted during the three months ended September 30, 2017, were 4.5% higher than expiring lease rates, and new lease rates were 1.4% higher than expiring lease rates, resulting in a weighted average increase of 3.0%. Same Store operating expenses decreased by $0.5 million, or 1.1%, primarily due to decreases in insurance costs and controllable operating expenses. During the three months ended September 30, 2017, as compared to 2016, controllable operating expenses, which exclude utility costs, real estate taxes and insurance, decreased by $0.4 million, or 2.0%.

~~The proportionate property net operating income of communities Outside of Same Store increased by $12.3 million, or 30.3%, due to:~~

Indigo and One Canal, where our lease-ups were completed earlier in 2017, combined to contribute $5.5 million of incremental property net operating income during the three months ended September 30, 2017, compared to the same period in 2016;

redevelopment leasing activities during the three months ended September 30, 2017, which included 278 apartment homes and helped contribute to incremental redevelopment related property net operating income of $1.7 million as compared to the same period in 2016; and

higher property net operating income of $5.1 million from other communities Outside of Same Store, including the effect of our increased ownership interest in the Palazzo communities from our June 2017 reacquisition of the 47% limited partner interest in the related joint venture.

Nine Months Ended September 30,
(in thousands) 2017 2016 $ Change % Change
Rental and other property revenues:
Same Store communities $ 439,115
$ 425,128
$ 13,987
3.3 %
Communities Outside of Same Store 227,005
192,994
34,011
17.6 %
Total 666,120
618,122
47,998
7.8 %
Property operating expenses:
Same Store communities 126,929
126,534
395
0.3 %
Communities Outside of Same Store 82,268
74,340
7,928
10.7 %
Total 209,197
200,874
8,323
4.1 %
Proportionate property net operating income:
Same Store communities 312,186
298,594
13,592
4.6 %
Communities Outside of Same Store 144,737
118,654
26,083
22.0 %
Total $ 456,923
$ 417,248
$ 39,675
9.5 %

For the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, our Real Estate segment’s proportionate property net operating income increased $39.7 million, or 9.5%

~~Same Store proportionate property net operating income increased by $13.6 million, or 4.6%. This increase was primarily attributable to a $14.0 million, or 3.3%~~3.5%, increase in rental and other property revenues due to higher average revenues ~~(approximately~~of $62 per ~~effective home),~~apartment home comprised ~~primarily~~ of increases in rental rates ~~partially offset by~~and a ~~10 basis~~60-basis point ~~decrease~~increase in average daily occupancy. ~~Rental rates on renewals transacted during~~Renewal rents in the ~~nine months ended September 30, 2017 were 4.6% higher than expiring lease rates,~~first quarter increased by 5.8%, and new lease ~~rates were 0.9% higher than expiring lease rates,~~rents increased by 1.7%, resulting in a ~~weighted average~~weighted-average increase of ~~2.7%~~3.6%. ~~The increase in~~ Same Store ~~rental and other property revenues was partially offset by a $0.4 million, or 0.3%, increase in~~ property operating expenses decreased $0.2 million, contributing to the proportionate property net operating income growth, driven primarily ~~due to increases~~by a $0.8 million, or 3.5%, decrease in ~~real estate taxes, utility costs and repairs and maintenance, partially offset by lower personnel and insurance expenses. During the nine months ended September 30, 2017, as compared to 2016,~~ controllable operating expenses, which exclude utility costs, real estate taxes, and ~~insurance, decreased by $0.8 million, or 1.3%.~~

~~The~~insurance.

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Redevelopment and Development proportionate property net operating income ~~of our communities Outside of Same Store increased~~decreased by ~~$26.1~~$1.5 million, or ~~22.0%~~17.5%, ~~due to:~~

~~our completion of~~for the three months ended March 31, 2020, compared to 2019. This decrease was attributable primarily to de-leasing at Flamingo Point and 707 Leahy in preparation for redevelopment, offset partially by increased occupancy driven by the lease-up ~~of Indigo and One Canal earlier in 2017, which contributed to $15.2 million of incremental~~at Parc Mosaic.

Other Real Estate proportionate property net operating income increased by $2.6 million, or 28.3%, for the three months ended March 31, 2020, compared to ~~the same period in 2016;~~

redevelopment leasing activities during the last 12 months, which included 930 apartment homes and helped contribute to incremental redevelopment related property net operating income of $3.2 million during the nine months ended September 30, 2017 as compared2019, due primarily to the ~~same period~~acquisition of 1001 Brickell Bay Drive in ~~2016; and~~

higher property net operating income of $7.7 million from other communities Outside of Same Store, including the effect of our increased ownership interest in the Palazzo communities as described above.

July 2019.

Non-Segment Real Estate Operations

Operating income amounts not attributed to our ~~Real Estate segment~~segments include offsite costs associated with property management, casualty losses, write-off of straight-line rent receivables, and the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our ~~Real Estate segment~~segments for purposes of evaluating segment ~~performance (see~~ ~~Note 7~~ ~~to the condensed consolidated financial statements in Item 1).~~

performance.

For the three months ended ~~September 30, 2017, casualty losses totaled $2.8 million~~March 31, 2020, we recognized a write-off of straight-line rent receivables due to the impact of COVID-19 and ~~included several large claims primarily related to hurricane damage.~~ the resulting economic impact on our commercial tenants. No similar write-off was recognized in 2019.

For the three months ended ~~September 30, 2016, casualty losses totaled $2.9 million and included one large claim related to fire damage and two large claims related to water damage resulting from damaged pipes.~~

~~For the nine months ended September 30, 2017, casualty losses totaled $7.1 million as~~March 31, 2020, compared to ~~$5.6 million for the nine months ended September 30, 2016. The increase was primarily due to casualty losses from Hurricane Irma.~~

~~Apartment communities previously in our Real Estate portfolio that were sold by December 31, 2016, generated~~2019, net operating income ~~of $3.5~~decreased by $7.7 million ~~and $16.9 million, during~~due to the ~~three and nine months ended September 30, 2016, respectively.~~

~~Asset Management Results~~

~~We hold a nominal ownership position in certain consolidated partnerships that own~~sale of apartment communities ~~that qualify for low-income housing tax credits~~in 2019.

Depreciation and are structured to provide for the pass-through of tax credits and tax deductions to their partners. In this role, we provide asset management and other services to these partnerships and receive fees and other payments in return.

In accordance with GAAP, we consolidate most of these partnerships and their underlying apartment communities. Our share of the partnerships’ net operating income, less interest expense and other amounts, was approximately 95% (inclusive of unconsolidated communities) at September 30, 2017, and represents income generated by the partnerships that is currently available to pay fees and other amounts due to us under the contractual agreements.

The operating results of the partnerships served by our Asset Management business and their underlying apartment communities were comparable for the three and nine months ended September 30, 2017, as compared to the three and nine months ended September 30, 2016.

We are also generally responsible for ensuring the underlying apartment communities comply with the requirements to earn low-income housing tax credits. We recognize income associated with the delivery of tax credits and tax deductions delivered to the partners.

Amortization

For the three ~~and nine~~ months ended ~~September 30, 2017, as~~March 31, 2020, compared to the three and nine months ended September 30, 2016, tax credit and transaction revenues decreased by $2.1 million and $9.7 million, respectively. We recognized lower tax credit income, the majority of which was due to our 2016 acquisition of an investor limited partner’s interest in one of the tax credit partnerships (and their rights to undelivered tax credits) prior to the end of the tax credit delivery period. Following the purchase, we generate tax benefits in our results of operations, which largely offsets the tax credit income we otherwise would have recognized. The remainder of the decrease in tax credit income is due to the delivery of the final tax credits for various apartment communities during 2016. Transaction revenues decreased due to a $3.6 million fee earned during the nine months ended September 30, 2016 for assisting a third party property owner with respect to a property we previously owned.

We expect the contribution to our net income from asset management activities to decline in future years as we continue to deliver the final tax credits for these communities and, as part of our plan to exit the Asset Management business, the partnerships sell the underlying apartment communities.

~~Depreciation and Amortization~~

~~For the three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016,~~2019, depreciation and amortization expense increased ~~$7.7~~by $6.9 million, or ~~9.0%~~7.4%, due primarily to communities acquired in 2019 and ~~$23.5 million, or 9.6%, respectively, primarily due to amounts~~apartment homes placed in service after ~~the~~ completion of ~~apartment homes~~construction. This increase was offset partially by decreases in ~~our Park Towne Place and The Sterling redevelopments, the completion of our One Canal development, our acquisition of Indigo and other capital additions, partially offset by decreases~~depreciation associated with apartment communities ~~sold.~~

~~General~~sold and ~~Administrative Expenses~~

For the three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016, general and administrative expenses decreased $1.1 million, or 9.3%, and $3.9 million~~, or~~ ~~11.1%, respectively, primarily due to lower compensation costs, professional services and corporate offsite costs.~~

assets fully depreciated in 2019.

Other Expenses, ~~net~~

Net

Other expenses, net, includes ~~franchise taxes,~~ costs associated with our risk management activities, partnership administration expenses, ground lease rent expense, and certain non-recurring items.

For the three months ended ~~September 30, 2017,~~March 31, 2020, compared to 2019, other expenses, net decreased by $3.5 million, or 68.0%, due primarily to a favorable incremental cash receipt in the first quarter of 2020 related to a previous settlement and lower ground lease expense.

Interest Income

Interest income for the three months ended ~~September 30, 2016, other expenses increased by $0.8 million, primarily due to higher legal costs.~~

~~For the~~ ~~nine months ended September 30, 2017, as~~March 31, 2020, compared to ~~the~~ ~~nine months ended September 30, 2016~~, ~~other expenses decreased~~2019, increased by $1.8 million, or 65.9%, due primarily to a gain recognized due to the ~~2016 recognition~~early payoff of ~~estimated environmental clean-up and abatement costs associated with~~ a ~~matter further discussed in Note 4 to the condensed consolidated financial statements in Item 1, partially offset by higher legal costs.~~

~~Interest Expense~~

~~For~~seller financing note.

Gain on Dispositions of Real Estate

During the three months ended ~~September 30, 2017, as compared to~~March 31, 2020, no apartment communities were sold. The table below summarizes dispositions of apartment communities from our portfolio during the three months ended ~~September 30, 2016, interest expense, which includes~~March 31, 2019 (dollars in thousands):

	2019
Number of apartment communities sold		7
Gross proceeds	$	408,550
Net proceeds (1)	$	340,218
Gain on dispositions	$	291,473

(1)	Net proceeds are after repayment of debt, if any, net working capital settlements, payment of transaction costs, and debt prepayment penalties, if applicable.

The apartment communities sold from our portfolio during the ~~amortization~~three months ended March 31, 2019, were primarily located outside of ~~debt issuance costs, increased by $1.3~~our primary markets or in lower-rated locations within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.

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Mezzanine Investment Income, Net

On November 26, 2019, we loaned $275 million ~~or 2.6%~~. ~~The increase was primarily due~~ to ~~higher amounts outstanding on corporate borrowings (including our term~~the partnership owning Parkmerced Apartments. During the three months ended March 31, 2020, we recognized $6.7 million of income in connection with the mezzanine loan, and ~~incremental line borrowings used to fund~~we received cash payments of $0.6 million on the reacquisition of the Palazzo limited partner interests), partially offset by lower average outstanding balances on non-recourse property debt for our Real Estate apartment communities, due to principal amortization and balance repayments and refinancing property loans at lower rates.

~~For the~~ ~~nine months ended September 30, 2017, as compared to the~~ ~~nine months ended September 30, 2016~~, ~~interest expense decreased $0.5 million, or~~ ~~0.3%~~. The decrease was primarily due to lower average outstanding balances on non-recourse property debt for our Real Estate apartment communities, due to principal amortization, balance repayments and refinancing property loans at lower rates, partially offset by loans placed later in 2016 on acquired apartment communities, higher amounts outstanding on corporate borrowings (as described above) and a decrease in capitalized interest associated with our redevelopment and development activities.

