UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 20222023
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 1-13232 (Apartment Investment and Management Company)
Commission File Number: 0-56223 (Aimco OP L.P.)
Apartment Investment and Management Company
Aimco OP L.P.
(Exact name of registrant as specified in its charter)
Maryland (Apartment Investment and Management Company) | 84-1259577 | |
Delaware (Aimco OP L.P.) | 85-2460835 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) |
| Identification No.) |
4582 South Ulster Street, Suite 1450 | ||
Denver, Colorado | 80237 | |
(Address of principal executive offices) | (Zip Code) |
(303) 224-7900
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
Class A Common Stock (Apartment Investment and Management Company) | AIV | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
None (Apartment Investment and Management Company)
Partnership Common Units (Aimco OP L.P.)
(title of each class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Apartment Investment and Management Company: Yes ☒ No ☐ | Aimco OP L.P.: Yes ☒ No ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Apartment Investment and Management Company: Yes ☒ No ☐ | Aimco OP L.P.: Yes ☒ No ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Apartment Investment and Management Company:
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||
Emerging growth company | ☐ |
Aimco OP L.P.:
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer |
| Smaller reporting company | ☐ | ||
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Apartment Investment and Management Company: | ☐ | Aimco OP L.P.: | ☒ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Apartment Investment and Management Company: Yes ☐ No | Aimco OP L.P.: Yes ☐ No |
The number of shares of Apartment Investment and Management Company Class A common stock ("Common StockStock") outstanding as of November 4, 2022:3, 2023: 151,632,179145,759,672
EXPLANATORY NOTE
Apartment Investment and Management Company (“Aimco” or “the Company”), a Maryland corporation, is a self-administered and self-managed real estate investment trust, or REIT. On December 15, 2020, Aimco completed the separation of its business intobusinesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp. (“AIR”). The separation was effected by way of a pro rata distribution, in which stockholders of Aimco received one share of Class A common stock of AIR for every one share of Class A common stock of Aimco held as of the close of business on December 5, 2020. Apartment Income REIT, L.P. (“AIR Operating Partnership”), formerly known as “Aimco Properties, L.P.” until July 7, 2021, also completed a pro rata distribution of all of the outstanding common limited partnership units of Aimco OP L.P. (“Aimco Operating Partnership” and such units, “OP Units”) to holders of AIR Operating Partnership common limited partnership units (Aimco and AIR Operating Partnership Class I High Performance partnership unitstogether, as ofthey existed prior to the close of business on December 5, 2020. The transactions describedSeparation, “Aimco Predecessor”). Events noted in this paragraph are collectively referred tofiling as the “Separation” and are governedoccurring before December 15, 2020, were those entered into by the terms of the Separation and Distribution Agreement (the “Separation Agreement”).Aimco Predecessor.
Aimco, through a wholly ownedwholly-owned subsidiary, is the general partner and directly is the special limited partner of Aimco OP L.P. ("Aimco Operating Partnership.Partnership"). As of September 30, 2022,2023, Aimco owned 92.7%92.4% of the legal interest in the common partnership units of Aimco Operating Partnership and 95.0%94.8% of the economic interest in Aimco Operating Partnership. The remaining 7.3%7.6% legal interest is owned by limited partners. As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.
Aimco Operating Partnership holds all of Aimco’s assets and manages the daily operations of Aimco’s business. Pursuant to the Aimco Operating Partnership agreement, Aimco is required to contribute to Aimco Operating Partnership all proceeds from the offerings of its securities. In exchange for the contribution of such proceeds, Aimco receives additional interests in Aimco Operating Partnership with similar terms (e.g., if Aimco contributes proceeds of a stock offering, Aimco receives partnership units with terms substantially similar to the stock issued by Aimco).
This filing combines the quarterly reports on Form 10-Q for the quarterly period ended September 30, 2022,2023, of Aimco and Aimco Operating Partnership. Where it is important to distinguish between the two entities, we refer to them specifically. Otherwise, references to “we,” “us,” or “our” mean, collectively, Aimco, Aimco Operating Partnership, and their consolidated entities.
We believe combining the periodic reports of Aimco and Aimco Operating Partnership into this single report provides the following benefits:
We operate Aimco and Aimco Operating Partnership as one enterprise; the management of Aimco directs the management and operations of Aimco Operating Partnership; and Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, is managed by Aimco.
We believe it is important to understand the few differences between Aimco and Aimco Operating Partnership in the context of how Aimco and Aimco Operating Partnership operate as a consolidated company. Aimco has no assets or liabilities other than its investment in Aimco Operating Partnership. Also, Aimco is a corporation that issues publicly traded equity from time to time, whereas Aimco Operating Partnership is a partnership that has no publicly traded equity. Except for the net proceeds from stock offerings by Aimco, which are contributed to Aimco Operating Partnership in exchange for additional limited partnership interests (of a similar type and in an amount equal to the shares of stock sold in the offering), Aimco Operating Partnership generates all remaining capital required by its business. These sources include Aimco Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility, the issuance of debt and equity securities, including additional partnership units, and proceeds received from the sale of real estate.
1
Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the condensed consolidated financial statements of Aimco and those of Aimco Operating Partnership. Interests in Aimco Operating Partnership held by entities other than Aimco which we refer to as OP Units, are classified within partners’ capital in Aimco Operating Partnership’s condensed consolidated financial statements and as noncontrolling interests in Aimco’s condensed consolidated financial statements.
To help investors understand the differences between Aimco and Aimco Operating Partnership, this report provides: separate condensed consolidated financial statements for Aimco and Aimco Operating Partnership; a single set of condensed consolidated notes to such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, and earnings per share or earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.
1
This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for Aimco and Aimco Operating Partnership in order to establish that the requisite certifications have been made and that Aimco and Aimco Operating Partnership are both compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.
2
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
TABLE OF CONTENTS
FORM 10-Q
Page | ||
ITEM 1. | ||
4 | ||
5 | ||
6 | ||
8 | ||
9 | ||
10 | ||
Condensed Consolidated Statements of Partners’ Capital (Unaudited) | 11 | |
13 | ||
14 | ||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|
ITEM 3. |
| |
ITEM 4. |
| |
ITEM 1A. |
| |
ITEM 2. |
| |
ITEM 6. |
| |
|
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
|
| September 30, 2022 |
|
| December 31, 2021 |
|
| September 30, 2023 |
|
| December 31, 2022 |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Buildings and improvements |
| $ | 1,248,005 |
|
| $ | 1,257,214 |
|
| $ | 1,546,503 |
|
| $ | 1,322,381 |
|
Land |
|
| 639,272 |
|
|
| 534,285 |
|
|
| 638,007 |
|
|
| 641,102 |
|
Total real estate |
|
| 1,887,277 |
|
|
| 1,791,499 |
|
|
| 2,184,510 |
|
|
| 1,963,483 |
|
Accumulated depreciation |
|
| (516,857 | ) |
|
| (561,115 | ) |
|
| (564,686 | ) |
|
| (530,722 | ) |
Net real estate |
|
| 1,370,420 |
|
|
| 1,230,384 |
|
|
| 1,619,824 |
|
|
| 1,432,761 |
|
Cash and cash equivalents |
|
| 206,366 |
|
|
| 233,374 |
|
|
| 95,680 |
|
|
| 206,460 |
|
Restricted cash |
|
| 19,075 |
|
|
| 11,208 |
|
|
| 20,205 |
|
|
| 23,306 |
|
Mezzanine investment |
|
| 362,788 |
|
|
| 337,797 |
|
|
| 158,173 |
|
|
| 158,558 |
|
Interest rate options |
|
| 61,448 |
|
|
| 25,657 |
|
|
| 9,161 |
|
|
| 62,387 |
|
Right-of-use lease assets |
|
| 95,506 |
|
|
| 429,768 |
| ||||||||
Unconsolidated real estate partnerships |
|
| 22,667 |
|
|
| 15,789 |
| ||||||||
Notes receivable |
|
| 39,802 |
|
|
| 39,014 |
| ||||||||
Right-of-use lease assets - finance leases |
|
| 109,311 |
|
|
| 110,269 |
| ||||||||
Other assets, net |
|
| 180,641 |
|
|
| 165,913 |
|
|
| 176,043 |
|
|
| 132,679 |
|
Total assets |
| $ | 2,296,244 |
|
| $ | 2,434,101 |
|
| $ | 2,250,866 |
|
| $ | 2,181,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-recourse property debt, net |
| $ | 859,593 |
|
| $ | 483,137 |
|
| $ | 869,586 |
|
| $ | 929,501 |
|
Construction loans, net |
|
| 80,816 |
|
|
| 163,570 |
|
|
| 250,630 |
|
|
| 118,698 |
|
Notes payable to AIR |
|
| — |
|
|
| 534,127 |
| ||||||||
Total indebtedness |
|
| 940,409 |
|
|
| 1,180,834 |
|
|
| 1,120,216 |
|
|
| 1,048,199 |
|
Deferred tax liabilities |
|
| 121,344 |
|
|
| 124,747 |
|
|
| 112,068 |
|
|
| 119,615 |
|
Lease liabilities |
|
| 98,467 |
|
|
| 435,093 |
| ||||||||
Lease liabilities - finance leases |
|
| 117,666 |
|
|
| 114,625 |
| ||||||||
Mezzanine investment - participation sold |
|
| 34,402 |
|
|
| — |
| ||||||||
Accrued liabilities and other |
|
| 125,132 |
|
|
| 97,400 |
|
|
| 111,049 |
|
|
| 106,600 |
|
Total liabilities |
|
| 1,285,352 |
|
|
| 1,838,074 |
|
|
| 1,495,401 |
|
|
| 1,389,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Redeemable noncontrolling interests in consolidated real estate partnerships |
|
| 158,135 |
|
|
| 33,794 |
|
|
| 170,201 |
|
|
| 166,826 |
|
Commitments and contingencies (Note 4) |
|
|
|
|
|
| ||||||||||
Equity: |
|
|
|
|
|
| ||||||||||
Common Stock, $0.01 par value, 510,587,500 shares authorized at both September 30, 2022 and December 31, 2021, and 149,124,466 and 149,818,021 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively |
|
| 1,492 |
|
|
| 1,498 |
| ||||||||
|
|
|
|
|
|
| ||||||||||
Commitments and contingencies (Note 3) |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
| ||||||||||
Equity (510,587,500 shares authorized at both September 30, 2023 and December 31, 2022): |
|
|
|
|
|
| ||||||||||
Common Stock, $0.01 par value, 141,994,719 and 146,524,941 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively |
|
| 1,420 |
|
|
| 1,466 |
| ||||||||
Additional paid-in capital |
|
| 514,341 |
|
|
| 521,842 |
|
|
| 472,261 |
|
|
| 496,482 |
|
Retained Earnings (accumulated deficit) |
|
| 250,996 |
|
|
| (22,775 | ) | ||||||||
Retained earnings |
|
| 35,207 |
|
|
| 49,904 |
| ||||||||
Total Aimco equity |
|
| 766,829 |
|
|
| 500,565 |
|
|
| 508,888 |
|
|
| 547,852 |
|
Noncontrolling interests in consolidated real estate partnerships |
|
| 45,517 |
|
|
| 35,213 |
|
|
| 48,703 |
|
|
| 48,294 |
|
Common noncontrolling interests in Aimco Operating Partnership |
|
| 40,411 |
|
|
| 26,455 |
|
|
| 27,673 |
|
|
| 29,212 |
|
Total equity |
|
| 852,757 |
|
|
| 562,233 |
|
|
| 585,264 |
|
|
| 625,358 |
|
Total liabilities and equity |
| $ | 2,296,244 |
|
| $ | 2,434,101 |
|
| $ | 2,250,866 |
|
| $ | 2,181,223 |
|
See notes to condensed consolidated financial statements.
4
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rental and other property revenues |
| $ | 47,683 |
|
| $ | 42,893 |
|
| $ | 148,375 |
|
| $ | 123,115 |
|
| $ | 47,701 |
|
| $ | 47,683 |
|
| $ | 137,643 |
|
| $ | 148,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property operating expenses |
|
| 17,455 |
|
|
| 18,155 |
|
|
| 56,384 |
|
|
| 51,500 |
|
|
| 18,328 |
|
|
| 17,455 |
|
|
| 54,648 |
|
|
| 56,384 |
|
Depreciation and amortization |
|
| 85,438 |
|
|
| 21,709 |
|
|
| 143,420 |
|
|
| 63,065 |
|
|
| 17,804 |
|
|
| 85,438 |
|
|
| 51,106 |
|
|
| 143,420 |
|
General and administrative expenses |
|
| 10,809 |
|
|
| 8,868 |
|
|
| 29,243 |
|
|
| 22,562 |
|
|
| 8,198 |
|
|
| 10,809 |
|
|
| 24,487 |
|
|
| 29,243 |
|
Total operating expenses |
|
| 113,702 |
|
|
| 48,732 |
|
|
| 229,047 |
|
|
| 137,127 |
|
|
| 44,330 |
|
|
| 113,702 |
|
|
| 130,241 |
|
|
| 229,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Interest income |
|
| 2,486 |
|
|
| 915 |
|
|
| 7,022 |
|
|
| 2,036 |
| ||||||||||||||||
Interest expense |
|
| (9,719 | ) |
|
| (12,680 | ) |
|
| (65,865 | ) |
|
| (37,995 | ) |
|
| (8,252 | ) |
|
| (9,719 | ) |
|
| (27,633 | ) |
|
| (65,865 | ) |
Mezzanine investment income, net |
|
| 8,423 |
|
|
| 7,636 |
|
|
| 24,990 |
|
|
| 22,654 |
| ||||||||||||||||
Mezzanine investment income (loss), net |
|
| (757 | ) |
|
| 8,423 |
|
|
| (1,013 | ) |
|
| 24,990 |
| ||||||||||||||||
Realized and unrealized gains (losses) on interest rate options |
|
| 9,209 |
|
|
| 2,231 |
|
|
| 48,005 |
|
|
| 10,608 |
|
|
| 955 |
|
|
| 9,209 |
|
|
| 3,280 |
|
|
| 48,005 |
|
Realized and unrealized gains (losses) on equity investments |
|
| (2,145 | ) |
|
| 1,233 |
|
|
| 20,152 |
|
|
| 2,107 |
|
|
| (1,066 | ) |
|
| (2,145 | ) |
|
| 165 |
|
|
| 20,152 |
|
Gains on dispositions of real estate |
|
| 75,539 |
|
|
| — |
|
|
| 170,004 |
|
|
| — |
| ||||||||||||||||
Gain on dispositions of real estate |
|
| — |
|
|
| 75,539 |
|
|
| 1,878 |
|
|
| 170,004 |
| ||||||||||||||||
Lease modification income |
|
| 1,577 |
|
|
| — |
|
|
| 206,963 |
|
|
| — |
|
|
| — |
|
|
| 1,577 |
|
|
| — |
|
|
| 206,963 |
|
Income from unconsolidated real estate partnerships |
|
| 320 |
|
|
| 159 |
|
|
| 614 |
|
|
| 459 |
| ||||||||||||||||
Other income (expense), net |
|
| (255 | ) |
|
| 552 |
|
|
| (1,743 | ) |
|
| 2,959 |
|
|
| (1,593 | ) |
|
| (1,329 | ) |
|
| (6,490 | ) |
|
| (4,238 | ) |
Income (loss) before income tax |
|
| 16,610 |
|
|
| (6,867 | ) |
|
| 321,834 |
|
|
| (13,679 | ) |
|
| (4,536 | ) |
|
| 16,610 |
|
|
| (14,775 | ) |
|
| 321,834 |
|
Income tax benefit (expense) |
|
| 17,563 |
|
|
| 2,021 |
|
|
| (24,338 | ) |
|
| 9,881 |
|
|
| 6,210 |
|
|
| 17,563 |
|
|
| 10,823 |
|
|
| (24,338 | ) |
Net income (loss) |
|
| 34,173 |
|
|
| (4,846 | ) |
|
| 297,496 |
|
|
| (3,798 | ) |
|
| 1,674 |
|
|
| 34,173 |
|
|
| (3,952 | ) |
|
| 297,496 |
|
Net (income) loss attributable to redeemable noncontrolling |
|
| (2,907 | ) |
|
| (127 | ) |
|
| (5,446 | ) |
|
| (41 | ) |
|
| (3,610 | ) |
|
| (2,907 | ) |
|
| (10,460 | ) |
|
| (5,446 | ) |
Net (income) loss attributable to noncontrolling interests |
|
| (240 | ) |
|
| (296 | ) |
|
| (585 | ) |
|
| (862 | ) |
|
| (447 | ) |
|
| (240 | ) |
|
| (1,060 | ) |
|
| (585 | ) |
Net (income) loss attributable to common noncontrolling |
|
| (1,554 | ) |
|
| 253 |
|
|
| (14,648 | ) |
|
| 209 |
|
|
| 123 |
|
|
| (1,554 | ) |
|
| 775 |
|
|
| (14,648 | ) |
Net income (loss) attributable to Aimco |
| $ | 29,472 |
|
| $ | (5,016 | ) |
| $ | 276,817 |
|
| $ | (4,492 | ) |
| $ | (2,260 | ) |
| $ | 29,472 |
|
| $ | (14,697 | ) |
| $ | 276,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) attributable to Aimco per common |
| $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.82 |
|
| $ | (0.03 | ) | ||||||||||||||||
Net income (loss) attributable to Aimco per common |
| $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.81 |
|
| $ | (0.03 | ) | ||||||||||||||||
Net income (loss) attributable to Aimco per common |
| $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.82 |
| ||||||||||||||||
Net income (loss) attributable to Aimco per common |
| $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.81 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Weighted-average common shares outstanding – basic |
|
| 149,611 |
|
|
| 149,762 |
|
|
| 149,706 |
|
|
| 149,517 |
|
|
| 143,299 |
|
|
| 149,611 |
|
|
| 144,431 |
|
|
| 149,706 |
|
Weighted-average common shares outstanding – diluted |
|
| 151,197 |
|
|
| 149,762 |
|
|
| 151,076 |
|
|
| 149,517 |
|
|
| 143,299 |
|
|
| 151,197 |
|
|
| 144,431 |
|
|
| 151,076 |
|
See notes to condensed consolidated financial statements.
5
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended September 30, 20222023 and 20212022
(In thousands)thousands, except per share data)
(Unaudited)
|
| Common Stock |
|
|
|
|
|
|
|
|
|
| Noncontrolling |
|
| Common |
|
|
|
|
| Common Stock |
|
|
|
|
|
|
|
|
|
| Noncontrolling |
|
| Common |
|
|
|
| ||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Additional |
|
| Retained Earnings (Accumulated Deficit) |
|
| Total Aimco |
|
| Consolidated |
|
| Aimco |
|
| Total |
| ||||||||||||||||||||||||||||||||||||||||
Balances at June 30, 2021 |
|
| 149,663 |
|
| $ | 1,496 |
|
| $ | 517,540 |
|
| $ | (16,315 | ) |
| $ | 502,721 |
|
| $ | 31,847 |
|
| $ | 26,654 |
|
| $ | 561,222 |
| ||||||||||||||||||||||||||||||||
Net income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (5,016 | ) |
|
| (5,016 | ) |
|
| 296 |
|
|
| (253 | ) |
|
| (4,973 | ) | ||||||||||||||||||||||||||||||||
Redemption of OP Units |
|
| 140 |
|
|
| 1 |
|
|
| 354 |
|
|
| — |
|
|
| 355 |
|
|
| — |
|
|
| (361 | ) |
|
| (6 | ) | ||||||||||||||||||||||||||||||||
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 1,019 |
|
|
| — |
|
|
| 1,019 |
|
|
| — |
|
|
| 441 |
|
|
| 1,460 |
| ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,158 |
|
|
| — |
|
|
| 3,158 |
| ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (287 | ) |
|
| — |
|
|
| (287 | ) | ||||||||||||||||||||||||||||||||
Other, net |
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| (46 | ) |
|
| (45 | ) |
|
| — |
|
|
| — |
|
|
| (45 | ) | ||||||||||||||||||||||||||||||||
Balances at September 30, 2021 |
|
| 149,803 |
|
| $ | 1,498 |
|
| $ | 518,913 |
|
| $ | (21,377 | ) |
| $ | 499,034 |
|
| $ | 35,014 |
|
| $ | 26,481 |
|
| $ | 560,529 |
| ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares |
|
| Amount |
|
| Additional |
|
| Retained Earnings (Accumulated Deficit) |
|
| Total Aimco |
|
| Consolidated |
|
| Aimco |
|
| Total |
| ||||||||||||||||
Balances at June 30, 2022 |
|
| 149,097 |
|
| $ | 1,492 |
|
| $ | 515,065 |
|
| $ | 224,567 |
|
| $ | 741,124 |
|
| $ | 44,665 |
|
| $ | 39,233 |
|
| $ | 825,022 |
|
|
| 149,097 |
|
| $ | 1,492 |
|
| $ | 515,065 |
|
| $ | 224,567 |
|
| $ | 741,124 |
|
| $ | 44,665 |
|
| $ | 39,233 |
|
| $ | 825,022 |
|
Net income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 29,472 |
|
|
| 29,472 |
|
|
| 240 |
|
|
| 1,554 |
|
|
| 31,266 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 29,472 |
|
|
| 29,472 |
|
|
| 240 |
|
|
| 1,554 |
|
|
| 31,266 |
|
Redemption of OP Units |
|
| 26 |
|
|
| — |
|
|
| 398 |
|
|
| — |
|
|
| 398 |
|
|
| — |
|
|
| (474 | ) |
|
| (76 | ) |
|
| 26 |
|
|
| — |
|
|
| 398 |
|
|
|
|
|
| 398 |
|
|
| — |
|
|
| (474 | ) |
|
| (76 | ) | |
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 1,454 |
|
|
| — |
|
|
| 1,454 |
|
|
| — |
|
|
| 258 |
|
|
| 1,712 |
|
|
| — |
|
|
| — |
|
|
| 1,454 |
|
|
| — |
|
|
| 1,454 |
|
|
| — |
|
|
| 258 |
|
|
| 1,712 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (287 | ) |
|
| (160 | ) |
|
| (447 | ) | ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 898 |
|
|
| — |
|
|
| 898 |
| ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 898 |
|
|
| — |
|
|
| 898 |
| ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (287 | ) |
|
| (160 | ) |
|
| (447 | ) | ||||||||||||||||||||||||||||||||
Purchase of noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| 155 |
|
|
| — |
|
|
| 155 |
|
|
| — |
|
|
| — |
|
|
| 155 |
|
|
| — |
|
|
| — |
|
|
| 155 |
|
|
| — |
|
|
| 155 |
|
|
| — |
|
|
| — |
|
|
| 155 |
|
Common stock repurchased |
|
| (73 | ) |
|
| (1 | ) |
|
| (525 | ) |
|
| — |
|
|
| (526 | ) |
|
| — |
|
|
| — |
|
|
| (526 | ) |
|
| (73 | ) |
|
| (1 | ) |
|
| (525 | ) |
|
| — |
|
|
| (526 | ) |
|
| — |
|
|
| — |
|
|
| (526 | ) |
Cash Dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,043 | ) |
|
| (3,043 | ) |
|
| — |
|
|
| — |
|
|
| (3,043 | ) | ||||||||||||||||||||||||||||||||
Cash dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,043 | ) |
|
| (3,043 | ) |
|
| — |
|
|
| — |
|
|
| (3,043 | ) | ||||||||||||||||||||||||||||||||
Other, net |
|
| 74 |
|
|
| 1 |
|
|
| (2,206 | ) |
|
| — |
|
|
| (2,205 | ) |
|
| 1 |
|
|
| — |
|
|
| (2,204 | ) |
|
| 74 |
|
|
| 1 |
|
|
| (2,206 | ) |
|
| — |
|
|
| (2,205 | ) |
|
| 1 |
|
|
| — |
|
|
| (2,204 | ) |
Balances at September 30, 2022 |
|
| 149,124 |
|
| $ | 1,492 |
|
| $ | 514,341 |
|
| $ | 250,996 |
|
| $ | 766,829 |
|
| $ | 45,517 |
|
| $ | 40,411 |
|
| $ | 852,757 |
|
|
| 149,124 |
|
| $ | 1,492 |
|
| $ | 514,341 |
|
| $ | 250,996 |
|
| $ | 766,829 |
|
| $ | 45,517 |
|
| $ | 40,411 |
|
| $ | 852,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Balances at June 30, 2023 |
|
| 143,734 |
|
|
| 1,438 |
|
| $ | 483,258 |
|
| $ | 37,486 |
|
| $ | 522,182 |
|
| $ | 48,472 |
|
| $ | 28,105 |
|
| $ | 598,759 |
| ||||||||||||||||||||||||||||||||
Net income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,260 | ) |
|
| (2,260 | ) |
|
| 447 |
|
|
| (123 | ) |
|
| (1,936 | ) | ||||||||||||||||||||||||||||||||
Redemption of OP Units |
|
| — |
|
|
| — |
|
|
| 244 |
|
|
| — |
|
|
| 244 |
|
|
| — |
|
|
| (332 | ) |
|
| (88 | ) | ||||||||||||||||||||||||||||||||
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 1,890 |
|
|
| — |
|
|
| 1,890 |
|
|
| — |
|
|
| 23 |
|
|
| 1,913 |
| ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 71 |
|
|
| — |
|
|
| 71 |
| ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (287 | ) |
|
| — |
|
|
| (287 | ) | ||||||||||||||||||||||||||||||||
Common stock repurchased |
|
| (1,744 | ) |
|
| (17 | ) |
|
| (13,132 | ) |
|
| — |
|
|
| (13,149 | ) |
|
| — |
|
|
| — |
|
|
| (13,149 | ) | ||||||||||||||||||||||||||||||||
Other common stock issuances |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||
Other, net |
|
| — |
|
|
| (1 | ) |
|
| 1 |
|
|
| (19 | ) |
|
| (19 | ) |
|
| — |
|
|
| — |
|
|
| (19 | ) | ||||||||||||||||||||||||||||||||
Balances at September 30, 2023 |
|
| 141,995 |
|
|
| 1,420 |
|
|
| 472,261 |
|
| $ | 35,207 |
|
| $ | 508,888 |
|
| $ | 48,703 |
|
| $ | 27,673 |
|
| $ | 585,264 |
|
See notes to condensed consolidated financial statements.
