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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 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 3,465 17,203 Lease liability — (80,651 ) Below-market lease liabilities (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 Joint Venture Transactions 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 nine months ended September 30, 2023, the number of our VIEs with interests in apartment communities decreased due to our Core JV partner's acquisition of an indirect 47% interest through the Core JV in one consolidated limited partnership with 175 apartment homes, and our purchase of the remaining non-controlling interest in a consolidated limited partnership with 328 apartment homes, which was subsequently contributed to the Core JV during the third quarter. 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 Please see Note four properties acquired in 2023. business, prior period segment information has been recast to conform with our reportable segment composition as of September 30, 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. 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 acquisitions. goals. non-recurring items including derivative gains that were accelerated through the repayment of certain previously hedged term loans, partially offset by higher than anticipated casualty and legal costs. After consideration of these non-recurring items Run-Rate FFO per share was $0.59 and $1.72 for the three and nine months ended September 30, 2023, respectively. 2022 four properties acquired in 2023. 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 % 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 % sold properties. administrative expenses lower personnel costs. expenses, net property. $325 million of term loans. expense, lower balances on our revolving credit facility, and repayment of $325 million of term loans. 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 12 apartment communities. During the three and nine months ended September 30, properties in the Core and Value-Add JV's at fair market value. Expense an income tax liability resulting from the formation of the Core JV. Run-Rate FFO and Run-Rate Adjusted Funds From Operations 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 6.2x Net Leverage to Adjusted EBITDAre 6.3x 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 As of September 30, We have sufficient committed credit to repay all debt coming due through 2027. measures in order to view the spend for the continuing portfolio. 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 basis. 2022. AND ISSUER PURCHASES OF EQUITY SECURITIES 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 September 30, 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: November 3, 2023☒x20222023☐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 ☒x2, 2022: 1, 2023: 146,992,7112022,2023, 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.2022,2023, AIR owned approximately 92.1%91.2% of the legal interest and 93.6% 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% 8.8% legal interest is owned by third-party limited partners.third parties. A portion of the 8.8% owned by third parties is subject to vesting. If the vesting requirements are not met, the 8.8% ownership will be reduced to no less than 6.4%. The legal ownership percentage is based on the outstanding common stockClass A Common Stock of AIR (“Common Stock”) and common OP Units (as defined below), 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.September 30, 2023 December 31, 2022 ASSETS Buildings and improvements $ 6,290,960 $ 6,784,965 Land 1,285,398 1,291,429 Total real estate 7,576,358 8,076,394 Accumulated depreciation (2,173,273) (2,449,883) Net real estate 5,403,085 5,626,511 Cash and cash equivalents 106,630 95,797 Restricted cash 27,540 205,608 Goodwill 32,286 32,286 Investment in unconsolidated real estate partnerships 352,096 41,860 Other assets, net 477,612 549,821 Total assets $ 6,399,249 $ 6,551,883 LIABILITIES AND EQUITY Non-recourse property debt, net $ 2,231,238 $ 1,985,430 Term loans, net 473,486 796,713 Revolving credit facility borrowings 25,750 462,000 Unsecured notes payable, net 397,760 397,486 Total indebtedness 3,128,234 3,641,629 Accrued liabilities and other 483,147 513,805 Total liabilities 3,611,381 4,155,434 Preferred noncontrolling interests in AIR Operating Partnership 77,140 77,143 Equity: Perpetual Preferred Stock 2,000 2,000 Common Stock, $0.01 par value, 1,021,175,000 shares authorized at September 30, 2023 and December 31, 2022, and 146,973,055 and 149,086,548 shares issued/outstanding at September 30, 2023 and December 31, 2022, respectively 1,470 1,491 Additional paid-in capital 3,355,316 3,436,635 Accumulated other comprehensive income 24,794 43,562 Distributions in excess of earnings (876,116) (1,327,271) Total AIR equity 2,507,464 2,156,417 Noncontrolling interests in consolidated real estate partnerships (83,110) (78,785) Common noncontrolling interests in AIR Operating Partnership 286,374 241,674 Total equity 2,710,728 2,319,306 Total liabilities, preferred noncontrolling interests in AIR Operating Partnership, and equity $ 6,399,249 $ 6,551,883 Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 REVENUES Rental and other property revenues $ 194,244 $ 198,413 $ 616,659 $ 558,686 Other revenues 3,063 2,458 7,018 7,163 Total revenues 197,307 200,871 623,677 565,849 EXPENSES Property operating expenses 58,076 64,009 190,122 176,679 Property management expenses 7,899 7,241 23,318 21,594 Depreciation and amortization 79,023 90,445 263,949 253,650 General and administrative expenses 5,663 7,663 18,866 19,593 Other expenses, net 8,110 4,941 14,434 5,883 158,771 174,299 510,689 477,399 Interest income 2,918 9,613 6,133 48,746 Interest expense (22,888) (32,656) (96,629) (80,790) Loss on extinguishment of debt — — (2,008) (23,636) Gain on dispositions and impairments of real estate 692,861 — 675,534 587,609 Gain on derivative instruments, net 14,070 — 23,322 — Loss from unconsolidated real estate partnerships (10,390) (87) (12,267) (2,974) Income before income tax expense 715,107 3,442 707,073 617,405 Income tax expense (4,595) (46) (5,911) (966) Net income 710,512 3,396 701,162 616,439 Noncontrolling interests: Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships (2,525) 102 (3,894) 285 Net income attributable to preferred noncontrolling interests in AIR Operating Partnership (1,570) (1,602) (4,710) (4,807) Net income attributable to common noncontrolling interests in AIR Operating Partnership (42,386) (137) (41,245) (37,053) Net income attributable to noncontrolling interests (46,481) (1,637) (49,849) (41,575) Net income attributable to AIR 664,031 1,759 651,313 574,864 Net income attributable to AIR preferred stockholders (44) (43) (129) (128) Net (income) loss attributable to participating securities (391) 44 (484) (373) Net income attributable to AIR common stockholders $ 663,596 $ 1,760 $ 650,700 $ 574,363 Net income attributable to AIR common stockholders per share – basic $ 4.50 $ 0.01 $ 4.39 $ 3.69 Net income attributable to AIR common stockholders per share – diluted $ 4.43 $ 0.01 $ 4.35 $ 3.68 Weighted-average common shares outstanding – basic 147,474 153,811 148,372 155,488 Weighted-average common shares outstanding – diluted 150,045 154,057 150,692 157,440 Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net income $ 710,512 $ 3,396 $ 701,162 $ 616,439 Unrealized (loss) gain on derivative instruments, net (2,236) 34,209 2,955 47,141 Reclassification of interest rate derivative (gain) loss to net income (loss) (14,186) 731 (23,704) 2,720 Comprehensive income 694,090 38,336 680,413 666,300 Comprehensive income attributable to noncontrolling interests (44,608) (4,379) (47,868) (45,488) Comprehensive income attributable to AIR $ 649,482 $ 33,957 $ 632,545 $ 620,812 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 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 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 Redemption of AIR Operating Partnership units — — — — — — — — — (1,745) (1,745) Repurchase of Common Stock, net — — (2,249,800) (22) (77,760) — — (77,782) — — (77,782) Amortization of share-based compensation cost — — — — 816 — — 816 — 1,155 1,971 Effect of changes in ownership of consolidated entities — — — — 1,446 — — 1,446 (1,397) 1,070 1,119 Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 718 — 718 Change in accumulated other comprehensive loss — — — — — (14,549) — (14,549) — (1,873) (16,422) Net income — — — — — — 664,031 664,031 2,525 42,386 708,942 Common