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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Maryland (Apartment Income REIT Corp.) 84-1299717 Delaware (Apartment Income REIT, L.P.) 84-1275621 (State or other jurisdiction of (I.R.S. Employer 4582 South Ulster Street, Denver, 80237 (Address of principal executive offices) (Zip Code) Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Class A Common Stock (Apartment Income REIT Corp.) AIRC New York Stock Exchange Large accelerated filer Accelerated filer Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Non-accelerated filer Smaller reporting company Emerging growth company Emerging growth company Page September 30, December 31, 2022 2021 ASSETS Buildings and improvements $ 6,742,347 $ 5,720,267 Land 1,296,223 1,164,814 Total real estate 8,038,570 6,885,081 Accumulated depreciation (2,370,792 ) (2,284,793 ) Net real estate 5,667,778 4,600,288 Cash and cash equivalents 87,732 67,320 Restricted cash 26,914 25,441 Note receivable from Aimco — 534,127 Leased real estate assets — 466,355 Goodwill 32,286 32,286 Other assets, net 779,205 568,051 Assets held for sale 128,538 146,492 Total assets $ 6,722,453 $ 6,440,360 LIABILITIES AND EQUITY Non-recourse property debt, net $ 2,019,417 $ 2,294,739 Term loans, net 796,334 1,144,547 Revolving credit facility borrowings 479,000 304,000 Unsecured notes payable, net 397,417 — Total indebtedness 3,692,168 3,743,286 Accrued liabilities and other 758,441 592,774 Liabilities related to assets held for sale 472 85,775 Total liabilities 4,451,081 4,421,835 Commitments and contingencies (Note 6) Preferred noncontrolling interests in AIR Operating Partnership 79,330 79,370 Equity: Perpetual preferred stock 2,000 2,129 Common Stock, $0.01 par value, 1,021,175,000 shares authorized at September 30, 2022 and December 31, 2021, and 152,993,448 and 156,998,367 shares issued/outstanding at September 30, 2022 and December 31, 2021, respectively 1,530 1,570 Additional paid-in capital 3,583,111 3,763,105 Accumulated other comprehensive income 45,948 — Distributions in excess of earnings (1,589,409 ) (1,953,779 ) Total AIR equity 2,043,180 1,813,025 Noncontrolling interests in consolidated real estate partnerships (76,200 ) (70,883 ) Common noncontrolling interests in AIR Operating Partnership 225,062 197,013 Total equity 2,192,042 1,939,155 Total liabilities, preferred noncontrolling interests in AIR Operating Partnership, and equity $ 6,722,453 $ 6,440,360 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 REVENUES Rental and other property revenues $ 198,413 $ 190,082 $ 558,686 $ 541,533 Other revenues 2,458 1,695 7,163 4,990 Total revenues 200,871 191,777 565,849 546,523 EXPENSES Property operating expenses 71,250 73,925 198,273 203,300 Depreciation and amortization 90,445 81,121 253,650 232,192 General and administrative expenses 7,663 5,875 19,593 15,510 Other expenses, net 4,941 3,816 5,883 9,207 174,299 164,737 477,399 460,209 Interest income 9,613 13,432 48,746 45,088 Interest expense (32,656 ) (30,530 ) (80,790 ) (100,212 ) Loss on extinguishment of debt — (6,673 ) (23,636 ) (44,833 ) Gain on dispositions of real estate and derecognition of leased properties — 7,127 587,609 94,512 Loss from unconsolidated real estate partnerships (87 ) — (2,974 ) — Income before income tax (expense) benefit 3,442 10,396 617,405 80,869 Income tax (expense) benefit (46 ) 275 (966 ) (770 ) Net income 3,396 10,671 616,439 80,099 Noncontrolling interests: Net loss attributable to noncontrolling interests in consolidated real estate partnerships 102 785 285 3,417 Net income attributable to preferred noncontrolling interests in AIR Operating Partnership (1,602 ) (1,603 ) (4,807 ) (4,810 ) Net income attributable to common noncontrolling interests in AIR Operating Partnership (137 ) (475 ) (37,053 ) (3,966 ) Net income attributable to noncontrolling interests (1,637 ) (1,293 ) (41,575 ) (5,359 ) Net income attributable to AIR 1,759 9,378 574,864 74,740 Net income attributable to AIR preferred stockholders (43 ) (43 ) (128 ) (136 ) Net (income) loss attributable to participating securities 44 (46 ) (373 ) (149 ) Net income attributable to AIR common stockholders $ 1,760 $ 9,289 $ 574,363 $ 74,455 Net income attributable to AIR common stockholders per share – basic $ 0.01 $ 0.06 $ 3.69 $ 0.49 Net income attributable to AIR common stockholders per share – diluted $ 0.01 $ 0.06 $ 3.68 $ 0.48 Weighted-average common shares outstanding – basic 153,811 156,646 155,488 153,289 Weighted-average common shares outstanding – diluted 154,057 157,042 157,440 153,650 (LOSS) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income $ 3,396 $ 10,671 $ 616,439 $ 80,099 Unrealized gains on derivative instruments 34,209 — 47,141 — Losses on derivative instruments reclassified into interest expense from accumulated other comprehensive income 731 — 2,720 — Unrealized losses on available for sale debt securities — — — (3,251 ) Other comprehensive income 38,336 10,671 666,300 76,848 Comprehensive income attributable to noncontrolling interests (4,379 ) (1,293 ) (45,488 ) (5,147 ) Comprehensive income attributable to AIR $ 33,957 $ 9,378 $ 620,812 $ 71,701 2022 Perpetual Preferred Stock Common Stock Accumulated Noncontrolling Common Shares Amount Shares Amount Additional Other Distributions Total AIR Consolidated AIR Total Balances at June 30, 2021 20 $ 2,000 156,856,952 $ 1,569 $ 3,773,173 $ — $ (2,197,843 ) $ 1,578,899 $ (67,531 ) $ 60,388 $ 1,571,756 Issuance costs — — — — (31 ) — — (31 ) — — (31 ) Redemption of AIR Operating Partnership units — — — — — — — — — (425 ) (425 ) Conversion of AIR Operating Partnership units — — 125,621 1 6,282 — — 6,283 — (6,283 ) — Amortization of share-based compensation cost — — — — 409 — — 409 — 992 1,401 Effect of changes in ownership of consolidated entities — — — — (5,423 ) — — (5,423 ) — 5,653 230 Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 4,128 — 4,128 Net income (loss) — — — — — — 9,378 9,378 (785 ) 475 9,068 Common Stock dividends — — — — — — (69,051 ) (69,051 ) — — (69,051 ) Preferred Stock dividends — — — — — — (43 ) (43 ) — — (43 ) Distributions to noncontrolling interests — — — — — — — — (3,910 ) (3,481 ) (7,391 ) Other, net — — 969 — (474 ) — (3 ) (477 ) — (230 ) (707 ) Balances at September 30, 2021 20 $ 2,000 156,983,542 $ 1,570 $ 3,773,936 $ — $ (2,257,562 ) $ 1,519,944 $ (68,098 ) $ 57,089 $ 1,508,935 Balances at June 30, 2022 20 $ 2,000 154,187,241 $ 1,542 $ 3,636,906 $ 13,750 $ (1,521,749 ) $ 2,132,449 $ (70,609 ) $ 226,985 $ 2,288,825 Redemption of AIR Operating Partnership units — — — — — — — — — (3,178 ) (3,178 ) Repurchase of Common Stock, net — — (1,195,690 ) (12 ) (46,699 ) — — (46,711 ) — — (46,711 ) Amortization of share-based compensation cost — — — — 878 — — 878 — 943 1,821 Effect of changes in ownership of consolidated entities — — — — (2,140 ) — — (2,140 ) — 2,140 — Purchase of noncontrolling interests in consolidated real estate partnerships — — — — (5,529 ) — — (5,529 ) 120 — (5,409 ) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 529 — 529 Change in accumulated other comprehensive income — — — — — 32,198 — 32,198 — 2,742 34,940 Net income (loss) — — — — — — 1,759 1,759 (102 ) 137 1,794 Common Stock dividends — — — — — — (69,377 ) (69,377 ) — — (69,377 ) Distributions to noncontrolling interests — — — — — — — — (6,226 ) (4,472 ) (10,698 ) Other, net — — 1,897 (305 ) — (42 ) (347 ) 88 (235 ) (494 ) Balances at September 30, 2022 20 $ 2,000 152,993,448 $ 1,530 $ 3,583,111 $ 45,948 $ (1,589,409 ) $ 2,043,180 $ (76,200 ) $ 225,062 $ 2,192,042 2022 Perpetual Preferred Stock Common Stock Accumulated Noncontrolling Common Shares Amount Shares Amount Additional Other Distributions Total AIR Consolidated AIR Total Balances at December 31, 2020 20 $ 2,000 148,861,036 $ 1,489 $ 3,432,121 $ 3,039 $ (2,131,798 ) $ 1,306,851 $ (61,943 ) $ 63,185 $ 1,308,093 Issuance of Common Stock — — 7,825,000 79 342,390 — — 342,469 — — 342,469 Issuance costs — — — — (337 ) — — (337 ) — — (337 ) Redemption of AIR Operating Partnership units — — — — — — — — — (3,975 ) (3,975 ) Conversion of AIR Operating Partnership units — — 168,940 1 8,239 — — 8,240 — (8,242 ) (2 ) Amortization of share-based compensation cost — — 33,000 — 2,953 — — 2,953 — 2,975 5,928 Effect of changes in ownership of consolidated entities — — — — (9,846 ) — — (9,846 ) — 10,076 230 Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 6,126 — 6,126 Change in accumulated other comprehensive income (loss) — — — — — (3,039 ) — (3,039 ) — (212 ) (3,251 ) Net income (loss) — — — — — — 74,740 74,740 (3,417 ) 3,966 75,289 Common Stock dividends — — — — — — (200,327 ) (200,327 ) — — (200,327 ) Preferred Stock dividends — — — — — — (136 ) (136 ) — — (136 ) Distributions to noncontrolling interests — — — — — — — — (8,744 ) (10,684 ) (19,428 ) Other, net — — 95,566 1 (1,584 ) — (41 ) (1,624 ) (120 ) — (1,744 ) Balances at September 30, 2021 20 $ 2,000 156,983,542 $ 1,570 $ 3,773,936 $ — $ (2,257,562 ) $ 1,519,944 $ (68,098 ) $ 57,089 $ 1,508,935 Balances at December 31, 2021 145 $ 2,129 156,998,367 $ 1,570 $ 3,763,105 $ — $ (1,953,779 ) $ 1,813,025 $ (70,883 ) $ 197,013 $ 1,939,155 Redemption of AIR Operating Partnership units — — — — — — — — — (7,423 ) (7,423 ) Repurchase of Common Stock, net — — (4,107,451 ) (41 ) (171,670 ) — — (171,711 ) — — (171,711 ) Amortization of share-based compensation cost — — — — 3,519 — — 3,519 — 2,753 6,272 Effect of changes in ownership of consolidated entities — — — — (5,404 ) — — (5,404 ) — 5,404 — Purchase of noncontrolling interests in consolidated real estate partnerships — — — — (5,529 ) — — (5,529 ) 120 — (5,409 ) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 8,337 — 8,337 Change in accumulated other comprehensive income — — — — — 45,948 — 45,948 — 3,913 49,861 Net income (loss) — — — — — — 574,864 574,864 (285 ) 37,053 611,632 Common Stock dividends — — — — — — (210,361 ) (210,361 ) — — (210,361 ) Distributions to noncontrolling interests — — — — — — — — (13,561 ) (13,408 ) (26,969 ) Other, net (125 ) (129 ) 102,532 1 (910 ) — (133 ) (1,171 ) 72 (243 ) (1,342 ) Balances at September 30, 2022 20 $ 2,000 152,993,448 $ 1,530 $ 3,583,111 $ 45,948 $ (1,589,409 ) $ 2,043,180 $ (76,200 ) $ 225,062 $ 2,192,042 Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 616,439 $ 80,099 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 253,650 232,192 Loss on extinguishment of debt 23,636 44,833 Gain on dispositions of real estate and derecognition of leased properties (587,609 ) (94,512 ) Income tax expense 966 770 Other, net 6,890 10,645 Net changes in operating assets and operating liabilities 37,484 (41,286 ) Net cash provided by operating activities 351,456 232,741 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of real estate and deposits related to purchases of real estate (858,815 ) (225,526 ) Capital expenditures (151,115 ) (130,877 ) Proceeds from dispositions of real estate 759,227 45,752 Proceeds from dispositions of unconsolidated real estate partnerships 7,244 — Proceeds from repayment of note receivable 534,127 — Proceeds from investments in debt securities — 100,852 Other investing activities (37,744 ) (40,792 ) Net cash provided by (used in) investing activities 252,924 (250,591 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal repayments on non-recourse property debt (361,056 ) (618,111 ) Proceeds from term loans — 1,150,000 Repayment of term loan (350,000 ) (350,000 ) Net borrowings on (repayments of) revolving credit facility 176,205 (206,144 ) Payment of debt issuance costs (4,793 ) (11,124 ) Payment of debt extinguishment costs (22,723 ) (42,760 ) Proceeds from the issuance of unsecured notes payable 400,000 — Proceeds from the issuance of Common Stock — 342,132 Repurchases of Common Stock (171,711 ) — Payment of dividends to holders of Common Stock (210,377 ) (200,624 ) Other financing activities (38,040 ) (21,872 ) Net cash (used in) provided by financing activities (582,495 ) 41,497 NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 21,885 23,647 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 92,761 73,480 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 114,646 $ 97,127 September 30, December 31, 2022 2021 ASSETS Buildings and improvements $ 6,742,347 $ 5,720,267 Land 1,296,223 1,164,814 Total real estate 8,038,570 6,885,081 Accumulated depreciation (2,370,792 ) (2,284,793 ) Net real estate 5,667,778 4,600,288 Cash and cash equivalents 87,732 67,320 Restricted cash 26,914 25,441 Note receivable from Aimco — 534,127 Leased real estate assets — 466,355 Goodwill 32,286 32,286 Other assets, net 779,205 568,051 Assets held for sale 128,538 146,492 Total assets $ 6,722,453 $ 6,440,360 LIABILITIES AND PARTNERS’ CAPITAL Non-recourse property debt, net $ 2,019,417 $ 2,294,739 Term loans, net 796,334 1,144,547 Revolving credit facility borrowings 479,000 304,000 Unsecured notes payable, net 397,417 — Total indebtedness 3,692,168 3,743,286 Accrued liabilities and other 758,441 592,774 Liabilities related to assets held for sale 472 85,775 Total liabilities 4,451,081 4,421,835 Commitments and contingencies (Note 6) Redeemable preferred units 79,330 79,370 Partners’ capital: Preferred units 2,000 2,129 General Partner and Special Limited Partner 2,041,180 1,810,896 Limited Partners 225,062 197,013 Partners’ capital attributable to the AIR Operating Partnership 2,268,242 2,010,038 Noncontrolling interests in consolidated real estate partnerships (76,200 ) (70,883 ) Total partners’ capital 2,192,042 1,939,155 Total liabilities, redeemable preferred units, and partners’ capital $ 6,722,453 $ 6,440,360 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 REVENUES Rental and other property revenues $ 198,413 $ 190,082 $ 558,686 $ 541,533 Other revenues 2,458 1,695 7,163 4,990 Total revenues 200,871 191,777 565,849 546,523 EXPENSES Property operating expenses 71,250 73,925 198,273 203,300 Depreciation and amortization 90,445 81,121 253,650 232,192 General and administrative expenses 7,663 5,875 19,593 15,510 Other expenses, net 4,941 3,816 5,883 9,207 174,299 164,737 477,399 460,209 Interest income 9,613 13,432 48,746 45,088 Interest expense (32,656 ) (30,530 ) (80,790 ) (100,212 ) Loss on extinguishment of debt — (6,673 ) (23,636 ) (44,833 ) Gain on dispositions of real estate and derecognition of leased properties — 7,127 587,609 94,512 Loss from unconsolidated real estate partnerships (87 ) — (2,974 ) — Income before income tax (expense) benefit 3,442 10,396 617,405 80,869 Income tax (expense) benefit (46 ) 275 (966 ) (770 ) Net income 3,396 10,671 616,439 80,099 Net loss attributable to noncontrolling interests in consolidated real estate partnerships 102 785 285 3,417 Net income attributable to the AIR Operating Partnership 3,498 11,456 616,724 83,516 Net income attributable to the AIR Operating Partnership’s preferred unitholders (1,645 ) (1,646 ) (4,935 ) (4,946 ) Net (income) loss attributable to participating securities 44 (46 ) (373 ) (149 ) Net income attributable to the AIR Operating Partnership’s common unitholders $ 1,897 $ 9,764 $ 611,416 $ 78,421 Net income attributable to the AIR Operating Partnership common unitholders per unit – basic $ 0.01 $ 0.06 $ 3.69 $ 0.49 Net income attributable to the AIR Operating Partnership common unitholders per unit – diluted $ 0.01 $ 0.06 $ 3.68 $ 0.48 Weighted-average common units outstanding – basic 163,866 164,603 165,578 161,336 Weighted-average common units outstanding – diluted 164,112 164,999 167,529 161,697 (LOSS) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income $ 3,396 $ 10,671 $ 616,439 $ 80,099 Unrealized gains on derivative instruments 34,209 — 47,141 — Losses on derivative instruments reclassified into interest expense from accumulated other comprehensive income 731 — 2,720 — Unrealized losses on available for sale debt securities — — — (3,251 ) Other comprehensive income 38,336 10,671 666,300 76,848 Comprehensive loss attributable to noncontrolling interests 102 785 285 3,417 Comprehensive income attributable to the AIR Operating Partnership $ 38,438 $ 11,456 $ 666,585 $ 80,265 2022 Preferred General Partner Limited Partners’ Capital Noncontrolling Total Balances at June 30, 2021 $ 2,000 $ 1,576,899 $ 60,388 $ 1,639,287 $ (67,531 ) $ 1,571,756 Issuance costs — (31 ) — (31 ) — (31 ) Redemption of common partnership units — — (425 ) (425 ) — (425 ) Conversion of common partnership units — 6,283 (6,283 ) — — — Amortization of share-based compensation cost — 409 992 1,401 — 1,401 Effect of changes in ownership of consolidated entities — (5,423 ) 5,653 230 — 230 Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 4,128 4,128 Net income (loss) — 9,378 475 9,853 (785 ) 9,068 Distributions to common unitholders — (69,051 ) (3,481 ) (72,532 ) — (72,532 ) Distributions to preferred unitholders — (43 ) — (43 ) — (43 ) Distributions to noncontrolling interests — — — — (3,910 ) (3,910 ) Other, net — (477 ) (230 ) (707 ) — (707 ) Balances at September 30, 2021 $ 2,000 $ 1,517,944 $ 57,089 $ 1,577,033 $ (68,098 ) $ 1,508,935 Balances at June 30, 2022 $ 2,000 $ 2,130,449 $ 226,985 $ 2,359,434 $ (70,609 ) $ 2,288,825 Redemption of common partnership units — — (3,178 ) (3,178 ) — (3,178 ) Repurchase of common partnership units — (46,711 ) — (46,711 ) — (46,711 ) Amortization of share-based compensation cost — 878 943 1,821 — 1,821 Effect of changes in ownership of consolidated entities — (2,140 ) 2,140 — — — Purchase of noncontrolling interests in consolidated real estate partnerships — (5,529 ) — (5,529 ) 120 (5,409 ) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 529 529 Change in accumulated other comprehensive income (loss) — 32,198 2,742 34,940 — 34,940 Net income (loss) — 1,759 137 1,896 (102 ) 1,794 Distributions to common unitholders — (69,377 ) (4,472 ) (73,849 ) — (73,849 ) Distributions to noncontrolling interests — — — — (6,226 ) (6,226 ) Other, net — (347 ) (235 ) (582 ) 88 (494 ) Balances at September 30, 2022 $ 2,000 $ 2,041,180 $ 225,062 $ 2,268,242 $ (76,200 ) $ 2,192,042 2022 Preferred General Partner Limited Partners’ Capital Noncontrolling Total Balances at December 31, 2020 $ 2,000 $ 1,304,851 $ 63,185 $ 1,370,036 $ (61,943 ) $ 1,308,093 Issuance of common partnership units to AIR, net — 342,469 — 342,469 — 342,469 Issuance costs — (337 ) — (337 ) — (337 ) Redemption of common partnership units — — (3,975 ) (3,975 ) — (3,975 ) Conversion of common partnership units — 8,240 (8,242 ) (2 ) — (2 ) Amortization of share-based compensation cost — 2,953 2,975 5,928 — 5,928 Effect of changes in ownership of consolidated entities — (9,846 ) 10,076 230 — 230 Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 6,126 6,126 Change in accumulated other comprehensive income (loss) — (3,039 ) (212 ) (3,251 ) — (3,251 ) Net income (loss) — 74,740 3,966 78,706 (3,417 ) 75,289 Distributions to common unitholders — (200,327 ) (10,684 ) (211,011 ) — (211,011 ) Distributions to preferred unitholders — (136 ) — (136 ) — (136 ) Distributions to noncontrolling interests — — — — (8,744 ) (8,744 ) Other, net — (1,624 ) — (1,624 ) (120 ) (1,744 ) Balances at September 30, 2021 $ 2,000 $ 1,517,944 $ 57,089 $ 1,577,033 $ (68,098 ) $ 1,508,935 Balances at December 31, 2021 $ 2,129 $ 1,810,896 $ 197,013 $ 2,010,038 $ (70,883 ) $ 1,939,155 Redemption of common partnership units — — (7,423 ) (7,423 ) — (7,423 ) Repurchase of common partnership units — (171,711 ) — (171,711 ) — (171,711 ) Amortization of share-based compensation cost — 3,519 2,753 6,272 — 6,272 Effect of changes in ownership of consolidated entities — (5,404 ) 5,404 — — — Purchase of noncontrolling interests in consolidated real estate partnerships — (5,529 ) — (5,529 ) 120 (5,409 ) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 8,337 8,337 Change in accumulated other comprehensive income — 45,948 3,913 49,861 — 49,861 Net income (loss) — 574,864 37,053 611,917 (285 ) 611,632 Distributions to common unitholders — (210,361 ) (13,408 ) (223,769 ) — (223,769 ) Distributions to noncontrolling interests — — — — (13,561 ) (13,561 ) Other, net (129 ) (1,042 ) (243 ) (1,414 ) 72 (1,342 ) Balances at September 30, 2022 $ 2,000 $ 2,041,180 $ 225,062 $ 2,268,242 $ (76,200 ) $ 2,192,042 Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 616,439 $ 80,099 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 253,650 232,192 Loss on extinguishment of debt 23,636 44,833 Gain on dispositions of real estate and derecognition of leased properties (587,609 ) (94,512 ) Income tax expense 966 770 Other, net 6,890 10,645 Net changes in operating assets and operating liabilities 37,484 (41,286 ) Net cash provided by operating activities 351,456 232,741 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of real estate and deposits related to purchases of real estate (858,815 ) (225,526 ) Capital expenditures (151,115 ) (130,877 ) Proceeds from dispositions of real estate 759,227 45,752 Proceeds from dispositions of unconsolidated real estate partnerships 7,244 — Proceeds from repayment of note receivable 534,127 — Proceeds from investments in debt securities — 100,852 Other investing activities (37,744 ) (40,792 ) Net cash provided by (used in) investing activities 252,924 (250,591 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal repayments on non-recourse property debt (361,056 ) (618,111 ) Proceeds from term loans — 1,150,000 Repayment of term loan (350,000 ) (350,000 ) Net borrowings on (repayments of) revolving credit facility 176,205 (206,144 ) Payment of debt issuance costs (4,793 ) (11,124 ) Payment of debt extinguishment costs (22,723 ) (42,760 ) Proceeds from the issuance of unsecured notes payable 400,000 — Proceeds from issuance of common partnership units to AIR, net — 342,132 Repurchases of common partnership units held by General Partner and Special Limited Partner (171,711 ) — Payment of distributions General Partner and Special Limited Partner (210,377 ) (200,624 ) Other financing activities (38,040 ) (21,872 ) Net cash (used in) provided by financing activities (582,495 ) 41,497 NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 21,885 23,647 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 92,761 73,480 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 114,646 $ 97,127 2023 2023. Principles of Consolidation Redeemable Preferred OP Units The following table presents a rollforward of the AIR Operating Partnership’s preferred OP Balance at January 1, 2022 $ 79,370 Preferred distributions (4,823 ) Redemption of preferred units and other (24 ) Net income allocated to preferred units 4,807 Balance at September 30, 2022 $ 79,330 Use of Estimates Note 3 — Significant Transactions Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Number of apartment communities 1 4 Number of apartment homes 350 1,351 Purchase price $ 173,000 $ 640,067 Capitalized transaction costs 1,551 7,325 Total consideration $ 174,551 $ 647,392 Land $ 14,480 $ 54,918 Building and improvements 156,980 577,712 Right-of-use lease asset — 80,651 Intangible assets (1) 3,465 17,203 Lease liability — (80,651 ) Below-market lease liabilities (1) (103 ) (613 ) Real estate tax liability assumed (271 ) (1,828 ) Total consideration $ 174,551 $ 647,392 Number of apartment communities 4 Number of apartment homes 865 Land $ 133,471 Building and improvements 520,448 Intangible assets (1) 13,470 Below-market lease liabilities (1) (866 ) Total consideration (2) $ 666,523 During the three months ended Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Fixed lease income $ 184,509 $ 176,388 $ 522,074 $ 505,400 Variable lease income 13,141 12,953 35,165 34,589 Total lease income $ 197,650 $ 189,341 $ 557,239 $ 539,989 2022 (remaining) $ 184,873 2023 440,389 2024 85,643 2025 11,264 2026 9,572 Thereafter 42,923 Total $ 774,664 Note 5 — Debt The following table summarizes Outstanding Balance September 30, 2022 December 31, 2021 Secured debt: Fixed-rate property debt due December 2022 to June 2032 (1) $ 1,940,158 $ 2,217,256 Variable-rate property debt due October 2024 (2) 88,500 88,500 Total non-recourse property debt 2,028,658 2,305,756 Debt issuance costs, net of accumulated amortization (9,241 ) (11,017 ) Total non-recourse property debt, net $ 2,019,417 $ 2,294,739 Unsecured debt: Term loans due December 2023 to April 2026 (2) (3) 800,000 1,150,000 Revolving credit facility borrowings due April 2025 (4) 479,000 304,000 4.58% Notes payable due June 2027 (5) 100,000 — 4.77% Notes payable due June 2029 (5) 100,000 — 4.84% Notes payable due June 2032 (5) 200,000 — Total unsecured debt 1,679,000 1,454,000 Debt issuance costs, net of accumulated amortization (6,249 ) (5,453 ) Total unsecured debt, net $ 1,672,751 $ 1,448,547 Total indebtedness $ 3,692,168 $ 3,743,286 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. Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit are as follows (in thousands, except per share and per unit data): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Earnings per share Numerator: Basic net income attributable to AIR common stockholders $ 1,760 $ 9,289 $ 574,363 $ 74,455 Effect of dilutive instruments — — 4,807 — Dilutive net income attributable to AIR common stockholders $ 1,760 $ 9,289 $ 579,170 $ 74,455 Denominator – shares: Basic weighted-average common shares outstanding 153,811 156,646 155,488 153,289 Dilutive common share equivalents outstanding 246 396 1,952 361 Dilutive weighted-average common shares outstanding 154,057 157,042 157,440 153,650 Earnings per share – basic $ 0.01 $ 0.06 $ 3.69 $ 0.49 Earnings per share – diluted $ 0.01 $ 0.06 $ 3.68 $ 0.48 Earnings per unit Numerator: Basic net income attributable to the AIR Operating Partnership's common unitholders $ 1,897 $ 9,764 $ 611,416 $ 78,421 Effect of dilutive instruments — — 4,935 — Basic and dilutive net income attributable to the AIR Operating Partnership's common unitholders $ 1,897 $ 9,764 $ 616,351 $ 78,421 Denominator – units: Basic weighted-average common units outstanding 163,866 164,603 165,578 161,336 Dilutive common unit equivalents outstanding 246 396 1,951 361 Dilutive weighted-average common units outstanding 164,112 164,999 167,529 161,697 Earnings per unit – basic $ 0.01 $ 0.06 $ 3.69 $ 0.49 Earnings per unit – diluted $ 0.01 $ 0.06 $ 3.68 $ 0.48 As of September 30, 2022 As of December 31, 2021 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Interest rate option $ 53,989 $ — $ 53,989 $ — $ 21,699 $ — $ 21,699 $ — Interest rate swap asset $ 34,543 $ — $ 34,543 $ — $ — $ — $ — $ — 2022, as they bear interest at floating rates which approximate market rates. As of September 30, 2022 As of December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value Non-recourse property debt $ 2,028,658 $ 1,785,851 $ 2,305,756 $ 2,367,713 The table below summarizes apartment community information regarding VIEs consolidated by the AIR Operating Partnership: September 30, 2022 December 31, 2021 VIEs with interests in apartment communities 5 5 Apartment communities owned by VIEs 16 16 Apartment homes in communities owned by VIEs 5,369 5,369 During the three months ended June 30, 2023, we purchased the remaining noncontrolling interest in a consolidated limited partnership in one apartment community with 328 apartment homes. Subsequent to this purchase, this apartment community no longer represents a VIE. September 30, 2022 December 31, 2021 ASSETS: Net real estate $ 1,075,327 $ 1,096,039 Cash and cash equivalents 51,199 29,863 Restricted cash 2,329 2,380 Other assets, net 21,873 21,745 LIABILITIES: Non-recourse property debt $ 1,215,933 $ 1,227,345 Accrued liabilities and other 40,814 34,659 represents 20%. sold. business, prior period segment information has been recast to conform with our reportable segment composition as of Same Other Proportionate Corporate and Consolidated Three months ended September 30, 2022: Total revenues $ 139,107 $ 30,258 $ 20,725 $ 10,781 $ 200,871 Property operating expenses 35,632 10,606 10,562 14,450 71,250 Other operating expenses not allocated to segments (3) — — — 103,049 103,049 Total operating expenses 35,632 10,606 10,562 117,499 174,299 Proportionate property net operating income (loss) 103,475 19,652 10,163 (106,718 ) 26,572 Other items included in income before income tax expense (4) — — — (23,130 ) (23,130 ) Income (loss) before income tax expense $ 103,475 $ 19,652 $ 10,163 $ (129,848 ) $ 3,442 Same Other Proportionate Corporate and Consolidated Nine months ended September 30, 2022: Total revenues $ 402,756 $ 62,371 $ 60,153 $ 40,569 $ 565,849 Property operating expenses 105,570 23,486 30,064 39,153 198,273 Other operating expenses not allocated to segments (3) — — — 279,126 279,126 Total operating expenses 105,570 23,486 30,064 318,279 477,399 Proportionate property net operating income (loss) 297,186 38,885 30,089 (277,710 ) 88,450 Other items included in income before income tax — — — 528,955 528,955 Income before income tax expense $ 297,186 $ 38,885 $ 30,089 $ 251,245 $ 617,405 Same Other Proportionate Corporate and Consolidated Three months ended September 30, 2021: Total revenues $ 134,102 $ 5,558 $ 20,608 $ 31,509 $ 191,777 Property operating expenses 36,883 2,963 10,604 23,475 73,925 Other operating expenses not allocated to segments (3) — — — 90,812 90,812 Total operating expenses 36,883 2,963 10,604 114,287 164,737 Proportionate property net operating income (loss) 97,219 2,595 10,004 (82,778 ) 27,040 Other items included in income (loss) before income tax benefit (4) — — — (16,644 ) (16,644 ) Income (loss) before income tax benefit $ 97,219 $ 2,595 $ 10,004 $ (99,422 ) $ 10,396 Same Other Proportionate Corporate and Consolidated Nine months ended September 30, 2021: Total revenues $ 386,998 $ 8,562 $ 58,904 $ 92,059 $ 546,523 Property operating expenses 109,299 5,351 30,091 58,559 203,300 Other operating expenses not allocated to segments (3) — — — 256,909 256,909 Total operating expenses 109,299 5,351 30,091 315,468 460,209 Proportionate property net operating income (loss) 277,699 3,211 28,813 (223,409 ) 86,314 Other items included in income (loss) before income tax expense (4) — — — (5,445 ) (5,445 ) Income (loss) before income tax expense $ 277,699 $ 3,211 $ 28,813 $ (228,854 ) $ 80,869 The assets of our segments and the consolidated assets not allocated to our segments were as follows (in thousands): September 30, 2022 December 31, 2021 Same Store $ 3,861,337 $ 3,824,277 Other Real Estate 2,077,214 787,534 Corporate and other assets (1) 783,902 1,828,549 Total consolidated assets $ 6,722,453 $ 6,440,360 2022 2021 Same Store $ 114,679 $ 97,294 Other Real Estate 30,459 13,588 Total capital additions $ 145,138 $ 110,882 We also have one land parcel and one indirect land interest that we lease to third parties. 6.5% benefiting from (i) 10-basis points from 2021 acquisitions (now in Same fourth quarters. Aimco AIR Q4 2019 or 2019A Q3 2022 Change Residents Average Household Income $165,000 $251,000 52% Median Household Income $116,000 $170,000 47% CSAT Score (out of 5) 4.30 4.33 (2021) 0.03 Kingsley Index (1) 4.09 4.05 (0.04) Portfolio Properties 124 80 (35%) Apartment Homes 32,598 23,499 (28%) Average Revenue per Apartment Home $2,272 $2,711 19% Redevelopment and Development ($M) $230 $– ($230) Mezzanine Investments ($M) $280 $– ($280) Low G&A Net G&A as % of GAV 36 bps (per GSA) <15 bps (at AIR Target) -21 bps Balance Sheet Net Leverage / EBITDAre 7.6x 5.9x (1.7x) Refunding: Next 3-Years (% Total Debt) 23% 10% (13%) Repricing: Next 3-Years (% Total Debt) 23% 10% (13%) Unencumbered Properties ($B) $2.4 $8.3 $5.9 Available liquidity of $2.3 billion and access to more potentially secured by $5.8 billion in unencumbered property value; and Separation from Aimco. our success. 2022 sold. Three Months Ended September 30, Historical Change Change Attributable to Changes in Ownership Change Excluding Changes in Ownership (in thousands, except percentages) 2022 2021 $ % $ % $ % Rental and other property revenues, before utility reimbursements: Same Store $ 139,107 $ 134,102 $ 5,005 3.7 % $ (7,157 ) (5.9 %) $ 12,162 9.6 % Other Real Estate 30,258 5,558 24,700 nm — — % 24,700 nm Total 169,365 139,660 29,705 21.3 % (7,157 ) (5.9 %) 36,862 27.2 % Property operating expenses, net of utility reimbursements: Same Store 35,632 36,883 (1,251 ) (3.4 %) (1,286 ) (3.5 %) 35 0.1 % Other Real Estate 10,606 2,963 7,643 nm — — % 7,643 nm Total 46,238 39,846 6,392 16.0 % (1,286 ) (3.5 %) 7,678 19.5 % Proportionate property net operating income: Same Store 103,475 97,219 6,256 6.4 % (5,871 ) (6.9 %) 12,127 13.3 % Other Real Estate 19,652 2,595 17,057 nm — — % 17,057 nm Total $ 123,127 $ 99,814 $ 23,313 23.4 % $ (5,871 ) (6.9 %) $ 29,184 30.3 % ADO. Nine Months Ended September 30, Historical Change Change Attributable to Changes in Ownership Change Excluding Changes in Ownership (in thousands, except percentages) 2022 2021 $ % $ % $ % Rental and other property revenues, before utility reimbursements: Same Store $ 402,756 $ 386,998 $ 15,758 4.1 % $ (21,473 ) (6.1 %) $ 37,231 10.2 % Other Real Estate 62,371 8,562 53,809 nm — — % 53,809 nm Total 465,127 395,560 69,567 17.6 % (21,473 ) (6.1 %) 91,040 23.7 % Property operating expenses, net of utility reimbursements: Same Store 105,570 109,299 (3,729 ) (3.4 %) (4,341 ) (4.0 %) 612 0.6 % Other Real Estate 23,486 5,351 18,135 nm — — % 18,135 nm Total 129,056 114,650 14,406 12.6 % (4,341 ) (4.0 %) 18,747 16.6 % Proportionate property net operating income: Same Store 297,186 277,699 19,487 7.0 % (17,132 ) (7.1 %) 36,619 14.1 % Other Real Estate 38,885 3,211 35,674 nm — — % 35,674 nm Total $ 336,071 $ 280,910 $ 55,161 19.6 % $ (17,132 ) (7.1 %) $ 72,293 26.7 % ADO. expenses, net. net the prior year. higher outstanding property debt balances. loss (gain) on dispositions and impairments of real estate due primarily to: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Number of apartment communities sold — 1 12 1 Gross proceeds $ — $ 40.0 $ 781.1 $ 40.0 Net proceeds (1) $ — $ 39.9 $ 646.8 $ 39.9 gains on derivative instruments that are not designated as cash flow hedges. Of the $11.4 million, $5.3 million represents cash gains and $6.1 million represents non-cash gains. Of the $9.3 million, $5.3 million represents cash gains and $4.0 million represents non-cash gains, net. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income attributable to AIR common stockholders $ 1,760 $ 9,289 $ 574,363 $ 74,455 Adjustments: Real estate depreciation and amortization, net of noncontrolling partners’ interest 85,057 74,864 240,436 213,947 Gain on dispositions of real estate and derecognition of leased properties, net of noncontrolling partners' interest — (7,127 ) (587,453 ) (94,512 ) Income tax adjustments related to gain on dispositions and other tax-related items (348 ) (122 ) (1,448 ) 150 Common noncontrolling interests in AIR OP’s share of above adjustments (5,198 ) (3,269 ) 21,083 (5,842 ) Amounts allocable to participating securities (52 ) — 244 — NAREIT FFO attributable to AIR common stockholders $ 81,219 $ 73,635 $ 247,225 $ 188,198 Adjustments: Loss on extinguishment of debt (1) — 6,673 23,636 44,833 Separation, business transformation, and transition related costs (2) 1,419 1,393 3,881 3,858 Non-cash straight-line rent (3) 3,660 642 4,944 1,979 Incremental cash received from leased properties (4) 109 191 432 500 Casualty and other (5) 4,280 5,364 4,635 6,144 Common noncontrolling interests in AIR OP’s share of above adjustments (581 ) (690 ) (2,300 ) (2,829 ) Amounts allocable to participating securities — (13 ) (19 ) (29 ) Pro forma FFO attributable to AIR common stockholders $ 90,106 $ 87,195 $ 282,434 $ 242,654 Weighted-average common shares outstanding – basic 153,811 156,646 155,488 153,289 Dilutive common share equivalents (6) 246 396 269 361 Total shares and dilutive share equivalents 154,057 157,042 155,757 153,650 Net income attributable to AIR per share – diluted $ 0.01 $ 0.06 $ 3.68 $ 0.48 NAREIT FFO per share – diluted $ 0.53 $ 0.47 $ 1.59 $ 1.22 Pro forma FFO per share – diluted $ 0.58 $ 0.56 $ 1.81 $ 1.58 2023. Annualized Current Quarter Proportionate Debt to Adjusted EBITDAre 6.3x 5.7x Net Leverage to Adjusted EBITDAre 6.5x 5.9x 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, outstanding borrowings under our revolving credit facility, term loans, and unsecured notes. Proportionate Debt excludes unamortized debt issuance costs because these amounts represent cash expended in earlier periods and do not reduce our contractual obligations. We reduce our recorded debt by the amounts of cash and restricted cash on-hand, September 30, 2022 Total indebtedness $ 3,692,168 Adjustments: Debt issuance costs related to non-recourse property debt and term loans 15,490 Proportionate share adjustments related to debt obligations (391,804 ) Cash and restricted cash (114,646 ) Tenant security deposits included in restricted cash 10,245 Proportionate share adjustments related to cash and restricted cash 4,844 Proportionate Debt $ 3,216,297 Perpetual preferred stock 2,000 Preferred noncontrolling interests in AIR Operating Partnership 79,330 Net Leverage $ 3,297,627 Leverage reduction funded by anticipated November 2022 property sales (460,000 ) Net Leverage, Pro forma for anticipated November 2022 sales $ 2,837,627 Three Months Ended September 30, 2022 Net income $ 3,396 Adjustments: Interest expense 32,656 Income tax expense 46 Depreciation and amortization 90,445 EBITDAre $ 126,543 Net income attributable to noncontrolling interests in consolidated real estate partnerships 102 EBITDAre adjustments attributable to noncontrolling interests and unconsolidated real estate partnerships (7,463 ) Interest income and prepayment penalties on note receivable from Aimco (5,209 ) Pro forma FFO adjustments, net (1) 11,293 Adjusted EBITDAre $ 125,266 Annualized Adjusted EBITDAre $ 501,064 Anticipated November 2022 property sales, annualized (21,775 ) Annualized Adjusted EBITDAre, Pro forma for anticipated November 2022 property sales $ 479,289 Nine Months Ended September 30, 2022 2021 Capital replacements $ 20,820 $ 20,377 Capital improvements 10,037 5,989 Capital enhancements 75,606 71,806 Initial capital expenditures 24,156 3,851 Casualty 12,348 2,565 Entitlement and planning 2,171 6,294 Total capital additions $ 145,138 $ 110,882 Plus: additions related to apartment communities sold and held for sale 4,014 17,482 Consolidated capital additions $ 149,152 $ 128,364 Plus: net change in accrued capital spending 1,963 2,513 Total capital expenditures per condensed consolidated statements of cash flows $ 151,115 $ 130,877 swaps, is $125 million, or 4% of total leverage; we estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would increase or decrease interest expense by $1.3 million, net, on an annual basis. 2022. Fiscal period Total Average Total Number of Maximum Dollar Value July 1 - July 31, 2022 — $ — — $ 375,000 August 1 - August 30, 2022 — $ — — $ 375,000 September 1 - September 30, 2022 1,195,690 $ 39.07 1,195,690 $ 328,289 Total 1,195,690 $ 39.07 1,195,690 2023. Fiscal period Total Average Total Number of Maximum Number July 1 - July 31, 2022 23,205 $ 41.00 N/A N/A August 1 - August 30, 2022 12,578 $ 43.28 N/A N/A September 1 - September 30, 2022 37,911 $ 44.38 N/A N/A Total 73,694 $ 43.13 2023: DESCRIPTION 101 The following materials from AIR’s and the AIR Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). Molly H.N. Syke By: AIR-GP, Inc., its General Partner By: /s/ Date: July 28, 2023☒xSeptemberJune 30, 20222023☐o(I.R.S. Employer
