ure

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 March 31, ~~2020~~2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-13232 (Apartment Investment and Management Company)

Commission File Number: ~~0-24497 (AIMCO Properties,~~0-056223 (Aimco OP L.P.)

Apartment Investment and Management Company

~~AIMCO Properties,~~Aimco OP L.P.

(Exact name of registrant as specified in its charter)

Maryland (Apartment Investment and Management Company)		84-1259577
Delaware ~~(AIMCO Properties,~~(Aimco OP L.P.)		~~84-1275621~~85-2460835
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

4582 South Ulster Street, Suite ~~1700~~1450
Denver, Colorado		80237
(Address of principal executive offices)		(Zip Code)

(303) ~~757-8101~~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 (Aimco 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 Properties,~~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 Properties,~~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 Properties,~~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 Properties,~~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).

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Apartment Investment and Management Company: Yes ☐ No ☒

~~AIMCO Properties,~~Aimco OP L.P.: Yes ☐ No ☒

The number of shares of Apartment Investment and Management Company Class A Common Stock outstanding as of May ~~6, 2020: 148,864,145~~13, 2021: 150,066,381

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EXPLANATORY NOTE

On December 15, 2020, Apartment Investment and Management Company (“Aimco” or “the Company”) completed the previously announced separation of its business into 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. AIMCO Properties, L.P. (“AIR Operating Partnership”) 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, “Aimco OP Units”) to holders of AIR Operating Partnership common limited partnership units and AIR Operating Partnership Class I High Performance partnership units as of the close of business on December 5, 2020. The transactions described in this paragraph are collectively referred to as the “Separation” and are governed by the terms of the Separation and Distribution Agreement (the “Separation Agreement”).

Notwithstanding the legal form of the Separation, for accounting and financial reporting purposes, Aimco is presented as being spun-off from AIR. This presentation is in accordance with generally accepted accounting principles in the United States and is due primarily to the relative significance of Aimco’s business, as measured in terms of revenue, net income, assets, and other relevant indicators, as compared to those indicators for AIR before the Separation. Therefore, Aimco is considered “spun” for accounting purposes and AIR is considered the divesting entity and treated as the accounting spinner, or accounting predecessor. A separate capital structure did not exist since the assets, liabilities and operations of Aimco prior to the Separation (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”) were spread across multiple legal entities. The historical financial statements of Aimco do not represent the financial position and results of operations of one legal entity, but rather a combination of entities under common control that have been “carved out” from Aimco Predecessor’s financial statements.

This filing combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, ~~2020,~~2021, of ~~Apartment Investment and Management Company, or~~ Aimco and ~~AIMCO Properties, L.P., or the~~ 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, ~~the~~ Aimco Operating Partnership, and their consolidated entities.

Aimco, a Maryland corporation, is a self-administered and self-managed real estate investment trust, or REIT. Aimco, through a wholly-owned ~~subsidiaries,~~subsidiary, is the general partner and directly is the special limited partner of ~~the~~ Aimco Operating Partnership. As of March 31, ~~2020,~~2021, Aimco owned approximately ~~93.4%~~93.3% of the legal interest in the common partnership units of ~~the~~ Aimco Operating Partnership and ~~94.8%~~94.9% of the economic interest in ~~the~~ Aimco Operating Partnership. The remaining ~~6.6%~~6.7% legal ~~interest and 5.2% economic~~ interest is owned by limited partners. As the sole general partner of ~~the~~ Aimco Operating Partnership, Aimco has exclusive control of ~~the~~ Aimco Operating Partnership’s day-to-day management.

~~The~~ 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 ~~the~~ Aimco Operating Partnership all proceeds from the offerings of its securities. In exchange for the contribution of such proceeds, Aimco receives additional interests in ~~the~~ 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).

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

•

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

•

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

•

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

We operate Aimco and ~~the~~ Aimco Operating Partnership as one ~~enterprise,~~enterprise; the management of Aimco directs the management and operations of ~~the~~ Aimco Operating ~~Partnership,~~Partnership; and ~~the members of the Board of Directors of~~ Aimco ~~are identical to those of the~~OP GP, LLC, Aimco Operating Partnership’s general ~~partner.~~partner, is member managed by Aimco.

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

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net cash provided by operating activities, borrowings under its revolving credit facility, the issuance of debt and equity securities, including additional partnership units, and proceeds received from the sale of ~~apartment communities.~~real estate.

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

To help investors understand the differences between Aimco and ~~the~~ Aimco Operating Partnership, this report provides: separate condensed consolidated financial statements for Aimco and ~~the~~ Aimco Operating Partnership; a single set of condensed consolidated notes to such financial statements that includes separate discussions of each entity’s 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.

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

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO ~~PROPERTIES,~~OP L.P.

TABLE OF CONTENTS

FORM 10-Q

		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Apartment Investment and Management Company:
	Condensed Consolidated Balance Sheets (Unaudited)	34
	Condensed Consolidated Statements of Operations ~~(Unaudited)~~	4
	~~Condensed Consolidated Statements of Comprehensive Income~~ (Unaudited)	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	~~AIMCO Properties,~~Aimco OP L.P.:
	Condensed Consolidated Balance Sheets (Unaudited)	8
	Condensed Consolidated Statements of Operations (Unaudited)	9
	Condensed Consolidated Statements of ~~Comprehensive Income (Unaudited)~~	10
	~~Condensed Consolidated Statements of~~ Partners’ Capital (Unaudited)	1110
	Condensed Consolidated Statements of Cash Flows (Unaudited)	1211
	Notes to the Condensed Consolidated Financial Statements of Apartment Investment and Management Company and ~~AIMCO Properties,~~Aimco OP L.P. (Unaudited)	1312
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2124
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4033
ITEM 4.	CONTROLS AND PROCEDURES	4033
	PART II. OTHER INFORMATION
ITEM 1A.	RISK FACTORS	4135
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4135
ITEM 6.	EXHIBITS	4336
Signatures		4438

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	March 31, 2020			December 31, 2019			March 31, 2021			December 31, 2020
ASSETS
Buildings and improvements	$	6,967,143		$	6,868,543		$	1,050,817		$	995,116
Land		1,869,465			1,869,048			506,968			505,153
Total real estate		8,836,608			8,737,591			1,557,785			1,500,269
Accumulated depreciation		(2,810,949	)		(2,718,284	)		(511,615	)		(495,010	)
Net real estate		6,025,659			6,019,307			1,046,170			1,005,259
Cash and cash equivalents		340,883			142,902			226,081			289,582
Restricted cash		33,933			34,800			9,224			9,153
Mezzanine investment		286,472			280,258			314,829			307,362
Other assets		361,298			351,472
Right-of-use lease assets								443,111			98,280
Other assets, net								178,475			130,856
Total assets	$	7,048,245		$	6,828,739		$	2,217,890		$	1,840,492

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	4,208,687		$	4,230,590		$	429,873		$	447,967
Revolving credit facility borrowings		593,845			275,000
Notes payable to AIR								534,127			534,127
Total indebtedness		4,802,532			4,505,590			964,000			982,094
Deferred tax liabilities								125,732			131,560
Lease liabilities								446,962			100,496
Accrued liabilities and other		349,099			360,574			95,733			62,988
Total liabilities		5,151,631			4,866,164			1,632,427			1,277,138

Redeemable preferred OP Units		96,449			97,064
Redeemable noncontrolling interests in consolidated real estate partnership		4,617			4,716
Redeemable noncontrolling interest in consolidated real estate partnership								4,111			4,263
Commitments and contingencies (Note 4)
Equity:
Common Stock, $0.01 par value, 510,587,500 shares authorized, 148,700,407 and 148,885,197 shares issued/outstanding at March 31, 2020 and December 31, 2019, respectively		1,487			1,489
Common Stock, $0.01 par value, 510,587,500 shares authorized, 149,208,479 and 149,036,263 shares issued/outstanding at March 31, 2021 and December 31, 2020, respectively								1,491			1,490
Additional paid-in capital		3,488,611			3,497,367			516,051			515,127
Accumulated other comprehensive income		4,139			4,195
Distributions in excess of earnings		(1,776,782	)		(1,722,402	)
Retained earnings (Accumulated deficit)								3,375			(16,839	)
Total Aimco equity		1,717,455			1,780,649			520,917			499,778
Noncontrolling interests in consolidated real estate partnerships		(3,409	)		(3,296	)		31,884			31,877
Common noncontrolling interests in Aimco Operating Partnership		81,502			83,442			28,551			27,436
Total equity		1,795,548			1,860,795			581,352			559,091
Total liabilities and equity	$	7,048,245		$	6,828,739		$	2,217,890		$	1,840,492

See notes to condensed consolidated financial statements.

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��

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended March 31,

2020

2019

REVENUES

Rental and other property revenues

$
224,552

$
230,235

OPERATING EXPENSES

Property operating expenses

75,480

78,959

Depreciation and amortization

100,476

93,565

General and administrative expenses

10,108

9,829

Investment management expenses

1,184

1,332

Other expenses, net

1,642

5,136

   Total operating expenses

188,890

188,821

Interest income

4,523

2,726

Interest expense

(41,336
)

(41,409
)
(Loss) gain on dispositions of real estate

(34
)

291,473

Mezzanine investment income, net

6,747

—

Income from unconsolidated real estate partnerships

182

72

   Income before income tax benefit (expense)

5,744

294,276

Income tax benefit (expense)

3,233

(2,981
)
   Net income

8,977

291,295

Noncontrolling interests:

      Net income attributable to noncontrolling interests in consolidated
         real estate partnerships

(18
)

(91
)
      Net income attributable to preferred noncontrolling interests in Aimco
         Operating Partnership

(1,869
)

(1,934
)
      Net income attributable to common noncontrolling interests in Aimco
         Operating Partnership

(368
)

(15,137
)
   Net income attributable to noncontrolling interests

(2,255
)

(17,162
)
      Net income attributable to Aimco

6,722

274,133

      Net income attributable to Aimco preferred stockholders

—

(2,148
)
      Net income attributable to participating securities

(43
)

(417
)
   Net income attributable to Aimco common stockholders

$
6,679

$
271,568

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

$
0.04

$
1.88

   Weighted average common shares outstanding – basic

148,518

144,232

   Weighted average common shares outstanding – diluted

148,786

144,445

~~See notes to condensed consolidated financial statements.~~

~~Table of Contents~~

~~APARTMENT INVESTMENT AND MANAGEMENT COMPANY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(In thousands)~~

~~(Unaudited)~~

Three Months Ended March 31,

2020

2019

Net income

$
8,977

$
291,295

Unrealized (losses) gains on available for sale debt securities

(60
)

61

Comprehensive income

8,917

291,356

Comprehensive income attributable to noncontrolling interests

(2,251
)

(17,166
)
Comprehensive income attributable to Aimco

$
6,666

$
274,190

	Three Months Ended March 31,
	2021			2020
REVENUES
Rental and other property revenues	$	39,804		$	38,309

OPERATING EXPENSES
Property operating expenses		16,942			15,349
Depreciation and amortization		20,717			19,347
General and administrative expenses		6,311			1,762
Total operating expenses		43,970			36,458

Interest expense		(12,677	)		(5,651	)
Mezzanine investment income, net		7,467			6,747
Unrealized gains on interest rate options		25,347			—
Other expenses, net		363			(415	)
Income before income tax benefit		16,334			2,532
Income tax benefit		5,100			2,023
Net income		21,434			4,555
Noncontrolling interests:
Net loss attributable to redeemable noncontrolling interest in consolidated real estate partnership		152			103
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships		(291	)		5
Net income attributable to common noncontrolling interests in Aimco Operating Partnership		(1,081	)		(236	)
Net income attributable to Aimco common stockholders	$	20,214		$	4,427

Net income attributable to Aimco per common share – basic	$	0.14		$	0.03
Net income attributable to Aimco per common share – diluted	$	0.14		$	0.03

Weighted average common shares outstanding – basic		148,914			148,549
Weighted average common shares outstanding – diluted		149,046			148,569

See notes to condensed consolidated financial statements.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

(In thousands)

(Unaudited)

Preferred Stock

Common Stock

Accumulated

Noncontrolling
Interests in

Common
Noncontrolling
Interests in

Shares
Issued

Amount

Shares
Issued

Amount

Additional
Paid-
in Capital

Other
Comprehensive
Income (Loss)

Distributions
in Excess
of Earnings

Total Aimco
Equity

Consolidated
Real Estate
Partnerships

Aimco
Operating
Partnership

Total
Equity

Balances at December 31, 2018

5,000

$
125,000

144,623

$
1,446

$
3,515,686

$
4,794

$
(1,947,507
)

$
1,699,419

$
(2,967
)

$
67,189

$
1,763,641

Repurchases of Common Stock

—

—

(461
)

(5
)

(20,677
)

—

—

(20,682
)

—

—

(20,682
)
Redemption of Aimco Operating Partnership units

—

—

—

—

—

—

—

—

—

(2,557
)

(2,557
)
Amortization of share-based compensation cost

—

—

22

—

2,442

—

—

2,442

—

796

3,238

Effect of changes in ownership for consolidated entities

—

—

—

—

(2,168
)

—

—

(2,168
)

—

2,168

—

Change in accumulated other comprehensive income

—

—

—

—

—

57

—

57

—

4

61

Net income

—

—

—

—

—

—

274,133

274,133

91

15,137

289,361

Common Stock dividends

—

—

—

—

—

—

(67,476
)

(67,476
)

—

—

(67,476
)
Common Stock issued to Common Stockholders in special dividend

—

—

4,492

45

(45
)

—

—

—

—

—

—

Preferred Stock dividends

—

—

—

—

—

—

(2,148
)

(2,148
)

—

—

(2,148
)
Distributions to noncontrolling interests

—

—

—

—

—

—

—

—

—

(3,244
)

(3,244
)
Other, net

—

—

82

2

57

—

—

59

19

—

78

Balances at March 31, 2019

5,000

$
125,000

148,758

$
1,488

$
3,495,295

$
4,851

$
(1,742,998
)

$
1,883,636

$
(2,857
)

$
79,493

$
1,960,272

Balances at December 31, 2019

—

$
—

148,885

$
1,489

$
3,497,367

$
4,195

$
(1,722,402
)

$
1,780,649

$
(3,296
)

$
83,442

$
1,860,795

Repurchases of Common Stock

—

—

(234
)

(2
)

(10,002
)

—

—

(10,004
)

—

—

(10,004
)
Redemption of Aimco Operating Partnership units

—

—

—

—

—

—

—

—

—

(969
)

(969
)
Amortization of share-based compensation cost

—

—

20

—

1,929

—

—

1,929

—

1,051

2,980

Effect of changes in ownership of consolidated entities

—

—

—

—

(769
)

—

—

(769
)

—

769

—

Cumulative effect of a change in accounting principle

—

—

—

—

—

—

(277
)

(277
)

—

—

(277
)
Change in accumulated other comprehensive income

—

—

—

—

—

(56
)

—

(56
)

—

(4
)

(60
)
Net income

—

—

—

—

—

—

6,722

6,722

118

368

7,208

Common Stock dividends

—

—

—

—

—

—

(60,825
)

(60,825
)

—

—

(60,825
)
Distributions to noncontrolling interests

—

—

—

—

—

—

—

—

(73
)

(3,155
)

(3,228
)
Other, net

—

—

29

—

86

—

—

86

(158
)

—

(72
)
Balances at March 31, 2020

—

$
—

148,700

$
1,487

$
3,488,611

$
4,139

$
(1,776,782
)

$
1,717,455

$
(3,409
)

$
81,502

$
1,795,548

	Common Stock																		Noncontrolling Interests in			Common Noncontrolling Interests in
	Shares Issued			Amount			Additional Paid- in Capital			Retained Earnings (Accumulated Deficit)			Aimco Predecessor Equity			Total Aimco Equity			Consolidated Real Estate Partnerships			Aimco Operating Partnership			Total Equity
Balances at December 31, 2019		—		$	—		$	—		$	—		$	513,264		$	513,264		$	108		$	188		$	513,560
Net income attributable to Aimco Predecessor		—			—			—			—			4,427			4,427			—			—			4,427
Net loss attributable to noncontrolling interests in consolidated partnerships		—			—			—			—			—			—			(5	)		—			(5	)
Net income attributable to common noncontrolling interests in Aimco Operating Partnership		—			—			—			—			—			—			—			236			236
Contributions from Aimco Predecessor, net		—			—			—			—			(6,194	)		(6,194	)		—			—			(6,194	)
Balances at March 31, 2020		—		$	—		$	—		$	—		$	511,497		$	511,497		$	103		$	424		$	512,024

Balances at December 31, 2020		149,036		$	1,490		$	515,127		$	(16,839	)	$	—		$	499,778		$	31,877		$	27,436		$	559,091
Redemption of Aimco Operating Partnership units		—			—			—			—			—			—			—			(36	)		(36	)
Issuance of common stock in connection with share-based compensation arrangements		232			2			1,069			—			—			1,071			—			—			1,071
Share-based compensation expense		—			—			171			—			—			171			—			58			229
Distribution to noncontrolling interests in consolidated real estate partnerships		—			—			—			—			—			—			(287	)		—			(287	)
Net income attributable to noncontrolling interests in consolidated partnerships		—			—			—			—			—			—			291			—			291
Net income attributable to common noncontrolling interests in Aimco Operating Partnership		—			—			—			—			—			—			—			1,081			1,081
Net income attributable to Aimco common stockholders		—			—			—			20,214			—			20,214			—			—			20,214
Other, net		(60	)		(1	)		(316	)		—			—			(317	)		3			12			(302	)
Balances at March 31, 2021		149,208		$	1,491		$	516,051		$	3,375		$	—		$	520,917		$	31,884		$	28,551		$	581,352

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended March 31,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income
$
8,977

$
291,295

Adjustments to reconcile net income to net cash provided by operating activities:

   Depreciation and amortization

100,476

93,565

   Loss (gain) on dispositions of real estate

34

(291,473
)
   Income tax (benefit) expense

(3,233
)

2,981

   Other adjustments

3,157

3,201

   Net changes in operating assets and operating liabilities

(31,995
)

(17,952
)
      Net cash provided by operating activities

77,416

81,617

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of real estate and deposits related to purchases of real estate

(2,733
)

(2,236
)
Capital expenditures

(94,842
)

(85,546
)
Proceeds from dispositions of real estate

—

342,083

Purchases of corporate assets

(5,104
)

(3,319
)
Other investing activities

4,665

1,422

   Net cash (used in) provided by investing activities

(98,014
)

252,404

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal repayments on non-recourse property debt

(22,622
)

(19,580
)
Net borrowings on (repayments of) revolving credit facility

318,845

(90,360
)
Repurchases of Common Stock

(10,004
)

(20,682
)
Payment of dividends to holders of Preferred Stock

—

(2,148
)
Payment of dividends to holders of Common Stock

(61,116
)

(67,405
)
Payment of distributions to noncontrolling interests

(5,442
)

(5,701
)
Redemptions of noncontrolling interests in the Aimco Operating Partnership

(1,584
)

(2,653
)
Other financing activities

(365
)

302

   Net cash provided by (used in) financing activities

217,712

(208,227
)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

197,114

125,794

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

177,702

72,595

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
$
374,816

$
198,389

	Three Months Ended March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	21,434		$	4,555
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,717			19,347
Income from unconsolidated real estate partnerships		(255	)		(182	)
Unrealized (gains) on interest rate options		(25,347	)		—
Income tax benefit		(5,100	)		(2,023	)
Mezzanine investment income, net		(7,467	)		(6,214	)
Share based compensation		704			—
Amortization of debt issuance costs and other		238			159
Changes in operating assets and operating liabilities:
Other assets, net		(19,231	)		(1,842	)
Accounts payable, accrued liabilities and other		16,631			1,755
Net cash provided by operating activities		2,324			15,555
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate		(6,230	)		—
Capital expenditures (1)		(31,658	)		(6,653	)
Other investing activities		(49	)		—
Net cash used in investing activities		(37,937	)		(6,653	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt		(18,174	)		(2,449	)
Payments on financing leases		(3,699	)		—
Purchase of interest rate option		(5,590	)		—
Change in Aimco Predecessor investment, net		—			(6,407	)
Other financing activities		(354	)		(14	)
Net cash used in financing activities		(27,817	)		(8,870	)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(63,430	)		32
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD		298,735			10,120
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	235,305		$	10,152

(1)

Capital expenditures is net of accrued capital costs of $14.5 million and $0.9 million for the three months ended March 31, 2021 and 2020, respectively.