Stock dividends — — — — — — (66,002) (66,002) — — (66,002) Distributions to noncontrolling interests — — — — — — — — (4,851) (4,134) (8,985) Other, net — — (671) — 83 — (44) 39 (18) 3 24 Balances at September 30, 2023 20 $ 2,000 146,973,055 $ 1,470 $ 3,355,316 $ 24,794 $ (876,116) $ 2,507,464 $ (83,110) $ 286,374 $ 2,710,728 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 — — — — — — — — — (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 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 — — — — — — — — — (17,559) (17,559) Repurchase of Common Stock, net — — (2,249,800) (22) (77,760) — — (77,782) — — (77,782) Amortization of share-based compensation cost — — — — 3,607 — — 3,607 — 3,465 7,072 Effect of changes in ownership of consolidated entities — — — — (7,840) — — (7,840) (1,397) 10,356 1,119 Purchase of noncontrolling interests in consolidated real estate partnerships — — — — 479 — — 479 (1,996) — (1,517) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 5,235 — 5,235 Change in accumulated other comprehensive loss — — — — — (18,768) — (18,768) — (1,981) (20,749) Net income — — — — — — 651,313 651,313 3,894 41,245 696,452 Common Stock dividends — — — — — — (200,142) (200,142) — — (200,142) Distributions to noncontrolling interests — — — — — — — — (9,908) (13,212) (23,120) Other, net — — 136,307 1 195 — (16) 180 (153) 3 30 Balances at September 30, 2023 20 $ 2,000 146,973,055 $ 1,470 $ 3,355,316 $ 24,794 $ (876,116) $ 2,507,464 $ (83,110) $ 286,374 $ 2,710,728 (Unaudited)
Interests in
Noncontrolling
Interests in
Issued
Issued
Paid-
in Capital
Comprehensive
Income
in Excess
of Earnings
Equity
Real Estate
Partnerships
Operating
Partnership
Equity2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 701,162 $ 616,439 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 263,949 253,650 Gain on dispositions and impairments of real estate (675,534) (587,609) Loss on extinguishment of debt 2,008 23,636 Income tax expense 5,911 966 Other, net 4,308 6,890 Net changes in operating assets and operating liabilities (55) 37,484 Net cash provided by operating activities 301,749 351,456 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of real estate (339,696) (858,815) Capital expenditures (140,855) (151,115) Contribution to unconsolidated joint ventures (51,836) — Proceeds from dispositions of real estate 52,066 759,227 Distributions from unconsolidated joint ventures 207,137 — Proceeds from repayment of note receivable — 534,127 Other investing activities, net 3,194 (30,500) Net cash (used in) provided by investing activities (269,990) 252,924 CASH FLOWS FROM FINANCING ACTIVITIES: Principal repayments on non-recourse property debt (111,699) (361,056) Proceeds from non-recourse property debt 1,005,920 — Repayment of term loan (325,000) (350,000) Net (repayments of) borrowings on revolving credit facility (436,250) 176,205 Proceeds from the issuance of unsecured notes payable — 400,000 Repurchases of Common Stock (77,782) (171,711) Payment of dividends to holders of Common Stock (200,137) (210,377) Payment of distributions to noncontrolling interests (23,524) (18,262) Other financing activities, net (30,522) (47,294) Net cash used in financing activities (198,994) (582,495) NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (167,235) 21,885 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 301,405 92,761 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 134,170 $ 114,646 September 30, 2023 December 31, 2022 ASSETS Buildings and improvements $ 6,290,960 $ 6,784,965 Land 1,285,398 1,291,429 Total real estate 7,576,358 8,076,394 Accumulated depreciation (2,173,273) (2,449,883) Net real estate 5,403,085 5,626,511 Cash and cash equivalents 106,630 95,797 Restricted cash 27,540 205,608 Goodwill 32,286 32,286 Investment in unconsolidated real estate partnerships 352,096 41,860 Other assets, net 477,612 549,821 Total assets $ 6,399,249 $ 6,551,883 LIABILITIES AND PARTNERS’ CAPITAL Non-recourse property debt, net $ 2,231,238 $ 1,985,430 Term loans, net 473,486 796,713 Revolving credit facility borrowings 25,750 462,000 Unsecured notes payable, net 397,760 397,486 Total indebtedness 3,128,234 3,641,629 Accrued liabilities and other 483,147 513,805 Total liabilities 3,611,381 4,155,434 Redeemable preferred units 77,140 77,143 Partners’ capital: Preferred units 2,000 2,000 General Partner and Special Limited Partner 2,505,464 2,154,417 Limited Partners 286,374 241,674 Partners’ capital attributable to the AIR Operating Partnership 2,793,838 2,398,091 Noncontrolling interests in consolidated real estate partnerships (83,110) (78,785) Total partners’ capital 2,710,728 2,319,306 Total liabilities, redeemable preferred units, and partners’ capital $ 6,399,249 $ 6,551,883 Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 REVENUES Rental and other property revenues $ 194,244 $ 198,413 $ 616,659 $ 558,686 Other revenues 3,063 2,458 7,018 7,163 Total revenues 197,307 200,871 623,677 565,849 EXPENSES Property operating expenses 58,076 64,009 190,122 176,679 Property management expenses 7,899 7,241 23,318 21,594 Depreciation and amortization 79,023 90,445 263,949 253,650 General and administrative expenses 5,663 7,663 18,866 19,593 Other expenses, net 8,110 4,941 14,434 5,883 158,771 174,299 510,689 477,399 Interest income 2,918 9,613 6,133 48,746 Interest expense (22,888) (32,656) (96,629) (80,790) Loss on extinguishment of debt — — (2,008) (23,636) Gain on dispositions and impairments of real estate 692,861 — 675,534 587,609 Gain on derivative instruments, net 14,070 — 23,322 — Loss from unconsolidated real estate partnerships (10,390) (87) (12,267) (2,974) Income before income tax expense 715,107 3,442 707,073 617,405 Income tax expense (4,595) (46) (5,911) (966) Net income 710,512 3,396 701,162 616,439 Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships (2,525) 102 (3,894) 285 Net income attributable to the AIR Operating Partnership 707,987 3,498 697,268 616,724 Net income attributable to the AIR Operating Partnership's preferred unitholders (1,614) (1,645) (4,839) (4,935) Net (income) loss attributable to participating securities (391) 44 (484) (373) Net income attributable to the AIR Operating Partnership’s common unitholders $ 705,982 $ 1,897 $ 691,945 $ 611,416 Net income attributable to the AIR Operating Partnership common unitholders per unit – basic $ 4.49 $ 0.01 $ 4.38 $ 3.69 Net income attributable to the AIR Operating Partnership common unitholders per unit – diluted $ 4.42 $ 0.01 $ 4.34 $ 3.68 Weighted-average common units outstanding – basic 157,366 163,866 158,138 165,578 Weighted-average common units outstanding – diluted 159,937 164,112 160,458 167,529 STATEMENTSSTATEMENTS OF COMPREHENSIVE INCOMEThree Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net income $ 710,512 $ 3,396 $ 701,162 $ 616,439 Unrealized (loss) gain on derivative instruments, net (2,236) 34,209 2,955 47,141 Reclassification of interest rate derivative (gain) loss to net income (loss) (14,186) 731 (23,704) 2,720 Comprehensive income 694,090 38,336 680,413 666,300 Comprehensive (income) loss attributable to noncontrolling interests (2,525) 102 (3,894) 285 Comprehensive income attributable to the AIR Operating Partnership $ 691,565 $ 38,438 $ 676,519 $ 666,585 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 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 — 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 Balances at June 30, 2023 $ 2,000 $ 1,997,465 $ 249,512 $ 2,248,977 $ (80,087) $ 2,168,890 Redemption of common partnership units — — (1,745) (1,745) — (1,745) Repurchase of common partnership units — (77,782) — (77,782) — (77,782) Amortization of share-based compensation cost — 816 1,155 1,971 — 1,971 Effect of changes in ownership of consolidated entities — 1,446 1,070 2,516 (1,397) 1,119 Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 718 718 Change in accumulated other comprehensive loss — (14,549) (1,873) (16,422) — (16,422) Net income — 664,031 42,386 706,417 2,525 708,942 Distributions to common unitholders — (66,002) (4,134) (70,136) — (70,136) Distributions to noncontrolling interests — — — — (4,851) (4,851) Other, net — 39 3 42 (18) 24 Balances at September 30, 2023 $ 2,000 $ 2,505,464 $ 286,374 $ 2,793,838 $ (83,110) $ 2,710,728 1220222023 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 — — (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 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 — — (17,559) (17,559) — (17,559) Repurchase of common partnership units — (77,782) — (77,782) — (77,782) Amortization of share-based compensation cost — 3,607 3,465 7,072 — 7,072 Effect of changes in ownership of consolidated entities — (7,840) 10,356 2,516 (1,397) 1,119 Purchase of noncontrolling interests in consolidated real estate partnerships — 479 — 479 (1,996) (1,517) Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 5,235 5,235 Change in accumulated other comprehensive loss — (18,768) (1,981) (20,749) — (20,749) Net income — 651,313 41,245 692,558 3,894 696,452 Distributions to common unitholders — (200,142) (13,212) (213,354) — (213,354) Distributions to noncontrolling interests — — — — (9,908) (9,908) Other, net — 180 3 183 (153) 30 Balances at September 30, 2023 $ 2,000 $ 2,505,464 $ 286,374 $ 2,793,838 $ (83,110) $ 2,710,728 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 701,162 $ 616,439 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 263,949 253,650 Gain on dispositions and impairments of real estate (675,534) (587,609) Loss on extinguishment of debt 2,008 23,636 Income tax expense 5,911 966 Other, net 4,308 6,890 Net changes in operating assets and operating liabilities (55) 37,484 Net cash provided by operating activities 301,749 351,456 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of real estate (339,696) (858,815) Capital expenditures (140,855) (151,115) Contribution to unconsolidated joint ventures (51,836) — Proceeds from dispositions of real estate 52,066 759,227 Distributions from unconsolidated joint ventures 207,137 — Proceeds from repayment of note receivable — 534,127 Other investing activities, net 3,194 (30,500) Net cash (used in) provided by investing activities (269,990) 252,924 CASH FLOWS FROM FINANCING ACTIVITIES: Principal repayments on non-recourse property debt (111,699) (361,056) Proceeds from non-recourse property debt 1,005,920 — Repayment of term loan (325,000) (350,000) Net (repayments of) borrowings on revolving credit facility (436,250) 176,205 Proceeds from the issuance of unsecured notes payable — 400,000 Repurchases of common partnership units held by General Partner and Special Limited Partner (77,782) (171,711) Payment of distributions to General Partner and Special Limited Partner (200,137) (210,377) Payment of distributions to Limited Partners (13,591) (13,439) Payment of distributions to noncontrolling interests (9,933) (4,823) Other financing activities, net (30,522) (47,294) Net cash used in financing activities (198,994) (582,495) NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (167,235) 21,885 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 301,405 92,761 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 134,170 $ 114,646 20222022,2023, 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 September 30, 2022,2023, our portfolio included 75 apartment80Table of Contents apartment 26,60026,623 apartment homes, in which we held an average ownership of approximately 88%81%. We also have one land parcel and one indirect land interest that we lease to third parties.152022,2023, after elimination of units held by consolidated subsidiaries, the AIR Operating Partnership had 166,045,781156,840,617 common OP Units outstanding. As of September 30, 2022,2023, AIR owned 152,993,448146,973,055 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%91.2% legal interest in the AIR Operating Partnership and a 93.8%93.6% 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 September 30, 2023 and December 31, 2022, AIR consolidated five 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 (4,710) Redemption of preferred units and other (3) Net income allocated to preferred units 4,710 Balance at September 30, 2023 $ 77,140 20222023 and December 31, 2021,2022, the AIR Operating Partnership had 2,934,0632,846,524 and 2,935,6622,846,574 redeemable preferred OP Units respectively, issued and outstanding.outstanding, respectively. 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.unit, respectively.162022,2023, we acquired threeone additional apartment communitiescommunity located in South Florida with 495 apartment homesone in the Washington, D.C. area.29,000 square feet of commercial space. Summarized information regarding these acquisitions is set forth in the table below (dollars in thousands):Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Number of apartment communities 2 3 Number of apartment homes 620 1,115 Purchase price $ 154,500 $ 452,500 Capitalized transaction costs 1,270 6,739 Total consideration (1) Total consideration (1) $ 155,770 $ 459,239 Land $ 19,226 $ 118,564 Building and improvements 130,937 318,364 (1)(2)5,768 17,845 Mark-to-market on debt assumed Mark-to-market on debt assumed — 7,370 (1)(2)(161) (2,904) Total consideration (1) Total consideration (1) $ 155,770 $ 459,239 2.21.4 years and 1.40.5 years, respectively. Intangible assets and below-market lease liabilities for the North Carolina apartment community acquisitions have a weighted-average term of 0.5 years.notnot sell any apartment communities. During the nine months ended September 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. suchany communities meet the criteria to be classified as held for sale. As of September 30, 2022, we had six apartment2023, no communities with 1,314 apartment homes that were classified as held for sale.Lease CancellationOn1,30, 2023, we did not recognize any impairment losses. During the nine months ended September 30, 2023, we evaluated the expected hold period of three apartment communities in our Other Real Estate reporting segment. Given management's assessment of the likelihood of the sale of these assets, which occurred during the nine months ended September 30, 2023, we reduced the carrying value of three properties to their estimated fair value and recognized a non-cash impairment loss on real estate of $23.6 million. As of September 30, 2023, the three impaired properties have been sold.canceled existing master leases at four properties owned by AIR and previously leased to Apartment Investment and Management Company (“Aimco”) for the purpose of their development. As part 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 Repurchases2022,2023, AIR repurchased 1.22.2 million shares for $47$77.8 million, at an average price of $39.07$34.57 per share. Subsequent to quarter end and through November 2, 2022As of September 30, 2023, we have purchased an additional 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$105.5 million of shares. We consider share buybacks as part of a balanced investment program.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 Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fixed lease income $ 179,069 $ 184,509 $ 572,123 $ 522,074 Variable lease income 14,502 13,141 43,043 35,165 Total lease income $ 193,571 $ 197,650 $ 615,166 $ 557,239 2022,2023, have an average remaining term of 10.510.8 months. In general, our commercial leases have options to extend for a certain period of time at the tenant’s option. FutureAs of September 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) $ 164,948 2024 379,399 2025 69,870 2026 11,740 2027 10,218 Thereafter 36,463 Total $ 672,638 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):September 30, 2023 December 31, 2022 Secured debt: Fixed-rate property debt due May 2025 to January 2055 (1) $ 2,244,776 $ 1,906,151 Variable-rate property debt — 88,500 Total non-recourse property debt 2,244,776 1,994,651 Debt issuance costs, net of accumulated amortization (13,538) (9,221) Total non-recourse property debt, net $ 2,231,238 $ 1,985,430 Unsecured debt: Term loans due December 2024 to April 2026 (2) $ 475,000 $ 800,000 Revolving credit facility borrowings due April 2025 (3) 25,750 462,000 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 900,750 1,662,000 Debt issuance costs, net of accumulated amortization (3,754) (5,801) Total unsecured debt, net $ 896,996 $ 1,656,199 Total indebtedness $ 3,128,234 $ 3,641,629 2.4%between 2.7% 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 September 30, 2022,2023, the weighted-average interest rate for our term loans which isbefore consideration of in place interest rate swaps was 6.4%. As of September 30, 2023, $350 million of our term loans are fixed via interest rate swaps beginningat a weighted-average interest rate of 4.3%. The blended weighted-average interest rate for our $475 million term loans, after consideration of in place interest rate swaps, is 4.9%. The term loans mature on the following schedule: $125 million matures on December 15, 2024, with the second quarter of 2022, wasa one-year extension option; $150 million matures on December 15, 2025; and $200 million matures 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 September 30, 2022,2023, the weighted-average remaining term of the term loans was 2.3 years.