incorporation or organization)
Identification No.), Suite 1700, Colorado(303) Yesx ☒ No ☐oYesx ☒ No ☐oYesx ☒ No ☐oYesx ☒ No ☐o☒x☐o☒x☐o☐o☐o☐o☐o☐o☐o☐o☐o☐o No ☒x☐o No ☒xNovember 2, 2022: July 25, 2023: 149,223,527SeptemberJune 30, 2022,2023, of Apartment Income REIT Corp. (“AIR”), Apartment Income REIT, L.P. (“AIR Operating Partnership”), and their consolidated subsidiaries. The AIR Operating Partnership’s condensed consolidated financial statements include the accounts of the AIR Operating Partnership and its consolidated subsidiaries. Except as the context otherwise requires, “we,” “our,” and “us” refer to AIR, the AIR Operating Partnership, and their consolidated subsidiaries, collectively. a Maryland corporation, is a self-administered and self-managed real estate investment trust.trust (“REIT”). AIR Operating Partnership owns all of the assets and owes all of the liabilities of the AIR enterprise and manages the daily operations of AIR’s business. AIR owns, through its wholly-owned subsidiaries, is the general partner interest and special limited partner ofinterest in the AIR Operating Partnership.SeptemberJune 30, 2022,2023, AIR owned approximately 92.1%91.3% of the legal interest and 93.1% of the economic interest in the common partnership units of the AIR Operating Partnership, (“OP Units”) and 93.8% of the economic interest in the AIR Operating Partnership.respectively. The remaining7.9% 8.7% legal interest is owned by third-party limited partners.third parties. A portion of the 8.7% owned by third parties is subject to vesting. If the vesting requirements are not met, the 8.7% ownership will be reduced to no less than 6.9%. The legal ownership percentage is based on the outstanding common stockClass A Common Stock of AIR (“Common Stock”) and common OP Units, including unvested restricted stock and unvested LTIP units. The economic ownership percentage includes any unvested restricted stock and unvested LTIP units to the extent they are considered participating securities, as defined by accounting principles generally accepted in the United States (“GAAP”). As the sole general partner of the AIR Operating Partnership, AIR has exclusive control of the AIR Operating Partnership’s day-to-day management.The(of awith terms substantially similar type and in an amount equal to the shares of stock sold in the offering),offering, the AIR Operating Partnership generates all remaining capital required by its business. These sources include the AIR 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.34455667899101011111212131415151615161617171818191920192020212122212422252528404240424144414443464447June 30, 2023 December 31, 2022 ASSETS Buildings and improvements $ 6,888,234 $ 6,784,965 Land 1,345,086 1,291,429 Total real estate 8,233,320 8,076,394 Accumulated depreciation (2,562,252) (2,449,883) Net real estate 5,671,068 5,626,511 Cash and cash equivalents 106,349 95,797 Restricted cash 23,564 205,608 Goodwill 32,286 32,286 Other assets, net 573,743 591,681 Total assets $ 6,407,010 $ 6,551,883 LIABILITIES AND EQUITY Non-recourse property debt, net $ 2,197,437 $ 1,985,430 Term loans, net 797,471 796,713 Revolving credit facility borrowings 292,000 462,000 Unsecured notes payable, net 397,669 397,486 Total indebtedness 3,684,577 3,641,629 Accrued liabilities and other 476,400 513,805 Total liabilities 4,160,977 4,155,434 Preferred noncontrolling interests in AIR Operating Partnership 77,143 77,143 Equity: Perpetual Preferred Stock 2,000 2,000 Common Stock, $0.01 par value, 1,021,175,000 shares authorized at June 30, 2023 and December 31, 2022, and 149,223,526 and 149,086,548 shares issued/outstanding at June 30, 2023 and December 31, 2022, respectively 1,492 1,491 Additional paid-in capital 3,430,731 3,436,635 Accumulated other comprehensive income 39,343 43,562 Distributions in excess of earnings (1,474,101) (1,327,271) Total AIR equity 1,999,465 2,156,417 Noncontrolling interests in consolidated real estate partnerships (80,087) (78,785) Common noncontrolling interests in AIR Operating Partnership 249,512 241,674 Total equity 2,168,890 2,319,306 Total liabilities, preferred noncontrolling interests in AIR Operating Partnership, and equity $ 6,407,010 $ 6,551,883 Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 REVENUES Rental and other property revenues $ 212,492 $ 181,012 $ 422,415 $ 360,273 Other revenues 2,068 2,488 4,138 4,705 Total revenues 214,560 183,500 426,553 364,978 EXPENSES Property operating expenses 72,012 63,787 147,465 127,023 Depreciation and amortization 89,260 78,656 184,926 163,205 General and administrative expenses 6,023 5,333 13,203 11,930 Other expenses (income), net 2,519 (3,076) 6,179 942 169,814 144,700 351,773 303,100 Interest income 1,507 25,652 3,032 39,133 Interest expense (37,554) (26,027) (73,741) (48,134) Loss on extinguishment of debt — — (2,008) (23,636) (Loss) gain on dispositions and impairments of real estate (17,472) 175,606 (17,472) 587,609 Gain on derivative instruments, net 11,390 — 9,252 — Loss from unconsolidated real estate partnerships (842) (873) (1,877) (2,887) Income (loss) before income tax expense 1,775 213,158 (8,034) 613,963 Income tax expense (1,177) (1,499) (1,316) (920) Net income (loss) 598 211,659 (9,350) 613,043 Noncontrolling interests: Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships (684) (381) (1,369) 183 Net income attributable to preferred noncontrolling interests in AIR Operating Partnership (1,570) (1,602) (3,140) (3,205) Net loss (income) attributable to common noncontrolling interests in AIR Operating Partnership 315 (12,749) 1,141 (36,916) Net income attributable to noncontrolling interests (1,939) (14,732) (3,368) (39,938) Net (loss) income attributable to AIR (1,341) 196,927 (12,718) 573,105 Net income attributable to AIR preferred stockholders (42) (43) (85) (85) Net income attributable to participating securities (56) (162) (93) (417) Net (loss) income attributable to AIR common stockholders $ (1,439) $ 196,722 $ (12,896) $ 572,603 Net (loss) income attributable to AIR common stockholders per share – basic and diluted $ (0.01) $ 1.26 $ (0.09) $ 3.66 Weighted-average common shares outstanding – basic 148,832 155,927 148,821 156,327 Weighted-average common shares outstanding – diluted 148,832 156,136 148,821 156,607 Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net income (loss) $ 598 $ 211,659 $ (9,350) $ 613,043 Unrealized gain on derivative instruments, net 16,631 13,715 5,191 12,932 Reclassification of interest rate derivative (gain) loss to net income (loss) (5,364) 1,989 (9,518) 1,989 Comprehensive income (loss) 11,865 227,363 (13,677) 627,964 Comprehensive income attributable to noncontrolling interests (2,933) (15,903) (3,260) (41,109) Comprehensive income (loss) attributable to AIR $ 8,932 $ 211,460 $ (16,937) $ 586,855 SeptemberJune 30, 20222023 and 2021
Interests in
Noncontrolling
Interests in
Issued
Issued
Paid-
in Capital
Comprehensive
Income
in Excess
of Earnings
Equity
Real Estate
Partnerships
Operating
Partnership
EquityPerpetual Preferred Stock Common Stock Additional
Paid-
in CapitalAccumulated
Other
Comprehensive
Income (Loss)Distributions
in Excess
of EarningsTotal AIR
EquityNoncontrolling Interests in Consolidated Real Estate Partnerships Common Noncontrolling Interests in AIR Operating Partnership Total
EquityShares
IssuedAmount Shares
IssuedAmount Balances at March 31, 2022 20 $ 2,000 157,082,823 $ 1,571 $ 3,762,457 $ (783) $ (1,648,077) $ 2,117,168 $ (70,157) $ 216,827 $ 2,263,838 Redemption of AIR Operating Partnership units — — — — — — — — — (793) (793) Repurchase of Common Stock, net — — (2,911,761) (29) (124,971) — — (125,000) — — (125,000) Amortization of share-based compensation cost — — — — 751 — — 751 — 950 1,701 Effect of changes in ownership of consolidated entities — — — — (578) — — (578) — 578 — Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 3,483 — 3,483 Change in accumulated other comprehensive income (loss) — — — — — 14,533 — 14,533 — 1,171 15,704 Net income — — — — — — 196,927 196,927 381 12,749 210,057 Common Stock dividends — — — — — — (70,556) (70,556) — — (70,556) Distributions to noncontrolling interests — — — — — — — — (4,188) (4,489) (8,677) Other, net — — 16,179 — (753) — (43) (796) (128) (8) (932) Balances at June 30, 2022 20 $ 2,000 154,187,241 $ 1,542 $ 3,636,906 $ 13,750 $ (1,521,749) $ 2,132,449 $ (70,609) $ 226,985 $ 2,288,825 Balances at March 31, 2023 20 $ 2,000 149,199,684 $ 1,492 $ 3,432,573 $ 29,070 $ (1,405,520) $ 2,059,615 $ (79,017) $ 254,304 $ 2,234,902 Redemption of AIR Operating Partnership units — — — — — — — — — (5,285) (5,285) Amortization of share-based compensation cost — — — — 820 — — 820 — 1,155 1,975 Effect of changes in ownership of consolidated entities — — — — (3,184) — — (3,184) — 3,184 — Purchase of noncontrolling interests in consolidated real estate partnerships — — — — 479 — — 479 (1,996) — (1,517) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 2,950 — 2,950 Change in accumulated other comprehensive income (loss) — — — — — 10,273 — 10,273 — 994 11,267 Net (loss) income — — — — — — (1,341) (1,341) 684 (315) (972) Common Stock dividends — — — — — — (67,201) (67,201) — — (67,201) Distributions to noncontrolling interests — — — — — — — — (2,572) (4,526) (7,098) Other, net — — 23,842 — 43 — (39) 4 (136) 1 (131) Balances at June 30, 2023 20 $ 2,000 149,223,526 $ 1,492 $ 3,430,731 $ 39,343 $ (1,474,101) $ 1,999,465 $ (80,087) $ 249,512 $ 2,168,890 6NineSix Months Ended SeptemberJune 30, 20222023 and 2021Perpetual Preferred Stock Common Stock Additional
Paid-
in CapitalAccumulated
Other
Comprehensive
Income (Loss)Distributions
in Excess
of EarningsTotal AIR
EquityNoncontrolling Interests in Consolidated Real Estate Partnerships Common Noncontrolling Interests in AIR Operating Partnership Total
EquityShares
IssuedAmount Shares
IssuedAmount Balances at December 31, 2021 145 $ 2,129 156,998,367 $ 1,570 $ 3,763,105 $ — $ (1,953,779) $ 1,813,025 $ (70,883) $ 197,013 $ 1,939,155 Redemption of AIR Operating Partnership units — — — — — — — — — (4,245) (4,245) Repurchase of Common Stock, net — — (2,911,761) (29) (124,971) — — (125,000) — — (125,000) Amortization of share-based compensation cost — — — — 2,641 — — 2,641 — 1,810 4,451 Effect of changes in ownership of consolidated entities — — — — (3,264) — — (3,264) — 3,264 — Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 7,808 — 7,808 Change in accumulated other comprehensive income (loss) — — — — — 13,750 — 13,750 — 1,171 14,921 Net income (loss) — — — — — — 573,105 573,105 (183) 36,916 609,838 Common Stock dividends — — — — — — (140,984) (140,984) — — (140,984) Distributions to noncontrolling interests — — — — — — — — (7,335) (8,936) (16,271) Other, net (125) (129) 100,635 1 (605) — (91) (824) (16) (8) (848) Balances at June 30, 2022 20 $ 2,000 154,187,241 $ 1,542 $ 3,636,906 $ 13,750 $ (1,521,749) $ 2,132,449 $ (70,609) $ 226,985 $ 2,288,825 Balances at December 31, 2022 20 $ 2,000 149,086,548 $ 1,491 $ 3,436,635 $ 43,562 $ (1,327,271) $ 2,156,417 $ (78,785) $ 241,674 $ 2,319,306 Issuance of AIR Operating Partnership units — — — — — — — — — 22,383 22,383 Redemption of AIR Operating Partnership units — — — — — — — — — (15,814) (15,814) Amortization of share-based compensation cost — — — — 2,791 — — 2,791 — 2,310 5,101 Effect of changes in ownership of consolidated entities — — — — (9,286) — — (9,286) — 9,286 — Purchase of noncontrolling interests in consolidated real estate partnerships — — — — 479 — — 479 (1,996) — (1,517) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 4,517 — 4,517 Change in accumulated other comprehensive income (loss) — — — — — (4,219) — (4,219) — (108) (4,327) Net (loss) income — — — — — — (12,718) (12,718) 1,369 (1,141) (12,490) Common Stock dividends — — — — — — (134,140) (134,140) — — (134,140) Distributions to noncontrolling interests — — — — — — — — (5,057) (9,078) (14,135) Other, net — — 136,978 1 112 — 28 141 (135) — 6 Balances at June 30, 2023 20 $ 2,000 149,223,526 $ 1,492 $ 3,430,731 $ 39,343 $ (1,474,101) $ 1,999,465 $ (80,087) $ 249,512 $ 2,168,890 (Unaudited)
Interests in
Noncontrolling
Interests in
Issued
Issued
Paid-
in Capital
Comprehensive
Income
in Excess
of Earnings
Equity
Real Estate
Partnerships
Operating
Partnership
EquitySix Months Ended
June 30,2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (9,350) $ 613,043 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 184,926 163,205 Loss (gain) on dispositions and impairments of real estate 17,472 (587,609) Loss on extinguishment of debt 2,008 23,636 Income tax expense 1,316 920 Other, net 624 2,939 Net changes in operating assets and operating liabilities (14,334) (14,638) Net cash provided by operating activities 182,662 201,496 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of real estate (182,459) (472,317) Capital expenditures (89,388) (90,599) Proceeds from dispositions of real estate 33,633 759,344 Proceeds from repayment of note receivable — 387,088 Other investing activities, net 9,804 (8,849) Net cash (used in) provided by investing activities (228,410) 574,667 CASH FLOWS FROM FINANCING ACTIVITIES: Principal repayments on non-recourse property debt (103,964) (353,770) Proceeds from non-recourse property debt 320,000 — Repayment of term loan — (350,000) Net (repayments of) borrowings on revolving credit facility (170,000) (154,795) Proceeds from the issuance of unsecured notes payable — 400,000 Repurchases of Common Stock — (125,000) Payment of dividends to holders of Common Stock (134,135) (141,104) Payment of distributions to common noncontrolling interests (14,159) (16,306) Redemptions of noncontrolling interests in the AIR Operating Partnership (15,814) (4,269) Other financing activities, net (7,672) (22,789) Net cash used in financing activities (125,744) (768,033) NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (171,492) 8,130 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 301,405 92,761 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 129,913 $ 100,891 June 30, 2023 December 31, 2022 ASSETS Buildings and improvements $ 6,888,234 $ 6,784,965 Land 1,345,086 1,291,429 Total real estate 8,233,320 8,076,394 Accumulated depreciation (2,562,252) (2,449,883) Net real estate 5,671,068 5,626,511 Cash and cash equivalents 106,349 95,797 Restricted cash 23,564 205,608 Goodwill 32,286 32,286 Other assets, net 573,743 591,681 Total assets $ 6,407,010 $ 6,551,883 LIABILITIES AND PARTNERS’ CAPITAL Non-recourse property debt, net $ 2,197,437 $ 1,985,430 Term loans, net 797,471 796,713 Revolving credit facility borrowings 292,000 462,000 Unsecured notes payable, net 397,669 397,486 Total indebtedness 3,684,577 3,641,629 Accrued liabilities and other 476,400 513,805 Total liabilities 4,160,977 4,155,434 Redeemable preferred units 77,143 77,143 Partners’ capital: Preferred units 2,000 2,000 General Partner and Special Limited Partner 1,997,465 2,154,417 Limited Partners 249,512 241,674 Partners’ capital attributable to the AIR Operating Partnership 2,248,977 2,398,091 Noncontrolling interests in consolidated real estate partnerships (80,087) (78,785) Total partners’ capital 2,168,890 2,319,306 Total liabilities, redeemable preferred units, and partners’ capital $ 6,407,010 $ 6,551,883 Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 REVENUES Rental and other property revenues $ 212,492 $ 181,012 $ 422,415 $ 360,273 Other revenues 2,068 2,488 4,138 4,705 Total revenues 214,560 183,500 426,553 364,978 EXPENSES Property operating expenses 72,012 63,787 147,465 127,023 Depreciation and amortization 89,260 78,656 184,926 163,205 General and administrative expenses 6,023 5,333 13,203 11,930 Other expenses (income), net 2,519 (3,076) 6,179 942 169,814 144,700 351,773 303,100 Interest income 1,507 25,652 3,032 39,133 Interest expense (37,554) (26,027) (73,741) (48,134) Loss on extinguishment of debt — — (2,008) (23,636) (Loss) gain on dispositions and impairments of real estate (17,472) 175,606 (17,472) 587,609 Gain on derivative instruments, net 11,390 — 9,252 — Loss from unconsolidated real estate partnerships (842) (873) (1,877) (2,887) Income (loss) before income tax expense 1,775 213,158 (8,034) 613,963 Income tax expense (1,177) (1,499) (1,316) (920) Net income (loss) 598 211,659 (9,350) 613,043 Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships (684) (381) (1,369) 183 Net (loss) income attributable to the AIR Operating Partnership (86) 211,278 (10,719) 613,226 Net income attributable to the AIR Operating Partnership's preferred unitholders (1,612) (1,645) (3,225) (3,290) Net income attributable to participating securities (56) (162) (93) (417) Net (loss) income attributable to the AIR Operating Partnership’s common unitholders $ (1,754) $ 209,471 $ (14,037) $ 609,519 Net (loss) income attributable to the AIR Operating Partnership common unitholders per unit – basic and diluted $ (0.01) $ 1.26 $ (0.09) $ 3.66 Weighted-average common units outstanding – basic 159,778 166,023 159,531 166,434 Weighted-average common units outstanding – diluted 159,778 166,232 159,531 166,714 STATEMENTSSTATEMENTS OF COMPREHENSIVE INCOMEThree Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net income (loss) $ 598 $ 211,659 $ (9,350) $ 613,043 Unrealized gain on derivative instruments, net 16,631 13,715 5,191 12,932 Reclassification of interest rate derivative (gain) loss to net income (loss) (5,364) 1,989 (9,518) 1,989 Comprehensive income (loss) 11,865 227,363 (13,677) 627,964 Comprehensive (income) loss attributable to noncontrolling interests (684) (381) (1,369) 183 Comprehensive income (loss) attributable to the AIR Operating Partnership $ 11,181 $ 226,982 $ (15,046) $ 628,147 SeptemberJune 30, 20222023 and 2021