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO ~~PROPERTIES,~~OP L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 31, 2020			December 31, 2019			March 31, 2021			December 31, 2020
ASSETS
Buildings and improvements	$	6,967,143		$	6,868,543		$	1,050,817		$	995,116
Land		1,869,465			1,869,048			506,968			505,153
Total real estate		8,836,608			8,737,591			1,557,785			1,500,269
Accumulated depreciation		(2,810,949	)		(2,718,284	)		(511,615	)		(495,010	)
Net real estate		6,025,659			6,019,307			1,046,170			1,005,259
Cash and cash equivalents		340,883			142,902			226,081			289,582
Restricted cash		33,933			34,800			9,224			9,153
Mezzanine investment		286,472			280,258			314,829			307,362
Other assets		361,298			351,472
Right-of-use lease assets								443,111			98,280
Other assets, net								178,475			130,856
Total assets	$	7,048,245		$	6,828,739		$	2,217,890		$	1,840,492

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	4,208,687		$	4,230,590		$	429,873		$	447,967
Revolving credit facility borrowings		593,845			275,000
Notes payable to AIR								534,127			534,127
Total indebtedness		4,802,532			4,505,590			964,000			982,094
Deferred tax liabilities								125,732			131,560
Lease liabilities								446,962			100,496
Accrued liabilities and other		349,099			360,574			95,733			62,988
Total liabilities		5,151,631			4,866,164			1,632,427			1,277,138

Redeemable preferred OP Units		96,449			97,064
Redeemable noncontrolling interests in consolidated real estate partnership		4,617			4,716
Redeemable noncontrolling interest in consolidated real estate partnership								4,111			4,263
Commitments and contingencies (Note 4)
Partners’ capital:
General Partner and Special Limited Partner		1,717,455			1,780,649			520,917			499,778
Limited Partners		81,502			83,442			28,551			27,436
Partners’ capital attributable to the Aimco Operating Partnership		1,798,957			1,864,091
Partners’ capital attributable to Aimco Operating Partnership								549,468			527,214
Noncontrolling interests in consolidated real estate partnerships		(3,409	)		(3,296	)		31,884			31,877
Total partners’ capital		1,795,548			1,860,795			581,352			559,091
Total liabilities and partners’ capital	$	7,048,245		$	6,828,739		$	2,217,890		$	1,840,492

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO ~~PROPERTIES,~~OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)

	Three Months Ended March 31,						Three Months Ended March 31,
	2020			2019			2021			2020
REVENUES
Rental and other property revenues	$	224,552		$	230,235		$	39,804		$	38,309

OPERATING EXPENSES
Property operating expenses		75,480			78,959			16,942			15,349
Depreciation and amortization		100,476			93,565			20,717			19,347
General and administrative expenses		10,108			9,829			6,311			1,762
Investment management expenses		1,184			1,332
Other expenses, net		1,642			5,136
Total operating expenses		188,890			188,821			43,970			36,458

Interest income		4,523			2,726
Interest expense		(41,336	)		(41,409	)		(12,677	)		(5,651	)
(Loss) gain on dispositions of real estate		(34	)		291,473
Mezzanine investment income, net		6,747			—			7,467			6,747
Income from unconsolidated real estate partnerships		182			72
Income before income tax benefit (expense)		5,744			294,276
Income tax benefit (expense)		3,233			(2,981	)
Unrealized gains on interest rate options								25,347			—
Other expenses, net								363			(415	)
Income before income tax benefit								16,334			2,532
Income tax benefit								5,100			2,023
Net income		8,977			291,295			21,434			4,555
Net income attributable to noncontrolling interests in consolidated real estate partnerships		(18	)		(91	)
Net income attributable to the Aimco Operating Partnership		8,959			291,204
Net income attributable to the Aimco Operating Partnership’s preferred unitholders		(1,869	)		(4,082	)
��Net income attributable to participating securities		(43	)		(483	)
Net loss attributable to redeemable noncontrolling interest in consolidated real estate partnerships								152			103
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships								(291	)		5
Net income attributable to the Aimco Operating Partnership’s common unitholders	$	7,047		$	286,639		$	21,295		$	4,663
Net income attributable to the Aimco Operating Partnership per common unit – basic and diluted	$	0.04		$	1.88
Net income attributable to the Aimco Operating Partnership per common unit – basic							$	0.14		$	0.03
Net income attributable to the Aimco Operating Partnership per common unit – diluted							$	0.14		$	0.03

Weighted-average common units outstanding – basic		156,660			152,303			156,882			156,480
Weighted-average common units outstanding – diluted		157,003			152,632			157,014			156,500

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO ~~PROPERTIES,~~OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~PARTNERS’ CAPITAL

For the Three Months Ended March 31, 2021 and 2020

(In thousands)

(Unaudited)

Three Months Ended March 31,

2020

2019

Net income

$
8,977

$
291,295

Unrealized (losses) gains on available for sale debt securities

(60
)

61

Comprehensive income

8,917

291,356

Comprehensive income attributable to noncontrolling interests

(18
)

(91
)
Comprehensive income attributable to the Aimco Operating
Partnership

$
8,899

$
291,265

	General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to the Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Aimco Predecessor Capital			Total Partners’ Capital
Balances at December 31, 2019	$	—		$	188		$	188		$	108		$	513,264		$	513,560
Net income attributable to Aimco Predecessor		—			236			236			—			4,427			4,663
Net loss attributable to noncontrolling interests in consolidated real estate partnerships		—			—			—			(5	)		—			(5	)
Contributions from Aimco Predecessor, net		—			—			—			—			(6,194	)		(6,194	)
Balances at March 31, 2020	$	—		$	424		$	424		$	103		$	511,497		$	512,024

Balances at December 31, 2020	$	499,778		$	27,436		$	527,214		$	31,877		$	—		$	559,091
Redemption of Aimco Operating Partnership units		—			(36	)		(36	)		—			—			(36	)
Share-based compensation expense		1,243			58			1,301									1,301
Distribution to noncontrolling interests in consolidated real estate partnerships		—			—			—			(287	)		—			(287	)
Net income attributable to noncontrolling interests in consolidated real estate partnerships		—			—			—			291			—			291
Net income		20,214			1,081			21,295			—			—			21,295
Other, net		(318	)		12			(306	)		3			—			(303	)
Balances at March 31, 2021	$	520,917		$	28,551		$	549,468		$	31,884		$	—		$	581,352

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO ~~PROPERTIES,~~OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF ~~PARTNERS’ CAPITAL~~

~~For the Three Months Ended March 31, 2020 and 2019~~CASH FLOWS

(In thousands)

(Unaudited)

Preferred Units

General Partner
and Special
Limited Partner

Limited Partners

Partners’ Capital
Attributable to the
Aimco Operating
Partnership

Noncontrolling
Interests
in Consolidated Real
Estate Partnerships

Total Partners’
Capital

Balances at December 31, 2018

$
125,000

$
1,574,419

$
67,189

$
1,766,608

$
(2,967
)

$
1,763,641

Repurchases of common partnership units

—

(20,682
)

—

(20,682
)

—

(20,682
)
Redemption of Aimco Operating Partnership units

—

—

(2,557
)

(2,557
)

—

(2,557
)
Amortization of share-based compensation cost

—

2,442

796

3,238

—

3,238

Effect of changes in ownership of consolidated entities

—

(2,168
)

2,168

—

—

—

Change in accumulated other comprehensive income

—

57

4

61

—

61

Net income

—

274,133

15,137

289,270

91

289,361

Distributions to common unitholders

—

(67,476
)

(3,244
)

(70,720
)

—

(70,720
)
Distributions to preferred unitholders

—

(2,148
)

—

(2,148
)

—

(2,148
)
Other, net

—

59

—

59

19

78

Balances at March 31, 2019

$
125,000

$
1,758,636

$
79,493

$
1,963,129

$
(2,857
)

$
1,960,272

Balances at December 31, 2019

$
—

$
1,780,649

$
83,442

$
1,864,091

$
(3,296
)

$
1,860,795

Repurchases of common partnership units

—

(10,004
)

—

(10,004
)

—

(10,004
)
Redemption of Aimco Operating Partnership units

—

—

(969
)

(969
)

—

(969
)
Amortization of share-based compensation cost

—

1,929

1,051

2,980

—

2,980

Effect of changes in ownership of consolidated entities

—

(769
)

769

—

—

—

Cumulative effect of a change in accounting principle

—

(277
)

—

(277
)

—

(277
)
Change in accumulated other comprehensive income

—

(56
)

(4
)

(60
)

—

(60
)
Net income

—

6,722

368

7,090

118

7,208

Distributions to common unitholders

—

(60,825
)

(3,155
)

(63,980
)

—

(63,980
)
Distributions to noncontrolling interests

—

—

—

—

(73
)

(73
)
Other, net

—

86

—

86

(158
)

(72
)
Balances at March 31, 2020

$
—

$
1,717,455

$
81,502

$
1,798,957

$
(3,409
)

$
1,795,548

	Three Months Ended March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	21,434		$	4,555
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,717			19,347
Income from unconsolidated real estate partnerships		(255	)		(182	)
Unrealized (gains) on interest rate options		(25,347	)		—
Income tax benefit		(5,100	)		(2,023	)
Mezzanine investment income, net		(7,467	)		(6,214	)
Share based compensation		704			—
Amortization of debt issuance costs and other		238			159
Changes in operating assets and operating liabilities:
Other assets, net		(19,231	)		(1,842	)
Accounts payable, accrued liabilities and other		16,631			1,755
Net cash provided by operating activities		2,324			15,555
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate		(6,230	)		—
Capital expenditures (1)		(31,658	)		(6,653	)
Other investing activities		(49	)		—
Net cash used in investing activities		(37,937	)		(6,653	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt		(18,174	)		(2,449	)
Payments on financing leases		(3,699	)		—
Purchase of interest rate option		(5,590	)		—
Change in Aimco Predecessor investment, net		—			(6,407	)
Other financing activities		(354	)		(14	)
Net cash used in financing activities		(27,817	)		(8,870	)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(63,430	)		32
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD		298,735			10,120
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	235,305		$	10,152

(1)

Capital expenditures in net of accrued capital costs of $14.5 million and $0.9 million for the three months ended March 31, 2021 and 2020, respectively.

See notes to condensed consolidated financial statements.

Table of Contents

~~AIMCO PROPERTIES, L.P.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In thousands)~~

~~(Unaudited)~~

Three Months Ended March 31,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income
$
8,977

$
291,295

Adjustments to reconcile net income to net cash provided by operating activities:

   Depreciation and amortization

100,476

93,565

   Loss (gain) on dispositions of real estate

34

(291,473
)
   Income tax (benefit) expense

(3,233
)

2,981

   Other adjustments

3,157

3,201

   Net changes in operating assets and operating liabilities

(31,995
)

(17,952
)
      Net cash provided by operating activities

77,416

81,617

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of real estate and deposits related to purchases of real estate

(2,733
)

(2,236
)
Capital expenditures

(94,842
)

(85,546
)
Proceeds from dispositions of real estate

—

342,083

Purchases of corporate assets

(5,104
)

(3,319
)
Other investing activities

4,665

1,422

   Net cash (used in) provided by investing activities

(98,014
)

252,404

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal repayments on non-recourse property debt

(22,622
)

(19,580
)
Net borrowings on (repayments of) revolving credit facility

318,845

(90,360
)
Repurchases of common partnership units held by General Partner and Special
   Limited Partner

(10,004
)

(20,682
)
Payment of distributions to General Partner and Special Limited Partner

(61,116
)

(67,405
)
Payment of distributions to Limited Partners

(3,492
)

(3,767
)
Payment of distributions to preferred OP Units

(1,869
)

(4,082
)
Payment of distributions to noncontrolling interests

(81
)

—

Redemption of common and preferred OP Units

(1,584
)

(2,653
)
Other financing activities

(365
)

302

   Net cash provided by (used in) financing activities

217,712

(208,227
)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

197,114

125,794

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

177,702

72,595

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
$
374,816

$
198,389

~~See notes to condensed consolidated financial statements.~~

~~Table of Contents~~

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO ~~PROPERTIES,~~OP L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2020~~2021

(Unaudited)

Note 1 — Organization

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

Aimco, through its wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, holds a majority of the ownership interests in the Aimco Operating Partnership. Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as OP Units. OP Units include common partnership units, which we refer to as common OP Units, as well as preferred partnership units, which we refer to as preferred OP Units. As of March 31, 2020, after elimination of units held by consolidated subsidiaries, the Aimco Operating Partnership had 159,196,780 common OP Units outstanding. As of March 31, 2020, Aimco owned 148,700,407 of the common OP Units of the Aimco Operating Partnership and Aimco had an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock. Aimco’s ownership of the total common OP units outstanding represents a 93.4% legal interest in the Aimco Operating Partnership and a 94.8% economic interest.Partnership”).

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

The Separation

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”).

Prior to the Separation, the condensed consolidated financial statements were prepared on a carve-out basis and reflect significant assumptions and allocations. The condensed consolidated financial statements reflect our historical consolidated financial position, results of operations, and cash flows in conformity with U.S. GAAP. The historical financial statements of Aimco do not represent the financial position and results of operations of one legal entity, but rather a combination of entities under common control that have been “carved out” from Aimco Predecessor’s financial statements. All significant intercompany balances have been eliminated in consolidation.

All separation related transactions between Aimco and Aimco Predecessor are considered effectively settled through partners’ capital in our condensed consolidated financial statements, other than the Notes Payable to AIR as discussed in Note 3. The settlement of these transactions is reflected as contributions from Aimco Predecessor, net in our condensed consolidated statements of equity and partners’ capital and net change in Aimco Predecessor investment in our condensed consolidated statements of cash flows as financing activities.

Business

As of March 31, 2021, Aimco owned approximately 93.3% of the legal interest in the common partnership units of Aimco Operating Partnership and 94.9% of the economic interest in Aimco Operating Partnership. The remaining 6.7% 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.

We own ~~and operate~~or lease a portfolio of real estate investments focused primarily on the U.S. multifamily sector. These real estate investments include a portfolio of 24 operating apartment communities with 6,067 apartment homes, diversified by both geography and price point, in ~~17 states and the District~~12 states; 1 commercial office building owned as part of ~~Columbia. As of March 31, 2020, our portfolio included 124~~a land assemblage; 2 residential apartment communities, with ~~32,846~~1,055 planned apartment homes, and 1 hotel, with 106 planned rooms, that we are actively developing and redeveloping; 1 residential apartment community, currently with 275 apartment homes, in ~~which we held an average ownership of approximately 99%. We consolidated 120 of these~~redevelopment planning; and 3 residential apartment communities, with ~~32,704~~499 apartment ~~homes.~~homes, for which we have completed the redevelopment and are in lease-up, but have not achieved stabilization.

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

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being

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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 months ended March 31, ~~2020,~~2021, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021.

The condensed consolidated balance sheets of Aimco and ~~the~~ Aimco Operating Partnership atas of December 31, ~~2019,~~2020, have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in Aimco’s and ~~the~~ Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Except where indicated, the footnotes refer to both Aimco and ~~the~~ Aimco Operating Partnership.

Principles of Consolidation

Aimco’s accompanying condensed consolidated financial statements include the accounts of Aimco, ~~the~~ Aimco Operating Partnership, and their consolidated subsidiaries. ~~The~~ Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of ~~the~~ Aimco Operating Partnership and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

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

As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member of a limited liability company.