$509.9$970.0 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 September 30, 2022,2023, the weighted-average interest rate for our revolving credit facility was 4.1%6.3%.(5)second quarterthree months ended September 30, 2023, AIR refinanced our $325 million of 2022,term loans with fixed rate property debt to lock in rates for debt with longer maturities. The amount included full repayment of $150 million of our term loans with a maturity of December 15, 2023 and partial repayment of $175 million of term loans with a maturity of December 15, 2024. In conjunction with the prepayment, AIR accelerated recognition of $0.8 million of associated debt issuance costs, which is included in interest expense in our condensed consolidated statements of operations.issued three tranchesestablished a secured credit facility that provides for up to $1 billion of guaranteed, senior unsecured notes, totaling $400 million.committed 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. As of September 30, 2022,2023, and after consideration of the weighted-average interest rate for seniorsecured credit facility, our share of cash and cash equivalents, and our share of restricted cash, total liquidity is approximately $2.1 billion.was 4.3% 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;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 1.00.1.00.wererecognized a gain of $0.5 million during the nine months ended September 30, 2023 in complianceconnection with these covenants asthis transaction.20222023, AIR has equity investments in three significant unconsolidated joint ventures: the Core JV, the Value-Add JV, and expectthe Virginia JV (collectively, the "Joint Venture Entities"). We account for these joint ventures utilizing the equity method of accounting and our ownership interests meet the definition of a VIE. However, we are not the primary beneficiary and do not consolidate these entities.Virginia JV Value-Add JV (1) Core JV Initial formation date October 2021 June 2023 July 2023 AIR Ownership 20% 30% 53% Outside Entities Ownership 80% 70% 47% Number of Apartment Communities 3 1 11 Apartment Units 1,748 443 3,549 remainthe joint venture.compliance duringeach joint venture is included in investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets. AIR's exposure to the next 12 months.obligations of the VIEs is limited to the carrying value of the limited partnership interests and AIR's interest of the joint ventures' guarantor non-recourse liabilities. The following table summarizes certain relevant information with respect to our investments in unconsolidated joint ventures (in thousands):September 30, 2023 Virginia JV Value-Add JV Core JV Total Third-Party Debt $ 395,000 $ 94,105 $ 799,164 AIR's Investment In Balance (1) $ 18,198 $ 29,341 $ 272,957 December 31, 2022 Virginia JV Value-Add JV Core JV Total Third-Party Debt $ 395,000 — — AIR's Investment In Balance (1) $ 20,660 — — Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Virginia JV $ (1,113) $ (87) $ (3,004) $ (2,974) Core JV (7,930) — (7,930) — Value-Add JV (1,347) — (1,333) — Total $ (10,390) $ (87) $ (12,267) $ (2,974) 67 — Commitments and Contingencies192022,2023, are immaterial to our condensed consolidated financial statements.78 — Earnings and Dividends per Share and per UnitThree Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Earnings per share Numerator: Basic net income attributable to AIR common stockholders $ 663,596 $ 1,760 $ 650,700 $ 574,363 Effect of dilutive instruments 1,570 — 4,710 4,807 Dilutive net income attributable to AIR common stockholders $ 665,166 $ 1,760 $ 655,410 $ 579,170 Denominator – shares: Basic weighted-average common shares outstanding 147,474 153,811 148,372 155,488 Dilutive common share equivalents outstanding 2,571 246 2,320 1,952 Dilutive weighted-average common shares outstanding 150,045 154,057 150,692 157,440 Earnings per share – basic $ 4.50 $ 0.01 $ 4.39 $ 3.69 Earnings per share – diluted $ 4.43 $ 0.01 $ 4.35 $ 3.68 Earnings per unit Numerator: Basic net income attributable to the AIR Operating Partnership’s common unitholders $ 705,982 $ 1,897 $ 691,945 $ 611,416 Effect of dilutive instruments 1,570 — 4,710 4,935 Dilutive net income attributable to the AIR Operating Partnership’s common unitholders $ 707,552 $ 1,897 $ 696,655 $ 616,351 Denominator – units: Basic weighted-average common units outstanding 157,366 163,866 158,138 165,578 Dilutive common unit equivalents outstanding 2,571 246 2,320 1,951 Dilutive weighted-average common units outstanding 159,937 164,112 160,458 167,529 Earnings per unit – basic $ 4.49 $ 0.01 $ 4.38 $ 3.69 Earnings per unit – diluted $ 4.42 $ 0.01 $ 4.34 $ 3.68 20222023 and 2021,2022, dividends and distributions paid per share of Common Stock and per common unit were $0.45$0.45 and $1.35, respectively, and $0.44 and $1.30,$1.35, respectively.werewas approximately 1.9 million, 1.64.0 million and 1.73.4 million for the three and nine months ended September 30, 2023, respectively. The number of common share equivalent securities excluded from the diluted earnings per share calculation was approximately 1.9 million for the three months ended September 30, 2022 and 2021, and2022. There were no anti-dilutive securities for the nine months2021, respectively.2022. These securities, which include preferred OP Units redeemable for Common Stock for the comparable period in 2022, were excluded from the diluted earnings per share calculationscalculation as they arewere 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.2089 — Fair Value MeasurementsRecurring 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 September 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 $ 29,898 $ — $ 29,898 $ — $ 32,222 $ — $ 32,222 $ — Interest rate swaps - pay-floating, receive fixed $ (3,035) $ — $ (3,035) $ — $ — $ — $ — $ — Interest rate swaps - forward starting $ 3,333 $ — $ 3,333 $ — $ — $ — $ — $ — Treasury rate locks $ — $ — $ — $ — $ 319 $ — $ 319 $ — The following table summarizes fair value for ourDuring the second quarter of 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, net and accrued liabilities and other in the condensed consolidated balance sheets.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 September 30, 20222023 and December 31, 2021.hierarchy. hierarchy, as summarized in the following table (in thousands):As of September 30, 2023 As of December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value Non-recourse property debt $ 2,244,776 $ 1,938,885 $ 1,994,651 $ 1,753,222 Unsecured notes payable $ 400,000 $ 363,609 $ 400,000 $ 371,368 Seller financing note receivable, net (1) $ 32,246 $ 30,723 $ 31,611 $ 32,286 Preferred equity investment (2) $ 22,398 $ 22,486 $ — $ — carrying value and fair value of our non-recourse property debt, excluding debt issuance costs (inderivative financial instruments (dollars in thousands):As of September 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 not designated as hedging instruments: Interest rate swap, floating to fixed 7 $ 600,000 $ 29,898 $ — Interest rate swap, fixed to floating 3 $ 250,000 $ — $ (3,035) Interest rate swap, forward starting 1 $ 50,000 $ 3,333 $ — 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 $ — 911 — Variable Interest Entitiesthatthose of the AIR Operating Partnership.fivethree 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.21September 30, 2023 (1) December 31, 2022 VIEs with interests in apartment communities 3 5 Apartment communities owned by VIEs 14 16 Apartment homes in communities owned by VIEs 4,866 5,369 September 30, 2023 December 31, 2022 ASSETS: Net real estate $ 1,024,555 $ 1,066,482 Cash and cash equivalents $ 42,133 $ 54,319 Restricted cash $ 1,970 $ 2,378 Other assets, net $ 21,216 $ 20,944 LIABILITIES: Non-recourse property debt, net $ 1,200,279 $ 1,212,065 Accrued liabilities and other $ 40,007 $ 35,365 During 2021, we formed a joint venture with an affiliate of Blackstone by selling an 80% interest in three multi-family properties with 1,748 units located in Virginia. Our 20% interest in the venture meets the definition of a VIE, however, we are not the primary beneficiary and do not consolidate these communities. As of September 30, 2022 and December 31, 2021, the carrying value of the investment of $21.3 million and $26.0 million, respectively, is included in other assets, net, in our condensed consolidated balance sheets. AIR’s exposure to the obligations of the VIE is limited to the carrying value of the limited partnership interests and 20% of Blackstone's guarantor liabilities, which were $79.0 million as of September 30, 2022.2022,2023 and December 31, 2021,2022, the investment balance of $362.8$158.3 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, all risks and rewards of ownership are Aimco’s,retained by the third party; 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.106 for further discussion regarding our unconsolidated joint ventures.hadhave 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, and three communities we expect to sell or lease to a third party, but do not yet meet the criteria to be classified as held for sale2022,2023, our Same Store segment included 5863 apartment communities with 20,73022,794 apartment homes and our Other Real Estate segment included 1612 apartment communities with 4,5563,829 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 amounts related to communities sold. To reflect how the CODM evaluates the 2220222023 (in thousands):Same