6
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Nine Months Ended September 30, 20222023 and 20212022
(In thousands)thousands, except per share data)
(Unaudited)
|
| Common Stock |
|
|
|
|
|
|
|
|
|
| Noncontrolling |
|
| Common |
|
|
|
|
| Common Stock |
|
|
|
|
|
|
|
|
|
| Noncontrolling |
|
| Common |
|
|
|
| ||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Additional |
|
| Retained Earnings (Accumulated Deficit) |
|
| Total Aimco |
|
| Consolidated |
|
| Aimco |
|
| Total |
| ||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020 |
|
| 149,036 |
|
| $ | 1,490 |
|
| $ | 515,127 |
|
| $ | (16,839 | ) |
| $ | 499,778 |
|
| $ | 31,877 |
|
| $ | 27,436 |
|
| $ | 559,091 |
| ||||||||||||||||||||||||||||||||
Net income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,492 | ) |
|
| (4,492 | ) |
|
| 862 |
|
|
| (209 | ) |
|
| (3,839 | ) | ||||||||||||||||||||||||||||||||
Redemption of OP Units |
|
| 580 |
|
|
| 6 |
|
|
| 1,252 |
|
|
| — |
|
|
| 1,258 |
|
|
| — |
|
|
| (1,305 | ) |
|
| (47 | ) | ||||||||||||||||||||||||||||||||
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 1,770 |
|
|
| — |
|
|
| 1,770 |
|
|
| — |
|
|
| 559 |
|
|
| 2,329 |
| ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,158 |
|
|
| — |
|
|
| 3,158 |
| ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (869 | ) |
|
| — |
|
|
| (869 | ) | ||||||||||||||||||||||||||||||||
Other common stock issuances |
|
| 232 |
|
|
| 2 |
|
|
| 1,069 |
|
|
| — |
|
|
| 1,071 |
|
|
| — |
|
|
| — |
|
|
| 1,071 |
| ||||||||||||||||||||||||||||||||
Other, net |
|
| (45 | ) |
|
| — |
|
|
| (305 | ) |
|
| (46 | ) |
|
| (351 | ) |
|
| (14 | ) |
|
| — |
|
|
| (365 | ) | ||||||||||||||||||||||||||||||||
Balances at September 30, 2021 |
|
| 149,803 |
|
| $ | 1,498 |
|
| $ | 518,913 |
|
| $ | (21,377 | ) |
| $ | 499,034 |
|
| $ | 35,014 |
|
| $ | 26,481 |
|
| $ | 560,529 |
| ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares |
|
| Amount |
|
| Additional |
|
| Retained Earnings (Accumulated Deficit) |
|
| Total Aimco |
|
| Consolidated |
|
| Aimco |
|
| Total |
| ||||||||||||||||
Balances at December 31, 2021 |
|
| 149,818 |
|
| $ | 1,498 |
|
| $ | 521,842 |
|
| $ | (22,775 | ) |
| $ | 500,565 |
|
| $ | 35,213 |
|
| $ | 26,455 |
|
| $ | 562,233 |
|
|
| 149,818 |
|
| $ | 1,498 |
|
| $ | 521,842 |
|
| $ | (22,775 | ) |
| $ | 500,565 |
|
| $ | 35,213 |
|
| $ | 26,455 |
|
| $ | 562,233 |
|
Net income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 276,817 |
|
|
| 276,817 |
|
|
| 585 |
|
|
| 14,648 |
|
|
| 292,050 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 276,817 |
|
|
| 276,817 |
|
|
| 585 |
|
|
| 14,648 |
|
|
| 292,050 |
|
Redemption of OP Units |
|
| 65 |
|
|
| 1 |
|
|
| 1,932 |
|
|
| — |
|
|
| 1,933 |
|
|
| — |
|
|
| (2,152 | ) |
|
| (219 | ) |
|
| 65 |
|
|
| 1 |
|
|
| 1,932 |
|
|
| — |
|
|
| 1,933 |
|
|
| — |
|
|
| (2,152 | ) |
|
| (219 | ) |
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 4,234 |
|
|
| — |
|
|
| 4,234 |
|
|
| — |
|
|
| 1,515 |
|
|
| 5,749 |
|
|
| — |
|
|
| — |
|
|
| 4,234 |
|
|
| — |
|
|
| 4,234 |
|
|
| — |
|
|
| 1,515 |
|
|
| 5,749 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (892 | ) |
|
| (160 | ) |
|
| (1,052 | ) | ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10,616 |
|
|
| — |
|
|
| 10,616 |
| ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10,616 |
|
|
| — |
|
|
| 10,616 |
| ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (892 | ) |
|
| (160 | ) |
|
| (1,052 | ) | ||||||||||||||||||||||||||||||||
Purchase of noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| (7,088 | ) |
|
| — |
|
|
| (7,088 | ) |
|
| — |
|
|
| — |
|
|
| (7,088 | ) |
|
| — |
|
|
| — |
|
|
| (7,088 | ) |
|
| — |
|
|
| (7,088 | ) |
|
| — |
|
|
| — |
|
|
| (7,088 | ) |
Common stock repurchased |
|
| (816 | ) |
|
| (8 | ) |
|
| (4,937 | ) |
|
| — |
|
|
| (4,945 | ) |
|
| — |
|
|
| — |
|
|
| (4,945 | ) |
|
| (816 | ) |
|
| (8 | ) |
|
| (4,937 | ) |
|
| — |
|
|
| (4,945 | ) |
|
| — |
|
|
| — |
|
|
| (4,945 | ) |
Other Common Stock issuances |
|
| 106 |
|
|
| 1 |
|
|
| 851 |
|
|
| — |
|
|
| 852 |
|
|
| — |
|
|
| — |
|
|
| 852 |
| ||||||||||||||||||||||||||||||||
Other common stock issuances |
|
| 106 |
|
|
| 1 |
|
|
| 851 |
|
|
| — |
|
|
| 852 |
|
|
| — |
|
|
| 109 |
|
|
| 961 |
| ||||||||||||||||||||||||||||||||
Redemption of redeemable noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| — |
|
|
| (183 | ) |
Cash Dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,043 | ) |
|
| (3,043 | ) |
|
| — |
|
|
| — |
|
|
| (3,043 | ) | ||||||||||||||||||||||||||||||||
Cash dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,043 | ) |
|
| (3,043 | ) |
|
| — |
|
|
| — |
|
|
| (3,043 | ) | ||||||||||||||||||||||||||||||||
Other, net |
|
| (49 | ) |
|
| — |
|
|
| (2,310 | ) |
|
| (3 | ) |
|
| (2,313 | ) |
|
| (5 | ) |
|
| 105 |
|
|
| (2,213 | ) |
|
| (49 | ) |
|
| — |
|
|
| (2,310 | ) |
|
| (3 | ) |
|
| (2,313 | ) |
|
| (5 | ) |
|
| (4 | ) |
|
| (2,322 | ) |
Balances at September 30, 2022 |
|
| 149,124 |
|
| $ | 1,492 |
|
| $ | 514,341 |
|
| $ | 250,996 |
|
| $ | 766,829 |
|
| $ | 45,517 |
|
| $ | 40,411 |
|
| $ | 852,757 |
|
|
| 149,124 |
|
| $ | 1,492 |
|
| $ | 514,341 |
|
| $ | 250,996 |
|
| $ | 766,829 |
|
| $ | 45,517 |
|
| $ | 40,411 |
|
| $ | 852,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2022 |
|
| 146,525 |
|
| $ | 1,466 |
|
| $ | 496,482 |
|
| $ | 49,904 |
|
| $ | 547,852 |
|
| $ | 48,294 |
|
| $ | 29,212 |
|
| $ | 625,358 |
| ||||||||||||||||||||||||||||||||
Net income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (14,697 | ) |
|
| (14,697 | ) |
|
| 1,060 |
|
|
| (775 | ) |
|
| (14,412 | ) | ||||||||||||||||||||||||||||||||
Redemption of OP Units |
|
| — |
|
|
| — |
|
|
| 4,500 |
|
|
| — |
|
|
| 4,500 |
|
|
| — |
|
|
| (5,209 | ) |
|
| (709 | ) | ||||||||||||||||||||||||||||||||
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 5,439 |
|
|
| — |
|
|
| 5,439 |
|
|
| — |
|
|
| 3,173 |
|
|
| 8,612 |
| ||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 234 |
|
|
| — |
|
|
| 234 |
| ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (885 | ) |
|
| — |
|
|
| (885 | ) | ||||||||||||||||||||||||||||||||
Common stock repurchased |
|
| (4,747 | ) |
|
| (47 | ) |
|
| (35,694 | ) |
|
| — |
|
|
| (35,741 | ) |
|
| — |
|
|
| — |
|
|
| (35,741 | ) | ||||||||||||||||||||||||||||||||
Other common stock issuances |
|
| 252 |
|
|
| 2 |
|
|
| 1,538 |
|
|
| — |
|
|
| 1,540 |
|
|
| — |
|
|
| 1,272 |
|
|
| 2,812 |
| ||||||||||||||||||||||||||||||||
Other, net |
|
| (35 | ) |
|
| (1 | ) |
|
| (4 | ) |
|
| — |
|
|
| (5 | ) |
|
| — |
|
|
| — |
|
|
| (5 | ) | ||||||||||||||||||||||||||||||||
Balances at September 30, 2023 |
|
| 141,995 |
|
| $ | 1,420 |
|
| $ | 472,261 |
|
| $ | 35,207 |
|
| $ | 508,888 |
|
| $ | 48,703 |
|
| $ | 27,673 |
|
| $ | 585,264 |
|
See notes to condensed consolidated financial statements.
7
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
| |||||
| 2022 |
|
| 2021 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income (loss) | $ | 297,496 |
|
| $ | (3,798 | ) |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 143,420 |
|
|
| 63,065 |
|
Income from unconsolidated real estate partnerships |
| (459 | ) |
|
| (743 | ) |
Realized and unrealized gains on interest rate options |
| (48,005 | ) |
|
| (10,608 | ) |
Income tax expense (benefit) |
| 24,338 |
|
|
| (9,881 | ) |
Amortization of debt issuance costs and other |
| 2,149 |
|
|
| 801 |
|
Mezzanine investment, net |
| (24,990 | ) |
|
| (22,654 | ) |
Loss on extinguishment of debt, net |
| 28,901 |
|
|
| — |
|
Lease modification income |
| (206,963 | ) |
|
| — |
|
Realized and unrealized gains (losses) on equity investments |
| (20,152 | ) |
|
| — |
|
Gain on disposition of real estate |
| (170,004 | ) |
|
| — |
|
Share-based compensation |
| 6,462 |
|
|
| 3,750 |
|
Changes in operating assets and operating liabilities: |
|
|
|
|
| ||
Other assets, net |
| 5,904 |
|
|
| (10,930 | ) |
Net cash received from development property lease terminations |
| 195,789 |
|
|
| — |
|
Accrued liabilities and other |
| (5,634 | ) |
|
| 13,083 |
|
Total adjustments |
| (69,244 | ) |
|
| 25,883 |
|
Net cash provided by operating activities |
| 228,252 |
|
|
| 22,085 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Purchases of real estate |
| (130,122 | ) |
|
| (69,601 | ) |
Capital expenditures (1) |
| (184,048 | ) |
|
| (134,855 | ) |
Proceeds from disposition of real estate |
| 243,134 |
|
|
| — |
|
Investment in IQHQ |
| (14,227 | ) |
|
| (12,091 | ) |
Redemption of IQHQ investment |
| 16,473 |
|
|
|
| |
Investment in unconsolidated real estate partnerships |
| (12,878 | ) |
|
| — |
|
Other investing activities |
| (1,293 | ) |
|
| (96 | ) |
Net cash used in investing activities |
| (82,961 | ) |
|
| (216,643 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from non-recourse property debt |
| 674,720 |
|
|
| 59,757 |
|
Proceeds from construction loans |
| 54,286 |
|
|
| 142,305 |
|
Payments of deferred loan costs |
| (8,244 | ) |
|
| (6,634 | ) |
Principal repayments on non-recourse property debt |
| (284,562 | ) |
|
| (22,307 | ) |
Principal repayments on construction loans |
| (138,404 | ) |
|
| — |
|
Principal repayments on Notes Payable to AIR |
| (534,127 | ) |
|
| — |
|
Purchase of interest rate options |
| (3,223 | ) |
|
| (5,905 | ) |
Proceeds from interest rate option |
| 15,465 |
|
|
| — |
|
Payments on finance leases |
| (25,797 | ) |
|
| (7,773 | ) |
Payments of prepayment premiums |
| (25,740 | ) |
|
| — |
|
Common stock repurchased |
| (4,419 | ) |
|
| — |
|
Dividend paid on common stock |
| (3,043 | ) |
|
|
| |
Distributions to noncontrolling interests |
| (1,052 | ) |
|
| — |
|
Distributions to redeemable noncontrolling interests |
| (917 | ) |
|
|
| |
Contributions from noncontrolling interests |
| 10,616 |
|
|
| — |
|
Contributions from redeemable noncontrolling interests |
| 122,413 |
|
|
| — |
|
Redemption of common and preferred OP units |
| (209 | ) |
|
| — |
|
Redemption of noncontrolling interests |
| (7,088 | ) |
|
| — |
|
Redemption of redeemable noncontrolling interests |
| (5,094 | ) |
|
| — |
|
Other financing activities |
| (13 | ) |
|
| (859 | ) |
Net cash provided by (used in) financing activities |
| (164,432 | ) |
|
| 158,584 |
|
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
| (19,141 | ) |
|
| (35,974 | ) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD |
| 244,582 |
|
|
| 298,735 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 225,441 |
|
| $ | 262,761 |
|
| Nine Months Ended September 30, |
| |||||
| 2023 |
|
| 2022 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income (loss) | $ | (3,952 | ) |
| $ | 297,496 |
|
Adjustments to reconcile net income (loss) to net cash provided by |
|
|
|
|
| ||
Depreciation and amortization |
| 51,106 |
|
|
| 143,420 |
|
Mezzanine investment (income) loss, net |
| 1,013 |
|
|
| (24,990 | ) |
Realized and unrealized (gains) losses on interest rate options |
| (3,280 | ) |
|
| (48,005 | ) |
Realized and unrealized (gains) losses on equity investments |
| (165 | ) |
|
| (20,152 | ) |
Income tax expense (benefit) |
| (10,823 | ) |
|
| 24,338 |
|
Share-based compensation |
| 7,632 |
|
|
| 6,462 |
|
Loss on extinguishment of debt, net |
| 929 |
|
|
| 28,901 |
|
Lease modification income |
| — |
|
|
| (206,963 | ) |
Gain on dispositions of real estate |
| (1,878 | ) |
|
| (170,004 | ) |
Income from unconsolidated real estate partnerships |
| (614 | ) |
|
| (459 | ) |
Amortization of debt issuance costs and other |
| 1,798 |
|
|
| 2,149 |
|
Changes in operating assets and operating liabilities: |
|
|
|
|
| ||
Other assets, net |
| 2,057 |
|
|
| 5,904 |
|
Net cash received from lease incentive |
| — |
|
|
| 195,789 |
|
Accrued liabilities and other |
| (1,272 | ) |
|
| (5,634 | ) |
Total adjustments |
| 46,503 |
|
|
| (69,244 | ) |
Net cash provided by operating activities |
| 42,551 |
|
|
| 228,252 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Purchases of real estate |
| (4,108 | ) |
|
| (130,122 | ) |
Capital expenditures (1) |
| (212,195 | ) |
|
| (184,048 | ) |
Proceeds from disposition of real estate |
| — |
|
|
| 243,134 |
|
Investment in IQHQ |
| — |
|
|
| (14,227 | ) |
Redemption of IQHQ investment |
| — |
|
|
| 16,473 |
|
Distributions received from unconsolidated real estate partnerships |
| 4,209 |
|
|
| — |
|
Investment in unconsolidated real estate partnerships |
| (3,381 | ) |
|
| (12,878 | ) |
Purchase of treasury bill |
| (53,773 | ) |
|
|
| |
Other investing activities |
| 5,124 |
|
|
| (1,293 | ) |
Net cash used in investing activities |
| (264,124 | ) |
|
| (82,961 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from non-recourse property debt |
| — |
|
|
| 674,720 |
|
Proceeds from construction loans |
| 127,423 |
|
|
| 54,286 |
|
Proceeds from sale of participation in Mezzanine Investment |
| 37,500 |
|
|
| — |
|
Payments of deferred loan costs |
| (229 | ) |
|
| (8,244 | ) |
Principal repayments on non-recourse property debt |
| (62,309 | ) |
|
| (284,562 | ) |
Principal repayments on construction loans |
| — |
|
|
| (138,404 | ) |
Principal repayments on Notes Payable to AIR |
| — |
|
|
| (534,127 | ) |
Purchase of interest rate options |
| (712 | ) |
|
| (3,223 | ) |
Proceeds from interest rate options |
| 57,182 |
|
|
| 15,465 |
|
Payments on finance leases |
| (2,221 | ) |
|
| (25,797 | ) |
Payments of prepayment premiums |
| — |
|
|
| (25,740 | ) |
Common stock repurchased |
| (36,769 | ) |
|
| (4,419 | ) |
Dividends paid on common stock |
| — |
|
|
| (3,043 | ) |
Redemption of redeemable noncontrolling interests |
| — |
|
|
| (5,094 | ) |
Distributions to redeemable noncontrolling interests |
| (7,210 | ) |
|
| (917 | ) |
Contributions from noncontrolling interests |
| 234 |
|
|
| 10,616 |
|
Distributions to noncontrolling interests |
| (885 | ) |
|
| (1,052 | ) |
Contributions from redeemable noncontrolling interests |
| 125 |
|
|
| 122,413 |
|
Redemption of OP units |
| (709 | ) |
|
| (209 | ) |
Redemption of noncontrolling interest in real estate partnership |
| — |
|
|
| (7,088 | ) |
Other financing activities |
| (3,728 | ) |
|
| (13 | ) |
Net cash provided by (used in) financing activities |
| 107,692 |
|
|
| (164,432 | ) |
NET DECREASE IN CASH, CASH EQUIVALENTS, |
| (113,881 | ) |
|
| (19,141 | ) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT |
| 229,766 |
|
|
| 244,582 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT | $ | 115,885 |
|
| $ | 225,441 |
|
(1) Accrued capital expenditures were $31.454.3 million and $19.431.4 million as of September 30, 20222023 and 2021,2022, respectively.
See notes to condensed consolidated financial statements.
8
AIMCO OP L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
|
| September 30, 2023 |
|
| December 31, 2022 |
| ||
ASSETS |
|
|
|
|
|
| ||
Buildings and improvements |
| $ | 1,546,503 |
|
| $ | 1,322,381 |
|
Land |
|
| 638,007 |
|
|
| 641,102 |
|
Total real estate |
|
| 2,184,510 |
|
|
| 1,963,483 |
|
Accumulated depreciation |
|
| (564,686 | ) |
|
| (530,722 | ) |
Net real estate |
|
| 1,619,824 |
|
|
| 1,432,761 |
|
Cash and cash equivalents |
|
| 95,680 |
|
|
| 206,460 |
|
Restricted cash |
|
| 20,205 |
|
|
| 23,306 |
|
Mezzanine investment |
|
| 158,173 |
|
|
| 158,558 |
|
Interest rate options |
|
| 9,161 |
|
|
| 62,387 |
|
Unconsolidated real estate partnerships |
|
| 22,667 |
|
|
| 15,789 |
|
Notes receivable |
|
| 39,802 |
|
|
| 39,014 |
|
Right-of-use lease assets - finance leases |
|
| 109,311 |
|
|
| 110,269 |
|
Other assets, net |
|
| 176,043 |
|
|
| 132,679 |
|
Total assets |
| $ | 2,250,866 |
|
| $ | 2,181,223 |
|
|
|
|
|
|
| |||
LIABILITIES AND EQUITY |
|
|
|
|
|
| ||
Non-recourse property debt, net |
| $ | 869,586 |
|
| $ | 929,501 |
|
Construction loans, net |
|
| 250,630 |
|
|
| 118,698 |
|
Total indebtedness |
|
| 1,120,216 |
|
|
| 1,048,199 |
|
Deferred tax liabilities |
|
| 112,068 |
|
|
| 119,615 |
|
Lease liabilities - finance leases |
|
| 117,666 |
|
|
| 114,625 |
|
Mezzanine investment - participation sold |
|
| 34,402 |
|
|
| — |
|
Accrued liabilities and other |
|
| 111,049 |
|
|
| 106,600 |
|
Total liabilities |
|
| 1,495,401 |
|
|
| 1,389,039 |
|
|
|
|
|
|
| |||
Redeemable noncontrolling interests in consolidated real estate partnerships |
|
| 170,201 |
|
|
| 166,826 |
|
|
|
|
|
|
|
| ||
Commitments and contingencies (Note 3) |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Partners’ capital: |
|
|
|
|
|
| ||
General Partner and Special Limited Partner |
|
| 508,888 |
|
|
| 547,852 |
|
Limited Partners |
|
| 27,673 |
|
|
| 29,212 |
|
Partners’ capital attributable to Aimco Operating Partnership |
|
| 536,561 |
|
|
| 577,064 |
|
Noncontrolling interests in consolidated real estate partnerships |
|
| 48,703 |
|
|
| 48,294 |
|
Total partners’ capital |
|
| 585,264 |
|
|
| 625,358 |
|
Total liabilities and partners’ capital |
| $ | 2,250,866 |
|
| $ | 2,181,223 |
|
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||
ASSETS |
|
|
|
|
|
| ||
Buildings and improvements |
| $ | 1,248,005 |
|
| $ | 1,257,214 |
|
Land |
|
| 639,272 |
|
|
| 534,285 |
|
Total real estate |
|
| 1,887,277 |
|
|
| 1,791,499 |
|
Accumulated depreciation |
|
| (516,857 | ) |
|
| (561,115 | ) |
Net real estate |
|
| 1,370,420 |
|
|
| 1,230,384 |
|
Cash and cash equivalents |
|
| 206,366 |
|
|
| 233,374 |
|
Restricted cash |
|
| 19,075 |
|
|
| 11,208 |
|
Mezzanine investment |
|
| 362,788 |
|
|
| 337,797 |
|
Interest rate options |
|
| 61,448 |
|
|
| 25,657 |
|
Right-of-use lease assets |
|
| 95,506 |
|
|
| 429,768 |
|
Other assets, net |
|
| 180,641 |
|
|
| 165,913 |
|
Total assets |
| $ | 2,296,244 |
|
| $ | 2,434,101 |
|
|
|
|
|
|
|
| ||
LIABILITIES AND EQUITY |
|
|
|
|
|
| ||
Non-recourse property debt, net |
| $ | 859,593 |
|
| $ | 483,137 |
|
Construction loans, net |
|
| 80,816 |
|
|
| 163,570 |
|
Notes payable to AIR |
|
| — |
|
|
| 534,127 |
|
Total indebtedness |
|
| 940,409 |
|
|
| 1,180,834 |
|
Deferred tax liabilities |
|
| 121,344 |
|
|
| 124,747 |
|
Lease liabilities |
|
| 98,467 |
|
|
| 435,093 |
|
Accrued liabilities and other |
|
| 125,132 |
|
|
| 97,400 |
|
Total liabilities |
|
| 1,285,352 |
|
|
| 1,838,074 |
|
|
|
|
|
|
|
| ||
Redeemable noncontrolling interests in consolidated real estate partnerships |
|
| 158,135 |
|
|
| 33,794 |
|
Commitments and contingencies (Note 4) |
|
|
|
|
|
| ||
Partners’ capital: |
|
|
|
|
|
| ||
General Partner and Special Limited Partner |
|
| 766,829 |
|
|
| 500,565 |
|
Limited Partners |
|
| 40,411 |
|
|
| 26,455 |
|
Partners’ capital attributable to Aimco Operating Partnership |
|
| 807,240 |
|
|
| 527,020 |
|
Noncontrolling interests in consolidated real estate partnerships |
|
| 45,517 |
|
|
| 35,213 |
|
Total partners’ capital |
|
| 852,757 |
|
|
| 562,233 |
|
Total liabilities and partners’ capital |
| $ | 2,296,244 |
|
| $ | 2,434,101 |
|
See notes to condensed consolidated financial statements.