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.

Allocations

The 2020 condensed consolidated statements of operations include allocations of general and administrative expenses from Aimco Predecessor. We consider the basis on which expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by us during the periods presented. However, the allocations may not include all of the actual expenses that we would have incurred and may not reflect our consolidated results of operations, financial position, and cash flows had it been a stand-alone company during the periods presented. Actual costs that might have been incurred had we been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions we might have performed ourselves or outsourced, and strategic decisions we might have made in areas such as information technology and infrastructure. Following the Separation, AIR, through its subsidiaries, provides Aimco with certain property management and other services, and we perform certain functions using our own resources or purchase services from third parties.

Common Noncontrolling Interests in ~~the~~Aimco Operating Partnership

Common noncontrolling interests in Aimco Operating Partnership ~~that are held by limited partners other than Aimco~~consist of common OP Units and are reflected in Aimco’s accompanying condensed consolidated balance sheets as common noncontrolling interests in ~~the~~ Aimco Operating Partnership. ~~Interests~~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 the three months ended March 31, 2021 and 2020, the holders of common OP Units had a weighted-average economic ownership interest in ~~partnerships consolidated by the~~ Aimco Operating Partnership ~~that~~of 5.1%. Substantially all of the assets and liabilities of Aimco are held by ~~third parties~~Aimco Operating Partnership.

Redeemable Noncontrolling Interest in Consolidated Real Estate Partnership

Redeemable noncontrolling interest consists of equity interests held by a limited partner in a consolidated real estate partnership that has a finite life. We generally attribute to noncontrolling interests their share of income or loss of consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity accounts.

If a real estate partnership includes redemption rights that are not within our control, the noncontrolling interest is included as temporary equity. If the redemption right is not currently redeemable but probable of being redeemable in the future, changes in redemption value are recognized each quarter with the change in value being reflected in additional paid-in-capital.

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The assets of our ~~accompanying condensed~~ consolidated ~~balance sheets as noncontrolling interests in~~real estate partnerships must first be used to settle the liabilities of the consolidated real estate partnerships.

~~We have an interest in a partnership that owns Parkmerced Apartments, which meets the definition of a VIE. However, we are not the primary beneficiary and~~ The consolidated real estate partnerships’ creditors do not ~~consolidate this partnership. We loaned $275 million~~have recourse to the ~~partnership, which accrues interest at 10% per annum with a~~ ~~five-year~~ ~~term and the right to extend for a second~~ ~~five-year~~ ~~term. Our investment balance~~general credit of ~~$286.5 million, reflected in mezzanine investment in our condensed consolidated balance sheets, primarily consists of notes receivable and represents our maximum exposure to loss in this VIE.~~

~~Redeemable Preferred OP Units~~

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

The following table presents a reconciliation of ~~the Aimco Operating Partnership’s preferred OP Units~~our redeemable noncontrolling interest in consolidated real estate partnership from December 31, ~~2019,~~2020, to March 31, ~~2020~~2021 (in thousands):

2020

Balance at December 31

$
97,064

Preferred distributions

(1,869
)
Redemption of preferred units

(615
)
Net income

1,869

Balance at March 31

$
96,449

Balance at December 31, 2020	$	4,263
Net loss		(152	)
Balance at March 31, 2021	$	4,111

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

Revenue from Leases

The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our residents and commercial tenants primarily for utility ~~reimbursements.~~reimbursements and other services. For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, our total lease income was comprised of the following amounts for all operating leases (in thousands):

					Three Months Ended March 31,
	2020		2019		2021		2020
Fixed lease income	$	213,416	$	215,581	$	36,789	$	35,388
Variable lease income		13,615		14,144		2,954		2,859
Total lease income	$	227,031	$	229,725	$	39,743	$	38,247

Lessee Arrangements

During the three months ended March 31, 2021, we, as lessee, and AIR, as lessor, entered into finance leases on four properties currently under construction or in lease-up. The life of three of the leases is 25 years and one lease is for 10 years. Each lease commenced January 1, 2021 and two of the leases have rent escalations which start at the point the property reaches stabilization. We have provided AIR with residual value guarantees aggregating to $244.7 which provide that if the residual value of the leased assets are less than the specified residual value guarantees at the earlier of lease expiration or termination, we are required to pay the difference. See Note 3 for further details.

As of March 31, 2021, operating and financing right-of-use lease assets of $5.4 million and $437.7 million, respectively, are included in the condensed consolidated balance sheets. For the three months ended March 31, 2021, amortization expense and interest expense related to our finance leases was $1.3 million and $1.7 million, respectively, net of capitalized costs.

As of March 31, 2021, Aimco’s operating leases and financing leases have weighted-average remaining terms of 8.2 years, and 38.7 years, respectively, and weighted-average discount rates of 3.2% and 5.4%, respectively.

Combined minimum annual lease payments, under operating and financing leases, reconciled to the lease liabilities in our condensed consolidated balance sheets, are as follows (in thousands):

	Sublease Income		Operating Lease Future Minimum Rent			Financing Leases Future Minimum Payments
Remainder of 2021	$	1,038	$	1,083		$	19,747
2022		1,393		1,841			26,862
2023		1,403		1,871			27,262
2024		1,413		1,900			28,262
2025		1,423		1,930			28,873
Thereafter		4,959		6,806			1,637,303
Total	$	11,629	$	15,431		$	1,768,309
Less: Discount				(2,006	)		(1,334,772	)
Total lease liabilities			$	13,425		$	433,537

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For the three months ended March 31, 2021, we capitalized $6.9 million of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets. NaN lease costs were capitalized on leased assets for the three months ended March 31, 2020.

Mezzanine Investment

On November 26, 2019, Aimco Predecessor made a five-year, $275.0 million mezzanine loan to Maximus PM Mezzanine A LLC, 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.

The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, 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 through 2024 to Aimco. At the time of the Separation and as of May 17, 2021, legal title of these subsidiaries had not yet transferred to Aimco. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments on such loan 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.

We ~~monitor~~recognize as income the ~~collectability~~net amounts recognized by AIR on its equity investment that are due to be paid to us when collected, which primarily represent the interest accrued under the terms of ~~unpaid rent obligations and~~the underlying mezzanine loan. As of March 31, 2021, the Mezzanine Investment in our condensed consolidated balance sheets represents the assets associated with our indirect interest in the subsidiary that owns Parkmerced Apartments, which we do not consolidate.

The loan is subject to certain risks, including, but not limited to, those resulting from the severe downturn in San Francisco rents, the ongoing disruption due to the ~~impact of~~ COVID-19 pandemic and associated governmental response, and the ~~resulting~~current economic ~~impact on our commercial tenants, we recognized~~situation, which may result in all or a ~~write-off of straight-line rent receivables and deferred leasing costs of $2.9 million and $2.2 million, respectively. The write-off~~portion of the ~~straight-line rent receivables~~loan not being repaid. In the event we determine that a portion of the Mezzanine Investment is not ~~included~~recoverable, we will recognize an impairment, if appropriate.

Income Tax Benefit

For the three months ended March 31, 2021, $2.7 million of the income tax benefit is related to internal restructuring completed in the ~~fixed lease income in~~first quarter and changes to our effective state rate expected to apply to the ~~table above.~~reversal of our existing deferred items.

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.

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 (in thousands):

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	March 31, 2021		December 31, 2020
Notes receivable	$	37,424	$	37,045
Deferred costs, deposits, and other		17,284		17,557
Interest rate options		44,241		13,315
Corporate fixed assets		11,986		12,860
Unconsolidated real estate partnerships		12,927		12,829
Investment in IQHQ		12,500		12,500
Prepaid expenses and other		9,331		10,493
Intangible lease assets, net		5,745		7,264
Due from affiliates		23,959		4,333
Accounts receivable, net of allowances of $1,693 and $1,467 as of March 31, 2021 and December 31, 2020, respectively		3,078		2,660
Total other assets, net	$	178,475	$	130,856

Note 3 — Transactions with AIR

In conjunction with the Separation, we entered into various separation and transition services agreements with AIR that provide for a framework of our relationship with AIR after the Separation, including: (i) a Separation Agreement setting forth the mechanics of the Separation, the key provisions relating to the separation of our assets and liabilities from those of AIR, and certain organizational matters and conditions; (ii) an Employee Matters Agreement to allocate liabilities and responsibilities relating to employment matters, employee compensation, benefits plans and programs, and other related matters; (iii) agreements pursuant to which AIR will provide property management and related services to us (collectively, the “Property Management Agreements”); (iv) an agreement pursuant to which AIR will provide us with customary administrative and support services on an ongoing basis (the “Master Services Agreement”); and (v) a master leasing agreement where we may enter into leases with AIR with the option to redevelop, develop, or lease-up the subject leased properties, and under which we will have certain lease termination rights (the “Master Leasing Agreement”).

Master Services Agreement

We and AIR entered into a Master Services Agreement, in which AIR will provide us with customary administrative and support services. We are obligated to pay AIR the fully burdened costs in performing the 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 months ended March 31, 2021, we incurred administrative and support fees of $0.4 million, which is included in general and administrative expenses in our condensed consolidated statements of operations. We did 0t incur any fees for the three months ended March 31, 2020.

Property Management Agreements

We entered into several Property Management Agreements with AIR, pursuant to which AIR will provide us with certain property management, property accounting and related services for the majority of our operating properties, and we will 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 to the other party a termination fee or other penalty upon such termination.

During the three months ended March 31, 2021, we recorded property management and property accounting fees of $1.3 million, which is included in property operating expenses in our condensed consolidated statements of operations. We did 0t incur any fees for the three months ended March 31, 2020.

Notes Payable to AIR

On December 14, 2020, we entered into $534.1 million of notes payable to AIR that are secured by a pledge of the equity interest in the entity that holds a portfolio of assets, however, the assets secure existing senior loans of $198.3 million as of March 31, 2021. The notes mature on January 31, 2024 and bear interest at 5.2%, with accrued interest payable quarterly on January 1, April 1, July 1 and October 1, commencing on April 1, 2021. For the three months ended March 31, 2021, we recognized interest expense of $6.9 million associated with the notes payable to AIR.

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~~Reclassifications~~Master Leasing Agreement

The Master Leasing Agreement governs the current and ~~Revisions~~

~~For~~any future leasing arrangements between us, as lessee and AIR, as lessor. The initial term of the 2020 presentation of our condensed consolidated statements of operations, we have added a caption for investment management expenses. We have reclassified certain items from property operating expenses, general and administrative expenses, and other expenses, net, in our 2019 presentationMaster Leasing Agreement is 18 months (expiring on or about June 14, 2022), with automatic annual extensions (subject to ~~conform~~each party’s right to terminate upon notice prior to the ~~current presentation.~~

~~Accounting Pronouncements Adopted in~~end of any such extension term). The Master Leasing Agreement provides that each time the ~~Current Year~~

~~On January 1, 2020, we adopted ASC 326,~~ ~~Financial Instruments – Credit Losses, issued by~~parties thereto wish to execute a lease for a particular property, such parties will cause their applicable affiliates to execute a stand-alone lease. The initial annual rent for any leased property is based on the Financial Accounting Standards Board, or FASB, which changes the method and timing of the recognition of credit losses on financial assets. The standard requires us to estimate and record credit losses over the life of a financial instrument, including receivables, at its inception. Our notes receivable and investments in available for sale, or AFS, debt securities are subject to the new standard. For AFS debt securities, the new standard requires us to estimate a credit loss if thethen-current fair market value of the ~~instruments~~subject property and market NOI cap rates, subject to certain adjustments, and is ~~less than~~further subject to periodic escalation as set forth in the ~~carrying~~applicable lease, and the other terms thereof, including the initial term and extensions. We have the right to terminate any such lease prior to the end of its term once the leased property is stabilized. In connection with such an early termination, AIR will generally have an option (and not an obligation) to pay us an amount equal to the difference between the property’s fair value at stabilization and the initial value of the ~~instruments.~~leasehold interest, at a five percent discount thereto; if AIR does not exercise such option, we will have the right to cause such property to be sold to a third party, with AIR guaranteed to receive an amount equal to the difference between the property’s fair market value at stabilization and the initial value of the leasehold interest and we will retain any excess proceeds. In the event of such sale of the property, we may also elect to purchase the property at a purchase price equal to the fair market value as agreed upon at the time of lease inception (and may subsequently sell the property to a third party, subject to AIR’s right of first refusal during the first year following our acquisition). If AIR elects not to pay the fee for the development or redevelopment-related improvements, and we decline to purchase the property or cause its sale to a third party, we may elect to rescind our termination of the applicable lease and instead continue such lease in effect in accordance with its terms.

We, ~~adopted~~as lessee, and AIR, as lessor, entered into leases of four properties currently under construction or in lease-up. The four properties include (i) North Tower at Flamingo Point in Miami Beach, Florida, (ii) The Fremont Residences on the ~~credit loss standard using~~Anschutz Medical Campus in Aurora, Colorado, (iii) Prism in Cambridge, Massachusetts, and (iv) 707 Leahy Apartments in Redwood City, California. According to the ~~modified-retrospective approach. We recorded~~terms of the lease agreements, we had the option to complete the on-going development and redevelopment of such properties and their lease-ups, which we elected on January 1, 2021.

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The life of each lease is 25 years except for Prism, which has a ~~cumulative-effect adjustment~~lease term of 10 years. Each lease commenced on January 1, 2021. Initial monthly lease payments approximate $2.1 million with aggregate total lease payments of approximately $611.9 million. The initial fair market values of the leased assets at the time of lease inception was determined to be $469.0 million in the aggregate. In connection with the commencement of the leases, we assumed $70.8 million of estimated obligations pursuant to certain construction contracts.

Acquisitions

In February 2021, we acquired The Benson Hotel and Faculty Club (“Benson Hotel”) development property for $6.2 million, net of outstanding construction liabilities of $0.9 million. The development property consists of land and initial construction costs. The project is expected to be completed in the first quarter of 2023.

Due to and from AIR

As of March 31, 2021, we have amounts due to and due from AIR of $23.9 million and $24.0 million, respectively. The amounts due to AIR primarily consist of invoices paid on our behalf and accrued interest on the notes payable to AIR. The amounts due from AIR primarily consists of net cash flows generated by our operating properties.

Terry Considine Service Arrangement

In conjunction with the Separation, the Company entered into an arrangement with AIR with respect to the services of Terry Considine, an Aimco board member and our former Chief Executive Officer, for services to be rendered by Mr. Considine separate from his services as a board member, including, but not limited to (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 Company is obligated to reimburse AIR for all base salary, short-term incentive amounts and long-term incentive amounts payable by AIR to Mr. Considine for the ~~estimated credit loss associated~~calendar year 2021under the terms of his employment agreement with ~~our notes receivable of $0.3 million in distributions~~AIR that are in excess of earnings and partners’ capital in our condensed consolidated balance sheets as of January 1, 2020. As of the date of adoption, the fair value of our AFS debt securities exceeded their carrying value and 0 estimate of credit loss was required for these instruments.

~~Note 3 — Significant Transactions~~

~~Financing Activity~~

~~On April 20, 2020, we secured a $350.0~~$1 million, ~~term loan. The loan matures on April 20, 2021, includes a~~ ~~one-year~~ extension option, and currently bears interest at a 30-day LIBOR plus 1.85%, with a 50-basis point LIBOR floor. Proceeds from the loan were used primarily to repay borrowings on our revolving credit facility.

~~Dispositions of Apartment Communities~~

~~During~~collectively. For the three months ended March 31, ~~2020, 0 apartment communities~~2021, we have recorded $1.45 million in associated service fees in general and administrative expenses in our condensed consolidated statements of operations. As of March 31, 2021, accrued service fees of $1.45 million are included in accrued liabilities and other and in our condensed consolidated balance sheets.

Guarantee Liability

Legal liabilities that relate to occurrences prior to the Separation, including environmental liabilities related to properties that were ~~sold. During~~no longer owned by Aimco or AIR at the time of the Separation, pursuant to the terms of the Separation Agreement, are borne by Aimco Operating Partnership up to the first $17.5 million of such liabilities, in the aggregate, and borne by AIR Operating Partnership for any such liabilities in excess of $17.5 million.

On the date of Separation, we recognized a guarantee liability of $16.4 million based on an estimate of the expected future cash flows required to settle the legal liabilities, including, but not limited to, remediation, settlement and legal costs, discounted by an estimated market discount rate of 4.25%. The guarantee liability is systematically reduced as costs related to the legal liabilities are incurred, which we estimate will occur through 2023. For the three months ended March 31, ~~2019 we sold apartment communities as summarized below (dollars in thousands):~~

2019

Number of apartment communities sold

7

Number of apartment homes sold

2,206

Gain on dispositions of real estate
$
291,473

The apartment communities sold were predominantly located outside of our primary markets or in lower-rated locations within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.

~~From time to time we may be marketing for sale certain apartment communities that are inconsistent with our long-term investment strategy. At~~2021, the ~~end of each reporting period we evaluate whether such communities meet the criteria to be classified as held for sale.~~guarantee liability was reduced by $1.3 million. As of March 31, ~~2020, 0 apartment communities were classified as held for sale.~~2021, the guarantee liability of $15.1 million is included in accrued liabilities and other in our condensed consolidated balance sheets.

Note 4 — Commitments and Contingencies

Commitments

In connection with our development, redevelopment, ~~development~~ and other capital additions activities, we have entered into various construction-related contracts and we have made commitments to complete ~~redevelopment~~development and ~~development~~redevelopment of certain ~~apartment communities,~~real estate, pursuant to financing or other arrangements. As of March 31, ~~2020,~~2021, our commitments related to these capital activities totaled approximately ~~$219.0~~$266.4 million most of which we expect to incur during the next 12 months.