StoreOther
Real EstateProportionate
and Other
Adjustments (1)Corporate and
Amounts Not
Allocated to
Segments (2)Consolidated Three months ended September 30, 2023: Total revenues $ 151,619 $ 29,543 $ 11,981 $ 4,164 $ 197,307 Property operating expenses 40,353 8,158 9,076 489 58,076 Other operating expenses not allocated to segments (3) — — — 100,695 100,695 Total operating expenses 40,353 8,158 9,076 101,184 158,771 Proportionate property net operating income (loss) 111,266 21,385 2,905 (97,020) 38,536 Other items included in income before income tax expense (4) — — — 676,571 676,571 Income before income tax expense $ 111,266 $ 21,385 $ 2,905 $ 579,551 $ 715,107
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 Nine months ended September 30, 2023: Total revenues $ 445,881 $ 86,104 $ 80,124 $ 11,568 $ 623,677 Property operating expenses 117,014 28,010 37,850 7,248 190,122 Other operating expenses not allocated to segments (3) — — — 320,567 320,567 Total operating expenses 117,014 28,010 37,850 327,815 510,689 Proportionate property net operating income (loss) 328,867 58,094 42,274 (316,247) 112,988 Other items included in income before income tax expense (4) — — — 594,085 594,085 Income before income tax expense $ 328,867 $ 58,094 $ 42,274 $ 277,838 $ 707,073 Same
StoreOther
Real EstateProportionate
and Other
Adjustments (1)Corporate and
Amounts Not
Allocated to
Segments (2)Consolidated Three months ended September 30, 2022: Total revenues $ 142,009 $ 14,025 $ 32,402 $ 12,435 $ 200,871 Property operating expenses 37,349 4,783 13,468 8,409 64,009 Other operating expenses not allocated to segments (3) — — — 110,290 110,290 Total operating expenses 37,349 4,783 13,468 118,699 174,299 Proportionate property net operating income (loss) 104,660 9,242 18,934 (106,264) 26,572 Other items included in income before income tax expense (4) — — — (23,130) (23,130) Income (loss) before income tax expense $ 104,660 $ 9,242 $ 18,934 $ (129,394) $ 3,442 Same
StoreOther
Real EstateProportionate
and Other
Adjustments (1)Corporate and
Amounts Not
Allocated to
Segments (2)Consolidated Nine months ended September 30, 2022: Total revenues $ 411,052 $ 16,437 $ 93,187 $ 45,173 $ 565,849 Property operating expenses 111,316 5,799 38,559 21,005 176,679 Other operating expenses not allocated to segments (3) — — — 300,720 300,720 Total operating expenses 111,316 5,799 38,559 321,725 477,399 Proportionate property net operating income (loss) 299,736 10,638 54,628 (276,552) 88,450 Other items included in income before income tax expense (4) — — — 528,955 528,955 Income from before income tax expense $ 299,736 $ 10,638 $ 54,628 $ 252,403 $ 617,405 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 expenses for the purpose of evaluating segment results. Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP. 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 extinguishmentpartnerships.September 30, 2023 December 31, 2022 Same Store $ 4,119,544 $ 4,610,356 Other Real Estate 1,575,415 1,211,136 Corporate and other assets (1) 704,290 730,391 Total consolidated assets $ 6,399,249 $ 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.20222023 and 2021,2022, capital additions related to our segments were as follows (in thousands):2023 2022 Same Store $ 114,844 $ 109,768 Other Real Estate 13,530 1,422 Total capital additions $ 128,374 $ 111,190 29the 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.withto 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 September 30, 2022,2023, our portfolio included 8075 apartment communities with 26,60026,623 apartment homes, in which we held an average ownership of approximately 88%81%.business planstrategy are further described in the sections that follow.Same Store highlights for2022 include:2023, Pro forma FFO increased 10.3% year-over-year as a result of same store revenue growth of 6.8% which drove higher net operating income of 6.3%, primarily driven by an increase of 5.6% in residential rents.Revenue increased•were constructed in the last two years (in contrast to 26 years for the interests sold); and9.6%approximately $161 million.NOI increased by 13.3%, compared toLiquidity2021;2023, AIR refinanced $154 million of borrowings on AIR's revolving credit facility and $325 million of term loans maturing in 2023 and 2024, with new fixed rate property debt. The new debt has a weighted-average life of 5.3 years and a weighted-average interest rate of 5.2%; 30-basis points greater than the short-term debt repaid.NOI margins were 74.3%, an all-time high for the third quarter and up 240 basis points comparedNear-term exposure to 2021; and•For transacted leases becoming effective during the quarter, new lease rents increased by 17.1% and renewal rents increased by 11.1%, for a weighted-average increase of 14.0%;Same Store Markets▪Consumer demand remained strong through the quarter, with signed new lease rates up 17.0% from the prior leases and renewals up 11.8%, resulting in a weighted-average increase of 14.5%. We saw a sequential decline in ADO of 90 basis points to 95.9%, reflecting the frictional vacancy consistent with the higher move out volume that is typical during the summer leasing season. Year-to-date ADO of 96.9% was 120 bps higher than 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, 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% 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.Portfolio 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.(1)AIR named Kingsley Elite Five in 2022, #2 among all operators and #1 for public REITsWe measure the quality of apartment communities in our portfolio based$79 million 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 September 30, 2022, AIR repurchased 1.2 million shares for $47 million, at an average price 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 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 million of shares. We consider share buybacks as part of a balanced investment program.Balance SheetWe seek to increase 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 a Net Leverage to EBITDAre ratio between 5.0x and 6.0x and anticipate the actual ratio will vary based on the timing of transactions. We maintain financial flexibility through ample unused and available credit, holding properties with substantial value unencumbered by property debt, maintaining an investment grade rating, and using partners’ capital when it enhances financial returns or reduces investment risk. We seek to minimize refunding and repricing risk.Components of LeverageOur leverage includes our share of long-term, non-recourse propertythe Virginia JV debt encumbering our apartment communities, together with outstanding borrowings underdue to the maturity in January 2024 of the in-place interest rate cap; plus our termunsecured notes payable, and preferred equity.with up to 10-year maturities.2022, about $170 million2023, AIR's leverage is temporarily elevated due to the timing 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 maturing before the secondthird quarter of 2025.28AIR 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, ourOctober 30, 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, 2022,2023 to stockholdersshareholders of record on November 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, 2022.17, 2023. In setting AIR's 2022the 2023 dividend ourrate, the Board of Directors targeted a dividend level75% payout ratio of Pro forma FFO, in 2023 equivalent to approximately 75%86% of full year FFO per share.Run-Rate AFFO.The after-tax dividend will benefit from AIR's refreshed tax basis. Two-thirds 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.offer benefits reinforcingalso 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 10-time winner of 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 two time winner of Built in 2023 Best Places to Work in Colorado, Los Angeles, Miami, and Washington, D.C., and the Denver Business Journal Healthiest Employer in Colorado for the third year in a row. We take seriously our value of caringresponsibility to care for our customers, our neighbors, and each other including an opportunity to manage one’s life through flexible work schedulesas teammates. We are grateful for these recognitions 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 durationconsider them confirmation 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. success.