9
AIMCO OP L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
(Unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rental and other property revenues |
| $ | 47,683 |
|
| $ | 42,893 |
|
| $ | 148,375 |
|
| $ | 123,115 |
|
| $ | 47,701 |
|
| $ | 47,683 |
|
| $ | 137,643 |
|
| $ | 148,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property operating expenses |
|
| 17,455 |
|
|
| 18,155 |
|
|
| 56,384 |
|
|
| 51,500 |
|
|
| 18,328 |
|
|
| 17,455 |
|
|
| 54,648 |
|
|
| 56,384 |
|
Depreciation and amortization |
|
| 85,438 |
|
|
| 21,709 |
|
|
| 143,420 |
|
|
| 63,065 |
|
|
| 17,804 |
|
|
| 85,438 |
|
|
| 51,106 |
|
|
| 143,420 |
|
General and administrative expenses |
|
| 10,809 |
|
|
| 8,868 |
|
|
| 29,243 |
|
|
| 22,562 |
|
|
| 8,198 |
|
|
| 10,809 |
|
|
| 24,487 |
|
|
| 29,243 |
|
Total operating expenses |
|
| 113,702 |
|
|
| 48,732 |
|
|
| 229,047 |
|
|
| 137,127 |
|
|
| 44,330 |
|
|
| 113,702 |
|
|
| 130,241 |
|
|
| 229,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Interest income |
|
| 2,486 |
|
|
| 915 |
|
|
| 7,022 |
|
|
| 2,036 |
| ||||||||||||||||
Interest expense |
|
| (9,719 | ) |
|
| (12,680 | ) |
|
| (65,865 | ) |
|
| (37,995 | ) |
|
| (8,252 | ) |
|
| (9,719 | ) |
|
| (27,633 | ) |
|
| (65,865 | ) |
Mezzanine investment income, net |
|
| 8,423 |
|
|
| 7,636 |
|
|
| 24,990 |
|
|
| 22,654 |
| ||||||||||||||||
Mezzanine investment income (loss), net |
|
| (757 | ) |
|
| 8,423 |
|
|
| (1,013 | ) |
|
| 24,990 |
| ||||||||||||||||
Realized and unrealized gains (losses) on interest rate options |
|
| 9,209 |
|
|
| 2,231 |
|
|
| 48,005 |
|
|
| 10,608 |
|
|
| 955 |
|
|
| 9,209 |
|
|
| 3,280 |
|
|
| 48,005 |
|
Realized and unrealized gains (losses) on equity investments |
|
| (2,145 | ) |
|
| 1,233 |
|
|
| 20,152 |
|
|
| 2,107 |
|
|
| (1,066 | ) |
|
| (2,145 | ) |
|
| 165 |
|
|
| 20,152 |
|
Gains on dispositions of real estate |
|
| 75,539 |
|
|
| - |
|
|
| 170,004 |
|
|
| - |
| ||||||||||||||||
Gain on dispositions of real estate |
|
| — |
|
|
| 75,539 |
|
|
| 1,878 |
|
|
| 170,004 |
| ||||||||||||||||
Lease modification income |
|
| 1,577 |
|
|
| - |
|
|
| 206,963 |
|
|
| - |
|
|
| — |
|
|
| 1,577 |
|
|
| — |
|
|
| 206,963 |
|
Income from unconsolidated real estate partnerships |
|
| 320 |
|
|
| 159 |
|
|
| 614 |
|
|
| 459 |
| ||||||||||||||||
Other income (expense), net |
|
| (255 | ) |
|
| 552 |
|
|
| (1,743 | ) |
|
| 2,959 |
|
|
| (1,593 | ) |
|
| (1,329 | ) |
|
| (6,490 | ) |
|
| (4,238 | ) |
Income (loss) before income tax |
|
| 16,610 |
|
|
| (6,867 | ) |
|
| 321,834 |
|
|
| (13,679 | ) |
|
| (4,536 | ) |
|
| 16,610 |
|
|
| (14,775 | ) |
|
| 321,834 |
|
Income tax benefit (expense) |
|
| 17,563 |
|
|
| 2,021 |
|
|
| (24,338 | ) |
|
| 9,881 |
|
|
| 6,210 |
|
|
| 17,563 |
|
|
| 10,823 |
|
|
| (24,338 | ) |
Net income (loss) |
|
| 34,173 |
|
|
| (4,846 | ) |
|
| 297,496 |
|
|
| (3,798 | ) |
|
| 1,674 |
|
|
| 34,173 |
|
|
| (3,952 | ) |
|
| 297,496 |
|
Net (income) loss attributable to redeemable noncontrolling |
|
| (2,907 | ) |
|
| (127 | ) |
|
| (5,446 | ) |
|
| (41 | ) |
|
| (3,610 | ) |
|
| (2,907 | ) |
|
| (10,460 | ) |
|
| (5,446 | ) |
Net (income) loss attributable to noncontrolling interests |
|
| (240 | ) |
|
| (296 | ) |
|
| (585 | ) |
|
| (862 | ) |
|
| (447 | ) |
|
| (240 | ) |
|
| (1,060 | ) |
|
| (585 | ) |
Net income (loss) attributable to Aimco Operating |
| $ | 31,026 |
|
| $ | (5,269 | ) |
| $ | 291,465 |
|
| $ | (4,701 | ) |
| $ | (2,383 | ) |
| $ | 31,026 |
|
| $ | (15,472 | ) |
| $ | 291,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) attributable to Aimco Operating |
| $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.82 |
|
| $ | (0.03 | ) | ||||||||||||||||
Net income (loss) attributable to Aimco Operating |
| $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.81 |
|
| $ | (0.03 | ) | ||||||||||||||||
Net income (loss) attributable to Aimco Operating |
| $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.82 |
| ||||||||||||||||
Net income (loss) attributable to Aimco Operating |
| $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.81 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Weighted-average common units outstanding – basic |
|
| 157,530 |
|
|
| 157,806 |
|
|
| 157,627 |
|
|
| 157,873 |
|
|
| 151,027 |
|
|
| 157,530 |
|
|
| 152,199 |
|
|
| 157,627 |
|
Weighted-average common units outstanding – diluted |
|
| 159,136 |
|
|
| 157,806 |
|
|
| 159,017 |
|
|
| 157,873 |
|
|
| 151,027 |
|
|
| 159,136 |
|
|
| 152,199 |
|
|
| 159,017 |
|
See notes to condensed consolidated financial statements.
10
AIMCO OP L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
For the three months endedThree Months Ended September 30, 20222023 and 20212022
(In thousands)
(Unaudited)
|
| General Partner |
|
| Limited |
|
| Partners’ Capital |
|
| Noncontrolling |
|
| Total |
| |||||||||||||||||||||||||
Balances at June 30, 2021 |
| $ | 502,721 |
|
| $ | 26,654 |
|
| $ | 529,375 |
|
| $ | 31,847 |
|
| $ | 561,222 |
| ||||||||||||||||||||
Net income (loss) |
|
| (5,016 | ) |
|
| (253 | ) |
|
| (5,269 | ) |
|
| 296 |
|
|
| (4,973 | ) | ||||||||||||||||||||
Redemption of OP Units |
|
| 355 |
|
|
| (361 | ) |
|
| (6 | ) |
|
| — |
|
|
| (6 | ) | ||||||||||||||||||||
Share-based compensation expense |
|
| 1,019 |
|
|
| 441 |
|
|
| 1,460 |
|
|
| — |
|
|
| 1,460 |
| ||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,158 |
|
|
| 3,158 |
| ||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (287 | ) |
|
| (287 | ) | ||||||||||||||||||||
Other, net |
|
| (45 | ) |
|
| — |
|
|
| (45 | ) |
|
| — |
|
|
| (45 | ) | ||||||||||||||||||||
Balances at September 30, 2021 |
| $ | 499,034 |
|
| $ | 26,481 |
|
| $ | 525,515 |
|
| $ | 35,014 |
|
| $ | 560,529 |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General Partner |
|
| Limited |
|
| Partners’ Capital |
|
| Noncontrolling |
|
| Total |
| ||||||||||
Balances at June 30, 2022 |
| $ | 741,124 |
|
| $ | 39,233 |
|
| $ | 780,357 |
|
| $ | 44,665 |
|
| $ | 825,022 |
|
| $ | 741,124 |
|
| $ | 39,233 |
|
| $ | 780,357 |
|
| $ | 44,665 |
|
| $ | 825,022 |
|
Net income (loss) |
|
| 29,472 |
|
|
| 1,554 |
|
|
| 31,026 |
|
|
| 240 |
|
|
| 31,266 |
|
|
| 29,472 |
|
|
| 1,554 |
|
|
| 31,026 |
|
|
| 240 |
|
|
| 31,266 |
|
Redemption of OP Units |
|
| 398 |
|
|
| (474 | ) |
|
| (76 | ) |
|
| — |
|
|
| (76 | ) |
|
| 398 |
|
|
| (474 | ) |
|
| (76 | ) |
|
| — |
|
|
| (76 | ) |
Share-based compensation expense |
|
| 1,454 |
|
|
| 258 |
|
|
| 1,712 |
|
|
| — |
|
|
| 1,712 |
|
|
| 1,454 |
|
|
| 258 |
|
|
| 1,712 |
|
|
| — |
|
|
| 1,712 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| (160 | ) |
|
| (160 | ) |
|
| (287 | ) |
|
| (447 | ) | ||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 898 |
|
|
| 898 |
| ||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 898 |
|
|
| 898 |
| ||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| (160 | ) |
|
| (160 | ) |
|
| (287 | ) |
|
| (447 | ) | ||||||||||||||||||||
Purchase of noncontrolling interests in consolidated real estate partnerships |
|
| 155 |
|
|
| — |
|
|
| 155 |
|
|
| — |
|
|
| 155 |
|
|
| 155 |
|
|
| — |
|
|
| 155 |
|
|
| — |
|
|
| 155 |
|
Repurchases of OP Units held by Aimco |
|
| (526 | ) |
|
| — |
|
|
| (526 | ) |
|
| — |
|
|
| (526 | ) |
|
| (526 | ) |
|
| — |
|
|
| (526 | ) |
|
| — |
|
|
| (526 | ) |
Cash Dividends |
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) | ||||||||||||||||||||
Cash dividends |
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) | ||||||||||||||||||||
Other, net |
|
| (2,205 | ) |
|
| — |
|
|
| (2,205 | ) |
|
| 1 |
|
|
| (2,204 | ) |
|
| (2,205 | ) |
|
| — |
|
|
| (2,205 | ) |
|
| 1 |
|
|
| (2,204 | ) |
Balances at September 30, 2022 |
| $ | 766,829 |
|
| $ | 40,411 |
|
| $ | 807,240 |
|
| $ | 45,517 |
|
| $ | 852,757 |
|
| $ | 766,829 |
|
| $ | 40,411 |
|
| $ | 807,240 |
|
| $ | 45,517 |
|
| $ | 852,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balances at June 30, 2023 |
| $ | 522,182 |
|
| $ | 28,105 |
|
| $ | 550,287 |
|
| $ | 48,472 |
|
| $ | 598,759 |
| ||||||||||||||||||||
Net income (loss) |
|
| (2,260 | ) |
|
| (123 | ) |
|
| (2,383 | ) |
|
| 447 |
|
|
| (1,936 | ) | ||||||||||||||||||||
Redemption of OP Units |
|
| 244 |
|
|
| (332 | ) |
|
| (88 | ) |
|
| — |
|
|
| (88 | ) | ||||||||||||||||||||
Share-based compensation expense |
|
| 1,890 |
|
|
| 23 |
|
|
| 1,913 |
|
|
| — |
|
|
| 1,913 |
| ||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 71 |
|
|
| 71 |
| ||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (287 | ) |
|
| (287 | ) | ||||||||||||||||||||
Repurchases of OP Units held by Aimco |
|
| (13,149 | ) |
|
| — |
|
|
| (13,149 | ) |
|
| — |
|
|
| (13,149 | ) | ||||||||||||||||||||
Other, net |
|
| (19 | ) |
|
| — |
|
|
| (19 | ) |
|
| — |
|
|
| (19 | ) | ||||||||||||||||||||
Balances at September 30, 2023 |
| $ | 508,888 |
|
| $ | 27,673 |
|
| $ | 536,561 |
|
| $ | 48,703 |
|
| $ | 585,264 |
|
See notes to condensed consolidated financial statements.
11
AIMCO OP L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
For the nine months endedNine Months Ended September 30, 20222023 and 20212022
(In thousands)
(Unaudited)
|
| General Partner |
|
| Limited |
|
| Partners’ Capital |
|
| Noncontrolling |
|
| Total |
| |||||||||||||||||||||||||
Balances at December 31, 2020 |
| $ | 499,778 |
|
| $ | 27,436 |
|
| $ | 527,214 |
|
| $ | 31,877 |
|
| $ | 559,091 |
| ||||||||||||||||||||
Net income (loss) |
|
| (4,492 | ) |
|
| (209 | ) |
|
| (4,701 | ) |
|
| 862 |
|
|
| (3,839 | ) | ||||||||||||||||||||
Redemption of OP Units |
|
| 1,258 |
|
|
| (1,305 | ) |
|
| (47 | ) |
|
| — |
|
|
| (47 | ) | ||||||||||||||||||||
Other common stock issuances |
|
| 1,071 |
|
|
| — |
|
|
| 1,071 |
|
|
| — |
|
|
| 1,071 |
| ||||||||||||||||||||
Share-based compensation expense |
|
| 1,770 |
|
|
| 559 |
|
|
| 2,329 |
|
|
| — |
|
|
| 2,329 |
| ||||||||||||||||||||
Contribution from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,158 |
|
|
| 3,158 |
| ||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (869 | ) |
|
| (869 | ) | ||||||||||||||||||||
Other, net |
|
| (351 | ) |
|
| — |
|
|
| (351 | ) |
|
| (14 | ) |
|
| (365 | ) | ||||||||||||||||||||
Balances at September 30, 2021 |
| $ | 499,034 |
|
| $ | 26,481 |
|
| $ | 525,515 |
|
| $ | 35,014 |
|
| $ | 560,529 |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General Partner |
|
| Limited |
|
| Partners’ Capital |
|
| Noncontrolling |
|
| Total |
| ||||||||||
Balances at December 31, 2021 |
| $ | 500,565 |
|
| $ | 26,455 |
|
| $ | 527,020 |
|
| $ | 35,213 |
|
| $ | 562,233 |
|
| $ | 500,565 |
|
| $ | 26,455 |
|
| $ | 527,020 |
|
| $ | 35,213 |
|
| $ | 562,233 |
|
Net income (loss) |
|
| 276,817 |
|
|
| 14,648 |
|
|
| 291,465 |
|
|
| 585 |
|
|
| 292,050 |
|
|
| 276,817 |
|
|
| 14,648 |
|
|
| 291,465 |
|
|
| 585 |
|
|
| 292,050 |
|
Redemption of OP Units |
|
| 1,933 |
|
|
| (2,152 | ) |
|
| (219 | ) |
|
| — |
|
|
| (219 | ) |
|
| 1,933 |
|
|
| (2,152 | ) |
|
| (219 | ) |
|
| — |
|
|
| (219 | ) |
Share-based compensation expense |
|
| 4,234 |
|
|
| 1,515 |
|
|
| 5,749 |
|
|
| — |
|
|
| 5,749 |
|
|
| 4,234 |
|
|
| 1,515 |
|
|
| 5,749 |
|
|
| — |
|
|
| 5,749 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| (160 | ) |
|
| (160 | ) |
|
| (892 | ) |
|
| (1,052 | ) | ||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10,616 |
|
|
| 10,616 |
| ||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10,616 |
|
|
| 10,616 |
| ||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| (160 | ) |
|
| (160 | ) |
|
| (892 | ) |
|
| (1,052 | ) | ||||||||||||||||||||
Purchase of noncontrolling interests in consolidated real estate partnerships |
|
| (7,088 | ) |
|
| — |
|
|
| (7,088 | ) |
|
| — |
|
|
| (7,088 | ) |
|
| (7,088 | ) |
|
| — |
|
|
| (7,088 | ) |
|
| — |
|
|
| (7,088 | ) |
Repurchases of OP Units held by Aimco |
|
| (4,945 | ) |
|
| — |
|
|
| (4,945 | ) |
|
| — |
|
|
| (4,945 | ) |
|
| (4,945 | ) |
|
| — |
|
|
| (4,945 | ) |
|
| — |
|
|
| (4,945 | ) |
Other OP Unit issuances |
|
| 852 |
|
|
| 109 |
|
|
| 961 |
|
|
| — |
|
|
| 961 |
|
|
| 852 |
|
|
| 109 |
|
|
| 961 |
|
|
| — |
|
|
| 961 |
|
Redemption of redeemable noncontrolling interests in consolidated real estate partnerships |
|
| (183 | ) |
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| (183 | ) |
|
| (183 | ) |
|
| — |
|
|
| (183 | ) |
|
| — |
|
|
| (183 | ) |
Cash dividends |
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) |
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) |
|
| — |
|
|
| (3,043 | ) |
Other, net |
|
| (2,313 | ) |
|
| (4 | ) |
|
| (2,317 | ) |
|
| (5 | ) |
|
| (2,322 | ) |
|
| (2,313 | ) |
|
| (4 | ) |
|
| (2,317 | ) |
|
| (5 | ) |
|
| (2,322 | ) |
Balances at September 30, 2022 |
| $ | 766,829 |
|
| $ | 40,411 |
|
| $ | 807,240 |
|
| $ | 45,517 |
|
| $ | 852,757 |
|
| $ | 766,829 |
|
| $ | 40,411 |
|
| $ | 807,240 |
|
| $ | 45,517 |
|
| $ | 852,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balances at December 31, 2022 |
| $ | 547,852 |
|
| $ | 29,212 |
|
| $ | 577,064 |
|
| $ | 48,294 |
|
| $ | 625,358 |
| ||||||||||||||||||||
Net income (loss) |
|
| (14,697 | ) |
|
| (775 | ) |
|
| (15,472 | ) |
|
| 1,060 |
|
|
| (14,412 | ) | ||||||||||||||||||||
Redemption of OP Units |
|
| 4,500 |
|
|
| (5,209 | ) |
|
| (709 | ) |
|
| — |
|
|
| (709 | ) | ||||||||||||||||||||
Share-based compensation expense |
|
| 5,439 |
|
|
| 3,173 |
|
|
| 8,612 |
|
|
| — |
|
|
| 8,612 |
| ||||||||||||||||||||
Contributions from noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 234 |
|
|
| 234 |
| ||||||||||||||||||||
Distributions to noncontrolling interests in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (885 | ) |
|
| (885 | ) | ||||||||||||||||||||
Repurchases of OP Units held by Aimco |
|
| (35,741 | ) |
|
| — |
|
|
| (35,741 | ) |
|
| — |
|
|
| (35,741 | ) | ||||||||||||||||||||
Other OP Unit issuances |
|
| 1,540 |
|
|
| 1,272 |
|
|
| 2,812 |
|
|
| — |
|
|
| 2,812 |
| ||||||||||||||||||||
Other, net |
|
| (5 | ) |
|
| — |
|
|
| (5 | ) |
|
| — |
|
|
| (5 | ) | ||||||||||||||||||||
Balances at September 30, 2023 |
| $ | 508,888 |
|
| $ | 27,673 |
|
| $ | 536,561 |
|
| $ | 48,703 |
|
| $ | 585,264 |
|
See notes to condensed consolidated financial statements.