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

~~Legal Matters~~

~~In addition~~We have a commitment to fund an additional $37.5 million to IQHQ and currently expect to incur this investment over the next two years. We also have unfunded commitments related to three investments in privately held entities that develop technology related to the ~~matters described below, we are a party to various legal actions and administrative proceedings arising~~real estate industry (“RETV”) in the ~~ordinary course~~amount of ~~business, some~~$1.1 million, the timing of which ~~are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.~~is uncertain.

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~~Environmental~~

~~Various federal, state and local laws subject apartment community owners or operators~~Legal Matters

From time to ~~liability for management, and~~time, the ~~costs of removal or remediation, of certain potentially hazardous materials that~~Company may be ~~present in the land or buildings of an apartment community. Such laws often impose liability without regard~~a party to fault or whether the owner or operator knew of, or was responsible for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such apartment communities as well as the ability to sell or finance such apartment communities. In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur or for personal injury, disease, disability or other infirmities relatedcertain legal proceedings, incidental to the ~~alleged presence~~normal course of hazardous materials. In addition to potential environmental liabilities or costs associated with our current apartment communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or apartment communities we no longer own or operate.

We are engaged in discussions with the Environmental Protection Agency, or EPA, regarding contaminated groundwater near an Indiana apartment community that has not been owned by us since 2008. The contamination allegedly derives from a dry cleaner that operated on our former property, prior to our ownership. We undertook a voluntary remediation of the dry cleaner contamination under state oversight. In 2016, EPA listed our former community and a number of residential communities in the vicinity on the National Priorities List, or NPL (i.e., as a Superfund site). In May 2018, we prevailed on our federal judicial appeal vacating the Superfund listing. We continue to work with EPA to formulate a scope of work and agreed order to finish clean up of the site outside the Superfund program. Althoughbusiness. While the outcome of ~~these processes are uncertain, we do~~the legal proceedings cannot be predicted with certainty, the Company does not expect ~~their resolution to~~that these proceedings will have a material ~~adverse~~ effect onupon our ~~consolidated~~ financial condition or results of ~~operations or cash flows.~~

We also have a contingent environmental liability related to a property in Lake Tahoe, California. An entity owned by us was the former general partner of a now-dissolved partnership that previously owned a site where a laundromat, with a self-service dry-cleaning machine, operated. That entity and the current property owner have been remediating the site since 2009, under the oversight of the Lahontan Regional Water Quality Control Board, or Lahontan. In May 2017, Lahontan issued a final cleanup and abatement order that names 4 potentially-responsible parties, acknowledges that there may be additional responsible parties, and requires the named parties to perform additional groundwater investigation and corrective actions with respect to onsite and offsite contamination. We are appealing the final order while simultaneously complying with it. Although the outcome of this process is uncertain, we do not expect its resolution to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

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

Note 5 — Earnings and Dividends per Share and Unit

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

The common shares and common partnership units outstanding at the Separation date are reflected as outstanding for all periods prior to the Separation for purposes of determining earnings per share and per unit.

Our common stock and common partnership unit equivalents include options to purchase shares of Common Stock, which, if exercised, would result in Aimco’s issuance of additional shares and ~~the~~ Aimco Operating Partnership’s issuance to Aimco of additional common partnership units equal to the number of shares purchased under the options. These equivalents also include unvested ~~total shareholder return, or~~ TSR ~~restricted stock~~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 Stock and common partnership units outstanding equal to the number of the shares that vest. Common partnership unit equivalents also include unvested long-term incentive partnership units. We include in the denominator securities with dilutive effect in calculating diluted earnings per share and per unit during these periods.

Our ~~restricted stock~~Time-Based Restricted Stock awards ~~that are subject to time-based vesting~~ receive non-forfeitable dividends similar to shares of ~~Common Stock~~common stock and common partnership units prior to vesting, and our TSR ~~long-term incentive partnership~~LTIP I units and TSR LTIP II units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership units prior to vesting and conversion. The unvested restricted shares and units related to these awards are participating securities. We include the

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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.

Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020, are as follows (in thousands, except per share and per unit data):

Three Months Ended

March 31, 2020

March 31, 2019

Earnings per share

Numerator:

Basic and dilutive net income attributable to Aimco common stockholders
$
6,679

$
271,568

Denominator - shares:

   Basic weighted-average Common Stock outstanding

148,518

144,232

   Dilutive share equivalents outstanding

268

213

Dilutive weighted-average Common Stock outstanding

148,786

144,445

Earnings per share – basic
$
0.04

$
1.88

Earnings per share – dilutive
$
0.04

$
1.88

Non-dilutive share equivalents outstanding

97

36

Earnings per unit

Numerator:

Basic and dilutive net income attributable to the Aimco Operating Partnership's
   common unitholders
$
7,047

$
286,639

Denominator - units

   Basic weighted-average common partnership units outstanding

156,660

152,303

   Dilutive partnership unit equivalents outstanding

343

329

Dilutive weighted-average common partnership units outstanding

157,003

152,632

Earnings per unit – basic
$
0.04

$
1.88

Earnings per unit – dilutive
$
0.04

$
1.88

Non-dilutive partnership unit equivalents outstanding

1,847

229

	Three Months Ended March 31,
	2021		2020
Earnings per share
Numerator:
Net income attributable to Aimco common stockholders	$	20,214	$	4,427

Denominator – shares:
Basic weighted-average Common Stock outstanding		148,914		148,549
Diluted share equivalents outstanding		132		20
Diluted weighted-average Common Stock outstanding		149,046		148,569

Earnings per share – basic	$	0.14	$	0.03
Earnings per share – diluted	$	0.14	$	0.03

Earnings per unit
Numerator:
Net income attributable to Aimco Operating Partnership's common unitholders	$	21,295	$	4,663

Denominator – units
Basic weighted-average common partnership units outstanding		156,882		156,480
Diluted partnership unit equivalents outstanding		132		20
Diluted weighted-average common partnership units outstanding		157,014		156,500

Earnings per unit – basic		0.14	$	0.03
Earnings per unit – diluted		0.14	$	0.03

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

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

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

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Note 6 — Fair Value Measurements

Recurring Fair Value Measurements

In 2020, we paid an upfront premium of $12.1 million for the option to enter into an interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk and is intended to mitigate interest rate increases between now and October 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68% five year swap strike price. The amount of future cash settlement is capped if the prevailing interest rate exceeds 2.78%. Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement.

During the three months ended March 31, 2021, we paid an upfront premium of $5.6 million (including transaction costs) for the option to enter into an interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk relative to our notes payable to AIR and is intended to mitigate interest rate increases between now and January 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 3% strike price on the five year swap rate. Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement.

We measure at fair value on a recurring basis our ~~investments in the securitization trust that holds certain of our property debt,~~interest rate options, which ~~we classify as AFS debt securities. These investments~~ are presented ~~within~~in other assets in ~~the~~our condensed consolidated balance sheets. ~~We hold several positions in the securitization trust that pay~~Our interest currently and we also hold the first loss position in the securitization trust, which accrues interest over the term of the investment. These investments were acquired at a discount to face value and we are accreting the discount to the $100.9 million face value of the investments through interest income using the effective interest method over the remaining expected term of the investments, which as of March 31, 2020, was approximately 1.2 years. Our amortized cost basis for these investments, which represents the original cost adjusted for interest accretion less interest payments received, was $91.7 million and $90.0 million as of March 31, 2020, and December 31, 2019, respectively.

~~Our investments in AFS debt securities~~rate options are classified within Level 2 of the GAAP fair value ~~hierarchy. We~~hierarchy, and we estimate ~~the~~their fair value ~~of these investments~~ using ~~an income~~pricing models that rely on observable market information, including contractual terms, market prices, and market approach with primarily observable inputs, including yields and other information regarding similar types of investments, and adjusted for certain unobservable inputs specific to these investments.interest rate yield curves. The fair value adjustment is included in earnings in Unrealized gains on interest rate options in our condensed consolidated statements of ~~the positions that pay interest currently typically moves~~operations. Changes in ~~an inverse relationship with movements in interest rates. The~~ fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, and the upfront premium is reflected in Purchase of interest rate option in our condensed consolidated statements of cash flows.

We have investments of $2.3 million in RETV consisting of three privately held entities that develop technology related to the ~~first loss position is primarily correlated to collateral quality and demand for similar subordinate commercial mortgage-backed securities.~~real estate industry. These investments are measured at net asset value (“NAV”) as a practical expedient.

The following table summarizes fair value for our ~~AFS debt securities~~interest rate options and our investment in RETV (in thousands):

As of March 31, 2020

As of December 31, 2019

Total Fair Value

Level 1

Level 2

Level 3

Total Fair Value

Level 1

Level 2

Level 3

AFS debt securities
$
95,906

$
—

$
95,906

$
—

$
94,251

$
—

$
94,251

$
—

	As of March 31, 2021								As of December 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Interest rate options	$	44,241	$	0	$	44,241	$	0	$	13,315	$	0	$	13,315	$	0
Investment in RETV (1)		2,342		0		0		0		2,293		0		—		0

(1)

Investments measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.

~~Non-Recurring~~ Fair Value ~~Measurements~~Disclosures

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable and ~~accounts payable~~payables approximated their fair value as of March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, due to their relatively short-term nature and high probability of realization. ~~The carrying amounts of notes receivable and the revolving credit facility approximated their estimated fair value as of March 31, 2020, and December 31, 2019.~~ We estimate the fair value of our non-recourse property debt and notes payable to AIR using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, ~~collateral quality~~debt service coverage ratios, and loan to value ~~ratios on similarly encumbered apartment communities within our portfolio.~~ratios. We classify the fair value of our non-recourse property debt within Level 2 of the GAAP ~~valuation~~fair value hierarchy based on the significance of certain of the unobservable inputs used to estimate its fair value.

The carrying amount of the notes payable to AIR approximated their fair value at both March 31, 2021 and December 31, 2020.

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

As of March 31, 2020

As of December 31, 2019

Carrying Value

Fair Value

Carrying Value

Fair Value

Non-recourse property debt
$
4,228,440

$
4,166,396

$
4,251,339

$
4,298,630

	As of March 31, 2021				As of December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Non-recourse property debt	$	431,336	$	451,675	$	449,510	$	467,010

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Note 7 — Variable Interest Entities

Consolidated Entities

Aimco consolidates Aimco Operating Partnership, a variable interest entity (“VIE”) of which Aimco is the primary beneficiary. Aimco, through Aimco Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Substantially all of the assets and liabilities of Aimco are that of Aimco Operating Partnership.

The VIEs that Aimco Operating Partnership consolidates owns interests in real estate. We are the primary beneficiary of the VIEs because we have the power to direct the activities that most significantly impact the entities’ economic performance and have a substantial economic interest. We have six unconsolidated VIEs for which we are not the primary beneficiary because we are not the decision maker.

The details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of March 31, 2021 and December 31, 2020 (in thousands, except for VIE count):

	March 31, 2021				December 31, 2020
	Consolidated		Unconsolidated		Consolidated		Unconsolidated
Count of VIEs	6		6		2		6
Assets
Real estate, net	$	439,513	$	0	$	310,552	$	0
Mezzanine investment		0		314,829		0		307,362
Right-of-use lease assets		437,697		0		92,709		0
Other assets, net		15,850		25,427		16,949		25,329
Liabilities
Deferred tax liabilities		129,729		0		133,842		0
Accrued liabilities and other		18,700		0		7,106		0
Lease liabilities		433,537		0		86,781		0

Assets of our consolidated VIEs must first be used to settle the liabilities of the VIE. The consolidated VIEs’ creditors do not have recourse to our general credit.

Unconsolidated Real Estate Partnerships

We own an interest in 4 apartment communities in San Diego, California, of which we are not the primary beneficiary. Our investment balance of $12.9 million and $12.8 million as of March 31, 2021 and December 31, 2020, respectively, represents our maximum exposure to loss in these VIEs. Our other unconsolidated VIE is insignificant to our condensed consolidated balance sheets for both periods presented.

Under the terms of the Separation Agreement, AIR has legally assigned all risks and rewards of ownership in its interest in a partnership that owns Parkmerced Apartments, of which it is not the primary beneficiary. Our investment balance of $314.8 million as of March 31, 2021, reflected in Mezzanine Investment in our condensed consolidated balance sheets, represents our indirect interest in Parkmerced Apartments notes receivable through our agreement with AIR and represents our maximum exposure to loss in this VIE.

Note 8 — Business Segments

We have 43 segments: ~~Same Store,~~(i) Development and Redevelopment, (ii) Operating Portfolio, and ~~Development, Acquisition, and Other Real Estate.~~(iii) Other.

Our ~~Same Store~~Development and Redevelopment segment includes residential apartment communities, including associated commercial space, that are under construction or have not achieved stabilization. Our Operating Portfolio segment includes majority owned residential communities that have ~~reached a~~achieved stabilized level of operations as of ~~the beginning of a two-year comparable period~~January 1, 2020 and maintained it throughout the current year and comparable ~~prior year and are not expected to be sold within 12 months. Our Redevelopment and Development segment includes~~period. We aggregate all our apartment communities that ~~are currently under construction, and those that~~ have been completed in recent years that have not achieved and maintained stabilized operations for both the current and comparable prior year. Our Acquisition segment includes communities that we have acquired since the beginning of a two-year comparable period.reached stabilization into our Operating Portfolio. Our Other ~~Real Estate~~ segment ~~primarily includes communities that are subject~~consists of 1001 Brickell Bay Drive, our only commercial real estate property. We realigned our segments during the fourth quarter 2020 and have restated historical periods to limitations on rent increases, communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale, communities that we expect to redevelop, and certain commercial spaces.conform with current segment presentation.

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Our chief operating decision maker (“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 ~~communities.~~Operating Portfolio. Proportionate property net operating income ~~reflects~~is defined as our share of rental and other property revenues, excluding ~~utility~~ reimbursements, less direct property operating expenses, net of utility reimbursements, for consolidated

~~Table of Contents~~

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

As of March 31, ~~2020,~~2021, our ~~Same Store~~Development and Redevelopment segment ~~included 95~~includes 3 real estate investments: Upton Place, Hamilton on the Bay and The Benson Hotel. The Development and Redevelopment segment also includes our 4 leased properties of which, 1 is under construction and 3 are in lease-up, but have not achieved stabilization. Our Operating Portfolio segment includes 24 consolidated apartment communities with ~~28,095~~6,067 apartment ~~homes; our Redevelopment and Development~~homes. Our Other segment included 6 consolidated communities with 2,210 homes; our Acquisition segment included 1 consolidated community with 110 homes, and 1 consolidated community with 136 homes under construction; and our Other Real Estate segment included 18 communities with 2,289 homes andincludes 1 office building.

The following tables present the ~~rental and other property~~ revenues, ~~property operating expenses,~~ proportionate property net operating income, and income before income tax benefit ~~(expense)~~ of our segments on a proportionate basis, excluding amounts related to ~~sold communities and~~ our proportionate share of 4four apartment communities with ~~142~~ apartment homes that we neither manage nor consolidate, for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):

	Same Store		Redevelopment and Development		Acquisition		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated			Development and Redevelopment		Operating Portfolio		Other		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Three months ended March 31, 2020:
Three months ended March 31, 2021:
Rental and other property revenues	$	187,956	$	11,913	$	884	$	17,875	$	8,812	$	(2,888	)	$	224,552		$	2,257	$	32,689	$	3,027	$	1,830	$	1		$	39,804
Property operating expenses		48,782		4,687		401		6,174		8,175		7,261			75,480			1,867		11,170		985		1,706		1,214			16,942
Other operating expenses not allocated to segments ~~(3)~~(2)		—		—		—		—		—		113,410			113,410			—		—		—		—		27,028			27,028
Total operating expenses		48,782		4,687		401		6,174		8,175		120,671			188,890			1,867		11,170		985		1,706		28,242			43,970
Proportionate property net operating income (loss)		139,174		7,226		483		11,701		637		(123,559	)		35,662
Proportionate property net operating income																		390		21,519		2,042		124		(28,241	)		(4,166	)
Other items included in income before income tax benefit ~~(4)~~(3)		—		—		—		—		—		(29,918	)		(29,918	)		—		—		—		—		20,500			20,500
Income before income tax benefit	$	139,174	$	7,226	$	483	$	11,701	$	637	$	(153,477	)	$	5,744		$	390	$	21,519	$	2,042	$	124	$	(7,741	)	$	16,334

	Same Store		Redevelopment and Development		Acquisition			Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated		Development and Redevelopment		Operating Portfolio		Other		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Three months ended March 31, 2019:
Three months ended March 31, 2020:
Rental and other property revenues	$	181,523	$	14,012	$	—		$	14,113	$	8,292	$	12,295		$	230,235	$	—	$	33,361	$	3,277	$	1,671	$	—		$	38,309
Property operating expenses		48,990		5,255		127			4,991		7,733		11,863			78,959		—		10,510		990		1,547		2,302			15,349
Other operating expenses not allocated to segments ~~(3)~~(2)		—		—		—			—		—		109,862			109,862		—		—		—		—		21,109			21,109
Total operating expenses		48,990		5,255		127			4,991		7,733		121,725			188,821		—		10,510		990		1,547		23,411			36,458
Proportionate property net operating income (loss)		132,533		8,757		(127	)		9,122		559		(109,430	)		41,414
Other items included in income before income tax expense (4)		—		—		—			—		—		252,862			252,862
Income before income tax expense	$	132,533	$	8,757	$	(127	)	$	9,122	$	559	$	143,432		$	294,276
Proportionate property net operating income																		—		22,851		2,287		124		(23,411	)		1,851
Other items included in income before income tax benefit (3)																		—		—		—		—		681			681
Income before income tax benefit																	$	—	$	22,851	$	2,287	$	124	$	(22,730	)	$	2,532

(1)

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

(2)

Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any. Also includes property management expenses and casualty gains and losses, which are included in consolidated propertyOther operating expenses ~~and are~~ not ~~part~~allocated to segments consists of our segment performance measure. Write-off of straight-line rent receivables, which was recognized due to the impact of COVID-19 and the resulting economic impact on our commercial tenants, is included in consolidated rental and other property revenues. The write-off of straight-line rent is not included in our measurement of segment performance.