Units
and Special
Limited Partner
Partners
Attributable to the
AIR Operating
Partnership
Interests
in Consolidated Real
Estate Partnerships
Partners’
CapitalPreferred Units General Partner
and Special
Limited PartnerLimited
PartnersPartners' Capital Attributable to the AIR Operating Partnership Noncontrolling Interests in Consolidated Real Estate Partnerships Total
Partners'
CapitalBalances at March 31, 2022 $ 2,000 $ 2,115,168 $ 216,827 $ 2,333,995 $ (70,157) $ 2,263,838 Redemption of common partnership units — — (793) (793) — (793) Repurchase of common partnership units — (125,000) — (125,000) — (125,000) Amortization of share-based compensation cost — 751 950 1,701 — 1,701 Effect of changes in ownership of consolidated entities — (578) 578 — — — Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 3,483 3,483 Change in accumulated other comprehensive income (loss) — 14,533 1,171 15,704 — 15,704 Net income — 196,927 12,749 209,676 381 210,057 Distributions to common unitholders — (70,556) — (70,556) — (70,556) Distributions to noncontrolling interests — — (4,489) (4,489) (4,188) (8,677) Other, net — (796) (8) (804) (128) (932) Balances at June 30, 2022 $ 2,000 $ 2,130,449 $ 226,985 $ 2,359,434 $ (70,609) $ 2,288,825 Balances at March 31, 2023 $ 2,000 $ 2,057,615 $ 254,304 $ 2,313,919 $ (79,017) $ 2,234,902 Redemption of common partnership units — — (5,285) (5,285) — (5,285) Amortization of share-based compensation cost — 820 1,155 1,975 — 1,975 Effect of changes in ownership of consolidated entities — (3,184) 3,184 — — — Purchase of noncontrolling interests in consolidated real estate partnerships — 479 — 479 (1,996) (1,517) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 2,950 2,950 Change in accumulated other comprehensive income (loss) — 10,273 994 11,267 — 11,267 Net (loss) income — (1,341) (315) (1,656) 684 (972) Distributions to common unitholders — (67,201) (4,526) (71,727) — (71,727) Distributions to noncontrolling interests — — — — (2,572) (2,572) Other, net — 4 1 5 (136) (131) Balances at June 30, 2023 $ 2,000 $ 1,997,465 $ 249,512 $ 2,248,977 $ (80,087) $ 2,168,890 12NineSix Months Ended SeptemberJune 30, 20222023 and 2021(Unaudited)
Units
and Special
Limited Partner
Partners
Attributable to the
AIR Operating
Partnership
Interests
in Consolidated Real
Estate Partnerships
Partners’
CapitalPreferred Units General Partner
and Special
Limited PartnerLimited
PartnersPartners' Capital Attributable to the AIR Operating Partnership Noncontrolling Interests in Consolidated Real Estate Partnerships Total
Partners'
CapitalBalances at December 31, 2021 $ 2,129 $ 1,810,896 $ 197,013 $ 2,010,038 $ (70,883) $ 1,939,155 Redemption of common partnership units — — (4,245) (4,245) — (4,245) Repurchase of common partnership units — (125,000) — (125,000) — (125,000) Amortization of share-based compensation cost — 2,641 1,810 4,451 — 4,451 Effect of changes in ownership of consolidated entities — (3,264) 3,264 — — — Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 7,808 7,808 Change in accumulated other comprehensive income (loss) — 13,750 1,171 14,921 — 14,921 Net income (loss) — 573,105 36,916 610,021 (183) 609,838 Distributions to common unitholders — (140,984) — (140,984) — (140,984) Distributions to noncontrolling interests — — (8,936) (8,936) (7,335) (16,271) Other, net (129) (695) (8) (832) (16) (848) Balances at June 30, 2022 $ 2,000 $ 2,130,449 $ 226,985 $ 2,359,434 $ (70,609) $ 2,288,825 Balances at December 31, 2022 $ 2,000 $ 2,154,417 $ 241,674 $ 2,398,091 $ (78,785) $ 2,319,306 Issuance of AIR Operating Partnership units — — 22,383 22,383 — 22,383 Redemption of common partnership units — — (15,814) (15,814) — (15,814) Amortization of share-based compensation cost — 2,791 2,310 5,101 — 5,101 Effect of changes in ownership of consolidated entities — (9,286) 9,286 — — — Purchase of noncontrolling interests in consolidated real estate partnerships — 479 — 479 (1,996) (1,517) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 4,517 4,517 Change in accumulated other comprehensive income (loss) — (4,219) (108) (4,327) — (4,327) Net (loss) income — (12,718) (1,141) (13,859) 1,369 (12,490) Distributions to common unitholders — (134,140) (9,078) (143,218) — (143,218) Distributions to noncontrolling interests — — — — (5,057) (5,057) Other, net — 141 — 141 (135) 6 Balances at June 30, 2023 $ 2,000 $ 1,997,465 $ 249,512 $ 2,248,977 $ (80,087) $ 2,168,890 Six Months Ended
June 30,2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (9,350) $ 613,043 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 184,926 163,205 Loss (gain) on dispositions and impairments of real estate 17,472 (587,609) Loss on extinguishment of debt 2,008 23,636 Income tax expense 1,316 920 Other, net 624 2,939 Net changes in operating assets and operating liabilities (14,334) (14,638) Net cash provided by operating activities 182,662 201,496 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of real estate (182,459) (472,317) Capital expenditures (89,388) (90,599) Proceeds from dispositions of real estate 33,633 759,344 Proceeds from repayment of note receivable — 387,088 Other investing activities, net 9,804 (8,849) Net cash (used in) provided by investing activities (228,410) 574,667 CASH FLOWS FROM FINANCING ACTIVITIES: Principal repayments on non-recourse property debt (103,964) (353,770) Proceeds from non-recourse property debt 320,000 — Repayment of term loan — (350,000) Net (repayments of) borrowings on revolving credit facility (170,000) (154,795) Proceeds from the issuance of unsecured notes payable — 400,000 Repurchases of common partnership units held by General Partner and Special Limited Partner — (125,000) Payment of distributions to General Partner and Special Limited Partner (134,135) (141,104) Payment of distributions to Limited Partners (9,103) (8,970) Payment of distributions to noncontrolling interests (5,056) (7,336) Redemption of common and preferred units (15,814) (4,269) Other financing activities, net (7,672) (22,789) Net cash used in financing activities (125,744) (768,033) NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (171,492) 8,130 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 301,405 92,761 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 129,913 $ 100,891 September2022ninesix months ended SeptemberJune 30, 2022,2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.2021,2022, 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 AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2021.2022. Except where indicated, the footnotes refer to AIR, the AIR Operating Partnership and their consolidated subsidiaries, collectively.shareholders’assets and liabilities, equity or partners'partners’ capital previously reported.real estate investment trust (“REIT”).REIT. AIR owns, through its wholly-owned subsidiaries, all of the common equity, the general partner interest and special limited partner interest in AIR Operating Partnership, a Delaware limited partnership originally formed on May 16, 1994.Partnership. AIR Operating Partnership conducts all of the business of AIR, which is focused on the ownership of stabilized multi-family properties located in top markets including eight important geographic concentrations: Boston; Philadelphia; Washington, D.C.; Miami; Denver; the San Francisco Bay Area; Los Angeles; and San Diego.1110 states and the District of Columbia. As of SeptemberJune 30, 2022,2023, our portfolio included 8073 apartment communities with26,600Table of Contents88%87%. We also have one land parcel and one indirect land interest that we lease to third parties.15SeptemberJune 30, 2022,2023, after elimination of units held by consolidated subsidiaries, the AIR Operating Partnership had 166,045,781163,508,889 common OP Units outstanding. As of SeptemberJune 30, 2022,2023, AIR owned 152,993,448149,223,526 of the common OP Units of the AIR Operating Partnership and AIR had an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock. AIR’s ownership of the total common OP Units outstanding represents a 92.1%91.3% legal interest in the AIR Operating Partnership and a 93.8%93.1% economic interest.a variable interest entityentities (“VIE”VIEs”), 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 June 30, 2023 and December 31, 2022, AIR consolidated six and seven VIEs, respectively, including the AIR Operating Partnership.which may be redeemedis currently redeemable at the holders’ option foroption. The AIR Operating Partnership, at its sole discretion, may settle such redemption requests in cash or at its option,cause AIR to issue shares of its Common Stock.Stock with a value equal to the redemption price. The preferred OP Units are therefore presented within temporary equity in AIR’s condensed consolidated balance sheets and within temporary partners’ capital in the AIR Operating Partnership’s condensed consolidated balance sheets.UnitsUnits’ redemption value (in thousands):Balance at January 1, 2023 $ 77,143 Preferred distributions (3,140) Net income allocated to preferred units 3,140 Balance at June 30, 2023 $ 77,143 SeptemberJune 30, 20222023 and December 31, 2021,2022, the AIR Operating Partnership had 2,934,063 and 2,935,6622,846,574 redeemable preferred OP Units respectively, issued and outstanding. Distributions per annum range from 1.92%1.92% to 8.75%8.75% per class and $0.48$0.48 to $8.00$8.00 per unit.ninesix months ended SeptemberJune 30, 2022,2023, we acquired threeone apartment communitiescommunity in South Florida, with 495 apartment homes, and one in the Washington, D.C. area.29,000 square feet of commercial space. Summarized information regarding these acquisitionsthis acquisition is set forth in the table below (dollars in thousands):Purchase price $ 298,000 Capitalized transaction costs 5,469 Total consideration (1) $ 303,469 Land $ 99,338 Building and improvements 187,427 Intangible assets (2) 12,077 Mark-to-market on debt assumed 7,370 Below-market lease liabilities (2) (2,743) Total consideration (1) $ 303,469 2.21.4 years and 1.40.5 years, respectively.SeptemberJune 30, 2022, we did not sell anysold four apartment communities.communities with 718 homes, three of which were included in our Same Store segment and one in our Other Real Estate segment, for a gain on disposition of $175.6 million. During the ninesix months ended SeptemberJune 30, 2022, we sold 12 apartment communities with 2,050 homes, 10 of which were included in our Same Store segment and two included in our Other Real Estate segment, for gross proceedsa gain on disposition of $781.1$587.6 million.From time to time we may be marketing for sale certain communities that are inconsistent with our long-term investment strategy. SeptemberJune 30, 2022, we had six apartment2023, no communities with 1,314 apartment homes that were classified as held for sale.Lease CancellationOn September 1, 2022,canceled existing master leases at four properties owned by AIR and previously leasedrecognize an impairment loss to Apartment Investment and Management Company (“Aimco”) for the purpose of their development. As partextent the carrying amount exceeds the estimated fair value of the cancellation, AIR paid $200 million to Aimco for the improvements added during the development period in accordance with the lease agreement. As AIR accounted for these leases as sales-type leases, we held a $466 million leased real estate asset on the consolidated balance sheet as of August 31, 2022. The total consideration of the added improvement value payment, leased real estate asset, and related costs were allocated to the underlying assets returned to AIR based on the following allocation (dollars in thousands):(1)Intangible assets and below-market lease liabilities have a weighted-average term of less than a year.(2)Includes the leased real estate asset as of the cancellation date and the added improvement value payment.17Capital Allocation – Share RepurchasesSeptemberJune 30, 2023, we evaluated the expected hold period of two real estate assets in our Other Real Estate reporting segment. Given management’s assessment of the likelihood of the sale of these assets, we reduced the carrying value to their estimated fair value and recognized a non-cash impairment loss on real estate of $8.2 million. During the three months ended June 30, 2023, these two properties sold for their estimated carrying value.repurchased 1.2 million sharesis the general partner with legal ownership of 30%, and AIR will receive 50% of the cash flows from operations, and various fees for $47 million, at an average price of $39.07 per share. providing property management, construction, and corporate services to the joint venture.quarter endJune 30, 2023, we formed a joint venture with a global institutional investor (the "Core JV") through selling a 47% interest in a portfolio of 10 of our Same Store properties in Philadelphia, Washington D.C., Denver, San Diego, and through November 2, 2022 we have purchasedMiami with 3,093 apartment homes and average monthly revenues of $2,534. Eight of the ten properties are now closed. Our purchases of two are subject to regulatory approvals, expected before year-end.3.1 million shares for $115 million. In aggregate, we have repurchased 7.2 million shares during 2022 at an average price of $39.96. We are authorized by the AIR Board of Directors to repurchase an additional $213$59.6 million of shares. We consider share buybacks as partthe new non-recourse property debt. The net of a balanced investment program. and tenants are fixed. We receive variable payments from our residents primarily for utility reimbursements. Our total lease income was comprised of the following amounts for all operating leases (in thousands):Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Fixed lease income $ 196,718 $ 169,337 $ 393,054 $ 337,567 Variable lease income 15,253 11,216 28,541 22,021 Total lease income $ 211,971 $ 180,553 $ 421,595 $ 359,588 SeptemberJune 30, 2022,2023, have an average remaining term of 10.517.1 months. In general, our commercial leases have options to extend for a certain period of time at the tenant’s option. FutureAs of June 30, 2023, future minimum annual rental payments we are contractually obligated to receive under residential and commercial leases, excluding such extension options, are as follows as of September 30, 2022 (in thousands):2023 (remaining) $ 262,306 2024 258,690 2025 41,745 2026 11,214 2027 9,701 Thereafter 34,712 Total $ 618,368 19Lessor ArrangementsDuring the three and nine months ended September 30, 2022, we recognized income of $4.4 million and $17.3 million, respectively, related to sales-type leases, compared to $6.5 million and $19.4 million, respectively, during the same periods in 2021, which is reflected in interest income in our condensed consolidated statements of operations. During the three months ended September 30, 2022, we canceled the existing sales-type leases, as described in Note 3. Accordingly, we will not receive any lease payments associated with these sales-type leases going forward.18debt as of September 30, 2022 and December 31, 2021our total indebtedness (in thousands):June 30, 2023 December 31, 2022 Secured debt: Fixed-rate property debt due May 2025 to January 2055 (1) $ 2,211,002 $ 1,906,151 Variable-rate property debt — 88,500 Total non-recourse property debt 2,211,002 1,994,651 Debt issuance costs, net of accumulated amortization (13,565) (9,221) Total non-recourse property debt, net $ 2,197,437 $ 1,985,430 Unsecured debt: Term loans due December 2023 to April 2026 (2) $ 800,000 $ 800,000 Revolving credit facility borrowings due April 2025 (3) 292,000 462,000 4.58% Notes payable due June 2027 100,000 100,000 4.77% Notes payable due June 2029 100,000 100,000 4.84% Notes payable due June 2032 200,000 200,000 Total unsecured debt 1,492,000 1,662,000 Debt issuance costs, net of accumulated amortization (4,860) (5,801) Total unsecured debt, net $ 1,487,140 $ 1,656,199 Total indebtedness $ 3,684,577 $ 3,641,629 2.4%between 2.4% to 4.2%5.7%.During the second quarter of 2022, we hedged $830 million of our floating rate debt through placement of floating to fixed rate swaps, which have been designated as cash flow hedges. These hedges lock $830 million of floating rate debt at an all in cost of 4.2%.