~~Other, net~~

Other, net includes our equity in the income or loss of unconsolidated real estate partnerships, and the results of operations related to the Napico business, which we accounted for under the profit sharing method until September 2017.

For the three and nine months ended September 30, 2017, as compared to the three and nine months ended September 30, 2016, net income of the Napico business increased by $7.1 million and $2.5 million, respectively. As discussed in ~~Note 3~~ ~~of the condensed consolidated financial statements in Item 1, in September 2017, we derecognized the assets and liabilities related to this property, resulting in a gain.~~

accrued interest.

Income Tax Benefit

(Expense)

Certain of our operations, including property management and risk management, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, some of our apartment communities and 1001 Brickell Bay Drive are owned through TRS entities.

Our income tax benefit calculated in accordance with GAAP includes: (a) ~~historic tax credits that offset income tax obligations of our TRS entities; (b)~~ income taxes associated with the income or loss of our TRS entities including tax on gains on dispositions, for which the ~~taxes~~tax consequences have been realized ~~in earlier periods~~ or will be realized in future periods; ~~and (c)~~(b) low income housing tax credits generated prior to the sale of our Asset Management business that offset REIT taxable income, primarily from retained capital ~~gains.~~gains; and (c) historic tax credits that offset income tax obligations of our TRS entities. Income taxes related to these items, ~~(before gains on dispositions)~~as well as changes in valuation allowance and the establishment of incremental deferred tax items in conjunction with intercompany asset transfers (if applicable), are included in income tax benefit in our condensed consolidated statements of operations.

~~Income tax benefit for the periods presented also reflects GAAP taxes associated with income and gains related to the Napico business, which was deconsolidated at the end of September 2017.~~

For the three months ended ~~September 30, 2017, compared to the three months ended September 30, 2016,~~March 31, 2020, we incurred income tax benefit ~~increased by $1.4 million. In 2017, we had lower historic tax credits associated with the redevelopment~~ of ~~certain apartment communities. Notwithstanding these lower historic tax credits, our~~$3.2 million, compared to income tax ~~benefit increased,~~provision of $3.0 million during the same period in 2019. The change is due primarily ~~due~~ to higher operating losses recognized by our TRS entities and higher tax benefits associated with low-income tax credits from our September 2016 acquisition of the limited partner interests in a tax credit partnership. Additionally, in 2017 we recognized higher tax expense than in 2016 due to our derecognition of the final community in the Napico business.

~~For the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016,~~ income tax ~~benefit decreased by $1.6 million. Income tax benefit decreased primarily due to lower historic tax credits associated with~~provision on the redevelopment of certain apartment communities, including the timing of final certification on one redevelopment in 2016. This was partially offset by higher tax benefits associated with low-income tax credits from the 2016 acquisition described above.

~~Gain on Dispositions of Real Estate, Net of Tax~~

~~Real Estate~~

We did not sell any apartment communities from our Real Estate portfolio during the nine months ended September 30, 2017, though we sold a commercial property resulting in a small gain. During the nine months ended September 30, 2016, we sold three apartment communities for gross proceeds of $301.9 million, resulting in net proceeds of $299.0 million and net gain on dispositions of real estate ~~of $222.7 million.~~

~~Asset Management~~

~~Consolidated partnerships served~~in 2019, offset partially by our Asset Management business did not sell any apartment communities during the three months ended September 30, 2017. During the nine months ended September 30, 2017, consolidated partnerships sold two apartment communities for gross proceeds of $10.9 million, resulting in a gain on disposition of real estate of $2.6 million and related tax expense of $0.9 million.

During the three and nine months ended September 30, 2016, a consolidated partnership served by our Asset Management business sold an apartment community for gross proceeds of $27.5 million, resulting in net proceeds of $10.3 million after repayment of property-level debt, payment of transaction costs and distribution of proceeds to noncontrolling interests, and net gain on dispositions of $14.5 million.

~~Noncontrolling Interests in Consolidated Real Estate Partnerships~~

Noncontrolling interests in consolidated real estate partnerships reflects the results of our consolidated real estate partnerships allocated to the owners who are not affiliated with Aimco. The amounts of income or loss of our consolidated real estate partnerships that we allocate to the owners not affiliated with Aimco include their share of property management fees, interest on notes and other amounts that we charge to these partnerships.

For the three months ended September 30, 2017 and 2016, we allocated net loss of $0.2 million and net income of $12.5 million, respectively, to noncontrolling interests in consolidated real estate partnerships, representing a decrease of $12.7 million. For the nine months ended September 30, 2017 and 2016, we allocated net income of $1.5 million and $22.1 million, respectively, to noncontrolling interests in consolidated real estate partnerships, representing a decrease of $20.6 million.

~~The amounts of net income allocated to noncontrolling interests related to our Real Estate segment and Asset Management business in the aggregate~~ decreased ~~by $11.9 million and $12.5 million during the three and nine months ended September 30, 2017, respectively, primarily~~benefit due to ~~a decrease in the amounts of gain we recognized on dispositions of real estate during these periods.~~

~~The amounts of~~lower net ~~income allocated to noncontrolling interests related to the Napico business decreased~~operating losses at communities held by $0.8 million and $8.1 million during the three and nine months ended September 30, 2017, respectively. As part of our ongoing plan to simplify our business, during 2012 we sold the Napico business. In 2016, we received final payment of the seller financing and we met the requirements to recognize the sale of the majority of that business. In 2017, the current owner of the Napico business refinanced the final property, for which we previously provided a debt guaranty, allowing us to derecognize the assets and liabilities related to this property and resulting in a gain.

~~Net Income Attributable to Aimco Preferred Stockholders and the Aimco Operating Partnership’s Preferred Unitholders~~

Net income attributable to Aimco Preferred Stockholders decreased by $2.2 million and $3.4 million during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016. Net income attributed to the Aimco Operating Partnership’s Preferred Unitholders decreased by $2.1 million and $2.8 million, respectively, during these periods. The decreases were primarily due to Aimco’s redemption of its Class Z Preferred Stock on July 29, 2016. In connection with the redemption we wrote off previously deferred issuance costs of $1.3 million. Additionally, the $0.7 million excess of redemption value over the carrying amount, was reflected in net income attributable to Aimco Preferred Stockholders and Aimco Operating Partnership’s Preferred Unitholders for the three and nine months ended September 30, 2016.

TRS entities.

Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the critical accounting policies that involve our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements relate to the impairment of long-lived assets and capitalized costs.

Our critical accounting policies are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. There have been no significant changes in our critical accounting policies from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Non-GAAP Measures

~~Various of the~~

Certain key financial indicators we use in managing our business and in evaluating our financial condition and operating performance are non-GAAP measures. Key non-GAAP measures we use are defined and described below, and for those ~~non-~~

~~GAAP~~non-GAAP measures used or disclosed within this quarterly report, we provide reconciliations of the non-GAAP measures to the most comparable financial measure computed in accordance with ~~GAAP are provided.~~

~~Funds from Operations, Pro forma Funds From Operations and Adjusted Funds From Operations are~~GAAP.

We measure our long-term total return using Economic Income, which is a non-GAAP financial ~~measures, which are defined~~measure. Economic Income represents stockholder value creation as measured by the per share change in estimated NAV plus cash dividends. We believe Economic Income is important to investors as it represents a measure of total return earned by our stockholders. We report and ~~further~~reconcile Economic Income annually. Please refer to the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations described ~~below under~~in Item 7 of our Annual Report on Form 10-K for the ~~Funds From Operations and Adjusted Funds From Operations heading.~~

year ended December 31, 2019, for more information about Economic Income.

Free Cash Flow, ~~or FCF,~~ as calculated for our retained portfolio, represents ~~an apartment community’s~~ property net operating income, less spending for ~~capital replacements,~~Capital Replacements, which represents our estimation of the capital additions made to replace capital assets consumed during our ownership period (further discussed under the Nareit Funds From Operations, Pro forma Funds From Operations, and Adjusted Funds From Operations heading and the Liquidity and Capital Resources ~~headings)~~heading). FCF margin as calculated for apartment communities sold represents anthe sold apartment community’s net operating income less $1,200 per apartment home of assumed annual capital replacement spending, as a percentage of the apartment community’s rental and other property revenues. Capital replacement spending represents a measure ~~of the cost~~ of capital asset usage during the period; therefore, we believe that FCF is useful to investors as a supplemental measure of apartment community performance because it takes into consideration costs incurred during the period to replace capital assets that have been consumed during our ownership.

~~We use Economic Income as our measure~~

Table of total return. Economic Income represents the change in estimated net asset value per share plus cash dividends per share. We report and reconcile our Economic Income annually. Readers should refer to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” described in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2016, for more information about Economic Income.

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Nareit Funds From Operations, Pro forma Funds From Operations, and Adjusted Funds From Operations

~~Funds From Operations, or~~

Nareit FFO is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers, or other personal property. ~~The National Association of Real Estate Investment Trusts, or NAREIT,~~Nareit defines FFO as net income ~~or loss~~ computed in accordance with GAAP, ~~excluding gains from sales of, and impairment losses recognized with respect to, depreciable property, plus~~excluding: depreciation and amortization related to real estate; gains and ~~after adjustments for~~losses from sales and impairment of depreciable assets and land used in our primary business; and income taxes directly associated with a gain or loss on the sale of real estate, and including our share of the FFO of unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine Nareit FFO. We calculate Nareit FFO attributable to Aimco common stockholders (diluted) by subtracting if dilutive, redemption or repurchase related preferred stock issuance costs and dividends on preferred stock, and adding back dividends/distributions on dilutive preferred securities and premiums or discounts on preferred stock redemptions or repurchases.

amounts allocated from Nareit FFO to participating securities.

In addition to Nareit FFO, we compute Pro forma FFO and ~~Adjusted FFO, or~~ AFFO, which are also non-GAAP financial measures that we believe are helpful to investors in understanding our short-term performance. Pro forma FFO represents Nareit FFO attributable to Aimco common stockholders (diluted), excluding ~~preferred equity redemption-related~~certain amounts ~~(adjusted for noncontrolling interests). Preferred equity redemption-related amounts (gains~~that are unique or ~~losses) are items that periodically affect our operating results and we exclude these items from our calculation of~~occur infrequently.

In computing 2020 Pro forma FFO, ~~because such amounts are not representative of our operating performance.~~ we made the following adjustment to Nareit FFO:

•

Straight-line rent: in 2018, we assumed a 99-year ground lease with scheduled rent increases. Due to the terms of the lease, GAAP rent expense will exceed cash rent payments until 2076. We include the cash rent payments for this ground lease in Pro forma FFO but exclude the incremental straight-line non-cash rent expense. We include the rent expense for this lease in other expenses, net, in our condensed consolidated statements of operations.

In computing 2019 Pro forma FFO, we made the following adjustments to Nareit FFO:

•

Straight-line rent: as described above.

•

Litigation: during 2018, we were engaged in litigation with Airbnb, which was resolved in December 2018. Due to the unpredictable nature of these proceedings, related amounts recognized are excluded from Pro forma FFO. These amounts are included in other expenses, net, in our condensed consolidated statements of operations.

AFFO represents Pro forma FFO reduced by Capital Replacements, ~~(also adjusted for noncontrolling interests),~~ which ~~represents~~represent our estimation of the actual capital additions made to replace capital assets consumed during our ownership period. When we make capital additions at an apartment community, we evaluate whether the additions ~~enhance~~extend the ~~value, profitability or~~ useful life of an asset as compared to its condition at the time we purchased the apartment community. We classify as Capital Improvements those capital additions that meet ~~these criteria~~this criterion, and we classify as Capital Replacements those that do not. AFFO is a key financial indicator ~~that~~ we use to evaluate our short-term operational performance and is one of the factors that we use to determine the amounts of our dividend payments.