12
AIMCO OP L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
| |||||
| 2022 |
|
| 2021 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income (loss) | $ | 297,496 |
|
| $ | (3,798 | ) |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 143,420 |
|
|
| 63,065 |
|
Income from unconsolidated real estate partnerships |
| (459 | ) |
|
| (743 | ) |
Realized and unrealized gains on interest rate options |
| (48,005 | ) |
|
| (10,608 | ) |
Income tax expense (benefit) |
| 24,338 |
|
|
| (9,881 | ) |
Amortization of debt issuance costs and other |
| 2,149 |
|
|
| 801 |
|
Mezzanine investment, net |
| (24,990 | ) |
|
| (22,654 | ) |
Loss on extinguishment of debt, net |
| 28,901 |
|
|
| — |
|
Lease modification income |
| (206,963 | ) |
|
| — |
|
Realized and unrealized gains (losses) on equity investments |
| (20,152 | ) |
|
| — |
|
Gain on disposition of real estate |
| (170,004 | ) |
|
| — |
|
Share-based compensation |
| 6,462 |
|
|
| 3,750 |
|
Changes in operating assets and operating liabilities: |
|
|
|
|
| ||
Other assets, net |
| 5,904 |
|
|
| (10,930 | ) |
Net cash received from development property lease terminations |
| 195,789 |
|
|
| — |
|
Accrued liabilities and other |
| (5,634 | ) |
|
| 13,083 |
|
Total adjustments |
| (69,244 | ) |
|
| 25,883 |
|
Net cash provided by operating activities |
| 228,252 |
|
|
| 22,085 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Purchases of real estate |
| (130,122 | ) |
|
| (69,601 | ) |
Capital expenditures (1) |
| (184,048 | ) |
|
| (134,855 | ) |
Proceeds from disposition of real estate |
| 243,134 |
|
|
| — |
|
Investment in IQHQ |
| (14,227 | ) |
|
| (12,091 | ) |
Redemption of IQHQ investment |
| 16,473 |
|
|
|
| |
Investment in unconsolidated real estate partnerships |
| (12,878 | ) |
|
| — |
|
Other investing activities |
| (1,293 | ) |
|
| (96 | ) |
Net cash used in investing activities |
| (82,961 | ) |
|
| (216,643 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from non-recourse property debt |
| 674,720 |
|
|
| 59,757 |
|
Proceeds from construction loans |
| 54,286 |
|
|
| 142,305 |
|
Payments of deferred loan costs |
| (8,244 | ) |
|
| (6,634 | ) |
Principal repayments on non-recourse property debt |
| (284,562 | ) |
|
| (22,307 | ) |
Principal repayments on construction loans |
| (138,404 | ) |
|
| — |
|
Principal repayments on Notes Payable to AIR |
| (534,127 | ) |
|
| (5,905 | ) |
Purchase of interest rate options |
| (3,223 | ) |
|
| — |
|
Proceeds from interest rate option |
| 15,465 |
|
|
| (7,773 | ) |
Payments on finance leases |
| (25,797 | ) |
|
| — |
|
Payments of prepayment premiums |
| (25,740 | ) |
|
| — |
|
Common stock repurchased |
| (4,419 | ) |
|
| — |
|
Dividend paid on common stock |
| (3,043 | ) |
|
| — |
|
Distributions to noncontrolling interests |
| (1,052 | ) |
|
| — |
|
Distributions to redeemable noncontrolling interests |
| (917 | ) |
|
| — |
|
Contributions from noncontrolling interests |
| 10,616 |
|
|
| — |
|
Contributions from redeemable noncontrolling interests |
| 122,413 |
|
|
|
| |
Redemption of common and preferred OP units |
| (209 | ) |
|
|
| |
Redemption of noncontrolling interests |
| (7,088 | ) |
|
|
| |
Redemption of redeemable noncontrolling interests |
| (5,094 | ) |
|
| — |
|
Other financing activities |
| (13 | ) |
|
| (859 | ) |
Net cash provided by (used in) financing activities |
| (164,432 | ) |
|
| 158,584 |
|
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
| (19,141 | ) |
|
| (35,974 | ) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD |
| 244,582 |
|
|
| 298,735 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 225,441 |
|
| $ | 262,761 |
|
| Nine Months Ended September 30, |
| |||||
| 2023 |
|
| 2022 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income (loss) | $ | (3,952 | ) |
| $ | 297,496 |
|
Adjustments to reconcile net income (loss) to net cash provided by |
|
|
|
|
| ||
Depreciation and amortization |
| 51,106 |
|
|
| 143,420 |
|
Mezzanine investment (income) loss, net |
| 1,013 |
|
|
| (24,990 | ) |
Realized and unrealized (gains) losses on interest rate options |
| (3,280 | ) |
|
| (48,005 | ) |
Realized and unrealized (gains) losses on equity investments |
| (165 | ) |
|
| (20,152 | ) |
Income tax expense (benefit) |
| (10,823 | ) |
|
| 24,338 |
|
Share-based compensation |
| 7,632 |
|
|
| 6,462 |
|
Loss on extinguishment of debt, net |
| 929 |
|
|
| 28,901 |
|
Lease modification income |
| — |
|
|
| (206,963 | ) |
Gain on dispositions of real estate |
| (1,878 | ) |
|
| (170,004 | ) |
Income from unconsolidated real estate partnerships |
| (614 | ) |
|
| (459 | ) |
Amortization of debt issuance costs and other |
| 1,798 |
|
|
| 2,149 |
|
Changes in operating assets and operating liabilities: |
|
|
|
|
| ||
Other assets, net |
| 2,057 |
|
|
| 5,904 |
|
Net cash received from lease incentive |
| — |
|
|
| 195,789 |
|
Accrued liabilities and other |
| (1,272 | ) |
|
| (5,634 | ) |
Total adjustments |
| 46,503 |
|
|
| (69,244 | ) |
Net cash provided by operating activities |
| 42,551 |
|
|
| 228,252 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Purchases of real estate |
| (4,108 | ) |
|
| (130,122 | ) |
Capital expenditures (1) |
| (212,195 | ) |
|
| (184,048 | ) |
Proceeds from disposition of real estate |
| — |
|
|
| 243,134 |
|
Investment in IQHQ |
| — |
|
|
| (14,227 | ) |
Redemption of IQHQ investment |
| — |
|
|
| 16,473 |
|
Distributions received from unconsolidated real estate partnerships |
| 4,209 |
|
|
| — |
|
Investment in unconsolidated real estate partnerships |
| (3,381 | ) |
|
| (12,878 | ) |
Purchase of treasury bill |
| (53,773 | ) |
|
| — |
|
Other investing activities |
| 5,124 |
|
|
| (1,293 | ) |
Net cash used in investing activities |
| (264,124 | ) |
|
| (82,961 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from non-recourse property debt |
| — |
|
|
| 674,720 |
|
Proceeds from construction loans |
| 127,423 |
|
|
| 54,286 |
|
Proceeds from sale of participation in Mezzanine Investment |
| 37,500 |
|
|
| — |
|
Payments of deferred loan costs |
| (229 | ) |
|
| (8,244 | ) |
Principal repayments on non-recourse property debt |
| (62,309 | ) |
|
| (284,562 | ) |
Principal repayments on construction loans |
| — |
|
|
| (138,404 | ) |
Principal repayments on Notes Payable to AIR |
| — |
|
|
| (534,127 | ) |
Purchase of interest rate options |
| (712 | ) |
|
| (3,223 | ) |
Proceeds from interest rate options |
| 57,182 |
|
|
| 15,465 |
|
Payments on finance leases |
| (2,221 | ) |
|
| (25,797 | ) |
Payments of prepayment premiums |
| — |
|
|
| (25,740 | ) |
Common stock repurchased |
| (36,769 | ) |
|
| (4,419 | ) |
Dividends paid on common stock |
| — |
|
|
| (3,043 | ) |
Redemption of redeemable noncontrolling interests |
| — |
|
|
| (5,094 | ) |
Distributions to redeemable noncontrolling interests |
| (7,210 | ) |
|
| (917 | ) |
Contributions from noncontrolling interests |
| 234 |
|
|
| 10,616 |
|
Distributions to noncontrolling interests |
| (885 | ) |
|
| (1,052 | ) |
Contributions from redeemable noncontrolling interests |
| 125 |
|
|
| 122,413 |
|
Redemption of OP units |
| (709 | ) |
|
| (209 | ) |
Redemption of noncontrolling interest in real estate partnership |
| — |
|
|
| (7,088 | ) |
Other financing activities |
| (3,728 | ) |
|
| (13 | ) |
Net cash provided by (used in) financing activities |
| 107,692 |
|
|
| (164,432 | ) |
NET DECREASE IN CASH, CASH EQUIVALENTS, |
| (113,881 | ) |
|
| (19,141 | ) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT |
| 229,766 |
|
|
| 244,582 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT | $ | 115,885 |
|
| $ | 225,441 |
|
(1) Accrued capital expenditures were $31.454.3 million and $19.431.4 million as of September 30, 20222023 and 2021,2022, respectively.
See notes to condensed consolidated financial statements.
13
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20222023
(Unaudited)
Note 1 — Organization
Apartment Investment and Management Company (“Aimco”), a Maryland corporation incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (“REIT”). Aimco, through a wholly owned subsidiary, is the general and special limited partner of Aimco OP L.P. (“Aimco Operating Partnership”).
Except as the context otherwise requires, “we,” “our,” and “us” refer to Aimco, Aimco Operating Partnership, and their consolidated subsidiaries, collectively.
On December 15, 2020, Aimco completed the separation of its businesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp. (“AIR”) (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”). Events noted in this filing as occurring before December 15, 2020, were those entered into by Aimco Predecessor. Aimco, through a wholly owned subsidiary, is the general and special limited partner of Aimco OP L.P. (“Aimco Operating Partnership”).
BusinessExcept as the context otherwise requires, “we,” “our,” and “us” refer to Aimco, Aimco Operating Partnership, and their consolidated subsidiaries, collectively.
As of September 30, 2022,2023, Aimco owned 92.792.4% of the legal interest in the common partnership units of Aimco Operating Partnership and 95.094.8% of the economic interest in Aimco Operating Partnership. The remaining 7.37.6% legal interest is owned by limited partners. The common partnership units of Aimco Operating Partnership are referred to as "OP Units". As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.
We own or lease a portfolio of real estate investments focused primarily on the U.S. multifamily sector. These real estate investments include: a portfolio of 26 operating apartment communities (22 consolidated properties with 5,640 apartment homes and four unconsolidated operating properties), diversified by both geography and price point; one commercial office building that is part of a land assemblage; twoone hotel, with 106 rooms; three residential apartment communities, with 9651,185 planned apartment homes, of which 276 have been completed and an additional 909 are planned, and a single family rental community with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms,which we are actively developing or redeveloping; land parcels held for development. Our real estate portfolio also includes one land parcel held for sale and two unconsolidated investments in land held for development. In addition, we hold other opportunistic and alternative investments, including our Mezzanine Investment (see Note 2 for further information); our investment in IQHQ, investment (see Note 3 for further information)Inc. ("IQHQ"); and our investment in real estate technology funds.
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022,2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.2023.
The Condensed Consolidated Balance Sheets of Aimco and Aimco Operating Partnership as of December 31, 20212022 have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in Aimco’s and Aimco 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 both Aimco and Aimco Operating Partnership.
14
14
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Aimco, Aimco Operating Partnership, and their consolidated subsidiaries. Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of Aimco Operating Partnership and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
We consolidate a variable interest entity (“VIE”) in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.
As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member of a limited liability company.
Certain reclassifications have been made to prior period amounts to conform to the current period condensed consolidated financial statement presentation with no effect on the Company’s previously reported results of operations, financial position, or cash flows.
Common Noncontrolling Interests in Aimco Operating Partnership
Common noncontrolling interests in Aimco Operating Partnership consist of common Aimco Operating PartnershipOP Units (“OP Units”),held by third parties, and are reflected in Aimco’s accompanying Condensed Consolidated Balance Sheets as Common Noncontrolling Interests in Aimco Operating Partnership. Aimco Operating Partnership’s income or loss is allocated to the holders of common OP Units, other than Aimco, based on the weighted-average number of common OP Units (including Aimco) outstanding during the period. For allthe periods presented,ended September 30, 2023 and 2022, the holders of common OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of approximately 5.1%, and 5.0%., respectively. Substantially all of the assets and liabilities of Aimco are held by Aimco Operating Partnership.
Redeemable Noncontrolling Interests in Consolidated Real Estate Partnerships
Redeemable noncontrolling interests consist of equity interests held by a limited partner in a consolidated real estate partnership that has a finite life. If a consolidated real estate partnership includes redemption rights that are not within our control, the noncontrolling interest is included as temporary equity.
The assets of these consolidated real estate partnerships must first be used to settle the liabilities of the consolidated real estate partnerships. The consolidated real estate partnerships' creditors do not have recourse to the general credit of Aimco Operating Partnership.
In July 2022, we closed a $102.0 million preferred equity financing with an institutional investor, providing for a fixed 8% annual rate of return payable monthly.
In February 2022, we acquired all of the outstanding redeemable noncontrolling interests in two consolidated properties for $5.1 million. At the time of redemption, the carrying amount of the redeemable non-controlling interests was $4.9 million.
Redeemable noncontrolling interests in consolidated real estate partnerships as of September 30, 20222023, consists of the following: (i) a $102.0 million preferred equity noted above and our partner's equity interest in an entity that owns a portfolio of operating apartment communities and (ii) equity interests in two separate consolidated joint ventures that are actively developing residential apartment communities. Capital contributions, distributions, and net income attributable to redeemable noncontrolling interests in consolidated real estate partnerships are determined in accordance with the Upton Joint Venture, which provides for an accruing 9.7% rate of return on their investment.relevant partnership agreements. These investment interests are presented as Redeemable noncontrolling interests in consolidated real estate partnerships in our Condensed Consolidated Balance SheetSheets as of September 30, 2022.2023.
The following table shows changes in our redeemable noncontrolling interests in consolidated real estate partnerships from December 31, 20212022 to September 30, 20222023 (in thousands):
Balance at December 31, 2021 |
| $ | 33,794 |
| ||||
Balance at December 31, 2022 |
| $ | 166,826 |
| ||||
Capital contributions |
|
| 124,723 |
|
|
| 125 |
|
Distributions |
|
| (917 | ) |
|
| (7,210 | ) |
Redemptions |
|
| (4,911 | ) | ||||
Net income |
|
| 5,446 |
|
|
| 10,460 |
|
Balance at September 30, 2022 |
| $ | 158,135 |
| ||||
Balance at September 30, 2023 |
| $ | 170,201 |
|
15
Mezzanine Investment
In November 2019, Aimco Predecessor made a five-year, $275.0 million mezzanine loan to the partnership owning the “Parkmerced Apartments” located in southwest San Francisco (the “Mezzanine Investment”). The loan bears interest at a 10% annual rate, accruing if not paid from property operations. OwnershipLegal ownership of the subsidiaries that originated and hold the mezzanine loanMezzanine Investment was retained by AIR following the Separation.
The Separation Agreement with AIR provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan,Mezzanine Investment, and a related equity option to acquire a 30% interest in the partnership owning Parkmerced Apartments and the interest rate option, or swaption, that provides partial protection against future refinancing risk to Aimco through 2024 once required third-party consents are received.Apartments. At the time of the Separation and as of the date of this filing, legal title of these subsidiaries had not yet transferred to Aimco.us. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments received on such loanthe Mezzanine Investment to us, and we are obligated to indemnify AIR against any costs and expenses related thereto. We have the risks and rewards of ownership of the Mezzanine Investment and have recognized an asset related to our right to receive the Mezzanine Investment from AIR.
On a periodic basis, we evaluate our Mezzanine Investment for impairment. We recognizeassess whether there are any indicators that imply the value of our investment may be impaired. These include assessments of both the underlying property performance and general market conditions in place. An investment is considered impaired if we determine that its fair value is less than the net carrying value of the investment on an other-than-temporary basis. Cash flow projections for the investment consider property level factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary. These factors include the loan’s maturity date, our intent and ability to retain our investment in the entity, and the financial condition and long-term prospects of the entity.
Prior to recording a non-cash impairment charge during the three months ended December 31, 2022, we recognized as income the net amounts recognizedearned on the Mezzanine Investment by AIR on its equity investment that arewere due to be paid to us when collected to the extent the income iswas supported by the change in AIR'sthe counterparty’s claim to the net assets of the underlying borrower. The income recognized primarily representsrepresented the interest accrued under the terms of the underlying mezzanine loan.Mezzanine Investment.
The loan andIn June 2023, we closed on the underlying real estate are subject to certain risks, including, but not limited to, those resulting fromsale of a 20% non-controlling participation in the lingering disruption dueMezzanine Investment for $33.5 million. Pursuant to the COVID-19 pandemic and associated response, and any similar events that might occur in the future, which may result in all or a portionterms of the loanagreement, the purchaser has the option to acquire the remaining 80% for an additional $134 million plus interest accruing at no less than 19% annually through May 2024 when the option expires. The purchaser pre-paid $4 million of interest at the time of closing. So long as the purchaser's option remains unexercised, Aimco receives a first priority return from any payments made to service or pay down the Mezzanine Investment equal to $134 million plus no less than a 19% annualized return as well as 80% of any residual payments after the purchaser receives a 10% annualized return on its subordinate investment. Additionally, Aimco is responsible for the servicing and administration of the Mezzanine Investment.
Because Aimco receives first priority and a higher annualized return than the purchaser, the sale and transfer of the financial interest does not being repaid. Inqualify for sale accounting in accordance with GAAP. Therefore, the event we conclude that a portion of the Mezzanine Investment that was sold, which has a carrying amount of $31.5 million, remains in Mezzanine investment in our Condensed Consolidated Balance Sheets. We have also recorded the cash received from the purchaser as a liability, which is not recoverable, we will recognize an impairment.included in Mezzanine investment - participation sold in our Condensed Consolidated Balance Sheets. Transaction costs have been deferred and presented as a direct reduction from the related liability in Mezzanine investment - participation sold in our Condensed Consolidated Balance Sheets. The cash flows associated with the Mezzanine investment - participation sold have been included in Cash Flows from Financing Activities in the Condensed Consolidated Statements of Cash Flows.
Income Tax Benefit (Expense)
Certain aspects of our operations, including our development and redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay Drive.
Our income tax benefit (expense) calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in Income tax benefit (expense) in our Condensed Consolidated Statements of Operations.
16
Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT. For the three and nine months ended September 30, 2022,2023, we had consolidated net loss and incomelosses subject to tax of $75.65.0 million and $91.012.4 million, respectively. For the three and nine months ended September 30, 2021,2022, we had consolidated net losses subject to tax of $7.975.6 million and net income of $26.491.0 million subject to tax, respectively.
For the three months ended September 30, 2022,2023, we recognized an income tax benefit of $6.2 million, compared to income tax benefit of $17.6 million compared to a $2.0 million benefit during the same period in 2021.2022. The change is due primarily due to the GAAP income taxestax benefit associated with the lease modification depreciation expense recognizedtaken related to the termination of four leases of four properties in the third quarter of 2022.2022, as well as a change in estimate associated with finalizing the 2022 tax return in the third quarter of 2023.
For the nine months ended September 30, 2022,2023, we recognized an income tax benefit of $10.8 million compared to income tax expense of $24.3 million compared to a $9.9 million benefit during the same period in 2021.2022. The change is primarily due to the GAAP income taxestax benefit associated with the net lease modification income recognized in 2022.the second quarter of 2022, as well as a change in the first quarter of 2023 to the effective state tax rate expected to apply to the reversal of deferred taxes and a change in estimate associated with finalizing the 2022 tax return in the third quarter of 2023.
Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.
16
Cash Equivalents
We classify highly liquid investments with an original maturity of three months or less as cash equivalents. We maintain cash equivalents in financial institutions in excess of insured limits. We have not experienced any losses in these accounts in the past and believe that we are not exposed to significant credit risk because our accounts are deposited with major financial institutions.
Restricted Cash
Restricted cash consists of tenant security deposits, capital replacement reserves, insurance reserves, and cash restricted as required by our debt agreements.
Other Assets, net
Other assets were comprised of the following amounts as of September 30, 2023 and December 31, 2022 (in thousands):
| September 30, 2022 |
|
| December 31, 2021 |
| September 30, 2023 |
|
| December 31, 2022 |
| ||||
Other investments | $ | 63,594 |
|
| $ | 45,386 |
| $ | 64,515 |
|
| $ | 63,982 |
|
Notes receivable |
| 38,759 |
|
|
| 38,029 |
| |||||||
Unconsolidated real estate partnerships |
| 28,958 |
|
|
| 13,025 |
| |||||||
Assets held for sale (1) |
| 11,735 |
|
|
| — |
| |||||||
Treasury bill |
| 54,298 |
|
|
| — |
| |||||||
Deferred costs, deposits, and other |
| 11,667 |
|
|
| 22,136 |
|
| 13,465 |
|
|
| 20,460 |
|
Prepaid expenses and real estate taxes |
| 10,489 |
|
|
| 20,516 |
|
| 13,862 |
|
|
| 17,363 |
|
Intangible assets, net |
| 13,573 |
|
|
| 14,160 |
| |||||||
Corporate fixed assets |
| 8,484 |
|
|
| 9,855 |
|
| 10,008 |
|
|
| 8,371 |
|
Accounts receivable, net of allowances of $1,406 and $1,285 as of September 30, 2022 and December 31, 2021, respectively |
| 2,544 |
|
|
| 2,469 |
| |||||||
Accounts receivable, net of allowances of $334 and $1,206 as of September 30, 2023 and December 31, 2022, respectively |
| 3,264 |
|
|
| 4,079 |
| |||||||
Deferred tax assets |
| 1,999 |
|
|
| 6,388 |
|
| 2,092 |
|
|
| 2,321 |
|
Intangible assets, net |
| 1,176 |
|
|
| 3,269 |
| |||||||
Due from third-party property manager |
| 169 |
|
|
| 1,669 |
| |||||||
Due from affiliates |
| 1,236 |
|
|
| 4,840 |
|
| 797 |
|
|
| 274 |
|
Total other assets, net | $ | 180,641 |
|
| $ | 165,913 |
| $ | 176,043 |
|
| $ | 132,679 |
|
(1) In addition to the properties we sold during the period, from time to time we may market to sell certain properties that are inconsistent with our long-term investment strategy. At the end of each reporting period, we evaluate whether such properties meet the criteria to be classified as held for sale. As of September 30, 2022, assets held for sale include one land parcel in Fort Lauderdale, Florida, which is expected to be sold during the fourth quarter of 2022.
Accounting Pronouncements Adopted in the Current Year
During the quarter ended March 31, 2022, we adopted ASU 2021-05 establishing Topic 842,
Lessors - Certain Leases with Variable Lease Payments17
ASU 2021-05requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct finance lease classification would trigger a day-one loss. The adoption of this standard on January 1, 2022, did not have a material impact on our condensed consolidated financial statements.
Recent Accounting Pronouncements
In March 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-04,“Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationshipsdebt, derivatives, and other transactions affected by the discontinuation of thecontracts that refer to LIBOR or by another reference rate expected to be discontinued because of reference rate reform. The guidanceoriginal ASU was effective beginning March 12, 2020as of its issuance date and can be applied prospectivelyprovided temporary relief through December 31, 2022. In January 2021, the FASB issued Accounting Standards Update 2021-012022, which was extended through December 31, 2024 by ASU 2022-06, , “Reference"Reference Rate Reform (Topic 848): Scope” (“ASU 2021-01”), which clarified the scope and applicationDeferral of the original guidance.Sunset Date of Topic 848". We plantransitioned to adopt ASU 2020-04 and ASU 2021-01 when LIBORthe Secured Overnight Financing Rate ("SOFR") effective July 1, 2023. There is discontinued. We are currently evaluating the potential impact of adopting this guidance, but do not expect it to have a material impact on our consolidated financial statements due to the fact that we hold one month LIBOR debt instruments, which are not expected to be discontinued in 2022.as a result of this transition.
Note 3 —Significant Transactions
Acquisitions and Investments
17
At the time of acquisition, one land parcel was subject to a sales agreement with closing expected during the fourth quarter of 2022. Based on the facts and circumstances related to the sale, we determined the land parcel met the criteria for classification as assets held for sale as of September 30, 2022. These assets are reported at a carrying value of $11.7 million, and are included within Other assets, net in our Condensed Consolidated Balance Sheets. Liabilities related to these assets held for sale of $8.1 million are included in Accrued liabilities and other in our Condensed Consolidated Balance Sheets.
Joint Venture Transactions
Dispositions
Lease Arrangements
18
Note 4 — Commitments and Contingencies
Commitments
In connection with our development, redevelopment, and other capital additions activities, we have entered into various construction-related contracts, and have made commitments to complete development and redevelopment of certain real estate, pursuant to financing or other arrangements. As of September 30, 2022, our commitments relatedWe expect to these capital activities totaled approximately $152.1 million,fund most of which we expect to incur duringthese commitments over the next 24 months.
As described in Note 3, we have joint venture commitments to fund a total of $29.6 million for our Edgewater joint venture and DC joint ventures formed during 2022. As of September 30, 2022,2023, we had remaining commitments for construction-related contracts of $14.2120.2 million, of remaining commitments. We expect to fund the remaining commitments over the next twelve months.with $173.8 million undrawn on our construction loans.
As of September 30, 2022,2023, we have remaining commitments of $2.73.1 million related to fourour unconsolidated joint ventures, which we expect to fund over the next twelve months. In addition, we have remaining commitments of $2.1 million related to our investments in privately heldproperty technology funds invested in entities that develop technology related to the real estate industry. The timing of the remaining funding of these commitments is uncertain.
We also enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
Legal Matters
From time to time, we may be a party to certain legal proceedings. While the outcome of the legal proceedings cannot be predicted with certainty, we believe there are no legal proceedings pending that would have a material effect upon our financial condition or results of operations.
Note 54 — Agreements and Transactions With AIR
In conjunction with the Separation in December 2020, we entered into the following agreements with AIR that have significant operational and financial impacts to us.
Master Services Agreement
Under the Master Services Agreement with AIR, AIR provides us with customary administrative and support services. We are obligated to pay AIR the fully burdened costs in performing those services. We may terminate any or all services on 60 days’ prior written notice, and AIR may terminate individual services at any time after December 31, 2023. During the three and nine months ended September 30, 2022, we incurred administrative and support fees of $0.6 million and $1.5 million, respectively, compared to $0.7 million and $1.8 million during the three and nine months ended September 30, 2021, respectively. These administrative support fees are included in General and administrative expenses in our Condensed Consolidated Statements of Operations.
Property Management Agreements
Under the Property Management Agreements with AIR, AIR provides us with certain property management, property accounting and related services for the majority of our operating properties. We pay AIR a property management fee equal to 3% of each respective property’s revenue collected and such other fees as may be mutually agreed upon for various other services. The initial term of each Property Management Agreement is one year, with automatic one-year renewal periods, unless either party elects to terminate upon delivery of 60 days’ prior written notice to the other party before the end of the term. Neither party is obligated to pay a termination fee or other penalty upon such termination.
During the three and nine months ended September 30, 2022, we incurred property management and property accounting fees of $1.4 million and $4.1 million, respectively, compared to $1.3 million and $3.8 million during the three and nine months ended September 30, 2021, respectively. These fees are included in Property operating expenses in our Condensed Consolidated Statements of Operations.
Master Leasing Agreement
The Master Leasing Agreement, as amended on June 14, 2022, governs the current and any future leasing arrangements between us, as lessee, and AIR, as lessor. Under the amendments to the Master Leasing Agreement, AIR's purchase option to acquire completed development and redevelopment properties was replaced with a right of first offer on development and
19
redevelopment assets that have achieved stabilization and that we choose to bring to market within one year thereafter. Each time the parties wish to execute a new lease for a particular property, they will execute a stand-alone lease.
In September 2022, we received final payment from AIR, pursuant to the lease termination agreement entered into in June 2022. The leases with respect to four properties were terminated, and we relinquished control of the associated properties. See Note 9 for further information.