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,Global Real Estate Sustainability Benchmark (“GRESB”). Strong progress was made by 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 participated2023 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 ouradvancing its commitments to ESG, andresponsibility beyond governance, achieving a GRESB score of 82 out of 100, placing AIR in the top 20% of residential companies in the Americas. We also 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, and community partners to identify which topics they consider most material to the Company. Subsequent to quarter end, AIR published its 2021-2022our 2022-2023 Corporate Responsibility Report which demonstrates AIR'shighlighting our commitment to being an outstanding corporate citizen,community 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 madecontinued progress on its goals to reduce the Company's environmental impact by 2025, which include 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, and a near-perfect corporate governance score.In partnership with the National Leased Housing Association, we continue 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 nationally as a “National Top Workplace Winner.” In addition to that national recognition, AIR has previously been recognized as a top workplace in Colorado, the Washington, D.C. area, and the San Francisco Bay area. Specifically in 2021, out 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.decreased $0.05was $4.43 and $4.35 for the three and nine months ended September 30, 2023, respectively, compared to $0.01 and $3.68 for the three and nine months ended September 30, 2022, respectively, due primarily to:2022,2023 compared to 2021, due primarily to2022. Additionally, acquisitions are growing faster than Same Store. For example, the Class of 2022 had revenue growth of 9.9%, which resulted in higher depreciation and amortization expense due to properties acquired and lower gain on dispositionsNOI of real estate, offset partially by increased contribution from property operations. Net income attributable to common stockholders per common share, on a dilutive basis, increased $3.2020.1% for the ninethree months ended September 30, 2022,2023 compared to 2021, respectively, due primarily to2022, lower prepayment penalties, higher depreciationamortizationthird quarters of 2022, and the $17.4 million prepayment penalty received from Aimco in connection with these repayments, andacquisitions.debt balances.compared to $0.56 and $1.58, respectively, for 2021, due primarily to increased contributionthe below factors.property operationshigher NOI of 6.3% primarily driven by an increase of 5.6% in residential rents for the three months ended September 30, 2023 compared to 2022. Additionally, acquisitions are growing faster than Same Store. For example, the Class of 2022 had revenue growth of 9.9% which resulted in higher NOI of 20.1% for the three month ended September 30, 2023 compared to 2022, and aexpense.income as noted above, andTable 2023, Pro forma FFO includes $0.05 per share of Contents2022,2023, 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, and three communities we expect to sell or lease to a third party, but do not yet meet the criteria to be classified as held for sale2022,2023, our Same Store segment included 5863 apartment communities with 20,73022,794 apartment homes and our Other Real Estate segment included 1612 apartment communities with 4,5563,829 apartment homes. As1012 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 September 30, Historical Change (dollars in thousands) 2023 2022 $ % Rental and other property revenues, before utility reimbursements: Same Store $ 151,619 $ 142,009 $ 9,610 6.8 % Other Real Estate 29,543 14,025 15,518 nm Total 181,162 156,034 25,128 16.1 % Property operating expenses, net of utility reimbursements: Same Store 40,353 37,349 3,004 8.0 % Other Real Estate 8,158 4,783 3,375 nm Total 48,511 42,132 6,379 15.1 % Proportionate property net operating income: Same Store 111,266 104,660 6,606 6.3 % Other Real Estate 21,385 9,242 12,143 nm Total $ 132,651 $ 113,902 $ 18,749 16.5 % 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%6.3%. This increase was attributable primarily to a $12.2$9.6 million, or 9.6%6.8%, increase in rental and other property revenues due to a 10.4%5.6% increase in residential rental rates, and a 30 basis point1.2% increase in other rental income, partially offset by a 0.6% decrease in net bad debt.Other ADO.2022,2023, compared to 2021,2022, increased by $17.1$12.1 million, due primarily to contribution from four properties 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.31Nine Months Ended September 30, Historical Change (dollars in thousands) 2023 2022 $ % Rental and other property revenues, before utility reimbursements: Same Store $ 445,881 $ 411,052 $ 34,829 8.5 % Other Real Estate 86,104 16,437 69,667 nm Total 531,985 427,489 104,496 24.4 % Property operating expenses, net of utility reimbursements: Same Store 117,014 111,316 5,698 5.1 % Other Real Estate 28,010 5,799 22,211 nm Total 145,024 117,115 27,909 23.8 % Proportionate property net operating income: Same Store 328,867 299,736 29,131 9.7 % Other Real Estate 58,094 10,638 47,456 nm Total $ 386,961 $ 310,374 $ 76,587 24.7 % 2022,2023, compared to 2021,2022, excluding changes attributable to changes in ownership, our Same Store proportionateproportionate property NOI increased by $36.6 million, or 14.1%9.7%. This increase was attributable primarily to a $37.2$34.8 million, or 10.2%8.5%, increase in rental and other property revenues due to a 7.6%an 8.1% increase in residential rental rates, a 120 basis pointand an 0.8% increase in ADO to 96.9%, andother residential income, partially offset by a 100 basis point0.7% decrease in net bad debt.ADO.2022,2023, compared to 2021, 2022, increased by $35.7$47.5 million, due primarily to contribution from four properties 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.For the three months ended September 30, 2022, compared to 2021, non-segment real estate operations decreased by $11.7 million, due primarily to $15.1 million of lower NOI attributable to sold properties, offset partially by a $1.9 million decrease in casualty losses and a $1.5 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.Depreciation and Amortization2021,2023.$9.3$10.3 million, or 11.5%4.1%, and $21.5 million, or 9.2%, respectively, due primarily to properties acquired subsequent to September 30, 2021,2022, offset partially by the reduction in depreciation associated with properties sold.Administrative Expenses2022,2023, compared to 2021,2022, general and administrative (“G&A”) expenses increased $1.8decreased $2.0 million, or 30.4%26.1%, due primarily to the timing of incentive compensation accruals.2022,2023, compared to 2021, G&A2022, general and administrative expenses increased by $4.1 million, or 26.3%, due primarily to higher personnel costs and timingwere relatively flat.Expenses, Net2022,2023, compared to 2021,2022, other expenses, net, increased $1.1by $3.2 million or 29.5%,and $8.6 million, respectively, due primarily to the ground lease expense at a property acquired in 2022, offset partially by the favorable settlement of litigation.32Forhigher legal expenses, and one-time severance payments. Additionally, for the nine months ended September 30, 2022, compared to 2021,2023, other expenses, net decreased by $3.3 million, or 36.1%,further increased due primarily to a gain on the sale of a cost basis investment, offset partially by theincremental ground lease expense at a propertyassociated with an acquired in 2022 and higher legal expenses.2022,2023, compared to 2021,2022, interest income decreased by $3.8$6.7 million, or, 28.4%69.6%, and $42.6 million, or 87.4%, respectively, due primarily to $17.4 million of lower interest income associated with