(3)1-monthone-month Term Secured Overnight Financing Rate (“SOFR”) plus 1.00%1.00% and a SOFR adjustment of 10 basis10-basis points, based on our current credit rating. As of SeptemberJune 30, 2022,2023, the weighted-average interest rate for our term loans which is fixed viabefore consideration of in place interest rate swaps beginningwas 6.2%. The term loans mature on the following schedule: $150 million mature on December 15, 2023, with the second quarter of 2022, wastwo one-year extension options; $300 million mature on December 15, 2024, with a one-year extension option; $150 million mature on December 15, 2025; and $200 million mature on April 14, 2026. 4.1%.(4)On May 2, 2022, we exercised the accordion feature on our revolving credit facility, increasing the revolving credit facility by $400 million to $1.0 billion. As of SeptemberJune 30, 2022,2023, the weighted-average remaining term of the term loans was 2.5 years. Refer to Note 9 for additional discussion regarding the purpose of these transactions. Subsequent to the closing of the Core JV, our floating rate debt, after consideration of our interest rate swaps, is $125 million, or 4% of total leverage.$509.9$703.7 million under our revolving credit facility after consideration of undrawn letters of credit. The revolving credit facility bears interest at a 1-monthone-month Term SOFR plus 0.89%0.89%, based on our current credit rating, and a SOFR adjustment of 10 basis10-basis points. As of SeptemberJune 30, 2022,2023, the weighted-average interest rate for our revolving credit facility was 4.1%.6.1%(5)second quarterthree months ended June 30, 2023, we established a secured credit facility that provides for up to $1 billion of 2022, we issued three tranchescommitted property level financing, on an as needed basis. The facility has minimal upfront costs, a 15-year term, and provides AIR the opportunity to place up to 10-year non-recourse property debt financing. Pricing can be fixed rate or variable rate at AIR's choice and is based on the Fannie Mae grid. After consideration of guaranteed, senior unsecured notes, totaling $400 million. As of September 30, 2022, the weighted-average interest rate for senior unsecured notes was 4.3% secured credit facility, total liquidity is approximately $1.8 billion. and revolving credit facility, we have agreed to maintain certain financial covenants, as well as other covenants customary for similar credit arrangements. The financial covenants we are required to maintain include a Maximum Leveragemaximum leverage ratio of no greater than 0.60 to 1.00;1.00; a Fixed Charge Coverage Ratiofixed charge coverage ratio of greaterno less than 1.5x,1.50 to 1.00, a Maximum Secured Indebtednessmaximum secured indebtedness to Total Assetstotal assets ratio of no greater than 0.450.40 to 1.00, through March 31, 2023, and 0.40 to 1.00 thereafter, a Maximum Unsecured Leveragemaximum unsecured leverage ratio no greater than 0.60 to 1.00,, and a Minimum Unsecured Interest Coverage Ratiominimum unsecured interest coverage ratio no less than 1.50 to 1.00. We were in compliance with these covenants as of September 30, 2022 and expect to remain in compliance during the next 12 months.1.00.19SeptemberJune 30, 2022,2023, are immaterial to our condensed consolidated financial statements.Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Earnings per share Numerator: Basic and dilutive net (loss) income attributable to AIR common stockholders $ (1,439) $ 196,722 $ (12,896) $ 572,603 Denominator – shares: Basic weighted-average common shares outstanding 148,832 155,927 148,821 156,327 Dilutive common share equivalents outstanding — 209 — 280 Dilutive weighted-average common shares outstanding 148,832 156,136 148,821 156,607 Earnings per share – basic and diluted $ (0.01) $ 1.26 $ (0.09) $ 3.66 Earnings per unit Numerator: Basic and dilutive net (loss) income attributable to the AIR Operating Partnership’s common unitholders $ (1,754) $ 209,471 $ (14,037) $ 609,519 Denominator – units: Basic weighted-average common units outstanding 159,778 166,023 159,531 166,434 Dilutive common unit equivalents outstanding — 209 — 280 Dilutive weighted-average common units outstanding 159,778 166,232 159,531 166,714 Earnings per unit – basic and diluted $ (0.01) $ 1.26 $ (0.09) $ 3.66 ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, dividends and distributions paid per share of Common Stock and per common unit were $0.45$0.45 and $$0.90, respectively.were approximately 1.9 million, 1.6 million, and 1.7was 2.2 million for the three and six months ended SeptemberJune 30, 20222023, and 2021,1.7 million and 1.6 million for the ninethree and six months ended SeptemberJune 30, 2021,2022, respectively. These securities, which include preferred OP Units redeemable for Common Stock, were excluded from the diluted earnings per share calculationscalculation as they are anti-dilutive. These securities were dilutive for the nine months ended September 30, 2022 and were included in the calculation of diluted earnings per share.20Recurring Fair Value MeasurementsDuring 2022, we entered into floating to fixed interest rate swaps for $830 million notional principal value of debt. These swaps have been designated as cash flow hedges of expected future variable interest payments. Changes in the fair value are recognized as unrealized gains (losses) on derivative instruments in other comprehensive income. Amounts reported in accumulated other comprehensive income will be reclassified into interest expense as interest payments are made on our variable-rate debt. We estimate that during the next twelve months, we will reclassify into earnings approximately $13.3 million of the unrealized gains in accumulated other comprehensive income.Additionally, in connection with our issuance of senior unsecured notes, we entered into a $400 million treasury hedge, locking the interest rate of the ten-year treasury at 2.43%. During the second quarter of 2022, we received $15.9 million for the settlement of this hedge, which was designated as a cash flow hedge. The settlement value of the treasury hedge is included in unrealized gains (losses) on derivative instruments in other comprehensive income (loss) and will be reclassified into earnings as a decrease to interest expense over the term of the senior unsecured notes issued.Prior to the December 15, 2020, separation (the “Separation”), Aimco paid an upfront premium of $12.1 million for the option to enter into an interest rate swap at a future date. In connection with the Separation, all of the risks and rewards of ownership related to this swap were assigned to post-Separation Aimco, with an offsetting and equal asset and liability recognized for the amount of gain or loss.TheseA three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value, as described below: are measured at fair value on a recurring basis, andwhich are presented in other assets, net, and accrued liabilities and other in our condensed consolidated balance sheets.sheets (in thousands):As of June 30, 2023 As of December 31, 2022 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Interest rate option (1) $ — $ — $ — $ — $ 53,481 $ — $ 53,481 $ — Interest rate swaps - pay-fixed, receive floating $ 35,395 $ — $ 35,395 $ — $ 32,222 $ — $ 32,222 $ — Interest rate swaps - pay-floating, receive fixed $ (1,959) $ — $ (1,959) $ — $ — $ — $ — $ — Treasury rate lock $ 2,236 $ — $ 2,236 $ — $ 319 $ — $ 319 $ — The following table summarizes fair value for ourDuring the three months ended June 30, 2023, the interest rate swap option asset and swaps (in thousands):offsetting liability associated with the Parkmerced mezzanine investment was settled, resulting in equal decreases in other assets and accrued liabilities and other.SeptemberJune 30, 20222023 and December 31, 2021,2022, due to their relatively short-term nature and high probability of realization. The carrying value of our unsecured notes payable, revolving credit facility and term loans, which we classify as Level 2 in the GAAP fair value hierarchy, approximated their estimated fair value as of SeptemberJune 30, 20222023 and December 31, 2021.As of June 30, 2023 As of December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value Non-recourse property debt $ 2,211,002 $ 1,966,566 $ 1,994,651 $ 1,753,222 Unsecured notes payable $ 400,000 $ 373,648 $ 400,000 $ 371,368 Seller financing note receivable, net (1) $ 32,032 $ 32,573 $ 31,611 $ 32,286 carrying value and fair value of our non-recourse property debt, excluding debt issuance costs (inderivative financial instruments (dollars in thousands):As of June 30, 2023 Number of Aggregate Notional Derivative Assets
(included in Other Assets, net)Derivative Liabilities
(included in Accrued Liabilities and Other)Instruments Amount Fair Value Derivatives designated as hedging instruments: Treasury rate locks 1 $ 150,000 $ 2,236 $ — Derivatives not designated as hedging instruments: Interest rate swap, floating to fixed 10 $ 830,000 $ 35,395 $ — Interest rate swap, fixed to floating 6 $ 480,000 $ — $ (1,959) As of December 31, 2022 Number of Aggregate Notional Derivative Assets
(included in Other Assets, net)Derivative Liabilities
(included in Accrued Liabilities and Other)Instruments Amount Fair Value Derivatives designated as hedging instruments: Treasury rate locks 1 $ 100,000 $ 319 $ — Interest rate swaps, floating to fixed 10 $ 830,000 $ 32,222 $ — 910 — Variable Interest Entitiesthatthose of the AIR Operating Partnership.fivefour VIEs that own interests in one or more apartment communities and are typically structured to generate a return for their partners through the operation and ultimate sale of the communities and (ii) one VIE related to a lessor entity that owns an interest in a property leased to a third party. The AIR Operating Partnership is the primary beneficiary in the limited partnerships in which it is the sole decision maker and has a substantial economic interest.21June 30, 2023 (1) December 31, 2022 VIEs with interests in apartment communities 4 5 Apartment communities owned by VIEs 15 16 Apartment homes in communities owned by VIEs 5,041 5,369 June 30, 2023 December 31, 2022 ASSETS: Net real estate $ 1,040,597 $ 1,066,482 Cash and cash equivalents 71,262 54,319 Restricted cash 2,009 2,378 Other assets, net 21,465 20,944 LIABILITIES: Non-recourse property debt, net $ 1,204,242 $ 1,212,065 Accrued liabilities and other 36,246 35,365 During 2021,Note 3, during the three months ended June 30, 2023, we formed aan unconsolidated joint venture with an affiliate of Blackstonea global asset manager, by selling an 80%a 70% interest in three multi-family properties with 1,748 unitsour Huntington Gateway property, a 443-unit property located in Virginia. Our 20%30% interest and $28.0 million preferred interest in the joint venture meets the definition of a VIE,VIE; however, we are not the primary beneficiary and do not consolidate these communities.this community. As of SeptemberJune 30, 2022 and December 31, 2021,2023, the carrying value of the investment of $21.3AIR's interest is $34.6 million, and $26.0 million, respectively,which is included in other assets, net, in our condensed consolidated balance sheets. As of June 30, 2023, AIR’s exposure to the obligations of the VIE is limited to the carrying value of the limited partnership interests, and 20%$28.2 million of Blackstone'sthe joint venture's guarantor non-recourse liabilities, which represents 30%.were $79.0 million as of September 30, 2022.SeptemberJune 30, 2022,2023 and December 31, 2021,2022, the investment balance of $362.8$158.5 million and $337.8$158.7 million, respectively, is included in other assets, net, in our condensed consolidated balance sheets. Subsequent to the Separation,December 2020 separation from Apartment Investment and Management Company (“Aimco”), all risks and rewards of ownership are Aimco’s,Aimco’s; however, as legal transfer has not occurred, there is an equal and offsetting liability included in accrued liabilities and other in our condensed consolidated balance sheets. Accordingly, there is no net effect on AIR’s stockholders’ equity or the AIR Operating Partnership's partners'Partnership’s partners’ capital.1011 — Business Segmentshadhave reached a stabilized level of operations. Our Other Real Estate segment includes five properties acquired in 2021, four properties acquired in 2022, four properties previously leased to Aimco, one property acquired in 2023, and three communities we expect to sell or lease to a third party, but do not yet meet the criteriaone community that is expected to be classified as held for saleSeptemberJune 30, 2022,2023, our Same Store segment included 5863 apartment communities with 20,73022,794 apartment homes and our Other Real Estate segment included 1610 apartment communities with 4,5562,945 apartment homes. As of September 30, 2022, we had six apartment communities with 1,314 homes that were classified as held for sale.(expense) benefitexpense of our segments on a proportionate basis. basis, excluding amounts22SeptemberJune 30, 20222023 (in thousands):
Store
Real Estate
and Other
Adjustments (1)
Amounts Not
Allocated to
Segments (2)
Store
Real Estate
and Other
Adjustments (1)
Amounts Not
Allocated to
Segments (2)
expense (4)
Store
Real Estate
and Other
Adjustments (1)
Amounts Not
Allocated to
Segments (2)
Store
Real Estate
and Other
Adjustments (1)
Amounts Not
Allocated to
Segments (2)Same
StoreOther
Real EstateProportionate
and Other
Adjustments (1)Corporate and
Amounts Not
Allocated to
Segments (2)Consolidated Three months ended June 30, 2023: Total revenues $ 160,180 $ 29,684 $ 22,385 $ 2,311 $ 214,560 Property operating expenses 41,330 10,640 11,496 8,546 72,012 Other operating expenses not allocated to segments (3) — — — 97,802 97,802 Total operating expenses 41,330 10,640 11,496 106,348 169,814 Proportionate property net operating income (loss) 118,850 19,044 10,889 (104,037) 44,746 Other items included in income (loss) before income tax expense (4) — — — (42,971) (42,971) Income (loss) before income tax expense $ 118,850 $ 19,044 $ 10,889 $ (147,008) $ 1,775 Same
StoreOther
Real EstateProportionate
and Other
Adjustments (1)Corporate and
Amounts Not
Allocated to
Segments (2)Consolidated Six months ended June 30, 2023: Total revenues $ 318,082 $ 59,501 $ 44,327 $ 4,643 $ 426,553 Property operating expenses 82,577 21,911 22,860 20,117 147,465 Other operating expenses not allocated to segments (3) — — — 204,308 204,308 Total operating expenses 82,577 21,911 22,860 224,425 351,773 Proportionate property net operating income (loss) 235,505 37,590 21,467 (219,782) 74,780 Other items included in income (loss) before income tax expense (4) — — — (82,814) (82,814) Income (loss) before income tax expense $ 235,505 $ 37,590 $ 21,467 $ (302,596) $ (8,034) Same
StoreOther
Real EstateProportionate
and Other
Adjustments (1)Corporate and
Amounts Not
Allocated to
Segments (2)Consolidated Three months ended June 30, 2022: Total revenues $ 147,075 $ 3,718 $ 19,894 $ 12,813 $ 183,500 Property operating expenses 39,667 1,989 9,630 12,501 63,787 Other operating expenses not allocated to segments (3) — — — 80,913 80,913 Total operating expenses 39,667 1,989 9,630 93,414 144,700 Proportionate property net operating income (loss) 107,408 1,729 10,264 (80,601) 38,800 Other items included in income before income tax expense (4) — — — 174,358 174,358 Income before income tax expense $ 107,408 $ 1,729 $ 10,264 $ 93,757 $ 213,158 Same
StoreOther
Real EstateProportionate
and Other
Adjustments (1)Corporate and
Amounts Not
Allocated to
Segments (2)Consolidated Six months ended June 30, 2022: Total revenues $ 290,405 $ 4,952 $ 39,428 $ 30,193 $ 364,978 Property operating expenses 79,553 2,928 19,511 25,031 127,023 Other operating expenses not allocated to segments (3) — — — 176,077 176,077 Total operating expenses 79,553 2,928 19,511 201,108 303,100 Proportionate property net operating income (loss) 210,852 2,024 19,917 (170,915) 61,878 Other items included in income before income tax expense (4) — — — 552,085 552,085 Income from before income tax expense $ 210,852 $ 2,024 $ 19,917 $ 381,170 $ 613,963 for third-partyto: (i) include AIR’s proportionate share of the results of unconsolidated apartment communities, which is excluded in the related consolidated amounts, and (ii) exclude the noncontrolling interests in consolidated real estate partnerships’ proportionate share of the results of communities, in our segments, which areis included in the related consolidated amounts but excluded from proportionate property NOI for our segment evaluation.amounts. Also includes the reclassification of utility reimbursements from revenues to property operating Effective in 2022, corporate and amounts not allocated to segments includes the depreciation of capitalized costs of non-real estate assets.IncludesIncludes: (i) the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any. Also includesany, (ii) property management revenues, which are not part of our segment performance measure, and property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our segment performance measure.provision for real estate impairment loss and write-offs of deferred leasing commissions, which are not included in our measure of segment performance.23 derecognition of leased properties, interest income, interest expense, loss from unconsolidated real estate partnerships, and loss on extinguishment of debt.June 30, 2023 December 31, 2022 Same Store $ 4,481,117 $ 4,610,356 Other Real Estate 1,466,200 1,251,581 Corporate and other assets (1) 459,693 689,946 Total consolidated assets $ 6,407,010 $ 6,551,883 properties, or properties classified as held for sale as of September 30, 2022. Corporate and other assets as of December 31, 2021, also includes the note receivable from Aimco, which was repaid in 2022, and the lease receivable related to properties leased to Aimco, which was canceled during the third quarter of 2022.sale.ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, capital additions related to our segments were as follows (in thousands):2023 2022 Same Store $ 80,362 $ 85,695 Other Real Estate 7,675 658 Total capital additions $ 88,037 $ 86,353 27the impact of the COVID-19 pandemic, including our ability to maintain current or meet projected occupancy, rental rate and property operating results; expectations regarding consumer demand, growth in revenue and strength of other performance metrics and models; the effect of acquisitions and dispositions; expectations regarding acquisitions as well as sales and the formation of joint ventures and the use of proceeds thereof; the availability and cost of corporate debt; our ability to comply with debt covenants; and risks related to the provision of property management services to Aimcothird parties and our ability to collect property management and asset management related fees.and the level of unemployment; the effects of the COVID-19 pandemic on AIR’s businessunemployment, and on the global and U.S. economies 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 herein;recession; the amount, location, and quality of competitive new housing supply, which may be impacted by global supply chain disruptions; the timing and effects of acquisitions and dispositions; changes in operating costs, including energy costs; negative economic conditions in our geographies of operation; loss of key personnel; AIR’s ability to maintain current or meet projected occupancy, rental rate and property operating results; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; financing risks, including interest rate changes and the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and 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 AIR. Other risks and uncertainties are described in this Quarterly Report on Form 10-Q, as well as the section entitled “Risk Factors” in Item 1A of AIR’s and AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2021,2022, and subsequent filings with the SEC.25ImproveContinuously improve our best-in-class property operations platform, the “AIR Edge,” to generate above-market organic growth.withand our commitment to keep net general and administrative expenses less than or equal to 15 basis15-basis points of gross asset value.DevelopForm private capital partnerships as a source of equity capital for accretive growth.point.point, in 10 states and the District of Columbia. As of SeptemberJune 30, 2022,2023, our portfolio included 8073 apartment communities with 26,60025,739 apartment homes, in which we held an average ownership of approximately 88%87%.business planstrategy are further described in the sections that follow.highlightsNOI margin was 74.2%, up 120-basis points year-over-year and an AIR record for the thirdsecond quarter, of 2022 include:•Revenue increased by 9.6% and NOI increased by 13.3%, compared to the third quarter of 2021;NOI margins were 74.3%, an all-time high for the third quarter8.8% growth in Residential Rents, and up 240 basis points compared to 2021; andFor transacted leases becoming effective during theSecond quarter newsigned lease rents increased by 17.1% and renewal rents increased by 11.1%, forrate growth is higher than assumed in our annual plan with a weighted-averageblended rate increase of 14.0%;Store MarketsConsumer demand remained strong through the quarter, with signed new lease rates up 17.0%Store) and (ii) 70-basis points from the prior leasescapital enhancement activity.renewals up 11.8%, resulting in a weighted-average increaseexpected seasonality (110-basis points of 14.5%. We saw a sequential decline in ADO of 90 basis pointsdecline) due to 95.9%, reflecting the frictional vacancy consistent withof the higher move out volume thatleasing season and (ii) increased move-outs of non-paying residents as COVID-related protections expired (60-basis points). ADO is typical during the summer leasing season. Year-to-date ADO of 96.9% was 120 bps higher thananticipated to reach its low point in the prior year. We anticipate continued occupancy gains throughout the fourth quarter.Acquisition PortfolioThe acquisition portfolio is currently comprised of five properties acquired in 2021, four acquired in 2022,July, and represents 14% of AIR GAV. At those properties acquired in 2021, leasing continues to exceed expectations. Signed new lease rates were up 25.1%then increase in the third quarter, with renewals up 23.2%, resulting in a weighted-average increase of 24.1%. Fourth quarter revenue growth for the 2021 acquisitions, the first reporting period with a year-over-year comparison, is anticipated to be 50% above the Same Store portfolio. At properties we acquired in 2022, performance is consistent with our expectations, and rental rate achievement is ahead of our initial projections. We will provide year-over-year comparable data as it becomes available.ManagementOur portfolio of apartment communities is diversified across primarily “A” and “B” price points, averaging “B/B+” in quality, and also across eight core markets in the United States. In the past two years, AIR has recycled approximately $5.4 billion, or 40%, of its gross asset value as part of and since the Separation, property sales, and joint ventures, all during a period of attractive pricing for26multi-family properties, using the proceeds to simplify its business, reduce leverage, and improve the quality and expected profitability of its real estate portfolio.We have improved AIR's portfolio through reducing our allocation to New York City and Chicago markets with regulatory risk, and reallocating capital into higher growth submarkets, such as Miami-Dade and Broward counties, now 19% of AIR GAV, in markets with limited REIT competition.PerformanceYear-over-Year Variance (1) Year Apartment Communities % of Gross Asset Value Rev Exp NOI Class of 2021 (2) 5 8.0% 19.0% (2.2%) 30.5% Sequential Variance (3) Year Apartment Communities % of Gross Asset Value NOI Class of 2021 (2) 5 8.0% 4.9% Class of 2022 and 2023 (4) 5 9.0% 3.4% Acquisition Portfolio 10 17.0% 4.1% Total Portfolio 73 100.0% 1.7% AIR named Kingsley Elite Five in 2022, #2 among all operators and #1Represents variance for public REITsWe measure the quality of apartment communities in our 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 local market average; and as “B” quality apartment communities those earning rents between 90% and 125% of local market average. We classify as “B/B+” quality a portfolio that on average earns rents between 100% and 125% of local market average rents. Although some companies and analysts within the multi-family real estate industry use apartment community quality ratings of “A” and “B,” some of which are tied to local market rent averages, the metrics used to classify apartment community quality as well as the 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 multi-family real estate industry.We expect to improve the quality of our portfolio by allocating investment capital to enhance rent growth and increase long-term capital values through routine investments in property upgrades (such as upgrading kitchens, bathrooms, and other interior design aspects) and through portfolio design, emphasizing land value as well as location and submarket. We plan to maintain a dynamic capital allocation and market selection process, expecting over time to reallocate our investment to locations with lower public tax burdens, including the southeastern United States and the Mountain West. We target geographic diversification in our portfolio to reduce the volatility of our rental revenue by avoiding undue concentration in any particular market.AIR uses “paired trades” to fund acquisitions, basing our cost of capital on the anticipated unlevered internal rates of return (“IRR”) of the communities or joint venture interests sold. We require a "spread" or accretion of an unlevered IRR at least 200 basis points higher on the communities purchased. This excess return is driven in part by what we call the AIR Edge, the cumulative result of our focus on resident selection, satisfaction, and retention, as well as relentless innovation in delivering best-in-class property management. We seek to sell communities with lower expected free cash flow (“FCF”) internal rates of return and reinvest the proceeds from such sales in accretive uses such as capital enhancements, share repurchases, and selective acquisitions of stabilized communities with projected FCF internal rates of return higher than expected from the communities being sold. When the cost of capital is favorable, we will look to grow through the acquisition of stabilized apartment communities that we believe we can operate better than their previous owners. Through this disciplined approach to capital allocation, we expect to increase the quality and expected growth rate of our portfolio.In the past two years, we have acquired $1.4 billion, or 14% of GAV, of properties new to the AIR operating platform. New purchases will increase to 17% of GAV with the anticipated acquisition in early next year of Southgate Towers in Miami Beach. (Please see below for further information regarding this acquisition.)27We estimate real estate values declined by approximately 10% during 2022, the result of approximately 85 basis points of NOI cap rate expansion, about half offset by strong NOI growth. As a paired trade investor, AIR is agnostic as to market changes insofar as it buys and sells properties in the same market conditions, and is focused on gaining an accretive “spread”. As market conditions change, AIR adjusts its target returns and spreads to reflect its new cost of capital. Our “paired trade” approach is intended to ensure that new acquisitions are accretive to earnings in the near-term, and will generate attractive spreads to IRRs in the long-term.TransactionsAcquisitionsAs previously announced, we acquired The District at Flagler Village in Fort Lauderdale, FL for $173 million in the third quarter. The property has 350 apartment homes and was newly constructed in 2021. It sits in the affluent and growing Flagler Village neighborhood with access to the Brightline train station. Year-to-date, we have acquired $640 million of properties new to the AIR platform.Additionally, and as previously announced, we canceled existing master leases at four properties owned by AIR and previously leased to Aimco for purpose of their development. As part of the cancellation, AIR paid $200 million to Aimco for the added improvements. The four properties include 865 apartment homes with average revenue per apartment home of $3,669 and are located in the South Beach neighborhood of Miami Beach, FL, Kendall Square in Cambridge, MA, the Anschutz Medical Campus in Aurora, CO, and Redwood City, CA.In aggregate, we expect a NOI yield in 2023 of mid 4%s and a long-term unlevered IRR of approximately 9%.During the quarter, we also went under contract with a non-refundable deposit to acquire Southgate Towers, located in the South Beach neighborhood of Miami Beach with 495 apartment homes for $298 million. The acquisition is expected to close in early January 2023. We expect unlevered IRRs greater than 10% and at a spread of more than 200 basis points to the properties sold to fund its acquisition.DispositionsWe had no dispositions in the third quarter. We anticipate selling six properties located in the New England area in November for a gross sales price of approximately $500 million, representing a trailing twelve-month NOI cap rate of 4.4%. These have been classified as held for sale as of September 30, 2022.Capital Allocation – Share RepurchasesDuring the three months ended SeptemberJune 30, 2022,2023, compared to three months ended June 30, 2022.repurchased 1.2platform. Common examples are the implementation of AIR’s “no smoking” policy and AIR’s requirement of high credit ratings from new residents. Over three or four years, results become stable as new residents are selected by AIR, increasing numbers of high quality residents renew their leases, and the disturbance of property upgrades is in the past.California JV Washington, D.C. JV Core JV Value-Add JV September 2020 October 2021 July 2023 June 2023 Gross Asset Value @ 100% $2.4B $0.5B $1.1B $0.1B AIR / JV Partner Ownership 61% / 39% 20% / 80% 53% / 47% 30% / 70% (1) Number of Properties 12 3 10 1 Units 4,051 1,748 3,093 443 Average Revenue per Unit $3,389 $2,070 $2,534 $2,307 shares for $47 million,and a non-cash GAAP loss of $8.2 million; andan averagea price which resulted in a non-cash GAAP write-down of $39.07 per share. Subsequent to quarter end and through November 2, 2022 we have purchased an additional 3.1 million shares for $115$15.4 million.we have repurchased 7.2 million shares during 2022 at an average pricesince the Separation, AIR has recognized non-cash GAAP gains of $39.96. We are authorized by the AIR Board$1.5 billion on $2.2 billion of Directors to repurchase an additional $213 milliondispositions.shares. We consider share buybacks as part of a balanced investment program.Balance SheetWe seek to increasecapital and enhance financial returns, by using leverage with appropriate caution. We limit risk through our balance sheet structure, employing low leverage and primarily long-dated debt. We target aAIR targets Net Leverage to EBITDAre ratio between 5.0x andto 6.0x and anticipate the actual ratio will vary basedwith focus on the timing of transactions.fixed-rate, long-term debt with well laddered maturities. We maintain financial flexibility through (i) ample unused and available credit, (ii) holding properties with substantial value unencumbered by property debt, and (iii) maintaining an investment grade rating,rating.using partners’ capital when it enhances financial returns or reduces investment risk. We seek to minimize refunding andextension of its weighted-average maturities by more than seven months;risk.Components of LeverageOur leverage includes our share of long-term, non-recourse property debt encumbering our apartment communities, together with outstanding borrowings under our revolving credit facility, our term loans, unsecured notes payable, and preferred equity.As of September 30, 2022, about $170 million of AIR’s debt matures before 2025 and it is expected to be refunded before year end with $55 million at 4.9%, $14 million repaid and the remainder at a fixed rate to be determined. Once completed, AIR will have no debt maturingrisk before the second quarter of 2025.2025;28•AIR anticipates using the net proceeds from the November property sales discussed above to reduce borrowings on its revolving credit facility.Pro forma the completion of these refinancing activities, and exclusive of any remaining borrowings under its revolving credit facility, AIR’s floating rate debt exposure is anticipated to be $79 million. This debt is subject to an interest rate cap at an effective rate of 5.35%.Please see the Liquidity and Capital Resources section for additional information regarding our leverage and the Leverage Ratios subsection of the Non-GAAP Measures section for further information about the calculation of our leverage ratios.LiquidityWe use our revolving credit facility for working capital, other short-term purposes, and to secure letters of credit. As of September 30, 2022, our share of cash and restricted cash, excluding amounts related to tenant security deposits, was $99.6 million and we had the capacity to borrow up to $509.9 million under our revolving credit facility, bringing total liquidity to $609.5 million. Liquidity is expected to increase by approximately $460 million with the closing of the November property sales.We manage our financial flexibility by maintaining an investment grade rating from S&P and holding communities that are unencumbered by property debt. As of September 30, 2022, we held unencumbered apartment communities with an estimated fair market value of approximately $8.3 billion, almost triple the amount from December 31, 2020.As previously announced, AIR is seeking an investment-grade Issuer Credit Rating from Moody’s and we anticipate receiving our rating during the fourth quarter.November 1, 2022, ourJuly 25, 2023, the AIR Board of Directors declared a quarterly cash dividend of $0.45 per share of Common Stock. This amount isStock, payable on November 30, 2022,August 29, 2023 to stockholdersshareholders of record on NovemberAugust 18, 2022. On an annualized basis, the dividend represents $1.80 per share, reflecting a dividend yield of approximately 4.7% based on AIR's closing share price on Tuesday, November 1, 2022. In setting AIR's 2022 dividend, our2023. The Board of Directors targeted a 75% payout ratio on Pro forma FFO in setting the dividend level of approximately 75% of full year FFO per share.The after-tax dividend will benefit from AIR'sfor 2023, which is also expected to have favorable tax characteristics due to AIR’s tax basis refreshed tax basis. Two-thirdsat the time of the 2021 dividend was a tax-free return of capital while the remaining one-third was taxable at capital gain rates. In the same year, approximately 60% of peer dividends were taxed at ordinary income rates, with the remaining 40% taxed at capital gain rates.In 2022, we currently project a majority of our dividend will be taxable at capital gain rates, with the remainder taxable at ordinary income rates. We believe the tax characteristics of our dividend makes our stock more attractive to taxable investors, such as foreign investors, taxable individuals, and corporations by comparison to peer shares whose dividends are taxed at higher rates. For example, if AIR's 2022 dividend is characterized as 50% capital gains and 50% as ordinary income and peer 2022 dividends are characterized consistently with 2021, AIR's estimated after tax dividend would be approximately 35% higher than peer average.We offer benefits reinforcing our valueThe Compensation and Human Resources Committee of caring for each other, including an opportunity to manage one’s life through flexible work schedules and “dress for your day,” paid time for parental leave, profit sharing, retirement plans for all, financial support for our teammates who are becoming United States citizens, and a bonus structure at all levels of the organization. Consistent with the duration of our other leave policies, we also pay full compensation and benefits for teammates who are actively deployed by the United States military.A critical element of our culture is a relentless focus on efficiency. We continuously seek to reduce costs through the use of additional automation and continued technological investment. We expect this focus will enable our general and administrative expenses to be lower, as a percentage of gross asset value, than our peers.Corporate responsibility is a longstanding AIR priority and a key part of our culture. We are committed to transparency, and continuous improvement, as measured by GRESB. Based on UN Sustainable Development Goals, we have set targets for energy, water, and greenhouse gas reductions. We contracted for expert review of the environmental impacts of our properties, and we are considering various ways to improve portfolio resilience.29During