Notes Payable to AIR
In July 2022, we completed the prepayment of the $534.1 million of Notes Payable to AIR. As a result of the prepayment, we incurred $17.4 million of spread maintenance costs, which were fully accrued as of June 30, 2022. For the three and nine months ended September 30, 2022, we recognized interest expense on the Notes Payable to AIR of $0.4 million and $13.7 million, respectively, compared to $6.9 million and $20.8 million for the three and nine months ended September 30, 2021, respectively.
Other
In June 2022, for $7.2 million, we acquired from AIR the common noncontrolling interest in the entity that indirectly holds a portfolio of assets that previously secured the Notes Payable to AIR.
Due to and from AIR
As of September 30, 2022, we have amounts due to and from AIR of $6.7 million and $1.0 million, respectively. As of December 31, 2021 we had amounts due to and from AIR of $15.7 million and $4.8 million, respectively. The amounts due to AIR primarily consist of invoices paid on our behalf and other reimbursements owed to AIR. The amounts due from AIR primarily consist of net cash flows generated by our operating properties.
Terry Considine Service Agreement/AIR Reimbursement
As contemplated by the Separation and by Aimco and AIR, Terry Considine, an Aimco board member and our former Chief Executive Officer, has specific responsibilities to us as a non-executive employee during 2022 to support the establishment and growth of our business, reporting directly to our board of directors (the "Board"). These responsibilities, separate from Mr. Considine’s services as a board member, include: (i) short and long-term strategic direction and advice; (ii) transition and executive support to officers; and (iii) advice and consultation with respect to strategic growth and acquisition activities. The independent directors of the Board set Mr. Considine’s 2022 target total compensation (including base compensation, short-term incentive, and long-term incentive) for these responsibilities at $2.1 million, to be paid in equity. Mr. Considine does not receive any additional compensation for serving on the Board.
Additionally, we are obligated for all base salary, short-term incentive amounts and long-term incentive amounts payable to Mr. Considine for the calendar year 2022 under the terms of his employment agreement with AIR that are in excess of $1.0 million, collectively. As of September 30, 2022, we estimate the total 2022 reimbursement to AIR, pursuant to this arrangement, will be $4.5 million.
We estimate compensation associated with these arrangements to total $6.6 million for 2022. For the three and nine months ended September 30, 2022, we recognized $1.7 million and $4.6 million of expense related to the arrangements, respectively, compared to $1.2 million and $4.1 million for the three and nine months ended September 30, 2021, respectively. This expense is included in General and administrative expenses in our Condensed Consolidated Statements of Operations.
Note 6 — Earnings and Dividends per Share and per Unit
Aimco and Aimco Operating Partnership calculate basic earnings per share of common stock and basic earnings per common unit based on the weighted-average number of shares of common stockCommon Stock and common partnership unitsOP Units outstanding. We calculate diluted earnings per share of common stock and diluted earnings per common unit taking into consideration dilutive shares of common stockCommon Stock and common partnership unitOP Unit equivalents and dilutive convertible securities outstanding during the period.
Each of our executivesAimco's Common Stock and AIR’s executives received one unvested share of Aimco stock and one unvested share of AIR stock at the Separation date for each unvested share they held at that date. We include AIR’s executives’ rights to receive Aimco shares upon vesting in our dilutive calculations.
20
Our common stock and common partnership unitOP Unit equivalents include options to purchase shares of common stock,Common Stock, which, if exercised, would result in Aimco’sour issuance of additional shares of common stockCommon Stock and Aimco Operating Partnership’s issuance to Aimcous of additional common partnership unitsOP Units equal to the number of shares of common stockCommon Stock purchased under the options. These equivalents also include unvested performance-basedmarket-based restricted stock awards that do not meet the definition of participating securities, which would result in an increase in the number of shares of common stockCommon Stock and common partnership unitsOP Units outstanding equal to the number of the shares that vest. Common partnership unitOP Unit equivalents also include unvested long-term incentive partnership units. We includeThe Common Stock and OP Unit equivalents were included in the denominator securities with dilutive effect in calculatingcomputation of diluted earnings per share and unit for the three and nine months ended September 30, 2022, because the effect of their inclusion was dilutive. However, the Common Stock and OP Unit equivalents were not included in the computation of diluted earnings per share and unit during these periods.for the three and nine months ended September 30, 2023, because the effect of their inclusion would be antidilutive. As of September 30, 2023, the Common Stock and OP Unit equivalents that could potentially dilute basic earnings per share or unit in future periods totaled 3.7 million and 8.0 million, respectively.
Our
18
Aimco's time-based restricted stock awards receive non-forfeitable dividends similar to shares of common stockCommon Stock and common partnership unitsOP Units prior to vesting, and our Performance-Based LTIP I units and Performance-Based LTIP IImarket-based long-term incentive partnership units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership unitsOP Units prior to vesting and conversion. The unvested restricted shares and units related to these awards are participating securities. We include the effect of participating securities in basic and diluted earnings per share and unit computations using the two-class method of allocating distributed and undistributed earnings when the two-class method is more dilutive than the treasury stock method. Participating securities arewere included in the computation of diluted earnings per share and unit for the three and nine months ended September 30, 2022, because the effect of their inclusion was dilutive. However, participating securities are not included in the computation of diluted earnings per share and 2021,unit for the three and nine months ended September 30, 2023, because the effect of their effects are dilutive.inclusion would be antidilutive. As of September 30, 2023, participating securities that could potentially dilute basic earnings per share or unit in future periods totaled 2.5 million.
Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three and nine months ended September 30, 20222023 and 2021,2022, are as follows (in thousands, except per share and per unit data):
| Three Months Ended |
|
| Nine Months Ended |
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||||||||||||
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) attributable to Aimco | $ | 29,472 |
|
| $ | (5,016 | ) |
| $ | 276,817 |
|
| $ | (4,492 | ) | $ | (2,260 | ) |
| $ | 29,472 |
|
| $ | (14,697 | ) |
| $ | 276,817 |
|
Net income (loss) allocated to Aimco participating securities |
| (405 | ) |
|
| — |
|
|
| (3,806 | ) |
|
| — |
| |||||||||||||||
Net income allocated to Aimco participating securities |
| — |
|
|
| (405 | ) |
|
| — |
|
|
| (3,806 | ) | |||||||||||||||
Net income (loss) attributable to Aimco common stockholders |
| 29,067 |
|
|
| (5,016 | ) |
|
| 273,011 |
|
|
| (4,492 | ) | $ | (2,260 | ) |
| $ | 29,067 |
|
| $ | (14,697 | ) |
| $ | 273,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Denominator - shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic weighted-average common stock outstanding |
| 149,611 |
|
|
| 149,762 |
|
|
| 149,706 |
|
|
| 149,517 |
|
| 143,299 |
|
|
| 149,611 |
|
|
| 144,431 |
|
|
| 149,706 |
|
Diluted share equivalents outstanding |
| 1,586 |
|
|
| — |
|
|
| 1,370 |
|
|
| — |
|
| — |
|
|
| 1,586 |
|
|
| — |
|
|
| 1,370 |
|
Diluted weighted-average common stock outstanding |
| 151,197 |
|
|
| 149,762 |
|
|
| 151,076 |
|
|
| 149,517 |
|
| 143,299 |
|
|
| 151,197 |
|
|
| 144,431 |
|
|
| 151,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Earnings (loss) per share - basic | $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.82 |
|
| $ | (0.03 | ) | $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.82 |
|
Earnings (loss) per share - diluted | $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.81 |
|
| $ | (0.03 | ) | $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Earnings per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) attributable to Aimco Operating Partnership | $ | 31,026 |
|
| $ | (5,269 | ) |
| $ | 291,465 |
|
| $ | (4,701 | ) | $ | (2,383 | ) |
| $ | 31,026 |
|
| $ | (15,472 | ) |
| $ | 291,465 |
|
Net income (loss) allocated to Aimco Operating Partnership participating securities |
| (421 | ) |
|
| — |
|
|
| (3,964 | ) |
|
| — |
| |||||||||||||||
Net income allocated to Aimco Operating Partnership participating securities |
| — |
|
|
| (421 | ) |
|
| — |
|
|
| (3,964 | ) | |||||||||||||||
Net income (loss) attributable to Aimco Operating Partnership's common unit holders |
| 30,605 |
|
|
| (5,269 | ) |
|
| 287,501 |
|
|
| (4,701 | ) | $ | (2,383 | ) |
| $ | 30,605 |
|
| $ | (15,472 | ) |
| $ | 287,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Denominator - units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic weighted-average common partnership units outstanding |
| 157,530 |
|
|
| 157,806 |
|
|
| 157,627 |
|
|
| 157,873 |
|
| 151,027 |
|
|
| 157,530 |
|
|
| 152,199 |
|
|
| 157,627 |
|
Diluted partnership unit equivalents outstanding |
| 1,606 |
|
|
| - |
|
|
| 1,390 |
|
|
| - |
|
| — |
|
|
| 1,606 |
|
|
| — |
|
|
| 1,390 |
|
Diluted weighted-average common partnership units outstanding |
| 159,136 |
|
|
| 157,806 |
|
|
| 159,017 |
|
|
| 157,873 |
|
| 151,027 |
|
|
| 159,136 |
|
|
| 152,199 |
|
|
| 159,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Earnings (loss) per unit - basic | $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.82 |
|
| $ | (0.03 | ) | $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.82 |
|
Earnings (loss) per unit - diluted | $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 1.81 |
|
| $ | (0.03 | ) | $ | (0.02 | ) |
| $ | 0.19 |
|
| $ | (0.10 | ) |
| $ | 1.81 |
|
21
Note 75 — Fair Value Measurements and Disclosures
Recurring Fair Value Measurements
From time to time we purchase interest rate swaps, caps, and other instruments to provide protection against increases in interest rates on our variable rate debt. As of September 30, 2022,2023, we held interest rate swaps and caps with $1.7627.4 billionmillion notional value that provide protection through the fourth quarter of 2024.value. These instruments were acquired for $15.75.8 million. Themillion, and the fair value of these instruments is noted in the table below.
During the nine months ended September 30, 2022,2023, we monetized anthe $1.5 billion notional amount interest rate swap and a portion of answaption, purchased in conjunction with the Mezzanine Investment to protect against future interest rate capincreases, for gross proceeds of $15.554.2 million. Proceeds from the monetization are currently invested in a short-term treasury bill, which is included in Other assets, net in our Condensed Consolidated Balance Sheets. This instrumenthas a carrying value and an approximate fair value of $54.3 million and recognized gainsas of $September 30, 2023.9.8
million, net
19
Table of transaction costs.Contents
On a recurring basis, we measure at fair value our interest rate options, which are presented in Other assets, net in our Condensed Consolidated Balance Sheets.options. Our interest rate options are classified within Level 2 of the GAAP fair value hierarchy, and we estimate their fair value using pricing models that rely on observable market information, including contractual terms, market prices, and interest rate yield curves. The fair value adjustment is included in earnings in UnrealizedRealized and unrealized gains (losses) on interest rate options in our Condensed Consolidated Statements of Operations. Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, and any upfront premium is reflected in Purchase of interest rate options, and any proceeds are reflected in Proceeds from interest rate options in our Condensed Consolidated Statements of Cash Flows.
As of September 30, 2023 and December 31, 2022, we have investments in stock of $3.92.3 million and $1.2 million, respectively, classified within Level 1 of the GAAP fair value hierarchy. In addition, as of September 30, 2023 and December 31, 2022, we have investments in property technology funds consisting of $2.5 million and $3.1 million, respectively, in entities that develop technology forrelated to the real estate industry. These investments are measured at net asset value (“NAV”) as a practical expedient. See Note 4 for further information.
The following table summarizes the fair value for our interest rate options, andinvestments in stock, our investments in real estate technology funds, and our investment in a treasury bill as of September 30, 2022,2023 and December 31, 20212022 (in thousands):
|
| As of September 30, 2022 |
|
| As of December 31, 2021 |
| ||||||||||||||||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||
Interest rate options |
| $ | 61,329 |
|
| $ | — |
|
| $ | 61,329 |
|
| $ | — |
|
| $ | 25,449 |
|
| $ | — |
|
| $ | 25,449 |
|
| $ | — |
|
Investment in real estate technology funds (1) |
| $ | 3,909 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 9,613 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| As of September 30, 2023 |
|
| As of December 31, 2022 |
| ||||||||||||||||||||||||||
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||||||||
Interest rate options |
| $ | 9,122 |
|
| $ | — |
|
| $ | 9,122 |
|
| $ | — |
|
| $ | 62,259 |
|
| $ | — |
|
| $ | 62,259 |
|
| $ | — |
|
Investments in stock |
|
| 2,346 |
|
|
| 2,346 |
|
|
| — |
|
|
| — |
|
|
| 1,179 |
|
|
| 1,179 |
|
|
| — |
|
|
| — |
|
Investments in real estate technology funds (1) |
|
| 2,480 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,117 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Investment in treasury bill |
|
| 54,298 |
|
|
| 54,298 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
(1) Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy.
Nonrecurring Fair Value Measurements
As of September 30, 2022, assets measured at fair value on a nonrecurring basis shown in our Condensed Consolidated Balance Sheets consisted of our investment in IQHQ. IQHQ was initially reported at cost. In June 2022, 22% of our original investment with a cost basis of $10.8 million was redeemed for $16.5 million. As a result, our remaining shares in IQHQ after the partial redemption were re-valued on a stepped up basis to fair value at the same per share value as the cash redemption per share value. These observable inputs are classified as Level 1 within the GAAP fair value hierarchy. As of September 30, 2022, the fair value of our investment in IQHQ measured on a nonrecurring basis remained at $59.7 million.
Fair Value Disclosures
We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable and payables approximated their fair value as of September 30, 2022,2023, and December 31, 2021,2022, due to their relatively short-term nature and high probability of realization. We estimate the fair value of our debt using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, debt service coverage ratios, and loan to value ratios. We classify the fair value of our non-recourse property debt and construction loans within Level 2 of the GAAP fair valuevaluation hierarchy based on the significance of certain of the unobservable inputs used to estimate their fair value. As of July 2022, we had prepaid the $534.1 million of Notes Payable to AIR.
22
The following table summarizes the carrying value and fair value of our non-recourse property debt, and construction loans and Notes Payable to AIR as of September 30, 2022,2023 and December 31, 2021,2022 (in thousands):
|
| As of September 30, 2022 |
|
| As of December 31, 2021 |
|
| As of September 30, 2023 |
|
| As of December 31, 2022 |
| ||||||||||||||||||||
|
| Carrying Value |
|
| Fair Value |
|
| Carrying Value |
|
| Fair Value |
|
| Carrying Value |
|
| Fair Value |
|
| Carrying Value |
|
| Fair Value |
| ||||||||
Non-recourse property debt |
| $ | 868,237 |
|
| $ | 796,311 |
|
| $ | 484,883 |
|
| $ | 498,960 |
|
| $ | 876,166 |
|
| $ | 796,035 |
|
| $ | 938,476 |
|
| $ | 878,804 |
|
Construction loans |
|
| 86,693 |
|
|
| 86,693 |
|
|
| 168,376 |
|
|
| 168,376 |
|
|
| 258,787 |
|
|
| 258,433 |
|
|
| 126,317 |
|
|
| 125,954 |
|
Notes Payable to AIR |
|
| — |
|
|
| — |
|
|
| 534,127 |
|
|
| 534,127 |
| ||||||||||||||||
Total |
| $ | 954,930 |
|
| $ | 883,004 |
|
| $ | 1,187,386 |
|
| $ | 1,201,463 |
|
| $ | 1,134,953 |
|
| $ | 1,054,468 |
|
| $ | 1,064,793 |
|
| $ | 1,004,758 |
|
Note 86 — Variable Interest Entities
We evaluate our investments in limited partnerships and similar entities in accordance with applicable consolidation guidance to determine whether each such entity is a VIE. The accounting standards for the consolidation of VIEs require qualitative assessments to determine whether we are the primary beneficiary. The primary beneficiary analysis is based on power and economics. We conclude that we are the primary beneficiary and consolidate the VIE if we have both: (i) the power to direct the activities of the VIE that most significantly influence the VIE's economic performance, and (ii) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. Significant judgments and assumptions related to these determinations include, but are not limited to, estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.
20
We consolidate Aimco Operating Partnership, a VIE of which Aimco iswe are the primary beneficiary. Aimco, throughThrough Aimco Operating Partnership, consolidateswe consolidate all VIEs for which it iswe are the primary beneficiary. Substantially all of theour assets and liabilities of Aimco are thatthose of Aimco Operating Partnership.
Aimco Operating Partnership is the primary beneficiary of, and therefore consolidates, ourits fourfive VIEs that own interests in real estate. Assets of our consolidated VIEs must first be used to settle the liabilities of those VIEs. The consolidated VIEs' creditors do not have recourse to the general credit of Aimco Operating Partnership.
In addition, we have nineeight unconsolidated VIEs for which we are not the primary beneficiary because we are not their primary decision maker. The nineeight unconsolidated VIEs include four unconsolidated real estate partnerships that hold four apartment communities in San Diego, California, the Mezzanine Investment, our passive equity investment in IQHQ, our investment in the Edgewater joint venture, and our two unconsolidated investments in land held for development in Miami, Florida and Bethesda, Maryland. Our maximum exposure to loss because of our involvement with the DC joint ventures.unconsolidated VIEs is limited to the carrying value of their assets.
DetailsThe details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of September 30, 2022,2023 and December 31, 2021,2022 (in thousands, except for VIE count):
|
| September 30, 2022 |
|
| December 31, 2021 |
|
| As of September 30, 2023 |
|
| As of December 31, 2022 |
| ||||||||||||||||||||
|
| Consolidated |
|
| Unconsolidated |
|
| Consolidated |
|
| Unconsolidated |
|
| Consolidated |
|
| Unconsolidated |
|
| Consolidated |
|
| Unconsolidated |
| ||||||||
Count of VIEs |
| 4 |
|
| 9 |
|
| 9 |
|
| 6 |
|
| 5 |
| 8 |
| 5 |
| 8 |
| |||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Real estate, net |
| $ | 210,586 |
|
| $ | — |
|
| $ | 564,909 |
|
| $ | — |
|
| $ | 440,801 |
|
| $ | — |
|
| $ | 258,529 |
|
| $ | — |
|
Cash and cash equivalents |
|
| 3,055 |
|
|
| — |
|
|
| 5,075 |
|
|
| — |
| ||||||||||||||||
Restricted Cash |
|
| — |
|
|
| — |
|
|
| 1,747 |
|
|
| — |
| ||||||||||||||||
Mezzanine investment |
|
| — |
|
|
| 362,788 |
|
|
| — |
|
|
| 337,797 |
|
|
| — |
|
|
| 158,173 |
|
|
| — |
|
|
| 158,558 |
|
Interest rate options |
|
| 5,767 |
|
|
| — |
|
|
| 3,900 |
|
|
| — |
| ||||||||||||||||
Right-of-use lease assets |
|
| 95,506 |
|
|
| — |
|
|
| 429,768 |
|
|
| — |
|
|
| 109,311 |
|
|
| — |
|
|
| 110,269 |
|
|
| — |
|
Unconsolidated real estate partnerships |
|
| — |
|
|
| 28,958 |
|
|
| — |
|
|
| 13,005 |
|
|
| — |
|
|
| 22,667 |
|
|
| — |
|
|
| 15,789 |
|
Other assets, net |
|
| — |
|
|
| 59,686 |
|
|
| 43,715 |
|
|
| 35,773 |
|
|
| 18,640 |
|
|
| 59,883 |
|
|
| 25,623 |
|
|
| 59,823 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Deferred tax liabilities |
|
| — |
|
|
| — |
|
|
| 124,747 |
|
|
| — |
| ||||||||||||||||
Accrued liabilities and other |
|
| 25,515 |
|
|
| — |
|
|
| 30,519 |
|
|
| — |
|
|
| 42,360 |
|
|
| — |
|
|
| 26,003 |
|
|
| — |
|
Non-recourse property debt, net |
|
| 31,904 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22,824 |
|
|
| — |
|
|
| 22,689 |
|
|
| — |
|
Construction loans, net |
|
| 12,237 |
|
|
| — |
|
|
| 163,570 |
|
|
| — |
|
|
| 150,495 |
|
|
| — |
|
|
| 40,013 |
|
|
| — |
|
Lease liabilities |
|
| 98,467 |
|
|
| — |
|
|
| 435,093 |
|
|
| — |
|
|
| 117,666 |
|
|
| — |
|
|
| 114,625 |
|
|
| — |
|
Mezzanine investment - participation sold |
|
| — |
|
|
| 34,402 |
|
|
| — |
|
|
| — |
|
Consolidated Real Estate Partnerships
The changes in consolidated VIE assets and liabilities from December 31, 2021 to September 30, 2022 in the table above are primarily due to the impact of:
(i) In September 2022, we as lessee received final payment from AIR as lessor, pursuant to the lease termination agreement entered into in June 2022. The leases with respect to four properties were terminated, and we relinquished control of the associated leasehold improvements and underlying land of these four properties. Consequently, we derecognized $86.6 million real estate assets and a $138.4 million construction loan was paid off and derecognized as well. In addition, we derecognized right-of-use
23
lease assets and lease liabilities of $326.1 million and $337.3 million, respectively, due to the lease modifications described in Note 9.
(ii) In February 2022, we acquired all of the outstanding redeemable non-controlling interests in an entity reported as a consolidated VIE as of December 31, 2021.
Unconsolidated Real Estate Partnerships
We own an interest in four unconsolidated real estate partnerships that hold four apartment communities in San Diego, California. We also own investments in the Edgewater joint venture formed in March 2022 to develop a 2.8-acre site in Miami's Edgewater neighborhood, and the DC joint ventures formed in May 2022 to develop a ground-up phased multifamily community in Bethesda, Maryland. See Note 3 for further information.
Our investment balances of $29.0 million and $13.0 million as of September 30, 2022 and December 31, 2021, respectively, represented our maximum exposure to loss in these unconsolidated VIEs.
Mezzanine Investment
AIR owns an interest in a partnership that owns Parkmerced Apartments, of which it is not the primary beneficiary, and under the terms of the Separation Agreement, AIR is obligated to transfer ownership of the subsidiaries that hold this interest to us upon receipt of required third-party consents. Our investment balances of $362.8 million and $337.8 million as of September 30, 2022 and December 31, 2021, respectively, represent our indirect interest in notes receivable through our agreement with AIR and our maximum exposure to loss in this VIE.
Note 97 — Lease Arrangements
Aimco as Lessor
The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our residents and commercial tenants primarily for utility reimbursements and other services.
For the three and nine months ended September 30, 20222023 and 2021,2022, our total lease income was comprised of the following amounts for all residential and commercial property leases (in thousands):
|
| Three Months Ended September 30, |
|
| Nine Months Ended |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Fixed lease income |
| $ | 44,239 |
|
| $ | 39,382 |
|
| $ | 137,519 |
|
| $ | 113,726 |
|
Variable lease income |
|
| 3,443 |
|
|
| 3,046 |
|
|
| 10,853 |
|
|
| 8,760 |
|
Total lease income |
| $ | 47,682 |
|
| $ | 42,428 |
|
| $ | 148,372 |
|
| $ | 122,486 |
|
Aimco as Lessee
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Fixed lease income |
| $ | 43,937 |
|
| $ | 44,239 |
|
| $ | 127,150 |
|
| $ | 137,519 |
|
Variable lease income |
|
| 3,640 |
|
|
| 3,443 |
|
|
| 10,046 |
|
|
| 10,853 |
|
Total lease income |
| $ | 47,577 |
|
| $ | 47,682 |
|
| $ | 137,196 |
|
| $ | 148,372 |
|
Lease Arrangements with AIR
We, as lessee, and AIR, as lessor, have entered into leases on properties currently under construction or in lease-up. These lease arrangements are governed by separate Master Lease Agreements and the Master Leasing Agreement.21
In June 2022, we as lessee and AIR as lessor, entered into a lease termination agreement with respect to four leases entered into on January 1, 2021 that pertained to our North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism properties. This agreement terminated the four finance leases on September 1, 2022. Upon termination, both parties were released of any and all liabilities and obligations under each respective lease other than those liabilities and obligations, if any, that expressly survived termination. On September 1, 2022, we relinquished control of the leasehold improvements on these four properties as well as the underlying land. In exchange, AIR remitted a total of $200.0 million in consideration to us as termination payments.
Because the termination agreement modified the expiration date of each lease to September 1, 2022, we accelerated depreciation on the associated leasehold improvements using lease terms that ended September 1, 2022. We recorded $69.9 million and $85.7 million of total depreciation expense for thethree and nine months ended September 30, 2022, respectively. In addition, we recognized Lease modification income of $1.6 million and $207.0 million, which is included in our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively.