~~(3)~~

~~Includes~~ depreciation and amortization, general and administrative ~~expenses,~~expense, and other operating expenses ~~including provision for real estate impairment loss,~~ which are not included in our measure of segment performance.

~~(4)~~(3)

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

1922

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~~The assets of our segments~~Net real estate and ~~the consolidated assets not allocated to~~non-recourse property debt, net, of our segments were as follows (in thousands):

March 31, 2020

December 31, 2019

Same Store
$
4,643,371

$
4,679,211

Redevelopment and Development

731,811

694,188

Acquisition

102,217

89,405

Other Real Estate

733,138

736,934

Corporate and other assets (1)

837,708

629,001

Total consolidated assets
$
7,048,245

$
6,828,739

~~(1)~~

~~Includes the assets not allocated to our segments, primarily corporate assets and assets of sold apartment communities.~~

	Development and Redevelopment			Operating Portfolio			Other			Total
As of March 31, 2021:
Buildings and improvements	$	114,950		$	775,140		$	160,727		$	1,050,817
Land		58,491			298,459			150,018			506,968
Total real estate		173,441			1,073,599			310,745			1,557,785
Accumulated depreciation		(772	)		(482,026	)		(28,817	)		(511,615	)
Net real estate	$	172,669		$	591,573		$	281,928		$	1,046,170

Non-recourse property debt, net	$	—		$	429,873		$	—		$	429,873

~~For~~

	Development and Redevelopment			Operating Portfolio			Other			Total
As of December 31, 2020:
Buildings and improvements	$	61,813		$	772,786		$	160,517		$	995,116
Land		56,676			298,459			150,018			505,153
Total real estate		118,489			1,071,245			310,535			1,500,269
Accumulated depreciation		(447	)		(469,873	)		(24,690	)		(495,010	)
Net real estate	$	118,042		$	601,372		$	285,845		$	1,005,259

Non-recourse property debt, net	$	—		$	447,967		$	—		$	447,967

In addition to the ~~three months ended~~amounts disclosed in the tables above, the Development and Redevelopment segment right-of-use lease assets and lease liabilities as of March 31, ~~2020~~2021 aggregated to $437.7 million and ~~2019, capital additions~~$433.5 million, respectively, related to our ~~segments were as follows (in thousands):~~investments in Upton Place, North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism. As of December 31, 2020, the Development and Redevelopment segment right-of-use lease assets and lease liabilities totaled $92.7 million and $86.8 million, respectively, related to our investment in Upton Place.

2020

2019

Same Store
$
27,526

$
35,379

Redevelopment and Development

44,596

36,458

Acquisition

15,343

76

Other Real Estate

6,419

3,477

Total capital additions
$
93,884

$
75,390

Note 89 – Subsequent Events

~~In December 2019, COVID-19 was first identified during an investigation~~On April 15, 2021, the Company entered into ~~an outbreak~~a $150 million variable-rate non-recourse construction loan collateralized by our leasehold interest and AIR’s fee ownership interest in ~~Wuhan, China.~~Flamingo North Tower. The ~~World Health Organization declared COVID-19 to be a pandemic on March 11, 2020. The outbreak~~initial term of the ~~COVID-19 pandemic has severely impacted global economic activity~~loan is three years and ~~caused significant volatility and negative pressure in financial markets. Many states and local jurisdictions~~bears interest at LIBOR plus 360 basis points subject to a minimum all-in per annum interest rate of 3.85%. Certain consolidated subsidiaries have ~~reacted~~indemnified AIR for any losses it incurs as a result of a default on the loan by instituting a wide variety of measures including states of emergency, mandatory quarantines, required business and school closures, implementing “shelter in place” orders, and restricting travel. In addition, many cities and states have enacted, or are considering enacting, protections for residents and commercial tenants, including government mandated rent delays, other abatement measures or concessions, and prohibitions on lease terminations or evictions for tenants. Many experts predict that the outbreak will trigger a period of material global economic slowdown or a global recession.

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

On April 10, 2020, the FASB issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions, including deferrals or reductions of future lease payments. Consequently, in accordance with the Staff Q&A issued by the FASB, we may elect to not follow lease modification accounting for concessions related to the effects of the COVID-19 pandemic. We are currently working with tenants impacted by the COVID-19 pandemic and will continue to evaluate the accounting impact of future lease concessions.Aimco.

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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 Aimco 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, ~~redevelopments,~~developments, and ~~developments;~~redevelopments; our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our ~~redevelopment~~development and ~~development~~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.

~~Actual~~These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties. Risks and uncertainties that could cause actual results ~~may~~to differ materially from ~~those described in these forward-looking statements~~our expectations include, but are not limited to: the effects of the coronavirus pandemic on Aimco’s business and ~~in addition, will be affected by a variety~~on the global and U.S. economies generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, all of which heightens the impact of the other risks and factors described herein, 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 growth 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; 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 ~~of which are beyond our control, including, without limitation:~~or all the benefits that we expect to achieve from the Separation; and such other risks and uncertainties described from time to time in filings by Aimco or the Separate Entities with the Securities and Exchange Commission (“SEC”).

•

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

•

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

•

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

•

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

•

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

In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and depends on our ability to meet the various requirements imposed by the ~~Internal Revenue~~ Code, through actual operating results, distribution levels and diversity of stock ownership.

Readers should carefully review our financial statements and the notes thereto, as well as Item 1A. Risk Factors in Part II of this ~~report,~~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 Properties,~~Aimco OP L.P.’s combined Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, and ~~the other~~subsequent documents we file from time to time with the ~~Securities and Exchange Commission.~~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 Properties,~~Aimco OP L.P. (which we refer to as ~~the~~ Aimco Operating Partnership) and their consolidated ~~entities,~~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, or GAAP. These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading and include: Nareit Funds from Operations, Pro forma Funds from Operations, Adjusted Funds from Operations, Free Cash Flow, Net Asset Value, Economic Income, and the measures used to compute our leverage ratios.heading.

Executive Overview

~~We are focused on the ownership, management,~~Our strategy includes property development, redevelopment, and ~~some development~~other opportunistic investments that offer the prospect of ~~quality apartment communities located in several~~outsized returns on a risk-adjusted basis. We invest where the talent of ~~the largest markets in the United States.~~our business professionals, including their local market knowledge and insight, offers a comparative advantage. We deploy a variety of project and property-level financing structures

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~~Our principal financial objective is~~ to ~~provide predictable~~improve our returns on invested capital. Additionally, we own a national portfolio of operating properties which offers diversification, capital allocation opportunity, and ~~attractive returns to~~a stable source of cash flow from operations.

We rely on the skills and experience of our ~~equity holders. We measure our long-term total return using Economic Income, defined as changes~~team in ~~the per share Net Asset Value, or NAV, growth plus dividends. NAV is used by many investors because the value~~building a broad portfolio of ~~company assets can be readily estimated, even for non-earning assets such as land or properties under development. NAV has the advantage of incorporating the investment decisions of thousands of~~value-add real estate ~~investors, enhancing comparability among companies~~investments, primarily focused on the multifamily sector and located within the continental United States. We plan to fund our investment activities through the redeployment of Aimco equity in combination with debt and third-party equity in order to improve our returns on invested capital and to grow assets under management.

Given our stated strategy, it is expected that ~~have differences~~at any point in ~~their accounting~~time the value-creation process will be ongoing at numerous of our investments and ~~avoiding disparity that can result from application of GAAP~~will therefore be difficult to ~~investment properties~~value. Over time, we expect the Aimco enterprise to produce superior returns on equity on a risk-adjusted basis and various ownership structures. NAV also provides real estate investors a basis for the perceived quality and predictability of future cash flows as well as their expected growth. Some investors focus on multiples of Adjusted Funds from Operations, or AFFO, and Funds from Operations as defined by the National Association of Real Estate Investment Trusts, or Nareit FFO. Our disclosure of AFFO, a measure of current return, complementsit is our ~~focus on Economic Income. We also use Pro forma FFO as a secondary measure of operational performance.~~

~~Our Economic Income is the result of performance in five key business areas:~~plan to do so by:

•

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

•

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

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

•

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

•

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

~~Over~~Our dedicated team will source and execute development and redevelopment projects across our ~~first 25 years as~~national platform. Aimco will seek outsized returns on incremental capital invested, for itself and its partners, through our team’s local insights regarding sub-market fundamentals, the specific property location, a ~~public company, our Economic Income compounded at an annual rate~~deep understanding of ~~14%.~~

~~COVID-19 Update~~

~~In December 2019, COVID-19 was first identified~~how best to meet the end users’ needs and wants, a disciplined commitment to mitigating risk during ~~an investigation into an outbreak in Wuhan, China. The World Health Organization declared COVID-19~~the construction process, and a ~~pandemic on March 11, 2020. The following is a summary~~passion for quality. We believe that each of ~~our response~~these components are critical to the ~~COVID-19 pandemic~~creation of an investment platform that is both sustainable and ~~a discussion~~viable independent of ~~financial information for the three months ended March 31, 2020, and periods subsequent to March 31, 2020.~~

~~As the crisis approached, we made the health and safety of teammates our priority and we:~~broader market conditions.

•

~~formed a cross-functional committee of approximately a dozen, from across the company, that met daily to re-design how work was done on site, to keep our team safe while continuing to lease apartments~~Managing and ~~fulfil service requests;~~investing in other value-add activities (opportunistic investments)

We expect to have a broad set of investment opportunities due to our national platform, management’s deep connections in the local markets in which we invest, and various strategic relationships. These opportunities may include, but are not limited to, portfolio acquisitions, programmatic joint ventures, debt placements, operational turnarounds, and re-entitlements. Aimco will undertake such opportunistic value-add transactions when warranted by the prospect of outsized risk-adjusted returns.

•

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

We own a geographically diversified portfolio of stabilized properties that produces stable cash flow and serves to balance the risk and highly variable cashflows associated with our portfolio of development and redevelopments and value-add investments. We expect to maintain, at any given time, an allocation of capital to stabilized operating properties of no less than 30% of Aimco equity.

•

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

•

~~committed to keep our team intact, without layoffs or pay cuts;~~Maintaining sufficient liquidity and

•

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

22We are highly focused on the importance of maintaining ample liquidity and of limiting our exposure to any single investment. On March 31, 2021, our cash on hand plus capacity to borrow on our revolving credit facility equaled $385.3 million.

~~Table~~We expect to capitalize our activities through a combination of ~~Contents~~

~~Customer focus led us~~non-recourse property debt, construction loans, third-party equity, and the recycling of Aimco equity, including through retained earnings. We plan to ~~make~~limit the use of recourse leverage, with a strong preference towards 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 ~~properties safer by increasing cleaning, reducing opportunities~~cost of capital, further leverage Aimco equity, reduce exposure to a single investment and, in certain cases, for ~~infection, and limiting in-person interactions with neighbors and site teams, and we:~~strategic benefits.

•

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

•

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

•

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

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

We have corporate headquarters in Denver, Colorado, and Bethesda, Maryland. Our ~~Board of Directors was fully informed~~investment platform is managed by experienced professionals based in four regions: West Coast, Central and ~~fully engaged, including two candidates for the board who were not formally elected until the end of April. During March~~Mountain West, Mid-Atlantic and ~~April, we delivered five management reports, made numerous calls, asked individual directors for specific assistance,~~Northeast, and ~~held four virtual board meetings.~~

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

~~Preliminary 2~~^nd ~~Quarter Information~~

•

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

•

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

•

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

•

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

•

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

Our new methodology accelerated the estimate of collectability to month-end based on our assessment of the creditworthiness of the tenants and third-party guarantors, based on their FICO scores. Previously, we evaluated collectability of balances only after such balances were more than 30 days past due. Using the new methodology, April residential bad debt expense was approximately 1% of revenues, or $670k; an increase of $270k from what would have been the result using our former methodology.

~~We also reviewed the viability of our commercial tenants and the related accounting assets for straight-line rents and deferred broker commissions.~~

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

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

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

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

~~Redevelopment and Development~~

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

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

~~Liquidity and Leverage~~

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

~~In total,~~platform, we are ~~placing $688 million~~able to leverage the in-depth local market knowledge of ~~new property debt, generating incremental proceeds of $367 million. We have closed or rate-locked $326 million of the new property loans. These loans have~~each regional leader, creating a ~~weighted-average term to maturity of 8.3 years~~comparative advantage when sourcing, evaluating, and a weighted-average interest rate of 2.9%, lowering our overall borrowing costs by five basis points. When these financings, and the property loans currently in process, are completed, we will have no loan maturities in 2020 and will have reduced 2021 to 2024 maturities by $229 million; resulting in average annual maturities of $265 million for the four years 2021 to 2024.

Our investment-grade balance sheet provides flexibility and liquidity. Leverage, as measured by leverage-to-EBITDAre, remains above targeted levels. We expect to reduce leverage to targeted levels through increased EBITDAre from the lease up of the five properties under construction and from property sales.

~~In early May, we sold an apartment community located in Annandale, Virginia at a price of $58.9 million, equal to its estimated gross asset value at December 31, 2019.~~executing investment opportunities.

Results for the Three Months Ended March 31, ~~2020~~2021

The results from the execution of our business plan during the three months ended March 31, ~~2020,~~2021, are further described below.

~~Operations~~Financial Highlights

~~We own and operate~~Net income attributable to Aimco common stockholders per common share, on a ~~portfolio~~dilutive basis, was $0.14 per share, an increase of apartment communities, diversified by both geography and price point. As of March 31, 2020, our portfolio included 124 apartment communities with 32,846 apartment homes in which we held an average ownership of approximately 99%.

~~Our property operations team produced solid results for our portfolio for~~$0.11 during the three months ended March 31, ~~2020. Same Store highlights include:~~

•

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

•

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

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•

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

Our focus on efficient operations through productivity initiatives such as centralization of administrative tasks, optimization of economies of scale at the corporate level, and increased automation has helped us control operating expenses. These and other innovations contributed to a growth rate in Same Store controllable operating expense, which we define as property expenses less taxes, insurance, and utility expenses, compounding for the 12 years ended December 31, 2019, at an annual rate of negative 0.2%. During the three months ended March 31, 2020, Same Store controllable operating expenses decreased 3.5%2021, compared to ~~the three months ended March 31, 2019.~~

~~Redevelopment and Development~~

~~Our second line of business is the redevelopment and some development of apartment communities. Through redevelopment activities, we expect~~2020, due primarily to ~~create value by repositioning communities within~~unrealized gains on our portfolio. We undertake ground-up development when warranted by risk-adjusted investment returns, either directly or in connection with the redevelopment of an existing apartment community. When warranted, we rely on the expertise and credit of a third-party developer familiar with the local market to limit our exposure to construction risk. We invest to earn risk-adjusted returns in excess of those expected from the apartment communities sold in “paired trades” to fund the redevelopment or development. Of these two activities, we generally favor redevelopment because it permits adjustment of the scope and timing of spending to align with changing market conditions and customer preferences.interest rate options.

We execute redevelopments using a range of approaches. We prefer to limit risk by executing redevelopments using a short-cycle approach, in which we renovate an apartment community in stages. These short-cycle redevelopments can be completed one apartment home at a time, when that home is vacated and available for renovation, or one floor at a time, thereby limiting the number of down homes and lease-up risk. As a result, short-cycle redevelopments provide us the flexibility to maintain current earnings while aligning the timing of the completed apartment homes with market demand. When short-cycle redevelopments are not possible, we may engage in redevelopment activities where an entire building or community is vacated. We refer to these as long-cycle redevelopments. We undertake some ground-up development when warranted by risk-adjusted investment returns. Redevelopment work may include seeking entitlements from local governments, which enhance the value of our existing portfolio by increasing density; that is, the right to add apartment homes to a site.

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

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

Location

Homes
Approved for
Redevelopment

Homes Completed

Homes Leased

Total Planned Investment
(1)

Investment to Date

Expected Initial Occupancy (2)

Expected NOI
Stabilization
(3)
Short-cycle redevelopments:

Bay Parc
Miami, FL

75

75

70

$
26.3

$
26.3

N/A

N/A
Long-cycle redevelopments:

707 Leahy (4)
Redwood City, CA

110

12

19

25.0

16.1

1Q 2020

2Q 2022
Eldridge Townhomes
Elmhurst, IL

58

—

12

35.1

24.1

2Q 2020

4Q 2022
Flamingo Point
Miami Beach, FL

385

18

12

224.9

90.2

4Q 2021

2Q 2024
The Fremont
Denver, CO (MSA)

253

—

16

87.0

69.8

3Q 2020

1Q 2023
Parc Mosaic (5)
Boulder, CO

226

226

157

124.6

123.4

3Q 2019

1Q 2022
Prism (6)
Cambridge, MA

136

—

2

73.2

32.8

1Q 2021

3Q 2023
Total

1,243

331

288

$
596.1

$
382.7

~~(1)~~

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

~~(2)~~

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

~~(3)~~

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

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~~(4)~~

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

~~(5)~~

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

~~(6)~~

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

AsOur business is organized around five areas of ~~March 31, 2020, our total estimated net~~strategic focus: development and redevelopment; asset management; investment ~~at redevelopment~~activity; balance sheet; and ~~development communities is $596.1 million, of which we have funded $382.7 million. We expect to fund the remaining estimated net investment of $213.4 million on these communities in 2020~~team and ~~future years, on a leverage-neutral basis, with proceeds from sales of apartment communities with lower forecasted FCF internal rates of return.~~culture.

Development and Redevelopment

Construction Activity

During the three months ended March 31, ~~2020,~~2021, we ~~leased 73 redeveloped or newly developed apartment homes. As~~invested approximately $45.8 million at our development and redevelopment projects.

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At the North Tower of Flamingo Point in Miami Beach, Florida, the major redevelopment continues on plan with approximately $43.0 million remaining to invest and a target to complete construction in 2022 and reach stabilization in 2023.