Nareit FFO, Pro forma FFO, and AFFO should not be considered alternatives to net income as determined in accordance with GAAP, as indications of our performance. Although we use these non-GAAP measures for comparability in assessing our performance compared to other REITs, not all REITs compute these same measures and those who do may not compute them in the same manner. Additionally, ~~our~~ computation of AFFO is subject to our definition of Capital Replacement spending. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other REITs.

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For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, Aimco’s Nareit FFO, Pro forma FFO, and AFFO are calculated as follows (in ~~thousands)~~thousands, except per share data):

	2020			2019
Net income attributable to Aimco common stockholders (1)	$	6,679		$	271,568
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest		97,792			91,374
Loss (gain) on dispositions and other, net of noncontrolling partners’ interest		34			(291,473	)
Income tax adjustments related to gain on dispositions and other tax-related items		226			6,526
Common noncontrolling interests in Aimco Operating Partnership’s share of above adjustments		(5,096	)		10,249
Amounts allocable to participating securities		(39	)		316
Nareit FFO attributable to Aimco common stockholders	$	99,596		$	88,560
Adjustments, all net of common noncontrolling interests in Aimco Operating Partnership and participating securities:
Straight-line rent		635			2,307
Litigation, net		—			25
Pro forma FFO attributable to Aimco common stockholders	$	100,231		$	90,892
Capital Replacements, net of common noncontrolling interests in Aimco Operating Partnership and participating securities		(11,605	)		(9,711	)
AFFO attributable to Aimco common stockholders	$	88,626		$	81,181

Total share and dilutive share equivalents used to calculate Net income and Nareit FFO per share (2)		148,786			144,445
Adjustment to weight reverse stock split (3)		—			3,888
Pro forma shares and dilutive share equivalents used to calculate Pro forma FFO and AFFO per share		148,786			148,333

Net income attributable to Aimco per common share – diluted	$	0.04		$	1.88
Nareit FFO per share – diluted	$	0.67		$	0.61
Pro forma FFO per share – diluted	$	0.67		$	0.61
AFFO per share – diluted	$	0.60		$	0.55

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income attributable to Aimco common stockholders (1) $ 17,430
$ 11,176
$ 44,764
$ 255,781
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest 89,879
80,313
257,409
231,809
Gain on dispositions and other, net noncontrolling partners’ interest (5,772 ) (5,041 ) (7,952 ) (224,925 )
Income tax provision related to gain on disposition of real estate 733
1,959
2,175
4,419
Common noncontrolling interests in Aimco Operating Partnership’s share of above adjustments (3,814 ) (3,680 ) (11,447 ) (506 )
Amounts allocable to participating securities (43 ) (110 ) (122 ) (14 )
FFO Attributable to Aimco common stockholders – Diluted $ 98,413
$ 84,617
$ 284,827
$ 266,564
Preferred redemption related amounts, net of common noncontrolling interests in Aimco Operating Partnership and participating securities —
1,877
—
1,877
Pro forma FFO Attributable to Aimco common stockholders – Diluted $ 98,413
$ 86,494
$ 284,827
$ 268,441
Capital Replacements, net of common noncontrolling interests in Aimco Operating Partnership and participating securities (14,446 ) (15,351 ) (40,752 ) (40,092 )
AFFO attributable to Aimco common stockholders – Diluted $ 83,967
$ 71,143
$ 244,075
$ 228,349

Weighted average common shares outstanding – diluted (2) 156,835
156,527
156,768
156,341

Net income attributable to Aimco per common share – diluted $ 0.11
$ 0.07
$ 0.29
$ 1.64
FFO per share – diluted $ 0.63
$ 0.54
$ 1.82
$ 1.71
Pro Forma FFO per share – diluted $ 0.63
$ 0.55
$ 1.82
$ 1.72
AFFO per share – diluted $ 0.54
$ 0.45
$ 1.56
$ 1.46

(1)
~~(1)~~	Represents the numerator for calculating Aimco’s earnings per common share in accordance with GAAP.

(2)
~~(2)~~	Represents the denominator for Aimco’s earnings per common share – diluted, calculated in accordance with GAAP.

~~Refer~~

(3)

During the three months ended March 31, 2019, we completed a reverse stock split and a special dividend paid primarily in stock. For stock splits, GAAP requires the restatement of weighted average shares as if the reverse stock split occurred at the beginning of the period presented; while shares issued in the special dividend are included in weighted average shares outstanding from the date issued. To minimize confusion and facilitate comparison of period-over-period Pro forma FFO and AFFO, we calculated pro forma weighted average shares for 2019 based on the effective date of the reverse stock split and ex-dividend date for the shares issued in the special dividend, thereby eliminating the per-share impact of the GAAP treatment to Aimco’s reported Pro forma FFO and AFFO.

Please refer to ~~the Executive Overview~~Financial Highlights above for discussion of the factors affecting our ~~FFO,~~ Pro forma FFO and AFFO ~~results~~growth for ~~2017,~~2020, as compared to ~~their comparable periods in 2016.~~

~~Refer to the Liquidity and Capital Resources section for further information regarding our capital investing activities, including Capital Replacements.~~

2019.

The Aimco Operating Partnership does not separately compute or report Nareit FFO, Pro forma FFO, or AFFO. However, based on Aimco’s method for allocation of such amounts to noncontrolling interests in the Aimco Operating Partnership, as well as limited differences between the amounts of net income attributable to Aimco’s common stockholders and the Aimco Operating Partnership’s unit holders during the periods presented, Nareit FFO, Pro forma FFO, and AFFO amounts on a per unit basis for the Aimco Operating Partnership would be ~~expected to be~~ substantially the same as the corresponding per share amounts for Aimco.

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Leverage Ratios

As discussed under the Balance Sheet ~~and Liquidity~~ heading, ~~as part of~~ our leverage strategy ~~we target~~targets the ratio of ~~Proportionate Debt and Preferred Equity~~Net Leverage to Adjusted ~~EBITDA~~EBITDAre to be below 7.0x and ~~we target~~ the ratio of Adjusted ~~EBITDA~~EBITDAre to Adjusted Interest Expense and Preferred ~~Dividends~~Distributions to be greater than 2.5x. We believe these ratios, which are ~~important measures as they~~based in part on non-GAAP financial information, are commonly used by investors and analysts to assess the relative financial risk associated with ~~balance sheets of~~ companies within the same industry, and they are believed to be similar to measures used by rating agencies to assess entity credit quality.

~~We calculate our leverage ratios based on the most recent three month amounts, annualized.~~

Proportionate Debt, as used in our leverage ratios, is a non-GAAP measure and includes our share of the long-term, non-recourse property debt, ~~secured by apartment communities in the Real Estate portfolio, our one-year term loan,~~ and outstanding borrowings under our revolving credit facility, reduced by our share of the cash and restricted cash of our consolidated and unconsolidated partnerships owning communities in our Real Estate portfolio, and also by our investment in the subordinate

~~tranches of a securitization trust that holds certain of our property debt (essentially, an investment in our own non-recourse property loans).~~

~~In our~~facility. Proportionate Debt ~~computation, we increase our recorded debt by~~excludes unamortized debt ~~issue~~issuance costs because these amounts represent cash expended in earlier periods and do not reduce our contractual ~~obligations, and we~~obligations. We reduce our recorded debt by the amounts of cash and restricted cash on-hand ~~(such restricted cash amounts being~~(which are primarily restricted under the terms of our property debt agreements), excluding tenant security deposits included in restricted cash, assuming ~~these~~the remaining amounts of cash and restricted cash would be used to reduce our outstanding leverage. We further reduce our recorded debt by the value of our investment in a securitization trust that holds certain of our property debt, as our payments of principal and interest associated with such property debt will ultimately repay our investments in the trust.

We exclude from our leverage the non-recourse property debt obligations of consolidated partnerships served by our Asset Management business. The non-recourse property debt obligations of these partnerships are not our obligations and have limited effect on the amount of fees and other payments we expect to receive.

We believe Proportionate Debt is useful to investors as it is a measure of our net exposure to debt obligations. Proportionate Debt, as used in our leverage ratios, is calculated as set forth in the table below.

Preferred ~~Equity,~~OP Units, as used in our leverage ratios, represents the redemption ~~amounts~~amount for ~~Aimco’s preferred stock and~~ the Aimco Operating Partnership’s preferred OP ~~Units. Preferred Equity,~~Units and, although perpetual in nature, is another component of our overall leverage.

The reconciliation of total indebtedness to Proportionate Debt and Net Leverage, as used in our leverage ratios as of March 31, 2020, is as follows (in thousands):

	March 31, 2020
Total indebtedness	$	4,802,532
Adjustments:
Debt issuance costs related to non-recourse property debt		19,753
Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships		(7,732	)
Cash and restricted cash		(374,816	)
Tenant security deposits included in restricted cash		14,432
Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships		1,071
Securitization trust investment and other		(95,906	)
Proportionate Debt	$	4,359,334
Preferred OP Units		96,449
Redeemable noncontrolling interests in consolidated real estate partnership		4,617
Net Leverage	$	4,460,400

We calculated Adjusted ~~EBITDA~~EBITDAre used in our leverage ratios based on the most recent three-month amounts, annualized. EBITDAre and Adjusted EBITDAre are non-GAAP measures, which we believe are useful to investors, creditors, and rating agencies as a supplemental measure of our ability to incur and service debt because they are recognized measures of performance by the real estate industry and allow for comparison of our credit strength to different companies. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of liquidity. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is ~~a non-GAAP performance measure. We believe Adjusted EBITDA provides investors relevant and useful information because it allows investors to view~~comparable with that of other real estate investment trusts. Nareit defines EBITDAre as net income ~~from our operations on an unleveraged basis,~~computed in accordance with GAAP, before ~~the effects of~~interest expense, income taxes, depreciation, and amortization ~~gains or losses on sales~~expense, further adjusted for:

•

gains and losses on the dispositions of depreciated property;

•

impairment write-downs of depreciated property;

•

impairment write-downs of investments in unconsolidated partnerships caused by a decrease in the value of the depreciated property in such partnerships; and

•

adjustments to reflect Aimco’s share of EBITDAre of investments in unconsolidated entities.

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EBITDAre is defined by Nareit and ~~impairment losses related to~~provides for an additional performance measure independent of capital structure for greater comparability between real estate ~~and various other items described below.~~

investment trusts. We define Adjusted ~~EBITDA represents Aimco’s share of the consolidated amount of our net income,~~EBITDAre as EBITDAre adjusted to exclude the effect of the following items for the reasons set forth below:

•

net income attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, to allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry;

•

the amount of interest income related to our investment in the subordinated tranches in a securitization trust holding primarily Aimco property debt, as we view our interest cost on this debt to be net of any interest income received from the investment; and

•

the amount by which GAAP rent expense exceeds cash rents for a long-term ground lease for which expense exceeds cash payments until 2076. The excess of GAAP rent expense over the cash payments for this lease does not reflect a current obligation that affects our ability to service debt.

The reconciliation of net income to EBITDAre and Adjusted ~~Interest Expense, defined below, to allow investors to compare a measure of our earnings before~~EBITDAre for the ~~effects of our indebtedness with that of other companies in the real estate industry;~~

~~preferred dividends, to allow investors to compare a measure of our performance before the effects of our capital structure with that of other companies in the real estate industry;~~

income taxes, to allow investors to measure our performance independent of income taxes, which may vary significantly from other companies within our industry due to leverage and tax planning strategies, among other considerations;

~~depreciation and amortization, gains or losses on dispositions and impairment losses related to real estate, for similar reasons to those set forth~~three months ended March 31, 2020, as used in our ~~discussion of FFO, Pro forma FFO and AFFO in the preceding section; and~~

other items, including gains on dispositions of non-depreciable assets, as these are items that periodically affect our operations but that are not necessarily representative of our ability to service our debt obligation.