the quarter, AIR engaged with holders of approximately 70% of outstanding common shares, which included the participation of multiple Board members alongside senior management, in a series of lunches, dinners, video meetings, and calls. Numerous topics were discussed such as governance, investment strategy, operations, and corporate responsibility, including CEO succession planning and matters related to Environmental, Social, and Governance ("ESG"). Board members have also participated in several industry conferences and private meetings throughout the year. AIR's Board is highly proactive and welcomes investor feedback to ensure stockholder perspectives are well heard in Board deliberations.AIR launched new corporate responsibility webpages during the quarter to highlight our commitments to ESG, and published corporate responsibility goals consistent with the United Nations Sustainable Development Goals. AIR also launched an inaugural materiality assessment and surveyed investors, its Board of Directors teammates, vendors,is responsible for succession planning in all leadership positions, both in the short-term and community partners to identify which topics they consider most material to the Company. Subsequent to quarter end,long-term, with particular focus on CEO succession.published its 2021-2022 Corporate Responsibility Report, which demonstrates AIR's commitment to being an outstanding corporate citizen, and reinforces its dedication to ESG goal setting and reporting on progress through transparent, data-driven disclosures consistent with the Sustainability Accounting and Standards Board (“SASB”).AIR has made progress on its goals to reduce the Company's environmental impact by 2025, which includewas named a 15% energy use reduction, 10% water usage reduction, and 15% greenhouse gas reduction, all by 2025. This is in addition to more than a decade of investment in clean energy, energy efficiency and water conservation, including $7.9 million invested in energy conservation between 2019 and 2021.AIR recently received its first public GRESB score of 78, which included an “A” grade for both ESG public disclosure and alignment with the Task Force for Climate-Related Financial Disclosures (“TCFD”). AIR received a “Green Star” from GRESB for overall Management and Performance in 2021, a perfect social responsibility score,Kingsley Excellence Elite Five multifamily company and a near-perfect corporate governance score.In partnership withwinner of the National Leased Housing Association,2023 Kingsley Excellence Awards for customer service. Of the winners, AIR ranked second among all operators, and first among publicly traded REITs. AIR is committed to world-class customer service, which we continuedeliver through listening to, learning from, and responding to our longstanding commitment to offer AIR Gives Opportunity Scholarships to students living in affordable housing. During 2022, we awarded 14 scholarships to students living in affordable housing.AIR has been recognized nationallyresidents every day. We also benefit from the support of great leadership, contributions from exceptional teammates, and a strong culture. These strengths are confirmed by such awards as AIR's 2023 Top Workplaces USA Award (the second consecutive year), a “National10-time winner of Top Workplace Winner.” In addition to that national recognition, AIR has previously been recognized as a top workplace in Colorado (by the Denver Post), Top Workplace in Philadelphia (by The Philadelphia Inquirer), and in South Florida (by the Sun Sentinel) as well as Built in 2023 Best Places to Work in Colorado, Los Angeles, Miami, and Washington, D.C. area,We take seriously our responsibility to care for our customers, our neighbors, and the San Francisco Bay area. Specifically in 2021, outeach other as teammates. We are grateful for these recognitions and consider them confirmation of hundreds of participating companies, AIR was one of only six recognized by the Denver Post as a “Top Workplace” in Colorado for each of the past nine years. Also in 2021, AIR was recognized by the Washington Post as a “Top Workplace” in the Washington, D.C. area. AIR was recognized by the Denver Business Journal as one of the Denver Area's Healthiest Employers in 2022 for the third consecutive year.incomeloss attributable to common stockholders per common share, on a dilutive basis decreased $0.05was $0.01 and $0.09 for the three and six months ended SeptemberJune 30, 2022,2023, respectively, compared to 2021, due primarily to higher depreciation and amortization expense due to properties acquired and lower gain on dispositions of real estate, offset partially by increased contribution from property operations. Netnet income attributable to common stockholders per common share on a dilutivediluted basis increased $3.20of $1.26 and $3.66 for the ninethree and six months ended SeptemberJune 30, 2022, compared to 2021, respectively, due primarily toto:lowerthird quarters of 2022, and the associated $12.9 million prepayment penalties,penalty received from Aimco in connection with its partial repayment during the second quarter of 2022, and higher depreciation amortization expense due to property acquisitions.$1.81$1.12 for the three and ninesix months ended SeptemberJune 30, 2023, respectively, compared to $0.66 and $1.23 for the three and six months ended June 30, 2022, respectively, compared to $0.56 and $1.58, respectively, for 2021, due primarily to increasedthe below factors. Before consideration of the impact from the Aimco note receivable contribution of $0.15 and $0.19 per share for the three and six months ended June 30, 2022, Pro forma FFO per share was $0.51 and $1.04, respectively.operations and a decrease in interest expense.operations.30NineSix Months Ended SeptemberJune 30, 2022,2023, Compared to 2021hadhave reached a stabilized level of operations. Our Other Real Estate segment includes five properties acquired in 2021, four properties acquired in 2022, four properties previously leased to Aimco, one property acquired in 2023, and three communities we expect to sell or lease to a third party, but do not yet meet the criteriaone community that is expected to be classified as held for saleSeptemberJune 30, 2022,2023, our Same Store segment included 5863 apartment communities with 20,73022,794 apartment homes and our Other Real Estate segment included 1610 apartment communities with 4,5562,945 apartment homes. As of September 30, 2022, we had six apartment communities with 1,314 homes that were classified as held for sale.1011 to the condensed consolidated financial statements in Item 1 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.Three Months Ended Historical Change Change Attributable to Changes in Ownership Change Excluding Changes in Ownership (dollars in thousands) June 30, 2023 June 30, 2022 $ % $ % $ % Rental and other property revenues, before utility reimbursements: Same Store $ 160,180 $ 147,075 $ 13,105 8.9 % $ 233 0.1 % $ 12,872 8.8 % Other Real Estate 29,684 3,718 25,966 nm — — % 25,966 nm Total 189,864 150,793 39,071 25.9 % 233 0.1 % 38,838 25.8 % Property operating expenses, net of utility reimbursements: Same Store 41,330 39,667 1,663 4.2 % 65 0.1 % 1,598 4.1 % Other Real Estate 10,640 1,989 8,651 nm — — % 8,651 nm Total 51,970 41,656 10,314 24.8 % 65 0.1 % 10,249 24.7 % Proportionate property net operating income: Same Store 118,850 107,408 11,442 10.7 % 168 0.1 % 11,274 10.6 % Other Real Estate 19,044 1,729 17,315 nm — — % 17,315 nm Total $ 137,894 $ 109,137 $ 28,757 26.3 % $ 168 0.1 % $ 28,589 26.2 % SeptemberJune 30, 2022,2023, compared to 2021,2022, excluding changes attributable to changes in ownership, our Same Store proportionate property NOI increased by $12.1 million, or 13.3%10.6%. This increase was attributable primarily to a $12.2$12.9 million, or 9.6%8.8%, increase in rental and other property revenues due to a 10.4%an 8.8% increase in residential rental rates, and a 30 basis point1.0% increase in late fees and other, partially offset by a 1.1% decrease in net bad debt.SeptemberJune 30, 2022,2023, compared to 2021,2022, increased by $17.1$17.3 million, due primarily to contribution from four propertiesone property acquired in 2021,2023, four properties acquired in 2022, and NOI contribution from the four properties acquired on September 1, 2022, when their respective master leases were canceled.31Six Months Ended Historical Change Change Attributable to Changes in Ownership Change Excluding Changes in Ownership (dollars in thousands) June 30, 2023 June 30, 2022 $ % $ % $ % Rental and other property revenues, before utility reimbursements: Same Store $318,082 $290,405 $27,677 9.5 % $ 460 0.1 % $ 27,217 9.4 % Other Real Estate 59,501 4,952 54,549 nm — — % 54,549 nm Total 377,583 295,357 82,226 27.8 % 460 0.1 % 81,766 27.7 % Property operating expenses, net of utility reimbursements: Same Store 82,577 79,553 3,024 3.8 % 95 0.1 % 2,929 3.7 % Other Real Estate 21,911 2,928 18,983 nm — — % 18,983 nm Total 104,488 82,481 22,007 26.7 % 95 0.1 % 21,912 26.6 % Proportionate property net operating income: Same Store 235,505 210,852 24,653 11.7 % 365 0.1 % 24,288 11.6 % Other Real Estate 37,590 2,024 35,566 nm — — % 35,566 nm Total $273,095 $212,876 $60,219 28.3 % $ 365 0.1 % $ 59,854 28.2 % ninesix months ended SeptemberJune 30, 2022,2023, compared to 2021,2022, excluding changes attributable to changes in ownership, our Same Store proportionate property NOI increased by $36.6 million, or 14.1%11.6%. This increase was attributable primarily to a $37.2$27.2 million, or 10.2%9.4%, increase in rental and other property revenues due to a 7.6%9.4% increase in residential rental rates, and a 120 basis point0.6% increase in ADO to 96.9%,late fees and other, partially offset by a 100 basis point0.7% decrease in net bad debt.ninesix months ended SeptemberJune 30, 2022,2023, compared to 2021,2022, increased by $35.7$35.6 million, due primarily to contribution from four propertiesone property acquired in 2021,2023, four properties acquired in 2022, and NOI contribution from the four properties acquired on September 1, 2022, when their respective master leases were canceled.SeptemberJune 30, 2022,2023, compared to 2021,2022, non-segment real estate operations decreased by $11.7$6.6 million due primarily to $15.1$6.7 million of lower NOI attributable to sold properties.offset partially by a $1.9$2.6 million decreaseincrease in casualty losses, and a $1.5$1.6 million increase in property management revenues.For the nine months ended September 30, 2022, compared to 2021, non-segment real estate operations decreased by $32.1 million, due primarily to $37.1 million of lower NOI attributable to sold properties, offset partially by a $3.4 million increase in property management revenues and $1.6 million decrease in casualty losses.ninesix months ended SeptemberJune 30, 2022,2023, compared to 2021,2022, depreciation and amortization expense increased $9.3$10.6 million, or 11.5%13.5%, and $21.5$21.7 million, or 9.2%13.3%, respectively, due primarily to properties acquired subsequent to SeptemberJune 30, 2021,2022, offset partially by the reduction in depreciation associated with properties sold.General and Administrative ExpensesFor the three months ended September 30, 2022, compared to 2021, general and administrative (“G&A”)increased $1.8 million, or 30.4%(income), due primarily to the timing of incentive compensation accruals.For the nine months ended September 30, 2022, compared to 2021, G&A expenses increased by $4.1 million, or 26.3%, due primarily to higher personnel costs and timing of incentive compensation accruals.Other Expenses, NetForSeptemberJune 30, 2022, compared to 2021, other expenses, net, increased $1.1expense of $2.5 million or 29.5%,for the three months ended June 30, 2023, due primarily to fees earned in connection with the ground lease expense at a property acquired inclosing of the Value-Add JV, and services provided under the transition services agreement for the 2022 sale of the New England portfolio, offset partially by the favorable settlement of litigation.32For the nine months ended September 30, 2022 compared to 2021, other expenses, net decreased by $3.3 million, or 36.1%, due primarily to a gain on the sale of a cost basis investment in the prior year.ground lease expense at2022 gain on the sale of a property acquiredcost basis investment in 2022 and higher legal expenses.SeptemberJune 30, 2022,2023, compared to 2021,2022, interest income decreased by $3.8$24.1 million, or, 28.4%94.1%, and $36.1 million, or 92.3%, respectively, due primarily to lower interest income associated with our note receivable from Aimco, which was repaid in the second and third quarters of 2022, the $12.9 million prepayment penalty received from Aimco in connection with its partial repayment during the thirdsecond quarter of 2022, and lower interest income associated with properties leased to Aimco through September 1, 2022, when the leases were canceled. The decrease was offset partially by the receipt of a $4.5 million prepayment penalty associated with the final $147 million repayment of the note receivable from Aimco.For the nine months ended September 30, 2022, compared to 2021, interest income was relatively flat.SeptemberJune 30, 2022,2023, compared to 2021,2022, interest expense was relatively flat.For the nine months ended September 30, 2022, compared to 2021, interest expense decreased by $19.4increased $11.5 million, or 19.4%44.3%, and $25.6 million, or 53.2%, respectively, due primarily to lower average property debt balances, offset partially by higher rates on our term loans and revolving credit facility, and interest expense associated with our senior unsecured notes issued in the second quarter of 2022, and interest rate swaps entered into in 2022.three and ninesix months ended SeptemberJune 30, 2022,2023, compared to 2021,2022, loss on extinguishment of debt decreased by $6.7$21.6 million, and $21.2 million, respectively, due to prepayment penalties incurred from the early payment of property debt in 2021 associated with the deleveraging2022.Derecognitionsix months ended June 30, 2023, we recognized $17.5 million of Leased PropertiesThere were no apartment communities sold d•uringA non-cash impairment loss on real estate due to the evaluation of the expected hold period of two real estate assets in our Other Real Estate reporting segment. Given management's assessment of the likelihood of the sale of these assets, which occurred during the three months ended SeptemberJune 30, 2022. 2023, we reduced the carrying value to their estimated fair value and recognized a non-cash impairment loss on real estate of $8.2 million;ninethree and six months ended SeptemberJune 30, 2022, we recognized $175.6 million and $587.6 million, respectively, of gain on dispositions of real estate.Apartment communities sold are summarized below (dollars in millions):(1)Net proceeds are after repayment of $114.0 million of property debt, net working capital settlements, payment of transaction costs, and debt prepayment penalties, if applicable.During the nine months ended September 30, 2021, we recognized $7.1 million of gain associated withestate related to the sale of onefour and 12 apartment communitycommunities, respectively, and $87.4 million of gain associated with the derecognition of the net book value of the properties leased to Aimco for redevelopment and development. The associated leases were canceled during the third quarter of 2022, as the developments were complete.Income Tax (Expense) BenefitCertain of our operations, including property management, are conducted through taxable REIT subsidiaries (“TRS entities”).Our income tax (expense) benefit calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities for which the tax consequences have been realized or will be realized in future periods. Income taxes related to these items, as well as changes in valuation allowance, are included in income tax (expense) benefit in our condensed consolidated statements of operations.Forwe did not recognize any real estate impairment losses.ninesix months ended SeptemberJune 30, 2022, compared to 2021, income tax (expense) benefit was relatively flat.33Table2023, we recognized $11.4 million and $9.3 million, respectively, of Contentscapitalized costs and the impairment of our long-lived assets.2021.2022. There have been no other significant changes in our critical accounting estimates 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.secondary measure of operational performance.estate,estate; and including (iv)adjustments for 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 AIR common stockholders (diluted) by subtracting dividends on preferred stockPreferred Stock and preferred units and amounts allocated from NAREIT FFO to participating securities.34Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net (loss) income attributable to AIR common stockholders $ (1,439) $ 196,722 $ (12,896) $572,603 Adjustments: Real estate depreciation and amortization, net of noncontrolling partners’ interest 83,749 73,922 173,761 155,379 Loss (gain) on dispositions and impairments of real estate, net of noncontrolling partners’ interest 17,472 (175,450) 17,472 (587,453) Income tax adjustments related to gain on dispositions and other tax-related items — (1,100) — (1,100) Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities (6,889) 6,328 (12,811) 26,577 NAREIT FFO attributable to AIR common stockholders $ 92,893 $ 100,422 $ 165,526 $ 166,006 Adjustments: Gain on derivative instruments (1) (11,390) — (9,246) — Non-cash straight-line rent (2) 3,090 642 6,180 1,284 Business transformation and transition related costs (3) 310 1,593 523 2,462 Loss on extinguishment of debt (4) — — 2,008 23,636 Casualty losses and other 281 322 2,127 678 Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities 533 (160) (93) (1,738) Pro forma FFO attributable to AIR common stockholders $ 85,717 $ 102,819 $ 167,025 $ 192,328 Weighted-average common shares outstanding – basic 148,832 155,927 148,821 156,327 Dilutive common share equivalents 55 209 65 280 Total shares and dilutive share equivalents 148,887 156,136 148,886 156,607 Net income attributable to AIR per share – diluted $ (0.01) $ 1.26 $ (0.09) $ 3.66 NAREIT FFO per share – diluted $ 0.62 $ 0.64 $ 1.11 $ 1.06 Pro forma FFO per share – diluted $ 0.58 $ 0.66 $ 1.12 $ 1.23 2022 and 2021,2023, in anticipation of future financing transactions, we incurred debt extinguishment costs relatedentered into treasury locks that did not qualify for hedge accounting under GAAP. Changes in the fair value of these instruments are included in net (loss) income attributable to AIR common stockholders. Any non-cash changes in fair value is excluded in the prepaymentdetermination of debt. We excluded these costs from Pro forma FFO because we believe they are not representative of future cash flows.During 2022, we incurred consulting, placement, legal, and other transformation related costs as we fully implement AIR’s business model, including projects intended to increase efficiency and reduce costs in future periods. During 2021, we incurred tax, legal and other costs in connection with the Separation. We excluded these costs from Pro forma FFO because we believe they are not related to ongoing operating performance.