the 2022 prepayment of our notenotes receivable from Aimco, which was repaid during the third quarter of 2022, andAimco. Interest income decreased further due to lower interest income associated with properties leased to Aimco through September 1, 2022, when the leases were canceled. The decrease was offset partially byreceiptthree months ended September 30, 2023, compared to 2022, interest expense decreased $9.8 million, or 29.9%, due primarily to the the impact of a $4.5 million prepayment penalty associated with the final $147 millionhedged derivative activity on interest expense, lower balances on our revolving credit facility, and repayment of the note receivable from Aimco.2022,2023, compared to 2021, interest income was relatively flat.Interest ExpenseFor the three months ended September 30, 2022, compared to 2021, interest expense was relatively flat.For the nine months ended September 30, 2022, compared to 2021, interest expense decreased by $19.4increased $15.8 million, or 19.4%19.6%, 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 higher outstanding property debt balances; offset partially by the impact of hedged derivative activity on interest rate swaps entered into in 2022.For2022,2023, compared to 2021,2022, loss on extinguishment of debt decreased by $6.7$21.6 million, and $21.2 million, respectively, due to higher prepayment penalties incurred from the early payment of property debt in 2021 associated with the deleveraging of AIR’s balance sheet and the write-off of deferred financing costs associated with our previous revolving credit facility in 2021.Gain2022. and Derecognition of Leased PropertiesThere were no apartment communities sold during2022.2023, we recognized a $692.9 million gain on dispositions of real estate and impairments of real estate due primarily to the gain associated with sale of a partial interest in 10 properties in connection with the Core JV.estate.Apartment communities sold are summarized below (dollars in millions):(1)Net proceeds are after repaymentestate related to the sale of $114.0 million of property debt, net working capital settlements, payment of transaction costs, and debt prepayment penalties, if applicable.2021,2022, we did not recognize any real estate impairment losses.$7.1$14.1 million and $23.3 million, respectively, of gain associated withgains on derivative instruments that are not designated as cash flow hedges primarily related to mark-to-sale of one apartment communityperiod. During the three and $87.4nine months ended September 30, 2022, we did not recognize any gains on derivative instruments.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$9.3 million, respectively. During the third quarter of 2022, as2023, our unconsolidated joint ventures generated NOI of $11.1 million. This incremental NOI was offset by higher depreciation expense due to valuing the developments were complete.(Expense) Benefit(expense) benefitexpense 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) benefitexpense in our condensed consolidated statements of operations.2022,2023, compared to 2021,2022, income tax (expense) benefit was relatively flat.33capitalized 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. and Pro forma Funds From Operations,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 arepreferred stockPreferred Stock and preferred units and amounts allocated from NAREIT FFO to participating securities.NAREIT Run-Rate FFO andrepresents Pro forma FFO as defined above, excluding certain amounts that are unique or occur infrequently. Run-Rate AFFO represents Pro forma FFO as defined above, reduced by Capital Replacements, and is a measure of current period performance. and Pro forma FFO, Run-Rate FFO, and Run-Rate AFFO are calculated as follows (in thousands, except per share data):Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net income attributable to AIR common stockholders $ 663,596 $ 1,760 $ 650,700 $ 574,363 Adjustments: Real estate depreciation and amortization, net of noncontrolling partners’ interest 87,169 85,057 260,930 240,436 Gain on dispositions and impairments of real estate, net of noncontrolling partners’ interest (690,992) — (673,520) (587,453) Income tax adjustments related to gain on dispositions and other tax-related items 4,400 (348) 4,400 (1,448) Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities 38,773 (5,250) 25,962 21,327 NAREIT FFO attributable to AIR common stockholders $ 102,946 $ 81,219 $ 268,472 $ 247,225 Adjustments: Gain on derivative instruments (1) (12,436) — (21,688) — Non-cash straight-line rent (2) 3,068 3,660 9,248 4,944 Business transformation and transition related costs (3) 897 1,419 1,420 3,881 Loss on extinguishment of debt (4) — — 2,008 23,636 Casualty losses and other (5) (272) 4,389 1,855 4,635 Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities 541 (581) 454 (1,887) Pro forma FFO attributable to AIR common stockholders $ 94,744 $ 90,106 $ 261,769 $ 282,434 Cash swap acceleration income, net of common noncontrolling interests in AIR OP and participating securities (10,854) — (10,854) — Aimco note prepayment, net of common noncontrolling interests in AIR OP and participating securities — (4,673) — (34,456) Casualty and Legal expense in excess of run-rate, net of common noncontrolling interests in AIR OP and participating securities 2,665 — 4,628 — Run Rate FFO attributable to AIR common stockholders $ 86,555 $ 85,433 $ 255,543 $ 247,978 Capital Replacements, net of common noncontrolling interests in AIR OP and participating securities (7,476) (6,706) (26,449) (22,912) Leasing Commissions, net of common noncontrolling interests in AIR OP and participating securities (1,712) (1,632) (5,029) (4,227) Run-Rate AFFO attributable to AIR common stockholders $ 77,367 $ 77,095 $ 224,065 $ 220,839 Weighted-average common shares outstanding – basic 147,474 153,811 148,372 155,488 Dilutive common share equivalents 299 246 143 269 Total shares and dilutive share equivalents 147,773 154,057 148,515 155,757 Net income attributable to AIR per share – diluted $ 4.43 $ 0.01 $ 4.35 $ 3.68 NAREIT FFO per share – diluted $ 0.70 $ 0.53 $ 1.81 $ 1.59 Pro forma FFO per share – diluted $ 0.64 $ 0.58 $ 1.76 $ 1.81 Run-Rate FFO per share - diluted $ 0.59 $ 0.55 $ 1.72 $ 1.59 Run-Rate AFFO per share - diluted $ 0.52 $ 0.50 $ 1.51 $ 1.42 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 income attributable to AIR common stockholders. Any non-cash changes in fair value are 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 FFO but exclude the incremental straight-line non-cash rent expense. The rent expense for this 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 ourthird party. Duenew ERP system, we expect to continue to incur these costs throughout 2023. We excluded these costs from Pro forma FFO because we believe they are not related to ongoing operating performance.termsprepayment of debt. In 2023, these leases, cash received exceeded GAAP income.costs are related to the prepayment of high-cost, floating-rate debt. We included the cash lease income inexcluded these costs from Pro forma FFO. These leases were canceled during the third quarterFFO because we believe they are not representative of 2022.In the third quarter of 2022,During 2023, we incurred significant casualty losses related to fire damage at our Palazzo East at Park La Brea apartment community. During 2021, we incurred significant 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-relatedIda-induced flooding in downtown Philadelphia causing damage to our Park Towne Place apartment community, whose clean-up costs extended into 2022. During the third quarter of 2023, we recorded a net gain upon receipt of third-party funds, upon closing the 2021 Park Towne Place claim. AIR excludes individually significant casualty losses from the computation of FFO when the expected gains or losses are atypical and continued to incur incremental costs related to its cleanup in 2022, net of third party reimbursements received. We excluded these costs and reimbursements from Pro forma FFO because of the unusual nature of the weather events.(6)Certain common share equivalents thatare greater than $1 million. Individual casualty losses less than $1 million are included in FFO. In 2023, these "normal" casualty losses are expected to exceed historical averages and AIR's expectation entering the year by $1.7 million. AIR has excluded casualty losses that exceeded our calculationbeginning of net income attributable to AIR per share, diluted are excluded from our calculation of NAREIT FFO per share and Pro forma FFO per share as 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 million 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 includedyear expectations 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 planningRun-Rate FFO.35associated with the Separation. 2022.2022,2023, are presented below:Pro forma Completion of