~~While Adjusted EBITDA is a relevant measure of performance and is commonly used in~~ leverage ratios, ~~it does not represent net income~~is as defined by GAAP, and should not be considered as an alternative to net income in evaluating our performance. Further, our definition and computation of Adjusted EBITDA may not be comparable to similar measures reported by other companies.follows (in thousands):

	Three Months Ended
	March 31, 2020
Net income	$	8,977
Adjustments:
Interest expense		41,336
Income tax benefit		(3,233	)
Depreciation and amortization		100,476
Loss on dispositions of real estate		34
Adjustment related to EBITDAre of unconsolidated partnerships		211
EBITDAre	$	147,801
Net income attributable to noncontrolling interests in Aimco Operating Partnership		(18	)
EBITDAre adjustments attributable to noncontrolling interests		(620	)
Interest income received on securitization investment		(2,171	)
Straight-line rent		635
Adjusted EBITDAre	$	145,627
Annualized Adjusted EBITDAre	$	582,508

We calculate Adjusted Interest Expense, as ~~calculated~~used in our leverage ratios, based on the most recent three-month amounts, annualized. Adjusted Interest Expense is a non-GAAP measure that we believe is meaningful for investors and analysts as it presents our share of current recurring interest requirements associated with leverage. ~~Our calculation of Adjusted Interest Expense is set forth in the table below.~~ Adjusted Interest Expense represents our proportionate share of interest expense on non-recourse property debt ~~encumbering apartment communities in the Real Estate portfolio~~ and interest expense on our ~~term loan and~~ revolving credit facility borrowings. We exclude from our calculation of Adjusted Interest Expense:

•

debt prepayment penalties, which are items that, from time to time, affect our interest expense, but are not representative of our scheduled interest obligations; and

~~debt prepayment penalties, which are items that, from time to time, affect our operating results but are not representative of our scheduled interest obligations;~~

•

the income we receive on our investment in the securitization trust that holds certain of our property debt, as this income is being generated indirectly from interest we pay with respect to property debt held by the trust.

~~the amortization of debt issue costs, as these amounts have been expended in previous periods and are not representative of our current or prospective debt service requirements; and~~

Preferred ~~Dividends~~Distributions represents the ~~preferred dividends paid on Aimco’s preferred stock and the preferred~~ distributions paid on the Aimco Operating Partnership’s preferred OP ~~Units, exclusive of preferred equity redemption related amounts.~~Units. We add Preferred ~~Dividends~~Distributions to Adjusted Interest Expense for a more complete picture of the interest and dividend requirements of our ~~leverage, inclusive~~leverage.

Table of ~~perpetual preferred equity.~~

~~Reconciliations~~Contents

The reconciliation of ~~the most closely related GAAP measures~~interest expense to ~~our calculations of Proportionate Debt, Preferred Equity, Adjusted EBITDA,~~ Adjusted Interest Expense and Preferred ~~Dividends,~~Distributions for the three months ended March 31, 2020, as used in our leverage ratios, ~~are~~is as follows (in thousands):

	Three Months Ended
	March 31, 2020
Interest expense	$	41,336
Adjustments:
Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships		(68	)
Interest income earned on securitization trust investment		(2,171	)
Adjusted Interest Expense	$	39,097
Preferred distributions		1,869
Adjusted Interest Expense and Preferred Distributions	$	40,966
Annualized Adjusted Interest Expense	$	156,388
Annualized Adjusted Interest Expense and Preferred Distributions	$	163,864

September 30, 2017
Total indebtedness associated with Real Estate portfolio $ 4,162,140
Adjustments:
Debt issue costs related to non-recourse property debt 16,944
Debt issue costs related to term loan 748
Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships (10,089 )
Cash and restricted cash (86,345 )
Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships 1,065
Securitization trust investment and other (79,889 )
Proportionate Debt $ 4,004,574

Preferred stock 125,000
Preferred OP Units 101,537
Preferred Equity 226,537
Proportionate Debt and Preferred Equity $ 4,231,111

Three Months Ended September 30, 2017
Net income attributable to Aimco Common Stockholders $ 17,430
Adjustments:
Adjusted Interest Expense 43,354
Income tax benefit (4,870 )
Depreciation and amortization, net of noncontrolling interest 92,569
Gains on disposition and other, net of income taxes and noncontrolling partners’ interests (5,039 )
Preferred stock dividends 2,148
Net income attributable to noncontrolling interests in Aimco Operating Partnership 2,815
Other items, net (2,903 )
Adjusted EBITDA $ 145,504

Annualized Adjusted EBITDA $ 582,016

Three Months Ended September 30, 2017
Interest expense $ 50,682
Interest expense related to non-recourse property debt obligations of consolidated partnerships served by our Asset Management business (3,382 )
Interest expense attributable to Real Estate portfolio 47,300
Adjustments:
Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships 96
Debt prepayment penalties and other non-interest items (869 )
Amortization of debt issue costs (1,395 )
Interest income earned on securitization trust investment (1,778 )
Adjusted Interest Expense $ 43,354

Preferred stock dividends 2,148
Preferred OP Unit distributions 1,938
Preferred Dividends 4,086
Adjusted Interest Expense and Preferred Dividends $ 47,440

Annualized Adjusted Interest Expense $ 173,416
Annualized Adjusted Interest Expense and Preferred Dividends $ 189,760

Liquidity and Capital Resources

Liquidity

Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flow from ~~our~~ operations. Additional sources are proceeds from ~~sales~~dispositions of apartment communities, proceeds from ~~refinancings of~~refinancing existing property debt, borrowings under new property debt, borrowings under our ~~Credit Agreement, including our~~ revolving credit facility, and proceeds from equity offerings.

As of March 31, 2020, our primary sources of liquidity were as follows:

•

$340.9 million in cash and cash equivalents;

~~Our principal uses~~

•

$19.5 million of restricted cash, excluding amounts related to tenant security deposits, consists primarily of escrows held by lenders for capital additions, property taxes, and insurance; and

•

$198.7 million of available capacity to borrow under our revolving credit facility after consideration of $7.4 million of letters of credit backed by the facility.

In response to economic uncertainty caused by the COVID-19 pandemic, we have taken several measures to further increase liquidity, including the following:

•

Reduced expected 2020 capital spending by approximately $150 million, or almost half, by pausing investment in our short-cycle redevelopment projects and delaying the start of new projects; and

•

undertook to increase available credit by approximately $720 million, comprised of a $350 million term loan and approximately $370 million in proceeds from property loans, of which half are closed or rate-locked and half closing over the next 30 days.

Additional liquidity may also be provided through property debt financing at properties current unencumbered by debt. As of March 31, 2020, we also held unencumbered communities with an estimated fair market value in excess of $2 billion.

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Uses for liquidity include normal operating activities, payments of principal and interest on outstanding property debt, capital expenditures, dividends paid to stockholders, distributions paid to noncontrolling interest partners, and acquisitions of apartment communities. We use our cash and cash equivalents and our cash provided by operating activities to meet short-term liquidity needs. In the event that our cash and cash equivalents and cash provided by operating activities are not sufficient to cover our short-term liquidity needs, we have additional means, such as short-term borrowing availability and proceeds from apartment community sales and refinancings. We may use our revolving credit facility for working capital and other short-term purposes, such as funding investments on an interim basis. We expect to meet our long-term liquidity requirements ~~such as debt maturities,~~including redevelopment spending, and apartment community acquisitions, through primarily non-recourse, long-term borrowings, ~~(primarily non-recourse),~~ the issuance of equity securities (including OP Units), the sale of apartment communities, and cash generated from operations.

~~As of September 30, 2017,~~ Additionally, we expect to meet our ~~primary sources of~~ liquidity ~~were as follows:~~

~~$38.8 million in cash and cash equivalents;~~

$47.6 million of restricted cash, which consists primarily of escrows related to resident security deposits and reserves and escrows held by lenders for capital additions, property taxes and insurance; and

~~$231.8 million of available capacity to borrow under~~requirements associated with our debt maturities. Our revolving credit facility ~~(which is more fully described below), after consideration~~matures on January 22, 2022. The following table summarizes the payments due under our non-recourse property debt commitments, excluding debt issuance costs, as of ~~outstanding borrowings of $356.2 million and $12.0 million of letters of credit backed by the facility.~~

~~At September 30, 2017, we also held unencumbered apartment communities with an estimated fair market value of approximately $1.8 billion, an increase of approximately 12% from December~~March 31, ~~2016. Each of the amounts presented above exclude amounts attributable to partnerships served by our Asset Management business.~~2020 (in thousands):

Total

Less than

One Year

(2020)

2-3 Years

(2021-2022)

4-5 Years

(2023-2024)

More than Five Years (2025 and Thereafter)

Non-recourse property debt

4,228,440

148,329

1,021,230

673,617

2,385,264

Leverage and Capital Resources

The availability of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing. Currently, interest rates are low compared to historical ~~levels~~levels. Recent events have increased volatility in interest rates, resulting in substantial movements, both up and ~~many lenders are active~~down, in ~~the market. However, any~~short periods of time. Capital is still available, but with fewer sources than in past periods. Any adverse changes in the lending environment could negatively affect our liquidity. We believe we have mitigated much of this exposure by reducing our short and intermediate term maturity risk through refinancing such loans with long-dated, fixed-rate property debt. However, if property financing options become unavailable for our ~~further~~future debt needs, we may consider alternative sources of liquidity, such as reductions in capital spending or proceeds from apartment community dispositions.

Two credit rating agencies rate our creditworthiness and both have rated our credit and outlook as BBB- (stable), an investment grade rating. Our investment grade rating would be useful in accessing capital through the sale of bonds in private or public transactions. However, our intention and historical practice has been to raise debt capital in the form of property-level, non-recourse, long-dated, fixed-rate, amortizing debt, the cost of which is generally less than that of recourse debt and the terms of which also provide for greater balance sheet safety.

As of ~~September 30, 2017,~~March 31, 2020, approximately ~~81.1%~~85.9% of our leverage consisted of property-level, non-recourse, long-dated, amortizing debt. Approximately ~~97.7%~~96.0% of ~~this~~our property-level debt is fixed-rate, which provides a hedge against increases in interest rates, capitalization rates, and inflation. The ~~weighted average~~weighted-average remaining term to maturity of our property-level debt was ~~7.1~~ y~~ears.~~

~~For property-level debt encumbering the communities in our Real Estate portfolio, $116.5 million~~was 7.3 years. On average, 8.1% of our unpaid principal balances ~~mature during the remainder of 2017, and on average, 9.3% of our unpaid principal balance~~ will mature each year from ~~2018~~2021 through ~~2020.~~

2023.

While our primary source of leverage is property-level, non-recourse, long-dated, fixed-rate, amortizing debt, we also have a ~~Senior Secured Credit Agreement~~revolving credit facility with a syndicate of financial ~~institutions, which we refer to as our Credit Agreement. Our Credit Agreement provides for $600.0 million of revolving loan commitments.~~institutions. As of ~~September 30, 2017,~~March 31, 2020, we had ~~$356.2~~$593.8 million of outstanding borrowings under ~~the Credit Agreement. The Credit Agreement provides us with an option to expand the aggregate loan commitments, subject to customary conditions, by up to~~ ~~$200.0 million.~~

~~On June 30, 2017, we amended the Credit Agreement to provide for a $250.0 million term loan to fund partially~~ our reacquisition of limited partner interests in the Palazzo joint venture. The term loan matures on June 30, 2018, has a one-year extension option and bears interest at 30-day LIBOR plus 135 basis points.