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At Upton Place in Washington D.C., construction activities began in January 2021 and are progressing on budget with approximately $221.1 million remaining to complete construction and on schedule for completion in 2024.

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As previously announced, we began construction on The Benson Hotel and Faculty Club on the Anschutz Medical Campus in Aurora, Colorado. We expect a remaining investment of approximately $52.0 million with completion planned for the first quarter of 2023.

Lease-up Progress

During the three months ended March 31, ~~2020, our exposure~~2021, Aimco held three properties where newly constructed or renovated homes had been delivered but stabilization had not yet been reached.

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At 707 Leahy, in Redwood City, California, all apartment homes had been delivered and construction was complete as of 4Q 2020. As of March 31, 2021, the 110-unit property was 71% leased.

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At The Fremont on the Anschutz Medical Campus in Aurora, Colorado, all apartment homes had been delivered and construction was complete as of 4Q 2020. As of March 31, 2021, the 253-unit property was 54% leased.

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At Prism, located in Cambridge, Massachusetts, all apartment homes had been delivered and construction was complete as of 1Q 2021. As of March 31, 2021 the 136-unit property was 22% leased.

The pace of absorption at these properties accelerated during April and early May as local economies reopen and we enter the prime leasing season. In April, leasing volume increased by more than a third when compared to ~~lease-up at long-cycle redevelopment~~March, and ~~development communities was 892 apartment homes; 70 homes where construction~~leasing in May is ~~complete, 347 homes expected~~projected to ~~be delivered during the remainder of 2020, and 475 homes expected to be delivered in 2021.~~outpace April.

~~Portfolio~~Asset Management ~~and Capital Allocation~~

~~Our~~

Operating Properties

We own a geographically diversified portfolio of ~~apartment communities is diversified across “A,” “B,”~~operating properties that produces stable cash flow and ~~“C+” price points, averaging “B/B+” in quality,~~serves to balance the risk and ~~is also diversified across several~~highly variable cashflows associated with its portfolio of the largest markets in the United States. We measure the quality of apartment communities in our portfolio based on average rents of our apartment homes compared to local market average rents as reported by a third-party provider of commercial real estate performance datadevelopment and analysis. Under this rating system, we classify as “A” quality apartment communities those earning rents greater than 125% of local market average; as “B” quality apartment communities those earning rents between 90%redevelopments and 125% of local market average; as “C+” quality apartment communities those earning rents greater than $1,100 per month, but lower than 90% of local market average; and as “C” quality apartment communities those earning rents less than $1,100 per month and lower than 90% of local market average. We classify as “B/B+” quality a portfolio that on average earns rents between 100% and 125% of local market average rents. Although some companies and analysts within the multifamily real estate industry use apartment community quality ratings of “A,” “B,” and “C,” some of which are tied to local market rent averages, the metrics used to classify apartment community quality as well as the period for which local market rents are calculated may vary from company to company. Accordingly, our rating system for measuring apartment community quality is neither broadly nor consistently used in the multifamily real estate industry.

~~The following table summarizes information about our portfolio relative to the market~~value-add investments. Our Operating Portfolio produced solid results for the three months ended March 31, ~~2020:~~2021. Highlights include:

Average revenue per Aimco apartment home (1)

$
2,280

Portfolio average rents as a percentage of local market average rents

112
%
Percentage A (1Q 2020 average revenue per Aimco apartment home $2,988)

53
%
Percentage B (1Q 2020 average revenue per Aimco apartment home $2,010)

30
%
Percentage C+ (1Q 2020 average revenue per Aimco apartment home $1,769)

17
%

•

Average daily occupancy at our Operating Portfolio of 97.6% for the three months ended March 31, 2021, a 70-basis point improvement from the three months ended December 31, 2020, and equal to the three months ended March 31, 2020.

~~(1)~~•

~~Represents average monthly rental~~Average revenue per occupied unit at our Operating Portfolio of $1,852 for the three months ended March 31, 2021, down 2.0% year over year and ~~other property revenues (excluding resident reimbursement~~essentially flat to the three months ended December 31, 2020.

•

Revenue, before utility reimbursements, was $32.7 million for the three months ended March 31, 2021, down 2.0% year over year but up 0.6% from the three months ended December 31, 2020.

•

Expenses, net of utility ~~cost) divided~~reimbursements were $11.2 million for the three months ended March 31, 2021, up 6.3% year over year and up 5.2% from the three months ended December 31, 2020. The year over year increase is due primarily to higher real estate taxes and insurance with the sequential increase due primarily to seasonal net utility costs and snow removal. Sequentially, expenses outside of these seasonal items were favorable 50 basis points.

•

Net operating income for our Operating Portfolio decreased by 5.8% year over year, for the ~~number of occupied apartment homes as of~~three months ended March 31, 2021, and down 1.6% from the ~~end of the period.~~three months ended December 31, 2020.

~~Our average revenue per apartment home was $2,280 for~~We measure residential rent collection as the amount of payments received as a percentage of all residential amounts owed. In the three months ~~ended~~ending March 31, ~~2020, representing an increase~~2021, we collected 97.5% of ~~5% compared to the same period in 2019. This increase is due primarily to growth in Same Store~~all amounts owed by Aimco residents and recognized 98.4% of revenue, ~~lease-up of redeveloped apartment homes, and the sale of communities with average monthly revenues per apartment home lower than those of the retained portfolio.~~

We follow a disciplined paired trade policy in making investments. As part of our portfolio strategy, we seek to sell up to 10% of our portfolio annually and to reinvest the proceeds from such sales in accretive uses suchreserving 160 basis points as capital enhancements, redevelopments, some developments, and selective acquisitions with projected FCF internal rates of return higher than expected from the communities being sold. We prefer well-located real estate where land is a significant percentage of total value and provides potential upside from development or redevelopment. Through this disciplined approach to capital recycling, we increase the quality and expected growth rate of our portfolio.

As we execute our portfolio strategy, we expect to increase average revenue per Aimco apartment home at a rate greater than market rent growth, increase FCF margins, and maintain sufficient geographic and price point diversification to limit volatility and concentration risk.bad debt.

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~~During~~1001 Brickell Bay Drive, a waterfront office building in Miami, FL owned as part of a larger assemblage, is currently 72.4% occupied with 100% of rents due collected, in the ~~three months ended~~first quarter.

Other Investments

Parkmerced Mezzanine Investment: On November 26, 2019, Aimco Predecessor made a five-year, $275.0 million mezzanine loan to a partnership owning 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. The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, 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 through 2024 to Aimco. At the time of the Separation and as of May 17, 2021, legal title of these subsidiaries had not yet transferred to Aimco. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments on such loan 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.

The loan is subject to certain risks, including, but not limited to, those resulting from the severe downturn in San Francisco rents, the ongoing disruption due to the COVID-19 pandemic and associated governmental response, and the current economic situation which may result in all or a portion of the loan not being repaid. In the event we determine that a portion of the Mezzanine Investment is not recoverable, we will recognize an impairment, if appropriate.

Life Science Developer Investment: In the third quarter of 2020, Aimco made a $50 million commitment to IQHQ, Inc. (“IQHQ”), a privately-held life sciences real estate development company. In addition, Aimco gained the right to collaborate with IQHQ on any multifamily component at its future development sites.

Investment Activity

Leasehold Agreements: On January 1, 2021, terms commenced on the leasehold agreements with AIR for 707 Leahy, The Fremont, Prism, and Flamingo Point North Tower. The combined initial value of leasehold interest, as indicative of the initial fair market values of the leased assets at the time of lease inception, was $469.0 million. The combined annual leasehold payment for these four assets is $25.3 million. We expect the total development and redevelopment expenditures related to these assets to be approximately $70.8 million with $24.1 million having been invested as of March 31, ~~2020,~~2021. The lease agreements provide Aimco the right to terminate each lease once the leased property is stabilized with AIR then having the option to retain ownership of the land and purchase the improvements from Aimco. Should AIR exercise their option, Aimco would be due the difference between the property’s fair-market value at stabilization and the initial value of the leasehold interest, less a 5% discount.

Acquisitions: In February 2021, we ~~made no acquisitions or dispositions.~~purchased, for $6.2 million, 1.5-acres of fully entitled land on the Anschutz Medical Campus in Aurora, CO plus options allowing for the purchase of an additional 5.2 acres that will accommodate more than 750,000 square feet of new development. The 1.5-acre site is now being developed as The Benson Hotel and Faculty Club (“Benson Hotel”) which represents a critical step in advancement of the campus masterplan. The purchase is net of outstanding construction liabilities of $0.9 million.

The Aimco team continues to actively source and evaluate a wide range of potential investment opportunities.

Balance Sheet

~~Leverage~~

~~Our leverage strategy seeks to increase financial returns by using leverage with appropriate caution. We limit risk~~Aimco capitalizes its activities through our balance sheet structure, employing low leverage, primarily non-recourse and long-dated property debt; build financial flexibility by maintaining ample unused and available credit; holding properties with substantial value unencumbered by property debt; maintaining an investment grade rating; and using partners’ capital when it enhances financial returns or reduces investment risk.

~~Our leverage includes our share~~a combination of ~~long-term,~~ non-recourse property debt, ~~encumbering apartment communities, outstanding borrowings~~construction loans, third-party equity, and the recycling of Aimco equity, including through retained earnings. We plan to limit the use of recourse leverage, with a strong preference towards 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 its cost of capital, further leverage Aimco equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.

We are highly focused on the importance of maintaining ample liquidity. As of March 31, 2021, we had access to $385.3 million, including $226.1 million of cash on hand, $9.2 million of restricted cash, and the capacity to borrow up to $150 million on our revolving credit ~~facility, and other leverage.~~facility. Please refer to the Liquidity and Capital Resources section for additional information regarding our leverage. ~~Other leverage includes mezzanine equity instruments,~~

In evaluating our financial condition and operating performance we use non-GAAP measures, including ~~preferred OP Units and redeemable noncontrolling interests in consolidated real estate partnership.~~

~~Our target leverage ratios are Net Leverage to~~ Adjusted EBITDAre, ~~below 7.0x~~which we believe is useful to investors and creditors as a supplemental measure of our ability to incur and service debt. Our Adjusted EBITDAre to Adjusted Interest Expense and Preferred Distributions greater than 2.5x. We calculate Adjusted EBITDAre and Adjusted Interest Expense used in our leverage ratios based on the most recent three-month amounts, annualized. Our leverage ratios for the three months ~~March 31, 2020, are presented below:~~


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

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

Under our revolving credit facility, we have agreed to maintain a fixed charge coverage ratio of 1.40x, as well as other covenants customary for similar revolving credit arrangements. For the trailing twelve months ended March 31, ~~2020, our fixed charge coverage ratio~~2021 was ~~2.08x. We expect to remain in compliance with these covenants.~~

$16.7 million. Please refer to ~~the Leverage Ratios subsection of~~ the Non-GAAP Measures section for further information about the calculation of Adjusted EBITDAre and our leverage ratios.

Please refer to the Liquidity

~~Our liquidity consists of cash~~ and ~~restricted cash balances and available capacity on~~Capital Resources section for additional information regarding our ~~revolving credit facility.~~

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

Additionally, as of May 1, 2020, we had closed or rate-locked $326.2 million of fixed-rate property debt financing with a weighted-average term to maturity of 8.3 years and a weighted-average interest rate of 2.9%. We have an additional $200.0 million of in-process property loans that we expect to close over the next 30 days.

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

~~We manage our financial flexibility by maintaining an investment grade rating and holding apartment communities that are unencumbered by property debt.~~

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

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~~Equity Capital Activities~~Financing Activity

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

On April ~~28, 2020,~~15, 2021, the Company entered into a $150 million variable-rate non-recourse construction loan collateralized by our ~~Board of Directors declared a quarterly cash dividend of $0.41 per share of Common Stock, an increase of 5% compared to the regular quarterly dividends paid~~leasehold interest and AIR’s fee ownership interest in ~~2019. This amount is payable on May 29, 2020, to stockholders of record on May 15, 2020.~~

~~Team and Culture~~

Our team and culture are keys to our success. Our intentional focus on a collaborative and productive culture based on respect for others and personal responsibility is reinforced by a preference for promotion from within. We focus on succession planning and talent development to produce a strong, stable team that is the enduring foundation of our success. We offer benefits reinforcing our value of caring for each other, including paid time for parental leave, paid time annually to volunteer in local communities, college scholarships for the children of team members, an emergency fund to help team members in crisis, financial support for our team members who are becoming United States citizens, and a bonus structure at all levelsFlamingo North Tower. The initial term of the ~~organization. We also pay full compensation~~loan is three years and ~~benefits~~bears interest at LIBOR plus 360 basis points subject to a minimum all-in per annum interest rate of 3.85%. Certain consolidated subsidiaries have indemnified AIR for ~~team members who are actively deployed by the United States military. Out of hundreds of participating companies in 2019, we were one of only seven recognized~~any losses it incurs as a ~~“Top Workplace” in Colorado for each~~result of a default on the past seven years. We were also recognized as a Top Workplace in the Bay Area in 2019. Also in 2019, we were the only real estate company to receive a BEST award from the Association for Talent Development in recognition of our company-wide success in talent development, marking our second consecutive year receiving this award.loan by Aimco

Financial Results of Operations

~~Because~~We have three segments: (i) Development and Redevelopment, (ii) Operating Portfolio, and (iii) Other. Our Development and Redevelopment segment includes properties that are under construction, in pre-construction, or have not achieved stabilization. The Development and Redevelopment segment also includes our ~~operating results depend primarily on income from~~four leased properties, one is under construction and three are operational but have not achieved stabilization. Our Operating Portfolio segment includes majority owned residential communities that have achieved stabilized levels of operations as of January 1, 2020 and maintained it throughout the current year and comparable period. Our Other segment consists of 1001 Brickell Bay Drive, our apartment communities, the supply of and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our apartment communities and the pace and price at which we redevelop, acquire, and dispose of our apartment communities affect our operating results.only commercial real estate property.

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.

~~Financial Highlights~~

Net income ~~attributable to common stockholders per common share, on a dilutive basis, decreased~~increased by ~~$1.84~~$8.5 million during the three months ended March 31, ~~2020,~~2021, compared to ~~2019, due primarily to lower gains from dispositions.~~

~~AFFO per share increased $0.05 for the three months ended March 31,~~ 2020, ~~compared to 2019, due primarily to a $0.05 increase in Same Store property net operating income.~~respectively, as described more fully below.

Detailed Results of Operations for the Three Months Ended March 31, ~~2020,~~2021, Compared to the Three Months Ended March 31, ~~2019~~

~~Net income decreased by $282.3 million during the three months ended March 31, 2020, compared to 2019, as described more fully below.~~2020.

Property ~~Operations~~

~~We have four segments: Same Store, Redevelopment and Development, Acquisition, and Other Real Estate.~~ Our Same Store segment includes communities that have reached a stabilized level of operations as of the beginning of a two-year comparable period and maintained it throughout the current and comparable prior year and are not expected to be sold within 12 months. Our Redevelopment and Development segment includes communities that are currently under construction, and those that have been completed in recent years that have not achieved and maintained stabilized operations for both the current and comparable prior year. Our Acquisition segment includes those communities that we have acquired since the beginning of a two-year comparable period. Our Other Real Estate segment primarily includes apartment communities that are subject to limitations on rent increases, communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale, ~~communities that we expect to redevelop, and certain commercial spaces.~~Results

As of March 31, ~~2020,~~2021, our ~~Same Store~~Development and Redevelopment segment included ~~95 apartment~~three properties that were under construction, three properties in lease-up and Hamilton on the Bay, which is being prepared for construction, our Operating Portfolio segment included 24 communities with ~~28,095 apartment homes.~~

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

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•

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

•

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

•

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

~~As of March 31, 2020: our Redevelopment and Development segment included six apartment communities with 2,210 apartment homes; our Acquisition segment included one apartment community with 110~~6,067 apartment homes, and ~~one apartment community with 136 homes under construction; and~~ our Other ~~Real Estate~~ segment ~~included 18 apartment communities with 2,289 apartment homes and~~includes one office building.

We use proportionate property net operating income to assess the operating performance of our ~~communities.~~segments. Proportionate property net operating income ~~reflects~~is defined as our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net of utility reimbursements, for consolidated communities. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP. Accordingly, the results of operations of our segments discussed below are presented on a proportionate basis and exclude the results of four apartment communities with an aggregate 142 apartment homes that we ~~do not consolidate.~~neither manage nor consolidate, notes receivable, our investment in IQHQ and the Mezzanine Investment.

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

Please refer to Note 78 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.

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Proportionate Property Net Operating Income

The results of our segments for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, as presented below, are based on segment classifications as of March 31, ~~2020.~~2021.