November 2022 Sales
Annualized Current Quarter (1)6.4x5.8x6.6x5.9x(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.September 30, 2023 Total indebtedness $ 3,128,234 Adjustments: Debt issuance costs related to non-recourse property debt and term loans 17,292 Proportionate share adjustments related to debt obligations 60,530 Cash and restricted cash (134,170) Tenant security deposits included in restricted cash 11,890 Proportionate share adjustments related to cash and restricted cash 10,791 Proportionate Debt 3,094,567 Perpetual Preferred Stock 2,000 Preferred noncontrolling interests in AIR Operating Partnership 77,140 Net Leverage $ 3,173,707 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 $ 710,512 Adjustments: Interest expense 22,888 Income tax expense 4,595 Depreciation and amortization 79,023 Gain on dispositions of real estate (692,861) Net income attributable to noncontrolling interests in consolidated real estate partnerships (2,525) EBITDAre adjustments attributable to noncontrolling interests and unconsolidated real estate partnerships 13,437 EBITDAre $ 135,069 Pro forma FFO and other adjustments, net (1) 177 Quarterly Adjusted EBITDAre $ 135,246 Adjusted EBITDAre, before removal of annualization impact for non-recurring items $ 540,984 Removal of annualization impact for non-recurring items (2) (38,313) Adjusted EBITDAre $ 502,671 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$0.9 million to reflect the cancellationdisposition of the four leasedtwo properties and (ii) $0.4 million to reflect the acquisition of one property,Core Joint Venture, as if both of the transactions closed on July 1, 2022.2023, and an adjustment of $11.5 million non-cash gain on derivative instruments.2022,2023, our available liquidity was $609.5 million,$2.1 billion, which consisted of:83.195.7 million inof our share of cash and cash equivalents;16.515.8 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; and509.9970.0 million of available capacity to borrow under our revolving credit facility after consideration of letters of credit.credit; andand acquisitions of apartment communities.communities, and repurchases of equity securities. We use our cash and cash equivalents and cash provided by operating activities to meet short-term liquidity needs. In the event that our cash and cash equivalents and cash provided by operating activities are not sufficient to meet our short-term liquidity needs, we have additional means, such as short-term borrowing availability and proceeds from apartment community sales and debt refinancings.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 apartment2021, 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, if6.46.9 years as of September 30, 20222023, inclusive of extension options, with a weighted-average interest rate of 3.9%4.3%. As of September 30, 2022, the interest rate on our fixed rate loans 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. 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 September 30, 20222023 and expect to remain in compliance during the next 12 months.2022,2023, net cash provided by operating activities was $351.5$301.7 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 nine months ended September 30, 2022, increased2023, decreased by $118.7$49.7 million compared to the same period in 2021,2022, due primarily to higher contribution from our Same Store portfolio andlower net operating income associated with sold apartment communities, partially offset by increased contribution from properties recently acquired.2022,2023, our net cash used in investing activities of $270.0 million consisted primarily of purchases of real estate and capital expenditures, offset partially by proceeds from dispositions of real estate and distributions from unconsolidated real estate partnerships. Net cash provided by investing activities of $252.9 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 $128.4 million and $110.9$111.2 million during the nine months ended September 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.•capital replacements, which do not increase the useful life of an asset from its original purchase condition. Capital replacements represent capital additions made to replace the portion of our investment in acquired apartment communities consumed during our period of ownership;improvements, which represent capital additions madereplacements, expenditures that are necessary to replacehelp preserve the portionvalue of acquired apartment communities consumed prior to our period of ownership;reduce costs, and do not significantly disrupt property operations; andof an apartment community after a casualty event.event; andmeasures.Nine Months Ended September 30, 2023 September 30, 2022 Capital Replacements $ 24,605 $ 19,965 Capital Enhancements 65,244 61,795 Initial Capital Expenditures 32,620 22,157 Casualty 5,036 3,649 Other 869 3,624 Total capital additions $ 128,374 $ 111,190 Plus: additions related to apartment communities sold and held for sale 12,674 37,962 Consolidated capital additions $ 141,048 $ 149,152 Plus: net change in accrued capital spending (193) 1,963 Total capital expenditures per condensed consolidated statements of cash flows $ 140,855 $ 151,115 20222023 and 2021,2022, we capitalized $1.1$1.0 million and $1.8$1.1 million of interest costs, respectively, and $12.6$12.7 million and $12.3$12.6 million of indirect costs, respectively. property debt and term loans, payment of dividends and distributions, and repurchases of Common Stock and OP Units, offset partially by proceeds from the issuance of unsecured notes payable. Net cash provided by financing activities of $41.5 million for the same period in 2021 consisted primarily of proceeds from term loans and the issuance of Common Stock, offset partially by repayments of non-recourse property debt and term loans.39(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.2022,2023, on a consolidated basis, we had approximately $800.0$475.0 million of outstanding borrowings on our term loans, $88.5 million of variable-rate property-level debt outstanding, and $479.0$25.8 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$1.5 million, net, on an annual basis, after consideration of our interest rate swaps.2022,2023, we had $114.6$134.2 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.59 to the condensed consolidated financial statements in Item 1. The estimated fair value of total indebtedness, including our non-recourse property debt, term loans, revolving credit facility, and unsecured notes payable, was $3.5approximately $2.8 billion as of September 30, 2022, inclusive of a $242.8 million mark-to-market asset, of which the amount attributable to AIR common shareholders is $189.4 million, or $1.13 per share.2023.20222023 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.20222023 that has materially affected, or is reasonably likely to materially affect, the AIR Operating Partnership’s internal control over financial reporting.2021.AND USE OF PROCEEDS,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 September 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 September 30, 2023, there was $105.5 million remaining available for future share repurchases under this authorization.Fiscal period Total
Number of
Shares
RepurchasedAverage
Price Paid
per UnitTotal Number of
Shares Repurchased as Part
of Publicly Announced
Plans or ProgramsMaximum Dollar Value
of Shares that May Yet
Be Repurchased Under
Plans or Programs
(in thousands) (1)July 1 – July 31, 2023 — $ — — $ 183,290 August 1 – August 31, 2023 2,249,800 $ 34.57 2,249,800 $ 105,507 September 1 – September 30, 2023 — $ — — $ 105,507 Total 2,249,800 $ 34.57 2,249,800 2022.2022,2023, no common OP Units were redeemed in exchange for Common Stock. of common OP Units during the three months ended September 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)July 1 – July 31, 2023 12,505 $ 35.52 N/A N/A August 1 – August 31, 2023 26,289 $ 34.99 N/A N/A September 1 – September 30, 2023 11,926 $ 33.77 N/A N/A Total 50,720 $ 34.83 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 any four consecutive fiscal quarters in an aggregate amount of up to 95% of AIR’s FFO for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain AIR’s REIT status.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