~~As of September 30, 2017, our outstanding perpetual preferred equity~~revolving credit facility, which represented approximately ~~5.2%~~12.1% of our total leverage. ~~Our~~

As of March 31, 2020, our outstanding preferred ~~securities~~OP Units represented approximately 2.0% of our total leverage. Preferred OP Units are ~~perpetual in nature;~~redeemable at the holder’s option; however, for illustrative purposes, we compute the ~~weighted average~~weighted-average maturity of our total leverage assuming a ~~40-year~~10-year maturity ~~for our preferred securities.~~

on the units.

The combination of non-recourse property-level debt, borrowings under our revolving credit facility, preferred OP Units, and ~~perpetual preferred equity that comprises the majority of~~redeemable noncontrolling interests in a consolidated real estate partnership comprise our total ~~leverage reduces our refunding and re-pricing risk.~~leverage. The ~~weighted average~~weighted-average remaining term to maturity for our total leverage described above was ~~8.2~~6.7 years as of ~~September 30, 2017.~~

March 31, 2020.

Under the ~~Credit Agreement,~~revolving credit facility, we have agreed to maintain a Fixed Charge Coverage ratio of 1.40x, as well as ~~comply with~~ other covenants customary for similar revolving credit arrangements. For the trailing ~~twelve month~~12-month period ended ~~September 30, 2017,~~March 31, 2020, our Fixed Charge Coverage ratio was ~~1.99x,~~2.08x, compared to a ratio of ~~1.96x~~2.05x for the trailing ~~twelve month~~12-month period ended ~~September 30, 2016.~~March 31, 2019. Our Fixed Charge Coverage ratio for March 31, 2020. We expect to remain in compliance with this covenant during the next 12 months.

~~Changes in Cash and Cash Equivalents~~

The following discussion relates to changes in consolidated cash and cash equivalents due to operating, investing and financing activities, which are presented in our condensed consolidated statements of cash flows included in Item 1 of this report.

~~Operating Activities~~

For the nine months ended September 30, 2017, net cash provided by operating activities was $285.0 million. Our operating cash flow is affected primarily by rental rates, occupancy levels and operating expenses related to our portfolio of apartment communities. Cash provided by operating activities for the nine months ended September 30, 2017, increased by $8.6 million as compared to the nine months ended September 30, 2016, due to improved operating results of our Same Store communities and increased contribution from our redevelopment and lease-up communities, partially offset by lower net operating income associated with apartment communities sold in 2016.

~~Investing Activities~~

For the nine months ended September 30, 2017, net cash used in investing activities of $274.1 million consisted primarily of capital expenditures. Capital expenditures totaled $266.6 million and $259.3 million during the nine months ended September 30, 2017 and 2016, respectively. We generally fund capital expenditures with cash provided by operating activities and cash proceeds from apartment community sales.

~~We categorize capital spending for communities in our Real Estate portfolio broadly into six primary categories:~~

~~capital replacements, which represent capital additions made to replace the consumed portion of acquired capital assets;~~

~~capital improvements, which are non-redevelopment capital additions that are made to enhance the value, profitability or useful life of an apartment community from its original purchase condition;~~

property upgrades, which may include kitchen and bath remodeling, energy conservation projects, and investments in longer-lived materials designed to reduce turnover costs and maintenance, all of which are generally lesser in scope than redevelopment additions and do not significantly disrupt property operations;

redevelopment additions, which represent capital additions intended to enhance the value of an apartment community through the ability to generate higher average rental revenues, and may include costs related to entitlement, which enhance the value of a community through increased density, and costs related to renovation of exteriors, common areas or apartment homes;

~~development additions, which represent construction and related capitalized costs associated with development of apartment communities; and~~

casualty capital additions, which represent capitalized costs incurred in connection with the restoration of an asset after a casualty event such as a severe snow storm, hurricane, tornado, flood or fire.

We exclude from these measures the amounts of capital spending related to apartment communities sold or classified as held for sale at the end of the period, as well as amounts expended by consolidated partnerships served by our Asset Management business as such amounts generally do not affect the amount of cash flow we expect to receive from the operation and ultimate disposition of these communities. We have also excluded from these measures indirect capitalized costs which are allocated later in the year to apartment communities with capital additions, and their related capital spending categories.

A summary of the capital spending for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying condensed consolidated statements of cash flow for the nine months ended September 30, 2017 and 2016, are presented below (dollars in thousands):

Nine Months Ended September 30,
2017 2016
Real Estate
Capital replacements $ 32,665
$ 30,467
Capital improvements 12,050
10,763
Property upgrades 85,670
53,707
Redevelopment additions 115,444
117,810
Development additions 5,783
30,481
Casualty replacements 6,700
4,280
Real Estate capital additions 258,312
247,508
Plus: additions related to consolidated asset managed communities, apartment communities sold or held for sale, and other adjustments 3,445
8,051
Consolidated capital additions 261,757
255,559
Plus: net change in accrued capital spending 4,866
3,764
Capital expenditures per consolidated statement of cash flows $ 266,623
$ 259,323

For the nine months ended September 30, 2017 and 2016, we capitalized $5.9 million and $7.8 million of interest costs, respectively, and $26.8 million and $24.1 million of other direct and indirect costs, respectively.

~~We invested $85.7 million in property upgrades during the nine months ended September 30, 2017, and we anticipate a full year investment ranging from $95 million to $105 million.~~

~~Redevelopment/Development~~

~~Information regarding our redevelopment and development communities at September 30, 2017, is presented below (dollars in millions):~~

Location Apartment Homes Approved for Redevelopment or Development Estimated Net Investment Inception-to-Date Net Investment Expected Stabilized Occupancy (1) Expected Net Operating Income Stabilization (1)
Under Redevelopment
Bay Parc Plaza Miami, FL (2) $ 16.0
$ 9.1
(2) (2)
Calhoun Beach Club Minneapolis, MN 275
28.7
5.1
(3) (3)
Flamingo South Beach Miami, FL (4) 9.7
1.2
(4) (4)
Palazzo at Park La Brea Los Angeles, CA 389
24.5
15.3
2Q 2020 3Q 2021
Palazzo East at Park La Brea Los Angeles, CA 611
28.0
0.6
4Q 2020 1Q 2022
Parc Mosaic Boulder, CO 226
117.0
19.2
4Q 2020 1Q 2022
Park Towne Place Philadelphia, PA 943
176.0
135.0
1Q 2019 2Q 2020
Saybrook Pointe San Jose, CA 324
18.3
13.7
1Q 2019 2Q 2020
Yorktown Lombard, IL 292
25.7
16.8
(3) (3)

Lease-up complete, NOI stabilization period
One Canal Boston, MA 310
195.0
194.8
1Q 2017 2Q 2018
The Sterling Philadelphia, PA 534
71.5
70.6
3Q 2017 4Q 2018
Total 3,904
$ 710.4
$ 481.4


~~(1)~~	Redevelopments provide us with the flexibility to align the timing of completed apartment homes with market demand. As such, expected occupancy stabilization and expected NOI stabilization dates may change as market conditions evolve.


~~(2)~~	~~This phase of redevelopment encompasses common areas, amenity improvements and the creation of a new retail space.~~


~~(3)~~	~~In response to market conditions, we slowed redevelopment activities and extended the estimated time for completion.~~


~~(4)~~	~~This phase of the redevelopment encompasses common areas and security system upgrades.~~

~~Net investment represents the total actual or estimated investment, net of tax and other credits earned as a direct result of our redevelopment or development of the community.~~

~~Net Operating Income Stabilization represents the period in which we expect the communities to achieve stabilized rents and operating costs, generally five quarters after occupancy stabilization.~~

~~During the nine months ended September 30, 2017, we invested $121.2 million in ongoing redevelopment and development projects.~~

During the nine months ended September 30, 2017, we completed construction of the third tower at Park Towne Place in Center City, Philadelphia. As of September 30, 2017 this tower was 74% leased at rates consistent with underwriting. We expect this tower to be more than 90% leased by year-end, as are the first two towers redeveloped at the community.

Also in Center City Philadelphia, during the nine months ended September 30, 2017, we completed redevelopment and the lease-up of the 534 apartment homes at The Sterling and substantially completed the reconfiguration of the second floor commercial space, upgrades to the third and fourth floor commercial space and upgrades to residential common areas.

In the past three years, we have leased more than 1,100 redeveloped apartment homes in Center City, Philadelphia. Based on these results, we decided to proceed with a $40.0 million redevelopment of the fourth and final tower at Park Towne Place. De-leasing of the fourth tower is underway and construction on this tower is scheduled to commence by year end.

~~In addition to the redevelopments described above, during the~~ nine months ended September 30, 2017 we continued redevelopment of three ongoing projects in Los Angeles and San Jose, California and Lombard, Illinois and commenced redevelopments at four apartment communities in Miami, Minneapolis, and Los Angeles, which are summarized in the table above.

In 2014, we acquired Eastpointe, a “C” property located in Boulder, Colorado. Over the past two years, we have planned and entitled a new $117.0 million, 226 apartment home community to be known as Parc Mosaic. De-leasing of Eastpointe is underway and construction of Parc Mosaic is scheduled to commence by year end.

Inclusive of the redevelopment and development projects discussed above, during the nine months ended September 30, 2017 we expanded our redevelopment and development pipeline by $223.1 million. The total estimated net investment for these redevelopment and development communities is $710.4 million, with a projected weighted average net operating income yield on these investments of 6.1% assuming untrended rents. Of this total, $481.4 million has been funded.

~~We expect our total development and redevelopment spending to range from $150 million to $170 million for the year ending December 31, 2017.~~

~~Financing Activities~~

For the nine months ended September 30, 2017, net cash used in financing activities of $16.4 million was primarily attributed to our reacquisition of the limited partner interests in the Palazzo joint venture, dividends paid to common security holders, distributions paid to noncontrolling interests and principal payments on property loans, mostly offset by proceeds from the term loan, net borrowings on our revolving credit facility and proceeds from non-recourse property debt.

Net borrowings on our revolving credit facility primarily relate to the timing of property debt financing activities and apartment community dispositions planned during 2017, as well as the timing of our reacquisition of the limited partner interests in the Palazzo joint venture. Proceeds from non-recourse property debt borrowings during the period consisted of the closing of six fixed-rate, amortizing, non-recourse property loans totaling $162.2 million. On a weighted average basis, these loans have a term of 9.3 years and an interest rate of 3.6%, 129 basis points more than the corresponding Treasury rate at the time of pricing.

We like the discipline of financing our investments in real estate through the use of fixed-rate, amortizing, non-recourse property debt, as the amortization gradually reduces our leverage and reduces our refunding risk, and the fixed-rate provides a hedge against increases in interest ~~rates.~~rates, and the non-recourse feature avoids entity risk.

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For information on additional financing activity subsequent to March 31, 2020, please refer to Liquidity above.

Changes in Cash, Cash Equivalents, and Restricted Cash

The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing and financing activities, which are presented in our condensed consolidated statements of cash flows in Item 1 of this report.

Operating Activities

For the three months ended March 31, 2020, net cash provided by operating activities was $77.4 million. Our operating cash flow is affected primarily by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment communities. Cash provided by operating activities for the three months ended March 31, 2020, decreased by $4.2 million compared to 2019, due to lower net operating income associated with communities sold, offset partially by improved operating results of our Same Store communities and increased contribution from our Acquisition and Other Real Estate communities.

Investing Activities

For the three months ended March 31, 2020, our net cash used in investing activities of $98.0 million was attributed to the items discussed below.

Total capital additions at apartment communities totaled $92.4 million and $75.4 million during the three months ended March 31, 2020 and 2019, respectively. We generally fund capital additions with cash provided by operating activities and cash proceeds from sales of apartment communities.