Three Months Ended March 31,

(in thousands)
2020

2019

$ Change

% Change

Rental and other property revenues, before utility reimbursements:

   Same Store
$
187,956

$
181,523

$
6,433

3.5
%
   Redevelopment and Development

11,913

14,012

(2,099
)

(15.0
%)
   Acquisition

884

—

884

nm

   Other Real Estate

17,875

14,113

3,762

26.7
%
      Total

218,628

209,648

8,980

4.3
%
Property operating expenses, net of utility reimbursements:

   Same Store

48,782

48,990

(208
)

(0.4
%)
   Redevelopment and Development

4,687

5,255

(568
)

(10.8
%)
   Acquisition

401

127

274

215.7
%
   Other Real Estate

6,174

4,991

1,183

23.7
%
      Total

60,044

59,363

681

1.1
%
Proportionate property net operating income:

   Same Store

139,174

132,533

6,641

5.0
%
   Redevelopment and Development

7,226

8,757

(1,531
)

(17.5
%)
   Acquisition

483

(127
)

610

(480.3
%)
   Other Real Estate

11,701

9,122

2,579

28.3
%
      Total
$
158,584

$
150,285

$
8,299

5.5
%

	Three Months Ended March 31,				Historical Change
(in thousands)	2021		2020		$			%
Rental and other property revenues, before utility reimbursements:
Development and Redevelopment	$	2,257	$	—	$	2,257			100	%
Operating Portfolio		32,689		33,361		(672	)		(2.0	%)
Other		3,027		3,277		(250	)		(7.6	%)
Total		37,973		36,637		1,336			3.6	%
Property operating expenses, net of utility reimbursements:
Development and Redevelopment		1,867		—		1,867			100	%
Operating Portfolio		11,170		10,510		660			6.3	%
Other		985		990		(5	)		(0.5	%)
Total		14,022		11,500		2,522			21.9	%
Proportionate property net operating income:
Development and Redevelopment		390		—		390			100	%
Operating Portfolio		21,519		22,851		(1,332	)		(5.8	%)
Other		2,042		2,287		(245	)		(10.7	%)
Total	$	23,951	$	25,138	$	(1,187	)		(4.7	%)

For the three months ended March 31, ~~2020,~~2021, compared to ~~2019,~~ 2020, our ~~Same Store~~Operating Portfolio proportionate property net operating income ~~increased~~decreased by ~~$6.6~~$1.3 million, or ~~5.0%~~5.8%. This ~~increase~~decrease was attributable ~~primarily~~ to a ~~$6.4~~$0.7 million, or ~~3.5%~~2.0%, ~~increase~~decrease in rental and other property revenues due to ~~higher~~lower average revenues of ~~$62~~$37 per apartment home ~~comprised of increases in rental rates~~ and a ~~60-basis point~~$0.7 million, or 6.3%, increase in ~~average daily occupancy. Renewal rents in the first quarter increased by 5.8%, and new lease rents increased by 1.7%, resulting in a weighted-average increase of 3.6%. Same Store~~ property operating expenses ~~decreased $0.2 million, contributing~~due primarily to ~~the proportionate property net operating income growth, driven primarily by a $0.8 million, or 3.5%, decrease in controllable operating expenses, which exclude utility costs,~~higher real estate taxes and insurance.

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~~Redevelopment and Development~~For the three months ended March 31, 2021, compared to 2020, total proportionate property net operating income decreased by ~~$1.5~~$1.2 million, or 17.5%, for the three months ended March 31, 2020, compared to 2019. This decrease was attributable primarily to de-leasing at Flamingo Point and 707 Leahy in preparation for redevelopment, offset partially by increased occupancy driven by the lease-up at Parc Mosaic.

Other Real Estate proportionate property net operating income increased by $2.6 million, or 28.3%, for the three months ended March 31, 2020, compared to 2019, due primarily to the acquisition of 1001 Brickell Bay Drive in July 2019.4.7%.

Non-Segment Real Estate Operations

Operating income amounts not attributed to our segments include offsite costs associated with property management, casualty losses, write-off of straight-line rent receivables, and the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our segments for purposes of evaluating segment performance.

For the three months ended March 31, 2020, we recognized a write-off of straight-line rent receivables due to the impact of COVID-19 and the resulting economic impact on our commercial tenants. No similar write-off was recognized in 2019.

~~For the three months ended March 31, 2020, compared to 2019, net operating income decreased by $7.7 million due to the sale of apartment communities in 2019.~~

Depreciation and Amortization

For the three months ended March 31, ~~2020, compared to 2019,~~2021 depreciation and amortization expense was higher by $1.4 million when compared to the same period ended in 2020.

General and Administrative Expenses

For the three months ended March 31, 2021, compared to 2020, general and administrative expenses increased by ~~$6.9~~$4.5 million due primarily to the difference of allocating costs in 2020 and the actual costs experienced running the separate business in 2021.

Interest Expense

For the three months ended March 31, 2021, compared to 2020, interest expense increased by $7.0 million, or ~~7.4%~~124.3%, due primarily to ~~communities acquired in 2019 and apartment homes placed in service after completion of construction. This increase was offset partially by decreases in depreciation~~interest associated with ~~apartment communities sold~~the notes payable to AIR entered into in conjunction with the Separation.

Mezzanine Investment Income, Net

On November 26, 2019, we made a five-year, $275.0 million mezzanine loan to a partnership owning Parkmerced Apartments, located in southwest San Francisco. The loan is junior to a $1.5 billion first mortgage position and ~~assets fully depreciated~~bears interest at a 10% annual rate, accruing if not paid from property operations. At March 31, 2021, the total receivable including accrued and unpaid interest was $314.8 million. During the three months ended March 31, 2021 and 2020, we recognized $0.7 million and $0.7 million, respectively, of income in ~~2019.~~connection with the mezzanine loan.

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situation which may result in all or a portion of the loan not being repaid. In the event we determine that a portion of the Mezzanine Investment is not recoverable, we will recognize an impairment, if appropriate.

Unrealized Gains 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 adjustment we recorded an unrealized gain in the amount of $25.3 million.

Other Expenses, Net

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

For the three months ended March 31, ~~2020,~~2021, compared to ~~2019,~~2020, other expenses, net decreased by ~~$3.5 million, or 68.0%, due primarily to a favorable incremental cash receipt in the first quarter of 2020 related to a previous settlement and lower ground lease expense.~~

~~Interest Income~~

Interest income for the three months ended March 31, 2020, compared to 2019, increased by $1.8 million, or 65.9%, due primarily to a gain recognized due to the early payoff of a seller financing note.

~~Gain on Dispositions of Real Estate~~

During the three months ended March 31, 2020, no apartment communities were sold. The table below summarizes dispositions of apartment communities from our portfolio during the three months ended March 31, 2019 (dollars in thousands):

2019

Number of apartment communities sold

7

Gross proceeds
$
408,550

Net proceeds (1)
$
340,218

Gain on dispositions
$
291,473

~~(1)~~

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

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

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~~Mezzanine Investment Income, Net~~

On November 26, 2019, we loaned $275 million to the partnership owning Parkmerced Apartments. During the three months ended March 31, 2020, we recognized $6.7 million of income in connection with the mezzanine loan, and we received cash payments of $0.6 million on the accrued interest.$0.8 million.

Income Tax Benefit ~~(Expense)~~

Certain of our operations, including ~~property management~~our Development and ~~risk management,~~Redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, ~~some~~our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay ~~Drive are owned through TRS entities.~~Drive.

Our income tax benefit calculated in accordance with GAAP ~~includes: (a)~~includes income taxes associated with the income or loss of our TRS entities including tax on gains on dispositions, for which the tax consequences have been realized or will be realized in future periods; (b) low income housing tax credits generated prior to the sale of our Asset Management business that offset REIT taxable income, primarily from retained capital gains; and (c) historic tax credits that offset income tax obligations of our TRS entities. Income taxes, ~~related to these items,~~ as well as changes in valuation allowance and ~~the establishment of~~ incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in income tax benefit in our condensed consolidated statements of 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 months ended March 31, 2021 and 2020, we ~~incurred~~had consolidated net loss subject to tax of $9.5 million and $4.4 million, respectively.

For three months ended March 31, 2021, we recognized income tax benefit of ~~$3.2~~$5.1 million, compared to ~~income tax provision of $3.0~~$2.0 million during the same period in ~~2019.~~2020. The change is due primarily to income tax ~~provision on~~benefit associated with internal restructuring completed in the ~~gain on dispositions~~first quarter and changes to our effective state rate expected to apply to the reversal of ~~real estate in 2019, offset partially by decreased benefit due to lower net operating losses at communities held by TRS entities.~~our existing deferred items.

Critical Accounting Policies and Estimates

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

Our critical accounting policies are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and ~~the~~ Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. There have been no significant changes in our critical accounting policies from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Non-GAAP Measures

~~Certain key financial indicators we~~We use EBITDAre and Adjusted EBITDAre in managing our business and in evaluating our financial condition and operating ~~performance~~performance. These key financial indicators are non-GAAP ~~measures. Key non-GAAP~~ measures ~~we use~~and are defined and described ~~below, and for those non-GAAP measures used or disclosed within this quarterly report, we~~below. We provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance with GAAP.

We measure our long-term total return using Economic Income, which is a non-GAAP financial measure. Economic Income represents stockholder value creation as measured by the per share change in estimated NAV plus cash dividends. We believe Economic Income is important to investors as it represents a measure of total return earned by our stockholders. We report and reconcile Economic Income annually. Please refer to the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019, for more information about Economic Income.

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

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

Nareit FFO is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers, or other personal property. Nareit defines FFO as net income computed in accordance with GAAP, excluding: depreciation and amortization related to real estate; gains and losses from sales and impairment of depreciable assets and land used in our primary business; and income taxes directly associated with a gain or loss on the sale of real estate, and including our share of the FFO of unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine Nareit FFO. We calculate Nareit FFO attributable to Aimco common stockholders (diluted) by subtracting amounts allocated from Nareit FFO to participating securities.

In addition to Nareit FFO, we compute Pro forma FFO and AFFO, which are also non-GAAP financial measures that we believe are helpful to investors in understanding our short-term performance. Pro forma FFO represents Nareit FFO attributable to Aimco common stockholders (diluted), excluding certain amounts that are unique or occur infrequently.

~~In computing 2020 Pro forma FFO, we made the following adjustment to Nareit FFO:~~

•

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

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

•

~~Straight-line rent: as described above.~~

•

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

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

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

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

2020

2019

Net income attributable to Aimco common stockholders (1)

$
6,679

$
271,568

Adjustments:

Real estate depreciation and amortization, net of noncontrolling partners’ interest

97,792

91,374

Loss (gain) on dispositions and other, net of noncontrolling partners’ interest

34

(291,473
)
Income tax adjustments related to gain on dispositions and other tax-related items

226

6,526

Common noncontrolling interests in Aimco Operating Partnership’s share of above
   adjustments

(5,096
)

10,249

Amounts allocable to participating securities

(39
)

316

Nareit FFO attributable to Aimco common stockholders

$
99,596

$
88,560

Adjustments, all net of common noncontrolling interests in Aimco Operating
   Partnership and participating securities:

Straight-line rent

635

2,307

Litigation, net

—

25

Pro forma FFO attributable to Aimco common stockholders

$
100,231

$
90,892

Capital Replacements, net of common noncontrolling interests in Aimco Operating
   Partnership and participating securities

(11,605
)

(9,711
)
AFFO attributable to Aimco common stockholders

$
88,626

$
81,181

Total share and dilutive share equivalents used to calculate Net income and Nareit FFO
   per share (2)

148,786

144,445

Adjustment to weight reverse stock split (3)

—

3,888

Pro forma shares and dilutive share equivalents used to calculate Pro forma FFO and
   AFFO per share

148,786

148,333

Net income attributable to Aimco per common share – diluted

$
0.04

$
1.88

Nareit FFO per share – diluted

$
0.67

$
0.61

Pro forma FFO per share – diluted

$
0.67

$
0.61

AFFO per share – diluted

$
0.60

$
0.55

~~(1)~~

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

~~(2)~~

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

~~(3)~~

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

~~Please refer to Financial Highlights above for discussion of the factors affecting our Pro forma FFO and AFFO growth for 2020, as compared to 2019.~~

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

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~~Leverage Ratios~~

~~As discussed under the Balance Sheet heading, our leverage strategy targets the ratio of Net Leverage to Adjusted EBITDAre to be below 7.0x and the ratio of Adjusted EBITDAre to Adjusted~~Earnings Before Interest Expense, Income Taxes, Depreciation and Preferred Distributions to be greater than 2.5x. We believe these ratios, which are based in part on non-GAAP financial information, are commonly used by investors and analysts to assess the relative financial risk associated with companies within the same industry, and they are believed to be similar to measures used by rating agencies to assess entity credit quality.Amortization for Real Estate (EBITDAre)

Proportionate Debt, as used in our leverage ratios, is a non-GAAP measure and includes our share of the long-term, non-recourse property debt, and outstanding borrowings under our revolving credit facility. Proportionate Debt excludes unamortized debt issuance costs because these amounts represent cash expended in earlier periods and do not reduce our contractual obligations. We reduce our recorded debt by the amounts of cash and restricted cash on-hand (which are primarily restricted under the terms of our property debt agreements), excluding tenant security deposits included in restricted cash, assuming the remaining amounts of cash and restricted cash would be used to reduce our outstanding leverage. We further reduce our recorded debt by the value of our investment in a securitization trust that holds certain of our property debt, as our payments of principal and interest associated with such property debt will ultimately repay our investments in the trust.

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

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

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

March 31, 2020

Total indebtedness

$
4,802,532

Adjustments:

Debt issuance costs related to non-recourse property debt

19,753

Proportionate share adjustments related to debt obligations of consolidated and unconsolidated
   partnerships

(7,732
)
Cash and restricted cash

(374,816
)
Tenant security deposits included in restricted cash

14,432

Proportionate share adjustments related to cash and restricted cash held by consolidated and
   unconsolidated partnerships

1,071

Securitization trust investment and other

(95,906
)
   Proportionate Debt

$
4,359,334

Preferred OP Units

96,449

Redeemable noncontrolling interests in consolidated real estate partnership

4,617

   Net Leverage

$
4,460,400

~~We calculated Adjusted EBITDAre used in our leverage ratios based on the most recent three-month amounts, annualized.~~ EBITDAre and Adjusted EBITDAre are non-GAAP measures, which we believe are useful to investors, creditors, and rating agencies as a supplemental measure of our ability to incur and service debt because they are recognized measures of performance by the real estate industry and allow for comparison of our credit strength to different companies. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of liquidity. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is comparable with that

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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:

•

gains and losses on the dispositions of depreciated property;

•

impairment write-downs of depreciated property;

•

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

•

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

~~Table of Contents~~

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 attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, and unrealized gain on interest rate options to allow investors to compare a measure of our earnings before the ~~following items for~~effects of our capital structure and indebtedness with that of other companies in the ~~reasons set forth below:~~real estate industry. Additionally, we exclude interest income recognized on our Mezzanine Investment that was accrued but not paid during the three months ended March 31, 2021.

•

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

•

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

•

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

The reconciliation of net income to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2021 and 2020, ~~as used in our leverage ratios,~~ is as follows (in thousands):

Three Months Ended

March 31, 2020

Net income

$
8,977

Adjustments:

Interest expense

41,336

Income tax benefit

(3,233
)
Depreciation and amortization

100,476

Loss on dispositions of real estate

34

Adjustment related to EBITDAre of unconsolidated partnerships

211

EBITDAre

$
147,801

Net income attributable to noncontrolling interests in Aimco
   Operating Partnership

(18
)
EBITDAre adjustments attributable to noncontrolling interests

(620
)
Interest income received on securitization investment

(2,171
)
Straight-line rent

635

   Adjusted EBITDAre

$
145,627

   Annualized Adjusted EBITDAre

$
582,508

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

•

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

•

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

Preferred Distributions represents the distributions paid on the Aimco Operating Partnership’s preferred OP Units. We add Preferred Distributions to Adjusted Interest Expense for a more complete picture of the interest and dividend requirements of our leverage.

~~Table of Contents~~

The reconciliation of interest expense to Adjusted Interest Expense and Preferred Distributions for the three months ended March 31, 2020, as used in our leverage ratios, is as follows (in thousands):

Three Months Ended

March 31, 2020

Interest expense

$
41,336

Adjustments:

Proportionate share adjustments related to interest of consolidated and
   unconsolidated partnerships

(68
)
Interest income earned on securitization trust investment

(2,171
)
   Adjusted Interest Expense

$
39,097

Preferred distributions

1,869

   Adjusted Interest Expense and Preferred Distributions

$
40,966

Annualized Adjusted Interest Expense

$
156,388

Annualized Adjusted Interest Expense and Preferred Distributions

$
163,864

	Three months ended			Three months ended
	March 31, 2021			March 31, 2020
Net income	$	21,434		$	4,555
Adjustments:
Interest expense		12,677			5,651
Income tax benefit		(5,100	)		(2,023	)
Depreciation and amortization		20,717			19,347
Adjustment related to EBITDAre of unconsolidated partnerships		215			211
EBITDAre	$	49,943		$	27,741
Net loss attributable to noncontrolling interests in consolidated real estate partnerships		(291	)		5
Net income attributable to redeemable noncontrolling interest consolidated real estate partnership		152			103
EBITDAre adjustments attributable to noncontrolling interests		(270	)		(241	)
Interest income received on Mezzanine Investment		(7,467	)		(6,747	)
Unrealized gains on interest rate options		(25,347	)		-
Adjusted EBITDAre	$	16,720		$	20,861

Liquidity and Capital Resources

Liquidity

Liquidity is the ability to meet present and future financial obligations. Our primary ~~source~~sources of liquidity isare cash ~~flow~~flows from ~~operations. Additional sources are proceeds from dispositions of apartment communities, proceeds from refinancing existing property debt, borrowings under new property debt, borrowings~~operations and borrowing capacity under our ~~revolving credit facility, and proceeds from equity offerings.~~loan agreements.

As of March 31, ~~2020,~~2021, our ~~primary sources~~available liquidity was $385.3 million. We have commitments for, and expect to spend, approximately $320 million on development and redevelopment projects underway.

As of March 31, 2021, our available liquidity ~~were as follows:~~was $385.3 million, which consists of:

•

$~~340.9~~226.1 million in cash and cash equivalents;

•

$~~19.5~~9.2 million of restricted cash, ~~excluding~~including amounts related to tenant security deposits ~~consists primarily of~~and escrows held by lenders for capital additions, property taxes, and insurance; and

•

$~~198.7~~150.0 million of available capacity to borrow under our revolving secured credit ~~facility after consideration of $7.4 million of letters of credit backed by the~~ facility.

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

•

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

•

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

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

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~~Uses~~

Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding ~~property~~ debt, capital expenditures, ~~dividends paid to stockholders, distributions paid to noncontrolling interest partners,~~ and ~~acquisitions of apartment communities.~~future investments. We use our cash and cash equivalents, ~~and our cash~~including that provided by operating activities, to meet short-term liquidity needs.