(3)thisthese ground leaseleases in Pro forma FFOthis leasethese leases is included in other expense,expenses, net, in our condensed consolidated statements of operations.(4)(3)20212023 and 2022, we had certain properties leasedincurred consulting, placement, legal, and other transformation related costs as we fully implement AIR’s business model, including projects intended to increase efficiency and reduce costs in future periods. As we engage in and finalize our finance transformation initiative that modernizes our systems and processes, including a third party. Duenew ERP system, we expect to the terms of these leases, cash received exceeded GAAP income. We included the cash lease income in Pro forma FFO. These leases were canceled during the third quarter of 2022.(5)In the third quarter of 2022, we incurred casualty losses due to Hurricane Ian-related wind damage, primarily at one of our communities in South Florida, and flooding at one of our communities in Boston. In the third quarter of 2021, we incurred casualty losses due to Hurricane Ida-related flooding in downtown Philadelphia causing damage to our Park Towne Place apartment community, and continuedcontinue to incur incrementalthese costs related to its cleanup in 2022, net of third party reimbursements received.throughout 2023. We excluded these costs and reimbursements from Pro forma FFO because of the unusual nature of the weather events.(6)(4)Certain common share equivalents thatDuring 2023 and 2022, we incurred debt extinguishment costs related to the prepayment of debt. In 2023, these costs are included in our calculationrelated to the prepayment of net income attributable to AIR per share, diluted arehigh-cost, floating-rate debt. We excluded these costs from our calculation of NAREIT FFO per share and Pro forma FFO per share asbecause we believe they are anti-dilutive.During the nine months ended September 30, 2022, we sold our 2% cost basis investment in the portfolio serving as collateral for the note receivable from Aimco. We recognized $7.2 millionnot representative of gain on dispositions of unconsolidated real estate partnerships in connection with the sale, or $5.4 million, net of tax. Consistent with prior treatment of gains on cost basis investments, this gain has been included in the determination of FFO given we consider the investment to be incidental to our main business as a REIT. Specifically, we only held the 2% interest in order to provide additional collateral for our short-term loan to Aimco and for tax planningfuture cash flows.35associated with the Separation. 2022.SeptemberJune 30, 2022,2023, are presented below:Pro forma Completion ofAnnualized Current Quarter
November 2022 Sales(1)Pro forma for the Core Joint Venture Transaction6.4x5.8x6.6x(1)Pro forma for the planned use of net proceeds from the November sales of approximately $460 million.(which are primarily restricted under the terms of our property debt agreements), excluding tenant security deposits included in restricted cash, assuming the remaining amounts of cash and restricted cash would be used to reduce our outstanding leverage.June 30, 2023 Total indebtedness $ 3,684,577 Adjustments: Debt issuance costs related to non-recourse property debt and term loans 18,425 Proportionate share adjustments related to debt obligations (360,696) Cash and restricted cash (129,913) Tenant security deposits included in restricted cash 11,633 Proportionate share adjustments related to cash and restricted cash 9,082 Proportionate Debt $ 3,233,108 Perpetual Preferred Stock 2,000 Preferred noncontrolling interests in AIR Operating Partnership 77,143 Net Leverage $ 3,312,251 Leverage reduction funded by Core Joint Venture transaction (451,904) Net Leverage, Pro forma for Core Joint Venture transaction $ 2,860,347 the derecognition of leased properties and dispositions of depreciated property;36entities.entities and consolidated entities with non-controlling interests.•net income attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests are excluded 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 income recognized related to our note receivable from Aimco, which was repaid during the third quarter of 2022, is excluded, as proceeds were used to repay current amounts outstanding;•rentsrent payments for two long-term ground leases for which expense exceeds cash payments until 2076 and 2079 respectively, is excluded. The excess of GAAP rent expense over the cash payments for this leasethese leases does not reflect a current obligation that affects our ability to service debt; andamount by which cash received exceeds GAAP lease income for the leased properties, fourheading “NAREIT Funds From Operations and Pro forma Funds From Operations,” excluding items that are not included in EBITDAre, to exclude certain amounts that are unique or occur infrequently.Net income $ 598 Adjustments: Interest expense 37,554 Income tax expense 1,177 Depreciation and amortization 89,260 Loss on dispositions and impairments of real estate 17,472 Net income attributable to noncontrolling interests in consolidated real estate partnerships (684) EBITDAre adjustments attributable to noncontrolling interests and unconsolidated real estate partnerships (6,765) EBITDAre $ 138,612 Pro forma FFO and other adjustments, net (1) (8,554) Quarterly Adjusted EBITDAre $ 130,058 Adjusted EBITDAre, before removal of annualization impact for non-recurring items $ 520,232 Removal of annualization impact for non-recurring items (2) (7,218) Adjusted EBITDAre $ 513,014 Core Joint Venture transaction, annualized (27,410) Pro forma Adjusted EBITDAre $ 485,604 Pro forma FFO adjustments, net, includesIncludes pro forma adjustments to NAREIT FFO under the heading NAREIT Funds From Operations and Pro forma Funds From Operations, excluding items that are not included in EBITDAre such as prepayment penalties, net, and amounts attributable to noncontrolling interest share.net. EBITDAre has also been adjusted by (i) $1.0$0.8 million to reflect the cancellationdisposition of the four leasedtwo properties and (ii) $0.4 million to reflect the acquisition of one property,Value-Add Joint Venture, as if both of the transactions closed on JulyApril 1, 2022.2023.SeptemberJune 30, 2022,2023, our available liquidity was $609.5 million,$1.8 billion, which consisted of:83.196.7 million inof our share of cash and cash equivalents;16.512.5 million of our share of restricted cash, excluding amounts related to tenant security deposits, which consists primarily of escrows held by lenders for capital additions, property taxes, and insurance; and509.9703.7 million of available capacity to borrow under our revolving credit facility after consideration of letters of credit.credit; andrefinancings.refinancing. 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, including apartment community acquisitions, primarily through secured and unsecured borrowings, the issuance of equity securities (including OP Units), the sale of apartment communities, and cash generated from operations. Additionally, we expect to meet our liquidity requirements associated with our debt maturities.2021, with the exception of the issuance of $400 million of senior unsecured notes, which were used to repay borrowings on our revolving credit facility, and the hedging of $830 million of our floating rate debt through placement of floating to fixed rate swaps, which were designated as cash flow hedges.2022. Additionally, during the second quarter of 2022, we entered into floating to fixed interest rate swaps for $830 million notional principal value of debt, further reducing our exposure to increasing interest rates. However, if6.46.6 years as of SeptemberJune 30, 20222023, inclusive of extension options, with a weighted-average interest rate of 3.9%4.3%. As of September 30, 2022,Subsequent to the Core JV transaction, the weighted-average interest rate onfor total leverage is 4.0% and the average remaining term to maturity is 7.2 years, inclusive of extension options. We have sufficient committed credit to repay all debt coming due through 2027.fixed rate loanscredit agreement and floating rate loans is 3.3% and 5.1%, respectively, and we face refunding and repricing risk in the next three years of only 10% of total debt.Under our unsecured notes payable, and revolving credit facility, we have agreed to maintain certain financial covenants, as well as other covenants customary for similar credit arrangements. The financial covenants we are required to maintain include a Maximum Leveragemaximum leverage ratio of no greater than 0.60 to 1.00; a Fixed Charge Coverage Ratiofixed charge coverage ratio of greaterno less than 1.5x,1.50 to 1.00, a Maximum Secured Indebtednessmaximum secured indebtedness to Total Assetstotal assets ratio of no greater than 0.45 to 1.00 through March 31, 2023, and 0.40 to 1.00, thereafter, a Maximum Unsecured Leveragemaximum unsecured leverage ratio no greater than 0.60 to 1.00, and a Minimum Unsecured Interest Coverage Ratiominimum unsecured interest coverage ratio no less than 1.50 to 1.00. We believe we were in compliance with these covenants as of SeptemberJune 30, 20222023 and expect to remain in compliance during the next 12 months.ninesix months ended SeptemberJune 30, 2022,2023, net cash provided by operating activities was $351.5$182.7 million. Our operating cash flow is affected primarily by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities, and changes in working capital items. Cash provided by operating activities for the ninesix months ended SeptemberJune 30, 2022, increased2023, decreased by $118.7$18.8 million compared to the same period in 2021,2022, due primarily to higher contribution from our Same Store portfolio and increasedlower net operating income associated with apartment communities sold, partially offset by an increase contribution from properties recently acquired.ninesix months ended SeptemberJune 30, 2022,2023, our net used in investing activities of $228.4 million consisted primarily of purchases of real estate and capital expenditures. Net cash provided by investing activities of $252.9$574.7 million for the same period in 2022 consisted primarily of proceeds from dispositions of real estate and proceeds from the partial repayment of the notenotes receivable from Aimco, which was repaid in the second and third quarters of 2022, offset partially by purchases of real estate and capital expenditures. Net cash used in investing activities of $250.6 million for the same period in 202138consisted primarily of purchases of real estate and capital expenditures, offset partially by the cash received from debt investment maturities.totaled $145.1totaled $88.0 million and $110.9 million$86.4 million during the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, respectively. We generally fund capital additions with cash provided by operating activities and cash proceeds from sales of apartment communities.fivesix primary categories: andof an apartment community after a casualty event.event; andSix Months Ended June 30, 2023 June 30, 2022 Capital replacements $ 17,372 $ 12,916 Capital improvements 5,880 6,855 Capital enhancements 44,756 41,920 Initial capital expenditures 15,250 12,807 Casualty 4,646 10,828 Entitlement and planning 133 1,027 Total capital additions $ 88,037 $ 86,353 Plus: additions related to apartment communities sold and held for sale 3,307 3,446 Consolidated capital additions $ 91,344 $ 89,799 Plus: net change in accrued capital spending (1,956) 800 Total capital expenditures per condensed consolidated statements of cash flows $ 89,388 $ 90,599 ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, we capitalized $1.1$0.7 million and $1.8$0.7 million of interest costs, respectively, and $12.6$8.3 million and $12.3$7.7 million of indirect costs, respectively.$582.5$125.7 million for the ninesix months ended SeptemberJune 30, 2023 consisted primarily of net repayments on our revolving credit facility and the payment of dividends, partially offset by net proceeds from non-recourse property debt. Net cash used in financing activities of $768.0 million for the six months ended June 30, 2022 consisted primarily of repayments ofon non-recourse property debt and term loans, payment of dividends, and distributions, and repurchases of Common Stock and OP Units,common stock, offset partially by proceeds from the issuance of unsecured notes payable. Net cash provided by financing activities39(including (including OP Units), and operating cash flows. 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 20222023 and beyond.SeptemberJune 30, 2022,2023, on a consolidated basis, we had approximately $800.0 million of outstanding borrowings on our term loans, $88.5 million of variable-rate property-level debt outstanding, and $479.0$292.0 million of variable-rate borrowings under our revolving credit facility. WeAfter consideration of our interest rate swap derivatives, which reduce our total variable rate exposure by $350 million, we estimate that a change in the floating rate of 100 basis100-basis points with constant credit risk spreads would increase or decrease interest expense by $5.4$7.4 million, net, on an annual basis,basis. Subsequent to the Core JV close, our floating rate debt, after consideration of our interest rate swaps.SeptemberJune 30, 2022,2023, we had $114.6$129.9 million of cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates, which may partially mitigate the effect of an increase in variable rates on our variable-rate debt discussed above.$3.5approximately $3.4 billion as of SeptemberJune 30, 2022,2023, inclusive of a $242.8$270.8 million mark-to-market asset, of which the amount attributable to AIR common shareholdersstockholders is $189.4 million, or $1.13 per share.$219.0 million.thirdsecond quarter of 20222023 that has materially affected, or is reasonably likely to materially affect, AIR’s internal control over financial reporting.Exchange)Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the chief executive officer and chief financial officer of AIR have concluded that, as of the end of such period, the AIR Operating Partnership’s disclosure controls and procedures are effective.thirdsecond quarter of 20222023 that has materially affected, or is reasonably likely to materially affect, the AIR Operating Partnership’s internal control over financial reporting.2021.Units, defined under The AIR Operating Partnership heading below.Units. Such shares are issued based on an exchange ratio of one share for each common OP Unit. We may also issue shares of Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the three months ended SeptemberJune 30, 2022,2023, we did not issue any shares of Common Stock in exchange for OP Units or limited partnership interests in consolidated real estate partnerships.The following table summarizes AIR's share repurchases during the three months ended September 30, 2022:
Number of
Shares
Repurchased
Price Paid
per Unit
Shares Repurchased as Part
of Publicly Announced
Plans or Programs
of Shares that May Yet
Be Repurchased Under
Plans or Programs
(in thousands) (1)(1)AIR'sAIR’s Board of Directors has authorized a share repurchase program of its outstanding capital stock for $500 million. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions. As of June 30, 2023, there was $183.3 million remaining available for future share repurchases under this authorization. There were no share repurchases during the three months ended June 30, 2023.SeptemberJune 30, 2022.SeptemberJune 30, 2022,2023, no common OP Units were redeemed in exchange for Common Stock. of common OP Units during the three months ended SeptemberJune 30, 2022:
Number of
Units
Repurchased
Price Paid
per Unit
Units Repurchased as Part
of Publicly Announced
Plans or Programs
of Units that May Yet
Be Repurchased Under
Plans or Programs (1)41Fiscal period Total
Number of
Units
RepurchasedAverage
Price Paid
per UnitTotal Number of
Units Repurchased as Part
of Publicly Announced
Plans or ProgramsMaximum Number
of Units that May Yet
Be Repurchased Under
Plans or Programs (1)April 1 – April 30, 2023 110,316 $ 35.78 N/A N/A May 1 – May 31, 2023 35,624 $ 35.20 N/A N/A June 1 – June 30, 2023 2,144 $ 35.42 N/A N/A Total 148,084 $ 35.63 unitsOP Units that may be repurchased, and other than the express terms of its Partnership Agreement, the AIR Operating Partnership has no publicly announced plans or programs of repurchase. However, for AIR to repurchase shares of its Common Stock, the AIR Operating Partnership must make a concurrent repurchase of its OP Units held by AIR at a price per unit that is equal to the price per share AIR pays for its Common Stock.agreementsagreement includes customary covenants, including a restriction on dividends and distributions and other restricted payments, but permits dividends and distributions during anySeptemberJune 30, 2022,2023, formatted in 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 equity and partners’ capital; (v) condensed consolidated statements of cash flows; and (vi) notes to condensed consolidated financial statements.APARTMENT INCOME REIT CORP. APARTMENT INCOME REIT CORP.By:/s/ Molly H.N. Syke By:/s/ Paul BeldinPaul BeldinExecutive Vice President and Chief FinancialAccounting Officer(principal financial and accounting officer)APARTMENT INCOME REIT, L.P. Paul BeldinMolly H.N. SykePaul BeldinMolly H.N. SykeExecutive Vice President and Chief FinancialAccounting Officer(principal financial and accounting officer)Date: November 4, 202244