We categorize capital spending for communities in our portfolio broadly into seven primary categories:

•

capital replacements, which do not increase the useful life of an asset from its original purchase condition. Capital replacements represent capital additions made to replace the portion of our investment in acquired apartment communities consumed during our period of ownership;

•

capital improvements, which represent capital additions made to replace the portion of acquired apartment communities consumed prior to our period of ownership;

•

capital enhancements, which may include kitchen and bath remodeling, energy conservation projects, and investments in more durable, longer-lived materials designed to reduce costs, all of which differ from redevelopment additions in that they are generally lesser in scope and do not significantly disrupt property operations;

•

initial capital expenditures, which represent capital additions contemplated in the underwriting of our recently acquired communities;

•

redevelopment additions, which represent capital additions intended to enhance the value of the apartment community through the ability to generate higher average rental rates, and may include costs related to entitlement, which enhance the value of a community through increased density, and costs related to renovation of exteriors, common areas, or apartment homes;

•

development additions, which represent construction and related capitalized costs associated with the ground-up development of apartment communities; and

•

casualty capital additions, which represent capitalized costs incurred in connection with the restoration of an apartment community after a casualty event.

We exclude the amounts of capital spending related to commercial spaces and to apartment communities sold or classified as held for sale at the end of the period from the foregoing measures. We have also excluded from these measures indirect capitalized costs, which are not yet allocated to communities with capital additions, and their related capital spending categories.

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A summary of the capital spending for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019, are presented below (in thousands):

	Three Months Ended March 31,
	2020		2019
Capital replacements	$	8,347	$	7,695
Capital improvements		1,755		2,286
Capital enhancements		10,363		15,736
Redevelopment		34,458		18,917
Development		32,917		26,211
Initial capital expenditures		2,002		2,705
Casualty		2,524		1,809
Total apartment community capital additions	$	92,366	$	75,359
Plus: additions related to commercial spaces		1,518		31
Plus: additions related to apartment communities sold or held for sale		—		2,263
Consolidated capital additions	$	93,884	$	77,653
Plus: net change in accrued capital spending		958		7,893
Capital expenditures per condensed consolidated statement of cash flows	$	94,842	$	85,546

For the three months ended March 31, 2020 and 2019, we capitalized $3.4 million and $2.1 million of interest costs, respectively, and $10.1 million and $8.9 million of other direct and indirect costs, respectively.

We invested $10.4 million in capital enhancements and $67.4 million in redevelopment and development during the three months ended March 31, 2020. Further details regarding our redevelopment and development activities, including apartment communities constructed and delivered during the three months ended March 31, 2020, is discussed in the Executive Overview section above.

Financing Activities

For the three months ended March 31, 2020, our net cash provided by financing activities of $217.7 million was attributed to the items discussed below:

Net borrowings on our revolving credit facility of $318.8 million were made to provide coverage of financial obligations.

Principal payments on property loans during the period totaled ~~$250.7~~$22.6 million ~~consisting~~ of scheduled principal ~~amortization of $64.3 million and repayments of $186.4~~amortization.

Aimco common share repurchases during the three months ended March 31, 2020 totaled $10.0 million.

Net cash ~~used in~~provided by financing activities also includes ~~$191.3~~$66.6 million of payments to equity holders, as further detailed in the ~~table~~tables below.

Equity and Partners’ Capital Transactions

The following table presents the Aimco Operating Partnership’s distribution activity (including distributions paid to Aimco) during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 (in thousands):

Cash distributions paid by the Aimco Operating Partnership to preferred unitholders	$	1,869
Cash distributions paid by the Aimco Operating Partnership to common unitholders (1)		64,608
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships		81
Total cash distributions paid by the Aimco Operating Partnership	$	66,558

Cash distributions paid by the Aimco Operating Partnership to holders of noncontrolling interests in consolidated real estate partnerships $ 1,977
Cash distributions paid by the Aimco Operating Partnership to preferred unitholders (1) 12,271
Cash distributions paid by the Aimco Operating Partnership to common unitholders (2) 177,013
Total cash distributions paid by the Aimco Operating Partnership $ 191,261

(1)
~~(1)~~	$~~6.4~~61.1 million represented distributions to Aimco, and ~~$5.8~~$3.5 million represented distributions paid to holders of OP Units.


~~(2)~~	~~$169.0 million represented distributions to Aimco, and $8.0 million represented distributions paid to holders of OP Units.~~

The following table presents Aimco’s dividend and distribution activity during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 (in thousands):

Cash distributions paid to holders of OP Units	$	5,361
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships		81
Cash dividends paid by Aimco to common stockholders		61,116
Total cash dividends and distributions paid by Aimco	$	66,558

Cash distributions paid by Aimco to holders of noncontrolling interests in consolidated real estate partnerships $ 1,977
Cash distributions paid by Aimco to holders of OP Units 13,852
Cash dividends paid by Aimco to preferred stockholders 6,445
Cash dividends paid by Aimco to common stockholders 168,987
Total cash dividends and distributions paid by Aimco $ 191,261

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Future Capital Needs

We expect to fund any future acquisitions, redevelopment, development, and other capital spending principally with proceeds from apartment community sales, short-term borrowings, debt and equity financing, and operating cash flows. Our ~~near term~~near-term business plan does not contemplate the issuance of equity.

We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for 2020 and beyond.


~~ITEM 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of ~~September 30, 2017,~~March 31, 2020, on a consolidated basis, we had approximately ~~$83.1~~$170.1 million of variable-rate ~~property~~property-level debt outstanding and ~~$606.2~~$593.8 million of ~~variable-rate~~outstanding borrowings under our ~~Credit Agreement.~~revolving credit facility. We estimate that ~~an increase~~a change in 30-day LIBOR of 100 basis points with constant credit risk spreads would result in our net income, the amount of net income attributable to Aimco common stockholders and the amount of net income attributable to the Aimco Operating Partnership’s common unitholders being reducedreduce or increase interest expense by approximately ~~$6.7~~$7.6 million on an annual basis. ~~We estimate that a decrease in 30-day LIBOR~~

As of ~~100 basis points would increase the amounts of our net income by a similar amount.~~

~~At September 30, 2017,~~March 31, 2020, we had approximately ~~$133.6~~$374.8 million inof cash and cash equivalents and restricted cash, a portion of which ~~bear~~bears interest at variable rates, ~~and~~which may ~~partially mitigate the effect of an increase~~offset somewhat a change in ~~variable~~ rates on our variable-rate debt discussed above.

~~We estimate the fair value for debt instruments as described in~~ ~~Note 6~~ to the condensed consolidated financial statements in Item 1. The estimated fair value of indebtedness associated with the Real Estate portfolio was approximately $4.2 billion at September 30, 2017, inclusive of a $62.3 million mark-to-market liability. The carrying value of non-recourse property debt of the partnerships served by our Asset Management business approximated its estimated fair value at September 30, 2017 and December 31, 2016. The mark-to-market liability increased by $4.7 million as compared to the mark-to-market liability at December 31, 2016.

If market rates for consolidated fixed-rate debt were higher by 100 basis points with constant credit risk spreads, the estimated fair value of consolidated debt discussed above would decrease from $4.4 billion in the aggregate to $4.3 billion. If market rates for consolidated debt discussed above were lower by 100 basis points with constant credit risk spreads, the estimated fair value of consolidated fixed-rate debt would increase from $4.4 billion in the aggregate to $4.6 billion.


~~ITEM 4.~~	~~Controls and Procedures~~

ITEM 4. CONTROLS AND PROCEDURES

Aimco

Disclosure Controls and Procedures

Aimco’s management, with the participation of Aimco’s chief executive officer and chief financial officer, has evaluated the effectiveness of Aimco’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, Aimco’s chief executive officer and chief financial officer have concluded that, as of the end of such period, Aimco’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There has been no change in Aimco’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~third~~first quarter of ~~2017~~2020 that has materially affected, or is reasonably likely to materially affect, Aimco’s internal control over financial reporting.

The Aimco Operating Partnership

Disclosure Controls and Procedures

The Aimco Operating Partnership’s management, with the participation of the chief executive officer and chief financial officer of both Aimco and AIMCO-GP, Inc., the Aimco Operating Partnership’s general partner, has evaluated the effectiveness of the Aimco Operating Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange) as of the end of the period covered by this report. Based on such evaluation, the chief executive officer and chief financial officer of AIMCO-GP, Inc. have concluded that, as of the end of such period, the Aimco Operating Partnership’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There has been no change in the Aimco Operating Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~third~~first quarter of ~~2017~~2020 that has materially affected, or is reasonably likely to materially affect, the Aimco Operating Partnership’s internal control over financial reporting.

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PART II. OTHER INFORMATION


~~ITEM 1A.~~	~~Risk Factors~~

ITEM 1A. RISK FACTORS

As of the date of this report, ~~there have been no material changes from~~we are updating the risk factors in Aimco’s and the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019 to include the following risk factor. The risk factors as-filed remain unchanged.

Pandemics may affect our operating results and financial condition.

A local, regional, national or international outbreak of a contagious disease, such as COVID-19, could negatively impact our tenants and our operations. The World Health Organization declared COVID-19 to be a pandemic on March 11, 2020. The outbreak of the COVID-19 pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting a wide variety of measures including states of emergency, mandatory quarantines, required business and school closures, implementing “shelter in place” orders and restricting travel. In addition, many cities and states have enacted, or are considering enacting, protections for residents and commercial tenants, including government mandated rent delays or other abatement measures or concessions or prohibitions on lease terminations or evictions. Many experts predict that the outbreak will trigger a period of material global economic slowdown or a global recession.

Factors that have negatively impacted, or would negatively impact, our ability to successfully operate during the COVID-19 pandemic or another pandemic include:

•

our ability to collect rents on a timely basis or at all, without reductions or other concessions;

•

our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption;

•

fluctuations in regional and local economies, local real estate conditions and rental rates;

•

our ability to dispose communities at all or on terms favorable to us;

•

our ability to complete redevelopments and developments as planned; and

•

potential litigation relating to the COVID-19 pandemic.

Given the ongoing and dynamic nature of the circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the impact of this outbreak will be on the global economy, our residents and commercial tenants, and our communities or for how long disruptions are likely to continue. The extent of such impact will depend on developments, which are highly uncertain, rapidly evolving and cannot be predicted, including the ability to contain the virus, the duration of measures implemented and the overall impact of these measures. Such developments, depending on their nature, duration, and intensity, could have a material adverse effect on our operating results and financial condition. The COVID-19 pandemic also may have the effect of heightening many of the other risks described in our combined Annual Report on Form 10-K for the year ended December 31, 2019.


~~ITEM 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Aimco

~~(a)~~

Unregistered Sales of Equity ~~Securities.~~ Securities

From time to time, Aimco may issue shares of Common Stock in exchange for OP Units, defined under The Aimco Operating Partnership heading below. Such shares are issued based on an exchange ratio of one share for each common OP Unit. Aimco may also issue shares of Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the three months ended March 31, 2020, Aimco did not issue any ~~unregistered~~ shares of Common Stock ~~during the nine months ended September 30, 2017.~~

~~(c)~~ in exchange for OP Units or limited partnership interests in consolidated real estate partnerships.

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Repurchases of Equity ~~Securities.~~ ~~There were no~~Securities

The following table summarizes Aimco’s share repurchases ~~by Aimco of its common equity securities during~~(in thousands, except for per share data) for the three months ended September 30, 2017. Aimco’s Board of Directors has, from time to time, authorized Aimco to repurchase shares of its outstanding capital stock. As of September 30, 2017, Aimco was authorized to repurchase approximately 19.3 million additional shares. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.March 31, 2020.