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 ~~short-term~~ liquidity needs, we have the means to generate additional ~~means,~~liquidity, such as ~~short-term borrowing availability~~property financing activity and proceeds from apartment community ~~sales and refinancings. We may use our revolving credit facility for working capital and other short-term purposes, such as funding investments on an interim basis.~~sales. We expect to meet our long-term liquidity requirements, ~~including~~such as debt maturities, development and redevelopment spending, and ~~apartment community acquisitions,~~future investment activity, primarily through ~~primarily non-recourse, long-term borrowings, the issuance of equity securities (including OP Units), the sale of apartment communities,~~property financing activity and cash generated from operations. ~~Additionally, we expect to meet our liquidity requirements associated with our debt maturities.~~ Our revolving secured credit facility matures on ~~January 22, 2022.~~ ~~The following table summarizes the payments due under our non-recourse property debt commitments, excluding debt issuance costs, as~~in December 2023, prior to consideration of ~~March 31, 2020 (in thousands):~~its two one-year extension options.

Total

Less than
One Year
(2020)

2-3 Years
(2021-2022)

4-5 Years
(2023-2024)

More than Five Years (2025 and Thereafter)

Non-recourse property debt

$
4,228,440

$
148,329

$
1,021,230

$
673,617

$
2,385,264

Leverage and Capital Resources

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

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

As of March 31, ~~2020,~~2021, approximately ~~85.9%~~45% of our leverage consisted of property-level, non-recourse, long-dated, amortizing debt. Approximately ~~96.0%~~87% of our property-level debt is fixed-rate, which provides a hedge against increases in interest rates, capitalization rates, and inflation. The weighted-average remaining term to maturity of our property-level debt was ~~7.3 years. On average, 8.1%~~5.6 years and a weighted-average interest rate of ~~our unpaid principal balances will mature each year from 2021 through 2023.~~3.09%.

While our primary source of leverage is property-level ~~non-recourse, long-dated, fixed-rate, amortizing~~ debt which includes construction loans, we also have a ~~revolving~~ credit facility with a syndicate of financial institutions. As of March 31, ~~2020,~~2021, we had ~~$593.8 million of~~no outstanding borrowings under our revolving secured credit facility, ~~which represented approximately 12.1%~~swingline loan sub-facility and letter of ~~our total leverage.~~credit sub-facility and had capacity to borrow up to $150.0 million.

As of March 31, ~~2020, our outstanding preferred OP Units represented~~2021, approximately ~~2.0%~~55% of our ~~total leverage. Preferred OP Units are redeemable at the holder’s option; however, for illustrative purposes, we compute the weighted-average maturity~~leverage consisted of ~~our total leverage assuming~~notes payable to AIR, with a ~~10-year maturity on the units.~~

~~The combination~~fixed interest rate of ~~non-recourse property-level debt, borrowings under our revolving credit facility, preferred OP Units,~~5.2% and ~~redeemable noncontrolling interests in~~ a ~~consolidated real estate partnership comprise our total leverage. The weighted-average remaining~~ term to maturity ~~for our total leverage described above was 6.7 years as~~ of ~~March 31, 2020.~~2.8 years.

Under ~~the~~our revolving secured credit facility, we have agreed to maintain a ~~Fixed Charge Coverage~~fixed charge coverage ratio of ~~1.40x,~~1.25x, minimum tangible net worth of $625 million, and maximum leverage of 60% as ~~well as other covenants customary for similar revolving~~defined in the credit arrangements. For the trailing 12-month period ended March 31, 2020, our Fixed Charge Coverage ratio was 2.08x, compared to a ratio of 2.05x for the trailing 12-month period ended March 31, 2019. Our Fixed Charge Coverage ratio for March 31, 2020.agreement. We are currently in compliance and expect to remain in compliance with ~~this covenant during the next 12 months.~~

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

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

Changes in Cash, Cash Equivalents, and Restricted Cash

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

Operating Activities

For the three months ended March 31, ~~2020,~~2021, net cash provided by operating activities was ~~$77.4~~$2.3 million. Our operating cash flow is affected primarily by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment communities. Cash provided by operating activities for the three months ended March 31, ~~2020,~~2021, decreased by ~~$4.2~~$13.2 million compared to ~~2019,~~the same period ended in 2020. The decrease was due to lower ~~net operating income associated with communities sold, offset partially by improved operating results of our Same Store communities and increased~~ contribution from our ~~Acquisition~~Operating Properties and ~~Other Real Estate communities.~~Development and Redevelopment communities, which were negatively impacted by the pandemic and governmental lockdown.

Investing Activities

For the three months ended March 31, ~~2020,~~2021, our net cash used in investing activities of ~~$98.0~~$37.9 million ~~was attributed to~~consisted primarily of capital expenditures and cash used in the ~~items discussed below.~~purchase of Benson Hotel and construction costs on our development properties.

Total capital additions ~~at apartment communities~~ totaled ~~$92.4~~$31.7 million and ~~$75.4~~$6.7 million during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. We have generally ~~fund~~funded capital additions with available cash and cash provided by operating ~~activities and cash proceeds from sales of apartment communities.~~activities.

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

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

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~~A summary of the capital spending for these categories, along with a reconciliation of the total for these categories~~For further details regarding our development and redevelopment activities, including apartment communities constructed and delivered refer to the ~~capital expenditures reported~~Executive Overview section above.

Financing Activities

Net cash used in ~~the accompanying condensed consolidated statements of cash flows~~financing activities for the three months ended March 31, ~~2020 and 2019, are presented below (in thousands):~~

Three Months Ended March 31,

2020

2019

Capital replacements

$
8,347

$
7,695

Capital improvements

1,755

2,286

Capital enhancements

10,363

15,736

Redevelopment

34,458

18,917

Development

32,917

26,211

Initial capital expenditures

2,002

2,705

Casualty

2,524

1,809

Total apartment community capital additions

$
92,366

$
75,359

Plus: additions related to commercial spaces

1,518

31

Plus: additions related to apartment communities sold or held for sale

—

2,263

Consolidated capital additions

$
93,884

$
77,653

Plus: net change in accrued capital spending

958

7,893

Capital expenditures per condensed consolidated statement of cash flows

$
94,842

$
85,546

~~For the~~2021 increased by $18.9 million compared to three months ended March 31, 2020, ~~and 2019, we capitalized $3.4 million and $2.1 million of interest costs, respectively, and $10.1 million and $8.9 million of other direct and indirect costs, respectively.~~

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

~~Financing Activities~~

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

~~Net borrowings~~primarily due principal payments on our ~~revolving credit facility~~non-recourse property debt and a purchase of ~~$318.8 million were made to provide coverage of financial obligations.~~an interest rate option.

~~Principal payments on property loans during the period totaled $22.6 million of scheduled principal amortization.~~

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

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

~~Equity and Partners’ Capital Transactions~~

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

Cash distributions paid by the Aimco Operating Partnership to preferred unitholders

$
1,869

Cash distributions paid by the Aimco Operating Partnership to common unitholders (1)

64,608

Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships

81

Total cash distributions paid by the Aimco Operating Partnership

$
66,558

~~(1)~~

~~$61.1 million represented distributions to Aimco, and $3.5 million represented distributions paid to holders of OP Units.~~

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

Cash distributions paid to holders of OP Units

$
5,361

Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships

81

Cash dividends paid by Aimco to common stockholders

61,116

Total cash dividends and distributions paid by Aimco

$
66,558

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Future Capital Needs

We expect to fund any future acquisitions, redevelopment, development, and other capital spending principally with proceeds from ~~apartment community sales,~~operating cash flows, short-term borrowings, debt and equity ~~financing, and operating cash flows.~~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 ~~2020~~2021 and beyond.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of March 31, ~~2020,~~2021, on a consolidated basis, we had approximately ~~$170.1~~$55.0 million of variable-rate property-level ~~debt outstanding and $593.8 million of outstanding borrowings under our revolving credit facility.~~debt. We estimate that a change in 30-day LIBOR of 100 basis points with constant credit risk spreads would reduce or increase interest expense by approximately ~~$7.6~~$0.6 million.

In 2020, we paid an upfront premium of $12.1 million onfor the option to enter into an ~~annual basis.~~interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk and is intended to mitigate interest rate increases between now and October 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68% strike price. The amount of a future cash settlement is capped if the prevailing interest rate exceeds 2.78%. Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement nor would we have any liability to make a payment.

During the three months ended March 31, 2021, we paid an upfront premium of $5.6 million (including transaction costs) for the option to enter into an interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk relative to our notes payable to AIR and is intended to mitigate interest rate increases between now and January 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 3% five year swap strike price. Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement nor would we have any liability to make a payment.

As of March 31, ~~2020, we had~~2021, the estimated fair value of total indebtedness, including our notes payable to AIR, was approximately $374.8 million of cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates, which may offset somewhat a change in rates on our variable-rate debt discussed above.$985.8 million.

ITEM 4. CONTROLS AND PROCEDURES

Aimco

Disclosure Controls and Procedures

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

Changes in Internal Control Over Financial Reporting

~~There~~During the three months ended March 31, 2021, the Company implemented a new financial and accounting system. We have designed controls around the new accounting system mainly on the review of journal entries and review of financial data. Other than these new controls there has been no change in Aimco’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter of ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, Aimco’s internal control over financial reporting.

~~The~~ Aimco Operating Partnership

Disclosure Controls and Procedures

~~The~~ Aimco Operating Partnership’s management, with the participation of the chief executive officer and chief financial officer of both Aimco and ~~AIMCO-GP, Inc., the~~Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, has evaluated the effectiveness of ~~the~~ Aimco

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Operating Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange) as of the end of the period covered by this report. Based on such evaluation, the chief executive officer and chief financial officer of ~~AIMCO-GP, Inc.~~Aimco OP GP, LLC have concluded that, as of the end of such period, ~~the~~ Aimco Operating Partnership’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

~~There~~During the three months ended March 31, 2021, the Company implemented a new financial and accounting system. We have designed controls around the new accounting system mainly on the review of journal entries and review of financial data. Other than these new controls there has been no change in ~~the~~ Aimco Operating Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter of ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, ~~the~~ Aimco Operating Partnership’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

As of the date of this report, ~~we are updating~~ the risk factors in Aimco’s and ~~the~~ Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2019 to include the following risk factor. The risk factors as-filed~~2020 remain unchanged.

~~Pandemics may affect our operating results and financial condition.~~

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

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

•

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

•

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

•

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

•

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

•

~~our ability to complete redevelopments and developments as planned; and~~

•

~~potential litigation relating to the COVID-19 pandemic.~~

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

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

Aimco

Unregistered Sales of Equity Securities

From time to time, Aimco may issue shares of Common Stock in exchange for OP Units, defined under ~~The~~the Aimco Operating Partnership heading below. Such shares are issued based on an exchange ratio of one share for each common OP Unit. Aimco may also issue shares of Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the three months ended March 31, ~~2020,~~2021, Aimco did not issue any shares of Common Stock in exchange for OP Units ~~or limited partnership interests~~ in ~~consolidated real estate partnerships.~~these transactions.

~~Table of Contents~~

Repurchases of Equity Securities

~~The following table summarizes Aimco’s share~~There were no repurchases ~~(in thousands, except for per share data) for~~by Aimco of its common equity securities during the three months ended March 31, ~~2020.~~2021. Aimco’s Board of Directors has, from time to time, authorized Aimco to repurchase shares of its outstanding Common Stock. As of March 31, 2021, Aimco was authorized to repurchase approximately #VALUE! million shares. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.

Fiscal period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)

January 1, 2020 ‒ January 31, 2020

—

$
—

—

10,630

February 1, 2020 ‒ February 29, 2020

—

—

—

10,630

March 1, 2020 ‒ March 31, 2020

234

42.79

234

10,396

Total

234

$
42.79

234

~~(1)~~

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

~~The~~ Aimco Operating Partnership

Unregistered Sales of Equity Securities

~~The~~ Aimco Operating Partnership did not issue any unregistered OP units during the three months ended March 31, ~~2020~~2021.

Repurchases of Equity Securities

~~The~~ Aimco Operating Partnership’s Partnership Agreement generally provides that after holding common OP Units for ~~one year,~~one-year, limited partners other than Aimco have the right to redeem their common OP Units for cash or, at our election, shares of Aimco Common Stock on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended March 31, ~~2020,~~2021, no common OP Units ~~or preferred OP Units held by Limited Partners~~ were redeemed in exchange for shares of ~~Aimco~~ Common Stock.

The following table summarizes ~~the~~ Aimco Operating Partnership’s repurchases, or redemptions in exchange for cash, of common OP Units ~~(in thousands, except for per share data)~~ for the three months ended March 31, ~~2020.~~2021.

Fiscal period

Total Number
of Units
Purchased

Average
Price Paid
per Unit (1)

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

Maximum Number of
Units that May Yet Be
Purchased Under the
Plans or Programs (1)
January 1, 2020 ‒ January 31, 2020

1

$
51.55

N/A

N/A
February 1, 2020 ‒ February 29, 2020

12

53.10

N/A

N/A
March 1, 2020 ‒ March 31, 2020

239

43.05

N/A

N/A
Total

252

$
43.55

Fiscal period	Total Number of Units Purchased		Average Price Paid per Unit		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs (1)
January 1, 2021 ‒ January 31, 2021		—	$	—	N/A	N/A
February 1, 2021 ‒ February 28, 2021		—		—	N/A	N/A
March 1, 2021 ‒ March 31, 2021		7,479		4.82	N/A	N/A
Total		7,479	$	4.82

(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 a price per unit 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 its Common Stock at least 90% of its “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income. Our revolving credit facility includes customary covenants, including a restriction on dividends and distributions and other restricted payments, but permits dividends and distributions during any four consecutive fiscal quarters in an aggregate amount of up to 95% of Aimco’s Funds From Operations for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain Aimco’s REIT status and avoid the payment of federal income or excise tax. Aimco’s Board of Directors ~~targets~~determines and declares its dividends. In making a dividend ~~payout ratio between 65%~~determination, Aimco’s Board of Directors considers a variety of factors, including REIT distribution requirements; current market conditions; liquidity needs; and ~~70%~~other uses of ~~AFFO.~~ cash, such as deleveraging and accretive investment activities. Aimco’s Board of Directors has not declared a dividend payment, nor have they set the expectation for any future regular dividend payments.

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ITEM 6. EXHIBITS

The following exhibits are filed with this report:


EXHIBIT NO. (1)		DESCRIPTION

3.1		Charter – Articles of Restatement (Exhibit 3.1 to Aimco’s Annual Report on Form 10-K dated February 24, 2020, is incorporated herein by this reference)

3.2		Amended and Restated Bylaws (Exhibit 3.1 to Aimco’s Current Report on Form 8-K dated January 26, 2016, is incorporated herein by this reference)

3.3		Articles Supplementary of Apartment Investment Management Company (Exhibit 3.1 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)

3.4		Amended and Restated Bylaws (Exhibit 3.2 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)

4.1		Description of Aimco’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (Exhibit 4.1 to Aimco’s Annual Report on Form 10-K dated February 24, 2020, is incorporated herein by this reference)

10.1		Fifth Amended and Restated Agreement of Limited Partnership of ~~the~~ Aimco Operating Partnership, dated as of July 29, 1994, as amended and restated as of April 8, 2019 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K dated April 5, 2019, is incorporated herein by this reference)

10.2		~~Second Amendment to Second Amended and Restated Senior Secured Credit~~Master Lease Agreement, dated as of ~~April 20,~~December 15, 2020 (effective January 1, 2021), by and ~~among Apartment Investment~~between AIMCO 50 Rogers Street, LLC and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., certain subsidiary loan parties party thereto, the lenders party thereto and KeyBank National Association, as administrative agentPrism Lessee, LLC (Exhibit ~~10.1~~10.5 to Aimco’s Current Report on Form 8-K, dated ~~April 20,~~December 15, 2020, is incorporated herein by this reference)

10.3		Master Lease Agreement, dated as of December 15, 2020 (effective January 1, 2021), by and between MCZ/Centrum Flamingo II, L.L.C. and Flamingo North Lessee, LLC (Exhibit 10.7 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)

10.4		Master Lease Agreement, dated as of December 15, 2020 (effective January 1, 2021), by and between AIMCO Leahy Square Apartments, LLC and 707 Leahy Lessee, LLC (Exhibit 10.8 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)

31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco

31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco

31.3		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – ~~the~~ Aimco Operating Partnership

31.4		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – ~~the~~ Aimco Operating Partnership

32.1		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Aimco

32.2		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – ~~the~~ Aimco Operating Partnership

101		The following materials from Aimco’s and ~~the~~ Aimco Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2020,~~2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) condensed consolidated balance sheets; (ii) condensed consolidated statements of operations; (iii) condensed consolidated statements of ~~comprehensive income;~~equity and partners’ capital; (iv) condensed consolidated statements of cash flows; and (v) notes to condensed consolidated financial statements.

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

~~(1)~~

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

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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/ ~~Paul Beldin~~H. Lynn C. Stanfield
		~~Paul Beldin~~H. Lynn C. Stanfield
		Executive Vice President and Chief Financial Officer
		~~(duly authorized officer and principal financial officer)~~

	AIMCO ~~PROPERTIES,~~OP L.P.

	By:	~~AIMCO-GP, Inc.,~~Aimco OP GP, LLC, its ~~general partner~~General Partner

	By:	/s/ ~~Paul Beldin~~H. Lynn C. Stanfield
		~~Paul Beldin~~H. Lynn C. Stanfield
		Executive Vice President and Chief Financial Officer
		~~(duly authorized officer and principal financial officer)~~

Date: May ~~8, 2020~~17, 2021

4438

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

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

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

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

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

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

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

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

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

Non-dilutive share equivalents outstanding		97		36

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

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

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

Non-dilutive partnership unit equivalents outstanding		1,847		229

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

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

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

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

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

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

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