24
Ground LeasesFinance Lease Arrangements
We are lessee to two 99-year groundfinance leases for the land underlying the development sitesites at Upton Place, a mixed-use development project which will create 689 apartment homesStrathmore Square, and approximately 100,000 square feet of commercial space in upper-northwest Washington, D.C. These ground leases are classified as finance leases.
Other Finance Lease Arrangements
As described in Note 3, in February 2022, we, as lessee, entered into certain finance lease arrangements concurrent with a purchase agreement to acquire a development site in the Flagler Village neighborhood of Fort Lauderdale, Florida. As of September 30, 2022, we had completed the $100.0 million purchase and recognized an additional $5.9 million of capitalized costs to Land in our Condensed Consolidated Balance Sheets. See Note 3 for additional information.Oak Shore.
As of September 30, 20222023 and December 31, 2021,2022, our finance leases had weighted-average remaining terms of 93.993.6 years and 38.594.2 years, respectively, and weighted-average discount rates of 6.06.1% and 5.4%, respectively.
As of September 30, 2022, finance lease right-of-use lease assets and liabilities totaled $95.5 million and $98.5 million, respectively. As of December 31, 2021, finance right-of-use lease assets and liabilities totaled $429.8 million and $435.1 million,at each period end, respectively.
For the three and nine months ended September 30, 2022,2023, amortization related to our finance leases was $0.0 million for each period, respectively, net of amounts capitalized, compared to $0.0 million and $6.7 million, respectively, net of amounts capitalized, compared to $2.1 million and $5.5 million for the three and nine months ended September 30, 2021, respectively.2022.
For the three and nine months ended September 30, 2022,2023, we capitalized $1.72.1 million and $6.56.3 million, respectively, of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets, compared to $5.81.7 million and $18.56.5 million, respectively, for the three and nine months ended September 30, 2021.2022.
Operating Lease Arrangements
We have operating leases primarily for corporate office space. Substantially all of the payments under our office leases are fixed. As of September 30, 20222023 and December 31, 2021,2022, our operating leases had weighted-average remaining terms of 6.65.4 years and 7.46.3 years, respectively. As of September 30, 2022respectively, and December 31, 2021, the leases had weighted-average discount rates of 3.13.3%, and 3.13.4%, respectively.
We record operating lease expense on a straight-line basis over the lease term. Total operating lease expense for the three and nine months ended September 30, 20222023 was $0.20.4 million and $0.51.1 million, respectively, compared to $0.2 million and $0.5 million, respectively, for the three and nine months ended September 30, 2021, respectively.2022. As of September 30, 20222023 and December 31, 2021,2022, operating lease right-of-use lease assets of $4.66.6 million and $5.16.7 million, respectively, are included in OtherOther assets, net in our Condensed Consolidated Balance Sheets. As of September 30, 20222023 and December 31, 2021,2022, operating lease liabilities of $11.612.1 million and $12.712.8 million, respectively, are included in AccruedAccrued liabilities and other in our Condensed Consolidated Balance Sheets.
For finance and operating leases, when the rate implicit in the lease cannot be determined, we estimate the value of our lease liabilities using discount rates equivalent to the rates we would pay on a secured borrowing with terms similar to the leases. We determine if an arrangement is or contains a lease at inception. We have lease agreements with lease and non-lease components, and have elected to not separate these components for all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded in our Condensed Consolidated Balance Sheets. Leases with initial terms greater than 12 months are recorded as operating or finance leases in our Condensed Consolidated Balance Sheets.
Office Space Sublease
We have a sublease arrangement to provide space within our corporate office for fixed rents, which commenced on January 1, 2021 and expires on May 31, 2029. For the three and nine months ended September 30, 2023, we recognized sublease income of $0.4 million and $1.1 million, respectively, compared to $0.4 million and $1.1 million, respectively, for the three and nine months ended September 30, 2022.
2522
Annual Future Minimum Lease Payments
CombinedCombined minimum annual lease payments under operating and finance leases, and sublease income that offsets our operating lease rent, are as follows (in thousands):
| Sublease Income and Lease Modification Income |
|
| Operating Lease Future Minimum Rent |
|
| Financing Leases Future Minimum Payments |
| Sublease Income and Lease Modification Income |
|
| Operating Lease Future Minimum Rent |
| Finance Leases Future Minimum Payments |
| |||||||
Remainder of 2022 | $ | 349 |
|
| $ | 314 |
|
| $ | 494 |
| |||||||||||
2023 |
| 1,403 |
|
|
| 1,922 |
|
|
| 2,335 |
| |||||||||||
Remainder of 2023 | $ | 351 |
|
| $ | 473 |
|
| $ | 725 |
| |||||||||||
2024 |
| 1,413 |
|
|
| 1,935 |
|
|
| 3,335 |
|
| 1,413 |
|
|
| 2,657 |
|
|
| 3,921 |
|
2025 |
| 1,423 |
|
|
| 1,930 |
|
|
| 3,835 |
|
| 1,423 |
|
|
| 2,355 |
|
|
| 4,437 |
|
2026 |
| 1,433 |
|
|
| 1,960 |
|
|
| 4,334 |
|
| 1,433 |
|
|
| 2,341 |
|
|
| 4,954 |
|
2027 |
| 1,443 |
|
|
| 2,380 |
|
|
| 5,483 |
| |||||||||||
Thereafter |
| 3,526 |
|
|
| 4,847 |
|
|
| 1,155,089 |
|
| 2,083 |
|
|
| 3,024 |
|
|
| 1,433,296 |
|
Total | $ | 9,547 |
|
| $ | 12,908 |
|
| $ | 1,169,422 |
| $ | 8,146 |
|
|
| 13,230 |
|
|
| 1,452,816 |
|
Less: Discount |
|
|
| (1,308 | ) |
|
| (1,070,955 | ) |
|
|
| (1,179 | ) |
|
| (1,335,150 | ) | ||||
Total lease liabilities |
|
| $ | 11,600 |
|
| $ | 98,467 |
|
|
| $ | 12,051 |
|
| $ | 117,666 |
|
Note 108 — Business Segments
We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other.
Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land held for development. As of September 30, 2023, our Development and Redevelopment segment consists of 12 properties: three residential apartment communities with 1,185 apartment homes, of which 276 have been completed and an additional 909 are planned, a single family rental community with 16 planned homes plus eight accessory dwelling units, which we are actively developing or redeveloping; one hotel with 106 rooms and 18,000 square feet of event space completed in April 2023, and land parcels held for development.
Our Operating segment includes 21 residential apartment communities with 5,600 apartment homes that have achieved a stabilized level of operations as of January 1, 20212022 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment. Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.
During the nine months ended September 30, 2022first quarter of 2023, we disposed of two Seattle, Washington area properties that had previously been reported as held for sale assets andreclassified one stabilized property located in Fremont, CA that was previously reported within our Operating segment. In addition, we terminated the leases for fourresidential apartment communities that were previously reported within our Development and Redevelopment segment.community from the Other segment to the Operating segment because it reached stabilization. Prior period segment information has been recast based upon our current segment population, and is consistent with how our chief operating decision maker ("CODM") evaluates the business. The recast conforms with our reportable segment compositionclassification as of September 30, 2022.2023.
Our Other segment consists of properties currently owned that are not included in our Development and Redevelopment or Operating segments. Our Other segment includes 1001 Brickell Bay Drive, our only office building, and St. George Villas.
Our CODM uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment. Our CODM uses proportionate property net operating income to assess the operating performance of our Operating segment. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net ofincluding utility reimbursements, for the consolidated communities. In our Condensed Consolidated Statements of Operations, utility reimbursements are included in Rental and other property revenues, in accordance with GAAP.communities; but
planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, we are actively developing or redeveloping; and, land parcels held for development. Our Operating segment includes 21 consolidated apartment communities with 5,582 apartment homes. Our Other segment includes Eldridge Townhomes apartment community, stabilized but not owned for the comparable reporting period, and 1001 Brickell Bay Drive, our only office building.
2623
The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended September 30, 20222023 and 20212022 (in thousands):
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| ||||||||||||
Three Months Ended September 30, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Three Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Rental and other property revenues | $ | 123 |
|
| $ | 34,691 |
|
| $ | 4,241 |
|
| $ | 1,344 |
|
| $ | 7,284 |
|
| $ | 47,683 |
| $ | 4,691 |
|
| $ | 37,722 |
|
| $ | 3,542 |
|
| $ | 1,746 |
|
| $ | — |
|
| $ | 47,701 |
|
Property operating expenses |
| 336 |
|
|
| 10,220 |
|
|
| 1,264 |
|
|
| 1,377 |
|
|
| 4,258 |
|
|
| 17,455 |
|
| 2,609 |
|
|
| 10,745 |
|
|
| 1,526 |
|
|
| 1,762 |
|
|
| 1,686 |
|
|
| 18,328 |
|
Other operating expenses not allocated |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 96,247 |
|
|
| 96,247 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 26,002 |
|
|
| 26,002 |
|
Total operating expenses |
| 336 |
|
|
| 10,220 |
|
|
| 1,264 |
|
|
| 1,377 |
|
|
| 100,505 |
|
|
| 113,702 |
|
| 2,609 |
|
|
| 10,745 |
|
|
| 1,526 |
|
|
| 1,762 |
|
|
| 27,688 |
|
|
| 44,330 |
|
Proportionate property net operating |
| (213 | ) |
|
| 24,471 |
|
|
| 2,977 |
|
|
| (33 | ) |
|
| (93,221 | ) |
|
| (66,019 | ) |
| 2,082 |
|
|
| 26,977 |
|
|
| 2,016 |
|
|
| (16 | ) |
|
| (27,688 | ) |
|
| 3,371 |
|
Other items included in income before |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 82,629 |
|
|
| 82,629 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7,907 | ) |
|
| (7,907 | ) |
Income (loss) before income tax | $ | (213 | ) |
| $ | 24,471 |
|
| $ | 2,977 |
|
| $ | (33 | ) |
| $ | (10,592 | ) |
| $ | 16,610 |
| $ | 2,082 |
|
| $ | 26,977 |
|
| $ | 2,016 |
|
| $ | (16 | ) |
| $ | (35,595 | ) |
| $ | (4,536 | ) |
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| ||||||||||||
Three Months Ended September 30, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Rental and other property revenues | $ | 256 |
|
| $ | 31,126 |
|
| $ | 3,459 |
|
| $ | 1,300 |
|
| $ | 6,752 |
|
| $ | 42,893 |
| $ | 123 |
|
| $ | 35,466 |
|
| $ | 3,466 |
|
| $ | 1,344 |
|
| $ | 7,284 |
|
| $ | 47,683 |
|
Property operating expenses |
| 472 |
|
|
| 10,301 |
|
|
| 1,124 |
|
|
| 1,293 |
|
|
| 4,965 |
|
|
| 18,155 |
|
| 325 |
|
|
| 10,386 |
|
|
| 1,099 |
|
|
| 1,376 |
|
|
| 4,269 |
|
|
| 17,455 |
|
Other operating expenses not allocated |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 30,577 |
|
|
| 30,577 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 96,247 |
|
|
| 96,247 |
|
Total operating expenses |
| 472 |
|
|
| 10,301 |
|
|
| 1,124 |
|
|
| 1,293 |
|
|
| 35,542 |
|
|
| 48,732 |
|
| 325 |
|
|
| 10,386 |
|
|
| 1,099 |
|
|
| 1,376 |
|
|
| 100,516 |
|
|
| 113,702 |
|
Proportionate property net operating |
| (216 | ) |
|
| 20,825 |
|
|
| 2,335 |
|
|
| 7 |
|
|
| (28,790 | ) |
|
| (5,839 | ) |
| (202 | ) |
|
| 25,080 |
|
|
| 2,367 |
|
|
| (32 | ) |
|
| (93,232 | ) |
|
| (66,019 | ) |
Other items included in income before |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,028 | ) |
|
| (1,028 | ) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 82,629 |
|
|
| 82,629 |
|
Income (loss) before income tax | $ | (216 | ) |
| $ | 20,825 |
|
| $ | 2,335 |
|
| $ | 7 |
|
| $ | (29,818 | ) |
| $ | (6,867 | ) | $ | (202 | ) |
| $ | 25,080 |
|
| $ | 2,367 |
|
| $ | (32 | ) |
| $ | (10,603 | ) |
| $ | 16,610 |
|
24
The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the nine months ended September 30, 20222023 and 20212022 (in thousands):
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| ||||||||||||
Nine Months Ended September 30, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Nine Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Rental and other property revenues | $ | 204 |
|
| $ | 100,052 |
|
| $ | 13,619 |
|
| $ | 4,466 |
|
| $ | 30,034 |
|
| $ | 148,375 |
| $ | 10,539 |
|
| $ | 111,404 |
|
| $ | 10,664 |
|
| $ | 5,036 |
|
| $ | — |
|
| $ | 137,643 |
|
Property operating expenses |
| 908 |
|
|
| 30,916 |
|
|
| 4,085 |
|
|
| 4,455 |
|
|
| 16,020 |
|
|
| 56,384 |
|
| 7,326 |
|
|
| 33,426 |
|
|
| 4,237 |
|
|
| 5,068 |
|
|
| 4,591 |
|
|
| 54,648 |
|
Other operating expenses not allocated |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 172,663 |
|
|
| 172,663 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 75,593 |
|
|
| 75,593 |
|
Total operating expenses |
| 908 |
|
|
| 30,916 |
|
|
| 4,085 |
|
|
| 4,455 |
|
|
| 188,683 |
|
|
| 229,047 |
|
| 7,326 |
|
|
| 33,426 |
|
|
| 4,237 |
|
|
| 5,068 |
|
|
| 80,184 |
|
|
| 130,241 |
|
Proportionate property net operating |
| (704 | ) |
|
| 69,136 |
|
|
| 9,534 |
|
|
| 11 |
|
|
| (158,649 | ) |
|
| (80,672 | ) |
| 3,213 |
|
|
| 77,978 |
|
|
| 6,427 |
|
|
| (32 | ) |
|
| (80,184 | ) |
|
| 7,402 |
|
Other items included in income before |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 402,506 |
|
|
| 402,506 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (22,177 | ) |
|
| (22,177 | ) |
Income (loss) before income tax | $ | (704 | ) |
| $ | 69,136 |
|
| $ | 9,534 |
|
| $ | 11 |
|
| $ | 243,857 |
|
| $ | 321,834 |
| $ | 3,213 |
|
| $ | 77,978 |
|
| $ | 6,427 |
|
| $ | (32 | ) |
| $ | (102,361 | ) |
| $ | (14,775 | ) |
27
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate and Other Adjustments(1) |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Proportionate |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| ||||||||||||
Nine Months Ended September 30, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Rental and other property revenues | $ | 2,006 |
|
| $ | 90,176 |
|
| $ | 9,783 |
|
| $ | 3,863 |
|
| $ | 17,287 |
|
| $ | 123,115 |
| $ | 204 |
|
| $ | 102,206 |
|
| $ | 11,466 |
|
| $ | 4,466 |
|
| $ | 30,033 |
|
| $ | 148,375 |
|
Property operating expenses |
| 1,737 |
|
|
| 30,461 |
|
|
| 3,251 |
|
|
| 3,825 |
|
|
| 12,226 |
|
|
| 51,500 |
|
| 901 |
|
|
| 31,345 |
|
|
| 3,656 |
|
|
| 4,448 |
|
|
| 16,034 |
|
|
| 56,384 |
|
Other operating expenses not allocated |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 85,627 |
|
|
| 85,627 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 172,663 |
|
|
| 172,663 |
|
Total operating expenses |
| 1,737 |
|
|
| 30,461 |
|
|
| 3,251 |
|
|
| 3,825 |
|
|
| 97,853 |
|
|
| 137,127 |
|
| 901 |
|
|
| 31,345 |
|
|
| 3,656 |
|
|
| 4,448 |
|
|
| 188,697 |
|
|
| 229,047 |
|
Proportionate property net operating |
| 269 |
|
|
| 59,715 |
|
|
| 6,532 |
|
|
| 38 |
|
|
| (80,566 | ) |
|
| (14,012 | ) |
| (697 | ) |
|
| 70,861 |
|
|
| 7,810 |
|
|
| 18 |
|
|
| (158,664 | ) |
|
| (80,672 | ) |
Other items included in income before |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 333 |
|
|
| 333 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 402,506 |
|
|
| 402,506 |
|
Income (loss) before income tax | $ | 269 |
|
| $ | 59,715 |
|
| $ | 6,532 |
|
| $ | 38 |
|
| $ | (80,233 | ) |
| $ | (13,679 | ) | $ | (697 | ) |
| $ | 70,861 |
|
| $ | 7,810 |
|
| $ | 18 |
|
| $ | 243,842 |
|
| $ | 321,834 |
|
25
Net real estate and non-recourse property debt, net, of our segments as of September 30, 20222023 and December 31, 2021,2022, were as follows (in thousands):
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Corporate(1) |
|
| Total |
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Total |
| |||||||||
As of September 30, 2022: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
As of September 30, 2023 |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Buildings and improvements | $ | 378,117 |
|
| $ | 671,670 |
|
| $ | 198,218 |
|
| $ | — |
|
| $ | 1,248,005 |
| $ | 675,020 |
|
| $ | 706,569 |
|
| $ | 164,914 |
|
| $ | 1,546,503 |
|
Land |
| 226,738 |
|
|
| 259,033 |
|
|
| 153,501 |
|
|
| — |
|
|
| 639,272 |
|
| 225,508 |
|
|
| 262,409 |
|
|
| 150,090 |
|
|
| 638,007 |
|
Total real estate |
| 604,855 |
|
|
| 930,703 |
|
|
| 351,719 |
|
|
| — |
|
|
| 1,887,277 |
|
| 900,528 |
|
|
| 968,978 |
|
|
| 315,004 |
|
|
| 2,184,510 |
|
Accumulated depreciation |
| (1,426 | ) |
|
| (459,722 | ) |
|
| (55,709 | ) |
|
| — |
|
|
| (516,857 | ) |
| (11,098 | ) |
|
| (480,983 | ) |
|
| (72,605 | ) |
|
| (564,686 | ) |
Net real estate | $ | 603,429 |
|
| $ | 470,981 |
|
| $ | 296,010 |
|
| $ | — |
|
| $ | 1,370,420 |
| $ | 889,430 |
|
| $ | 487,995 |
|
| $ | 242,399 |
|
| $ | 1,619,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Non-recourse property debt and construction loans, net | $ | 170,939 |
|
| $ | 743,001 |
|
| $ | 26,469 |
|
| $ | — |
|
| $ | 940,409 |
| $ | 273,454 |
|
| $ | 765,919 |
|
| $ | 80,843 |
|
| $ | 1,120,216 |
|
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Corporate(1) |
|
| Total |
| |||||
As of December 31, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Buildings and improvements | $ | 202,367 |
|
| $ | 675,269 |
|
| $ | 196,853 |
|
| $ | 182,725 |
|
| $ | 1,257,214 |
|
Land |
| 82,325 |
|
|
| 259,033 |
|
|
| 153,501 |
|
|
| 39,426 |
|
|
| 534,285 |
|
Total real estate |
| 284,692 |
|
|
| 934,302 |
|
|
| 350,354 |
|
|
| 222,151 |
|
|
| 1,791,499 |
|
Accumulated depreciation |
| (1,426 | ) |
|
| (444,324 | ) |
|
| (41,841 | ) |
|
| (73,524 | ) |
|
| (561,115 | ) |
Net real estate | $ | 283,266 |
|
| $ | 489,978 |
|
| $ | 308,513 |
|
| $ | 148,627 |
|
| $ | 1,230,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Non-recourse property debt, net | $ | 36,218 |
|
| $ | 428,308 |
|
| $ | — |
|
| $ | 182,181 |
|
| $ | 646,707 |
|
28
| Development and Redevelopment |
|
| Operating |
|
| Other |
|
| Total |
| ||||
As of December 31, 2022: |
|
|
|
|
|
|
|
|
|
|
| ||||
Buildings and improvements | $ | 449,316 |
|
| $ | 708,665 |
|
| $ | 164,400 |
|
| $ | 1,322,381 |
|
Land |
| 228,568 |
|
|
| 262,409 |
|
|
| 150,125 |
|
|
| 641,102 |
|
Total real estate |
| 677,884 |
|
|
| 971,074 |
|
|
| 314,525 |
|
|
| 1,963,483 |
|
Accumulated depreciation |
| (2,378 | ) |
|
| (468,428 | ) |
|
| (59,916 | ) |
|
| (530,722 | ) |
Net real estate | $ | 675,506 |
|
| $ | 502,646 |
|
| $ | 254,609 |
|
| $ | 1,432,761 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-recourse property debt and construction loans, net | $ | 200,135 |
|
| $ | 767,513 |
|
| $ | 80,551 |
|
| $ | 1,048,199 |
|
In addition to the amounts disclosed in the tables above, as of September 30, 20222023 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $95.5109.3 million and $98.5117.7 million, respectively, and as of December 31, 2021,2022, aggregated to $429.8110.3 million and $435.1114.6 million, respectively. As of September 30, 2023 and December 31, 2022, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore. As described in Note 9, we entered into termination agreements to cancel our leases on North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism on September 1, 2022. Consequently, during the period ended September 30, 2022, we wrote off $326.1 million and $337.3 million right-of-use lease assets and lease liability, respectively.
Note 11 – Financing Activities
Our outstanding indebtedness as of September 30, 2022 includes the following borrowings that closed during the nine months ended September 30, 2022 (in thousands):
|
| Loan Amount |
|
| Balance at |
|
| Contractual Interest Rate |
| Maturity Date | ||
Variable-Rate: |
|
|
|
|
|
|
|
|
|
| ||
Variable property loans |
| $ | 100,000 |
|
| $ | 100,000 |
|
| Multiple (1) |
| Multiple (1) |
|
|
|
|
|
|
|
|
|
|
| ||
Construction loan |
| $ | 23,000 |
|
| $ | 1 |
|
| One-Month SOFR+ 4.41% (min 5.56%) |
| June 2025 (2) |
Fixed-Rate: |
|
|
|
|
|
|
|
|
|
| ||
Non-recourse property loans |
| $ | 574,700 |
|
| $ | 574,700 |
|
| 4.63% |
| Multiple (3) |
Note 12 – Subsequent Events
In October 2022, we entered into an $26
million non-recourse property loan with an initial term of 36 months, extendable for two additional one year periods, and with an interest rate based on the sum of the One-Month Term SOFR plus a spread of 4.5%, subject to a minimum all-in interest rate of 6.0%. Concurrently, we paid a $1.5 million premium to enter an $81.3 million notional amount interest rate cap agreement, which caps the One-Month Term SOFR at 3.5%.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report on Form 10-Q contains or may contain information that is forward-looking within the meaning of the federal securities laws, including, without limitation, statements regarding: the ongoing relationship between Aimcoour future plans and AIR (the “Separate Entities”) following the Separation; the impact of the COVID-19 pandemic, including on our ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, developments, and redevelopments;goals, including our abilitypipeline investments and projects, our plans to meet budgeted costseliminate certain near term debt maturities, our estimated value creation and timelines,potential, our timing, scheduling and achieve budgeted rental rates relatedbudgeting, projections regarding lease growth, our plans to form joint ventures, our plans for new acquisitions or dispositions, our strategic partnerships and value added therefrom, and changes to our development and redevelopment investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ratios; and the outcome and consequences of the current proxy contest with Land & Buildings Capital Growth, L.P.("Land & Buildings").governance.
These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties that could cause actual results to differ materially from our expectations, including, but not limited to: the effectsrisk that the 2023 plans and goals may not be completed, as expected, in a timely manner or at all, the inability to recognize the anticipated benefits of the coronavirus pandemic on Aimco’s businesspipeline investments and on the global and U.S. economies generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, geopolitical events which may adversely affect the marketsprojects, changes in which our securities trade, and other macroeconomic conditions, including, among other things, supply chain challenges and rising interest rates, all of which heightens the impact of the other risks and factors
29
described herein, and the impact on entities in which Aimco holds a partial interest, including its indirect interest in the partnership that owns Parkmerced Apartments, and the impact of coronavirus related governmental lockdowns on Aimco’s residents, commercial tenants, and operations; real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including, the pace of job growthincreases in interest rates and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing and effects of acquisitions, dispositions, developments and redevelopments; 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; supply chain disruptions, particularly with respect to raw materials such as lumber, steel, and concrete; financing risks, including 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; possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of real estate presently or previously owned by Aimco; the relationship between Aimco and Separate Entities after the Separation; the ability and willingness of the Separate Entities and their subsidiaries to meet and/or perform their obligations under the contractual arrangements that were entered into among the parties in connection with the Separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; and the ability to achieve some or all the benefits that we expect to achieve from the Separation; the outcome and consequences of activist stockholders on our business;force-majeure events and such other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission (“SEC”).