Fiscal period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
January 1, 2020 ‒ January 31, 2020		—	$	—		—		10,630
February 1, 2020 ‒ February 29, 2020		—		—		—		10,630
March 1, 2020 ‒ March 31, 2020		234		42.79		234		10,396
Total		234	$	42.79		234

(1)	Aimco’s Board of Directors has, from time to time, authorized Aimco to repurchase shares of its outstanding capital stock. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.

The Aimco Operating Partnership

~~(a)~~

Unregistered Sales of Equity ~~Securities.~~ Securities

The Aimco Operating Partnership did not issue any unregistered OP ~~Units~~units during the ~~nine~~three months ended ~~September 30, 2017.~~

~~(c)~~ March 31, 2020.

Repurchases of Equity ~~Securities.~~ Securities

The Aimco Operating Partnership’s Partnership Agreement generally provides that after holding ~~the~~ common OP Units for one year, limited partners other than Aimco have the right to redeem their common OP Units for cash ~~subject to the Aimco Operating Partnership’s prior right to cause Aimco to acquire some~~ or, ~~all of the common OP Units tendered for redemption in exchange for~~at our election, shares of ~~Common Stock. Common OP Units redeemed for~~Aimco Common Stock ~~are exchanged~~ on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended ~~September 30, 2017,~~March 31, 2020, no common OP Units or preferred OP Units held by Limited Partners were redeemed in exchange for shares of Aimco Common Stock.

The following table summarizes ~~repurchases (redemptions in exchange for cash) of~~ the Aimco Operating Partnership’s ~~equity securities~~repurchases, or redemptions in exchange for cash, of common OP Units (in thousands, except for per share data) for the three months ended ~~September 30, 2017.~~March 31, 2020.

Fiscal period	Total Number of Units Purchased		Average Price Paid per Unit (1)		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs (1)
January 1, 2020 ‒ January 31, 2020		1	$	51.55	N/A	N/A
February 1, 2020 ‒ February 29, 2020		12		53.10	N/A	N/A
March 1, 2020 ‒ March 31, 2020		239		43.05	N/A	N/A
Total		252	$	43.55

Period
Total
Number
of Units
Purchased

Average
Price
Paid
per Unit

Total Number of
Units Purchased
as Part of
Publicly
Announced
Plans or
Programs (1)

Maximum Number
of Units that
May Yet Be
Purchased Under the Plans or Programs (1)
July 1 - July 31, 2017 9,601
$ 44.03
N/A N/A
August 1 - August 31, 2017 684
43.09
N/A N/A
September 1 - September 30, 2017 14,388
45.56
N/A N/A
Total 24,673
$ 44.89

(1)

~~(1)~~

The terms of the Aimco Operating Partnership’s Partnership Agreement do not provide for a maximum number of units that may be repurchased, and other than the express terms of its Partnership Agreement, the Aimco Operating Partnership has no publicly announced plans or programs of repurchase. However, ~~whenever~~for Aimco ~~repurchases~~to repurchase shares of its Common Stock, ~~it is expected that Aimco will fund the repurchase with proceeds from a concurrent repurchase by~~ the Aimco Operating Partnership must make a concurrent repurchase of its common partnership units held by Aimco at a price per unit that is equal to the price per share ~~paid~~Aimco pays for its Common Stock.

~~Aimco and the Aimco Operating Partnership~~

Dividend and Distribution ~~Payments.~~ Payments

As a REIT, Aimco is required to distribute annually to holders of its Common Stock at least 90% of its “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income. Our ~~Credit Agreement~~revolving credit facility includes customary covenants, including a restriction on dividends and distributions and other restricted payments, but permits dividends and distributions during any ~~12-month period~~four consecutive fiscal quarters in an aggregate amount of up to 95% of Aimco’s Funds From Operations for such period, subject to certain non-cash adjustments, ~~for such period~~ or such amount as may be necessary ~~for Aimco~~ to maintain ~~its~~Aimco’s REIT ~~status.~~

status and avoid the payment of federal income or excise tax. Aimco’s Board of Directors targets a dividend payout ratio between 65% and 70% of AFFO.

Table of Contents


~~ITEM 6.~~	~~Exhibits~~

ITEM 6. EXHIBITS

The following exhibits are filed with this report:



EXHIBIT NO. (1)		DESCRIPTION
~~3.1~~
3.1		Charter – Articles of Restatement (Exhibit 3.1 to Aimco’s ~~Quarterly~~Annual Report on Form ~~10-Q for the quarterly period ended June 30, 2015,~~10-K dated February 24, 2020, is incorporated herein by this reference)
~~3.2~~
3.2		Amended and Restated Bylaws (Exhibit 3.1 to Aimco’s Current Report on Form 8-K dated January 26, 2016, is incorporated herein by this reference)
~~10.1~~
4.1	~~Fourth~~	Description of Aimco’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (Exhibit 4.1 to Aimco’s Annual Report on Form 10-K dated February 24, 2020, is incorporated herein by this reference)

10.1		Fifth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of July 29, 1994, as amended and restated as of ~~February 28, 2007 (Exhibit 10.1 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2006, is incorporated herein by this reference)~~
~~10.2~~			~~First Amendment to Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of December 31, 2007~~April 8, 2019 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K dated ~~December 31, 2007,~~April 5, 2019, is incorporated herein by this reference)
~~10.3~~
10.2		Second Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of July 30, 2009 (Exhibit 10.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009, is incorporated herein by this reference)
~~10.4~~			Third Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of September 2, 2010 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated September 1, 2010, is incorporated herein by this reference)
~~10.5~~			Fourth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of July 26, 2011 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated July 26, 2011, is incorporated herein by this reference)
~~10.6~~			Fifth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of August 24, 2011 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated August 24, 2011, is incorporated herein by this reference)
~~10.7~~			Sixth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of December 31, 2011 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated December 31, 2011, is incorporated herein by this reference)
~~10.8~~			Seventh Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of May 13, 2014 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated May 13, 2014, is incorporated herein by this reference)
~~10.9~~			Eighth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of October 31, 2014 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated October 31, 2014, is incorporated herein by this reference)
~~10.10~~			Ninth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of August 16, 2016 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated August 16, 2016, is incorporated herein by this reference)
~~10.11~~			Tenth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of January 31, 2017 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated January 31, 2017, is incorporated herein by this reference)
~~10.12~~			Second Amended and Restated Senior Secured Credit Agreement, dated as of ~~June 30, 2017,~~April 20, 2020, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., certain subsidiary loan parties party thereto, the lenders party thereto and KeyBank ~~N. A.,~~National Association, as administrative agent ~~swing line lender and letter of credit issuer.~~ (Exhibit 10.1 to Aimco’s Current Report on Form 8-K dated ~~June 30, 2017,~~April 20, 2020, is incorporated herein by this reference)
~~31.1~~
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco
~~31.2~~
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco
~~31.3~~
31.3		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – ~~The~~the Aimco Operating Partnership
~~31.4~~
31.4		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – ~~The~~the Aimco Operating Partnership
~~32.1~~
32.1		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Aimco
~~32.2~~
32.2		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – ~~The~~the Aimco Operating Partnership



~~EXHIBIT NO. (1)~~ 101	~~DESCRIPTION~~
~~99.1~~			~~Agreement Regarding Disclosure of Long-Term Debt Instruments – Aimco~~
~~99.2~~			~~Agreement Regarding Disclosure of Long-Term Debt Instruments – The Aimco Operating Partnership~~
~~101~~			~~XBRL (Extensible Business Reporting Language).~~ The following materials from Aimco’s and the Aimco Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2017, tagged~~March 31, 2020, formatted in ~~XBRL:~~iXBRL (Inline Extensible Business Reporting Language): (i) condensed consolidated balance sheets; (ii) condensed consolidated statements of operations; (iii) condensed consolidated statements of comprehensive income; (iv) condensed consolidated statements of cash flows; and (v) notes to condensed consolidated financial statements.

~~(1)~~ 104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

(1)	Schedules and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



APARTMENT INVESTMENT AND MANAGEMENT COMPANY

~~By:~~	By:	/s/ ~~PAUL BELDIN~~Paul Beldin
		Paul Beldin
		Executive Vice President and Chief Financial Officer
		(duly authorized officer and
	principal financial officer)

~~By:~~	~~/s/ ANDREW HIGDON~~
	~~Andrew Higdon~~
	~~Senior Vice President and~~
	~~Chief Accounting Officer~~



AIMCO PROPERTIES, L.P.

~~By:~~	By:	AIMCO-GP, Inc., its general partner

~~By:~~	By:	/s/ ~~PAUL BELDIN~~Paul Beldin
		Paul Beldin
		Executive Vice President and Chief Financial Officer
		(duly authorized officer and
	principal financial officer)

~~By:~~	~~/s/ ANDREW HIGDON~~
	~~Andrew Higdon~~
	~~Senior Vice President and~~
	~~Chief Accounting Officer~~

Date: ~~November 1, 2017~~

May 8, 2020


☒


~~UNITED STATES~~
~~SECURITIES AND EXCHANGE COMMISSION~~
~~Washington, D.C. 20549~~
~~_______________________________________~~
~~Form 10-Q~~
~~(Mark One)~~
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the quarterly period ended September 30, 2017~~
OR
o ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the transition period from~~to
~~Commission File Number 1-13232 (Apartment Investment and Management Company)~~
~~Commission File Number 0-24497 (AIMCO Properties, L.P.)~~

~~Apartment Investment and Management Company~~
~~AIMCO Properties, L.P.~~
~~(Exact name of registrant as specified in its charter)~~



Maryland (Apartment Investment and Management Company)		84-1259577
Delaware (AIMCO Properties, L.P.)		84-1275621
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ Identification No.)

4582 South Ulster Street, Suite ~~1100~~1700
Denver, Colorado		80237
(Address of principal executive offices)		(Zip Code)

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
~~(303) 757-8101~~
~~(Registrant’s telephone number, including area code)~~

~~Not Applicable~~
~~(Former name, former address,~~ Class A Common Stock (Aimco Investment and ~~former fiscal year, if changed since last report)~~Management Company)			AIV	New York Stock Exchange

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
~~Indicate by check mark whether the registrant is a large~~		Emerging growth company	☐



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Apartment Investment and Management Company: Yes x☒ No o ☐		AIMCO Properties, L.P.: Yes x☒ No o☐

Large accelerated filer ~~an accelerated~~	☐	Accelerated filer ~~a non-accelerated~~	☒
Non-accelerated filer ~~a smaller~~	☐	Smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):	☐
		Emerging growth company	☐

Apartment Investment and Management Company:
~~Large accelerated filer~~	x ☐		~~Accelerated filer~~	o
~~Non-accelerated filer~~	o	~~(Do not check if a smaller reporting company)~~	~~Smaller reporting company~~	o
			~~Emerging growth company~~	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange act. o
AIMCO Properties, L.P.:
~~Large accelerated filer~~	o		~~Accelerated filer~~	x
~~Non-accelerated filer~~	o	~~(Do not check if a smaller reporting company)~~	~~Smaller reporting company~~	o
			~~Emerging growth company~~	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange act. o ☐



~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).~~
Apartment Investment and Management Company: Yes ☐ No ☒	o	No	x	AIMCO Properties, L.P.: Yes	o	☐No	x	☒



	September 30, 2017			December 31, 2016
ASSETS
Buildings and improvements	$	6,264,146		$	6,106,298
Land	1,827,748			1,824,819
Total real estate	8,091,894			7,931,117
Accumulated depreciation	(2,549,197		)	(2,421,357		)
Net real estate	5,542,697			5,509,760
Cash and cash equivalents	38,780			45,821
Restricted cash	47,565			36,405
Other assets	247,722			293,768
Assets of partnerships served by Asset Management business:
Real estate, net	228,830			245,648
Cash and cash equivalents	16,901			15,423
Restricted cash	30,350			33,501
Other assets	16,493			52,492
Total assets	$	6,169,338		$	6,232,818

LIABILITIES AND EQUITY
Non-recourse property debt secured by Real Estate communities, net	$	3,556,668		$	3,630,276
Term loan, net	249,252			—
Revolving credit facility borrowings	356,220			17,930
Total indebtedness associated with Real Estate portfolio	4,162,140			3,648,206
Accrued liabilities and other	207,533			218,937
Liabilities of partnerships served by Asset Management business:
Non-recourse property debt, net	228,382			236,426
Accrued liabilities and other	20,135			62,630
Deferred income	13,922			18,452
Total liabilities	4,632,112			4,184,651
Preferred noncontrolling interests in Aimco Operating Partnership	101,537			103,201
Commitments and contingencies (Note 4)
Equity:
Perpetual Preferred Stock	125,000			125,000
Common Stock, $0.01 par value, 500,787,260 shares authorized, 157,023,314 and 156,888,381 shares issued/outstanding at September 30, 2017 and December 31, 2016, respectively	1,570			1,569
Additional paid-in capital	3,898,441			4,051,722
Accumulated other comprehensive income	1,898			1,011
Distributions in excess of earnings	(2,572,723		)	(2,385,399		)
Total Aimco equity	1,454,186			1,793,903
Noncontrolling interests in consolidated real estate partnerships	(2,955		)	151,121
Common noncontrolling interests in Aimco Operating Partnership	(15,542		)	(58		)
Total equity	1,435,689			1,944,966
Total liabilities and equity	$	6,169,338		$	6,232,818



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
REVENUES
Rental and other property revenues attributable to Real Estate	$	233,708		$	225,902		$	686,639		$	672,234
Rental and other property revenues of partnerships served by Asset Management business	18,232			18,213			55,327			56,233
Tax credit and transaction revenues	2,695			4,789			8,242			17,894
Total revenues	254,635			248,904			750,208			746,361

OPERATING EXPENSES
Property operating expenses attributable to Real Estate	81,179			82,756			239,819			241,936
Property operating expenses of partnerships served by Asset Management business	8,865			9,410			26,445			28,199
Depreciation and amortization	92,513			84,848			268,836			245,356
General and administrative expenses	10,529			11,615			31,599			35,529
Other expenses, net	2,344			1,543			6,809			8,639
Total operating expenses	195,430			190,172			573,508			559,659
Operating income	59,205			58,732			176,700			186,702
Interest income	2,047			2,163			6,251			5,841
Interest expense	(50,682		)	(49,377		)	(145,422		)	(145,905		)
Other, net	6,937			558			7,602			5,541
Income before income taxes and gain on dispositions	17,507			12,076			45,131			52,179
Income tax benefit	4,870			3,462			14,878			16,469
Income before gain on dispositions	22,377			15,538			60,009			68,648
Gain (loss) on dispositions of real estate, inclusive of tax	(233		)	14,498			881			237,226
Net income	22,144			30,036			60,890			305,874
Noncontrolling interests:
Net loss (income) attributable to noncontrolling interests in consolidated real estate partnerships	249			(12,489		)	(1,515		)	(22,096		)
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership	(1,938		)	(1,842		)	(5,826		)	(5,276		)
Net income attributable to common noncontrolling interests in Aimco Operating Partnership	(820		)	(192		)	(2,164		)	(12,499		)
Net income attributable to noncontrolling interests	(2,509		)	(14,523		)	(9,505		)	(39,871		)
Net income attributable to Aimco	19,635			15,513			51,385			266,003
Net income attributable to Aimco preferred stockholders	(2,148		)	(4,323		)	(6,445		)	(9,838		)
Net income attributable to participating securities	(57		)	(14		)	(176		)	(384		)
Net income attributable to Aimco common stockholders	$	17,430		$	11,176		$	44,764		$	255,781

Net income attributable to Aimco per common share – basic and diluted	$	0.11		$	0.07		$	0.29		$	1.64
Dividends declared per common share	$	0.36		$	0.33		$	1.08		$	0.99

Weighted average common shares outstanding – basic	156,306			156,079			156,290			155,944
Weighted average common shares outstanding – diluted	156,835			156,527			156,768			156,341



Balance, December 31, 2016	$	103,201
Distributions to preferred unitholders	(5,826		)
Redemption of preferred units and other	(1,664		)
Net income	5,826
Balance, September 30, 2017	$	101,537



	Aimco Equity			Noncontrolling interests in consolidated real estate partnerships			Common noncontrolling interests in Aimco Operating Partnership			Total Equity
Balance, December 31, 2016	$	1,793,903		$	151,121		$	(58	)	$	1,944,966
Contributions	—			3,341			—			3,341
Dividends on Preferred Stock	(6,445		)	—			—			(6,445		)
Dividends and distributions on Common Stock and common OP Units	(169,582		)	(1,977		)	(8,094		)	(179,653		)
Redemptions of common OP Units	—			—			(11,524		)	(11,524		)
Amortization of stock-based compensation cost	6,780			—			460			7,240
Effect of changes in ownership for consolidated entities	(160,187		)	(157,056		)	4,497			(312,746		)
Cumulative effect of a change in accounting principle	(62,682		)	—			(3,028		)	(65,710		)
Change in accumulated other comprehensive loss	887			101			41			1,029
Other	127			—			—			127
Net income	51,385			1,515			2,164			55,064
Balance, September 30, 2017	$	1,454,186		$	(2,955	)	$	(15,542	)	$	1,435,689



	Partners’ capital attributable to the Aimco Operating Partnership
Balance, December 31, 2016	$	1,793,845
Distributions to preferred units held by Aimco	(6,445		)
Distributions to common units held by Aimco	(169,582		)
Distributions to common units held by Limited Partners	(8,094		)
Redemption of common OP Units	(11,524		)
Amortization of Aimco stock-based compensation cost	7,240
Effect of changes in ownership for consolidated entities	(155,690		)
Cumulative effect of a change in accounting principle	(65,710		)
Change in accumulated other comprehensive loss	928
Other	127
Net income	53,549
Balance, September 30, 2017	$	1,438,644



	Nine Months Ended September 30,
	2017			2016
Beginning balance	$	(3,175	)	$	(4,938	)
Realized (unrealized) losses included in interest expense	73			(33		)
Realized losses on derecognition of interest rate swaps included in earnings	273			—
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss	1,076			1,208
Unrealized losses included in equity and partners’ capital	(280		)	(748		)
Ending balance	$	(2,033	)	$	(4,511	)



	Real Estate		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Reportable Segment (2)			Consolidated
Three Months Ended September 30, 2017
Rental and other property revenues attributable to Real Estate	$	230,008	$	1,170	$	2,530		$	233,708
Rental and other property revenues of partnerships served by Asset Management business	—		—		18,232			18,232
Tax credit and transaction revenues	—		—		2,695			2,695
Total revenues	230,008		1,170		23,457			254,635
Property operating expenses attributable to Real Estate	71,346		410		9,423			81,179
Property operating expenses of partnerships served by Asset Management business	—		—		8,865			8,865
Other operating expenses not allocated to reportable segment (3)	—		—		105,386			105,386
Total operating expenses	71,346		410		123,674			195,430
Net operating income	158,662		760		(100,217		)	59,205
Other items included in income before gain on dispositions (4)	—		—		(36,828		)	(36,828		)
Income before gain on dispositions	$	158,662	$	760	$	(137,045	)	$	22,377



	September 30, 2017		December 31, 2016
Real Estate	$	5,593,795	$	5,545,693
Corporate and other assets (1)	575,543		687,125
Total consolidated assets	$	6,169,338	$	6,232,818



	September 30, 2017	December 31, 2016
Real Estate portfolio:
VIEs with interests in apartment communities	12	13
Apartment communities held by VIEs	16	19
Apartment homes in communities held by VIEs	4,728	6,110
Consolidated partnerships served by the Asset Management business:
VIEs with interests in apartment communities	53	54
Apartment communities held by VIEs	37	38
Apartment homes in communities held by VIEs	5,893	6,093



	Three Months Ended September 30,
(in thousands)	2017		2016		$ Change			% Change
Rental and other property revenues:
Same Store communities	$	148,207	$	144,127	$	4,080		2.8	%
Communities Outside of Same Store	81,801		66,648		15,153			22.7	%
Total	230,008		210,775		19,233			9.1	%
Property operating expenses:
Same Store communities	42,289		42,776		(487		)	(1.1	)%
Communities Outside of Same Store	29,057		26,157		2,900			11.1	%
Total	71,346		68,933		2,413			3.5	%
Proportionate property net operating income:
Same Store communities	105,918		101,351		4,567			4.5	%
Communities Outside of Same Store	52,744		40,491		12,253			30.3	%
Total	$	158,662	$	141,842	$	16,820		11.9	%



	Three Months Ended September 30, 2017
Interest expense	$	50,682
Interest expense related to non-recourse property debt obligations of consolidated partnerships served by our Asset Management business	(3,382		)
Interest expense attributable to Real Estate portfolio	47,300
Adjustments:
Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships	96
Debt prepayment penalties and other non-interest items	(869		)
Amortization of debt issue costs	(1,395		)
Interest income earned on securitization trust investment	(1,778		)
Adjusted Interest Expense	$	43,354

Preferred stock dividends	2,148
Preferred OP Unit distributions	1,938
Preferred Dividends	4,086
Adjusted Interest Expense and Preferred Dividends	$	47,440

Annualized Adjusted Interest Expense	$	173,416
Annualized Adjusted Interest Expense and Preferred Dividends	$	189,760



	Location	Apartment Homes Approved for Redevelopment or Development	Estimated Net Investment		Inception-to-Date Net Investment		Expected Stabilized Occupancy (1)	Expected Net Operating Income Stabilization (1)
Under Redevelopment
Bay Parc Plaza	Miami, FL	(2)	$	16.0	$	9.1	(2)	(2)
Calhoun Beach Club	Minneapolis, MN	275	28.7		5.1		(3)	(3)
Flamingo South Beach	Miami, FL	(4)	9.7		1.2		(4)	(4)
Palazzo at Park La Brea	Los Angeles, CA	389	24.5		15.3		2Q 2020	3Q 2021
Palazzo East at Park La Brea	Los Angeles, CA	611	28.0		0.6		4Q 2020	1Q 2022
Parc Mosaic	Boulder, CO	226	117.0		19.2		4Q 2020	1Q 2022
Park Towne Place	Philadelphia, PA	943	176.0		135.0		1Q 2019	2Q 2020
Saybrook Pointe	San Jose, CA	324	18.3		13.7		1Q 2019	2Q 2020
Yorktown	Lombard, IL	292	25.7		16.8		(3)	(3)

Lease-up complete, NOI stabilization period
One Canal	Boston, MA	310	195.0		194.8		1Q 2017	2Q 2018
The Sterling	Philadelphia, PA	534	71.5		70.6		3Q 2017	4Q 2018
Total		3,904	$	710.4	$	481.4



Cash distributions paid by the Aimco Operating Partnership to holders of noncontrolling interests in consolidated real estate partnerships	$	1,977
Cash distributions paid by the Aimco Operating Partnership to preferred unitholders (1)	12,271
Cash distributions paid by the Aimco Operating Partnership to common unitholders (2)	177,013
Total cash distributions paid by the Aimco Operating Partnership	$	191,261



Period	Total Number of Units Purchased	Average Price Paid per Unit		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs (1)
July 1 - July 31, 2017	9,601	$	44.03	N/A	N/A
August 1 - August 31, 2017	684	43.09		N/A	N/A
September 1 - September 30, 2017	14,388	45.56		N/A	N/A
Total	24,673	$	44.89