In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.
Readers should carefully review our financial statements and the notes thereto, as well as Item 1A. Risk Factors in Part II of this report. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Readers should also carefully review the section entitled “Risk Factors” described in Item 1A of Apartment Investment and Management Company’s and Aimco OP L.P.’s combined Annual Report on Form 10-K for the year ended December 31, 2021,2022, and subsequent documents we file from time to time with the SEC.
As used herein and except as the context otherwise requires, “we,” “our,” and “us” refer to Apartment Investment and Management Company (which we refer to as Aimco), Aimco OP L.P. (which we refer to as Aimco Operating Partnership) and their consolidated subsidiaries, collectively.
Certain financial and operating measures found herein and used by management are not defined under accounting principles generally accepted in the United States ("GAAP"). These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading.
27
Executive Overview
Our mission is to make real estate investments, primarily focused on the multifamily sector within the continental United States,targeted U.S. markets, where outcomes are enhanced through our human capital so thatand substantial value is created for investors, teammates, and the communities in which we operate.
Our value proposition includes our:
Our primary goal is outsized risk adjusted returns and accelerating growth for our shareholders. We are focused on providing superior total-return performance to shareholders, primarily through capital appreciation driven by accretive investment and active portfolio management over multi-year periods. We plan to reinvest earnings to facilitate growth and, therefore, do not presently intend to pay a regular quarterly cash dividend.
30
Our financial objectives are to create value and produce superior, project-level, risk-adjusted returns on equity as measured by the investment period Internal Rate of Return (“IRR”) and the project-level Multiple on Invested Capital (“MOIC”). We measure broader performance based on Net Asset Value (“NAV”) growth over time.
Our capital allocation strategy has beenis designed to leverage our investment platform and optimize risk-adjusted returns for our shareholders.
Overall, we targetAimco targets a growth-oriented capitalbalanced allocation, primarily weighted toward direct investmentwhich includes investments in “Value Add” and “Opportunistic” multifamily real estate.estate, primarily located in Southeast Florida, the Washington D.C. Metro Area and Colorado's Front Range, plus investment in a geographically diversified portfolio of "Core" and "Core-Plus" apartment communities.
From time to time,In addition, we expect to allocate a limited/small portioncurrently hold select alternative assets, consisting primarily of our capital to passiveindirect, real estate related debt and equity investments. We have reduced our allocation to these investments both directly and indirectly. We may also utilizeplan to continue to significantly reduce our established platform and existing relationships to generate fees through service offerings.allocation over time.
We have policies in place that support our stated strategy, guide our investment allocations, and manage risk, including to hold at all times a sizeablesizable portion of our net equity in a diversified portfolio of “Core” and “Core-Plus”stabilized cash-flowing assets and before starting a project,to require cash or committed credit necessary for completion.completion of development and redevelopment projects prior to their commencement.
28
Given our stated strategy, it is expected that at any point in time the value-creation process will be ongoing at numerous of our investments. Over time, we expect the Aimcoour enterprise to produce superior returns on equity on a risk-adjusted basis and it is our plan to do so by:
We have corporate headquarters in Denver, Colorado and Bethesda, Maryland.Washington D.C. Our investment platform is managed by experienced professionals based in four regions: West Coast, Centralthree regions, where we will focus our new investment activity: Southeast Florida, the Washington D.C. Metro Area and Mountain West, Mid-Atlantic and Northeast, and Southeast.Colorado's Front Range. By regionalizing this platform, we are able to leverage the in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities.
Our dedicated team will source and execute development and redevelopment projects, and various other direct investment strategies. The AimcoOur development and redevelopment portfolio currently includes $0.6 billion of projects in construction and lease-up. In addition, since the Separation, our team has secured significant, high-quality, future development opportunities, more than tripling Aimco’s controlled pipeline to aincluding total potential of more than 1514 million square feet, located in high-growth markets. Generally, we seek direct investment opportunities in locations where barriers to entry are high, target customers can be clearly defined and where we have a comparative advantage over others in the market. From time to time, we may choose to monetize certain pipeline assets prior to vertical construction in an effort to maximize value and risk adjusted returns. In any time period, the amount of Aimco capital that is allocated to development activities may vary based on market conditions and other factors.
Our entire portfolio of operating properties includes 26 apartment communities (22 consolidated properties and four unconsolidated properties) with average rents in line with local market averages (generally defined as B class). We also own one commercial office building that is part of an assemblage with an adjacent apartment building. The target composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across a geographically diversified portfolio, and with a bias toward long established residential neighborhoods that rank highly in regard to schools, employment fundamentals and state and regional governance. Core-Plus opportunities offer the opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and improve asset values.
We expectcurrently hold select alternative investments, the majority of which originated with Aimco Predecessor and, over time, plan to allocate a limited portion of oursignificantly reduce capital allocated to passive debt and equity investments, both directly and at the entity level when warranted by risk adjusted returns.these investments. Our current allocation to alternative investments includes: our indirect interest mezzanine loanin the Mezzanine Investment to the Parkmerced partnership, which owns 3,165 apartment homes and future development rights in San Francisco, California, and our passive equity investments in IQHQ, Inc. (“IQHQ”("IQHQ"), a privately heldprivately-held life sciences real estate development company, and in property technology funds consisting of entities that develop technology related to the real estate industry. We have made significant progress on our plan to reduce capital allocated to alternative investments through the partial sale of the Mezzanine Investment, as discussed further below.
31
At all times, weWe will guard our liquidity at all times by maintaining sufficient cash and committed credit.
From time-to-time,time to time, we will allocate capital to financial assets designed to mitigate risks elsewhere in the Aimco enterprise.risks. Existing examples include our option to acquire an interest rate swap designed to protect against repricing risk on our maturing liabilities and the use of interest rate caps to provide protection against increases in interest rates on in-place loans.
We expect to capitalize our activities through a combination of non-recourse property debt, construction loans, third-party equity, and the recycling of Aimco equity, including retained earnings. We plan to limit the use of recourse leverage, with a strong preference towards non-recourse property-level debt in order to limit risk to the Aimco enterprise. When warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage Aimco equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.
29
The results from the execution of our business plan during the three and nine months ended September 30, 20222023 are further described below.
Financial Results and Recent Highlights
Value Add, Opportunistic & Alternative Investments
Development and Redevelopment
We generally seek development and redevelopment opportunities where barriers to entry are high, target customers can be clearly defined, and where we have a comparative advantage over others in the market. We will focus our new investment activity in Southeast Florida, the Washington D.C. Metro Area and Colorado's Front Range. Our Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.
We currently have fourfive active development and redevelopment projects, located acrossin four U.S. markets, in varying phases of construction and lease-up. These projects remain on track, as measured by construction budget and lease-up metrics,metrics. Additionally, we have a pipeline of future value-add opportunities totaling approximately 14 million gross square feet of development in our target markets of Southeast Florida, the Washington D.C. Metro, and current market valuations. Colorado's Front Range.During the three and nine months ended September 30, 2022,2023, we invested $60.6$74.4 million and $188.9$220.4 million, respectively, in development and redevelopment activities.
Updates include:
3230
Alternative Investments
Aimco makes alternative investments where it has special knowledge or expertise relevant to the venture and opportunity exists for positive asymmetric outcomes. Aimco'sOur current alternative investments are primarily those investments originated by Aimco Predecessor and include a mezzanine loanMezzanine Investment to the Parkmerced partnership secured by a stabilized multifamily property with an option to participate in future multi-familymultifamily development, as well as three passive equity investments. Over time, we plan to significantly reduce capital allocated to these investments.
Updates for our alternative investments include:
Investment and Disposition Activity
Aimco isWe are focused on growing the business and delivering strong investment returns, through the ownership of apartment properties as well as development and redevelopment activities, funded primarily through our joint ventures. Aimco will also consider opportunistic investments in related activities. Updates include:
months ended September 30, 2023, no new investment or disposition activity occurred.
Operating Property Results
Aimco ownsWe own a diversified portfolio of stabilized apartment communities located in eight major U.S. markets with average rents in line with local market averages. We also own a commercial office building that is part of an assemblage with an adjacent apartment building.
Highlights for the three months ended September 30, 20222023 include:
Balance Sheet and Financing Activity
We are highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of September 30, 2022,2023, we had access to $375.4$320.2 million in liquidity, including $206.3$95.7 million of cash on hand, $19.1a $54.3 million short term investment in a treasury bill, $20.2 million of restricted cash, and the capacity to borrow up to $150.0 million on our revolving credit facility. Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.
33
31
Financial Results of Operations
We have three segments: (i) Development and Redevelopment, (ii) Operating, and (iii) Other.
Our Development and Redevelopment segment consists ofincludes properties that are under construction or have not achieved stabilization, as well as land assemblages that are being held for development adjacent to The Hamilton community and other land purchases.future development. Our Operating segment includes 21 residential apartment communities that have achieved stabilized levellevels of operations as of January 1, 20212022 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment. Our Other segment consists of properties currently owned that are not included in our Development and Redevelopment or Operating segments.
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.
Three and Nine Months Ended September 30, 2022 compared with the Three and Nine Months Ended September 30, 2021
Net income increased by $34.5 million and by $281.3 million duringResults of Operations for the three and nine months ended September 30, 2023 and 2022
Net income attributable to Aimco common stockholders decreased by $31.7 million and $291.5 million, respectively, for the three and nine months ended September 30, 2023, compared to the same periodsperiod in 2021,2022, as described more fully below.
Property Results
As of September 30, 2022,2023, our Development and Redevelopment segment included four12 properties, three of which were properties that were under construction.construction and two of which were recently completed, while the remaining were land held for development. Our Operating segment included 21 communities with 5,5825,600 apartment homes, and our Other segment included 1001 Brickell Bay Drive, our recent Eldridge Townhomes acquisition,only office building, and St. George Villas. During the first quarter of 2023, we reclassified one office building.residential apartment community from the Other segment to the Operating segment because it reached stabilization. Prior period segment information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the business. The recast conforms with our reportable segment classification as of September 30, 2023.
We use proportionate property net operating income to assess the operating performance of our segments. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, but
Please refer to Note 108 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.
34
Proportionate Property Net Operating Income
The results of our segments for the three months ended September 30, 20222023 and 2021,2022, as presented below, are based on segment classifications as of September 30, 2022:2023:
| Three Months Ended |
|
|
|
| Three Months Ended |
|
|
|
| ||||||||||||||||||||
(in thousands) | 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
| 2023 |
|
| 2022 |
|
| $ Change |
|
| % Change |
| ||||||||
Rental and other property revenues, before utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Development and Redevelopment | $ | 123 |
|
| $ | 256 |
|
| $ | (133 | ) |
|
| (52.0 | %) | $ | 4,691 |
|
| $ | 123 |
|
| $ | 4,568 |
|
|
| 100.0 | % |
Operating |
| 34,691 |
|
|
| 31,126 |
|
|
| 3,565 |
|
|
| 11.5 | % |
| 37,722 |
|
|
| 35,466 |
|
|
| 2,256 |
|
|
| 6.4 | % |
Other |
| 4,241 |
|
|
| 3,459 |
|
|
| 782 |
|
|
| 22.6 | % |
| 3,542 |
|
|
| 3,466 |
|
|
| 76 |
|
|
| 2.2 | % |
Total |
| 39,055 |
|
|
| 34,841 |
|
|
| 4,214 |
|
|
| 12.1 | % |
| 45,955 |
|
|
| 39,055 |
|
|
| 6,900 |
|
|
| 17.7 | % |
Property operating expenses, net of utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Development and Redevelopment |
| 336 |
|
|
| 472 |
|
|
| (136 | ) |
|
| (28.8 | %) |
| 2,609 |
|
|
| 325 |
|
|
| 2,284 |
|
|
| 100.0 | % |
Operating |
| 10,220 |
|
|
| 10,301 |
|
|
| (81 | ) |
|
| (0.8 | %) |
| 10,745 |
|
|
| 10,386 |
|
|
| 359 |
|
|
| 3.5 | % |
Other |
| 1,264 |
|
|
| 1,124 |
|
|
| 140 |
|
|
| 12.5 | % |
| 1,526 |
|
|
| 1,099 |
|
|
| 427 |
|
|
| 38.9 | % |
Total |
| 11,820 |
|
|
| 11,897 |
|
|
| (77 | ) |
|
| (0.6 | %) |
| 14,880 |
|
|
| 11,810 |
|
|
| 3,070 |
|
|
| 26.0 | % |
Proportionate property net operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Development and Redevelopment |
| (213 | ) |
|
| (216 | ) |
|
| 3 |
|
|
| (1.4 | %) |
| 2,082 |
|
|
| (202 | ) |
|
| 2,284 |
|
|
| (100.0 | %) |
Operating |
| 24,471 |
|
|
| 20,825 |
|
|
| 3,646 |
|
|
| 17.5 | % |
| 26,977 |
|
|
| 25,080 |
|
|
| 1,897 |
|
|
| 7.6 | % |
Other |
| 2,977 |
|
|
| 2,335 |
|
|
| 642 |
|
|
| 27.5 | % |
| 2,016 |
|
|
| 2,367 |
|
|
| (351 | ) |
|
| (14.8 | %) |
Total | $ | 27,235 |
|
| $ | 22,944 |
|
| $ | 4,291 |
|
|
| 18.7 | % | $ | 31,075 |
|
| $ | 27,245 |
|
| $ | 3,830 |
|
|
| 14.1 | % |
32
For the three months ended September 30, 2022,2023, compared to the same period in 2021:2022:
The results of our segments for the nine months ended September 30, 20222023 and 2021,2022, as presented below, are based on segment classifications as of September 30, 2022:2023:
| Nine Months Ended September 30, |
|
| Historical Change |
| Nine Months Ended |
|
|
|
| ||||||||||||||||||||
(in thousands) | 2022 |
|
| 2021 |
|
| $ |
|
| % |
| 2023 |
|
| 2022 |
|
| $ Change |
|
| % Change |
| ||||||||
Rental and other property revenues, before utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Development and Redevelopment | $ | 204 |
|
| $ | 2,006 |
|
|
| (1,802 | ) |
|
| (89.8 | %) | $ | 10,539 |
|
| $ | 204 |
|
| $ | 10,335 |
|
|
| 100.0 | % |
Operating |
| 100,052 |
|
|
| 90,176 |
|
|
| 9,876 |
|
|
| 11.0 | % |
| 111,404 |
|
|
| 102,206 |
|
|
| 9,198 |
|
|
| 9.0 | % |
Other |
| 13,619 |
|
|
| 9,783 |
|
|
| 3,836 |
|
|
| 39.2 | % |
| 10,664 |
|
|
| 11,466 |
|
|
| (802 | ) |
|
| (7.0 | %) |
Total |
| 113,875 |
|
|
| 101,965 |
|
|
| 11,910 |
|
|
| 11.7 | % |
| 132,607 |
|
|
| 113,876 |
|
|
| 18,731 |
|
|
| 16.4 | % |
Property operating expenses, net of utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Development and Redevelopment |
| 908 |
|
|
| 1,737 |
|
|
| (829 | ) |
|
| (47.7 | %) |
| 7,326 |
|
|
| 901 |
|
|
| 6,425 |
|
|
| 100.0 | % |
Operating |
| 30,916 |
|
|
| 30,461 |
|
|
| 455 |
|
|
| 1.5 | % |
| 33,426 |
|
|
| 31,345 |
|
|
| 2,081 |
|
|
| 6.6 | % |
Other |
| 4,085 |
|
|
| 3,251 |
|
|
| 834 |
|
|
| 25.7 | % |
| 4,237 |
|
|
| 3,656 |
|
|
| 581 |
|
|
| 15.9 | % |
Total |
| 35,909 |
|
|
| 35,449 |
|
|
| 460 |
|
|
| 1.3 | % |
| 44,989 |
|
|
| 35,902 |
|
|
| 9,087 |
|
|
| 25.3 | % |
Proportionate property net operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Development and Redevelopment |
| (704 | ) |
|
| 269 |
|
|
| (973 | ) |
|
| (100.0 | %) |
| 3,213 |
|
|
| (697 | ) |
|
| 3,910 |
|
|
| (100.0 | %) |
Operating |
| 69,136 |
|
|
| 59,715 |
|
|
| 9,421 |
|
|
| 15.8 | % |
| 77,978 |
|
|
| 70,861 |
|
|
| 7,117 |
|
|
| 10.0 | % |
Other |
| 9,534 |
|
|
| 6,532 |
|
|
| 3,002 |
|
|
| 46.0 | % |
| 6,427 |
|
|
| 7,810 |
|
|
| (1,383 | ) |
|
| (17.7 | %) |
Total | $ | 77,966 |
|
| $ | 66,516 |
|
| $ | 11,450 |
|
|
| 17.2 | % | $ | 87,618 |
|
| $ | 77,974 |
|
| $ | 9,644 |
|
|
| 12.4 | % |
For the nine months ended September 30, 2022,2023, compared to the same period in 2021:2022:
35
Non-Segment Real Estate Operations
Operating income amounts not attributed to our segments include property management costs, casualty losses, and, if applicable, the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our segments for purposes of evaluating segment performance.
Depreciation and Amortization
For the three and nine months ended September 30, 2022, depreciation and amortization expense increased by $63.7 million, or 100%, and $80.4 million, or 100%, respectively, when2023, compared to the same periods in 2021,2022, Depreciation and amortization decreased by $67.6 million, or 79.2%, and $92.3 million, or 64.4%, respectively, due primarily due to accelerated depreciation recognized relating to the leasedisposition of three properties and the termination transaction inof leases of four properties and related relinquishment of the amount of $69.9 million and $85.7 million forassociated leasehold improvements during the three and nine monthsyear ended September 30, 2022, respectively.December 31, 2022.
General and Administrative Expenses
For the three months ended September 30, 2022, general and administrative expenses increased by $1.9 million, or 21.9% compared to the three months ended September 30, 2021. For the nine months ended September 30, 2022, general and administrative expenses increased by $6.7 million, or 29.6%2023, compared to the nine months ended September 30, 2021. same periods in 2022, General and administrative expenses incurred decreased by $2.6 million, or 24.2%, and $4.8 million, or 16.3%, respectively, due primarily to a decrease in expenses for consulting services per the Separation Agreement with AIR, which concluded at December 31, 2022.
33
Interest Income
For the three and nine months ended September 30, 2021 were prior2023, compared to the full build outsame periods in 2022, interest income increased by $1.6 million, or 100.0%, and $5.0 million, or 100.0%, respectively, due primarily to increased interest earned on greater amounts of our platform and are not representative of what we believe our anticipated expenses will be going forward. Additionally, for three and nine months ended September 30, 2022 and 2021, general and administrative expenses included $1.7 million and $4.6 million of expenses, respectively, to be reimbursed to AIR, per agreement upon separation, for consulting services with respect to strategic growth, direction, and advice. This agreement will concludeinvested cash at higher rates in the current year end.versus the prior year.
Interest Expense
For the three and nine months ended September 30, 2022,2023, compared to the same periods in 2021,2022, interest expense decreased by $3.0$1.5 million, or 23.4%15.1%, and increased by $27.9$38.2 million, or 73.4%58.0%, respectively. The quarterly decrease of $3.0 million wasrespectively, due primarily to repayment and refinancing activity. The year to date increase of $27.9 million was due primarily to spread maintenance costs related tothe prepayment of the Notes Payablenotes payable due to AIR and other property debt, partially offset by an increase related to the refinancingplacement of certain property debt andduring the payoff of a construction loan.year ended December 31, 2022.
Mezzanine Investment Income (Loss), Net
On November 26, 2019, Aimco Predecessor made a five-year, $275.0 million mezzanine loan to the partnership owning the “Parkmerced Apartments” located in southwest San Francisco (the “Mezzanine Investment”). The loan bears interest at a 10% annual rate, accruing if not paid from property operations. Ownership of the subsidiaries that originated and hold the mezzanine loan was retained by AIR following the Separation. The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, once required third-party consents to transfer are received. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments on the mezzanine loan to us.
As of September 30, 2022 and December 31, 2021, the total receivable, including accrued and unpaid interest, was $362.8 million and $337.8 million, respectively. DuringFor the three and nine months ended September 30, 2023, compared to the same periods in 2022, we recognized $8.4Mezzanine Investment income decreased by $9.2 million, or 100%, and $25.0$26.0 million or 100.0%, respectively, due primarily to our cessation of income in connection withrecognition after the mezzanine loan, compared to $7.6 million and $22.7 millionnon-cash impairment recorded during the three and nine monthsyear ended September 30, 2021, respectively.
The loan is subject to certain risks, including, but not limited to, those resulting from the lingering disruption due to the COVID-19 pandemic and associated response, and any similar events that might occur in the future, which may result in all or a portion of the loan not being repaid. In the event we determine that a portion of the related Mezzanine Investment is not recoverable, we will recognize an impairment.December 31, 2022.
Realized and Unrealized Gains (Losses) on Interest Rate Options
We are required to adjust our interest rate options to fair value on a quarterly basis. As a result of the mark-to-market adjustments, we recorded unrealized losses of $0.5 million and unrealized gains of $0.1 million, respectively, for the three and nine months ended September 30, 2023, compared to unrealized gains of $7.5 million and $38.3 million, respectively, duringfor the three and nine months ended September 30, 2022, compared to unrealized2022. In addition, we recorded realized gains of $2.2$1.5 million and $10.6$3.2 million, duringrespectively, for the three and nine months ended September 30, 2021, respectively. In addition, we recorded2023, compared to realized gains of $1.7 million and $9.7 million, duringrespectively, for the three and nine months ended September 30, 2022.
36
Realized and Unrealized Gains (Losses) on Equity Investments
In June 2022, 22% of our original investment in IQHQ was redeemed for $16.5 million and we recognized a realized gain of $5.7 million. Our remaining investment in IQHQ with a cost basis of $39.2 million was valued at an estimated fair market value of $59.7 million, and a $20.5 million unrealized gain was recognized.at the same per share value as the cash redemption.
We measure our investments in stock based on market prices at period end and our investments in property technology funds at NAV as a practical expedient. As a result of changes in NAV,the values of these investments, we recorded unrealized losses of $1.1 million and unrealized gains of $0.2 million, respectively, for the three and nine months ended September 30, 2023, compared to unrealized losses of $2.2 million and $6.0 million, respectively, duringfor the three and nine months ended September 30, 2022.
During the three and nine months ended September 30, 2022, we recognized realized and unrealized gains on our investment in IQHQ totaling $0.0 million and $26.2 million, respectively, resulting from a partial redemption of our investment during June 2022.
Gain on Dispositions of Real Estate
During the three months ended September 30, 2023, we had no gain on dispositions compared to unrealizeda gain of $75.5 million for the three months ended September 30, 2022 related to the sale of two apartment communities.
During the nine months ended September 30, 2023, we recognized a gain on disposition of $1.9 million for the contribution of real estate to an unconsolidated joint venture compared to gains of $1.2$170.0 million and $2.1 million duringfor the nine months ended September 30, 2022 related to the sale of three apartment communities.
Lease Modification Income
During the three and nine months ended September 30, 2021.
Gains on Dispositions of Real Estate
In July and August 2022, we sold our Cedar Rim and 2900 on First properties located in Seattle, Washington, for a total gross sales price of $122.0recognized $1.6 million and recognized gains from the sales$207.0 million, respectively, of $75.5 million.
In May 2022, we sold our Pathfinder Village property located in Fremont, California, for a gross sales price of $127.0 million and recognized a gain from the sale of $94.6 million.
Lease Modification Income
In June 2022, we as lessee and AIR as lessor, entered into a lease termination agreement pursuant to which AIR paid us a termination payment on September 1, 2022. Upon receipt of this payment, the leases with respect to four properties were terminated, and we relinquished control of the associated leasehold improvements and underlying land of these four properties. The total lease modification income recognizedrelated to the agreement entered into with AIR for the nine months ended September 30, 2022 was $207.0 million.termination of the leases of four properties.
Other Income (Expense), Net
Other income (expense), net, includes costs associated with our risk management activities, partnership administration expenses, valuation changes associated with equity investments, fee income, and certain non-recurring items. Other income (expense), net, forFor the three months ended September 30, 2022 decreased by $0.8 million, or 100.0%,2023, compared to the three months ended September 30, 2021. Other income (expense),same period in 2022, other expenses, net forincreased by $0.3 million, or 19.9%. For the nine months ended September 30, 2023, compared to the same period in 2022, decreasedother expenses, net increased by $4.7$2.3 million, or 100.0% compared53.1%, primarily due to 2021.the incremental expense associated with pre-existing long-term incentive partnership units recorded upon the resignation of one of our board members during the first quarter of 2023.
34
Income Tax Benefit (Expense)
Certain aspects of our operations, including our development and redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay Drive.
Our income tax benefit calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in incomeIncome tax benefit (expense) in our Condensed Consolidated Statements of Operations.Operations.
Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT. For the three and nine months ended September 30, 2022, we had consolidated net loss and income subject to tax of $75.6 million and $91.0 million, respectively. For the three and nine months ended September 30, 2021,2023, we had consolidated net losses subject to tax of $7.9$5.0 million and $26.4$12.4 million, respectively.respectively, compared to consolidated net losses of $75.6 million and net income of $91.0 million subject to tax, respectively, for the same periods in 2022.
For the three months ended September 30, 2022,2023, we recognized an income tax benefit of $6.2 million, compared to an income tax benefit of $17.6 million compared to a $2.0 million benefit duringfor the same period in 2021.2022. The change is due primarily due to the GAAP income taxestax benefit associated with the lease modification depreciation expense recognizedtaken related to the termination of four leases of four properties in the third quarter of 2022.2022, as well as a change in estimate associated with finalizing the 2022 tax return in the third quarter of 2023.
For the nine months ended September 30, 2022,2023, we recognized an income tax benefit of $10.8 million, compared to income tax expense of $24.3 million compared to a $9.9 million benefit duringfor the same period in 2021.2022. The change is primarily due to the GAAP income taxestax benefit associated with the net lease modification income recognized in 2022.
37
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the critical accounting policies that involve our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements relate to thecapitalized costs, impairment of long-lived assets, acquisitions, and capitalized costs.the Mezzanine Investment.
Our critical accounting policies are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2021.2022. There have been no significant changes in our critical accounting policies from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.
35
Non-GAAP Measures
We use EBITDAre and Adjusted EBITDAre in managing our business and in evaluating our financial condition and operating performance. These key financial indicators are non-GAAP measures and are defined and described below. We provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance with GAAP.
Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")
EBITDAre and Adjusted EBITDAre are non-GAAP measures, which we believe are useful to investors, creditors, and rating agencies as a supplemental measure of our ability to incur and service debt because they are recognized measures of performance by the real estate industry and allow for comparison of our credit strength to different companies. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of liquidity. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is comparable with that of other real estate investment trusts. Nareit defines EBITDAre as net income computed in accordance with GAAP, before interest expense, income taxes, depreciation, and amortization expense, further adjusted for:
EBITDAre is defined by Nareit and provides for an additional performance measure independent of capital structure for greater comparability between real estate investment trusts. We define Adjusted EBITDAre as EBITDAre adjusted to exclude the effect of net income(income) loss attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, and realized and unrealized gain(gains) losses on interest rate options, which we believe 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. Additionally, we exclude interest incomethe (income) loss recognized on our Mezzanine Investment that was accrued but not paid.Investment.
38
The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the three and nine months ended September 30, 20222023 and 2021,2022, is as follows (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
Net income (loss) |
| $ | 34,173 |
|
| $ | (4,846 | ) |
| $ | 297,496 |
|
| $ | (3,798 | ) |
| $ | 1,674 |
|
| $ | 34,173 |
|
| $ | (3,952 | ) |
| $ | 297,496 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest expense |
|
| 9,719 |
|
|
| 12,680 |
|
|
| 65,865 |
|
|
| 37,995 |
|
|
| 8,252 |
|
|
| 9,719 |
|
|
| 27,633 |
|
|
| 65,865 |
|
Income tax (benefit) expense |
|
| (17,563 | ) |
|
| (2,021 | ) |
|
| 24,338 |
|
|
| (9,881 | ) |
|
| (6,210 | ) |
|
| (17,563 | ) |
|
| (10,823 | ) |
|
| 24,338 |
|
Gains on dispositions of real estate |
|
| (75,539 | ) |
|
| — |
|
|
| (170,004 | ) |
|
| — |
| ||||||||||||||||
Gain on dispositions of real estate |
|
| — |
|
|
| (75,539 | ) |
|
| (1,878 | ) |
|
| (170,004 | ) | ||||||||||||||||
Lease modification income |
|
| (1,577 | ) |
|
| — |
|
|
| (206,963 | ) |
|
| — |
|
|
| — |
|
|
| (1,577 | ) |
|
| — |
|
|
| (206,963 | ) |
Depreciation and amortization |
|
| 85,438 |
|
|
| 21,709 |
|
|
| 143,420 |
|
|
| 63,065 |
|
|
| 17,804 |
|
|
| 85,438 |
|
|
| 51,106 |
|
|
| 143,420 |
|
Adjustment related to EBITDAre of unconsolidated partnerships |
|
| 253 |
|
|
| 225 |
|
|
| 768 |
|
|
| 655 |
|
|
| 25 |
|
|
| 253 |
|
|
| 589 |
|
|
| 768 |
|
EBITDAre |
| $ | 34,904 |
|
| $ | 27,747 |
|
| $ | 154,920 |
|
| $ | 88,036 |
|
| $ | 21,545 |
|
| $ | 34,904 |
|
| $ | 62,675 |
|
| $ | 154,920 |
|
Net (income) loss attributable to redeemable noncontrolling |
|
| (2,907 | ) |
|
| (127 | ) |
|
| (5,446 | ) |
|
| (41 | ) |
|
| (3,610 | ) |
|
| (2,907 | ) |
|
| (10,460 | ) |
|
| (5,446 | ) |
Net (income) loss attributable to noncontrolling interests |
|
| (240 | ) |
|
| (296 | ) |
|
| (585 | ) |
|
| (862 | ) |
|
| (447 | ) |
|
| (240 | ) |
|
| (1,060 | ) |
|
| (585 | ) |
EBITDAre adjustments attributable to noncontrolling interests |
|
| (93 | ) |
|
| 177 |
|
|
| (325 | ) |
|
| (54 | ) |
|
| 22 |
|
|
| (93 | ) |
|
| 10 |
|
|
| (325 | ) |
Mezzanine investment income, net (1) |
|
| (8,423 | ) |
|
| (7,636 | ) |
|
| (24,990 | ) |
|
| (22,654 | ) | ||||||||||||||||
Mezzanine investment (income) loss, net |
|
| 757 |
|
|
| (8,423 | ) |
|
| 1,013 |
|
|
| (24,990 | ) | ||||||||||||||||
Realized and unrealized (gains) losses on interest rate options |
|
| (9,209 | ) |
|
| (2,231 | ) |
|
| (48,005 | ) |
|
| (10,608 | ) |
|
| (955 | ) |
|
| (9,209 | ) |
|
| (3,280 | ) |
|
| (48,005 | ) |
Unrealized (gains) losses on IQHQ investment |
|
| — |
|
|
| — |
|
|
| (20,501 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (20,501 | ) |
Adjusted EBITDAre |
| $ | 14,032 |
|
| $ | 17,634 |
|
| $ | 55,068 |
|
| $ | 53,817 |
|
| $ | 17,312 |
|
| $ | 14,032 |
|
| $ | 48,898 |
|
| $ | 55,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
(1) Includes the portion of accrued and unpaid income recognized during the year |
|
|
|
|
|
|
36
Liquidity and Capital Resources
Liquidity
Liquidity is the ability to meet present and future financial obligations. Our primary sources of liquidity are cash flows from operations and borrowing capacity under our loan agreements.
As of September 30, 2022,2023, our available liquidity was $375.4$320.2 million, which consisted of:
We have commitments for, and expect to spend, approximately $152.1 million on development and redevelopment projects underway, with $211.2 million undrawnAs of September 30, 2023, we had sufficient capacity on our construction loans asto cover our commitments of September 30, 2022.approximately $120.2 million. The initial allocationallocations to our Edgewater joint venture and DC joint ventures have remaining unfunded commitments of $14.2$3.1 million. We also have unfunded commitments in the amount of $2.7$2.1 million related to four investments in entities that develop technology forrelated to the real estate industry. Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, and future investments. Additionally, our third-party property managers may enter into commitments on our behalf to purchase goods and services in connection with the operation of our apartment communities and our office building. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to historical levels.
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 the next twelve months.
In the event that our cash and cash equivalents, revolving secured credit facility, and cash provided by operating activities are not sufficient to cover our liquidity needs, we have the means to generate additional liquidity, such as from additional property financing activity and proceeds from apartment community sales. We expect to meet our long-term liquidity requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily through property
39
financing activity, cash generated from operations, and the recycling of our equity. Our revolving secured credit facility matures in December 2023,2024, prior to consideration of its two one-year extension options.option.
Leverage and Capital Resources
The availability and cost of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing. Any adverse changes in the lending environment could negatively affect our liquidity. We have taken steps to mitigate a portion of our repricingshort-term refunding risk. However, if property or development financing options become unavailable, we may consider alternative sources of liquidity, such as reductions in capital spending or apartment community dispositions.
As of September 30, 2022, 81%2023, approximately 88% of our outstanding non-recourse property debt had a fixed interest rate and 19%approximately 12% had a variable interest rate. TheIn addition, the weighted-average interestcontractual rate on our non-recourse debt was 4.86%,5.0% and 4.7% inclusive of interest rate caps, and the average remaining term to maturity was 7.26.8 years. At quarter end, Aimco had interest rate cap protection in place for 100%September 30, 2023, all of its variable interest rate debt. Aimco'sour outstanding non-recourse property debt was either fixed or hedged. Our use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on forecasted interest rates.
While our primary source of leverage is property-level debt and construction loans, we also have a secured $150.0 million credit facility with a syndicate of financial institutions, and construction loans.institutions. As of September 30, 2022,2023, we had no outstanding borrowings under our revolving secured credit facility. Under our revolving secured credit facility, we have agreed to maintain a fixed charge coverage ratio of 1.25X minimum tangible net worth of $625.0 million, and maximum leverage of 60.0% as defined in the credit agreement. We are currently in compliance and expect to remain in compliance with these covenants during the next twelve months.
Changes in Cash, Cash Equivalents, and Restricted Cash
The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing and financing activities, which are presented in our condensed consolidated statementsCondensed Consolidated Statements of cash flowsCash Flows in Item 1 of this report.
37
Operating Activities
For the nine months ended September 30, 2022,2023, net cash provided by operating activities was $228.3$42.6 million. Our operating cash flow is primarily affected by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment communities and general and administrative costs. Cash provided by operating activities for the nine months ended September 30, 2022, increased2023, decreased by $206.2$185.7 million compared to the same period ended in 20212022, due primarily to lower net cash received from lease incentive, lower net operating income associated with apartment communities sold in the latter part of 2022, and timing of balance sheet position changes.changes, partially offset by decreased interest payments.
Investing Activities
For the nine months ended September 30, 2022, our2023, net cash used in investing activities of $83.0$264.1 million consisted primarily of capital expenditures of $184.0$212.2 million and $130.1 millionthe purchase of a short-term treasury bill for $53.8 million. Net cash used to acquire undeveloped land parcels in Fort Lauderdale, Florida, offset by $243.1 million of proceeds received from the disposition of our properties located in Fremont, California and Seattle, Washington.
Total capital additions were $184.0 million and $134.9 million duringinvesting activities for the nine months ended September 30, 2023, increased by $181.2 million compared to the same period ended in 2022, due primarily to increased capital expenditures and 2021, respectively,the purchase of a short-term treasury bill offset by decreased funding for net real estate and were primarily used for construction costs on our development and redevelopment properties.investment transactions. We have generally funded capital additions with available cash and cash provided by operating activities and construction loans.
We exclude the amounts of capital spending related to commercial spaces and to apartment communities sold or classified as held for sale at the end of the period from the foregoing measures. We have also excluded from these measures indirect capitalized costs, which are not yet allocated to communities with capital additions, and their related capital spending categories.
Financing Activities
For the nine months ended September 30, 2022, our2023, net cash used inprovided by financing activities of $164.4$107.7 million consisted primarily of proceeds from construction loans, the $534.1 million payoffsale of a participation in the Notes Payable to AIR, $284.6 million to retireMezzanine Investment, and the monetization of interest rate options, partially offset by repayments on non-recourse property debt and the $138.4 million paydown
40
of construction loans, offset by $674.7 million in cash raised from the issuance of new property debt and a $102.0 million redeemable noncontrolling interest preferred equity contribution from an institutional partner.
common stock repurchases. Net cash provided by financing activities for the nine months ended September 30, 2021 was $158.62023, increased by $272.1 million compared to the same period ended in 2022, due primarily due to $142.3 million ofprior year repayment and borrowing activity, offset by current year activity, including increased proceeds received from construction loans, undertaken.the sale of a participation in the Mezzanine Investment and the monetization of interest rate options.
Future Capital Needs
We expect to fund any future acquisitions, development and redevelopment, and other capital spending principally with operating cash flows, short-term borrowings, and debt and equity financing. Our near-term business plan does not contemplate the issuance of equity. We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for the next twelve months.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our chief market risks are refunding risk, that is the availability of property debt or other cash sources to refund maturing property debt, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads. We primarily use long-dated, fixed-rate, non-recourse property debt on stabilized properties in order to avoid the refunding and repricing risks of short-term borrowings.
We use working capital primarily to fund short-term uses. We make limited use of derivative financial instruments primarily to mitigate repricingas a risk management tool and we do not use them for trading or other speculative purposes.
As of September 30, 2022,2023, on a consolidated basis, we had approximately $91.9$104.2 million of variable-rate property-level debt outstanding in addition to threeand $218.1 million of variable rate construction loans that totaled $86.7 million. We estimate that a change in variableloans. The impact of rising interest rates of 100 basis points with constant credit risk spreads would reduce or increase interest expense by approximately $1.8 million. This risk is mitigated by Aimco'sour use of interest rate caps, which as of September 30, 2022,2023, provided protection for 100% of itsour variable interest rate debt. Aimco'sOur use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and Aimco'sour view on forecasted interest rates. We estimate that an increase or decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would have no impact on interest expense on an annual basis.
As of September 30, 2022,2023, we held interest rate swaps and caps with $1.7 billion$627.4 million notional value that provide protection through June 2025.value. These instruments were acquired for $15.7$5.8 million and are currentlyat September 30, 2023, were valued at $61.3$9.1 million.
As of September 30, 2023, we had $115.9 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.
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ITEM 4. CONTROLS AND PROCEDURES
Aimco
Disclosure Controls and Procedures
Aimco’s management, with the participation of Aimco’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Aimco’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, Aimco’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, Aimco’s disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
ThereDuring the quarter ended September 30, 2023, we implemented the first phase of a new enterprise resource planning ("ERP") system, which replaced a legacy system where a significant portion of our transactions were originated, processed, or recorded. We updated our internal control over financial reporting, as necessary, to accommodate related changes in our financial management processes resulting from this implementation. While we believe that this new system will enhance our internal control over financial reporting, there are inherent risks in implementing a new ERP system. Accordingly, we will continue to evaluate the design and operating effectiveness of these controls.
Except for this system implementation, there has been no changeother changes in Aimco’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2022,2023, that has materially affected, or is reasonably likely to materially affect, Aimco’s internal control over financial reporting.
Aimco Operating Partnership
Disclosure Controls and Procedures
Aimco Operating Partnership’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of both Aimco and Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, has evaluated the effectiveness of Aimco Operating Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer of Aimco OP GP, LLC have concluded that, as of the end of such period, Aimco Operating Partnership’s disclosure controls and procedures are effective.
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Changes in Internal Control Over Financial Reporting
ThereDuring the quarter ended September 30, 2023, we implemented the first phase of a new ERP system, which replaced a legacy system where a significant portion of our transactions were originated, processed, or recorded. We updated our internal control over financial reporting, as necessary, to accommodate related changes in our financial management processes resulting from this implementation. While we believe that this new system will enhance our internal control over financial reporting, there are inherent risks in implementing a new ERP system. Accordingly, we will continue to evaluate the design and operating effectiveness of these controls.
Except for this system implementation, there has been no changeother changes in Aimco Operating Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2022,2023, that has materially affected, or is reasonably likely to materially affect, Aimco Operating Partnership’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
As of the date of this report, there have been no material changes from the risk factors in Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2021, except as discussed2022, other than the new risk factor identified below. We may disclose changes to such factors or disclose additional factors from time to time in our filings with the SEC.
Activist ShareholdersOur implementation of a new enterprise resource planning ("ERP") system may adversely affect our business, results of operations, and financial condition or the effectiveness of our internal control over financial reporting.
OnWe are engaged in a phased implementation of a new ERP system, which is expected to continue into 2024. During the quarter ended September 8, 2022, Land & Buildings Capital Growth Fund, LP, nominated three individuals30, 2023, we implemented the first phase, which replaced a legacy system where a significant portion of our transactions were originated, processed, or recorded. The ERP system is designed to stand for election as directors at the Company’s 2022 annual meeting of stockholders in oppositionaccurately maintain our financial records, enhance operational functionality and provide timely information to our management team related to the three nominees recommended byoperation of our business. The implementation of a new ERP system has required, and will continue to require, the Board. On September 30, 2022, Land & Buildings withdrew oneinvestment of its nominees.
significant financial and human capital resources. While we strivehave invested, and continue to maintain constructive, ongoing communications with allinvest, significant resources in planning, project management, consulting, and training, it is possible that significant implementation, operational, and functionality issues may arise during the course of implementing and utilizing the ERP system, and it is further possible that we may experience significant delays, increased costs, and other difficulties that are not presently contemplated. Any significant disruptions, delays, deficiencies, or errors in the design, implementation, and utilization of the ERP system could adversely affect our operations, prevent us from accurately and timely reporting our financial results, and negatively impact our business, results of operations and financial condition. Additionally, if we do not effectively implement and utilize the ERP system as planned or the system does not operate as intended, the effectiveness of our stockholders, and welcome their views and opinions with the goal of enhancing value for all stockholders, activist stockholders may, from time to time, engage in proxy solicitationsinternal control over financial reporting could be adversely affected or advance stockholder proposals, or otherwise attempt to effect changes and assert influence on the Board and management. Responding to proposals by activist stockholders may and responding to a proxy contest instituted by stockholders would, require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated costs and require significant time and attention by the Board and management, diverting their attention from the pursuit of our business strategy. Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or changes to the composition of the Board or senior management team arising from proposals by activist stockholders or a proxy contestadequately assess its effectiveness could lead to the perception of a change in the direction of our business or instability which may be exploited by our competitors, result in the loss of potential business opportunities, and make it more difficult to pursue our strategic initiatives or attract and retain qualified personnel and business partners, any of which could have an adverse effect, which may be material, on our business and operating results and could result in volatility in the trading prices of our common stock. We may choose to initiate, or may become subject to, litigation as a result of proposals by activist stockholders or proxy contests or matters relating thereto, which would serve as a further distraction to the Board and management and could require us to incur significant additional costs.delayed.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Aimco
Unregistered Sales of Equity Securities
From time to time, Aimcowe may issue shares of common stockour Common Stock in exchange for OP Units, defined under the Aimco Operating Partnership heading below. Such shares are issued based on an exchange ratio of one share for each common OP Unit. AimcoWe may also issue shares of common stockour Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the three months ended September 30, 2022, Aimco issued approximately 26,0002023, no shares of common stockCommon Stock were issued in exchange for OP Units in thesesuch transactions. Such shares were issued in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.
Repurchases of Equity Securities
Aimco’sThe following table summarizes Aimco's share repurchase for the three months ended September 30, 2023.
Fiscal Period |
| Total Number of Shares Repurchased |
|
| Weighted Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
| Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs (1) |
| ||||
July 1 - 31, 2023 |
|
| 131,342 |
|
| $ | 8.51 |
|
|
| 131,342 |
|
|
| 9,148,546 |
|
August 1 - 31, 2023 |
|
| 500,084 |
|
|
| 7.99 |
|
|
| 500,084 |
|
|
| 8,648,462 |
|
September 1 - 30, 2023 |
|
| 1,112,289 |
|
|
| 7.19 |
|
|
| 1,112,289 |
|
|
| 7,536,173 |
|
Total |
|
| 1,743,715 |
|
| $ | 7.52 |
|
|
| 1,743,715 |
|
|
|
|
(1)Our Board of Directors has, from time to time, authorized Aimcous to repurchase shares of itsour outstanding common stock. As of September 30, 2022, Aimco was authorized to repurchase up to 14.9 million shares of Aimco's outstanding common stock, subject
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to certain customary limitations, whichCommon Stock. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions. This authorization has no expiration date.
DuringSubsequent to quarter end, the three months ended SeptemberBoard of Directors increased the number of shares authorized for repurchase to 30 2022, we repurchased 73,444 sharesmillion, doubling the size of Aimco Class A common stock at a weighted-average price of $7.16 per share. During the nine months ended September 30, 2022, we repurchased 815,608 shares of our common stock at a weighted-average price of $6.06 per share.previous authorization.
Aimco Operating Partnership
There is no public market for OP Units, and we have no intention of listing OP Units on any securities exchange. In addition, Aimco Operating Partnership’s Partnership Agreement restricts the transferability of OP Units.
On November 3, 2023, there were 157,757,324 OP Units and equivalents outstanding (of which 145,759,672 were held by us), that were held by 2,029 unitholders of record.
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Unregistered Sales of Equity Securities
Aimco Operating Partnership did not issue any unregistered OP Units during the three months ended September 30, 2022.2023.
Repurchases of Equity Securities
Aimco Operating Partnership’s Partnership Agreement generally provides that after holding common OP Units for one year, limited partners other than Aimco have the right to redeem their common OP Units for cash or, at our election, shares of Aimcoour Common Stock on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended September 30, 2022, approximately 26,0002023, no common OP Units were redeemed in exchange for shares of Common Stock. During the same period, approximately 12,000 common OP Units were redeemedThe following table summarizes repurchases, or redemptions in exchange for cash, of the Aimco Operating Partnership’s equity securities for the three months ended September 30, 2023.
Fiscal Period |
| Total Number of Units Repurchased |
|
| Weighted Average Price Paid per Unit |
|
| Total Number of Units Purchased as Part of Publicly Announced Plans or Programs |
| Maximum Number of Units That May Yet Be Purchased Under Plans or Programs (1) | ||
July 1 - 31, 2023 |
|
| — |
|
| $ | — |
|
| N/A |
| N/A |
August 1 - 31, 2023 |
|
| — |
|
|
| — |
|
| N/A |
| N/A |
September 1 - 30, 2023 |
|
| 10,266 |
|
|
| 8.59 |
|
| N/A |
| N/A |
Total |
|
| 10,266 |
|
| $ | 8.59 |
|
|
|
|
|
(1)The terms of the Aimco Operating Partnership’s Partnership Agreement do not provide for a maximum number of units that may be repurchased, and other than the express terms of its Partnership Agreement, the Aimco Operating Partnership has no publicly announced plans or programs of repurchase. However, for Aimco to repurchase shares of its Common Stock, the Aimco Operating Partnership must make a concurrent repurchase of its common partnership units held by Aimco at an averagea price per unit of $6.57.that is equal to the price per share Aimco pays for its Common Stock.
Dividend and Distribution Payments
As a REIT, Aimco is required to distribute annually to holders of shares of its Common Stock at least 90.0% of its “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income. Aimco’s Board of Directors determines and declares itsAimco's dividends. In making a dividend determination, Aimco’s Board of Directors considers a variety of factors, including REIT distribution requirements; current market conditions; liquidity needs; and other uses of cash, such as deleveraging and accretive investment activities. On September 30, 2022, we paid a special cash dividend of $0.02 per share to shareholders of record on September 14, 2022.
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ITEM 6. EXHIBITS
The following exhibits are filed with this report:
EXHIBIT NO. | DESCRIPTION | |
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EXHIBIT NO. | DESCRIPTION | |
101 | The following materials from Aimco’s and Aimco 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). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY | ||
By: | /s/ H. Lynn C. Stanfield | |
H. Lynn C. Stanfield | ||
Executive Vice President and Chief Financial Officer | ||
By: | /s/ Kellie E. Dreyer | |
Kellie E. Dreyer | ||
Senior Vice President and Chief Accounting Officer | ||
AIMCO OP L.P. | ||
By: | Aimco OP GP, LLC, its General Partner | |
By: | /s/ H. Lynn C. Stanfield | |
H. Lynn C. Stanfield | ||
Executive Vice President and Chief Financial Officer | ||
By: | /s/ Kellie E. Dreyer | |
Kellie E. Dreyer | ||
Senior Vice President and Chief Accounting Officer | ||
Date: November 7, 20226, 2023
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